China's Sloping Land Conversion Program: Institutional innovation or business as usual?

China's Sloping Land Conversion Program (SLCP) is the largest land retirement program in the developing world, having the goal of converting 14.67 million hectares of cropland to forests by 2010 (4.4 million of which is on land with slopes greater than 25 degrees) and an additional "soft" goal of afforesting a roughly equal area of wasteland by 2010 (WWF, 2003; SFA, 2003). Pending successful completion it could represent a 10-20% increase in China's national forest area and a 10% decrease in current cultivated area (Hyde, Belcher and Xu, 2003; ZGTJNJ, 2001). At present the program is being implemented in more than 2000 counties across 25 provinces in China - a wide area containing huge ecological and economic heterogeneity - and involves the participation of tens of millions of rural households. The program has a total budget of RMB 337 billion (over US$40 billion), around RMB 50 billion of which has been spent so far, and over 7.2 million hectares of cropland has been retired by the end of 2003 (Uchida et al., 2002; Xu and Cao, 2001; Tao, Xu and Xu, 2004). This case study draws upon past research of the program during its pilot phase (1999-2001) as well as a 2003 household and village-level survey conducted by the Center for Chinese Agricultural Policy, CAS, to examine program design, implementation and outcomes to date. We find significant problems in design and implementation in terms of the program's predominantly top-down approach and lack of true conditionality, differentiation and mechanisms to ensure permanence. We arguing that SLCP needs to be redesigned to allow for greater choice on the part of rural households as to whether or not to participate, greater local innovation and input, and utilization of market-based mechanisms to improve cost effectiveness and reduce adverse outcomes. Furthermore, policymakers need to recognize that the long-term nature of the environmental services targeted by the program require significant extension of the subsidy lengths, which at present are at most 8 years.