In Nepal, the number of Forest User Groups (FUGs) and areas of community forest are increasing every year. If these FUGs and community forests are managed properly, they can provide many direct and indirect benefits to the local communities on a sustainable basis. Forests are an integral part of the farming system and ecosystems of Nepal, therefore the sustainability of the two are inseparable. This case study illustrates the importance of a range of social and economic indicators, in addition to the usual environmental indicators, as a measure of sustainability. The identification, quantification and valuation of the costs and benefits associated with the management of a community forest can help the FUG to monitor the sustainability of their management regime. In the case of the Chuliban community forest, the distribution of these costs and benefits among the different forest users was found to be a particularly critical factor that could lead to the long-term success or failure of the FUG.
