The enduring effects of China’s Payments for Ecosystem Services: Short- and long-term industrial transformations

Payments for Ecosystem Services (PES) policies are crucial for forest conservation and restoration. While initially restricting the availability of land for primary agricultural activities, these policies can catalyze value-added transformations in the agricultural sectors through the redistribution of resources and labor. Using county-level business registration data from 1998 to 2015, this study examines the agricultural transitions and industrial shifts resulting from China’s Sloping Land Conversion Program (SLCP). Employing a staggered difference-in-differences approach, we observed an annual increase of 24.37 agricultural enterprises and a 2.55% annual rise in agricultural industries within SLCP counties. Further analysis indicates that labor mobility influences the changes in the agro-industries. Over the long term, the availability of transportation and internet services fosters agro-industrial growth; however, in the short term, these factors impede immediate growth by accelerating labor out-migration.