Rural Land Rights Reform and Agro-Environmental Sustainability : Empirical Evidence from China

The landscape of China's rural land market has been changed by several significant land right reforms since 1970s. It is always of great interest to both the government and the public to gauge the effectiveness of these reforms. We address this question by investigating the impact of a recent land use right reform, namely, the ‘Three Rights Separation Policy', on agro-environmental sustainability. By separating land management right from land contracted management right, this new reform is believed to be a powerful tool to encourage land transfer, optimize land resource allocation, and increase the economy of scale in agriculture sector. Using PSM-DID model applied to panel data for the years 2008 and 2014, Our study demonstrates that the new policy also increases the use of organic fertilizers by 48.641kg/mu in total, which is a very important step to ensure agro-environmental sustainability in China. The new policy is more effective in encouraging the application of organic fertilizer when the issuing of land certificates is enforced and administrative barriers in land right transfers are removed. The findings add values to the growing literature on rural land right reforms in China and may also has significant implications in developing countries with similar rural land tenure systems and underdeveloped land and labor markets