"During the past hundred years Sri Lanka has lost half of its forest cover. Deforestation and forest degradation is a source of poverty for rural households.
"It results in less availability of water for farming and drinking, more time needed to collect firewood and increases the risks of drought and fire.
"Forests in the dry and intermediate climatic zone are particularly vulnerable but also contain a large number of poor farmer communities that use forest resources to survive."
Sri Lanka's forestry department with Australian support had done a pilot program from 2003 to 2008 in 55 areas in Anuradapura, Kurunegala, Matale, Monaragala and Puttalam.
The pilot had regenerated of 11,000 hectares of forest and increased the monthly income of beneficiaries by almost 100 per cent.
The Forestry Department expanded the community forestry model into another 24 communities following the end of the project.Sri Lanka wants to double its forest cover over the next 10 years.
"The Sri Lankan Government is committed to increasing forest cover and reducing destructive slash and burn cultivation in the dry zone using the successful community forestry model," minister for environment Anura Priyadarshana Yapa said.
The new 5 million Australian dollar forestry program aims to regenerate 23,000 hectares of forest and increase the income of around 90,000 rural people.
The program will expand the community forestry model to 167 new communities across 15 districts, including the Northern and Eastern Provinces, which had recently emerged from a 30-year civil war.
"The community forestry model is based on the proven idea that local communities are best placed to protect forests, particularly if they are supported with better knowledge and access to alternative sources of income," Robyn Mudie, Australia’s High Commissioner (ambassador) to Sri Lanka said.
"Australia’s commitment to help Sri Lanka address environmental issues is part of a bigger aid program focused on supporting Sri Lanka’s poorest and most vulnerable communities."
The program will also support microfinance and micro-enterprises such as bee keeping, rice and vegetable cultivation, fruit gardens, food processing, handicrafts and livestock development to reduce dependency on forest resources, the Australian embassy said.