*5.2. Policy Implication*

For the purpose of coordinating the relationship between the scale and revenue of the balanced quota and improving the performance of the IVDB policy, this paper offers the following three suggestions.

Firstly, the scale of the balanced quota should be determined through comprehensive consideration of inputs. In the process of implementing the project based IVDB policy, in addition to the quota quantity, such factors as the coordination and governance capacity of local government, fund raising for demolition, reclamation and resettlement, and the unavoidable transaction costs can affect the returns of the quota. Only when the whole inputs are coupled and coordinated can the benefits be maximized. Therefore, when the provincial government approves the balanced quota or the county government applies for it to the superior government, the first step is to assess how well each input matches up. Then the optimal balanced quota of every project can be determined comprehensively. The optimal scale determined based on these comprehensive factors can realize the maximization of the revenue, theoretically. Based on the revenue of the balanced quota, the incremental benefits returning to the demolished areas will also be increased accordingly, and the economic situation of farmers will be significantly improved.

Secondly, the spatial planning of rural resettlements needs to be optimized. Rural spatial plans and project design are highly significant for IVDB policy implementation. In the whole process of planning and designing, it is pivotal to listen to the farmers' thinking and respect their willingness. In particular, when the rural resettlement program is launched, planners should consider suitable distance for cultivation, space for storing goods such as farm tools, stable cost of living, etc. In this case, farmers' enthusiasm for cooperation can be motivated greatly in the implementation of demolition and reclamation, which will improve the efficiency of the balanced quota's producing and trading eventually. Additionally, the quota for the integration of tertiary industries in rural areas should be reserved if it is necessary and the countryside has a sound industrial base. Then farmers can obtain sustainable income in this way. The above measures are necessary supplements to determine the optimal scale of the balanced quota, so are in line with the inherent requirements of rural revitalization. In particular, the layout of rural residential areas based on spatial planning is conducive to improving the living environment of farmers and creating an ecologically livable production and living space.

Thirdly, central-government supervision should be strengthened in the process of the provincial-oriented IVDB implementation. While the provincial government leads the IVDB policy, there is also a risk of over-expanding the scale of the balanced quota, driven by government performance assessment and land finance. The 'merging villages and living together' policy in Shandong province is typical evidence. Then the central government, the paramount decision-maker at the top of governmental hierarchy in China, scan supervise and regulate the implement of IVDB directly and design policies to make provincial government more accountable [37]. To some extent, the strong supervision of central government provides the most solid backing to protect the interests of farmers. Any local government behavior at the expense of farmers' interests will be sanctioned severely by central government.

#### **6. Conclusions**

Under the background of IVDB implementation power moving down to the provincial government, this paper verified the inverted U-shaped impact of the scale of the balanced quota on the revenue at both theoretical and empirical levels and obtains the appropriate quota scale corresponding to the maximization of the earnings. Based on 1907 IVDB projects in Zhejiang province, the conclusions are as follows. First, with the quantity increase of the balanced quota, the revenue of the quota climbs and then declines. In other words, the relationship between the quota's scale and the revenue shows an inverted 'U' type. On the premise of controlling the characteristics of the projects and the socio-economic development of the county in which the IVDB project is located, the optimal balanced quota of Zhejiang province is 7.19 ha. When the quota exceeds this critical point, the revenue will decrease constantly. Second, there is spatial heterogeneity in the optimal scale of the balanced quota in Zhejiang. Specifically, the optimal scale of the quota in northeast and southwest Zhejiang is 9.50 ha and 6.03 ha, respectively, and the marginal return of the quota in the former is higher than the latter, which is consistent with the general rule that the more developed the region is, the higher the unit price of the quota. In the context of increasing the efficiency of quota-allocation and further improving the IVDB performance, we suggest that: (1) the scale of the balanced quota should be determined through comprehensive consideration of inputs, (2) the spatial planning of rural resettlements need to be optimized, and (3) central-government supervision should be strengthened in the process of the provincial-oriented IVDB implementation.

However, despite our study being carefully conducted, there are still several crucial limitations. On the one hand, considering that the prefectural government plays a pivotal role in adopting the IVDB and the early characteristics of the policy, we use a county-level project as the basic research unit along with the advantages of data acquisition. With the evolution and development of the IVDB policy, the balanced quota will be transferred across prefectures or even across provinces around China with high probability. These phenomena mean that the project based IVDB beyond the county is much different from the within, which may lead to quite different relationship between the scale and the revenue of the balanced quota. In short, more attention should be paid to the cross-regional implement of the IVDB to explore the optimal scale of the balanced quota. On the other hand, due to the inseparability of the capital invested in demolition and reclamation of the IVDB project, the appropriate scale oriented to the maximization of revenue mainly adopts the gross profit index. The net profit after deducting the actual invested capital amount is not analyzed as a dependent variable, which is involved only in the robustness test. Future research needs to find a more scientific way to deal with profits.

**Author Contributions:** Conceptualization, Y.J. and B.Z.; data curation, L.T.; methodology, J.M.; software, Y.J.; formal analysis, Y.J.; investigation, L.T.; resources, Y.J. and B.Z.; supervision, H.Z.; validation, H.Z.; visualization, J.M.; writing—original draft, Y.J.; writing—review & editing, B.Z. and H.Z.; All authors have read and agreed to the published version of the manuscript.

**Funding:** This study was supported by the Youth Foundation for Humanities and Social Science Research of the Ministry of Education (No.22YJC630049), the Basic Research Program of Natural Science of Shaanxi Province (No.2022JQ-747), the Peking University-Lincoln Land Center Annual Research Fund Project (No.FS13-20211215-JYY), the Major Theoretical and Practical Problems of Philosophy and Social Sciences of Shaanxi Province(No.2022ND0342), and the Startup Foundation of Northwest A&F University (No.2452021012).

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Not applicable.

**Data Availability Statement:** Not applicable.

**Conflicts of Interest:** The authors declare no conflict of interest.
