Impact of precipitation on the two-stage grassland eco-subsidy policy effect on stocking reduction in Inner Mongolia, China

China launched the Grassland Ecological Subsidy Policy in 2011 for restoring grassland ecology by paying pastoralists to downsize stocking on the degraded grasslands and compensate their income loss from livestock reduction. The policy, the largest payment for ecosystem services program targeting pastoralism in the world, has been so far through two 5-year stages: 2011 to 2015 with a subsidy at 1.5 CNY per standard mu per year and 2016 to 2020 at 2.5 CNY increased to boost the stocking reduction. How was the boost effect? We investigated that stocking responses in 2010, 2015 and 2018 using the panel data of 410 herder households in the subpolicy forage-livestock balance areas in Inner Mongolia, China, tested various attributes on stocking rate and stocking reduction rate at the two stages of the policy using econometric models of random effects and ordinary least squares. This study is the first empirical case containing the two 5-year policy data and with both subsidy and precipitation effects. We confirmed the regulating impact of precipitation on the subsidy policy effect, and more precipitation in the second stage appeared to offset the effect of the increased subsidy. We suggested changing the subsidy targeting mechanism from rewarding stocking reduction to direct grassland restoration.