Given the increasing global concern surrounding ecological conservation, primarily attributed to significant biodiversity declines, the importance of protecting natural ecosystems and endangered species protection has become increasingly evident. This is crucial for ensuring regional ecological security and sustainable development. Due to the intricate relationship between farmers’ activities and their surrounding environment, they emerge as key stakeholders and implementers in long-term ecological conservation achievements. The engagement of rural villagers and farmers is essential in achieving ecological conservation and environmental protection goals.

This thesis confronts a primary challenge in ecological conservation: the insufficient long-term impact valuation of ecosystem services, especially those influenced by farmers. China has spearheaded many significant initiatives in this direction, with its forest conservation policies standing out as a paradigm in advanced conservation efforts. In the first Chapter, I estimate the environmental effectiveness of Natural Forest Protection Program, one of the world’s most influential conservation programs due to its substantial investment magnitude and extensive geographical coverage. Using the spatial Regression discontinuity approach, I address both observed and unobserved heterogeneity in estimating the impact of the NFPP on forest cover. Further, the NFPP includes different provisions across property right regimes; therefore, I empirically test whether the state property regime (SOFEs) outperforms the private property regime (village forests) under the NFPP, which provides highly relevant empirical evidence for the debate surrounding the property right reform of China’s state-owned forests and natural resource governance in developing countries.

Subsequent chapters address the challenges in current conservation efforts, focusing on Payments for Ecosystem Services (PES) as an emerging policy tool for incentivizing environmental service provision. Despite some biodiversity gains, current conservation initiatives have occasionally fallen short in curbing ecological degradation effectively. One inherent characteristic of PES schemes lies in its payment structure. There is a growing emphasis on ‘Outcome-Based Payments’ (also known as results-based schemes) within PES schemes due to their potential for cost-effectiveness and enhanced environmental efficiency. In this Chapter, I examine farmers’ preferences towards participating in an outcome-based tree planting scheme through a choice experiment conducted in Yunnan, China. I incorporate uncertainty affecting environmental outcomes, which affects farmers’ payments, into the choice experiment design. Moreover, I introduce a measure of farmers’ risk perceptions using real-money lottery games in the field, and then investigate its influence on participation in outcome-based PES programs and the associated minimum willingness to accept (WTA) estimates. In all, I want to investigate the role of uncertainty and risk perceptions in shaping farmers’ decision-making processes in outcome-based PES.

Furthermore, the integration of an auction mechanism within the PES, aimed at optimizing the allocation of conservation contracts, has the potential to enable cost-effective delivery of environmental services and goods. Additionally, enhancing spatial coordination in farmers’ participations can improve environmental outcomes for a range of important environmental targets, including species conservation, nutrient pollution reduction and habitat restoration. In the third chapter, I investigate a spatially coordinated auction mechanism for allocating agri- environmental contracts in China. This mechanism incentivizes farmers to change their agricultural practices for environmental benefits. This chapter examines the effectiveness of introducing agglomeration bonuses and joint bidding mechanisms to improve auction performance. Agglomeration Bonus (AB) payments are awarded to neighboring farmers who, although bidding individually, receive contracts simultaneously. The joint bidding (JB) mechanism enables collaborative bids with additional rewards for successful joint bids. The empirical study presented in the third chapter involved 432 Chinese farmers, who were randomly assigned to one of four different treatment groups in a comprehensive two-by-two factorial experimental design, aimed at determining the efficacy of these mechanisms.