We examined the local community incentive programs to improve traditional forest management in three forested villages in Baneh city, Kurdistan province in the northern Zagros forests of western Iran. Zagros forests cover 6.07 million ha and support rich plant and animal diversity. Changes in local community social and economic sys-tems and the inefficiency of traditional forest management led to a criti-cal situation in the stability of forest regeneration in recent decades. Due to a shortage of productive and arable lands and resulting unemployment and poverty, people overexploited the Zagros forests. Outside interven-tion in traditional forest management creates conflicts between local peoples and forest management organizations. To achieve sustainable forest management, including forest resources conservation and im-provement of natural resource based livelihoods of communities, it is desirable to implement Forestry Incentive Programs (FIP) based on the important functions of forests. Detailed information on the so-cio-economics of communities, the effect of forests on local livelihoods, and lists of products extracted from the forest were obtained from a sur-vey of local communities though questionnaire, interview and observa-tion. We studied 276 households in three villages and completed 76 ques-tionnaires by householders in the quantitative analysis. Sampling was performed by simple random sampling (SRS). The needs of rural com-munities, such as livestock husbandry, mainly arise from the characteris-tics and environmental features of villages. We identified the driving forces, pressures, status, impacts and responses (DPSIR) to design incen-tive programs, by DPSIR analysis and interaction analysis. Evaluation of local community benefits from forests showed that in order to improve forest management, 319 dollars per year would be needed by each family as an incentive in 2010 to prevent lopping and firewood collecting, the main causes of forest degradation.