Poor governance is a major impediment to achieving development outcomes of the forest sector. It results in losses of income, employment, government revenues, and local and global environmental services. However, at present, no comprehensive guide to reforming forest governance has been developed. Although usually it is relatively easy to recognize that the forest sector in a country is failing to deliver all its potential benefits, the lack of an appropriate analytical framework makes it much harder to identify the major shortcomings and to propose a fitting response. This economic and sector work (ESW) is the first step in creating a reformer's tool to diagnose forest governance weaknesses and pinpoint appropriate reforms. Section one of these studies explores the consequences of poor governance and the need for and the track record of forest governance reforms. It highlights some key gaps in our understanding of the governance challenge that provide the rationale for this report. Section two reviews the available literature and extant initiatives on describing and measuring governance. It looks at existing general indicators of governance and an indicator aim specifically at the forest sector and highlights the main lessons learned. Section three presents a comprehensive conceptual framework with which forest governance diagnostics can be undertaken in a country. Finally, section four summarizes the material and offers conclusions.