Incentive contract or tenure reform? Understanding the transition of forest resources management in China

Purpose - China's government has been facing a trade-off in choosing between tenure reform and forest concessions to manage forest resources. The purpose of this paper is to investigate how the government's policy choices can be affected by environmental benefits and the economic value of forests. Design/methodology/approach - We build a simple theoretical model and employ province-level data. Findings - The results show that the government will allocate less forestland to local people if environmental concerns are more important and privatize less forest if the economic benefits from forest are higher. Social implications - Therefore, the transformation of forest management policies reflects not only the government's own preferences but also its gradual adjustment to the changing market and institutional environment. Originality/value - The present paper provides a regulation approach that complements the growing literature on forest resource management.