The impacts of the eco-environmental policy on grassland degradation and livestock production in Inner Mongolia, China : An empirical analysis based on the simultaneous equation model

Grassland degradation has been deteriorating while the demands for meat products have been surging in China over the past few decades, leading to multiple policy initiatives to balance the grassland ecosystem and livestock production of the pastoral areas. This paper investigates the impacts of a prevailing eco-environmental program, i.e. Subsidy and Incentive System for Grassland Conservation (SISGC), in the pastoral areas of Inner Mongolia, on grassland condition and livestock production. The Normalized Difference Vegetation Index (NDVI), measured with remote sensing technology, is used to quantify grassland condition. Our empirical analysis was based on the data of 52 counties across a 15-year timespan covering 10 years before the introduction of SISGC and 5 years after its implementation. Simultaneous equation models are employed to study the mutual relationship between grassland condition and livestock production. The results suggest that the SISGC has significantly improved grassland condition. The total livestock population, especially the sheep population, has decreased due to SISGC, but the large animal population has not been impacted. On the other hand, growing meat prices (market demands) have resulted in an increase in the population of sheep, large animals, and total livestock. Implications are that the SISGC has been successful in preventing grassland degradation by controlling the increase in livestock population of the pastoral areas. Other policy initiatives need to consider how to prevent grassland degradation not only by controlling the livestock population given the soaring meat demand by the Chinese population and to address the high level of poverty among pastoralists.