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On May 12, 2008, southern Aba prefecture in north-central Sichuan was devastated by the M8.0 Wenchuan earthquake. A massive multi-year central government environmental mitigation effort resulted in economic revitalization based largely on the development of nature- and ethnic- tourism and the expansion of production from agriculture and husbandry. Concurrently, however, management of pasture areas was largely removed from local control and ceded to provincial and national environmental managers who instituted many draconian measures intended to protect pasture areas from further degradation while significantly restricting access by local pastoralists. Results of fieldwork, and subsequent analyses of archived data, indicate the strict enactment and enforcement of new environmental regulations with limited local input radically altered the local economy including the structure of husbandry activities, expanded tourism and crop production and shifted residence patterns. These policy interventions that excluded local stakeholders also increased income inequality and drastically reduced the practice of transhumant pastoralism which in turn created new ecological challenges. • Study of Aba Sichuan identifies expected and unexpected outcomes of environmental and economic policies post-2008 earthquake. • Local control of environmental and economic policy in west China is lost if funding is from central government sources. • Investment in tourism infrastructure in Tibetan areas of China aids local economy but speeds erosion of traditional culture. [ABSTRACT FROM AUTHOR]

To secure effective and sustainable climate change policies, it is of the utmost importance to create synergies between socioeconomic and environmental development goals. Payments for Ecosystem Services (PES) programs are being promoted as a suitable mechanism furthering, among others, carbon offsetting and poverty reduction in ecologically fragile areas of developing countries. Rural households are compensated for the loss of property and business income through income transfers and potential job opportunities connected to environmental programs. While the potential pro-poor effects of such policies are well recognized, the impact of PES on extremely poor households has not been systematically reviewed. Drawing on a pooled cross-sectional dataset of 5225 households in the Province of Sichuan, this paper analyzes the income and distributional effects among poor households in rural China participating in a forest carbon sink (FCS) program. To be able to make causal inferences, we employ an Instrumental Variable (IV) approach to control for potential endogeneity and self-selection. Our results indicate a strong need to adjust the PES program: While moderately poor rural households benefit from program participation, extremely poor rural households, in fact, suffer net losses. The main reason is that income reduction resulting from limited access to forest resources is compensated mainly via wage income from participating in forest tending work. Extremely poor households with low labor ability cannot make use of these job opportunities, and thus they'll not only fail to benefit but even incur losses from a PES program. While PES programs can be a viable tool for poverty reduction in underdeveloped regions due to their overall pro-poorness, they need to be accompanied by additional benefits for extremely poor rural households to avoid net losses among marginalized population groups especially. [ABSTRACT FROM AUTHOR]