Econometric analysis of the causes of forest land use changes in Hainan, China

This paper addresses the effects of economic, demographic, and institutional factors on land allocation between forestry and other uses. A panel data set from Hainan Island in China and a generalized least squares estimation method, allowing individual effects for counties, are applied. The results indicate that higher timber prices have led to an acceleration in rain forest exploitation, but encouraged investment in plantation forests. Population growth is the driving force behind the loss of natural forests, but it is positively related to plantation forests. Decollectivization seems to have promoted plantation forests, but has not saved the rain forest. A higher share of forestry land owned by state-owned enterprises also fosters afforestation on wasteland, but seems to lead to faster exploitation of natural forest, at least initially. The uncertainty that existed in the early period of economic reform quickened the pace of resource extraction and deterred investment.