How Forest Subsidies Impact Household Income: The Case from China

(1) Background: It is of great significance to evaluate the impact of forestry subsidies on the income of forest farmers to improve policy and enhance efficiency. (2) Methods: Based on the static panel data of household tracking surveys from 2014 to 2018 in Sichuan, Liaoning, and Zhejiang provinces in China, the impacts of forestry subsidies on forest farmer income and impact paths were systematically verified via parameter estimation with the Fixed-Effect model. (3) Results: Forestry subsidies significantly increased forest farmer income. The impact paths could be summarized as follows: First, from the perspective of operating income, forestry subsidies effectively motivated forestry production and promoted the expenditure on forestry production, and thus increased forest farmer operating income. Second, from the perspective of wage income, forestry subsidy policies played a negative role in releasing the forest farmer labor force for off-farm employment. Third, from the perspective of transfer income as a kind of transferred governmental financial subsidy, forestry subsidies covered a large proportion of transfer income for forest farmers. (4) Conclusions: Forestry subsidies could directly increase the transfer income, effectively improve the forestry production capacity, and increase the income of forest farmers. However, forestry subsidies could also bind forest farmers to forestry production to a certain extent, which was not conducive to the liberation of the labor force.