A factor-income approach to estimating grassland protection subsidy payments to livestock herders in Inner Mongolia, China

Anne T. Byrne, Joleen C. Hadrich, Brian E. Robinson, Guodong Han

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


This paper contributes to the growing literature on land use policies designed to prevent livestock overgrazing. It offers a straightforward factor-income approach to calculating payments for ecosystem services (PES) to livestock producers who reduce or suspend grazing for the purpose of grassland restoration. Our approach requires only cross-sectional farm-level accounting data and is thus feasible where policies have either not yet been applied or specialized data is sparse, as is common in many developing regions. We apply and validate this approach with empirical analysis of sheep and goat herders in the Ulanqab prefecture in Inner Mongolia, China where herders currently receive payments in exchange for reduced grazing intensity on vulnerable land. However, observed stocking rates are still commonly higher than recommended. Our results suggest payments are currently insufficient to offset the financial loss incurred by herders who reduce their grazing intensity, a finding consistent with previous studies. Using an approach we refer to as the factor-income method, we estimate and validate new levels of recommended payments. This demonstrates how future payments could be tailored to meet the financial needs of individual herding communities using basic farm-level data.

Original languageEnglish (US)
Article number104352
JournalLand Use Policy
StatePublished - Feb 2020

Bibliographical note

Funding Information:
This work was supported by the U.S. National Science Foundation ( DEB-1313693 and EAPSI-1514650 ), the Inner Mongolia Key Project ( 2016YFC0500504 ), the Australian Centre for International Agricultural Research , ( ADP/2012/107 ) and the Innovative Team for the Ministry of Education, China ( IRT_17R59 ). Data collection and initial data analysis for this work was completed while both A. Byrne and J. Hadrich were affiliated with the Department of Agricultural and Resource Economics at Colorado State University (CSU). In addition to the research sponsors and authors' current host institutions, the authors wish to acknowledge and thank CSU for supporting this research. Finally, the authors wish to acknowledge the editors and reviewers for their substantive and constructive feedback.

Publisher Copyright:
© 2019 Elsevier Ltd


  • Government subsidy
  • Grassland policy
  • Inner Mongolia
  • Livestock production
  • Payment for ecosystem services

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