Community forestry, a participatory forest management system, encourages forest conservation, enhances carbon sequestration, and advances the Sustainable Development Goals (SDGs) by increasing community ownership of resource management. Community forestry, in terms of policies and practices, directly supports SDG-1, SDG-13, and SDG-15 by promoting community ownership and empowerment as well as ecosystem health. It provides immediate benefits to local livelihoods by enhancing access to ecosystem services such as fuelwood, fodder, and non-timber forest products. Here, we assess the forest regeneration and conservation value of a community forest in Nepal by recording seedlings, saplings, and mature trees in randomly sampled plots. The plots were structurally complex with rich tree diversity; most plots showed high diameter at breast height (DBH) differentiation and diversity. Most tree species followed an abundance distribution of seedlings > saplings > adults, suggesting “good” regeneration. Tree carbon stock was 137.6 tons per hectare and was positively associated with tree density and diversity and negatively with altitude. An increase of one standard deviation in the diversity index ~0.39 was associated with an 11.7% higher tree carbon stock per hectare. Plot-level tree height was positively related to diversity at lower tree heights. Overall, community forestry successfully transformed a degraded forest into one of quality regeneration and conservation value within two decades, outperforming the regional average forest carbon stock and diversity. Thus, community forests can act as an effective model for sustainable forest management and are essential tools for policymakers to promote regeneration, structural diversity, carbon storage, tree growth, and sustainable resource utilization.

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