Many rural households in developing countries derived their income partly from forest
extraction yet, very little is known about the distributional implications of this income source on
poverty and household welfare in general. Applying Gini and poverty decomposable techniques to
community level datasets in rural Nigeria for analyzing the distributional implications of forest
income on household welfare, the study finds that forest income reduces both income inequality
and poverty. 2-step Ordinary Least Square (OLS) analysis of the determinants of forest income
indicates that the decision to participate in forest extraction increases with more access to natural
forest areas, larger and poorer households; and decreases with membership in forestry
management and higher educational attainment. Furthermore, poverty simulations revealed that
poverty can be reduced in the short run, through programs that raise the price that households
receive for minor forest products. However, in order to synergize forest-led poverty reduction and
forest conservation, the study recommends the planting and use of minor forest products outside of
the natural forest areas. Other policy options and implications of the study are fully discussed.