The climate change agenda is more important in global politics today than ever before. This research set out to examine whether community forest management (CFM) can play a signifi cant role in reducing global emissions, by taking Nepal’s community forestry sector as a case. The thesis selects three community managed forests in Nepal’s Himalaya region to investigate the extent to which management of such forests by the local communities can successfully contribute towards reducing global atmospheric CO2 concentration (Chapter 1). The results of this analysis are used to make policy recommendations as regards the formulation of the new climate treaty that is expected to replace the Kyoto Protocol (KP) after 2012. The thesis shows that climate change can be viewed essentially as a market failure and explains that, as a result, global efforts to mitigate this change are also based on market mechanisms. It is certainly expected that the new treaty to replace the KP will be also market oriented. Climate is a global public good or common resource that requires international management, so the nations have jointly developed the KP to combat the dangers of climate change by regulating emissions. This has largely been done through a cap-and-trade mechanism. This limits the emission levels a country or an industry can emit and then allows individual countries or fi rms to buy and sell credits.