The present article examines the relationship between community forest management policies on the one hand, and income and unemployment in rural areas of Nepal on the other, by modeling the effect of forest management constraints on community forest use. Current government policy dictates the use of all community forestland for environmental conservation and limited timber production, and provides little scope for fodder and firewood production. Based on data from 259 households in six community forest user groups in three 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 utilise the family labour force of many rural households, and are insufficient to generate a bare subsistence income for the poorest households. The study shows that a policy 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.
