This paper was presented by Keshav Kanel and George Varughese at the Eighth Conference of the International Association for the Study of Common Property in Bloomington, Indiana, USA, May 31-June 4, 2000.

This paper is based on research on community forestry in eastern Nepal, focused on the economic costs and benefits of community forestry at a disaggregated level. In the context of Nepal, community forests are managed by groups of rural households organized into User Groups. The Community Forest User Groups (CFUGs) make day to day decisions on how forests are to be protected, managed and utilized for long-term benefit.

The research was mainly designed to develop a methodology of economic analysis of community forestry at a disaggregated level. However, some preliminary conclusions can be drawn from the four CFUGs and their community forests. One of the conclusions is that costs and benefits of community forests differs substantially based on the type of forests and the economic status of the users. Moreover, the returns to labour also differ for different subgroups and different CFUGs. It appears that the poor do not get as much benefit from community forests as the rich. This poses a problem of fundamental policy importance to countries such as Nepal who use community-based resource management to help change the lives of the poor for the better and to help reduce disparities between the rich and the poor.