The REDD+ literature in Nepal in its assessment of the likely impacts of REDD+ has paid little attention to the drivers behind the increasing forest cover and the changing role of forests in Nepal’s rural economy. This paper explores how changes in the agrarian economy in the Nepalese Mid-Hills have had locally specific effects on forest area, agricultural practices and ecosystem service (ES) provision and use. The contribution of agriculture to rural livelihoods has declined in many locations, and in parallel, the demands on community forests have changed. However, pockets of subsistence agriculture are likely to remain in the hills and these will remain dependent on forest-related ES provision. REDD+’s formulaic approach to forests and carbon sequestration fails to address the question of how forests in different contexts can support sustainable agriculture. The findings draw on field observation and interviews with officials and organisations, forest user groups, forest users and small-scale farmers in Dolakha and Chitwan districts.