Institutional Change in Agriculture and Natural Resources Institutioneller Wandel der Landwirtschaft und Ressourcennutzung edited by/herausgegeben von Volker Beckmann & Konrad Hagedorn Volume/Band 56 Rong Tan Governing Farmland Conversion in China Transactions and Institutional Fit Shaker Verlag Aachen 2015
Contents Acknowledgements Contents List of Figures List of Tables List of Abbreviations List of Annex 1 Introduction 1 1.1 Research background: Biased land use polices in China 1 1.1.1 Land use problems in China 1 1.1.2 Negative impacts of ongoing land policies 2 1.1.3 Crucial land policy issues in China 4 1.2 Research purpose: Seeking appropriate governance structures 5 1.3 The state of current research 7 1.3.1 Williamson's Fourth level: Farmland as a resource to be allocated 7 1.3.2 Third level: Governance structures of farmland conversion 9 1.3.3 Second level: Institutional environment 13 1.3.4 First level: Social embeddedness 16 1.3.5 Summary of the literature review 17 1.4 Research questions 17 1.5 Structure of the analysis 18 2 Analytical framework for studying the governance of farmland conversion in China 21 2.1 Basic concepts 21 2.1.1 Taking transactions as an analytical unit 21 2.1.2 The attributes of transactions 23 2.1.3 Institutions and governance structures 24 2.1.4 Transaction costs in a frictional world 25 2.2 The analytical framework 27 2.3 Applying transaction cost economics to farmland conversion 29 2.3.1 Transactions of farmland conversion 30 vii ix xv xvii xix xxi
X Contents 2.3.2 Transaction attributes of farmland conversion 31 2.3.3 Governance structures for farmland conversion 33 2.3.4 Malching 34 2.4 Models and methods 39 2.4.1 Model I: Policy design at the central level 40 2.4.2 Model II: Policy implementation at the local level 41 3 Farmland conversion in current China 45 3.1 Features of farmland conversion in contemporary China 45 3.1.1 Features of farmland resources 45 3.1.2 Features of farmland conversion in China 46 3.2 Actions of resource users 51 3.2.1 The "puzzling" behaviour of farmers 51 3.2.2 The "contradictory" behaviour of local govemments 52 3.2.3 The "inappropriate" behaviour of the central government 53 3.2.4 Diverse actions of land users in the urban sector 53 3.3 Rules behind actors' actions: Preliminary understanding 54 3.3.1 The weakness of farmers' property rights 54 3.3.2 The source of competition among local govemments 55 3.3.3 Trade-offs for the central government 56 3.3.4 Monopolists do not seek monopoly profits 57 3.4 Conclusion 57 4 Institutional arrangements for farmland conversion in current China 59 4.1 Introduction 60 4.2 Formal institutions for Farmland conversion in China 61 4.2.1 Land ownership and land use rights 61 4.2.2 Hierarchical land use planning: A quota system 63 4.2.3 Land market system 64 4.2.4 Main features of the formal constraints on farmland conversion 67 4.3 Chinese farmland conversion procedures in detail 68 4.3.1 Land use planning system: The legal basis for farmland conversion 68
Contents xi 4.3.2 Detailed urban land development plans 70 4.3.3 Acquisition of farmland 71 4.3.4 Land servicing 71 4.3.5 Transference of converted-land use rights 72 4.4 Comparing China with Germany 73 4.4.1 Procedures for farmland conversion in Germany 75 4.4.2 Comparing China with Germany 80 4.5 Conclusion 86 5 Choosing diverse control measures for farmland conversion at the national level 89 5.1 Introduction 90 5.2 Malching quota systems with Controlling farmland conversion 91 5.3 Diversity of practical quota systems in the Netherlands, the United States, China, and Germany 93 5.3.1 Agricultural zoning in the Netherlands 93 5.3.2 Transferable Development Rights in the United States 94 5.3.3 Command and Control quotas in China and new innovations in transfer 95 5.3.4 Tradable planning permits under discussion in Germany 97 5.4 Multi-country comparison in Transaction Cost Economics 98 5.5 Case study implications 101 5.5.1 Common implications 101 5.5.2 Implications from comparison of the cases 101 5.6 Conclusions 104 6 Control it or leave it? The appropriate scope of governmental control for governing farmland conversion 107 6.1 Introduction 107 6.2 A Transaction Cost Economics model for analysing farmland conversion 109 6.2.1 Considering farmland conversion as a set of transactions 109 6.2.2 The transaction attributes of farmland conversion 110 6.2.3 Governance structures of farmland conversion 114 6.2.4 Transaction costs of farmland conversion 117
xii Contents 6.3 Why insourcing or outsourcing? A quantitative model 118 6.3.1 Impact Factors on governance choice: First stage regression 118 6.3.2 Transaction-cost function: Second stage re-testing 118 6.4 Application of the model: A Chinese case 119 6.4.1 The Data 120 6.4.2 Why insourcing or outsourcing? 121 6.5 Conclusion 126 6.5.1 Application of Transaction Cost Economics to the Public Domain. 127 6.5.2 Scopes of government control in farmland conversion in China 127 6.5.3 Reconsideration of the assumed fixed institutional environment 129 6.5.4 Limitations 129 7 Public or self-organized mode? Land readjustment for farmland conversion: AComparison 131 7.1 Introduction 131 7.2 Practical changes: From a public approach to a self-organising one... 133 7.2.1 Integrated urban and rural land readjustment 134 7.2.2 The public approach 136 7.2.3 The self-organising approach 137 7.3 Analysing institutional change through the Transaction Cost Economics model 139 7.3.1 Changing external factors and obstacles to traditional measures 140 7.3.2 Considering efficiency from the transaction cost perspective 141 7.3.3 Comparing public and self-organising approaches via the Transaction Cost Economics perspective 144 7.3.4 Practical reasons for adoption of the self-organising approach 154 7.4 Discussion and conclusion 155 8 Conclusions 157 8.1 Theoretical conclusions 157 8.1.1 Features of farmland conversion 157 8.1.2 Nexus of transactions, governance structures, their attributes and Performance 159 8.1.3 Applying the nexus to the analysis of governing farmland conversion 160
Contents xiii 8.2 Practical implications for farmland conversion in China 161 8.2.1 Transactions and the attributes of farmland conversion in China... 161 8.2.2 A need for amelioration of governing farmland conversion in China 162 8.2.3 A practical path for ameliorating the governance of farmland conversion in China 165 8.3 Limitations and future research 166 References 169 Annex 183