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Forest rehabilitation activities within centrally controlled state-owned forests in Ethiopia could not deliver communities with increased income. A study aiming to assess the benefits of forests for smallholder farmers whose land falls close to the state forest was conducted in Hugumbirda and Endedo kebele, two villages located adjacent to the Hugumbirda forest. Semi-structured questionnaires were used to collect data from 251 randomly selected households living near or adjacent to the state forest. A logit model was used to analyze factors affecting household’s willingness to scale up forests at the communal level. Most of the respondents living near or adjacent to the national forest were found to be dependent on the forest for fuelwood and therefore energy, timber products, and farming equipment. Furthermore, households were found to perceive that communal intervention management is a significant factor in attempts to further scale up forests. Scale-up of forests at the community was one option to enhance the vegetation cover and therefore increase primary production by promoting infiltration and decrease evaporation and runoff water. Finally farmers have suggested the state forest should be devolved to the community to improve the current level of forest contributions to the livelihood of smallholder farmers.