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This paper reviews the expectations for forestry’s contribution to rural development – and for its special contributions to the most disadvantaged, to women and the landless users of the forest commons. A growing literature challenges some of these expectations; in particular, certain expectations about cultural differences and physical stocks as explanatory factors for patterns of household behavior. This literature could also be used to support a call for sharper definitions of deforestation, improved indicators of the effects of forest resources on the rural poor, and improved design of forest policy interventions. Our paper reviews the literature, suggests some unifying themes, and identifies the critical issues that remain unanswered. The primary contention arising from this literature is that households follow systematic patterns of economic behavior in their consumption and production of forest resources, and that policy interventions in social forestry should be analyzed with regard to markets, policies, and institutions. Markets for forest resources generally exist in some form – although they may be thin. Successful forestry projects and policies require careful identification of the target populations and careful estimation of market and market-related effects on the household behavior of these populations. Institutional structures that assure secure rights for scarce forest resources are uniquely important in a forest enviornment often characterized by open access resources and weak government administration. Social and community forestry, improved stoves, improved strains of multi-purpose trees, and even private commercial forest operations can all improve local welfare, but only where scarcity is correctly identified and the appropriate institutions are in place. An increasing number of observations of afforestation from developing countries around the world is evidence that forestry activities do satisfy these conditions in selective important cases. The critical point for policy is to identify the characteristics of these successful cases that are predictive of other cases where new forestry activities can be welfare enhancing.