Evaluating the Impact of Forest Tenure Reform on Farmers’ Investment in Public Welfare Forest Areas: A Case Study of Gansu Province, China

In recent times, forest tenure reform has become one of the most discussed agendas among local and global policymakers. Forest tenure is a contract that specifies who has rights to forestry resources and depicts who should utilize, maintain, and acquire them. It can have a significant impact on whether farmers invest in their forestland. The study’s primary purpose is to explore whether and how the reform of forest rights affects farmers’ investment in public welfare forestry. More specifically, the study thoroughly analyzes the impact of primary and supplementary reforms on farmers’ investment in public welfare forest areas. We have outlined the theoretical framework using the theory of property rights and utilized the fixed-effect model and the Difference in Differences (DID) model to achieve research objectives. However, the empirical setup of the study has comprised time series data of 500 farmers, which was collected via interviews conducted at regular time intervals (2011—before the reform; 2013, 2015, and 2017— after the reform). The collective forest land welfare areas in Gansu Province, China, have been selected as the key data collection area. The study concludes that: (i) although the principle reform of forest tenure can stimulate farmers’ investment intensity in the short term, it is insufficient in the long term. (ii) The supplementary reform of forest tenure can significantly promote farmers’ long-term effective investment. There is a significant difference in forest land investment between the experimental and control groups, and this difference gradually expands over time. The study suggests that the government should pay more attention to the relevance of additional reforms to encourage the growth of forest rights mortgages and circulation. Moreover, the core themes of sustainable development in forestry should be highlighted.