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• Full case study (PDF, 431kb)
• Case study summary (PDF, 76kb)

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• Regional Activities - Asia

Nepal 's midhills community forestry has attracted international interest and praise. Its successes in the forest sector are widely publicised, largely in relation to the promotion of livelihoods activities and forest protection. Rather less is known internationally, however, about commercial forestry in Nepal, including activities of private industry and commercially-oriented community forestry. Commercial forestry mainly takes place in the rich southern plain forests known as the 'Terai'. This region contains high value timber resources, which are unfortunately being poorly managed. It is estimated that approximately 8% of the total area is being lost annually due primarily to illegal logging and forest clearance. This paper considers the prospects for verification of legality in the Terai. It presents the strengths and weakness of the existing system, and the origins of its present difficulties. It then reviews Nepal 's main anti-corruption agency, the Commission to Investigate the Abuse of Authority (CIAA), to see what lessons might be learnt from this experience to help improve commercial forest management in the country. The paper is intended as a scoping study - to identify issues for future research, and to stimulate debate on how to improve forest management in a difficult governance situation.

There are three main forest ownership regimes in Nepal : government, community and private. Community forests (now about 25% of the total forest area) are national forests whose management has been handed over to communities by the Government. Most of the commercially valuable Terai forest lands, by contrast, are still government-owned and managed. The Terai timber production and trade is based on the sale of the lucrative timber species, Sal ( Shorea robusta ), from these government forests, which is primarily destined for sale on the domestic market.

The existing system for verifying the legality of commercial timber production involves three levels of controls:

• A variety of permits, each set specifically to its particular management regime, which cover, respectively, harvest, transport and sale of timber and products.
• An internal checking system operated by the Forest Department, to ensure that the regulations are respected.
• 'Third party monitoring', in the sense of monitoring by parties external to the Forest Department and private industry (including police, military, customs officers, local government representatives and others).

Despite the fact that a large number of different institutions are involved in checking that proper procedures have been followed (upwards of 23 separate institutions), the present controls are extremely ineffective in controlling illegal activities. It is well-known that the system is widely abused due to high levels of corruption, primarily in the form of various bribe taking. This is illustrated by means of a case study of the Terai timber trade in a typical district, Udayapur, which costs the typical levels of bribes required at every step in the production and transport chain. The reasons for such rampant corruption are explored in the paper.

The strengths and weaknesses of the existing verification system are explored in turn. The former include the high profile which corruption now occupies in public debates in Nepal, and the potential for checks and balances to operate between the numerous interested institutions. The weaknesses include the lack of public participation in the present system and the lack of independent monitoring agencies - as well as, paradoxically, the plethora of institutions currently involved that operate in an anarchic way, which undermines, rather than strengthens, the actions of each other.

The paper then turns to the role the CIAA might play in improving forest management, as good governance must be approached from a broad national perspective as opposed to a sectoral perspective. This institution maintains a high profile in Nepal society and has already intervened in the forest sector, albeit not always very effectively. Though the CIAA has had a patchy record, there is cause for optimism in new procedures implemented since 2002. The paper reviews this evolution in CIAA performance, and suggests additional ways in which the agency could improve its interventions in the forest sector. Establishing an independent and authoritative system for the verification of legality figures high on the agenda if the quality of forest management is to improve from its present low level of effectiveness and currently lost government revenues are to be captured.