Is the Contribution of Community Forest Users Financially Efficient? A Household Level Benefit-Cost Analysis of Community Forest Management in Nepal

Abstract

"Community forestry in Nepal is considered an exemplary forest management regime. However, the economics behind managing a community forest is not fully studied. This study examines whether the benefits generated from community forest management justify the contributions of forest users. The study is based on a survey of community forest users in Chitwan, Nepal. A household level benefit-cost analysis was performed to quantify and compare the costs and benefits from community forest management. Only direct benefits were included in the analysis. The study shows that older forest user groups derive more benefits to households compared to more recently established ones. The extent of timber harvesting also substantially influences the size of the household benefits. In addition, redistribution of benefits at the household level, in terms of income generating activities and payment for involvement in forest management activities, also enhances household benefits. Sensitivity analysis suggests that the current practice of community forest management enhances the welfare of rural households in this subsistence community. However, this finding is sensitive to assumptions regarding the opportunity cost of time. The study also found that the household costs of community forest management depend upon two factors – the area of community forest and the size of the forest area relative to the number of households."