Natural Resources and Rural Development – Regional Knowledge Sharing Initiative

4 Reasons Why Reforestation Is Great for Rural Growth

Restoring forests can create good rural jobs, reduce disaster risks, and secure water supplies—while helping close the gap between booming cities and left behind countrysides.

Forest restoration in Asia and the Pacific is no longer only the work of conservationists; it’s fast becoming central to economic development and how communities cope with increased flooding, heat, and other impacts from changing weather. A major bonus is that it can also create significant employment and bring social benefits to rural areas.

The region’s economic success story is well known, but that big picture hides a deep divide between rural and urban areas. Take almost any modern city in developing Asia and it will stand in stark contrast to the surrounding countryside that’s often struggling with unemployment, poverty, and a lack of basic services.

Many development initiatives struggle to take root beyond booming cities. Poor infrastructure, difficult geography, limited local capacity, and scarce financing often hold back rural projects. While there are many national initiatives to correct this imbalance, the region would benefit from a more unified strategy that taps into its extraordinary concentration of forests and other natural resources.

One way to do this is to shift from exploiting forests and landscapes to managing them in a way that allows them to regenerate. New data from the Asian Development Bank’s Basic Statistics 2026 provides a snapshot of the top 30 countries in terms of forest cover as a share of their land area.

With more than 500 million hectares of degraded land across the region, large-scale programs show what is possible. For example, the Returning Farmland to Forest Program of the People’s Republic of China (PRC) has helped raise forest cover from about 10% 70 years ago to around 25% today.

The rest of the region is stepping up too: the RESULT (Restoring and Sustaining Landscapes Together) Asia-Pacific program was established in 2024 to support 20 countries in restoring 100 million hectares of degraded forests, agricultural land, and urban areas.

Forest Area as a Proportion of Total Land Area, Top 30 ADB Economies, 2025

Here are four reasons why nurturing forests and other natural resources can support rural communities and narrow the urban–rural divide in many of the region’s developing economies.

First, when done well, reforestation is a powerful way to create steady, decent jobs in rural areas, ranging from planning to planting, maintenance to security, and accounting to marketing. Successful agroforestry and forest restoration create a mix of unskilled, semi-skilled, and whiter-collar jobs, which are often missing in many rural communities.

A good example is in Viet Nam, where small farmers have played a central role in reforestation. Ambitious tree-planting and restoration programs have expanded forest cover from around 9.4 million hectares in 1990 to an estimated 14.8 million hectares in 2025. This included policy reforms that allowed households to use government-owned forests through land-use agreements, devolving forest management to locals. Later programs funded by the government and international organizations gave cash payments to communities for managing and protecting forests in their local area. About five million smallholders now manage somewhere between 40% and 70% of the country’s newer wood plantations.

Initiatives like this can deliver large social and economic gains and contribute to reducing rural poverty. By contrast, when local needs and rights are not prioritized in large reforestation projects, forests may be restored but at the expense of local people’s lands and livelihoods.

Second, forests are not only important for prosperity; they also play a key role in managing weather-related risks in rural areas. Many rural communities face frequent typhoons, floods, landslides, and storm surges. Reintroducing forests, mangroves, and other forms of tree and shrub cover provides natural barriers that help shield exposed communities.

Third, new forests and grasslands also combat desertification by stabilizing soil, restoring water cycles, and creating vegetation cover that prevents erosion. The PRC, India, and Mongolia all have large initiatives to combat desertification and land degradation. Mongolia has committed 1% of its annual gross domestic product to its “One Billion Trees” program, with more than 41 million trees planted between 2021 and 2024. Partnerships between the government and international organizations have created forest nurseries near planting areas to raise tree survival rates. Community members frequently receive training to operate these nurseries, providing jobs for residents. This program shows how restored forest cover supports local communities and contributes to national development.

Fourth, reforestation is critical for water security, another cornerstone of rural development. Forests act as natural sponges: they store, slow, filter, and regulate water flows, making water supplies for farming and daily use more reliable. These functions help buffer communities from erratic and changing weather, with more frequent droughts and damaging downpours.

Beyond these economic and environmental benefits, restoring indigenous trees and plants can help people reconnect with their surroundings and traditional land‑based practices, while also providing spaces for recreation, reflection, and better mental health for all—including people living in cities.

Brad Earvin T. Zuniga

Statistician

Stefan Schipper

Principal Statistician, Data Division, Economic Research and Development Impact Department

Sean Crowley

Communications Consultant

Reproduced from adb.org.

What a 1,000-Year-Old Drainage System Teaches Us About Flood Risk

Ganzhou’s ancient Fushougou system offers a model of integrated, nature-based flood management for modern communities.

Introduction

As climate change intensifies extreme rainfall across Asia, cities are increasingly challenged by stormwater management, aging drainage infrastructure, and rising urban flood risk. Many urban drainage systems designed decades ago are now under stress due to rapid urbanization, expanding impervious surfaces, and more frequent high-intensity rainfall events.

Yet centuries before modern urban drainage engineering emerged, the city of Ganzhou in Jiangxi Province, People’s Republic of China (PRC), developed an innovative stormwater management system known as Fushougou. Constructed during the Song Dynasty nearly 1,000 years ago, the system combined engineered drainage channels, hydraulic control structures, and natural storage ponds into an integrated urban water management network closely linked with the city wall.

Historical accounts and local narratives often attribute Ganzhou’s long-standing ability to manage stormwater and reduce flood impacts to the Fushougou system, although detailed quantitative performance data remain limited. Its design reflects principles that resonate strongly with contemporary approaches to nature-based solutions (NBS) and sponge city development, particularly the integration of engineered drainage with natural storage and gravity-driven hydraulic systems.

As cities seek more resilient and adaptive flood management strategies, Fushougou provides a valuable historical example of how integrated water infrastructure can operate effectively over long periods.

A System Designed Around Natural Topography

Ganzhou lies at the confluence of the Gong and Zhang Rivers, which merge to form the Gan River. This geographical setting historically exposed the city to seasonal flooding during the rainy season. Annual rainfall in the region often exceeds 1,500 mm, with approximately 64% of runoff occurring between April and September, creating significant pressure on urban drainage.

To address these challenges, city planners during the Song Dynasty constructed the Fushougou drainage system to serve the southeastern and northwestern sections of ancient Ganzhou. The system covered approximately 3 km² and included more than 12 km of underground drainage pipelines, working in coordination with an approximately 8 km-long city wall.

Historical sources attribute the expansion and refinement of the system to Liu Yi, a water management specialist during the Northern Song Dynasty, who improved the connectivity and capacity of the drainage network.

The system relied entirely on gravity-driven flow, utilizing the natural terrain gradient of the city rather than mechanical pumping. By integrating drainage channels, hydraulic control structures, and surface water bodies, Fushougou functioned as a comprehensive water management network that managed stormwater, urban wastewater, and river flooding simultaneously.

Three key components formed the backbone of the system.

Key Components of the Fushougou System

1. Brick-lined drainage channels and pipelines

The primary infrastructure consisted of arched brick-lined drainage channels, designed for both structural stability and hydraulic efficiency. Larger channels reached approximately 0.9–1.0 m in width and 1.6–1.8 m in height, while smaller channels were covered with stone slabs.

One notable feature of the system is the depth of the pipelines, which in many locations extend roughly 2 meters below ground level. The deeper placement increased storage capacity within the network and reduced the risk of surface flooding during heavy rainfall.

Hydraulic performance was also enhanced through relatively steep channel gradients. For example, recent studies have identified a slope of approximately 4.25% near one of the system’s discharge structures. Such gradients produce relatively high flow velocities that help flush sediments and debris through the system, reducing blockages and minimizing long-term maintenance requirements.

In some sections, culverts narrow near discharge points, increasing flow velocity and helping to facilitate efficient outflow through the system’s outlets. These design characteristics demonstrate a strong understanding of hydraulic principles and the importance of self-cleansing flow velocities in urban drainage systems.

2. Water windows: Passive hydraulic control structures

The drainage network discharged through twelve outlets located along the city wall, known as “water windows.”

These structures functioned similarly to modern hydraulic check valves. Under normal river conditions, stormwater from the city could flow outward through the windows into surrounding rivers. In some locations, accelerated flow from narrowed culverts helped push the windows open.

However, when river levels rose during flood events, the increased external water pressure forced the openings closed, preventing floodwaters from flowing back into the city.

This passive hydraulic mechanism allowed the system to automatically respond to changing river levels without mechanical components or manual intervention. Such gravity-based and pressure-responsive controls represent a simple yet effective method for preventing backflow in flood-prone urban environments.

3. Interconnected storage ponds

Complementing the underground drainage network was a system of interconnected ponds located within and around the city. Historical accounts suggest that the system was linked to over one hundred ponds, forming a distributed storage network.

These ponds served multiple functions, including agricultural irrigation, aquaculture, and stormwater retention. Fish farming was commonly practiced, and nutrient-rich sediments accumulated in the ponds were reused in agriculture, forming a localized ecological cycle.

During heavy rainfall, the ponds acted as temporary storage basins, capturing excess runoff and reducing peak flows within the drainage system. Water could then be gradually released after storm events, helping to moderate downstream flood risks.

From a contemporary perspective, these ponds function similarly to decentralized stormwater detention and retention systems, which are widely used in modern sponge city designs. In addition to their hydraulic role, the ponds also supported microclimate regulation and aquatic ecosystems, demonstrating how water infrastructure can simultaneously deliver environmental and social benefits.

Long-Term Performance and Resilience

Historical records indicate that by the late 1960s approximately 12.6 km of the Fushougou drainage network was still functioning and serving an estimated 100,000 residents in Ganzhou’s old urban district.

Rapid urban expansion during the twentieth century led to the loss of many original components of the system. Today, only about 1 km of the original drainage network, along with two ponds and two water windows, remain intact.

Despite this partial loss, the surviving elements of the system continue to illustrate the durability of its design. The longevity of the infrastructure highlights several characteristics that contributed to its resilience:

Gravity-driven drainage, eliminating reliance on mechanical pumps
High hydraulic capacity relative to the scale of the historic city
Self-cleansing flow velocities that reduce sediment accumulation
Distributed storage through ponds, which buffer peak stormwater flows
Integration with natural terrain gradients

Together, these features demonstrate how urban water infrastructure designed around natural hydrology and passive hydraulic processes can remain functional for centuries.

Lessons for Contemporary Urban Flood Management

Although the historical context of Fushougou differs from that of modern megacities, several design principles remain relevant for contemporary urban flood risk management.

1. Integrating natural and engineered infrastructure

The Fushougou system demonstrates how engineered drainage can be combined with natural landscape features such as ponds and terrain gradients. This hybrid approach aligns with current nature-based solution strategies, which seek to enhance the role of natural systems in urban water management.

2. Multifunctional water infrastructure

The system simultaneously supported stormwater drainage, wastewater conveyance, irrigation, and aquaculture. Such multifunctionality is increasingly recognized as an important characteristic of sustainable urban infrastructure, allowing water systems to deliver environmental, economic, and social benefits.

3. Passive hydraulic design

The water windows illustrate how simple hydraulic mechanisms, including pressure-responsive closures and flow-accelerating channel design, can provide reliable flood protection without energy inputs or complex mechanical systems.

4. Designing for longevity and maintainability

The steep gradients and self-cleansing flow conditions of the drainage network reduced sediment accumulation and maintenance demands. Designing systems that can maintain hydraulic performance with minimal intervention is an important consideration for long-term infrastructure sustainability.

Xiaoyan Yang

Principal Project Officer (Natural Resources and Environment), Agriculture, Food, Nature, and Rural Development Sector Office,

Reproduced from Asian Development Blog.

Strengthening the Climate Resilience and Restoration of Wetlands and Lakes in the Yangtze River Floodplain

Saving Mongolian Forests with Finnish Expertise

Boreal forests cover 14.2 million hectares or nine percent of Mongolia.

Forest User Groups (FUGs) receiving training in forest management.

Mongolia's forests are under threat. An ADB project, financed by the Japan Fund for Prosperous and Resilient Asia and the Pacific, is building resilience of forest ecosystems by boosting capacity for forest management.

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Boreal forests cover 14.2 million hectares or 9% of Mongolia. With support from ADB, expertise from Finnish partners, and local participation, sustainable forestry is promoted to build the resilience of Mongolia's forests.

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Improving the livelihoods of local communities through sustainable forest management would require policy changes. Mongolia is building resilient forests, restoring and conserving forest resources, as well as developing economic opportunities.

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Famously known for its deserts and steppes, Mongolia is actually a forest nation too. Boreal forests cover 14.2 million hectares or 9% of this vast country. Compared with tropical forests, boreal forests store twice as much carbon per hectare, much of it below ground. They are the earth’s largest terrestrial carbon sink, a hugely important factor in the fight against climate change.

But Mongolia’s forests are under threat. More than 140,000 hectares of forest are lost every year to fires, insect pests, grazing, and illegal logging. Being one of the coldest countries in the world, Mongolia is already seeing the impacts of climate change, with average temperature increases of more than 2 degrees Celsius, and significant changes to once reliable precipitation patterns. Average annual precipitation in northern Mongolia is around 220 millimetres, less than a quarter of the globally averaged annual precipitation. Drier forests contain large amounts of deadfalls and debris, further increasing the fire risks.

Unsustainable and illegal logging poses another threat. The Government of Mongolia has enacted a variety of laws and policies to curb the loss of forest cover. One of these, the Law on Environmental Protection, was amended in 2005 to allow for the creation of Forest User Groups (FUGs), voluntary organizations of local citizens that are tasked with the appropriate utilization and rehabilitation of local forests in accordance with civil law. The implementation of FUGs has resulted in a significant decrease in illegal logging wherever these groups are active.

Sustainable Forest Management

In 2015, the Mongolian government and ADB signed a letter of agreement for a technical assistance (TA) project to improve sustainable livelihoods for local communities through sustainable forest management. The project, totaling $2.1 million, was financed by grants from the Government of Japan through the Japan Fund for Poverty Reduction, now Japan Fund for Prosperous and Resilient Asia and the Pacific. The executing agency was the Ministry of Environment and Tourism, represented by its Forest Policy and Coordination Department.

The project targeted building resilience of boreal forest ecosystems, supporting policies around forest protection while encouraging private enterprises and FUGs to get involved in forest management. “To achieve these goals, the project was designed to boost capacity of governmental forest management line agencies and to strengthen forest product value chains. It was also necessary to improve FUGS’ capacities to managing the forests for which they are responsible,” says ADB Country Director for Mongolia Pavit Ramachandran. “The project also demonstrates technology for wood processing systems.”

In 2015, NIRAS, a multi-disciplinary consulting company with its global headquarters in Denmark, was awarded a contract of $2 million to provide the technical assistance. NIRAS’ Finland office, jointly with their local partner MonConsult LLC., implemented the TA.

Forestry a Finnish Specialty

As one of the most forested countries in Europe, with trees covering two thirds of its area, Finland has a long history of working for a balance between intensive industrial use of forests and sustainability. Until the 19th century, Finnish forests were heavily exploited for building materials and fuel as well as for exports, later for pulp and paper production. This was a concern for Anton Blomqvist, the father of Finnish forestry. Foresightful, he founded its first professional institution to train forest officers in 1862, the Evo College forest school, only two years after the establishment of Finland’s Ministry of Agriculture. In 1907, the Finnish forest management society (Tapio) was founded as the first nongovernment organization to assist with forestry management and the rational use of forest resources.

“We are proud to have played a role in promoting the importance of sustainable forestry and building related capacities in Mongolia,” says NIRAS Regional Director for Asia and Pacific Antti Inkinen. “NIRAS Asia, with head office in Manila, specialises in transferring our global expertise to the many countries NIRAS works in with ADB. In the case of Mongolia and forestry, this international expertise was firmly anchored in Finland, specifically applied in developing transparent fair value chains for forest products and services to generate new income and employment opportunities for the local community while securing protection of the natural environment.”

The project engaged in a variety of activities, including business management training; the integration of global information systems to capture related data in the planning of the sustainable forest management; and forest and non-forest product development. The Bayan Tunkhel Cooperative was created as a pathway for FUGs to derive economic benefit from harvesting forest products, utilizing wood processing technology, and providing biomass for heating.

The project found that improving the livelihoods of local communities through sustainable forest management would require policy changes. These would promote community-based forest management planning, the removal of ineffective timber quotas to allow FUGs to harvest more valuable products under controlled circumstances, and a greater sense of ownership that allows FUG members to derive economic value from their activities.

“The outcome from this TA puts forestry high up on the agenda in Mongolia,” says ADB Principal Environment Specialist Suzanne Robertson. “We see an increased environmental awareness and the role of forests within that, which, given the importance of forests in the fight against climate change is extremely welcome.”

Mongolia’s boreal forests act as ecological security buffers, being a source of food and fuelwood and livelihoods to local communities. By developing methods and tools, along with capacity building and knowledge sharing, the project has enabled FUGs to prepare sustainable forest management plans that restore and conserve forest resources, as well as develop economic opportunities. Continuing to support FUG’s is a good way to ensure the future of Mongolia’s boreal forests.

Providing Long-term Development Support

The ultimate goal of ADB’s support is to help achieve a climate-resilient, sustainable forestry sector which benefits local livelihoods. Achieving this requires a long-term commitment. In 2021, the Government and ADB initiated a follow-up project, the Forest Sector Development Program (2021–2023). The project is being funded by another generous grant ($0.8 million) from the Government of Japan through the Japan Fund for Prosperous and Resilient Asia and the Pacific. The program is in the early stages of implementation and will be reported on in the future.

ADB, Mongolia and Europe

Since Mongolia joined ADB in 1991, ADB has been Mongolia’s largest multilateral development partner, supporting the country’s transformation to a middle-income, market-based economy. In those 30 years, ADB has committed sovereign loans totalling $3 billion, nonsovereign loans totalling $182.1 million, grants of $335.7 million, and technical assistance worth $187.1 million for Mongolia. The blueprint for ADB’s operations in Mongolia, the Country Partnership Strategy (2021–2024), focuses on fostering inclusive social development and economic opportunity, climate-resilient infrastructure to drive competitiveness and diversification, and resilience for sustainable, green, and climate-conscious development.

ADB’s European Representative Office, based in Frankfurt, Germany, works with companies and governments across ADB’s 17 European member countries to facilitate the application of European expertise in ADB projects in its developing member countries.

This article is reproduced from Asian Development Bank.

Scaling Natural Capital Investments in the Yellow River Ecological Corridor

Asia’s Eating Habits are Changing and the Environmental Impact Could be Huge

These charts illustrate the environmental impact of agriculture in Asia and the need to move toward sustainable and healthy diets that are also environmentally friendly and affordable.

The critical role of agriculture to Asia and the Pacific’s development can hardly be overstated. In the 1960s, food supply was a severe problem with most economies in the region struggling to feed their growing population. Many economies depended on food aid, while shortages and speculation prompted food crises in a few others.

The adoption of green revolution technologies in the 1960s increased agriculture productivity and not only allowed the region to meet increasing food demand, but also release labor to contribute towards vibrant manufacturing and services sectors.

In 2018, daily calorie intake per capita in the region, which is now home to more than half of the world’s population, had increased from 1245 kilo calories (kcal) in 1961 to 1914 kcal. Despite this progress, different forms of undernourishment such as stunting and wasting of children persists, even as obesity is rising in many parts of the region.

Today agriculture in the region faces a different kind of food supply challenge. Higher incomes and increasingly urban lifestyles have changed the needs and preferences of consumers. Instead of a diet heavy on traditional staples such as rice and wheat, consumers today prefer a more diverse diet. Per capita consumption of rice has leveled off; while that of fruit, vegetables, eggs, dairy products, as well as meat and seafood is increasing.

Although the consumption of cereals in developing countries in Asia increased between 1961 and 2018, its overall share in the diet decreased. The share for meat and animal products increased from 1% to 4%. This represents a more than six-fold increase in protein intake from animal meat from 1.5 grams to 10 grams per person per day. Still, this is well below the 34.6 grams average in advanced economies outside of the region.

In the PRC daily calorie intake more than doubled between 1961 to 2018, reaching 3205 kcal in 2018. Cereals only make up 46% of the diet, while the share of meat and animal products increased from a mere 3% in 1961 to 21% in 2018. This represents a 20-fold increase in per capita intake from 1.1 grams in 1961 to 19.7 grams in 2018.

To meet these changing food preferences, agriculture in the region will have to reorient from a traditional focus on the production of food staples to high-value crops such as fruit and vegetables, as well as livestock and aquaculture. This will mean a more resource-intensive production as well as rising greenhouse gases. As figure 3 shows, animal-based products have a much larger resource footprint, especially with regard to greenhouse gas emissions and water use.

To reduce the environmental impact of agriculture, it is important to move toward sustainable and healthy diets that are also socially acceptable and economically accessible for all. Some ways to achieve this are to promote mostly plant-based diets, reduce red meat consumption, promote fish obtained from sustainable stocks, and reduce food loss and waste throughout the supply chain.

This blog post is based on data from the recently published Asian Development Outlook Update 2021 Theme Chapter, Transforming Agriculture in Asia.

Author

Manisha Pradhananga

Economist, Economic Research and Regional Cooperation Department, ADB

Daryll Naval

Research Associate, Economic Research and Regional Cooperation Department, ADB

This blog is reproduced from Asian Development Blog.

A Holistic Ecosystem-Based Approach to Ecological Protection and Green Development: The Case of Huangshan in the PRC

Expanding Agri-Trade in Central Asia through the Use of Electronic Certificates

How Rural Pensions in the PRC Impact Older Persons’ Well-Being and Their Families

In the People’s Republic of China, a study shows pension income in rural areas improves economic independence and health of older people.

Overview

Establishing sustainable social pension systems in low- and middle-income countries is an urgent task as the growth rate of the senior population in these countries substantially exceeds that of high-income countries (Edmonds et al., 2005). Analysis of the People’s Republic of China’s (PRC) new rural pension scheme, the world’s largest social pension program, offers a robust case study of the impacts of pension benefits on older persons and their extended families in developing countries. In particular, our study examines whether increased income for aging parents relaxes the overall credit constraints for households, especially those in poor rural areas, thereby facilitating more independent living for pensioners and better access to crucial services including medical care.

Analysis

Like many developing countries, the PRC’s population is aging rapidly. By 2050, more than 25.6% of its population is expected to be over the age of 65. Moreover, stringent family planning policies during the last 3 decades have contributed to a dramatic increase in the ratio of relatively low-income senior dependents, further intensifying the pressure on a shrinking working-age population to take care of their parents. Older rural residents living in less developed regions are particularly disadvantaged. In 2010, the poverty rate for rural people aged 60 and above was as high as 22.3%, compared to 7.8% for the rural population in the PRC as a whole (Cai et al., 2012).

The PRC launched the rural pension scheme in 2009 to alleviate some of these pressures and better provide for the basic needs of aging residents. The program now covers almost all counties with over 400 million people enrolled. Considering its scale and the large disparities between rural and urban areas as well as across regions and age cohorts, this pension scheme provides a unique case study of the heterogeneous impacts of pension income.

In analyzing these effects, three questions were asked:

Does more income for aging parents facilitate more independent living and less co-residence with adult children, particularly adult sons?
Does pension income facilitate better access to and use of crucial services, such as medical care for seniors?
Does pension income change pecuniary and nonpecuniary transfers between older people, their adult children, and their grandchildren?

To answer these questions, we examined two detailed household surveys: from Guizhou province, which is one of the poorest areas of rural PRC, and from the relatively well-off Shandong province. In both cases, we tracked each adult child’s living arrangements and demographic information regardless of whether the adult child is counted as a household member. Using both sets of comparative data allowed us to conduct stronger empirical tests.

Taken together, the research design disentangles the effects of pensions from other age-related factors shaping intergenerational relationships, thus contributing to the growing literature on the specific mechanisms underlying impacts of the pension scheme.

Our findings indicate that the pension scheme significantly reduces intergeneration co-residence, promotes pensioners’ consumption of healthcare services, and weakens (but does not supplant) nonpecuniary and pecuniary transfers across three generations. All of these impacts of the pension scheme exhibit far greater magnitudes in the locality with lower income, Guizhou, than the locality with higher income, Shandong.

In looking at intergeneration co-residence, we observed a perceptible reduction in adult sons’ co-residence with parents around the cut-off age for pension receipt, with a larger and more significant effect for Guizhou than for Shandong. Similarly, there is a more salient decline in co-residence between grandchildren and grandparents for Guizhou than for Shandong. Thus, pension income does appear to relax credit constraints most significantly for the poorer rural area and is associated with purchase of greater living space (and privacy) across three generations.

Moreover, the rural pension scheme appears to reduce some nonpecuniary transfers between senior parents and adult children and grandchildren, such as being assisted by children when ill, and to weaken pecuniary transfers between generations. One interpretation for the finding is that pensioners transfer less money to adult children and grandchildren after household division, especially in Guizhou, and that they instead spend the money on hired services. Another interpretation centered in household division is that separation between older people, their adult children, and grandchildren decreases the level of utility from companionship felt, thereby reducing a grandparent’s monetary investment in a grandchild. It could also be the case that parents’ pensions contribute to adult children’s rising migration rate and off-farm employment, thus increasing children’s economic resources and decreasing the demand for transfers from grandparents. In any case, the introduction of pension incomes appears to increase the economic independence of older people.

In addition to these multi-generation impacts, pension receipt is associated with greater healthcare consumption among pensioners or greater perceived confidence in consuming medical services when needed. In rural PRC, despite universal coverage by basic health insurance schemes, financial difficulties often prevent patients from receiving or continuing expensive medical treatments. Our findings suggest that pension benefits may help to alleviate this problem by promoting confidence in ability to pay for necessary medical services, positively impacting both the health and well-being of aging patients in rural areas and allowing family units the option of investing economic funds previously allocated toward the medical needs of senior parents into alternative investments, such as education, additional job training, or relocation.

Policy Implications

Throughout the developing world, adult children often provide the most important form of support for their aging parents, both through pooling of household public goods in co-resident living arrangements and other nonpecuniary support. Pension payments increase older people’s economic resources, which may promote their economic independence and enable adult children to choose to live in a separate home in the same village or to move further away in pursuit of education or work. Our analysis of the PRC’s pension scheme shows that providing pension income to older persons in rural areas may

reduce intergeneration co-residence, thereby creating additional economic and migratory opportunities for adult children and grandchildren;
weaken, but not eliminate, the web of nonpecuniary and pecuniary transfers across three generations, increasing the economic independence of older persons and allowing for immediate family to reallocate economic resources toward options, such as schooling and work opportunities; and
increase access to medical services among older persons in rural areas, improving their personal health and well-being and reducing the burden of medical expense coverage by extended family.

Our findings help strengthen the rural pension scheme program and thus improve the well-being of older persons and their families across regions in the PRC. They also offer insights into the feasibility of replicating similar schemes in other developing countries that are facing similar demographic challenges.

The complete study is co-authored by Karen Eggleston (Stanford University), Xi Chen (Yale University), and Ang Sun (Central University of Finance and Economics, People’s Republic of China) and is published in the November 2018 issue of The Journal of the Economics of Ageing.

References

E. Edmonds, K. Mammen, and D.L. Miller. 2005. Rearranging the Family? Income Support and Elderly Living Arrangements in a Low-Income Country.The Journal of Human Resources, 40 (1). pp. 186–207.

F. Cai et al., eds. 2012. The Elderly and Old-age Support in Rural China: Challenges and Prospects. Washington, D.C.: World Bank.

Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. World Population Prospects: The 2010 Revision.

X. Chen, K. Eggleston, and A. Sun. 2018. The Impact of Social Pensions on Intergenerational Relationships: Comparative Evidence from the People’s Republic of China. Journal of the Economics of Ageing. 12. pp. 225–235.

Author

Karen Eggleston

Deputy Director, Shorenstein Asia-Pacific Research Center, Stanford University

This blog is reproduced from Development Asia.

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