In this study the municipal efficiency in the forest sector for year 2006 was analyzed, for a sample of 100 municipalities of Bolivia, by means of the interpretation of the local public activities as a production process that transforms inputs (municipal Cost in the forest sector) into outputs (municipal Performance for the forest sector). In the first stage, indicators of municipal performance for the forest sector were constructed taking as reference four municipal capacities which are: Capacity to plan and to execute the plans; Capacity of financial management generation and distribution of resources and social control; Capacity to involve and to interrelate with other actors (civil society, private sector and others) and Capacity of internal management and the organizational and institutional context.