Grassland ecological compensation policy in China improves grassland quality and increases herders' income

Many countries have undertaken large and high-profile payment-for-ecosystem-services (PES) programs to sustain the use of their natural resources. Nevertheless, few studies have comprehensively examined the impacts of existing PES programs. Grassland Ecological Compensation Policy (GECP) is one of the few pastorally focused PES programs with large investments and long duration, aiming to improve grassland quality and increase herder income. This study presents empirical evidence of GECP effects on grassland quality and herder income using econometric analysis of remote sensing and household survey data. Findings show that GECP improves grassland quality to a small extent and has a large positive effect on income, but exacerbates income inequality among herders within local communities. The program induced changes in livestock production behavior. Heterogeneity analysis highlights the need for flexible program designs adapted to local resource circumstances.