LAUSR

A small literature investigates the co-evolution of culture and institutions (formal regulation). We present new micro-level evidence on the relationship between culture and institutions in forest resource management. Using data on forest user groups in Ethiopia, we document a negative correlation between various measures of trust and the degree of formalization of forest monitoring and extraction. Additional analysis suggests the nature of this relation is causal: groups with low level of trust implement more extensive rules to govern monitoring and extraction of their forest resource. This is consistent with the idea that trust and rules are substitutes in natural resource management.