Valuing The Social Welfare Of Farmland Retirement Project

The implementation of Farmland Retirement Project(FRP)by China’s central government was an effective way to consolidate food security,promote ecological conservation,support supply-side structural reform for agricultural,and thus,ensure the sustainable utilization of arable land resources.This study investigated the social welfare associated with China’s pilot FRP with data that was robustly collected and analyzed.The choice experiment(CE)was employed to investigate public’s multi-dimensional preferences for the FRP and provided guidance for farmland retirement practices.Our research objective was divided into the discussion of the following three research questions: designing the CE for the valuation of FRP’s social welfare by including spatial preference heterogeneity;comparing the estimations from different stated preference methods(the CE,contingent valuation and contingent ranking)for testing the robustness of welfare valuation results;and conducting a meta-analysis that synthesized the valuation results from our study as well as from multiple prior studies for benefit transfer.We first designed the CE questionnaire with five attributes(duration of the retirement,priority zone for conservation,vegetation type for planting,and the annual payment for the FRP per households)and the Bayesian optimal experimental design was conducted for generating 12 versions of the questionnaire with 48 choice sets.Since CE and contingent valuation were both stated preference methods that were used for eliciting the economic value using responses to survey questions,particular attention had been given in designing the FRP questionnaire in order to create a “credible” hypothetical environmental market.Therefore,this paper gave a review of the questionnaire design literature from the aspect of attribute selection,experimental design and bias control,after which a well-designed and pretested stated preference questionnaire for the valuation of FRP was designed by integrating the weight of evidence in the literature with FRP practices in China.The core CE part within the questionnaire was 4 choice questions that collected respondents’ votes for the most cost-effective alternatives among two LPR options and one status quo option.In addition,the questionnaire also included: contingent ranking questions that collected respondents’ ranking of specific attribute’s levels before the CE part;discrete choice of single/double bounded dichotomous contingent valuation questions that collected respondents’ opinions for a specific FRP scenario after the CE part;and various survey instruments,including but not limited to scenario descriptions,verbal protocols,protest-zero detection,effectiveness evaluation,that helped obtain reliable preference information from the respondents and pave the way for the analysis of welfare analysis.Secondly,employing the stated preference questionnaire,this study obtained survey data from three districts of Wuwei city: Gulang county in the upper reaches of the Shiyang River Basin,Liangzhou district in the middle reaches,and Minqin county in the lower reaches.A random parameter Logit model was estimated by incorporating the spatial heterogeneity of respondents’ residence locations from upper-middle-lower differences and urban-rural differences.The simulation algorithms were used to calculate social benefits associated with the FRP to guide the establishment of preference-consistent FRP in the city of Wuwei.This study found the following conclusions.(1)The social welfare of FRP had significant spatial heterogeneity.Rural residents from the upper,middle and lower reaches have a decreasing preference for FRP,while urban residents did not have a systematic upper-middle-lower heterogeneity;urban residents were willing to pay 88.89 RMB more,on average,than rural residents for the implementation of FRP;urban residents preferred a larger retirement area and a longer retirement period than urban residents.Results showed that spatial heterogeneity had an important effect on social welfare analysis for FRP,which not only contributed to the literature of spatial heterogeneity in welfare analysis but also provided references for the development of differentiation retirement projects.(2)In the study areas of Wuwei,an expansion of the area enrolled in the program,from 10,000 mu to 20,000 mu and then to 50,000 mu,had a positive influence on the social welfare of urban residents,while its effect on rural residents would increase firstly and then stabilize;extending the duration of the retirement from 3 years to 5 years and then to 10 years would significantly increase and then decrease the social welfare of urban and rural residents.The results showed that FRP should balance the improvement of ecological condition and the development of agricultural production,as well as avoid blindly expanding the duration and areas of the FRP in terms of welfare maximization.(3)Urban residents and rural residents had a similar preference order for the selection of priority retirement zone,that was,wildlife conservation < surface water protection < groundwater protection < sandstorm reduction;for the vegetation type for planting,urban residents preferred forests which had a greater landscape value,while rural residents had no significant differences in the preferences of different vegetation types.Thus,the FRP policy in Wuwei should adapt to its environmental and ecological conditions so as to better meet local demands for controlling sandstorm sources and increasing forest areas.(4)The aggregate value of social welfare of the current pilot FRP in Wuwei City was 114 million RMB per year,accounting for 0.41% of the city’s GDP in 2016,which could be used for the cost-benefit analysis of the corresponding FRPs;and under the guidance of public preference information,by increasing the area and period for the retirement and improving the ecological conditions to satisfy the public’s preferences,the social welfare would increase by 157.89%,which was 294 million RMB per year.In summary,the application of choice experiment provided policy implications for many aspects,including the marginal utility estimation of attributes’ levels,valuation of social welfare,and identification of special heterogeneity.These results supported that FRP can improve social welfare,also indicated the direction for further adjustment of retirement policies.Thirdly,considering that the application of CE in the context of China was more complex and less mature than that of contingent valuation method,this paper used contingent ranking and contingent valuation method to test the robustness of above-mentioned results derived from the CE.The results from contingent ranking showed that respondents’ rankings of the different levels of priority zone and vegetation type attributes were similar with the results from the order of corresponding implicit prices from the CE.Moreover,the willingness to pay(WTP)for a specific FRP scenario derived from the single bounded,as well as double bounded,dichotomy contingent valuation had no statistically significant differences with the aggregated results from the CE.Therefore,the valuation of the social welfare with the use of CE was robust,and this conclusion also provided additional evidence for the debate on the results consistency by the use of different stated preference methods in the literature.Finally,our research presented the first comprehensive synthesis of economic valuations of China’s farmland protection and preservation practices by including the results from this study as well as the domestic and foreign literature.Meta-regression analysis was conducted to transfer the results from the current site-specific valuation results to other targeted policy sites.Due to the differences in regional social,economic and environmental characteristics,many primary studies focusing on a single study site were limited in their scope and hard to be adopted by the decision makers.A meta-regression model was used to 78 estimates of the economic value.The results showed that households’ WTP for cultivated land protection estimated from the use of open-ended contingent valuation,payment-card contingent valuation,dichotomy contingent valuation and the choice experiment had no significant differences,and urban residents’ WTP estimates were higher than that of rural residents,which were consistent with the findings above.The influences of per capita arable land,per capita GDP,and regional grain output rank on households’ WTP were significant and negative.The WTP for the farmland protection and preservation was increasing,with an average annual growth rate of 7.1% since 2004.We also found that using volunteer labor or volunteer labor combined with volunteer donation as the payment vehicle would exaggerate the WTP by 220.91% and 65.0% respectively.The average estimated transfer error for the valuation of FRP in Wuwei by using meta-regression analysis was 41%.The results from meta-regression analysis not only quantified the correlation between regional characteristics and social welfare that were more widely applicable,but also could be used to estimate the social benefits of cultivated land protection in policy sites when they lacked the infrastructure for primary studies,thus encouraging the government to introduce relevant ecological restoration policies and improving the allocation efficiency of financial resources.