Collective action and heterogeneous welfare effects: Evidence from Ethiopian villages

•We examine the welfare and distributive effects of Forest Users Cooperatives (FUC) in Ethiopia.•We find that the FUC raise the welfare of the average program participating households.•We also find that this effect is heterogonous across income groups.•We argue FUC programs is not pro-poor, and, therefore, is not equity enhancing. In this study, welfare and distributional impacts associated with a forest users cooperative (FUC) programs in Ethiopian villages were examined. We employed covariate balancing propensity scores (CBPS), instrumental variable (IV) and selection models to estimate both the average treatment effect and quantile treatment effects. Our results revealed that the program was found to raise the welfare of the average program participating households and that result is robust to alternative specifications. Furthermore, the analysis confirmed that no-targeted households would similarly benefit from the program, underscoring the importance of expanding the current programs. Results of quantile treatment effect evaluations confirmed that return to the program participation is heterogeneous across income distribution. Specifically, the program was found to raise welfare only for households in the middle and uppers spans of income distribution, without bearing effect along the bottom income quantiles. This suggests that FUC programs is not pro-poor, and, therefore, is not equity enhancing.