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Community forestry is an expanding model of forest management around the world. Over a quarter of forests in developing countries are now owned by or assigned to communities and there is a growing community forestry movement in developed countries such as Canada and the USA. There is, however, no economic theory of community forestry and no systematic treatment of the potential economic advantages of promoting Community forestry in developed countries. The Economic Theory of Community Forestry aims to address this gap and provides the tools for understanding community forestry movement as an alternative form of ownership that can mobilize community resources and encourage innovation.