This report examines the impact of the use of forest products on biodiversity and the sustainability of agricultural production systems in Nepal, and the costs and benefits of these practices to a household, the nation, and the global community. The report is divided into an introduction and four chapters. The introduction presents the objectives of the study and background information. The first chapter outlines the approach and analytical framework, presenting the three scenarios used to develop analytical models and the implications of these for biodiversity and agricultural production. Chapter 2 presents the methods used and the results of economic and financial analyses of alternatives. Chapter 3 discusses the analytical results in relation to national economic and other policies and to social, institutional, legal, or technical issues. The final chapter discusses strategies for change and examines investment needs to bring about these changes.