Land Tenure Reforms and Land Conservation Investments in China - A Theoretical Analysis

摘要

Using real option value theory, we investigate the impact of the recent land tenure reforms aimed at improving land tenure security and transferability in rural China on land conservation investments. We find that investments in land conservation triggered by the land reforms may occur only after a time lag, but provide indirect economic benefits through an increase in the real option value. Moreover, the reforms are more likely to elicit land conservation investments in areas where formal rather than informal land transactions dominate.