History Of Land Protection Regulation On Urban Development Across China

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Farmland protection has become a contentious political issue in China due to the loss of cultivated land in rapidly growing urban centers. In response to new information about rates of farmland conversion, the national government placed a national moratorium on arable land conversion in
1997 and imposed stringent regulations on the encroachment of urban land on agricultural lands in the Land Management Law of 1998 (Lin and Ho 2005). There has been speculation about the efficacy of the regulations, which are challenging to enforce. Others have expressed concern that the regulations could severely distort China’s most productive urban land markets (Lichtenberg and Ding 2009, Ding 2003).
This paper estimates the causal effect of the primary farmland protection regulation on urban land development across China. I use a satellite-based data set that measures time-varying rates of agricultural and urban land change before and after the regulatory change in 1998. Satellite data have played an important role in assessments of farmland loss in China for over a decade, but have not been used to examine the impact of the regulatory policy. I make use of an important feature of the regulation’s design, the ’no net loss’ rule, which provides an arbitrary discontinuity in the likelihood that the regulation will bind in different provinces. I estimate effects using the province-level as well as across discontinuities at provincial borders. The simultaneity of regulatory decision-making and
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