The failure of a centrally controlled bureaucratic system of classical forestry, and the existence of informal indigenous forest management provided the impetus for institutional innovation in Nepal’s forestry sector. Successive refinement of partnership arrangements between local communities and the state forest agency based on practices in the field, and mutual assessment of the results has led to the growth of community forestry.

The initial phase of community forestry in Nepal was geared towards assigning responsibilities and rights of local forest management to the village level political bodies’ i.e Panchayat with the enactment of the Panchayat Forest Rules and the Panchayat Protected Forest Rules, 1978. It was based on protecting and planting
trees to meet the forest product needs of the local people based on the principle of ‘gap analysis’.

Three years of rigorous study and consultation in the preparation of the Master Plan for the Forestry Sector (MPFS), in addition to the first national level workshop on community forestry held in 1987 laid the foundation for handing over forests to groups of traditional forest users so that they could meet their basic forest product needs and at the same time conserve these forests. Reorientation of foresters was also considered essential for the sustainable management of these community forests. The MPFS further stressed that participation of local communities in decision-making and benefit sharing was essential for the conservation of forest management.

The endorsement of MPFS in 1988 and the political regime change in 1990 were instrumental in the formulation of new forest act in 1993 and forest regulations in 1995. By the early 1990s, however, continued experiential learning had started to highlight deficiencies in the legislative framework under which the community forestry model was being implemented. In particular, the key role of the Panchayat as a local institution began to be questioned. Panchayat were often large (geographically and in terms of population) and tended to be dominated by the traditional elite in rural society (wealthier, better educated, male and high caste). It was found that actual management of community forest and day-to-day decision-making on how the forest was to be developed and used would improve if they were undertaken by those people most directly affected by such decisions and prepared to contribute time and inputs into what they considered as their local resource. Thus, the concept of ‘forest users’ arose, i.e. those local people who traditionally used a particular patch of forest. Subsequently, community forestry became based around the community forest user groups (CFUGs) rather than the panchayat. Much effort during the early 1990s thus became focused on basing community forestry at the community level and seeking ways to bring such disparate groups together into CFUGs.

The Forest Act 1993 provided a clear legal basis for community forestry, enabling the government to ‘hand over’ identified areas of forest to CFUGs. The procedures were later detailed in the 1995 Forest Regulations, backed by the Community Forestry Operational Guidelines 1995. According to the Forest Act and the associated Forest Regulations, CFUGs are legal, autonomous and corporate bodies having full power, authority and responsibility to protect, manage and utilize forest and other resources as per the decisions taken by their assemblies and according to their self prepared constitutions and operational plans (with minimal scope for interference from the state forestry agency). Although all benefits from community forests would go to the CFUGs concerned, the land legally remained part of the state.