What Happens When a Massive Ecological Rehabilitation Program Ends? Evidence from China Using a Quasi-Natural Experiment

This paper studies the impact of a national ecological rehabilitation program on sustainable development outcomes in rural China. I use the 2009-2010 consolidation of the Land Sloping Conversion Program (SLCP) as a quasi-natural experiment to study what happens when one of the world’s largest payments for ecosystems services program is scaled back. A staggered difference-in-differences design is applied to a novel panel of households and villages located in lagging, ethnically diverse and ecologically fragile areas of western China. The results show that villages where SLCP is abandoned versus maintained enjoy compararable sustainable development outcomes in terms of similar average income per capita, temporary wages, likelihood of experiencing natural disasters, and agricultural loss due to natural disasters. To explore the underlying mechanisms, I further investigate the effect of SLCP abandonment on rural household's labor reallocation decisions. In favor of the behavioral permanence thesis, the household likelihood of engaging in off-farm work remains unchanged even after SLCP payments cease. The findings indicate that SLCP helps to generate self-reinforcing economic and environmental benefits even after the program ends driven primarily by sustained out-migration, although local contexts matter and important questions emerge about social equity