Assessing total factor productivity and efficiency change for farms participating in Grain for Green program in China: A case study from Ansai, Loess Plateau

In 1999, the Grain for Green program (also known as Sloping Land Conversion program), one of the world's largest land-conservation programs, was launched in China. It emphasizes both eco-environment rehabilitation and poverty alleviation, with the ultimate goal of sustainable development. Total Factor Productivity (TFP) has important implications for conservation of the environment, enhancement of wellbeing, food self-sufficiency, and the sustainability of the program. Using data from the year before and the ending year of the first phase, we did a case study in the Zhifanggou watershed on China's Loess Plateau. We used a Data-Envelopment-Analysis based on Malmquist TFP index approach to find out the changes of TFP, the sources of TFP growth, and the determinant factors at a farm level. We found that 1) TFP has been greatly improved after the implementation of the program and 2) the sole source of TFP growth is technological growth. In contrast, the technical efficiency of farms under the improved technology has decreased; 3) farms with an unfavorable initial state benefited more after the introduction of the program; and 4) land terracing and access to credit contributed significantly to TFP growth and technological growth. Land terracing is positively related to technical efficiency change, too. Extension services are positively related to technological growth, while age is negatively related to technical efficiency change. We therefore suggest a focus on terracing slopes, improving access to credit and extension services.