Vague thoughts considering the government system...
I haven't yet tried the game. Only read the news and descriptions. And it of course feels an awesome idea.
Just imagine: such a social experiment!
But when I got to the description of perspectives of law enforcement I wondered...
Of course, punishment is the most popular mode of control of other people's behavior, but it's not the only one! There's reinforcement also! The designers of the game (understandably) make the same mistake our governments and parents and teachers and trainers make! Why not try another way, at least in the game?!
If you want to reduce chopping wood, reinforce (reward) other activities, incompatible with woodcutting, and reduce reinforcement of woodcutting.
Even more: why not provide ingame tools for BOTH modes of control?..
Of course this needs further elaboration.
My personal opinion: the designers of the game SHOULD read B.F. Skinner's "Contingencies of reinforcement". Google it, it's worth it.