In the present socio-economic structure of Nepal, land is the main source of income and
consumption for the majority of Nepalese. This study analyses the economic relationship
between access to land and poverty in Nepal by establishing the link between land and
consumption and land and income. The results show that greater access to land increases
income and consumption of the household thereby reducing poverty. The significant marginal
value of land for both consumption and income implies that an effective land reform policy
could well be an effective approach to alleviate rural poverty. However, land reform must
be part of a larger overhaul. Cluster analysis shows that land reform should target
appropriate subgroups within the community in order to differentiate those who would
make use of the extra land from those who would not, and apply appropriate strategies
to each subgroup. It reveals the importance of subgroups in determining an appropriate
strategy for tackling poverty.