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Making Forests Pay: Future pathways: paying for ecosystem services - Carbon and watershed management

Global land use changes, including deforestation, contribute nearly one tenth of global greenhouse gas emissions (Le Quéré et al., 2014). Providing incentives to halt deforestation is an important part of the global climate change agreement. Over the last five years, Farm Africa has been exploring what some of these incentives might look like from a PFM perspective.

The best-known model for sustainable finance to reduce deforestation is the “Reducing Emissions from Degradation and Deforestation”, more commonly known as REDD+ scheme (UN-REDD, 2015). The scheme sets out the conditions under which governments and local communities can claim carbon credits for each ton of carbon that will be kept in the forest as a result of additional forest conservation actions.

REDD+ shares many of the same aims as PFM: reducing deforestation, improving forest management and enhancing forest based livelihoods, such that PFM offers an effective institutional foundation for REDD+. In Ethiopia, the forest laws now empower rural communities with well-defined rights to (co)-own, manage and benefit from forest and woodland resources within their area through PFM. This has driven national REDD+ policy to adopt PFM as a vehicle for implementing REDD+ projects (Federal Democratic Republic of Ethiopia, 2011).

Ethiopia’s REDD+ Preparedness Plan (R-PP) notes that aligning REDD+ and PFM has two major advantages: it gives REDD+ a strong grassroots institution to effectively address deforestation and degradation, and facilitates a socially acceptable, cost-effective way of using carbon revenue. The forest laws of some regional states include provisions for community based organisations to share carbon credit benefits when realised.

In Oromia state, agreement has already been reached between the Oromia Forest Wildlife Enterprise (OFWE) and Forest Managing Cooperatives in the Bale REDD+ project that communities will be entitled to 60% of carbon credit revenues once realised. These provisions and the experiences gained via such agreements will provide a good foundation to make REDD+ work effectively in the country.  

While PFM provides the institutional base for forest management, REDD+ provides the additional incentives and resources needed for a full landscape perspective. With the potential financial resources obtainable from REDD+, investments can be facilitated that will improve farm activities, address energy problems (e.g. access to efficient cook stoves) and stimulate agroforestry practices and woodlot development. Today, large scale or jurisdictional[1] REDD+ projects in the country have also adopted PFM as their institutional base at grassroots level. 

REDD+ is not the only avenue for PFM-led sustainable financing. In Tanzania, a recent carbon stock assessment of the Nou Forest[2] demonstrated that, while deforestation was not a current issue, thus undermining the case for REDD+ in this region, there exist other ways in which to derive an economic value from conserving what is already there.

Forests and their surrounding agricultural lands play a crucial role in watershed management and so the project team is considering the introduction of a watershed-based “payment for ecosystems services” scheme to reward forest dependent communities for making special efforts to maintain the vegetative cover in the uplands.

Farm Africa’s “Conservation of biodiversity and ecosystems functions and improved well-being of Highland and Lowland Communities in the Bale Eco Regionproject in Ethiopia, part of the EU Supporting the Horn of Africa’s Resilience (Horn of Africa-SHARE, 2015 ) programme, will investigate a similar approach to help safeguard the Bale Eco-Region’s crucial water supply function to the Ethiopian lowlands. 

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[1] Jurisdictional REDD+ refers to REDD+ initiatives encompassing geographical areas administrated by a legal authority such as a regional state or district

[2] A description of this project is available on our website here: