From 1950 to 1980, Nepal lost half of its forest cover. The first scientific measurement of forest resources was done in a 1964 survey, which estimated about 6.5 million hectares of forest area. Studies indicated that as of 1987 the forest area in the hills had remained the same but that elsewhere forests had been degraded. By 1988 forests covered only approximately 30 percent of the land area.

Deforestation was typical of much of the country and was linked to increased demands for grazing land, farmland, and fodder as the animal and human populations grew. Further, most of the population's energy needs were met by firewood. All these factors exacerbated deforestation.

Fuelwood needs of the population mainly resulted from the lack of alternative sources of energy. This fact was particularly evident during the 1989 trade and transit impasse with India when the dispute resulted in a shortage of domestic cooking fuel. Because of the decreased availability of kerosene during this period, the demand for fuelwood rose sharply in the Kathmandu Valley, and fuelwood consumption increased by an estimated 415 percent.

Deforestation caused erosion and complicated cultivation, affecting the future productivity of agricultural lands. Although several laws to counter degradation had been enacted, the results were modest, and government plans for afforestation had not met their targets. The government also established the Timber Corporation of Nepal, the Fuelwood Corporation, and the Forest Products Development Board to harvest the forests in such a way that their degradation would be retarded. In 1988-89 the Fuelwood Corporation merged with the Timber Corporation of Nepal, but forest management through these and other government agencies had made very little progress. In FY 1989, more than 28,000 hectares were targeted for afforestation, but only approximately 23,000 hectares were afforested that year.

A twenty-one-year forestry master plan was devised in FY 1989 to stem deforestation. Implemented with the help of the Asian Development Bank, the program targeted reforestation and education. It sought to maintain the forestation level at 37 percent of land area.