Abstract:

Objective: The new round of forest rights reform (referred to as the“new forest reform”) has not succeeded in activating the forestland transfer market. From the dual perspective of transaction costs and credit constraints, this paper systematically evaluates the impacts and mechanisms of forest rights reform on forestland transfer, identifies its unintended effects, and offers guidance for developing a sound forestland transfer market and achieving efficient resource allocation. Method: Using stratified random sampling, we gathered plot-level data on 1 795 forestland parcels in Guangxi, Zhejiang, and Fujian Provinces (autonomous region) in 2021. Probit, Tobit, and propensity score matching models are employed to estimate the effects of forest rights reform on forestland transfer. A dual mediating effects model, centred on transaction costs and credit constraints, further reveals the key factors that hinder forestland transfer. Result: The benchmark regression results show that the reform has no significant effect on forestland transfer, including both inflow and outflow. Further empirical analysis reveals that this insignificance stems from unintended effects of the reform, which hinder the realisation of“Pareto improvement”in forestland transfers. The fundamental reason for this dilemma lies in dual offsetting effects related to transaction costs and credit constraints. Regarding transaction costs, the reform significantly reduces forestland disputes at the 5% statistical level, thereby lowering transaction costs, but it also significantly exacerbates forestland fragmentation at the 1% level, leading to increased transaction costs. These two channels offset each other, making it difficult for the reform to promote forestland transfer through cost reduction. In terms of credit constraints, the reform significantly facilitates forestland mortgage lending at the 5% level, indicating that credit constraints have been alleviated. However, the alleviation exerts opposite effects on the inflow and outflow of forestland: it provides financial support for farmers to expand their holdings, encouraging inflow, while reducing the incentive to transfer forestland out for funds, discouraging outflow. As a result, although the reform mitigates credit constraints, it leads to differentiated impacts on inflow and outflow, ultimately weakening its ability to promote forestland transfer through this channel. Conclusion: The expected positive impact of forest rights reform on forestland transfer has not materialised because of the dual obstacles posed by transaction costs and credit constraints. While the reform provides an essential policy starting point, further efforts are needed to reduce transaction costs, ease credit constraints, and strengthen market institutions to foster a robust forestland transfer market.

Key words: new forest reform, forestland transfer, transaction costs, credit constraints, mediating effect