Decentralization, market integration and efficiency-equity trade-offs: Evidence from Joint Forest Management in Ethiopian villages

Extant literature on Joint Forest Management (JFM) impact evaluation has concluded that it \ngenerally does not provide sufficient incentives to justify the costs that forest use restrictions \nimpose on local people. However, there is a dearth of evidence concerning whether alternative \nJFM intervention with improved market linkages for non-timber forest products has similar \nimplications. In this study, we evaluated the income and distributive effects of a JFM program in \nEthiopia in which additional support was provided for improved market linkages for non-timber \nforest products (NTFPs). Exploiting exogenous variation in customary rights across eligible \ngroups of communities that participate in JFM programs, as well as using heteroskedasticitybased \ninstrumentations, we identified the income and distributive effects of the program. Our \nanalysis shows that the program has raised the income of the households who chose to \nparticipate by approximately 400 Ethiopian Birr or 26% of per capita expenditure; that result was \nrobust to various specifications. We also found that this effect is largely driven by marketing \nincentives to use non-timber forest products. However, we found that the program’s benefit is biased toward the upper end of the income distribution, a result that points to the inequality-reinforcing effects of the program.