"GRAIN FOR GREEN" IN CHINA: COST-EFFECTIVENESS AND SUSTAINABILITY OF A CONSERVATION SET-ASIDE PROGRAM

Since 1999, China has pursued one of the most ambitious conservation set-aside program's, known as Grain for Green. The overall goal of our paper is to analyze this program's cost-effectiveness and sustainability. We find that while the program has made a clear attempt to retire land that has the highest potential of contributing to soil erosion, cost-effectiveness can be improved by targeting plots with highest environmental benefits and allowing payments to reflect heterogeneous opportunity costs. We also find indications that preventing farmers from reconverting plots to cultivation will be critical to sustain environmental benefits of the program.