Government’s complicated laws are hindering forest enterprises in Nepal: Thakur Bhandari

FECOFUN chair Thakur Bhandari says legal barriers keep community forest user groups from expanding enterprises, despite gains in conservation, eco-tourism and sustainable forest use across Nepal.

It has been 33 years since the community forestry programme began in Nepal. At a time when deforestation and forest degradation were increasing, the government realized it could not protect forests alone without the participation of local people. As a result, it decided to hand over forest management to local communities. After the Forest Act 1993 and the Forest Regulations 1995 came into force, community forests across the country were gradually handed over to local users.
As communities took responsibility for protecting forests, Nepal’s forest cover increased from 29 percent to 46 percent. Their efforts not only expanded the country’s forest area but also earned Nepal international recognition for its community forestry model.

The Federation of Community Forestry Users Nepal (FECOFUN) has decided to celebrate August 4–10, 2026 as Community Forestry Week. On the occasion, The Climate Watch spoke with FECOFUN Chairperson Thakur Bhandari.

The following are edited excerpts from the interview.

Q: What is the current situation of community forestry in Nepal?

Community forestry in Nepal has made remarkable progress. In the past, community forest user groups focused mainly on forest conservation. Today, while conservation remains a priority, they are also promoting the sustainable use of forest resources. Community forest groups are working on agriculture, eco-tourism and the development of forest-based enterprises.

Community forestry has also become more inclusive than before. The participation of young people has increased because involving them helps develop future leaders. Young people now understand that forests are not just a source of income—they are also important for the environment, society and culture. They have also gained a better understanding of the valuable role community forests play in protecting the environment.

Q: Does that mean the conservation work is now complete?

No, not at all. Conservation remains our top priority. It is the foundation of community forestry. We have reached this stage because of our conservation efforts, and that success has put us in a position where we can now focus on both protecting forests and making sustainable use of them. This does not mean conservation is over.
In the past, forests were not in a condition where people could harvest products. Communities first protected the forests and conserved biodiversity. Now, the time has come to use those resources sustainably. We need a balanced approach-continue protecting forests while also harvesting mature trees, medicinal herbs, fruits and fodder grasses in a planned and sustainable way.

Q: Community forest user groups at the local level do not seem as active as before. Have they lost interest in forests?

No. That is a completely false narrative. Nepal now has 23,089 community forests, involving around 3.5 million households. It is wrong to say that community forest users have become inactive. Anyone who believes that has misunderstood the very purpose of community forestry.

The main role of community forest users is to protect and improve forests. However, current laws prevent them from running forest-based enterprises. The Industrial Act does not recognize community forest user groups as business entities. When registering an enterprise, only individuals—not community groups—are legally recognized. As a result, enterprises have to be registered in an individual’s name.

If community forest groups were allowed to establish enterprises, they could produce organic compost from forest litter and process forest products into organic goods for national and international markets. But existing laws prevent this. Community forest users are not inactive—they only appear inactive because of legal barriers.

Q: The problems you mentioned exist at the local level. Why has the Federation not been more effective in pushing for legal reforms?

It would be unfair to say that FECOFUN has not worked to protect the rights of community forest users or secure those rights in law. Since the federation was established in 1995, we have consistently advocated for forest users. We have also successfully challenged several laws and regulations that threatened community forestry.
For example, in 1998, a law was introduced that could have effectively dismantled community forestry. In 2002, the government proposed a 40 percent tax on community forests. We prevented both measures from being implemented.

The Forest Act of 2019 includes several important provisions that did not exist before. It recognizes agroforestry, legalizes eco-tourism activities in forests, and includes provisions for forest-based enterprise development. Before 2019, many eco-tourism activities inside forests technically lacked legal recognition.

The Ministry of Forests is generally supportive of community forestry. Our main challenge now is the Industrial Act, which falls under the Ministry of Industry. We have been in continuous dialogue with the ministry, but the issue has not yet been resolved. We have also worked with the Ministry of Finance to resolve several issues, including obtaining PAN registration. So, it is incorrect to say that FECOFUN has failed to influence legal reforms.

Q: Forest-based enterprises still seem limited. How can they really contribute to prosperity?

The biggest obstacle is the complicated legal and administrative process. There are still many hurdles in transporting, managing and marketing forest products. As a result, community forestry has not reached its full potential.

For example, people can make traditional leaf plates from sal leaves, but they still face restrictions when trying to sell them. Forest-based enterprises can make a significant contribution to Nepal’s economy. If all community forests were allowed to develop enterprises, they could create thousands of jobs and transform local livelihoods from subsistence to commercial production.

Q: Why has community forestry not become more business-oriented?

The government must be more supportive. If it recognizes community forest user groups as an important pillar of the economy and provides the necessary support, many of these problems can be solved.

At the same time, we should not judge community forestry only by its financial contribution. Community forestry is about much more than money. It protects the environment, preserves culture and the traditional practices of Indigenous communities, and develops local leadership. Environmental and social values come before economic benefits. Looking at community forestry only through an economic lens would be unfair to both society and the environment. We need to maintain a balanced approach.

Q: Shouldn’t the social and environmental value of community forests also be measured?

Absolutely. If we look only at income and business, we overlook the true value of community forestry. But measuring that value is not our role.

Before community forestry began, Nepal was moving towards severe environmental degradation. National and international experts recognized that local communities possessed the traditional knowledge and skills needed to protect forests. That is how community forestry developed.

Our role is to advocate for the rights of communities, not to conduct research. Nepal’s forest cover increased from 29 percent to 46 percent because of the hard work and commitment of local people. Researchers and economists should calculate the value of those contributions. We have protected forests, culture, traditions and the environment—the true value of that work should also be recognized.

Q: What should be done to create more jobs through forest enterprises?

Forest enterprises are not just factories. Agroforestry itself is a forest enterprise. Forest tourism around urban areas is another successful example, with many communities earning good incomes. Collecting and processing forest products is also a business opportunity. If laws are simplified and communities receive better support, forest enterprises can expand significantly and create many more jobs.