Heterogeneous Choice in WTP and WTA for land rental arrangement in Rural China: Choice experiment from the Field

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China's institutional structures regarding land are unique and complex. Private ownership of land is not allowed in China since rural collective organizations own farmland. Farmers however have land use rights, which are divided into contract rights and use rights, to use the land for a certain period. Recent changes to the land laws now permit farmers to rent the use rights from other farmers. As a result, a small sub-population of Chinese farmers are renting use rights (and land) to increase the size and scale of operations. Land rental arrangements can be organized through newly established ‘land transfer centers’ or through traditional informal arrangements. An analysis of farmers’ economic perspectives towards land transfer is increasingly policy relevant, and the subject matter of this thesis. This thesis estimates the economic value of farm land rental by using data from 208 farm households across China. In-the-field D-optimal choice experiments and household surveys were conducted from June to December 2018. A choice experiment was used to determine the key factors that motivate farmers to rent out or rent in land. We then estimated the demand and supply for farmland rental according to the results from the choice experiment using conditional and mixed Logit models. The analysis provides several insights into Chinese land rental markets that are not well understood or documented. First, a strong legal framework surrounding contracts makes farmers more likely to rent land out. Secondly, even without ownership for farmers, China still has a well-functioning farmland rental market where people want more productive land with greater levels of characteristics. It is a validation of the assumptions from Ricardian rent theory in a completely competitive market. Thirdly, farmers’ preferences for land characteristics correspond to their unique geographic environments. Fourthly, the rent price equilibrium revealed by choice experiment is consistent with other studies using different methods and responses to household surveys. Lastly, results suggest, at least in the short term, that the farmland rental market is a renter’s market with the supply of transferable land use rights. Consequently, farmers who choose to rent-in land have an advantage over farmers who decide to rent-out land when it comes to price negotiations.

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Willingness to Pay; land economics; ricardian rent; Agriculture economics


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Turvey, Calum G.

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Ifft, Jennifer Ellen

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Applied Economics and Management

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M.S., Applied Economics and Management

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Master of Science

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dissertation or thesis

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