Abstract: This paper uses the panel dataset of 1 921 rural households in 6 provinces from 1995 to 2008 and permanent income hypothesis to extended linear expenditure system is used to analyzes the effects of the project of conversion from cropland to forest on rural households’ consumption structure. The empirical results indicate that the impact of project of conversion from cropland to forest in non-desertification combating program area around Beijing and Tianjin sample rural households' non-basic demand consumption is positive, while the impacts of project of conversion from cropland to forest in the desertification combating program around Beijing and Tianjin on their basic demand consumption is positive.

Key words: the project of conversion from cropland to forest, consumption, permanent Income, ELES model, forest economics