Grain for green: Cost-effectiveness and sustainability of China's conservation set-aside program

Since 1999, China has pursued Grain for Green, an ambitious conservation set-aside program to prevent soil erosion. This paper evaluates its cost-effectiveness and sustainability. The results indicate that while the program has made a clear attempt to retire plots that are susceptible to soil erosion, there is room for better targeting. The government also may be able to generate fiscal savings if the payments more accurately reflect the differences in the opportunity costs of each plot. The study finds that some farmers may reconvert the land back to cultivation after program ends.