The public finance potential of community forestry in Nepal

Abstract

This paper explores the public finance potential of community forestry in Nepal on the basis of a comprehensive dataset on forest revenue and expenditures of 41 randomly selected community-forest user groups (CFUG) from Gorkha district. The results show that CFUG income distribution is highly skewed; the high- and low-income one-third of CFUGs in the sample account for 74.3 and 4.1% of the total income, respectively. CFUG income depends on age of the CFUG institution, CFUG membership size, and, in particular, on whether the community forest features the valuable timber species Sal (Shorea robusta, C. F. Gaertn.) and/or Chir Pine ( Pinus roxburghii Sarg.). CFUG expenditure pattern is also highly skewed, with 85.2% of all public services and infrastructure financed by the one-third high-income CFUGs. CFUG financing of public services and infrastructure is shaped by income, management costs, and socio-political and contextual factors, such as whether the CFUG jurisdiction covers several wards and the presence of existing public infrastructure in the community. Finally, results show that the amounts of revenue generated through community forestry are negligible when compared to households' private gains from extraction of products from community forests, indicating a limited potential for redistribution of benefits under the current taxation system.