There is almost a consensus that Nepal's Terai forests, which comprise some of the last remaining natural forest reserves in Asia, suffer from the problem of "bad governance". The problem of Terai Forest governance sits oddly with the widely hailed success of Community Forestry (CF) in the hills. Despite second generation issues related to equity and inclusion, community forestry in the hills is by and large considered a successful program in Nepal.

The opportunity costs of not properly managing Terai forests comes around Rs 13 crore everyday and this loss over 15 days is equal to annual foreign aid amount in Nepal's forestry sector. The social costs are also immense: poor, marginalized, women, and madhesis are being denied access to material benefits from forests; in addition, these groups are also being subjected to second-grade identities of lakadi chor (timber smuggler), ban mara (forest destroyer), daure (firewood seller) and the like, when they seek to earn livelihoods by utilizing forest products. The ecological cost is also equally high: significant size of forest areas are being cleared for non-forestry purposes. Annually 8000 ha of forestland are converted to non-forestry purposes, mainly for subsistence agriculture, the condition of existing forest is being deteriorated, and the old growth whenever intact is in stagnation (leading to reduced annual increment).

Why Nepalese government and civil society fail to craft proper governance that could address these problems and generate opportunities for sustainable, equitable and efficient management? Why did the actors who developed successful CF model in the hills fail in the case of Terai? The attached paper analyzes the underlying dynamics of the problem and explores the opportunity for transforming governance.