In Nepal Community Forest User Groups are responsible for managing forest resources according to their own constitution and operational plans to meet their livelihoods needs as far as possible. In additon, many forest user groups have gone beyond forest management towards holistic development initiatives, including actions for improved education, health and sanitation, agriculture, safe drinking water, economic opportunities and rural infrastructure. This success story of comes from the hill district of Terhathum.

In Terhathum about 81% of households are members of community forestry user groups and the members are ranked through a participatory well-being ranking process. The leading criteria for 'very poor' household identification were landlessness, illiterate members and households that need to work as farm labour throughout the year. The process helps in ensuring poverty reduction activities reach the most resource-poor people. The process of targeting the poor adopted by the Livelihoods & Forestry Programme (LFP) is effective and many government agencies and NGOs have replicated it in their own initiatives.

The District Development Committee (DDC) is a meso level local government body that is lead by elected representatives. Terhathum DDC realised the importance of well-being ranking and the active targeting approach that LFP practiced. Therefore, they decided to adopt the approach for all households of the district and organised meetings with government and non-governmental agencies to agree to and support the process. After several meetings and discussions, they agreed to conduct well-being ranking of all households in the district in late 2005. LFP covers about 80% of district households through forest user groups. Since these groups had already completed household well-being ranking, the ranking process for the remaining households was completed in six months.

A total of 20,373 households were ranked and 12,775 (63% of total) households were identified as 'poor' (6,729 as 'very poor' and 6,046 as 'poor'). The DDC secretary provided identity cards to 6,729 very poor households to which all service providers agreed to actively target their input. Diagram (i) shows the benefits to the identity card holders from different service providers as a result of collective effort.

During 2007, LFP sampled user groups for another round of well-being ranking with the same criteria that were used in the 2003-4 ranking, with the following results:
* 16% of poor households had moved out of the 'poor' group and had reached the middle or above class: i.e. about 1,000 households of the district had become non-poor.
* 42% (2,826) of 'very poor' households had moved into the 'poor' category.

The active targeting efforts to take poor people out of poverty included activities such as income generating support (agriculture, forestry or livestock based), subsidised seeds and seedlings, community forest land-allocation (leasing for free or on a subsidised basis), together with social mobilisation input. The study also showed ‘an increasing level of participation of poor in decision making and wider development work’ with empowerment and leadership development. It has also been proposed to the local transport entrepreneurs that they provide subsidised bus fares to cardholders and to show solidarity to the initiative.

This case indicates that forest user groups can be an effective vehicle for wider development initiatives in rural Nepal, particularly for taking people out of poverty. The groups are credible organisations since they are legal and resource-based, and managed by democratically elected representatives.