Rural land policy and land use change in China: A dynamic Computable General Equilibrium (CGE) Analysis

Abstract

China's economic growth has relied excessively on land-intensive urbanisation, which has led to a decrease in arable land and an increase in environmental degradation. This economic development pattern threatens the quality of agricultural produce and the capacity for food production in China. This study focuses on the economic effects of the rural land tenure security policy and land use change in China on rural-urban inequality and the government's priority of food security. To address this question, we simulate two policies under two scenarios using a single-country, multi-regional dynamic computable general equilibrium - TERMCN-Land model of the Chinese economy. TERMCN-Land is the first dynamic multi-regional CGE model that has been built in this research for the Chinese economy with a land use change module. In order to investigate the effects of land use change in China, a land use change module is introduced into our model, which is based on land transition matrices that uses data from satellite imagery. It includes 147 industries, 147 commodities, 2 occupational categories, 2 household groups and 5 broad types of land in each of 31 domestic provinces/municipalities. In scenario I, we find that the fallow land policy that addresses arable land contamination leads to a slight decrease in domestic food output. However, economic growth causes significant increases in food imports. Our results under scenario II indicate that the rural land tenure security policy is able to partially counteract the negative influence of arable land contamination on domestic food production. This thesis makes a number of contributions. First, this is the first study to estimate the impact of land conversion and land tenure security policies in China using a dynamic single-country, multi-regional CGE model. Moreover, in comparison to the comparative static model, the dynamic model is well suited not only to conducting policy analysis, but also to forecasting and historical analysis. Third, the method and database developed in this research can be used to evaluate many other topical issues in China.