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This study, which forms part of the wider DFID Forestry Research Programme study ‘The Economic Analysis of Stakeholder Incentives in Participatory Forest Management’, focuses on the extent to which it is possible for forest users themselves to make financial calculations of the benefits and costs of community forestry (CF). An ideal opportunity to do this was presented in Nepal where the Nepal UK Community Forestry Project (NUKCFP) felt that greater transparency in terms of the returns to different stakeholder groups in the Forest User Groups (FUGs) might assist the process of achieving more equity within the FUGs. This was also seen as part of a process of capacity building in the FUGs. At the same time it was an opportunity to examine some of the economic impacts of community forestry, so this became a subsidiary objective. The study took place during two fieldwork periods totalling about four and a half weeks between January and March 1999.
The study focussed on four FUGs in Dhankuta and Terhathum Districts in the Koshi Hills of the Eastern region of Nepal. The methodology evolved through a process of experimentation to assess what was feasible, and therefore varied from each FUG. The fourth FUG case study represented a test-run of the participatory methodology. The initial intention was to develop a single methodology, but it was soon discovered that there were important trade-offs between the objectives, so that it proved necessary to develop two parallel inter-linked methodologies. The first was for the stakeholder groups to make the calculations and assess the results with minimal outside assistance, while the second, involving more external inputs, aimed to provide a better understanding of stakeholder incentives for secondary stakeholders, involving for example computer spreadsheet analysis of the data. The two methodologies are termed the ‘FUG calculation’ (i) and the ‘project (economic) analysis’ (ii).