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Nepal is a world leader in returning forest tenure rights to local people. But restrictive regulations continue to undermine communities’ attempts to establish sustainable businesses from forest products, experts say.

Following sweeping reforms in the 1990s aimed at addressing widespread deforestation, over 20,000 community forest user groups now manage 30 percent of Nepal’s forest area. That means almost 40 percent of the country’s population is involved in forest management.

Previous studies have found that as a result, forest cover has increased, as has the availability of firewood, fodder, timber and certain non-timber forest products (NTFPs).

But can these forests provide communities with income and employment too? A new study from the Center for International Forestry Research (CIFOR) examines the successes and challenges faced by a number of community forest enterprises in Nepal, which provide a range of products and services including ecotourism, timber, essential oils, handmade paper, and juice made from forest fruits.

The study found that in general, these small community-run businesses have many positive benefits. They generated income for the group, provided employment, and encouraged forest protection.

They were also inclusive, with high participation by both poor and disadvantaged members.

“Where inclusion is stronger, then outcomes will be better,” says Steven Lawry, one of the study’s co-authors and Director of CIFOR’s Equity, Gender and Tenure research portfolio. “And that’s very important in a country that’s characterized by stark social inequality along the lines of economic status, gender, caste and ethnicity.”

An enterprise producing wood-apple juice particularly benefited the Dalits (Nepal’s lowest caste), he says, who were able to collect the fruits from the forest where they live, and sell them to a nearby processing plant.

Some enterprises have been very successful. One ecotourism business that takes tourists elephant-riding through the community forest to see wildlife like rhinoceros and antelope brought in more than 200,000 US dollars per year.

Others, however, have struggled to make ends meet.


Despite Nepal’s support for community forestry, legal and administrative barriers have had a strangling effect on these small businesses, says Naya Sharma Paudel, the study’s co-author and a senior researcher at ForestAction Nepal, a Kathmandu-based forestry research institution.

“When you fell a tree from your community forest, there are at least 15 different steps to follow. You have to go to the authorities with a number of documents to get their approval, and that incurs a huge transaction cost to the community,” he says. “That makes the enterprises less viable – and they end up importing timber from Malaysia, Myanmar or Cameroon!”

Another problematic regulation is the requirement that these enterprises be based at least one kilometer from the forest boundary.

“The problem is, in the hills of Nepal, finding a place that’s one kilometer from a forest only puts you in another forest,” says Lawry. “It’s a Catch-22.”

The government has revised the rules relatively recently, and enterprises that are community-run can be 500 meters from the forest, but in the hills, finding a site that has road access, a power supply, and is half a kilometer from the forest in every direction is still difficult.

The idea behind the law, Lawry says, is to increase transparency: “If you have a timber mill deep in the forest, it can potentially evade regulation, as it can’t be easily monitored.”

The unintended consequence is that it is near impossible for communities to comply with the law. Many small enterprises, unable to find a suitable, legal place to site their production facilities, simply avoid registering with the government – and that makes them vulnerable to enforcement action and corruption, and introduces a lot of insecurity to the business.

A community group running a sawmill in the Dang district told researchers the process had disillusioned them about their real rights over the forest.

“We had felt that we were the owners of our forest and were ranked at a five [in terms of tenure security, on a scale of one to five with one being least secure]. But after being rejected after several visits to the DFO [District Forest Officer] trying to get our enterprise registered, we now feel we have been granted nothing, and that we are ranked no more than a two.”

For community enterprises to really have a chance to develop and benefit their communities, a law change is required, Paudel says.

“There are possibilities for simplifying many of the existing rules and regulations, and that would help communities to increase the performance and profitability of the businesses.”


Yet what is even more important is a change in attitude.

“All those regulations are imposed as if the forest still belongs to the government, when in fact it doesn’t,” says Paudel. “The central spirit of the tenure reform program is to fully allow communities to manage their resources and to benefit from them. So these provisions are not adequately respecting the communities’ tenure rights to the forests.”

This tension between the legal devolution of rights and older forestry regulations is a global trend, says Lawry.

“Where we see reforms that devolve property rights to forest communities, the regulatory environment frequently continues to be very restrictive of forest use.”

It is a reflection of an ongoing philosophical difference between the core goals of forest utilization and management, he says.  “Forestry departments tend to embrace a conservationist and protectionist ethic, which really reduces the scope for utilization – including the kinds of uses that the communities in Nepal are proposing, which are mainly quite sustainable, and consistent with forest conservation.”

That means that reforms that devolve forests to local people must also be accompanied by reforms to forest agencies. Forest departments can no longer merely be policing organizations and viewing forest users as law-breakers.

“Where communities have rights to use forests, we need to ask questions about what kinds of skills and services forest agencies should be offering that support sustainable use of forests by communities that now have rights,” Lawry says.

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