Community forest management in Nepal: Saving the forest at the expense of the poorest

Globalization, population pressures and consumptive choices coincident with higher incomes have induced an urgent search for optimal management techniques as indigenous resources have become increasingly accessible and hence more vulnerable to over-exploitation. Devastating losses of forest cover and persistently high rates of deforestation in south Asia have led governments to devolve authority over forest management to the community level.;The case study literature suggests that community forestry has managed to halt degradation but that the expected benefits from community level resource management and exploitation have been unevenly shared within the communities, with the poorest most negatively-impacted, as unexpected consequences of behavioral responses to the institutional shift percolate throughout the economy.;This study presents a model of a forest-based community that is heterogeneous along several axes and undergoes an institutional change in its resource management regime. Calibrated to yield results emerging from south Asian experience, it allows us to experiment with parameter changes to simulate policy options with the aim of understanding how the implementation of community forestry affects household behavior, household welfare and community distributional equity.;The inferences are tested on empirical data from Nepal, which implemented a widespread institutional change in the early 1990s and which thus becomes an ideal laboratory for research on outcomes of that change. First, an analysis of household behavioral responses to varying levels of devolution is conducted, followed by an examination of the effect of this institutional shock on household welfare and distributional equity.;Our findings indicate that for a transitional period there is a substantial loss in terms of income growth but that this loss is gradually eliminated. Further we find some evidence to support the hypothesis that inequality in several income and asset categories increases in the short term. Given that the authority for forest management is increasingly being devolved to the local level, these results suggest that welfare and equity considerations should take a more prominent role, particularly in developing countries where those populations are dependent on natural resources for their livelihoods and thus have little welfare to cede, even in the short term.