This paper presents novel empirical evidence on the welfare impacts of forest protection programs, focusing on both income and material welfare at the household level. Specifically, we conduct a household survey of 1271 households in forestry communities that participate in the Natural Forest Protection Program (NFPP) in China. The survey data are collected from 56 state forest enterprises (SFEs) across three provinces in China. We employ the Alkire–Foster method to calculate and decompose the material deprivation index based on household income levels. Our analysis reveals that forestry communities exhibit a significant proportion of households in low-income welfare states, comprising nearly one-fourth (25.41%) of the sample. Furthermore, we observe that the percentage of households in a low-material welfare state is nearly one-fifth (21.70%), with 7.79% of households experiencing both low-income and low-material welfare. Importantly, we find that welfare disparities persist across population subgroups based on occupation and geography. In addition, we assess the impact of the NFPP on household welfare outcomes and identify an elite group of technicians residing in urban communities down the hill who experience positive welfare effects from the program. These findings provide critical insights beyond a single welfare dimension and contribute to the growing literature on evaluating forest protection policies. Furthermore, the results offer valuable lessons for designing and implementing forest protection programs in other developing countries.

Forestry projects have long faced the inherent tension between stringent conservation objectives and the enhancement of human well-being, making it increasingly important to assess the sustainable livelihoods of participating households. The Natural Forest Management Project in the Northeast and Inner Mongolia state-owned forest region (NSFR) aims to transform high-quality ecological products and services into inclusive public benefits while providing reasonable compensation for ecological conservation and restoration efforts. This approach seeks to achieve synergies among ecological protection, economic development, and livelihood improvement. Drawing on six consecutive years (2017–2022) of longitudinal micro-level household survey data, this study quantifies the sustainable livelihood levels of households participating in natural forest management. A Natural Forest Involvement (NFI) index was constructed to measure their degree of participation. Furthermore, the well-being effects of frontline participants in natural forest management activities were investigated. The findings indicate that the overall sustainable livelihood capital of these households shows a steady upward trend across NSFR, significant disparities exist among different areas. Moreover, approximately half of forestry worker households are deeply embedded in the natural forest management system, and this engagement pattern negatively affects households’ sustainable livelihood capital. These results not only enrich the empirical literature on forestry project effectiveness but also offer relevant insights for forestry project design and policy formulation in other developing countries.