Kebebew, Zerihun

Forest conservation plays an important role in mitigating climate change. When experiencing negative income shocks, however, local forest users may resort to unsustainable forest management practices to compensate for their financial losses. Using an interactive dynamic resource extraction game, we investigate the role of social norms for collaborative forest management under an exogenous income shock, such as during the COVID-19 pandemic. In an incentivized lab-in-the-field experiment with 162 smallholder farmers in rural Ethiopia, farmers individually decide how many trees to harvest from a community forest, where harvested trees generate private income while unharvested trees provide group benefits. They do so under different experimental conditions — either with or without i) a negative income shock and ii) a previous activation of social norms — allowing us to causally explore potential drivers of sustainable forest management. We find that negative income shocks induce higher levels of resource exploitation. In the short run, the activation of social norms helps to mitigate this effect. In the long run, it only helps in the absence of an income shock, suggesting that further institutional mechanisms are needed to increase the resilience of forests in times of crisis.