As night embraces the small village of Simpani on the Champadevi hill south-west of Kathmandu, 35-year-old Pasang Lama (first name changed) quietly walks into the forest on the hill where he's buried his treasure-charcoal. "It's about time to take the burning coals out from the pit or they'll be burnt to ash," he says. "Couldn't make it during the day." That was because a banpale, or forest guard, had been making his rounds on the lookout for people like Lama who illegally chop down trees in government-owned forests in the area and burn them into saleable charcoal to make a living.

On Champadevi hill, along every 10 m are dug pits 3-4 feet deep. After felling the trees, the charcoal producers neatly arrange the chopped branches to the top in the pits and cover them up with damp green leaves so that the flames do not burn the wood to ashes. After setting the leaves alight, they leave. In about 90 hours, the charcoal is ready. To produce a large sackful of charcoal 10-12 trees are required.

The villages on Champadevi hill, also known as Bhasmasur Danda, and similar places on the Valley-rim have been supplying charcoal to the Kathmandu area for decades. But, with the growth of alternative technologies and the introduction of community forestry, it's getting harder for people from Valley-rim villages to supplement their income from farming small strips of land with the production and sale of charcoal. And now they are being driven to cutting down trees under government jurisdiction.

Take a walk through the streets of Wotu in Kathmandu or Mangal Bazaar, and it's obvious that there's still a demand for charcoal in the city-and there are enough suppliers to ensure the price is never high enough for people to make anything but the most meagre living off it.

Wotu is the hub for charcoal trade in Kathmandu, and technically it is an illegal trade since practically all the charcoal there is obtained from trees felled clandestinely. But it has tradition on its side and so no one does anything to stop it. There is, however, a cloak-and-dagger-ish feel to the way supplies are brought in. The salesmen themselves have not had any trouble with the authorities, but their bosses aren't taking any chances. A shopkeeper in the area describes how the operations are carried out: "There's a goldsmith in the neighbourhood, for example, who has contracted people at Rs 150 a day to sell charcoal. And his suppliers from the villages come early in the morning when it's still dark. You see them sometimes, in rags, carrying bamboo torches. He pays them and disappears. It's all done very quickly."

Charcoal is mainly in demand in the city not for barbecues or roasting ears of corn, but in goldsmiths' workshops. There are three kinds-brown, white and red. Goldsmiths use the brown one as it burns very slowly and produces a lot of heat. This charcoal is produced from very rare trees like the agrath. The white and red varieties burn too quickly without producing much heat. The temperature in a small 20 cm furnace exceeds 20000 Celsius. Goldsmiths don't seem to think it's the ideal fuel, but as yet it's the only thing they use. "It's expensive, but so far we haven't tried any alternatives," says one from Patan. "We could use LPG or electricity. But the gas machine is very noisy and also dangerous to handle. As for electricity, there's no guarantee it will be available all the time. So we're compelled to use charcoal."

Charcoal retails here at Rs 60/kg, or Rs 850 for a 15-kg sack. Lama says the charcoal business doesn't supplement his income as much as he'd like it to. "We earn around Rs 2500 a month if we can sell regularly in Kathmandu," he says. Lama can raise his price October through January, when the demand for gold jewellery is fuelled by Dasain, Tihar, and the wedding season. Suppliers like him then visit the city twice a week on average. They're paid around Rs 550 per sack. They know they take a risk doing what they do. "The forester snatches all the charcoal. We also run into cops sometimes, but they let us go-after we pay them Rs 10-15 per sack," says Lama.

There are other places also around the Valley, like Kakani and the villages near Pulchowki, where trees are felled illegally to produce charcoal. There's even charcoal made from wood salvaged from the Pashupati cremation site. There are still other places that local residents would like to mine to produce charcoal, but can't, like Jamacho, where there is an army barracks, and the Shivapuri Watershed Reserve. The forests of Champadevi were undisturbed for some time, until the army barracks moved out of there about a year and a half ago. "We're very poor. There's nothing else we can do except maybe go to Kathmandu and work as wage labourers," says Lama. "The forest might last only another five years. Don't know what I'll do next."

Neither the villagers nor environmentally concerned people are happy with the situation. But no one yet seems to have come up with a sustainable, legal charcoal-producing initiative, so Pasang Lama will keep felling government-owned forest. After there isn't anything left on Champadevi, he might have to move to the city, another daily-wage labourer part of the growing urban influx, dependent on chance and luck for work. Or he and others like him might find other forests to turn into charcoal, and extend their tenuous subsistence on the Valley-rim for a few more years. Either way, the situation looks grim for Pasang Lama and the forests around the Valley.