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The objective of this study is to assess the economic impacts of Knuckles Conservation Zone (KCZ)on the livelihoods of peripheral households and vise versa the impact of the utilization offorest resourcesby households on the sustainabi lity of the forest after the conservation zone declaration. A detailedpopulation survey, observations, participatory methods and discussions were conducted to gatherinformation as part of an EU funded IUCN project on forestry governance. Around 57% of thehouseholds arc poor. Following the declaration, there has been a significant reduction in the number ofhouseholds harvesting non-timber forest products (NTFP) even for subsistence purposes. The shareof income derived through NTFP out oftotal household income is very minimal. Almost all householdshad been harvesting NTFPs earlier and now it has been reduced to 60% of households. Banning ofchena cultivation in the forest area, following the conservation zone has posed negative impacts onlivelihoods, as chena was one of the main income sources earlier. This natural resource has a higherpotential for ecotourism, as viewed by communities. It is necessary to compensate for the loss ofincome from chena and reduced access to subsistence products from the forest. The future policiesshould be formulated in a way that provides economic incentives to the peripheral communities, whichwill encourage them to use the forest in sustainable manner. This could include sharing the tourist fewwith the affected households. Each household would need to receive about Rs. 15,000 per year tocover the lost access rights to the forests.

Economic implications of declaration of Knuckles conservation zone