Course:FRST370/2022/Special Understory Medicinal Economy under Collective Forests Management Model of Lijiang City, Yunnan Province, China

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Abstract and Keywords


This case study aims to introduce the special understory medicinal economy in Lijiang City, Yunnan Province, China. The emphasis is on the method by which local people plant diverse understory products after Collective Forest Tenure Reform in China to gain both economic and environmental benefits. Lijiang city is famous for its abundant medicinal resources and tourist value because of its suitable climate and geological diversity. Since the 1980s' Collective Forest Tenure System Reform, lots of communities changed from traditional agriculture to the understory medicinal economy and set up cooperatives for collective production and management. This model has become one of the biggest contributors to most communities and even helps to find their positions in national and international markets. However, owing to the complexity of involving stakeholder groups and diverse policies, lots of issues and conflicts are generated and needed to be solved.


understory medicinal economy, Collective Forest Tenure Reform (CFTR), non-timber forest product (NTFP), community forestry, Lijiang City

General Description

Geological location and climate


Location of the Lijiang City, Yunnan Province, China

The Lijiang City in southwest China is located in the middle-upper stream of the Jinsha River and has a total area of 21,219 km2.[1]As it is at the joint position of Tibet Plateau and the Yunnan-Guizhou Plateau and crossing the Hengduan Mountains Canyon and Western Yunnan Plateau, the topographic conditions are diverse and complex in Lijiang City.[1]


Owing to the special geological background, the altitude difference is obvious within the Lijiang City which plays a leading role in the climate and leads to multiple horizontal and vertical climate zones.[2] The multi-year average precipitation of Lijiang City is about 1000 mm, and the annual mean temperature is 12.6–19.9 °C.[1] The unique environmental conditions with abundant precipitation, subtropical, temperate and frigid climate zones, and longtime of daylight are beneficial to supporting tourism , forestry and biodiversity.[1]


Mu Palace

The history of Lijiang City could date back about 800 years to Song Dynasty (960–1279) when the initial Lijiang Old Town was constructed.[3] During the Ming Dynasty (1368–1644), the emperors granted it as an autonomous prefecture to a local elite clan (surnamed Mu) hereditary status to govern the Indigenous Naxi minority groups. Until 1722, Han (the Chinese majority) administration replaced the Mu clan, and it became the Lijiang city since the establishment of the People's Republic of China in 1949.[3]

Land use pattern

Current forestry situations

Majority area in Lijiang is in mountains rather than plains, and the total forest coverage is more than 72%.[1] Owing to the suitable climatic conditions of ample precipitation, moderate temperature and plenty of sunlight, the understory economy emerged and quickly became the backbone of local economy. There is 19,317,600 Mu of forests and 88% is suitable for understory economy.[2]

Medicinal resources

Lijiang City is famous for abundant medicinal resources. One district and four counties are regarded as the land of medicines.[2] With high quality of medicinal products and other understory species, lots of counties are recognized and certified by China Forestry Industry Federation. Thus, these counties have built their own brands and patented their products which leads to a more secure income source.

Current achievements of understory economy

The under-forest-economy is one of the basic incomes for local farmers. They have developed diversified products and value chains in order to gain more profits and mitigate the impacts of market fluctuations. There are four categories of income: understory planting, understory breeding, gathering and processing, and tourism. Noticeably, Yulong County in Lijiang has been included in the first batch of 128 national Understory Economic Demonstration Bases.[4]

Conservation goals

Instead of the economic benefits, some of the susceptible forests (the public benefit forest) are under specific preservation. Moderately timber harvest is allowed in these forests. So that more communities tend to develop understory economy and ecotourism. These forests are protected by national law, and state governments have contracts with these forest owners for conservation plans and will compensate for conservation, silviculture, fire, pest controls, etc.[2]


There are two renowned mountains (Jade Dragon Snow Mountain and Laojun Mountain) and one United Nations World Heritage Site (Old Town of Lijiang) in Lijiang city which has already appealed to hundreds of thousands of tourists each year.[1] Because of the maturity and popularization of local understory forestry, more and more communities are going to develop ecotourism in forests. Ecotourism not only produces more economic incomes but also helps to propagandize local products and raise public awareness of conservation.


The total population of Lijiang City is about 1,302,400 with 55% population belonging to Minorities (e.g., Naxi, Yi and Bai), they are co-living in the Lijiang City with the Han people since 1949.[2]

In the long history of development, the Indigenous Minorities have been living and breeding in this city and their traditional customs and culture have been passed down through generations. They have their style of awe and protection of nature which regard harmonious coexistence between human and nature as the main goal. For instance, the Naxi communities have customary rules for respectful extraction forest resources and water protection which are maintained and abided by all members.[5]

Tenure arrangements

The reform of the collective forest rights system

The reform of the collective forest rights system is to hand over the management right of forest land to farmers on the premise of keeping the ownership of collective forest land unchanged, so that they not only have the status of the main body of management, but also enjoy the ownership, disposal, and income rights of forest trees. This reform aims to establish a forestry management system that meets the requirements of the market economy, can rejuvenate forests, and enrich the people, and form a self-developing forestry organizational mechanism, to promote forestry development and increase farmers' income.

Four major changes in ownership of Yunnan's forest

The land reform period (1951-1953)

During the land reform period (1951-1953), the Land Reform Law of the People's Republic of China stipulated that the land ownership system of feudal exploitation by the landlord class should be abolished, and the land should be owned by the peasants.[6] After the completion of the land reform and reform, the peasants became the masters of the land, realizing the transition from the private ownership of feudal landlords to the ownership of individual peasants. During this period, farmers had complete property rights to forest resources, but this period was shorter. The Yunnan border ethnic areas carried out land reform through peaceful consultation.

The cooperative period (1953-1957)

During the cooperative period (1953-1957), the property rights of forest resources were separated, and individual farmers were still the main body of ownership of forest land assets, but the ownership and use rights of forest land assets, forest assets were converted into shares and transferred to rural cooperatives, which was also the first "separation of two rights" period since the founding of China, and collective forests began to move towards large-scale operation, the essence of which was the separation of farmers' forest resource asset ownership and management rights.[6]

The rural collectivization period (1958-1980)

During the period of rural collectivization (1958~1980), all the property rights of forest resources were collected into the ownership of rural collectives through people's communes, and rural collectives became the sole subject of forest resource property rights.[6] Among them, in 1962, according to the requirements of the central government, forest rights were divided, and the national and collective mountain forest rights were basically clearly divided.[7] Two forms of ownership, state and collective, have been formed. Collective mountain forests shall be managed and controlled by collectives, and state-owned mountain forests shall be managed by state-owned forestry units or entrusted to collective escrow.

The "three determinations" period of forestry (1981 to the present)

During the "three determinations" period of forestry (1981 to the present), rural collectives are still the main body of ownership of forest land assets.[6] The forestry "three determinations" work with the content of "stabilizing the ownership of mountains and forests, implementing the responsibility system for forestry production and delimiting self-retained mountains" has been carried out. In the reform of forest rights in the mid-90s of the 20th century, most places implemented the transfer of barren mountains for compensation, and some places transferred the right to use barren mountains and wasteland to individual farmers.

Bundle of Rights
rights The land reform period The cooperative period The rural collectivization period The "three determinations" period of forestry
Access (to go into a defined area at any or prescribed times)
Withdrawal/Use rights for subsistence (named products and specified amounts)
Withdrawal/Use rights for sale (named products and specified amounts)
Management or Co-management rights (right to regulate internal use patterns)
Exclusion rights (right to determine who will have access to a defined area)
Alienation rights (sell; give away; mortgage; lease/loan management or exclusion rights)
Duration (time-limited) 70 years
Bequeathe (rights to hand over or pass on your right to someone else)
Extinguishability (rights to due process, provisions for adequate compensation)

The impact of tenure changes

The reform of the collective forest tenure system in Yunnan Province mainly involves the change of property rights, which also has a certain impact on the forestry management model. At this stage, the forestry business model in Yunnan Province mainly includes three forms: single-family operation, joint household operation and joint-stock cooperative operation.[7] After the reform, the main body of forestry management has shown a trend of diversification and scale, while the forestry management model has shown diversified development.[8]

Yunnan is an important collective forest area in western China and one of the pioneer provinces and regions in the reform of the national collective forest tenure system. Since the reform of the collective forest tenure system was carried out in 2007, the main reform task has been basically completed, supporting reforms are being deepened, and phased results have been achieved in mobilizing the enthusiasm of forest farmers in managing forestry, releasing the development potential of collective forests, and increasing the property income of forest farmers.[9] At the same time, there are also serious problems such as the phenomenon of low-price land enclosure, imperfect socialized service system, extensive forest land management and management, forest land fragmentation restricts large-scale operation, forest felling is restricted, and compensation is low.

Institutional/Administrative arrangements

The content of the reform of the collective forest tenure system in Yunnan Province mainly involves the change of property rights, which also has a certain impact on the forestry management model.[8] At this stage, the forestry management model in Yunnan Province mainly includes various forms of single-family management, joint-family management and joint-stock cooperative management. After the reform, the main body of forestry management showed a trend of diversification and large-scale development, while the forestry management model showed a diversified development.

Diversification and scale of forestry management subjects

For a long time, the main body of forestry production and operation activities in Yunnan Province is the forestry and agricultural industry. Affected by factors such as cultural level, management and protection skills, and economic ability, it is difficult for forestry farmers to achieve ideal results in the process of forestry production and operation. The sustainable development of forestry has brought adverse effects.[6] After the reform and implementation of the collective forest tenure system, forest farmers have obtained the right to manage and dispose of forest land, which provides favorable conditions for the circulation of forest land. Forest farmers can transfer forest rights within the validity period of forest rights. Auction etc. That is to say, the main body of forestry management activities is differentiated, which makes the management subjects with sufficient funds and rich technical experience participate in the forestry management activities, which lays the foundation for the scientific development of forestry.

Secondly, the reform of the collective forest tenure system has promoted the large-scale development of forestry management entities. After the reform of the collective forest tenure system, the cycle of forestry management has become longer, but the management risks are also greater.[9] In order to reduce personal risks, some forest farmers have begun to run joint households in villages and share risks with everyone. Driven by this factor, different types of forestry economic cooperatives have obtained rapid development. From the pilot reform in 2007 to the beginning of 2009, the number of professional forestry cooperative organizations in Yunnan has exceeded 700, which has promoted the development of wood processing, characteristic economic forest, forest tourism and other industries.[8] The popularization of such forestry economic cooperatives has greatly reduced the risk of forestry management.

Diversification of forestry management forms

Before the reform of the collective forest tenure system was implemented, due to the poor stability of forestry management policies, forests generally lacked necessary trust in forestry policies.

Under such circumstances, forest farmers usually focus on short-term interests and do not control deforestation when they carry out forestry management, which has caused serious damage to forest resources and affected the sustainable development of forestry.[7] With the implementation of the reform of the collective forest tenure system, although it is still impossible to completely eliminate short-term forestry management practices, forest farmers will cut down the forest once they have obtained the forest rights. change in form. In the process of forestry management, forest farmers began to consider the characteristics of all forest lands more, that is, to carry out scientific management according to local conditions, which changed the management mode based on forest resources under the traditional model. Various forms of understory management have gained widespread popularity. Such as under-forest planting, including forest medicine, forest oil, etc.; under-forest farming, including forest animals, forest lilies, etc.[9] The richness of forestry management forms not only helps forest farmers to increase their incomes and promotes the utilization of forest land resources, but also enhances the fertility of forest land, making great contributions to the sustainable development of forestry.

Affected Stakeholders

Local communities

Local communities, especially local communities that share interests in forestry in the same or contiguous geographic region are the most important stakeholders that should be given first priority on forestry issues. Their objectives include 1) ensuring the integrity of tenure rights, and 2) sharing interest from collective forests. Usually, individuals in communities don't have many powers and direct control over forestlands, unless they select their representatives as their speakers in stakeholder meetings at a higher level. However, communities have medium-high relative powers over local forestry affairs and could have direct consultation and communication with government departments.

It's believed that the understory forestry economy is a kind of circular economy, which has a large employment capacity and low employment threshold.[10] The presence of community forestry significantly expands the social and natural capital of local communities. Researchers believe that with the development of collective community forestry, the local community will have a higher dependency on local forests[10].

Ethnic minority people

There are 25 ethnic minorities (with more than 5,000 people for each minority group) in Yunnan Province, 14 of which only distribute in Yunnan Province. The ethnic minority population accounts for 33.6% of the total population of the province.[11] The provincial area of the autonomous minority area accounts for 70.2%.[11] Yi (彝) Minority Group and Bai (白) Minority Group are the majority population with them.

In the long historical period, they have formed a traditional knowledge system on medicinal herbaceous and forestland management.[12][13] Along with Han (汉) People who traditionally live there, they are considered to have traditional customary rights on the land.[14] The main objectives for those groups are keeping and respecting their histories and cultures. Preservation and protection of their historical sites (or landscapes) and intangible cultural heritage (e.g., embroidery and traditional textiles) during development are also vital. Minority Groups have some powers, e.g., some autonomy. Thus, we put them into high-influence and high-important in the power analysis table.

They are important participants in collective forests and local community forests. Researchers noticed that “forest resources are abundant in ethnic minority areas of Yunnan, and forest farmers are very willing to develop the forest economy (Translated from Chinese)".[15] Thus, they are critical to forestry development. Numerous national and local policies have placed Minority Peoples at the centre of development and resource allocation.

Individual farmers (engaged in forestry production)

For individual farmers that are engaged in forestry production, those groups are largely overlapping with the local communities we mentioned before. Their long-term livelihood and well-being are dependent on collective forests and forestry.  As individuals, they don't have much power. As price takers, they are forced to accept the market price of forest goods. Their major concerns and objectives are benefiting from collective forests, ensuring their customary and legal rights on the land, and having equal and fair opportunities to involve local forestry affairs.

Interested Stakeholders

Municipal city (the City of Lijiang)

The municipal city is supervised by higher authorities (including Provincial Government, State Council and Party Institutions) and guided by the provincial forestry departments on forestry issues. The municipal government is considered to be responsible for the implementation of specific policies, local poverty eradication and the well-being of the local population.[10] The main objectives of municipal government are to improve employment and promote local economic development through collective forestry, to make full use of natural resources and to access a range of secondary environmental benefits through the development of forestry economies and innovative economic development models.[16]

In this case study, the government has the right to formulate by-laws and local regulations, local forestry policies and related economic policies and guidelines. We regard the municipal city as the most powerful stakeholder in this case study and assume other stakeholders will follow its instructions in the following power analysis.

Forestry and Natural Resources Department

The forestry and natural resource department is regarded to be responsible for the promotion China's collective forest tenure system reform and the development and exploration of the forest economy based on local conditions.[17] These two points are also the main objectives of the department.

The forestry and natural resource department has high power and influence, second only to the municipal government, which has more direct influence in forestry field compared with the municipal city. The department has some autonomy within the governmental and legal framework and based on the reality. It could collaborate with its partners, especially the multiple cooperatives, which we will mentioned later. The department has the direct responsibilities to develop local forestry economy and deal with forestry issues, e.g., forest degeneration.

Forest products market (the trading centre)

The market of forest products, along with the understory non-timber forest products market circulation system it represents, is another vital interested stakeholder. It doesn't have much power on the forest issues as the above two entities do but is an important economic entity that transfers forest productivity into monetary value.[18]

The main objectives are providing places and channels for trade in forest products, profiting from the processing and circulation of forest products, and linking local populations and markets to regional value chains. We also believe that the market would benefit from the industrial cluster, and subsidies for forestry from the local government. The influence of the market is often invisible, while it does play a role in forestry production and has dependency on forests.

Forestry farmer and worker cooperatives

The forestry farmer and worker cooperative are a form of professional cooperative in Yunnan Province. It’s an independent economic entity, which integrates the producer and operator of similar forest products or forestry services, allowing the participants to voluntarily unite, effectively manage and share interests.[19] This is a common organizational form of community forestry in China.

The cooperative has medium-high influence and medium-high importance in most regions. The major objective is representing the individuals it involves and providing multiple benefits, for example, developing markets, creating brand effects, supervising product quality, and offering financial support, etc. It also empowers individual farmers and workers to respond to the power of authoritative sectors like the government and markets.

Zhang & Wang visited and surveyed 65 forestry cooperatives in Yunnan Province, and noticed that their development and operation vary in internal management, financial status, membership tenure, and employee change, which may suggest different cooperatives have different relevant interests and influences.[19]

Individual farmers (not engaged in forestry production)

In this case study, the individual workers and farmers that are not engaged in local forest products value chains are also our stakeholders. They could be fishers, craftsmen, or other service providers. As individuals, they don't have much power. They are often ignored by the local government during the decision-making processes. We believe that in such a one-size-fits-all policy context, they rarely have rights over collective forestry topics. They should be on an equal footing with those who engaged in forestry production with regard to livelihoods and well-being. Thus, their main objectives could be balancing the development between local forestry and other industries and ensuring their own rights and voices over local affairs.

Assessment of Relative Power

Relative power of stakeholders
High Influence

● Municipal Partners

● Municipal City

● Department of Forestry & Nature Resource

● Forestry Cooperatives

● Ethnic Minority Groups

● Local Communities

Low Influence ● State-owned Forest Farm

● Forest Products Chamber of Commerce

● Forest Economic Development Enterprises

● Forst Products Trading Centre

● Farmers (as individuals)

Low Important High Importance

Critical Issues, Conflicts and Possible Solutions

Issues and conflicts


A woman who is harvesting the medicinal products

As a novel industry, majority of farmers don't have systematic and comprehensive awareness of it. Most of them still focus on small range of household activities rather than participating in collective actions. Lack of relevant knowledge about how to plant and breed some specific species and scientific guidance, make them unable to take full of local advantages.


After the Collective Forestry Tenure Reform, the following policies have not been established and refined yet which contributes to an immature insurance system of Community Trust, right transfer, loan, and mortgage. Without sufficient monetary input, the capacity of each community is limited and most of resources are still unused. Such imbalance between input and output also reduces the famers' enthusiasms so that most of farmers still prefer traditional agriculture.

Cooperatives and corporations

In some communities, most of the farmers are self-organized and lack of formal guidance of cooperatives which restrict local forestry in a quiet small range. In other areas, local cooperatives and leader companies are too small to withstand market fluctuations and risks. And because of the funding deficiency, the brands are not famous and influential in large markets. They still need lots of external support to increase their competitiveness and find their position in the value chains.

Ideas for tacking issues and challenges

To overcome the recognition obstacles, spreading normal information and knowledge through in-person meetings, or social media (e.g., radio and TV) are beneficial to draw a thorough picture of the meanings, models, and profits of understory economy for farmers. What's more, some pilots are set and popularized around the city to activate more communities.

Government collaborates with universities, scientific research institutions, and the Department of Forestry and Agriculture to give guidance and training to local farmers to solve their technical bottlenecks. An open platform between these organizations and local cooperatives is needed to integrate industry, education, and research within a system. With this supportive system, the quality of products could be improved and generate more added value after getting the quality certification. At the same time, particularly financial support in the form of micro-credit, low interest, and discount interest are provided to these communities.[4]


Goals of the community forestry project

The main goals of the community forestry project are to follow and deepen the Collective Forest Tenure System Reform and develop lucrative methods for local farmers to protect their livelihoods. The development of local understory economy takes the advantage of local diverse topographic characteristics, climatic conditions, abundant forest resources, and convenient transportation.

Successes and failures


The branding and certification of a company in Yulong County

With the support from state and municipal government, people are going to create varieties of characteristic brands based on the cultural and natural conditions of each community. The understory economy has greatly facilitated local agricultural development and increased the incomes of each community and household. Since 2014, more than 440,000 households have earned money from understory planting.[2] It provides jobs for surplus laborers in communities and improves their literacy by training, so there can be found more emergence of forestry cooperatives and professional farmers in understory planting and breeding. Each cooperative in different communities works to build their unique value chains including the planting, breeding, gathering, processing, and related tourism. As solid unions, they have increasingly important status within the markets. What's more, the government also offer communities with increase funding and positive policies for better infrastructures, necessary mentorship, and equipment. Local corporations also play as key partners in this case, there are place-based construct industrial unions include leading companies for further processing and research. They provide advanced knowledge and techniques for production and help to broaden national and international markets through advertisements.


However, the development of local community understory economy is still in the early stages. And there is a tendency of the conflict between abundant resources vs. small scale of industry which is caused by the lack of overall planning and fragmented small scales.[4] Moreover, the combination of diverse climate, cultures and topography conditions also lead to unbalanced development among these communities.[20]


Narrowing regional development gaps

Although the past 40 years have witnessed a significant change in Yunnan Province, including living conditions, economic growth, and forestry tenure systems. There are still huge gaps lie on the development in different regions. Effects need to be paid to reduce such regional gaps in development. Government need pay particular attention to remote mountainous areas and minority regions.

Ensuring equitable participation and full involvement

During the stakeholder power analysis, we noticed that provincial preferential policies or fiscal policies did improve the living conditions of the local population. However, some policies have a very narrow audience, for example, they only applied to minority peoples or farmers engaged in forestry production. We believe that these policies were designed to emphasize compensation for less-advantaged groups. But it may also lead to less active non-policy audiences engaged in forestry production. We would encourage the municipal government, as well as communities and the trading centre, to have a long-term stakeholder engagement plan. Feasible specific ways include, but are not limited to holding stakeholder workshops, improving information disclosure work, cooperating with cooperatives, universities and institutions, etc. We hope those processes could promote equitable participation and full involvement of local labor.

Developing industry standards

Although natural medicines, represented by traditional Chinese herbal medicine are very popular in China and have high commercial values, it lacks industry standard and product quality assurance mechanism. Thus, industry standards on both modes of planting and product quality are necessary and of great urgency. We would suggest local communities, engaged framers, and medical herb trade companies to sit down, fully considering the minority knowledge on herbs and practical history of local communities, and develop relevant industry standards.

Providing more financial support

Zhang & Wang pointed out that although forestry enterprises or cooperatives receive preferential tax policies, it is difficult to obtain loans from financial institutions as start-up or operating funds.[19] The loans for community forestry should have longer cycles, as agroforestry products tend to have longer production cycles and are "exposed to both natural and market risks".[19] Governments should establish additional earmarked funds for forestry, as well as encourage banks to provide financial support for those communities and cooperatives. Meanwhile, it’s also important to inform the public about these funding projects and preferential policies.

Accelerating technological innovation and improving production technology

Most of the understory medicine products are raw materials like whole herbs or parts of plants, like roots or fruits. Such production and products do not have a high technological level or added value. The communities need to seek a way to extend their value chain through technological innovation and improved production processes. For example, extraction and finishing of active ingredients of medicinal herbs. That's not to say, farmers must get further education. We would encourage worker cooperatives and communities to provide necessary technological supports.


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This conservation resource was created by Youquan Gong, Xiaofan Shen, Shichun Wu.
It is shared under a CC-BY 4.0.