The co-evolution of renewable natural resources and informal institutions, and the implications for government policy design

Concise summary Key objectives: This research projects starts from the observation that in some instances, government intervention is effective in conserving renewable natural resources (specific species, or more generally biodiversity), but not in others. The key objective of this project is to identify the factors that determine failure or success. We argue that government intervention does not necessarily take place in a vacuum; sets of local self-enforcing rules (also known as informal institutions) may exist that govern resource use. Success or failure of government intervention depends crucially on whether this intervention strengthens or weakens the local set of regulations. Approach: We hypothesize that these informal institutions are shaped by the state and dynamics of the natural resources and hence co-evolve with these resources. Hence, to infer whether government intervention strengthens or replaces informal institutions, one must take into account the biological aspects of the environment in which these informal rules and government policies operate. We combine mathematical biology with economic modeling and behavioral experiments, to obtain a unique mix of methods allowing us to address the research topic. Innovation: Our approach is innovative as we explicitly take into account that the institutional setting is not an exogenous constant (as does the bulk of the literature on the ?economics of? nature conservation); informal institutions that shape extraction and conservation decisions of resource users are affected by the state of the resource itself, and hence by past and present resource use. Informal institutions are also affected by other factors such as market conditions and ecological interdependencies between economic activities, as well as by government policy. Over time, institutions are therefore determined endogenously through the interplay between economic, social and ecological forces. The project thus requires close cooperation between natural and social scientists. Relevance This research project contributes to all three goals of the programme ?Evolution and Behaviour?. It increases our insight into the evolutionary basis of human behavior as it analyzes how informal institutions are shaped by the interaction of humans with their natural environment. It introduces evolutionary considerations into policymaking as it addresses under what circumstances formal government intervention can be ineffective as it may crowd out self-regulation. Third, the execution of this research project is explicitly interdisciplinary and stimulates close cooperation between economists and mathematical biologists.