ABSTRACT. This paper studies the impact of the largest conservation set-aside program in the developing world: China's Grain for Green program, on poverty alleviation in rural areas. Based on a large-scale survey, we find that the program was implemented mostly in the areas of China that are fairly poor. In addition, we show that income from livestock activities and some types of asset holdings of participants have increased significantly more than those of non-participants (due to program effects). Only weak evidence is provided demonstrating that participating households have begun to shift their labor into the off-farm sectors. Overall, the results suggest that the program has been moderately successful in achieving its poverty alleviation objectives.
This study evaluates the labor response of rural households participating in the Grain for Green program in China, the largest payments for ecosystem services program in the developing world. Using a panel data set that we designed and implemented, we find that the participating households are increasingly shifting their labor endowment from on-farm work to the off-farm labor market. However, the effects vary depending on the initial level of human and physical capital. The results support the view that one reason why the participants are more likely to find off-farm employment is because the program is relaxing households' liquidity constraints.
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