Impact of the Sloping Land Conversion Program on Rural Household Income in China

As the largest Payment for Environmental Services (PESs) program in China, the Sloping Land Conversion Program (SLCP) has exerted a profound impact on both the ecosystems and rural households’ livelihoods. However, the direct impact and indirect impact mechanism of the SLCP on income remain poorly understood. To bridge this research gap, a unique dataset was used in this study, comprising more than 1200 sampled rural households from 1995 to 2016. An estimation was conducted regarding the direct impact of the SLCP and its subsidy changes in different implementation stages on rural household income, as well as the indirect impact mechanism of the SLCP on income. Our results provided twofold findings. First, participation in the first round of the SLCP increased rural household’s income by 4.63% compared with non-participation. However, in the transition period, the SLCP had no significant effect on the total income of rural households. In the subsidy extension and subsidy expiration stages, participation in the SLCP increased rural household total income by 12.53% and 11.77%, respectively. Second, the variables, including farmland area, forestland area, land-based production expenditure, land-based labor input, and off-farm labor input, had significant mediation effects on the impact of the SLCP on rural household income. To improve the implementation of the SLCP, policymakers could pay attention to more integrative approaches, such as forestland transfer, reduction in forestland fragmentation, and promotion of off-farm job opportunities.