Han Zhang, Shunbo Yao
College of Economics and Management, Northwest A&F University

As a typical case of enterprises’ funds to conserve soil erosion, Qingshuigou Agroforestry Cooperatives have operated in the form of “Coal companies + University + Farmers”. The fragmented lands of 1640 mu have been integrated, and the agroforestry system have been adopted. During the contract period, the net present value will be 40.4 million yuan, and the internal rate of return will be 25.6%, much higher than the social discount rate of 8%. Meanwhile, the annual conservation of soil and water will be 3200 tones and 27000 m3, respectively. We also find the threshold amount of ecological forestlands on which the coal companies have no incentives to invest is 1287 mu. Given only 500 mu ecological forestlands are managed in the Cooperatives, the local government should take much stricter environmental standard.