In 1995 the contribution of the forestry sector to the Sri Lanka economy was nearly 1.3 percent of the Gross National Product (Central Bank of Sri Lanka, 1995). Its contribution to the national economy declined from 1.7 percent in 1988 to 1.4 percent in 1994 as can be seen in Table 1. The marginal decline of the forestry sector reflected diminishing timber resources which has resulted from over exploitation of forests during this period due to population growth and economic development. The total employment in forestry and wood-based industries in 1995 were around 331,000 persons. Of the total 67 percent biomass energy produced in the country, nearly 66 percent was mainly from fuel wood, a main product of natural forests in the dry and wet zones of the country. This means fuel wood provided nearly 44 percent of the total energy produced in the country.