Understanding grassland rental markets and their determinants in eastern inner Mongolia, PR China

doi:10.1016/j.landusepol.2017.07.006

Land Use Policy

Volume 67, September 2017, Pages 733-741

https://doi.org/10.1016/j.landusepol.2017.07.006 Get rights and content

Highlights

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Around 43% sampled herder households are involved in grassland rental markets.
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Imbalance in “people-grassland-livestock-productive assets” are the major determinants of market participation.
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Livestock herd size encourages rent in while productive assets discourage rent out behaviors.
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Educated (10 years) herders with higher Chinese level and more family labor available tend to expand their grazing.
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Need to ensure adequate measures to implement grassland policies.

Abstract

Grassland rental markets function as a venue for balancing production factors of herder households. This paper jointly determines the socioeconomic factors affecting herders’ grassland rent-in and rent-out behaviors by applying Bivariate Probit Model with clustering standard errors on 422 households’ data from Eastern Inner Mongolia. Results reveal that imbalances in “people-grassland (grass)-livestock-productive assets” are the major determinants of the herder households’ participation in grassland rental markets. Given other factors, an increase of 10 thousand yuan in a household’ productive assets renders an increase/decrease in their rent-in/rent-out participation likelihood by 1.0% and 2.0%, respectively; an increase of 100 standard sheep unit may bring about 4% increase in rent-in participation and 0.6% decrease in rent-out participation; an increase of 100 hm² in hayfields may decrease and increase the likelihood of rent-in and rent-out participation by 13% and 3%, respectively; an increase of 1.0% in ratio of non-livestock income may decrease propensity of rent-in by 0.34%, and increase propensity of rent-out by 0.2%. In addition, the education and Chinese level of household head, and the available family labor encourage participation in grassland rent-in market. Main findings help facilitate better allocation of herders’ livelihood assets by participating the functional grassland rental markets.

Introduction

Theoretically and empirically, land rental markets have proved to be effective for improving efficiency, equity and welfare at the farm household level by providing a vehicle to equalize factor proportions (Feder, 1985, Tesfaye and Adugna, 2004, Otsuka, 2007, Jin and Jayne, 2013). While studies on farmland rental markets are abundant worldwide (e.g. Haile-Gabriel, 2000, Rahman, 2010, Holden et al., 2009) and across China (e.g. Xu and Guo, 2011, Gao et al., 2012, Yan and Huo, 2016), relatively few studies are found on grassland rental markets.

Within the literature on grassland rental markets, most previous studies have mainly applied descriptive and case study methods (e.g. Lai and Li, 2012, Yin et al., 2014), focusing on several samples. The studies applying quantitative methods based on sufficient sample size at herder household level are limited (Wang et al., 2007, Xue et al., 2010, Hu et al., 2014). Among the available ones, Xue et al. (2010) compare the willingness to rent land between 151 farmers and 274 herders in agricultural areas, semi-agricultural and semi-pastoral areas in Erdos city, Inner Mongolia. Wang et al. (2007) examine the driving factors of the land rental behavior of farmers and herders also in semi-pastoral areas by applying an economic model. However, it is not clear how the data used in the analyses were collected and from where. Applying single regression models with contracted and rented grassland area as the only two regressors, Hu et al. (2014) examine the impacts of grassland rental markets on the ecological environment by using data on 209 herder households collected in Inner Mongolia and Gansu Province.

In these studies, there is little evidence on the reasons why herder households would want to rent in or/and rent out grasslands in pastoral areas, where the implementation of the Household Responsibility System (HRS) has aggravated imbalances in the livelihood assets of herder households (Tan and Tan, forthcoming). According to our field surveys, grassland rental markets are more widespread than previously realized. Considering that Chinese government has encouraged and further regulated land transfer in rural areas since 2005 (MoA, 2005), whereas the rural land (including grassland) transfer markets are not well developed as expected, it is practically significant to understand the grassland rental markets and their determinants for promoting the development of effective grassland markets. Besides, the study intends to test if conclusions derived from cropland rental markets hold for grassland rental markets. These are the main motivations for the current study.

To address these points, the study analyzes the data of 2011 from 422 herder households in eastern inner Mongolia. Bivariate Probit model is used to examine the determinants of grassland rental markets by distinguishing between rent-in and rent-out markets. To our knowledge, this is the first study to apply such a large sample to explore the grassland rental markets and their driving factors in pure pastoral areas of China. Differing from farming areas, data collection in vast grassland areas with a sparse population is both time-consuming and costly. The study is expected to provide policy implications for fostering efficiency, equity and welfare-oriented grassland markets. The paper is structured as follows: Section 2 presents a theoretical framework followed by a brief introduction to the regulations on grassland transfer/rental markets in Inner Mongolia in Section 3; data and methods are introduced in Section 4; Section 5 discusses the results and Section 6 concludes the paper.

Section snippets

Theoretical framework

Grassland is one of the herder households’ indispensable productive factors, which together with other production factors, such as labor and capital, makes livestock production possible. However, the Household Responsibility System (HRS) implemented in pastoral areas of China since the beginning 1980s has caused unbalanced production factors, resulting in disproportionally combined “people (labor)-grassland (grass)-livestock-productive assets” (Tan and Tan, forthcoming). As a consequence,

Regulations on grassland rental markets

Two documents have been issued to directly regulate grassland rental markets in Inner Mongolia. The first one is Regulations on Transfer of Grassland Contractual Management Rights in Inner Mongolia (RTGCMR), which was issued on December 9, 1999 by the Inner Mongolian Autonomous People's Government (IMAPG); the second one, Grassland Management Regulations of Inner Mongolian Autonomy (GMR), was promulgated by the Standing Committee of the People's Congress of Inner Mongolia (SCPCIM) on November

Sampling and data collection

Inner Mongolian grassland is regarded as an important ecological barrier to north of China. It extends more than 3000 km from east to west, with types of grassland gradually changed from meadow steppe to typical steppe, desert steppe and desert. The total grasslands cover 74.92 million hm², accounting for 63.3% of the total land area of Inner Mongolia. Eighty-four per cent or 62.93 million hm² of the total grasslands are usable for grazing. It is one of the most representative pastoral areas in

Extent of participation

The extent of herder households’ participation in grassland rental markets in the surveyed areas is shown in Table 4. Around 43% sampled herder households are involved in the markets. Of which, households involved in rent-in market were found to be 12% more than that of the rent-out market, namely 28% vs. 16%, respectively. This is close to what Rahman (2010) found in Bangladesh, where the proportion of households’ rent-in participation was 38.2%, which is 17% higher than that of the rent-out

Concluding remarks

In many developing countries with imperfections on other factor markets, land rental markets are expected to become an important vehicle to balance the proportion of production factors at household level. Based on the 2011 data collected from 422 herder households, this paper applies Bivariate Probit Model with clustering standard errors to analyze the determinants of herder household participation in grassland rental markets in eastern inner Mongolia. Main results show that around 43% of the

Acknowledgements

The authors thank the Foundation of Renmin University of China (16XNI004) for their funding support, thank the students from Inner Mongolian University, Hulun Buir College, and Renmin University of China for their participation in the field surveys. We also appreciate the anonymous reviewers for their constructive comments.

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Understanding grassland rental markets and their determinants in eastern inner Mongolia, PR China

Highlights

Abstract

Introduction

Section snippets

Theoretical framework

Regulations on grassland rental markets

Sampling and data collection

Extent of participation

Concluding remarks

Acknowledgements

J. Dev. Econ.

J. Comp. Econ.

Handbook Agric. Econ.

Land Use Policy

Institutions and Policies of Pastoral Areas: Based on the Transition of Grassland Animal Husbandry Production Hohhot

Analysis of herders’ credit characteristics in typical pastoral areas–data from Hulun Buir

China Price

Community-based grassland management in western China rationale pilot project experience, and policy implications

Mt. Res. Dev.

Grassland Animal Husbandry in Inner Mongolia: History and Future Hohhot

Participation in rural land rental markets in Sub-Saharan Africa: who benefits and by how much? evidence from Malawi and Zambia

Am. J. Agric. Econ.

Land sales and rental markets in transition: Evidence from rural Vietnam

Oxford Bull. Econ. Stat.