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This paper explores the impact of participatory forest management (PFM) initiatives in Tanzania that have excluded villagers from forests to which they have traditionally, albeit illegally, had access to collect non-timber forest products (NTFPs). Motivated by our fieldwork and using a spatial-temporal model, we focused on the paths of forest degradation and regeneration and villagers’ utility before and after PFM has been introduced. Our paper illustrates a number of key points for policymakers. First, the benefits of PFM tend to be greatest in the first few periods after it is introduced, after which the overall forest quality often declines. Second, villagers may displace their NTFP collection into more distant forests that may have been completely protected by distance alone before PFM was introduced. Third, permitting villagers to collect limited amounts of NTFPs for a fee, or alternatively fining villagers caught collecting illegally from the PFM forest, and returning the fee or fine revenue to the villagers, can improve both forest quality and villagers’ livelihoods.