Abstract: It has been seven years since China implemented the policy of grant and reward for grassland ecological protection. Empirical analysis and in depth study of the policy’s impact on herdsmen’s decision-making behavior pertaining to production from their farms, is of positive value to inform the implementation of the second stage of the policy. This paper is based on a survey of 220 herdsmen in seven counties including pastoral areas and semi-agricultural and semi-pastoral areas in Gansu Province before and after the implementation of the eco-compensation policy. A logistic model and negative binomial regression model are used to analyze the impact of the grassland eco-compensation policy on herdsmen’s production decision-making behavior. It was found that the policy of grassland reward has a significant positive impact on the production decision-making behavior of herdsmen in general, but the impact on the production decision-making behavior of herdsmen in semi-agricultural and semi-pastoral areas is higher than that in pastoral areas. The policy of grassland reward is not the sole factor affecting the production decision-making behavior of herdsmen. Besides the policy of reward, the other factors affecting the production decision-making behavior of herdsmen in pastoral areas are different from semi-agricultural and semi-pastoral areas. The analysis showed decision-making in the pastoral areas is mainly affected by the family situation, while in the semi-agricultural and semi-pastoral areas decision-making is mainly affected by external environmental factors. With respect to the scale of animal production and decisions about future expansion, herdsmen in pastoral areas pay more attention to availability of capital, the risk profile of the animal production system, and forage reserves, while herdsmen in semi-agricultural and semi-pastoral areas focus on income sources, market returns and forage reserves. Based on the data from this study, it is suggested that attention should focus on grassland types prone to desertification, comprehensive understanding of herdsmen’s family situations. Differential subsidies should be implemented, and targeted to meet herdsmen’s needs, positively direct the decision-making of herdsmen and maximize the wider benefits of the animal production industry.

Key words: grassland ecological reward policy, production decision-making behaviour, logistic model, negative binomial regression model