Abstract: Rural household survey characterized as a direct, up-to-date data gathering,and holistic problem meeting can be used to investigate engineering effects on rural household in production and livelihood. This method was applied to returned cropland to forest or grassland project in this study. A case study based on data from rural household survey in Huangfuchuan Watershed shows that most farmers agree to return cropland to forest or grassland, while some of them resent against grazing prohibition and feeding confinement. The age of the peasants, peasant family size and derived income from the project greatly influence the overall attitude of the peasants towards the project, while income earned from animal husbandry is the main factor influencing peasant attitude towards feeding confinements. While correlation analysis shows that educational status is the main factor influencing peasant family income, cropland area and crop and animal produce are inversely proportional to peasant per-capita net income. Hence unsustainable mode of production coupled with unsustainable environmental conditions leads to vicious circle of eco-economy. It is therefore prudent to develop countermeasures to the unsustainable economic growth by efficiently utilizing the project and encouraging peasants to return cropland to forest or grassland.