Almost all of the fuelwood and timber used in Nepal”s Kathmandu Valley is trucked in from the Terai from distances of as much as 300 km. This report analyzes the flow of forest products to the Valley”s urban areas and assesses the complex roles of both public enterprises and the private sector in the forest product marketing system. After a summary review of forest product flows in the region, the report details the important role played by three public enterprises – the Timber Corporation of Nepal, the Nepal Fuelwood Corporation, and the Forest Products Development Board – as well as the policy environment in which they operate. Next, the report analyzes the total marketing system for both fuelwood and timber and shows the important role played by official and unofficial private suppliers, as well as the interplay between officially controlled flows and private market responses. Associated revenue, cost, and profit flows for both fuelwood and timber are also examined. Results show that public enterprises do not effectively control the forest products marketing system, which is for the most part already privatized (the thriving unofficial sector helping to meet otherwise unmet demand). Existing marketing problems reflect more fundamental resource management problems. These problems cannot be alleviated through increased controls or price subsidies, but require sustained effort to (1) increase incentives for decentralized and private production and (2) promote transition strategies which reduce demand through efficiency improvement and substitution. Specific recommendations towards these ends are included.
