This research follows the manner in which State-driven, upwardly accountable, forest decentralization programs play out on the ground, and evaluates their impact on forests and local institutions, a topic of much current concern and debate. In a landscape in Nepal's Terai plains, we conducted a census of 23 co-managed community and buffer-zone forest user groups—two predominant approaches to involving communities in forest-management activities in Nepal's Terai plains—to draw statistically relevant conclusions about the relative impact of these two programs at a landscape scale. We use a multi- date Landsat TM® image classification to develop a land-cover change classification, and use this to generate objective, quantitative, biophysical indicators that enable us to assess the extent of clearing and regeneration in the forest areas controlled and managed by each of these communities. In-depth field interviews with the communities provide us with information about the impact of these initiatives on local institutions. Finally, we link these two kinds of information sets to interpret the satellite information on forest-cover change with reference to the socioeconomic processes and management rules that influence forest-cover change in these regions. Satellite image analysis shows the regeneration of several patches of forest that are managed within the purview of the Royal Chitwan National Park's buffer-zone program. This can be related to high levels of investment in plantation and forest-management activities by external agencies. The substantial revenue that these communities derive from ecotourism also helps, allowing them to hire forest guards, and afford better monitoring capabilities. In contrast, the less wealthy, community- forestry user groups have to make do with volunteer patrols, and do not have the same level of external technical and financial support to invest in plantation activities. Buffer-zone users, however, have to deal with rather strict controls on export of forest products, which were put in place by park authorities, and which the users do not have the power to modify. Downward accountability is limited, and communities do not have a high degree of effective control over forest-management policies. Thus, local communities currently function under a situation of constraint, where they have been delegated responsibilities, but lack the devolution of property rights and decision-making power. This has significant and potentially negative implications for the future of the program.