The Nepal Australia Community Resource Management and Livelihoods Project (NACRMLP) is the sixth and final phase of a forty-year partnership between the Australian and Nepali governments designed to promote reforestation in the Middle Hills of Nepal in order to decrease environmental degradation and to improve rural welfare through the development and institutionalisation of a sustainable community-based approach to natural resource management (NRM). Forests got special attention because they are at the foundation of the subsistence economy of farmers in this region. In its first stage (January 2003-January 2005) NACRMLP worked to test and refine methodologies for addressing the social, economic and environmental issues associated with second-generation control of community forests. In its second two-year stage, which began in June 2005 after a four-month interim period, it is consolidating those lessons and aiming for a smooth handover.