There is growing appreciation of the use of concentrated rural settlement as an effective means of implementing infrastructure projects and helping to achieve sustainable development in rural areas. This occurs in China through the exchange of rural residential land for urban construction. However, this policy has not been effective under normal circumstances (called development-driven conditions) as frequently farmers are reluctant to accept such an exchange. By contrast, in a time of disaster, such as after the 2008 earthquake in Sichuan Province, China, rural victims have accepted this policy of rural residential land exchange. Employing game theory, this paper identifies the reasons for the different outcomes and it contends that the implementation of concentrated rural settlement practice under disaster-induced conditions is more effective than its introduction under development-driven conditions. The results of the analysis indicate that, in China, concentrated rural settlement is feasible in a context of post-disaster reconstruction.