Evaluating the Impact of Ecological Property Rights to Trigger Farmers’ Investment Behavior—An Example of Confluence Area of Heihe Reservoir, Shaanxi, China

Property rights of natural resources have been acting as a critical legislative tool for promoting sustainable resource utilization and conservation in various regions of the globe. However, incorporating ecological property rights into the natural resources property rights structure may significantly influence farmers’ behavior in forestry investment. It may also trigger forest protection, water conservation, and urban water security. The main aim of the research is to evaluate the impact of ecological property rights and farmers’ investment behavior in the economic forest. We have constructed an analytical framework of collective forest rights from two indicators of integrity and stability, by adopting the theory of property rights and ecological capital to fulfill the study’s aims. The empirical data has been comprised of the microdata of 708 farmers, collected from the confluence area of the Heihe Reservoir, Shaanxi, China. The study also conducted pilot ecological property rights transactions in the surveyed area. The study utilized the double-hurdle model to test the proposed framework empirically. The results show that forest land use rights, economic products, and eco-product income rights positively affect farmers’ forestry investment intensity, and disposal rights (forest land transfer rights) negatively affect farmers’ investment intensity. However, in terms of the integrity of property rights, only the right to profit from ecological products affects farmers’ forestry investment willingness, and other property rights are insignificant. The study also found that the lower the farmers’ forest land expropriation risk is expected, the greater the possibility of investment and the higher the input level. However, we traced that the farmers’ forest land adjustment has no significant impact on farmers’ willingness to invest. Obtaining the benefits of ecological products has been found as the primary motivation for forestry investment within the surveyed area. The completeness of ownership rights positively impacted farmers’ investment intensity. Farmers should realize the ecological value of water conservation forests through the market orientation of the benefit of ecological products. Therefore, the government should encourage farmers and arrange proper training to facilitate a smooth investment. A well-established afforestation program should also be carried out.