1. China’s Forest Tenure Reform and Institutional Change at a Crossroads Runsheng Yin (yinr@msu.edu) Michigan State University, USA

3. China’s forest resource distribution Collective forestland: 60% of the area (208 million ha) and 45% of the volume (16 billion m 3 ); low stocking level.

4. Tenure reform and institutional change What has been undertaken by China ◦ Not only tenure reform but also broad institutional transformation (>100 million ha)  Use rights to collectively owned forestland can be transferred, mortgaged, bequeathed.  With land ownership attenuated, use rights become important Rationale ◦ Stronger incentive of forestland use if the corresponding responsibilities, rewards, and authorities can be aligned  Lead to improved forest conditions and human wellbeing  Forest-based climate mitigation is part of China’s INDCs Major challenges ◦ Harvest restriction and stumpage taxation ◦ Parcelization and rush to forming coops ◦ Presence of unclear and disputed land boundaries ◦ Takings of individual’s land without fair compensation

5. I: Harvest Restrictions On both final cutting and thinning Bureaucratic worry about deforestation Fundamental disincentive leading to the lack of management response Transitional measures ◦ Phasing out the permitting/quota system ◦ Allowing local piloting and experimenting ◦ Monitoring and trust building

6. The idea of scale economies is weak in arguing for coops Make the transferability work to consolidate landholdings ◦ Transaction costs, predatory behavior… Get the basic rules/constraints right Collective action transpires only when the benefits outweigh the costs of cooperation More attention to the incentive structure II: Parcelization and rush to forming coops

7. Simplistic, egalitarian division of forestland ◦ Resulted in a large number of small plots ◦ Urbanization/off-farm opportunities cause absentee users Confounding the existing confusion/dispute Documentation and information service Avoid grabbing and facilitate transactions in transferring III: Unclear and disputed land boundaries

8. Flawed classification and restrictions ◦ Current zoning too small and rigid ◦ Even thinning is not allowed in ecological forests Takings without fair compensation ◦ Collective forests designated as ecological ones ◦ Motivations of local agency vs. individuals What ecosystem services? How to make the market work? ◦ Payment levels and mechanisms IV: Providing Ecosystem Services

9. To build a Strong Forest Economy Having a vibrant forest products manufacturing industry ◦ Processing firms’ interest in owning/managing timberland  Forestry activities can be incorporated into the supply chains of forest products processing and marketing  Industry also plays a demonstrative role to the individuals Appreciating the role of a well-functioning market system ◦ Acting as mechanisms of resource allocation/collective learning ◦ Actors are free to act and held responsible for their actions  They are disciplined by a common set of constraints  Simplify administrative control and harmonize regulations … ◦ Why high prices have not attracted tremendous actions in timberland investment and forest management by farmers?  Limited investments by domestic/international firms and investors Attention to providing information &risk-sharing services ◦ Centralized trading centers of timber assets may not work ◦ Private foresters should be encourage to provide services

10. Closing Remarks China’s unprecedented campaign of forest tenure reform and institutional transformation ◦ Substantial advances and positive impacts The empowerment and incentivizing of individuals and communities, as envisioned in launching the reforms, have not come close to what was promised. ◦ Proper follow-through steps must be taken in some cases ◦ In other cases, more integrated and coherent measures must be adopted; ◦ In still other cases, safeguard measures must be put in place. A long process and a lot remains to be done ◦ Done properly, it will bring about profound changes to the rural economy and forest ecosystems China needs international attention, and international community can learn from China