Examines the distributional impact of community forest management on three economic groups (rich, medium and poor) in two selected forest user groups in the Koshi Hills of Nepal with the objective of assessing the costs and benefits of community forest management processes. Wealth ranking identified the three groups according to the locally perceived criteria.Costs of forest management were classified as forestry operations costs (such as involvement in plantation etc.) and transaction costs (such as decision-making etc.). Benefits included all material values of the forest actually consumed, excluding intangible benefits such as greenery.A simple benefit-cost analysis (B-C Ratio) was done (using non-discounted techniques), and B-C ratios for the three income groups were calculated. The analysis showed that the B-C ratios of poor, medium and rich households (0.94, 1.17 and 1.10) are markedly different. This indicates that the poor users are getting negative benefits from the community forests. The middle-income groups get the highest net benefits followed by the rich households.The paper also analyzes the reasons behind this observation concluding that:"The main reasons [...] are that despite policy emphasis on generating consensus among users in Community Forest management, there is no real consensus that actually incorporates the aspirations and views of the weaker sections of the community. Forest management and distributions systems are mostly controlled by the elites in the community, and community forestry extension input alone may not be expected to reorient the entire socio-political structure".Possible implications for policy, implementation support and research are identified:Suggestion for improvement of support include: Empower poor and disadvantaged users for increased access to decision-making on forest management and utilization issuesEncourage equitable forest products distribution systems, for example, by making groups aware on innovative practices carried out by other Forest User Groups (FUGs) in other areas (see Dhanmane FUG of Ilam reported by Subedi et al, 2000)Sensitize, train and reorient the community leaders/FUGs members on the linkages between silvicultural practices and equityDevelop capacity of DOF field staff and NGOs in understanding and facilitating links between community forest management and rural livelihoods, with particular emphasis on equityCommunity Forestry research issues include:Carry out study into organizational development processes of FUGs and implications for support to make FUGs more democratic institutionsCarry out participatory action research to develop suitable silvicultural technologies/methodologies for various ecological and socio-economic situationsExplore market and forest product development potential at commercial (beyond subsistence) levelsPolicy suggestions inclueExplore policy mechanisms for ensuring increased flow of benefits to the poor. Possible options include introducing leasehold and private use provisions within community forest. Give policy mandate to DoF to undertake periodic monitoring of livelihood impact of CF managementEmpower FUGs to sell community forest products extracted on a sustainable basis[authors]