Periodic Reporting for period 4 - NATCOOP (How nature affects cooperation in common pool resource systems)
Periodo di rendicontazione: 2021-02-01 al 2022-01-31
Global changes in the natural and social environment put natural resource systems under increasing pressure. This development is particularly acute for communally managed resources such as fisheries. On the one hand, economic incentives encourage overusing ecosystem resources while on the other hand, resource users directly rely on the services provided by the ecosystem. This reliance is particularly significant in the developing world where natural resources are often vital for providing food security, employment possibilities, and a steady flow of income for subsistence level households. The exploitation of common-pool resources can therefore become a livelihood of last resort that buffers income shocks in a growing economy. However, natural resources are often poorly regulated due to weak legal institutions and insufficient enforcement of regulations. Solutions to this social dilemma are desperately sought-after but not obvious.
The NATCOOP project adopts a social-ecological perspective towards the sustainable development of natural resources. By bringing the dynamic two-way relationship between nature and cooperation in renewable resource systems into focus, the project aims to study how nature shapes preferences and incentives of economic agents and how this in turn affects common-pool resource management. In recent advances of the economic literature, the effect of the natural environment on economic agents has been largely overlooked. NATCOOP aims to incorporate the “environment” of an agent into the analysis. Thereby, the project proposes a new perspective on common-pool resource management in order to improve the understanding of the relationship between nature and cooperation. This should facilitate solutions for the efficient allocation of scarce resources to pursue long-term social and economic development.
The NATCOOP team visited fisheries in Tanzania, Chile, and Norway to study these three topics. The fisheries for dagaa and Nile perch at Lake Victoria, the pelagic and benthic fisheries in Chile, and the Norwegian fisheries for cod and herring serve as case studies with differing natural and social environments. Through comparing these frameworks and drawing connections between all three topics, NATCOOP utilized organizational and conceptual synergies as a unified project. In one line, NATCOOP highlights specific mechanisms how the natural environment influences incentives for common-pool resource use that can be used to improve governance.
The NATCOOP project adopts a social-ecological perspective towards the sustainable development of natural resources. By bringing the dynamic two-way relationship between nature and cooperation in renewable resource systems into focus, the project aims to study how nature shapes preferences and incentives of economic agents and how this in turn affects common-pool resource management. In recent advances of the economic literature, the effect of the natural environment on economic agents has been largely overlooked. NATCOOP aims to incorporate the “environment” of an agent into the analysis. Thereby, the project proposes a new perspective on common-pool resource management in order to improve the understanding of the relationship between nature and cooperation. This should facilitate solutions for the efficient allocation of scarce resources to pursue long-term social and economic development.
The NATCOOP team visited fisheries in Tanzania, Chile, and Norway to study these three topics. The fisheries for dagaa and Nile perch at Lake Victoria, the pelagic and benthic fisheries in Chile, and the Norwegian fisheries for cod and herring serve as case studies with differing natural and social environments. Through comparing these frameworks and drawing connections between all three topics, NATCOOP utilized organizational and conceptual synergies as a unified project. In one line, NATCOOP highlights specific mechanisms how the natural environment influences incentives for common-pool resource use that can be used to improve governance.
NATCOOP concentrated on three topics that revolve around three specific mechanisms. First, the project explored how potential tipping points in natural resource systems lead to changes in cooperative behavior. Experiencing and learning about the dynamics of tipping might enable agents to coordinate on optimal outcomes. To this end, game-theoretical models of resource use with a threatening regime-shift were developed and complemented by behavioral experiments. We find that the value of a system that gives an early warning about tipping depends on its informativeness. Importantly, our theoretical work shows a trade-off between the value derived from such a system and the risk of system collapse that its use implies. The behavioral experiments document that humans react more strongly to a system collapse (by reducing pressure on the system) when it has been caused by strategic uncertainty (human coordination failure) rather than by natural uncertainty, even in a highly controlled setting where the backward-looking information on what caused the event is not actionable.
Second, the project aimed to uncover whether natural resource volatility influences risk preferences and how this in turn affects the resulting level of cooperation. Here, the relationship between risk exposure and risk aversion was analyzed and their combined effect on resource governance were formalized by theoretical models. Taking a unified look at the data collected over the project period, we find suggestive, but not conclusive evidence that risk exposure shapes risk preferences. In the course of our work in Chile, we could show the importance of natural resources to buffer income risk. The insurance that natural resources can provide ought to be taken into account when developing policies that regulate resource use.
Third, NATCOOP studied how social norms interact with the natural environment to facilitate cooperative solutions to the social dilemma of common-pool resource extraction. The project highlighted the possibility to change social norms of cooperation by providing information on the behavior of peers (a so-called social norm nudge) only when simultaneously offering enforcement mechanisms within the community. Further, we documented that social norm nudges also work to increase cooperation in a behavioral experiment when decisions are taken by teams of resource users (as opposed to decisions taken by individuals).
Second, the project aimed to uncover whether natural resource volatility influences risk preferences and how this in turn affects the resulting level of cooperation. Here, the relationship between risk exposure and risk aversion was analyzed and their combined effect on resource governance were formalized by theoretical models. Taking a unified look at the data collected over the project period, we find suggestive, but not conclusive evidence that risk exposure shapes risk preferences. In the course of our work in Chile, we could show the importance of natural resources to buffer income risk. The insurance that natural resources can provide ought to be taken into account when developing policies that regulate resource use.
Third, NATCOOP studied how social norms interact with the natural environment to facilitate cooperative solutions to the social dilemma of common-pool resource extraction. The project highlighted the possibility to change social norms of cooperation by providing information on the behavior of peers (a so-called social norm nudge) only when simultaneously offering enforcement mechanisms within the community. Further, we documented that social norm nudges also work to increase cooperation in a behavioral experiment when decisions are taken by teams of resource users (as opposed to decisions taken by individuals).
In relation to the overall objectives of NATCOOP (as outlined above), we employ state of the art tools from game theory, experiments, and statistical analysis. However, we also go beyond the state of the art where necessary. Consider these three examples:
We ran multi-period behavioral experiments and comprehensive survey questionnaires with individual fishers and teams of fishers in Tanzania. To best mimic natural resource use in the field, this required randomized controlled matching of participants (or participant teams) and dynamic calculations between each period, to enable participants to learn about the behavior of others. Since there was no electricity or network available in the field, we successfully relied on a robust battery powered local network, a new generation of experimental software, and portable tablet computers to create a connected and interactive lab-in-the-field experiment, even in remote fishing villages.
The lab-in-the-field experiments in Chile that aimed to measure the relationship between risk preference and risk exposure among resource fishers required input about the variability of their target species. We then combined this experimental data with a statistical analysis of a large data set of Chilean harvesting events (spanning over several years with daily frequency) and developed an applied theoretical model to illustrate the long-term dynamic consequences of our empirical results, describing the full circle of modern methods used in environmental and resource economics in one single project.
The theoretical work in part [A] of the project replicates results from a commonly used dynamic model of an ecosystem with tipping points and early warning signals and takes this as the starting point for making and end-to-end connection to the decision-theoretic optimal management problem of maximizing utility derived from such a model ecosystem. This interdisciplinary integration allows us (i) to show how one can operationalize early warning signals (EWS) of tipping points for ecosystem management, (ii) to offer guidance on how to design early warning systems, and (iii) to uncover a surprising tension between better information and the risk of collapse.
We ran multi-period behavioral experiments and comprehensive survey questionnaires with individual fishers and teams of fishers in Tanzania. To best mimic natural resource use in the field, this required randomized controlled matching of participants (or participant teams) and dynamic calculations between each period, to enable participants to learn about the behavior of others. Since there was no electricity or network available in the field, we successfully relied on a robust battery powered local network, a new generation of experimental software, and portable tablet computers to create a connected and interactive lab-in-the-field experiment, even in remote fishing villages.
The lab-in-the-field experiments in Chile that aimed to measure the relationship between risk preference and risk exposure among resource fishers required input about the variability of their target species. We then combined this experimental data with a statistical analysis of a large data set of Chilean harvesting events (spanning over several years with daily frequency) and developed an applied theoretical model to illustrate the long-term dynamic consequences of our empirical results, describing the full circle of modern methods used in environmental and resource economics in one single project.
The theoretical work in part [A] of the project replicates results from a commonly used dynamic model of an ecosystem with tipping points and early warning signals and takes this as the starting point for making and end-to-end connection to the decision-theoretic optimal management problem of maximizing utility derived from such a model ecosystem. This interdisciplinary integration allows us (i) to show how one can operationalize early warning signals (EWS) of tipping points for ecosystem management, (ii) to offer guidance on how to design early warning systems, and (iii) to uncover a surprising tension between better information and the risk of collapse.