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The Link Between Community Forestry Policies and Poverty and Unemployment
in Rural Nepal
Author(s): Bhubaneswor Dhakal, Hugh R. Bigsby, and Ross Cullen
Source: Mountain Research and Development, 27(1):32-39.
Published By: International Mountain Society
DOI: http://dx.doi.org/10.1659/0276-4741(2007)27[32:TLBCFP]2.0.CO;2
URL: http://www.bioone.org/doi/full/10.1659/0276-4741%282007%2927%5B32%3ATLBCFP
%5D2.0.CO%3B2
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Introduction
One way of achieving the Millennium Development
Goals (alleviating suffering from chronic hunger, social
inequalities, and disease, and providing incomes suffi-
cient for basic goods and services) is to increase house-
hold income and employment based on locally available
natural resources. This is particularly true in mountain-
ous regions, where there are many limitations on pro-
moting the industrial and service sectors (Wymann von
Dach et al 2006). The principles/elements of forest
management internationally agreed on at the Earth
Summit (1992) state that national policies should pro-
mote appropriate conditions that “achieve and maintain
cultural identity and social organization, as well as ade-
quate levels of livelihood and wellbeing, through, inter
alia, those land tenure arrangements which serve as
incentives for the sustainable management of forests….
Sustainable forest management and use should be car-
ried out in accordance with national development prior-
ities and on the basis of environmentally sound national
guidelines” (Johnson 1993, pp 112–113).
Of specific interest is the use of community forest
resources to complement private resources to provide
basic needs and generate household income and
employment in rural Nepal, where alleviation of poverty
is a major challenge. Although Nepal has an economy
based on agriculture, farmland occupies only 21% of
the national land area (CBS 2003; Ives 2004). The area
of farmland is not sufficient to meet employment and
food needs, and 48 out of 75 districts have a food
deficit (UNDP 2005). In addition, creation of sufficient
off-farm income and employment opportunities is limit-
ed by institutional and resource constraints (Ives 2004).
As a result, many rural people, particularly in isolated
and remote mountain areas, persistently suffer from
hunger and poverty (Ives 2004; UNDP 2005). Social
problems related to poverty and unemployment have
increased in recent years, and are worse in areas with
food deficits and where people have little access to land
(Murshed and Gates 2005). The incidence of poverty is
more pronounced for marginal ethnic groups, the
elderly, women, and children, who have little say, little
access to resources, and fewer social opportunities
(Huijbers et al 1996; Messer 1997; NPC 2003).
Forests occupy about 40% of Nepal’s land area (CBS
2003) and have the potential to be an important comple-
ment to private agricultural land in providing for local
communities. The importance of forests was recognized
in the development of the community forestry program
in Nepal, which brought management power and bene-
fits from forest resources into local communities (Min-
istry of Forest 1988). However, despite the establishment
of more than 13,000 forest user groups, the impact of the
community forestry program on reducing rural poverty
and unemployment is debatable (Dhakal 2005). There
have been improvements in physical forest resources and
the environment, and flows of community development
funds from sales of forest products (Dongol et al 2002;
Gautam et al 2002; Dhakal 2005). However, parallel with
this, there has been a reduction in fodder and firewood
supplies (Malla 2000; Dhakal et al 2005), and household
income, employment, and livestock holdings have
decreased (Bhatta 2002; Timilsina 2003). Since wealthier
households have sufficient private landholdings to pro-
duce their own fodder, the effects of these reductions
appear to have been disproportionately felt by the poor-
est households, women, and minorities (Agrawal 2001;
Adhikari et al 2004; Dhakal 2006; Maskey et al 2006).
These negative outcomes raise a question about why
devolution of management of public forestlands to com-
munities and the addition of resources have generally not
resulted in a significant increase in living standards.
The answer to this question requires a framework that
can incorporate the interaction of community forest
The present article
examines the relation-
ship between commu-
nity forest manage-
ment policies on the
one hand, and income
and unemployment in
rural areas of Nepal
on the other, by model-
ing the effect of forest
management con-
straints on community forest use. Current government
policy dictates the use of all community forestland for
environmental conservation and limited timber produc-
tion, and provides little scope for fodder and firewood
production. Based on data from 259 households in 6
community forest user groups in 3 hilly districts
(Dolakha, Kavre, and Nuwakot), the results show that the
resources available from private lands and community
forests under current policies are inadequate to fully uti-
lize the family labor force of many rural households, and
are insufficient to generate a bare subsistence income
for the poorest households. The study shows that a poli-
cy change to community forest management using a
more flexible agroforestry model could overcome rural
unemployment problems and increase incomes while
ensuring sustainable resource use from the forests.
Keywords: Community welfare; community forestry;
rural unemployment; forest policy; rural poverty; welfare
maximization model; Nepal.
Peer-reviewed: November 2006 Accepted: November
2006
The Link Between Community Forestry Policies
and Poverty and Unemployment in Rural Nepal
Bhubaneswor Dhakal, Hugh R. Bigsby, and Ross Cullen
32
Mountain Research and Development Vol 27 No 1 February 2007: 32–39
Research
33
resources with local economies, and the effect of national
forest policies on community forest management. One
such framework is a constrained welfare maximization
model. The remainder of this article outlines a welfare
model of a community forest user group in Nepal, and
the results of a study of the effects that different con-
straints on community forest use have on income and
employment for a number of forest user groups in Nepal.
Modeling community forest-based households
Household income depends on the outputs produced on
private land (ap), community forestland (ac), and house-
hold labor endowment (L). Use of community forestland
is constrained by government policy (G). The generalized
decision-making problem for a household is then to
Maximize y =
Subject to and Xj≥0
where y is household income, Xjis a vector of decision
variables (ap, ac, L, G), Arj is a constraint function with r
linear constraints and jdecision variable matrices, bris a
constant, and Xj≥0 denotes non-negativity of the deci-
sion variables. The specific model of community
forestry used in the study is outlined below.
Household production system
In this model, it is assumed that a production (cropping)
system can produce more than one product simultane-
ously and that marginal products are constant. Output of
any good iunder production system ton land type kis a
function of yield per unit area with a production system
on a land type (gitk) and the area of land type kallocated
to a particular production system by a household (atk).
Land can include private land, land used under share-
cropping, and common forestland. Products may be a
single output from a production system or by-products.
Total output of any particular good by a household (qi)
is then a function of how much land of various types the
household allocates to different production systems.
In a subsistence agricultural household, it is
impractical to separate household production from
household consumption. In this model, only labor that
is hired (Lh) and production inputs that are purchased
(I) are accounted for as costs. Household labor require-
ments for a particular output will be either a function
of labor hours required per unit area (hatk) and the
area of land type kallocated to a particular production
system tby a household (atk), or a function of output
(qi) and harvest productivity for that good (hvi). Total
household labor (L) required is then
The amount of hired labor (Lh) required is a function
of available family labor (Lo) and the total household
labor (L) requirement (Lh = L – Lo).
Net household income (y) is the difference between
revenue and cost. In addition to producing output qiwith
a farm-gate price of Pi, households are able to earn exter-
nal income in the labor market (Lm), earning a wage rate
(w). In practice, a household will either earn outside
income (Lm) or employ outside labor (Lh), but will not
do both. A household can also buy products (food, fire-
wood, timber, and fodder) in the market (qmi) at market
prices (pi). Market prices will be higher than farm-gate
prices (pi> Pi). Total net income for a household is then,
Community welfare
In this model the community is structured as mdiffer-
ent income groups with nhouseholds in each group.
Income groups are categorized as poor (P), medium
(M), and rich (R), based on sufficiency of household
income from private landholdings to meet basic needs.
In this study, poor households are defined as having
insufficient private land to meet basic needs, medium
households have just sufficient land, and rich house-
holds have a surplus of land to meet basic needs. The
community forest can be managed for joint benefit and
treated as another income group/household, or it can
be treated as semi-private land if rights are allocated to
individuals to make individual decisions over a particu-
lar area. The objective is maximization of community
income (Y) across all households in each income
group, including from community managed forests and
all products subject to a number of constraints.
Maximize Y =
Subject to
yy
xz xz
0
≥
q=
d
ixz ix z
LL
hxz
z=1
m
x=1
n
mxz
z=1
m
x=1
n
∑∑∑∑
≥
L
+
L
+
LL
fxz cxz mxz xz
≤
a=a
xztk k
t=1
r
z1
m
x=1
n
∑∑∑
=
yxz
z=1
m
x=1
n
[]
∑
∑
y= P q L w L
ii h
t=1
m
k=1
n
i=1
r
m
×
()
−×
()
−
⎡
⎣⎤
⎦+×
∑∑∑ Iww- p q
i
m
i=1
r
i
()
×
()
∑
L= h a h q
a
tk tk
k1
n
t=1
m
v
ii
i=1
r
×
()
+×
()
=
∑∑∑
q= g a
i itk tk
t=1
m
k1
n
×
()
∑∑
=
j
J
rj jr
AX b
=
∑≤
1
f a ,a ,L,G
pc
()
Bhubaneswor Dhakal, Hugh R. Bigsby, and Ross Cullen
Mountain Research and Development Vol 27 No 1 February 2007
34
The constraints are as follows: The total amount of
land type kused by households xin income groups z
and production systems tcannot exceed the total
amount of that land type available in the community
(ak). Labor allocated by any household xof income
group zto their own farm (Lfxz), to community forest
activities (Lcxz), or to outside employment (Lmxz) can-
not exceed available labor for that household (Lxz).
Employment opportunities are limited to what is avail-
able in the community, so off-farm employment (Lmxz)
cannot exceed local employment opportunities (Lhxz).
Households are required to have minimum amounts
(dixz) of certain goods to meet basic food, heating,
and housing needs. There is also a restriction against
making individual households worse off to maximize
community income.
The potential to alleviate poverty and unemploy-
ment was evaluated by modeling the effect of different
policy scenarios relating to the use of community
forests (Table 1) and comparing this to the effect of
current policy. Although the alternative policies are
notionally unconstrained, since the objective is to main-
tain environmental benefits, cereal production is con-
strained to private land, and the only unconstrained
activities allowed on community forests are some combi-
nation of fodder, firewood and timber production. As
such, the alternatives represent an unconstrained agro-
forestry alternative. A number of studies have shown
that agroforestry models provide sustainable land uses
which contribute to biodiversity conservation, carbon
sequestration and soil erosion control (Narain et al
1997; Montagnini and Nair 2004; McNeely and Schroth
2006). In the agroforestry model used in this study,
trees are assumed to cover 40% of the land area and the
cut-and-carry method is used for fodder supplies. As
Gilmour et al (1987) showed, a reduction in forest cov-
er makes little contribution to soil erosion unless there
are very high livestock numbers or overgrazing. Since
this study assumes a system where there is no grazing,
fodder production should not disturb the soil. Yield
information for the agroforestry parameters in the
model are from the Master Plan (Ministry of Forest
1988) for firewood, fodder, and timber yields, and from
Paudel and Tiwari (1992) for fodder yield using the cut-
and-carry method. Forest product consumption infor-
mation was obtained from Mahat et al (1987) and the
Master Plan (Ministry of Forest 1988).
Data
Data for the model were collected using household sur-
veys, user group surveys, and secondary sources. For the
study, 6 community forest user groups in 3 districts
(Dolakha, Kavre, and Nuwakot) of the mid-hill region
of Nepal were selected on the basis of representative
forest condition, type of forage gathering practices, age
of the user group, forest size, and level of access to dis-
trict forest office services. For the household surveys, a
structured questionnaire was administered to female
heads of 259 farming households in May–July 2003. The
respondents were asked a range of questions, including
the size of landholdings for all types of private lands,
including share cropping, level of food sufficiency, fam-
ily size, household labor, livestock holdings, and fire-
wood and timber collection from community forests.
Table 2 outlines the main characteristics of the case
study user groups. The average landholdings of those
covered by this survey are relatively high
compared to the National Agricultural Survey 2002,
which found 0.68 ha per household (hh) in Dolakha
Policy Description
Current policy The forest is managed collectively but is only used for timber production. User groups
are allowed an annual harvest of only 30% of mean annual increment (MAI) for hard-
woods and mixed deciduous forests, and 50% of MAI for pine forests. Firewood and fod-
der collection are permitted from residual products.
Unconstrained community use The community forest is modeled as a separate household in the community, maximizing
its income through sales of outputs, and with no constraints on use for firewood, fodder,
or timber. Since the community forest has no labor supply, it must employ others for pro-
duction. As is common practice, households can purchase community forest output at a
lower price than the market price to meet home consumption needs, with surplus prod-
ucts sold outside the local market.
Unconstrained lease Similar to the unconstrained community use case, there are no constraints on use of
community forest for firewood, fodder, or timber. However, in this scenario the community
forest can be leased to individual households. This allows households with surplus labor
to use community forests as if the land was under private management, effectively
increasing the land available to a household. The community earns rent on the area
leased to households, and earns income from products produced on the land remaining
under community management.
TABLE 1 Policy scenarios.
Research
35
District, 0.55 ha/hh in Karve District, and 0.53 ha/hh
in Nuwakot District (CBS 2003).
Incomes in the model are estimated assuming that
all forest user groups fully use their timber product
allowances up to the government policy limit. However,
the Bidur user group is currently unable to fell any tim-
ber because they have not done a mandatory forest
inventory. For policy modeling, this constraint is main-
tained under the current policy option, but removed
for the other options. In each user group, households
were grouped into poor, medium, and rich categories
based on level of household food sufficiency from pri-
vate landholdings obtained in the survey. For the pur-
poses of this study, households with a food deficit are
classed as poor, those with just sufficient food are
classed as medium-income, and those with a food sur-
plus are classed as rich.
Data common to all households, such as yields,
prices, or labor requirements, were collected from local
market surveys, key informants, and secondary sources
(Dhakal 2005). In addition, it was necessary to make
some assumptions due to a lack of data. In particular, it
was assumed that a person is available to work only 265
days in a year, and that all households practice the cut-
and-carry method of fodder collection from community
forests to feed their livestock. This practice generally
requires more labor than other grazing practices.
Results and discussion
The results are presented in terms of changes in
income, employment, and land use patterns for each of
the forest user groups with each policy.
Income
Figure 1A shows household income under the current
policy. The vertical bars are average household incomes
for each income group, which includes both on-farm
and off-farm income. The horizontal Basic Need line is
household income required to provide the minimum
calorific intake and other non-food items essential for
survival. This survival income figure is estimated to be
NRs 6725 (US$ 93) for a person in 2003 and was calcu-
lated from the National Planning Commission Survey
2001 (NPC 2003) and 5% inflation. The minimum
income needed in each forest user and household
income group varies due to differences in the number
of consumer units in households (family members
under 15 years old were considered equivalent to half
an adult). Under the current policy, the incomes of all
poor households are below the minimum required for
survival. For medium-income households incomes are
reasonably sufficient. In all user groups the incomes of
rich households are more than enough for minimum
needs.
Figure 1B shows household incomes for households
under the unconstrained community use policy. Com-
pared to the current policy case, all incomes generally
increase, with the greatest increase for poor house-
holds. The income of poor households increased by
72% in the Banshkharka group, and nearly 50% in the
Khorthali, Chapanigadi and Bidur groups. The income
level of poor households in the Chapanigadi, Bansh-
kharka and Suryamati groups were now above the mini-
mum level required for survival. The medium house-
holds in all user groups also gained income to some
extent. Even for the rich households, income increased
in 4 out of 6 user groups. This indicates that the
incomes of many poor households could be increased
above the minimum needed for survival under a policy
of unconstrained community management.
Figure 1C shows household income under the lease
policy. The income increase under the unconstrained
lease policy alternative was greater than that under the
unconstrained community use policy. Again, the great-
est income increase was for poor households, ranging
from 44% in the Suryamati group to 110% in the Ban-
shkharka group. Medium-income households also
increased their incomes almost in the same proportion.
The greatest income increase for rich households was
about 47% in the Banshkharka group but was almost
zero in other groups.
TABLE 2 Characteristics of forest user groups surveyed (May–July 2003; HH = household).
Forest user
groups
Private landholdings (ha/HH) Average
community forest
area (ha /HH)
Labor force
(person/HH)
Consumers
(unit/HH)
Estimated altitude
of locality (m asl)
Poor HH Medium HH Rich HH
Khorthali 0.40 1.06 2.03 0.35 3.4 4.6 1800–2600
Siddeswori 0.24 0.78 2.06 0.42 3.0 6.0 800–900
Chapanigadi 0.67 1.03 2.75 0.90 3.6 6.2 1200–1400
Banshkharka 0.46 0.76 1.08 0.83 3.1 4.9 1300–1500
Bidur 0.29 0.88 1.18 0.62 3.3 8.6 700–1000
Suryamati 0.42 0.73 0.93 0.62 2.8 5.9 700–800
Bhubaneswor Dhakal, Hugh R. Bigsby, and Ross Cullen
Mountain Research and Development Vol 27 No 1 February 2007
36
In general, the results indicate that poor house-
holds could meet their survival income from a combina-
tion of farm and community forest resources if all poli-
cy constraints on land use were fully relaxed and user
groups were allowed to maximize income. Except for
the Khorthali and Bidur user groups, the incomes of
poor households were above the minimum survival lev-
el. In the Khorthali user group, low productivity due to
location in a high-altitude region and relatively less
community forest area are the main reasons why
incomes for poor households are still below survival lev-
els. In the Bidur user group, relatively larger family
sizes for poor households is one of the main reasons
why incomes are insufficient for survival level. For both
of these user groups, local resources are not sufficient
to support these communities.
Employment
For each policy alternative, unemployment was calcu-
lated for rich, medium, and poor households. The
community forest (Common) was also treated as a
household that must employ labor to carry out com-
munity forest activities on the land it manages. Com-
mon practice is that members of Community Forest
User Groups (CFUGs) are required to contribute
some labor towards management of the community
forest, and this is incorporated in the model. Labor
demand for community forest management is the net
demand after allowing for household contributions as
part of their membership in the CFUG. Since each
household type may have a labor surplus or deficit and
thus either be employed by or employ labor from oth-
er households, there will also be a net unemployment
level for the community as a whole (Net Community).
Figure 2A shows unemployment levels under cur-
rent policy. There is a large variation in unemployment
across user groups and across household income
groups. However, in all user groups there was net unem-
ployment in the community. In all cases, poor house-
holds faced the greatest unemployment, but even medi-
um-income households are affected in most user
groups. In the high-altitude Khorthali and Banshkharka
user groups, even rich households face unemployment.
A key factor for most user groups is that the direct
employment contributions of the community forest are
small.
The unemployment status under the uncon-
strained community use policy is shown in Figure 2B
and under the unconstrained lease policy in Figure
2C. Under these policies there is no unemployment in
any group except for the poor and medium-income
households of the high-altitude Khorthali user group.
Other than the Khorthali user group, communities
now experience labor shortages. In most cases labor is
employed for community forest work. The main differ-
ence between the unconstrained community use and
unconstrained lease policies is that there is generally
no labor shortage problem with the unconstrained
lease policy.
In summary, under the current policy there is
about 30% community unemployment. The unemploy-
ment of almost all user groups is reduced to zero
under the unconstrained lease and unconstrained
community use policy alternatives. The key difference
FIGURES 1A–1C 1A: household incomes under current policy (NRs 72 = US$ 1.00). The
Basic Need line is household income required to provide the minimum calorific intake and
other non-food items essential for survival, estimated to be NRs 6725 (US$ 93) per
person in 2003. 1B: household incomes under the unconstrained community use policy
(NRs 72 = US$ 1.00). 1C: household incomes under the lease policy (NRs 72 = US$
Research
37
is that a labor deficit appears under the unconstrained
community use policy but not under the uncon-
strained lease policy. The difference is determined by
production costs in terms of labor requirements. More
labor days are required for buying fodder, timber, and
firewood from the community forest under the uncon-
strained community use policy than for individually
producing and collecting it under the unconstrained
lease policy.
Land use change
Land uses under the different policy scenarios are
shown in Table 3. The area in all cases is a combination
of private and community forest areas. In each case the
area used totals less than 100%, with the residual being
areas allocated to homestead use. Under current poli-
cy, land is generally allocated equally to either food or
timber production. This reflects the focus on timber
production in community forests under the current
policy.
Under the unconstrained community use and
unconstrained lease policies, there is a major shift in
the use of community forest land from timber to fod-
der production. The main cause of this is that timber
is the least profitable use and fodder production the
most profitable. Log production on only a small pro-
portion of the community forest is sufficient for all of
the required household timber needs in the 5–8% of
total area. Where there is still significant production
of timber in some communities under the uncon-
strained lease policy, this is associated with a scarcity
of labor that makes it infeasible to allocate more area
to fodder production. The results also show substan-
tial shifts in land use to firewood production in some
user groups. This is generally related to the needs of
poor households who have limited access to land and
to the availability of fuels produced as a by-product of
other activities.
Conclusions
This study examined the potential of community forest-
lands to increase income and employment in rural com-
munities while ensuring sustainable use of the forests.
This was done using a welfare maximization model that
maintained conservation outcomes through explicit
constraints on use of community forests which reflected
particular production and environmental outcomes (eg
agroforestry systems) while maximizing income. The
essence of the problem is that the private landholdings
of most rural households are insufficient to provide
bare subsistence income and inadequate to utilize fami-
ly labor. The results show that under current forest poli-
cy, community forestland has been over-allocated
towards timber production relative to how user groups
would allocate land to maximize income. To make com-
munities better off, policies need to be changed so that
communities can make decisions about the best mix of
land use.
The results here show that user groups would shift
to fodder production in community forests. An
increase in fodder supplies from community forests
increases livestock farming, which in turn increases
household income, manure supply, and food produc-
tion. This land use model is particularly beneficial in
high-altitude and isolated communities where the inci-
dence of food deficits and poverty is highest. In addi-
FIGURES 2A–2C 2A: household group unemployment rates under the current policy.
2B: unemployment rates under the unconstrained community use policy. 2C: household
group unemployment rates under the lease policy.
Bhubaneswor Dhakal, Hugh R. Bigsby, and Ross Cullen
Mountain Research and Development Vol 27 No 1 February 2007
38
tion, fodder and firewood are collected daily—gener-
ally by women—and adequate supplies of these prod-
ucts could reduce women’s workloads. Since fodder
production is based on an agroforestry land use mod-
el, this change should have little effect on environ-
mental services while increasing income and employ-
ment.
The implication of this study is that the restric-
tions on use of community forestland limit the poten-
tial to significantly meet local income and employ-
ment requirements, and in particular address the
plight of the poorest households. To make socially dis-
advantaged people (women, high-altitude communi-
ties, and poor households) better off, the Nepalese
government should consider at a minimum allowing
communities unconstrained use of their community
forests for agroforestry as well as timber uses. To have
a much greater impact on rural unemployment, the
government should consider a policy change that
allows user groups to lease community forestlands to
individual households based on their needs and ability
to use land.
User group
Uses
Policy
User group
Uses
Policy
Current
Unconstrained
community
Lease
Current
Unconstrained
community
Lease
Khorthali
Food 67 66 67
Banshkharka
Food 40 40 40
Fodder 124 24 Fodder 653 46
Firewood 000 Firewood 005
Timber 31 8 8 Timber 52 6 7
Total 98 98 98 Total 99 98 98
Siddeswori
Food 60 59 59
Bidur
Food 42 43 42
Fodder 227 26 Fodder 144 35
Firewood 456 Firewood 718
Timber 32 7 7 Timber 48 11 13
Total 98 98 98 Total 98 99 98
Chapanigadi
Food 47 47 47
Suryamati
Food 44 44 43
Fodder 447 31 Fodder 443 28
Firewood 004 Firewood 448
Timber 48 517 Timber 47 819
Total 99 99 99 Total 98 98 98
TABLE 3 Land use by product from the survey results, in percent (rounded to the nearest whole number).
ACKNOWLEDGMENTS
We acknowledge the generous financial assistance provided by Winrock-
Nepal and Lincoln University, New Zealand, for this field survey.
AUTHORS
Bhubaneswor Dhakal, Hugh R. Bigsby, Ross Cullen
Lincoln University, Commerce Division, PO Box 84, 7647 Lincoln,
Canterbury, New Zealand.
bhubaneswordhakal@gmail.com (B.D.); bigsbyh@lincoln.ac.nz (H.B.),
cullenr@lincoln.ac.nz (R.C.)
Research
39
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