Impacts of the Grassland Ecological Compensation Policy on Household Livestock Production in China: An Empirical Study in Inner Mongolia

Grassland Ecological Compensation Policy (GECP) is a large-scale program in which China has invested since 2011 to alleviate grassland degradation and increase herders' income. Although the amount invested in the program has increased each year, little research has been conducted to evaluate the impacts of the program; as such, this study examines such impacts on livestock production, grazing intensity, and structure using panel data from a herders' field survey conducted in 2015 in Inner Mongolia, China. Results from the econometric models show that the forage-livestock balance, which is one sub-policy of the GECP, had incentivized large farms to reduce their total number of sheep, but the implementation of the GECP could not greatly influence the reduction in the number of cattle present on any farm size. This study also reveals that herders made their livestock production and grazing decisions in response to market prices and that herder households that also had off-farm jobs raised fewer livestock and grazed lighter. Several policy implications are discussed in this paper.