The main objective of this paper is to assess existing and emerging economic tools in terms of their potential and limitations for assessing stakeholder incentives in Participatory forest management (PFM). It explores the debate between two schools of opinion as regards the application of economics to community-level forestry. On the one hand there are those who think economic analysis is inappropriate or tends to result in ‘spurious precision’, and who feel that a more qualitative analysis is more appropriate and useful. And on the other hand are those who think that lack of more quantitative analysis and a failure to place realistic numbers on costs and benefits has proved a serious limitation on the design of effective PFM interventions. This paper also aims to explain economic concepts and jargon as clearly as possible for the non-economist reader.