Empirical study on compensation mechanism in the context of government’s purchase of ecological forest

Based on a household survey on farmers’Willingness To Accept (WTA) the goverment’s ecological compensation in Sichuan Province, this paper attempts to study the compensation mechanism in the context of goverment’s purchase of ecological forest by establishing the ecological forest supply curve. We find that, given the budget constraint of 500000 CNY, the appropriate purchase price is 5400 CNY/hm2, and the survey villages can supply 80% of their forest lands. In addition, we find that the 10 years contract duration with the compensation paid by year is the best one for the supply of forest lands. The estimated results further verify that contract duration and compensation paid channel have produced a significant effect on farmers’ Willingness To Accept (WTA). We finally discuss the relevant policy implication.