Despite the interest and willingness of donor communities to support the conservation projects of tropical rainforests, scientific evidence on effective ways of providing such assistance is lacking. Recent evidence on failures of integrated conservation and development projects also highlight the need for more research in this area. Dependency of local communities on forest resources is a major obstacle in implementing forest protection programmes. This paper develops two forest dependency models for Knuckles and Sinharaja forests in Sri Lanka. Data were collected from peripheral villages of Knuckles and Sinharaja forests applying stratified random sampling procedures. Two regression models were developed incorporating nine socio-economic variables. Results show that involvement in non-farm and non-forestry employment, higher agricultural income, higher agricultural productivity, better education and, possibly, the incorporation of local communities into the outside markets can reduce dependency on forest resources. Therefore, the paper suggests rural development with the above components as an alternative strategy for forest protection.