Assessing the Ecological Effects of Fiscal Investments in Sloping Land Conversion Program for Revegetation: A Case Study of Shaanxi Province, China

Abstract

The study of the ecological effects of the Sloping land conversion program (SLCP) has great significance for afforestation optimization policies based on cost-effectiveness. This paper uses the panel fixed effect model and the panel threshold model to study the ecological effects of fiscal investments in the SLCP at the county level in Shaanxi Province of China. The regional ecological performance indicated by the normalized difference vegetation index (NDVI) has improved after the implementation of the SLCP, but the vegetation suffers degradation risks due to the cessation of subsidies. The results demonstrate strong support for a time lag effect, an effect of diminishing marginal returns, and a threshold effect whereas a significant but negative direct effect of SLCP’s fiscal investments on the vegetation. Specifically, it takes approximately four years after fiscal investments for the NDVI to realize the greatest investment performance. The marginal contribution of fiscal investments to ecological performance reveals an increasing trend initially, followed by a decreasing trend. In addition, the ecological effects of fiscal investments in the SLCP are moderated negatively by ecological endowments. The results indicate that fiscal investments in the SLCP should consider its cost-effectiveness in policy design and improvements.