leasehold forestry, exclusion, collective action, poverty alleviation, devolutionNepal’s Hills Leasehold Forestry and Forage Development Project leases forestland to small, organized groups of rural households. Effective community management of forestland requires the capacity to exclude other potential resource claimants. Through institutional analysis of a single leasehold forest case-study, we argue that exclusion by small groups is difficult, especially for the poorest of the poor. We recommend ensuring adequate provisions for meeting the forest product needs of the poorest within the context of community forestry as a more effective poverty alleviation and conservation strategy. In addition to community forestry-based forest access, poor farmers need a leasehold program for farmland that would enable food self-sufficiency.