Regional cooperation for ecological conservation and economic development provides an innovative mechanism to solve operational problems related to institution and governance. Improving local households' livelihoods is the key to achieving conservation and development goals. Beijing and Hebei province have been working together on a range of developing and conservation issues, including agriculture, tourism, employment, public services and upgrading industries. A very important purpose of the cooperation now is how to protect and utilize water resource better for these regions. Beijing is facing the serious problem of water shortage, and more than 50% of water consumption in Beijing is provided by Miyun Reservoir. The upstream watershed of Miyun Reservoir is mainly located in Hebei Province.
We adopt Sustainable Livelihood Approach (SLA) to a case study on the Paddy Land Conversion Program (PLCP), a pilot regional cooperation policy between Beijing and Hebei Province. More-developed Beijing provides funding and other resources to support less-developed Hebei in securing ecosystem and developing economy. Households living upstream in Hebei province are encouraged to converse paddy lands into dry lands to save water with payments from Beijing. Beijing government paid average 450 Yuan/666.7m² to upstream households, and the payment criteria will be adjusted to market changes and land use. At the same time, local communities in the program areas are supported with water conservation infrastructure investment, regional industries improvement, as well as agricultural marketing development in Beijing and other well-developed regions. As a result, participating households' livelihoods plays a crucial role in the achievement of PLCP and regional cooperation mechanism. Using recent survey data from Beijing and Hebei, we show that PLCP has significantly changed households' assets, activities and livelihood outcomes. Participants have more productive physical capital and social capital than non-participants; however, they have less agriculture and livestock production, and use less Sodium Bicarbonate after the conversion of their paddy lands. Participants engage more in wage labor markets, and PLCP has a significant positive effect on the total income for participants. Participants' average total income improved from 12267 yuan in 2006 to 28419 yuan in 2010, with a change of 16151 yuan; while non-participants' average total income improved from 11887 to 24865, with a change of 12978 yuan, implying that participants improved 3173 yuan more than non-participants did. The PLCP has also changed households' income portfolio. Participants had a lower agriculture income proportion after they converted the paddy land to dry land, and they relied more on non-farm work. In 2006 before households participated in the program, only 52.02% of total income was from migrating work, while in 2010, 68.9% of income was from migrating work. In general, regional cooperation policies have a broad base of support from local communities.
We also point out some weaknesses of program design and implementation. We suggest that the payment should be adjusted according to market grain prices, and supporting policies for PLCP should be customized for various types of households; in the long term, upgrading industry and creating lucrative working opportunities for local residents is the key to improving regional cooperation mechanism and achieving sustainable development.