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In this chapter, we use data from a survey of rural residents in Xi’an, Yan’an and other places undertaken by Xi’an Jiaotong University to perform an empirical analysis of the impact of ecological compensation policies on rural livelihoods and on the poverty alleviation efforts in the western mountainous areas.

With about 70% of its territory covered with mountains and hills, China faces the serious challenge of soil erosion. Its particular geographical features, socioeconomic conditions as well as improper ways of land development and utilization work together to exacerbate the problem, producing far-reaching and wide-ranging impacts.

The Five-pronged Poverty Alleviation Measures were first proposed at the National Conference on Poverty Alleviation and Development held in end-2015. One of the five prongs is resettling poor residents from inhospitable areas, the most challenging part of the poverty alleviation program. During the 13th Five-Year Plan period, a total of 9.81 million rural residents were relocated for this purpose. This figure includes 1.3 million people registered as poor in Guizhou and another 1.25 million people registered as poor in Shaanxi.

In this chapter, we conduct an empirical analysis of the perceptions of rural household regarding the fairness of the Grain-for-Green program and of the welfare impact of the Grain-for-Green policy for rural households in the western mountainous regions based on the theoretical examination of evaluation standards for ecological compensation programs performed in Chapter Five as well as actual survey data from Ankang, Shaanxi Province and Zhouzhi County, Xi’an.

Poverty and environmental deterioration are the two major problems that many developing countries face. Population growth and rapid economic development in China have been often accompanied by the irrational use of natural resources, environmental deterioration, and shrinking biodiversity. The conflict between the population and economy on the one hand, and resources and the environment on the other, is becoming increasingly prominent in rural areas in western China. The livelihood activities of the rural population in ecologically fragile areas are at the heart of the conflict, and are thus particularly worthy of attention. Just how to improve the living standards, to protect the local environment, and to promote the sustainable development of rural areas has always been a concern of government departments and experts and scholars. An effective mechanism dealing with both problems needs to be introduced, so as to promote sustainable livelihoods for farmers in ecologically fragile areas and at the same time protect local environments through policy interventions.

Relations of households in poor mountainous areas to the environment are reflected on the one hand by households’ behavior of forest resource utilization and production, forestry-related production and direct utilization of forest resources—e.g., non-timber forest products and wildcrafting, and dependence for livelihood on forest resources, and on the other hand by households’ attitudes, satisfaction, and other perceptions with respect to policies on ecological protection and forestry in the mountains areas where they live.

The term “shengji”, the Chinese term for “livelihood”, first appeared in the 1978 edition of the Modern Chinese Dictionary (Xiandai Hanyu Cidian). Two definitions for the term were given: (1) a means of sustaining life; and (2) a term used to describe living itself. Here, “living” encompasses elements such as clothing, food, housing, and travel/transport. In the English language, the term “livelihood” is also defined as the means and way of sustaining life.

Livelihood choices are one of the main topics in the study of rural livelihood. This chapter offers an empirical analysis of the livelihood choices of rural households in poverty-stricken mountainous areas in western China. As relative poverty has become an increasingly prominent problem among rural households in China, it is necessary for us to assess and measure poverty from multiple perspectives. As such, there are three sections in this chapter. The first section examines the background of the two rural household surveys from which this book draws its empirical study, as well as the surveys proper. In the second section, we look at the livelihood choices made by rural households in Ankang, and in the third section we look at ways of measuring multi-dimensional poverty in rural households.