AbstractRecent reforms in the distribution of incremental land revenue in China aimed to establish an optimal scheme for the rational and equitable allocation of appreciation revenue from land that has been expropriated from peasant collectives, which effectively enables development and protects the interests of the peasants. First, the Shapley value method will be used to formulate a preliminary scheme for the equitable distribution of incremental land revenue between the government and peasant collectives, then a risk assessment procedure will be applied to adjust the allocations following both stakeholders’ risks and contributions. The rationality of the resulting allocation scheme will be verified by comparing the theoretical results with the actual allocation of benefits accrued from transfers of rural collectives’ operational construction land over 3 years in Jiutai District, Changchun City, Jilin Province, China. A questionnaire survey will be used to clarify peasants’ opinions of land expropriation. The results obtained with the Shapley value method indicated that the government and relevant peasant collective were entitled to 93.19% and 6.81%, respectively, of the incremental land revenue based on their contributions. However, the corresponding allocations following risk adjustment were 90.83% and 9.17%, because the peasants have higher risks than the government. The peasants could generate CNY 38.38 × 104/ha by directly marketing their rural collectives’ operational construction land. This is similar to the amount (CNY 37.99 × 104/ha) that they could obtain from the modified land expropriation system proposed in this study, which includes a share of the incremental land revenue. In addition, it agrees with the results of two pilot studies and meets the objectives of the reform. However, the questionnaire results showed that the peasants were in a weak position following land expropriation, and the current land expropriation system should include measures that safeguard their long-term well-being, which includes the dissemination of land expropriation information, strengthening of capital supervision, and the establishment of diversified, long-term security mechanisms.

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