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(1) Background--As a significant ecological safeguard measure, the new round of returning farmland to forests project is of great ecological significance for ecological protection in Beijing and Tianjin. However, as a policy measure involving the withdrawal of farmers' cultivated land, whether it can guarantee the continuous in-crease of farmers' income and the stability of farmers' consumption is more worthy of discussion. (2) Methods--Based on the micro-panel data of 1115 farmers from 223 rural households in the "Beijing-Tianjin Sandstorm Source Treatment Project Monitoring" project from 2013 to 2017, this paper used the random effect model and the mediating effect model to study the impact of the new round of returning farmland to forests on the rural households' income and consumption and the effect mechanism on the rural households' consumption. (3) Results--The new round of returning farmland to forests significantly increased the total family income of the rural households, and had a significant positive impact on the total family income and operational income of the rural households at the level of 10%. However, the new round of returning farmland to forests did not improve the income structure of the rural households, and did not significantly affect the wage income, property income and transfer income of the rural households. The factors such as the farmers' education level and the number of migrant workers had a significant positive impact on the wage income. Overall, the income of the rural households was still dominated by operational income. The new round of returning farmland to forests significantly increased the total family consumption of the rural households, especially the basic consumption and productive consumption. However, there was no significant increase in children's education consumption, medical consumption and interpersonal communication consumption, which also indicated that the consumption structure of the rural households was still in basic consumption. The new round of returning farmland to forests had a positive impact on the rural households' consumption through the mediating variable of increasing the rural households' income, which verified the transmission mechanism that the farmers participated in the new round of returning farmland to forests to promote the increase of their income, and then affected their consumption. (4) Conclusions and Discussions--First, appropriately raise the subsidy standards and improve the compensation mechanism. Especially for areas prone to return to poverty and ecological functional areas, reasonable compensation standards can make up part of the losses caused by the farmers' participation in the project of returning farmland to forests. In addition, the government can implement a dynamic compensation mechanism according to the actual local situation, so that the subsidy standard is in line with the actual social and economic development situation. Second, actively promote the centralized utilization and circulation of the remaining finely fragmented land through the separation of the three rights of land. On one hand, the circulation of the fragmented land can improve the utilization rate of land, on the other hand, it can promote the flow of labor forces, so as to promote the increase of the rural households' income and the improvement of consumption structure. Third, actively implement the reform policy of forest rights, ensure clear rights to the rural households, and fully improve the promotion role of property rights income on the farmers' willingness to return farmland to forests. In addition, the farmers can also use forest rights as collateral to obtain loans to inject financial impetus into forestry production. Fourth, encourage the development of undergrowth economy and develop three-dimensional agriculture such as fruit industry, under-forest breeding industry, forage-grass planting industry, medicinal materials planting industry according to local conditions. However, while developing the corresponding undergrowth economy, we should also pay attention to the maintenance of forest nutrients, which is conducive to the sustainable and circular development of forestry. [ABSTRACT FROM AUTHOR]