Final Report
Strategy options for the Oromia
Forested Landscape Project
Addis Ababa, 10.12.2014
Assignment: Analysis of causes of deforestation and forest degradation in the Oromia Regional
State and identification of strategies to address those
Client: World Bank
Authors: UNIQUE forestry and land use GmbH, CONSCIENTIA
Cover photo credits: UNIQUE forestry and land use GmbH
Calculations in this report are based on the most recent land cover data provided by the Woody
Biomass Inventory and Strategic Planning Project.
Content
Executive Summary ....................................................................................................................... 7
1 Introduction ............................................................................................................................. 9
2 Methodology .......................................................................................................................... 10
2.1 Preliminary identification of a long list of strategy options ........................................... 10
2.2 Filtering strategy options to prioritize for detailed assessment .................................... 10
2.3 Project description ......................................................................................................... 10
2.4 Economic assessment of priority strategy options ........................................................ 11
2.5 Implementation of strategy options .............................................................................. 11
3 Overview of strategy options ................................................................................................. 13
3.1 Forestry sector strategy options .................................................................................... 13
3.1.1 Participatory Forest Management ....................................................................... 15
3.1.2 Project objectives ................................................................................................. 16
3.1.3 Approach and beneficiaries ................................................................................. 16
3.1.4 Potential locations for implementation ............................................................... 20
3.1.5 Appraisal .............................................................................................................. 21
3.1.6 Non-carbon benefits ............................................................................................ 21
3.1.7 SWOT.................................................................................................................... 22
3.2 Agriculture sector strategy options ................................................................................ 24
3.2.1 Sustainable Land Management Project ............................................................... 25
3.2.2 Project objectives ................................................................................................. 26
3.2.3 Approach and beneficiaries ................................................................................. 26
3.2.4 Potential locations for implementation ............................................................... 29
3.2.5 Appraisal .............................................................................................................. 30
3.2.6 Non-carbon benefits ............................................................................................ 31
3.2.7 SWOT.................................................................................................................... 31
3.3 Energy sector project component .................................................................................. 33
3.3.1 Improved cookstoves production and distribution ............................................. 35
3.3.2 Project objectives ................................................................................................. 36
3.3.3 Approach and beneficiaries ................................................................................. 36
3.3.4 Potential locations for implementation ............................................................... 39
3.3.5 Appraisal .............................................................................................................. 39
3.3.6 Non-carbon benefits ............................................................................................ 39
3.3.7 SWOT.................................................................................................................... 40
4 Overall implementation framework ...................................................................................... 41
4.1 Scale: area, finance, and GHG emissions reductions ..................................................... 41
4.1.1 Area ...................................................................................................................... 41
4.1.2 Finance requirements .......................................................................................... 42
4.1.3 Emission reductions and employment potential ................................................. 44
4.2 Scale required for climate neutrality.............................................................................. 46
5 Next steps............................................................................................................................... 48
6 References.............................................................................................................................. 49
Annexes ....................................................................................................................................... 51
Final Report
Strategy Options for Oromia REDD+ Program
UNIQUE/CONSCIENTIA
Acronyms
ACCES
Africa Clean Cooking Energy Solutions
A/R
Afforestation / Reforestation
ADLI
Agriculture Development-Led Industrialization
ANR
Assisted Natural Regeneration
BioCF
BioCarbon Fund
CDM
Clean Development Mechanism
CRGE
Climate Resilient Green Economy
CSA
Climate Smart Agriculture
DA
Development Agent
DD
Deforestation and forest Degradation
ER
Emission Reduction
FAO
Food and Agriculture Organization (of the United Nations)
GHG
Greenhouse Gas
GOE
Government of Ethiopia
GTP
Growth and Transformation Plan
MEF
Ministry of Environment and Forest
MoA
Ministry of Agriculture
MoFED
Ministry of Finance and Economic Development
MoWIE
Ministry of Water, Irrigation and Energy
MRV
Measurement, Reporting and Verification
NGO
Non-governmental Organization
NTFP
Non-Timber Forest Product
OFLP
Oromia Forested Landscape Project
OFWE
Oromia Forest and Wildlife Enterprise
PAD
Project Appraisal Document
PFM
Participatory Forest Management
PFRA
Participatory Forest Resources Assessment
PMU
Project Management Unit
REDD+
Reducing Emissions from Deforestation and Forest Degradation
REL /RL
Reference Emission Level / Reference Level
SLMP
Sustainable Land Management Project
SFM
Sustainable Forest Management
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Strategy Options for Oromia REDD+ Program
SNNPR
Southern Nations, Nationalities and Peoples Region
tCO2
Ton of Carbon dioxide
TWG
Technical Working Group
UNFCCC
United Nations Framework Convention on Climate Change
USD
United States Dollar
WBISPP
Woody Biomass Inventory and Strategic Planning Project
UNIQUE/CONSCIENTIA
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Executive Summary
Ethiopia’s plans to accelerate economic growth along a climate resilient green pathway include
REDD+ as a key component, given emissions from land use constitute the main sources of national GHG emissions. The Oromia Regional State has been selected for the development of a
landscape-level REDD+ pilot, with USD 50 million committed as performance-based payments
for net emission reductions. Termed the Oromia Forested Landscape Project (OFLP), this pilot
will combine catalytic sector-based investments and policy reform to transform current land
use practices in forested landscapes to become more productive, and increase the contribution of forest resources to national and local incomes while reducing net greenhouse gas emissions.
This report summarizes the technical feasibility assessments of the specific strategy options
identified and prioritized for the OFLP during the Oromia Technical Working Group meeting in
August 2014, namely: Participatory Forest Management (PFM); Sustainable Land Management
(SLM) (with three components: Climate Smart Agriculture; Assisted Natural Regeneration and
woodlots); and cookstove production and dissemination.
PFM has a marginal abatement costs1 of USD 1.4/tCO2 and SLM USD 3.6/tCO2; while improved
cookstoves generate net economic benefits of USD 10.8/tCO2, i.e. negative costs. The SLMP
would generate emission reductions (ER) estimated at 4.03 million tCO2, the PFM 5.35 million
tCO2, and improved cookstoves 1.21 million tCO2 over a period of five years, totaling 10.6 million tCO2. Over 20 years, ER potential is estimated at 16.35 million tCO2, 24.12 million tCO2 and
14.44 million tCO2, respectively, amounting to 54.9 million tCO2 in total.
To achieve these net ERs, we suggest OFLP implementation within the targeted landscapes at
the following scales: PFM adopted on 125,000 ha, SLMP financed on 112,500 ha and 258,750
improved cookstoves disseminated in addition to cross-cutting and sector-wide policy reforms.
In order to achieve this ER potential advance incentive payments will be required followed by
performance-based payments. The strategy options are to be implemented as packages, with
proposed combination of strategy options designed to achieve the highest possible net emission reductions, employment and cost-effectiveness, taking into account time and resource
constraints. Over five years, the, REDD+ finance requirements (programmatic and farm/forestlevel input investment costs) are estimated at USD 19.9 million and USD 26 million, respectively. That will generate about 10.6 million tCO2 over a period of 5 years and 54.9 million tCO2
over 20 years. At a carbon price of USD 5/tCO2, total performance-based payments amount to
USD 54.1 million over five years.
As shown in Figure 8, advance payments are required over the first four years. In year 1, advance-payments would amount to USD 2.29 million followed by USD 8.44 million in year 2. In
return, emission reductions will be verified at the end of year 2, justifying performance-based
payments of USD 3.88 million (0.78 million tCO2), thus a finance gap of USD 6.85 million would
remain. In year three, the finance gap between programmatic REDD+ cost and expected performance-based payment would even increase to USD 10.46 million. The break-even would be
achieved in year 5 where USD 3.1 million of performance-based finance would remain for benefits sharing investments.
1
The marginal abatement costs is calculated at a social discount rate of 6% (same as under CRGE, 2011), as the societal and
incremental cost and benefits, irrespective of who bears costs or who benefits.
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Achieving the CRGE climate neutrality goals in the land use sector through the OFLP contribution would require an additional investment of USD 1.2 billion over 20 years or USD 411 million
over the initial 5 years to achieve climate neutrality of the 2030 projected land use sector
emissions in Oromia (excluding livestock sector emission).
This report is not stand-alone but rather the first in a series of other important on-going assignments for the design of OFLP, and should be deliberated on in combination with the legal
and institutional analysis (where the existing and new government and community institutions
at woreda and kebele level are further described), a broad-based stakeholder consultation and
participation strategy, and the work related to the Reference Level development and MRV
system design.
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1 Introduction
The Oromia Forested Landscape Project (OFLP) will contribute to Ethiopia’s climate neutrality
goals by implementing REDD+ in an integrated landscape approach that combines sectorbased investments with cross-cutting policy reforms. OFLP provides the framework for engaging policy makers, rural land users and large- and small-scale businesses to reduce deforestation and degradation and increase the carbon stocks of forested landscapes. Within this
framework, the BioCarbon Fund’s Sustainable Forest Landscapes Initiative is providing USD 50
million as performance-based payments for net emission reductions (ER) achieved through
OFLP of which part is envisioned to be provided as advanced payments and expect to achieve a
minimum of 10 million tCO2 net GHG emissions reductions /carbon stock enhancements over
a period of 5 year.
To support the preparation of the OFLP, UNIQUE forestry and land use and CONSCIENTIA were
contracted to generate key technical inputs that structure the design of sector interventions
leading to net ER. This report builds on a diagnostic of the main drivers, agents and underlying
causes of deforestation and forest degradation in Oromia and related abatement costs (outlined in the related Mid-Term Report). The objective of this assignment is to identify and prioritize strategy options that address drivers of deforestation and forest degradation; as well as
assess the potential for increased carbon removals through afforestation and reforestation
and conduct of a cost and benefit analysis of these interventions.
Current forest loss and degradation found in Oromia stems from diverse drivers, agents and
underlying causes, reflecting the Region’s heterogeneous forested landscapes. Main deforestation and forest degradation (DD) agents operating in Oromia relate to agriculture, with unplanned small-scale subsistence and cash crop farming generally affecting a larger forest area
compared to poorly executed and large-scale planned deforestation. With population growth
and significant barriers to intensification and land sparing, small-scale agriculture is expected
to continue to be an important DD driver as rural livelihood alternatives remain scarce. The
dominant source of household energy demand is extraction of woody biomass, responsible for
gross deforestation and significant degradation of forest and woodlands. The wood fuel sector
is characterized by inefficient value chains and there is significant potential for productivity
improvements at the household level.
The main results of the drivers study were validated by the recently established Oromia REDD+
Technical Working Group (TWG) during their first meeting in August 2014. Participants included the national REDD+ Secretariat, the Oromia Forest and Wildlife Enterprise (OFWE) and representatives of key donors and technical partners, Norway, the World Bank and Farm Africa.
During this meeting, participants discussed the implications of the drivers study and provided
guidance on strategy options to address DD. Of the several strategy options identified and
discussed (see section 3), the following were selected for further analysis regarding their climate mitigation potentials and costs:
1. PFM in high forests including the establishment of commercial sawlog production
2. SLMP with ANR, woodlots, and CSA sub-components
3. Improved cookstoves
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2 Methodology
The identification, prioritization, technical assessment and cost/benefit analyses of the strategy options was carried out according to the steps described in the following sections:
2.1 Preliminary identification of a long list of strategy options
To ensure that the proposed OFLP strategy is comprehensive in addressing main drivers of DD,
several strategy options were preliminarily identified based on the drivers analysis (see Midterm report) and ranked. In addition, relevant strategy options in non-forest areas not captured in the drivers assessment have been identified, i.e. forest carbon stock enhancement
through A/R, Assisted Natural Regeneration (ANR), woodlots, and fuelwood energy efficiency.
This first step was carried out through a review of best practices with the objective of identifying interventions possessing proof of concept and up-scaling potential. Particular focus was
placed on national and local experiences in addressing deforestation and forest degradation,
efforts in the rehabilitation of degraded lands, use of alternative energy or energy efficient
technologies, sustainable coffee management and other climate smart agriculture approaches
such as intensification and agroforestry in combination with land use planning and enforcement.
2.2 Filtering strategy options to prioritize for detailed assessment
The following criteria were used to filter the long list of strategy options to prioritize the most
promising for detailed assessment, listed in order of importance and as presented at the TWG
meeting:
1.
GHG mitigation potential and scalability through up-scaling.
2. Marginal abatement potential, including cost/benefit estimation
3. Government development priorities
4. Social acceptability / livelihood benefits
5. Private sector investment potential
6. Institutional implementation arrangements, including risks and risk mitigation potential
During the TWG meeting, the general priorities for the OFLP and trade-offs of the different
potential strategy options in meeting OFLP objectives were discussed. Four specific strategy
options were agreed upon for detailed analysis and costing, and are further detailed in this
report.
2.3 Project description
In this step, the technical components of the strategy options were elaborated using the structure provided in World Bank Project Appraisal Documents (PAD) as guidance. Key assumptions
underlying the assessment have been outlined and checked for plausibility with local experts
and existing project/program design figures and evaluation reports.
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2.4 Economic assessment of priority strategy options
The costs and benefits of the strategy options were quantified from the DD agent (land user)
perspective by developing one hectare cost-benefit land use models (see Annex). Programlevel costs including implementation, transaction costs and institutional costs such as training
and capacity building were calculated based on budget from existing initiatives such as SLMP
and PFM and cookstoves programs. Data gaps were complemented by expert estimates. The
climate mitigation benefits or net emission reductions have been estimated for each strategy
option and a marginal abatement cost analysis conducted to compare the cost per ton of ER
among the different strategy options.
Estimates of marginal abatement costs of the proposed strategy options were calculated using
a social discount rate of 6% - the same rate assumed for the CRGE strategy. For the economic
assessments, a series of spreadsheet-based economic models were constructed, where the
private and public costs and benefits for each strategy option are calculated. This was then
combined with an assessment of the non-carbon benefits associated with each strategy option.
We assume initially the MRV system will be established at Oromia level, financed through the
Technical Assistance already committed through the national REDD+ process. Cost estimates
for this component were estimated, assuming that only 30 % of the cost will be covered, while
remaining cost will be covered by the WB USD 10 million TA and or the FAO MRV and REL
grant (USD 3.9 million). Eventually the system will be integrated in or replaced by a national
system.
For each strategy option a non-carbon benefits assessment has also been included to accompany the analysis of mitigation benefits, namely:

Social development benefit i.e. anticipated employment in terms of full time equivalents
generated for each strategy option.

Adaptation benefits i.e. actions that strengthen resilience to climate variability and build
structural adaptation, including environmental benefits to biodiversity and hydrology.

Economic development benefits i.e. opportunities for knowledge building, training, and
capacity building in resource management and promotion of sustainable livelihood alternatives and promotion and protection of rights; described as non-carbon benefits in each
strategy option.
The non-carbon benefits are described under each strategy option and should be considered
as indicative as they are determined by the scale and location of each activity and the benefitting population, which are yet to be agreed upon at a later stage.
2.5 Implementation of strategy options
To complement the analysis of ER potential and abatement cost, a SWOT analysis was carried
out to identify key issues and how these could be overcome for a successful implementation of
the OFLP strategy options. The underlying principle is the strategy options are considered as a
set of packages, where the combined interventions reinforce each other and economies of
scale and synergies with existing program reduce overall costs. Considering that performancebased finance has been committed only for the first 5 years of the OFLP, the proposed strate-
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gies are initially assessed for this duration. Then a further up-scaling to achieve climate neutrality (offset all emissions) from the land use sector is modelled. A distinction has been made
between the intervention area (where strategy options are implemented) and the project accounting area. The latter is significantly larger, as there are positive spillover effects from the
strategic investments into these areas. In addition, the project will promote policies and regulations to foster net ERs throughout Oromia.
Finally, a preliminary outline of possible locations for implementation and suggested implementation arrangements are described as have been calculated for the modeling of strategy
options. Note that the assessment was informed by previous projects and available
knowledge. However, subsequent project implementation planning through development of a
Project Implementation Manual is required to identify intervention areas and to scale the proposed interventions based on participatory planning procedures. Clear guidance from this
manual will be important to ensure the project implementation is guided by the principles of
effectiveness, efficiency, fairness, transparency and accountability.
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3 Overview of strategy options
The overall objective of OFLP is to reduce deforestation and achieve net GHG emission reductions (ERs) from land use throughout Oromia. Meeting this objective will require investments
that transform land use, adjustments in regional policy, and capacity building for small holder
land users, cooperatives, and government institutions at the Regional and lower levels. Supporting policies and regulations to enable net ERs will be promoted at the Regional level as
well as through the national REDD+ program.
Three sector-based interventions are proposed: (i) Participatory Forest Management (PFM) –
including commercial sawlog production in the forestry sector; (ii) Sustainable Land Management (SLM) actions in the agricultural sector; (iii) Cookstove production and distribution in the
energy sector. In the following sections, these strategy options are described, including the
process through which these were selected. Each selected strategic option integrates green
business components and seeks to engage key private sector actors as implementation partners. The OFLP interventions are structured to catalyze transformational change towards local
economic development that incorporates environmental and social sustainability. Moving forward, the business models underpinning these sector interventions will be further elaborated
in parallel to the Project Implementation Manual in partnership with key implementation
stakeholders, including OFWE and communities.
3.1 Forestry sector strategy options
The gap between demand and domestic supply of timber and non-timber forest products is
growing in Ethiopia (Lemenih & Kassa 2014). The farming systems of Oromia’s highlands are
characterized by low integration between agricultural (crop and livestock) production and tree
management. Forest management is generally lacking except in certain areas (Tesfaye, 2011).
Since 2007, the Federal Forest Development, Conservation and Utilization Proclamation number 542/2007 made provisions for the ownership of natural forests by local communities.
However, community access to state forests is still highly restricted, exemplified by the timber
harvesting ban on numerous indigenous tree species in natural forests (Tesfaye, 2011). Responsible forest resource management is hampered by conflicting interests between the government and local people, weak enforcement of forest property rights, inadequate resources,
and a lack of sufficient incentive for local people to manage forests (Bekele, 2003).
In order to address forest loss and degradation caused by conversion and unsustainable timber
and wood fuel harvesting while addressing the expanding gap between supply and demand in
the forest sector, the following strategy options have been considered:
1.
Participatory forest management (PFM) including commercial sawlog production
2. Timber production through plantations (private or joint-public investment)
3. Tree planting outside forests (e.g. large-scale reforestation scheme by providing seedlings
to communities)2
4. Area enclosure and assisted natural regeneration
2
Woodlot establishment and ANR are proposed under the agriculture sector component.
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These strategy options have been evaluated according to the criteria outlined in section 2.2.
The outcomes are presented in Table 1 and Figure 1. Consequently, PFM has been selected for
further analysis as the strategy option that is very much in line with government development
priorities in the forestry sector and has a good level of social acceptability, hence, a high
chance of success – as well capable of delivering increased livelihoods benefits from management of forest resources in Oromia. However, as explained in further detail below, PFM comprises a wide range of interventions to reduce deforestation and forest degradation, including
plantation forestry and area enclosure.
Table 1: Assessment of forestry sector potential strategy options
GHG mitigation
potential
for upscaling
Marginal
abatement
potential
1. Promotion of PFM
(expansion
or reinforce
existing)
Has potential for preventing
forest loss
and degradation
Low cost as
largely involves
community
contribution
of labor
High priority
in promotion joint
ownership
and community participation.
2. Timber
plantation
High potential but land
availability is
considered
limiting
factor
Low cost as
many upfront and
recurring
costs covered by
private investor
OFWE prior- Potential
ity and exist- land use
ing expericonflicts
ence
3. Tree
planting
outside
forest
High potential but
needs aggregation of
smallholders
High costs
associated
with aggregation
Priorityexisting
government
programs
Activity/
Investment
4. Area
enclosure
and ANR
Limited
knowledge
of land suitability
Source: TWG, 2014
Government development
priority
Lower inUnclear
vestment
policy supcompared to port
planting
Social
acceptability
Private
sector investment
potential
Beneficial
for communities in
terms of
livelihoods
and capacity
Limited,
entrepreneurial aspects need
reinforcement
Conducive
policy
frameworks
High potential but
needs structuring in
private sector investment window
Limited
previous
engagement
between
OFWE and
private investors in
forest
Risk of tree
Likely to be
damage
small areas
from grazing that are
unattractive
for private
sector
Limited
technical
support
when planting on land
outside
OFWE mandate
Requires
site specific
community
engagement
Requires
strong local
governance
structures
Unattractive
so no involvement
or interest
Institutional capacity
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Figure 1: Evaluation matrix of forestry sector strategy options
GHG mitigation, potential
for up-scaling
Institutional viability/
chances for success
Abatement potential (low
relative costs)
Potential for leveraging
additional finance
Government development
priority
Social acceptability/
livelihood benefits
Timber plantation
Tree planting outside forests
Participatory Forest Management
Area enclosure
3.1.1 Participatory Forest Management
Participatory forest management (PFM), introduced in the mid-1990s in Ethiopia, describes
situations where governments and local communities share responsibility for the management
of forest resources. PFM was introduced in response to past experience showing that topdown “protectionist” forest management approaches are considered unsuccessful and did not
sufficiently consider the social, economic and cultural importance of forests for rural populations (Jirane et al. 2007). Today, PFM is considered the most promising strategic intervention
to avoid deforestation and forest degradation by increasing the economic value of healthy
forest ecosystems. Further, PFM is a government priority, with roughly 2.5 million ha already
under PFM in Ethiopia (Temesgen & Lemenih 2011). There is also general consensus on the
most appropriate implementation practices as outlined in PFM guidelines which are based on
experience with OFWE (Temesgen & Lemenih 2011).
In principle, PFM is a participatory bottom-up process of involving communities in forest management and thus, the specific community engagement strategies to engender sustainable
development at the local level must be developed in partnership with communities and other
stakeholders in the selected PFM localities. Depending on local circumstances (i.e. community
preferences for potential economic activity and local forest resource endowments), PFM manages forests for a range of purposes, including biodiversity conservation, production of timber
and non-timber forest products, and maintaining or enhancing forest regeneration capacity.
However, in practice there are only a few cases where PFM agreements include sustainable
timber utilization rights and PFM is often introduced just on paper with communities lacking
the skills, the formal or informal rights to engage in sustainable forest management practices.
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Due to the enormous pressure on forests and natural resources it is also challenging to provide
all communities that are interested to use the forest with respective rights. Hence only when
rights are transparently and equitably distributed PFM is a real option to reverse the current
trend of forest loss and degradation as local communities engaged in unsustainable forest use
become more aware of the importance of maintaining forest health and are encouraged to
engage in collective forest management. Besides increasing benefits derived from high forests
through sustainable management, PFM also includes measures to reduce pressure on natural
forests through timber plantations, tree planting outside forests and area enclosure. Such
measures are best supported through government or private business to support communities
in implementing the most adapted techniques and management procedures.
3.1.2 Project objectives
The main objective of PFM is to ensure environmental and socio-economic sustainability of the
forest resource by fostering wealth creation based on sustainable natural resource management at the local level. Environmental sustainability is achieved through community involvement in forest management, which enables the forest resources to be more effectively protected from deforestation/degradation while socio-economic sustainability is achieved by increasing livelihood benefits of participating communities through sustainable utilization of the
forest and related resources.
The success of PFM is contingent on its ability to motivate local stakeholders to engage in improved forest management practices. Hence, PFM should incorporate livelihood strategies
(income-generating activities), which allow local communities to receive direct economic benefit. The livelihood strategies introduced through PFM relate to forests either directly, i.e.
through timber or NTFP harvesting; or indirectly through crop diversification and promotion of
agriculture that has less impact on forests or the introduction of alternative protein sources
such as poultry to replace beef, which has much higher emissions per product unit and a
greater environmental footprint resulting from methane, nitrous oxide emissions and soil carbon losses due to overgrazing.
3.1.3 Approach and beneficiaries
In order to transform the forestry sector towards a more productive and efficient sector that is
able to fill the growing gap between forest product supply and demand, especially timber, the
PFM component includes the establishment of commercial timber production schemes. These
schemes will be established as a joint venture between OFWE, private investor and small-scale
woodlot owner. As presented in the figure below two core sawlog production areas, each covering 3,000 ha in the forest buffer zone of Jimma-Illubabor and Bale, will be established and
managed by OFWE, possible in a joint venture with a private investor. In addition smallholder
sawlog producer, covering an area of 2,000 ha in the above mentioned zones, will receive
technical support on raising and marketing sawlogs and quality seedlings to increase the sawlog production scheme. Considering that quality seedling production is lacking in Ethiopia the
option to attract a commercial clonal eucalyptus nursery investor e.g. from South Africa should
be considered. Production sites will be selected using a site – species – market approach. This
means only productive sites will be selected and species will be matched with site conditions
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and market requirements. The timber supply and demand analysis conducted in the framework of the ongoing Forest Sector Review will inform the timber supply requirements for the
industrialization of the timber and forest sector in Ethiopia. To ensure the plantation is established using state-of –the-art practice and innovation in species and seed production, international expertise will be sought from business actors familiar with the context of Oromia.
Figure 2a: Commercial sawlog production scheme
In parallel, natural forest management will be organized through the establishment of Forest
User Groups (FUGs), cooperatives and cooperative unions. FUGs become legally recognized
community-based organizations i.e. CBO/ or an NGO or enterprise – made up of members
from surrounding villages – who are self-motivated to get involved and benefit from structured
management of the nearby forest resources. These FUGs are then grouped into cooperatives
which manage the business aspects of the interventions. Establishing FUGs and operational
cooperatives requires a significant amount of time and resources before permanent ERs can be
achieved. Thus, it is in the interest of OFLP to engage with existing initiatives that have already
established PFM, such as the Bale REDD project. Establishing PFM does not follow a universal
or linear path, as the participatory process must be adapted to the variety of forest ecosystems, technical capacities and socio-economic contexts. The concrete PFM activities described
in this report include natural forest management, enrichment planting and plantations on barren land, which may also be combined with non-forest related alternative income generation
activities, depending on the local ecosystems. Compared to the commercial sawlog production
scheme serving as a resource base for the timber processing industry, the plantations on barren land are primarily used to meet the fuel-wood demand.
Natural forest management is undertaken based on forest management plans in places that
are stocked with existing trees, and do not require planting to optimize stocking level. The
main activities relate to tending of the existing trees e.g. protection from fire, pruning, thinning. Enrichment planting is carried out in degraded areas where stocking and regeneration is
low. Such sites are restored with indigenous species with suitable nursery characteristics and
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reasonable initial growth e.g. Cordia africana Croton macrostachyusand Prunus africana,
Planted trees are managed together with existing trees in order to regain optimum stocking
levels. Plantations are to be established in sites that are degraded/barren or dominated by
grasslands or in areas that have been specifically designated by OFWE for plantation purposes
with the PFM site. Proper plantation silviculture are to be followed in establishment of plantation including site-species matching, proper spacing, and tending operations (i.e. weeding,
pruning and thinning, and fires and pest protection). Depending on the species, the plantations
are harvested for timber at about 19-22 years. In the natural forests, regeneration is spaced,
increment is focused on potential crop trees, and over-mature trees are either protected as
seed trees or for biodiversity protection or gradually harvested. The harvesting approach applied is selective logging where only a few mature trees (1-3) are singled out and cut for desired products (Amente et al. 2006).
The potential ER generated through the adoption of sustainable forest management practices
are 5.35 million tCO2 over 5 years.3 For natural intact forest management the ER potential is
1.34 million tCO2 (average 10.5 / ha / year) over 5 year assuming an annual average deforestation rate of 2 % in the baseline and a reduction by 50 % over 5 years. For enrichment planting
we estimate 2.72 million tCO2 of net GHG benefits, based on the same baseline deforestation
rate and deforestation rate reduction. In addition, we assume increasing carbon stocks due to
improved management and enrichment planting. In the commercial plantation forest model,
we assume a zero-emissions baseline and a non-forested land. The model assumes volume
accumulation of 22 m³/ha/year, equivalent to 42 tCO2/ha/year over the initial 6 years until a
long-term equilibrium of 251 tCO2/ha is achieved. In total the commercial forest component of
10,000 ha will result in 1.3 million tCO2 net carbon stock enhancements over 5 years. For a
detailed description of assumptions for each one-hectare model, please refer to the Annex one
ha models.
Table 2: Key PFM interventions over 5 years
Estimated area
per woreda /
PFM site
Total net GHG
benefits (tCO2/
5 yr)
Annual carbon
benefit
(tCO2/ha/yr)
Forest condition
Proposed PFM
strategy option
Relatively intact forest
Natural forest
management
37,500 ha
1.34 million
10.5
Degraded forest
Enrichment planting
77,500 ha
2.72 million
10.5
Barren land/grassland
Plantation
10,000 ha
1.3 million
41.9
A Participatory Forest Resource Assessment (PFRA) is carried out jointly by local OFWE staff
and the community FUGs to define the specific ER interventions (see Table 2 above). A forest
management plan outlining forest management measures while improving the forest-based
livelihoods of the community is developed. Silvicultural interventions like restricting grazing,
spacing regeneration and harvesting over-mature trees to enable the regeneration to develop
will be introduced, which requires significant training of FUG and continuous accompaniment
3
This assumes a scale of 25 woredas, which can be increased over time.
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of the relevant state forestry entity. Given the limited experience with forest management
planning and silvicultural interventions, capacity building for forester and community FUG
members will be crucial before interventions are implemented.
Depending on the specific conditions, other possible livelihood improvement activities may
include forest coffee management, honey production or other NTFP producing species. Nonforest livelihoods options such as fruit trees (e.g. avocado and mango), enset, or poultry production provide significant additional incomes without compromising forest health (Armeha,
2011). However, livelihood options should remain forest-based to the best extent possible. The
terms of livelihood options must be clearly delineated in the PFM management plan and understood by all parties. An example of a good livelihood approach in PFM is outlined in the
Infobox below. However, not all forested areas in Oromia possess the same timber production
potential:
Infobox: The special case of natural forest management in Adaba-Dodola
Forest cooperatives in Adaba-Dodola area have legal rights to harvest and sale forest products from
the natural forest which is a unique case compared to other PFM sites elsewhere in the country.
Members of WAJIBs sale wood to their respective cooperatives and the cooperatives, depending on
the type of product, sale to their UNION, to other buyers in the nearby markets or further away up to
Adama and Addis. This has been a good source of income for the WAJIB members. Preliminary assessment shows a WAJIB member household on average earns from ETB 120-160 per month from sale
of processed wood products (kenchi- smoothened juniper splits and lumber), excluding fire wood. This
is high income considering the overall average household income in the area. WAJIBs are practicing
their exclusive use right agreements in this respect. It can be considered as good lesson for the other
PFM sites where groups are not allowed to harvest and sale forest products from natural forest.
The pie charts above show the revenue sources from upper (left-hand figure) and lower (right-hand
figure) WAJIB blocks. Total share of forest revenues has increased from 48% and 52% before PFM to
76% and 70% after PFM for lower and upper blocks, respectively. The increment for the lower blocks
(28%) is higher than the upper blocks (18%) due largely to the latter’s ability to legally sell wood from
natural forest and because the lower blocks are endowed with timber species of higher market value.
Thus, in absolute terms, the lower blocks earn high income from wood compared to the upper blocks.
Source: Armeha (2011).
PFM will be implemented by the respective OFWE branch offices (there are nine branches
spread cross the Regional State) with support from NGOs. The transfer of forest use rights and
management responsibilities is made by defining through consensus the boundaries of forest
units, and allocating them to specific FUGs. Then an agreement specifying the rights and responsibilities of FUGs in developing, utilizing, and protecting the forest is drafted via a partici-
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patory decision-making process. Local pressure on forests is clarified, including identification of
who will be the losers of PFM arrangements, and a mutually negotiated formal agreement is
signed between the FUGs/Cooperatives and the government forestry service (OFWE branch
office).
The agreement formalizes the recognition of the FUG/Cooperative as the manager/official
partner in PFM; legitimizes their user rights; and establishes the roles and responsibilities of
the parties. Proper management is ensured via sharing of duties (costs) and revenue (benefits)
among the parties and the FUG/Cooperative/members; and through sanctions (in the case of
non-compliance), and review and adapting of the management and/or agreement. The actual
forest management activities will be guided by a forest management plan, which has to be
designed for the specific forest area, and the FUG/Cooperative byelaws.
To be sustainable in the long term, PFM must be introduced as a livelihoods and business activity, where forest or non-forest based incomes are generated in parallel to setting up the
institutional arrangements required for forest protection. The ultimate goal is for PFM to be
implemented as a business of local forest-based enterprises. Cooperatives are the main mechanism through which these community businesses are established (Ameha, 2014). In most
cases, it will be necessary to establish for-profit and forest protection/community enforcement
institutions (i.e. non-profit) in parallel. To facilitate local business, clusters for local entrepreneurs could be set up to provide credit to finance timber processing and value adding equipment, facilitate marketing and trade activities, or construct necessary infrastructure such as
stores and sawmills. Implementation may also include partnerships with private sector commodity traders such as in the case of the Bonga PFM site, where the forest cooperatives and
the Kaffa Wild Forest Coffee Union have formed a public private partnership (PPP) with support from the GIZ and FAO (see Chapter 4 for further details on private sector intervention).
3.1.4 Potential locations for implementation
PFM is implemented in forested woredas, with a number of woredas in Oromia already under
PFM; e.g. Farm-Africa/SOS Sahel has been implementing PFM in Chilimo, Bonga and Borana,
amongst others (OFWE, 2014). According to the WBSIPP (2004), there are 95 woredas in Oromia with natural forest cover greater than 1,000 ha. This provides a large pool for initial sites
selection. Although the final decision will depend on the results the ongoing national forest
inventory and a consultative process, it is important to focus efforts initially in areas where the
risks or actual incidences of deforestation and forest degradation are high (deforestation
hotspots), and institutional capacity for success can be easily built. Hence, drawing from the
results of the drivers study, the initial sites could include zones such as Guji/Borena, Jimma,
Illlubabor, and Bale. Previous experience shows that PFM works best when the forest are not
heavily disturbed and offer sustainable income opportunities. Avoiding further deforestation
and forest degradation is most important in these areas.
Based on a study conducted on pilot PFM sites (Ameha et al. 2014), the PFM sites are estimated to have the following physical status: about 62% are moderately disturbed but able to naturally regrow without the need for any form of planting; 30% will require enrichment planting in
order to regain optimum stocking levels, and 8% are suitable for plantation. Hence, each site
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can on average be assumed to comprise of 30% natural forest management area (37,500 ha),
62% enrichment planting area (77,500 ha) and 8% plantation area (10,000 ha).
3.1.5 Appraisal
This section presents key figures projecting the PFM strategy options over 5 years, as finance
for this period has already been committed. Table 3 below shows the key performance indicators for the PFM. The estimates are based on technical analysis and modelling of carbon benefits and costs over time. Successful PFM implementation, even at the scale of 25 woredas
(125,000 ha), would generate significant benefits both in terms of climate mitigation (emission
reductions) and household livelihood benefits. The magnitudes of the benefits far exceed the
costs of PFM implementation in the long run. Over the first 5 years costs are higher compared
to the household benefits.
Table 3: Key performance indicators of PFM over 5 years
Indicator
Area (ha)
No. of beneficiaries (households)
Project cost: (USD)
Project cost at Farm/forest level (USD)
Magnitude
125,000 ha
75,000
2,167,500
18,643,100
In-kind contributions: household-level cost (USD)
Estimated emission reductions/carbon stock enhancement
potential (tCO2)
5,353,236
Household-level benefits (USD)4
9,901,320
Average annual employment generated (full time equivalents)
Marginal abatement cost (USD/tCO2) over 20 year period
5,874
1.4
3.1.6 Non-carbon benefits
Ethiopian forests contribute significantly to the energy requirements (for cooking and lighting),
food security, and incomes through timber, and NTFPs. Forests are already an important
sources of household income, but the livelihood benefits derived from forests can be further
enhanced and diversified through the local capacity built through PFM. The livelihoods approach proposed for this component fosters the establishment of sustainable local business
supporting broad-based development. By adding value to forest incomes, PFM is meant to
provide a buffer against extreme poverty, fill seasonal income gaps and serve as a safety net in
times of income crisis. Improved forest management has positive spill-over effects on other
livelihood staples in Oromia’s rural areas, such as hydrology conservation in forested watersheds and biodiversity protection for valuable species such as wild coffee. In addition, the PFM
strategy option contributes on average 5,900 jobs annually over the project lifetime.
4
Household benefits are expected to materialize beyond the five years project cycle.
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3.1.7 SWOT
As with all proposed strategy options, PFM has some strength, weaknesses, opportunities, and
faces some threats that can undermine its success. The evaluation of these strengths, weaknesses, opportunities and threats (SWOT) is summarized in Table 4.
The main strength of PFM is that it has high social acceptance and is favored by the current
paradigm shift from forest-policing to community participation; but its major weaknesses that
need to be addressed relate to quality of community organizations, and derivation and use of
benefits.
Table 4: SWOT assessment for PFM
STRENGTHS
 Has high social acceptance
 Successfully tested and known forest management approach
 Experienced organizations e.g. OFWE, NGOs
(e.g. SOS/Sahel/Farm Africa) can be involved
in implementation.
 A number of development partners are supporting respective schemes such as GIZ and
JICA
 Less expensive to implement compared to
forest-policing
 Policy framework/guidelines exist5
WEAKNESSES
 In most PFM schemes FUGs have not received
any timber use rights and long term incentives to protect the forest are often not sufficient
 In some PFM schemes not all local communities can be involved, which may cause conflicts and equity issues
 Is a learning process in areas where PFM is
new
 Strong and capable local/community organizations have to be built through a long learning process
 Sustainability and longevity difficult without
external support at least initially
OPPORTUNITIES
 High upscaling potential over large forest
areas in Oromia
 Past experiences exist to learn from e.g.
Chilimo, Bonga, Yabello PFM.
 Has political backing from Regional and Federal Governments
THREATS
 Easy to undermine in areas with forest resource conflicts among communities
 Current strict rule on timber resource exploitation is discouraging
 In degraded forest sites, benefits may be little
and discouraging or come much later
 Can be undermined by dishonesty, outright
corruption, and inequity in benefit sharing
 OFWE staffing level is very thin on the
ground, hence, assistance from government
extension services is weak
Mitigating PFM implementation threats/risks
The following are proposed for mitigating the threats/risks and tackling weaknesses that may
impede successful PFM implementation:
1. PFM should be developed primarily where organization structures are in place already
and in a thoroughgoing consultative process involving key stakeholders in the forestry
5
E.g. MoA, 2012. Guideline for Participatory Forest Management in Ethiopia.
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sector – in particular development partners, government agencies, and rural-based NGOs
such as SOS Sahel/Farm Africa – that have been at the forefront of PFM support in the
country.
2. A system of conflict analysis and resolution pertaining forest resource utilization be instituted right away at PFM formulation.
3. There should be full devolution of resource management and user rights to communities coupled with strict and regular monitoring by the government forest service (OFWE).
4. Capacity building will be a key success factor. Local extension agents (Development
Agents) in participating villages should be trained/and equipped with PFM management
skills in order to bolster forest extension support, which at present is minimally provided
by OFWE.
5. FUGs/Cooperatives should have the right to harvest both timber and NTFPs on a sustainable yield basis – in areas where these resources are available. This should be strictly monitored by OFWE.
6. A strong system of accountability be instituted in the process of FUG institutional building
so that members can demand for proper accountability from their leaders – coupled with
continuous monitoring to check if management is on-going as per the agreement signed
with OFWE.
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3.2 Agriculture sector strategy options
Agriculture is the main livelihoods activity in Oromia, with small-scale farming in forest areas
causing significant deforestation and forest degradation. Current farming systems have very
low productivity, which contributes to continuous farmland expansion at the expense of forests. The choice of crop combinations and livestock management approaches result in different degrees of degradation, with certain techniques holding significant potential for increasing
productivity while maintaining tree cover e.g. agroforestry. Combined with improved agricultural extension services, policy frameworks and enforcement capacity, agriculture can continue to be Oromia’s engine of growth without compromising the enhancement and maintenance
of forest cover and health.
In the agriculture sector, three strategy options were considered:
1. SLMP, which includes intensification through sustainable land management practices, and
inputs such as improved seeds and fertilizer – backed by quality agricultural extension
services.
2. Livestock value chain improvement e.g. meat and dairy
3. Expansion of irrigation
Table 5: Assessment of agricultural sector potential strategy options in
the selected target region
Activity/
Investment
GHG mitigation
potential
for upscaling
Marginal
abatement
potential
1. SLMP
High potential to upscale over a
large area
(Oromiawide)
Moderate
costs in
terms of
inputs, increased
labor, and
aggregation
2. Livestock
value chain
improvements
High but not
directly
related to
REDD+
3. Expansion Limited to
of irrigation suitable
agroecology
(water resources
availability)
Source: TWG, 2014
Government development
priority
Hinges on
Agricultural
Development-Led
Industrialization (ADLI)
Social
acceptability
Private
sector investment
potential
Institutional capacity
High understanding
from existing cultural
land management
practices
Limited as
private sector investment tend
to be large
scale and
inputsintensive
Extension
capacities
exist; each
Kebele is
served by 3
DAs
High costs in CRGE interterms of
vention
inputs, infocus
creased
labor, and
capacity
building
Restricted
by traditional livestock
practices
such as free
grazing
Moderate
interest
related
mainly to
diary and
meat
Extension
capacities
exist; each
Kebele is
served by 3
DAs
High infrastructural
cost
Moderate as
requires
behavioral
change from
rain-fed
agriculture
High infrastructural
cost hamper
private sector involvement
Limited
capacity
especially at
lower government
levels
Highlighted
as potential
strategy to
reduce pressure on
forests in
CRGE
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Figure 3: Evaluation matrix of agricultural sector strategy options
GHG mitigation,
potential for up-scaling
Institutional viability/
chances for success
Abatement potential
(low relative costs)
Potential for leveraging
additional finance
Government
development priority
Social acceptability/
livelihood benefits
Livestock value chain
SLMP
Expansion of irrigation
3.2.1 Sustainable Land Management Project
The Sustainable Land Management Project (SLMP) will implement practices that improve the
conditions of environmental resources (land, water, and biodiversity) to meet human needs
while sustaining and/or improving ecosystem services and livelihoods. It will comprise three
components:
1. Climate Smart Agriculture (CSA)
2. Assisted Natural Regeneration (ANR) of degraded sites suitable for reforestation
3. Woodlots on farmer-owned or communal land
The OFLP SLMP strategy option will align with the MoA’s Sustainable Land Management Project (SLMP) which has been running since 2009 in selected watersheds across the country, and
structured around four areas: Integrated Watershed and Landscape Management; Institutional
Strengthening, Capacity Development and Knowledge Generation and Management; Rural
Land Administration, Certification and Land Use; and Project Management. The MoA SLMP is
financially supported by the World Bank, and is now in its second phase with financial commitment of about USD 108 million. Phase II of the SLMP (2014-2018) targets 135 watersheds in
135 woredas spread across the country.
The three SLMP strategy components proposed for the OFLP should build and expand on the
knowledge and experiences gained in the SLMP; hence, the above three components are considered to be implemented as a package. ANR potential has been successfully tested in Ethiopia in projects such as the renowned Humbo and Sodo ANR projects. The Humbo project for
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example, has successfully rehabilitated about 2,700 hectares of degraded lands in SNNPR. The
fundamental principle is to remove the agents of degradation and allow natural regeneration
of trees, complimented by forest restoration and integrated fire protection practices. The site
is placed directly under the management of surrounding community groups; hence, success is
ensured through establishment of strong and capable community organizations.
A parallel SLMP intervention is woodlot establishment, which is common practice in Ethiopia in
areas that are dominated by agricultural land use and already stripped of original natural tree
cover. Farmers plant mainly Eucalyptus to supply fuelwood and construction materials (poles)
for personal use and sale. According to Bekele (2011), there are 0.8 million hectares of farm
woodlots in Ethiopia, with the major species indisputably being Eucalyptus.
3.2.2 Project objectives
SLMP aims to reduce land degradation and improve land productivity, thereby, improving the
ability of the landscapes to provide increased levels of environmental services and livelihoods
benefits. Deforestation and forest degradation is reduced through land sparing which results
from productivity gains combined with policy and institutional adjustments. These objectives
will be met by adopting agricultural land use practices that reduce loss of soils and enhance
productivity – such as biological and physical measures to halt erosion, agroforestry, and vegetating degraded and bare lands through tree planting and removal of factors that are responsible for degradation to allow for natural tree regeneration (ANR). The overall goal of SLMP is
to ensure sustainable increases in agricultural productivity without compromising ecosystem
functions, while reducing pressure on forest resources by increasing forest resource supply
from sources outside forests. These combined measures result in carbon stock enhancement
across the agricultural landscapes.
3.2.3 Approach and beneficiaries
Assisted Natural Regeneration
Assisted Natural Regeneration (ANR) is meant to rehabilitate degraded lands. It will involve
reforestation through natural regeneration of trees by removing from the degraded sites the
agents of degradation such as animal grazing. The ANR sites will be managed by registered
Forest User Groups/Cooperatives, supported by OFWE. The goal is to regain the vegetation
cover, reduce erosion and gradually restore landscape hydrology so as to create favorable
ecological conditions for farming and supply of forest products e.g. timber, NTFPs and nondestructive forest benefits, and carbon sequestration.
Over five 5 years of the OFLP, ANR will be implemented in 25 woredas benefiting an estimated
12,500 households. Developing the ANR component of the SLMP will involve:

Awareness creation meetings as an entry point in the community and trust-building. During the meetings, the goals/objectives, expected benefits, obligations for all parties are
thoroughly discussed and agreed upon.

Identification of sites and boundary demarcation – done in a participatory manner involving all relevant stakeholders. This can be coupled with land use planning or the use
/adaptation of such plans if already available.
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
Creation of community FUGs or cooperatives including by-laws for managing the sites and
benefit sharing arrangement.

Development of a management plan.

Supply of planting materials by establishing community tree nurseries of purchase of seedlings.

Implementation of forest tending activities including planting, weeding of planted stands,
thinning, pruning, de-coppicing, harvesting, etc.

Protection including control of human and animal intrusions, fire, pests, etc.

Continuous monitoring and reporting.
From the experience in the Humbo ANR project and an assignment previously undertaken by
UNIQUE to assess sites suitable for ANR for the purpose of mainstreaming carbon finance in
SLMP II, ANR sites are projected to have varying levels of degradation: about 60 % would be
able to naturally re-grow from existing stumps and seed banks without the need for any form
of planting; 30 % will require enrichment planting with seedlings, and 10% would be suitable
for plantation. Hence, it is assumed that each ANR site would on average comprise of 60 %
natural regeneration area, 30 % enrichment planting area and 10 % plantation area.
Two groups of species will be planted following the forest restoration framework species approach (Elliott et al. 2013). The first group is meant to restore natural species populations and
include indigenous species such as Cordia africana, Croton macrostachyus, Juniperus procera,
Albizia spp., etc. The second group comprises introduced non-invasive tree species, which are
used for establishing pockets of plantation forests on the bare lands, planted at stem density
of about 1,100 stems per hectare. Depending on the quality of control exercised by the cooperative, a buffer (live fence) may be planted around the enclosed area – with species such as
Euphorbia tirucalii, Euphorbia abyssinica, Agave americana to prevent livestock and human
intrusion in the enclosed ANR area.
Only native tree species should be planted on ANR sites for forest restoration and degraded
land. These should be fast-growing and provide products such as timber, poles, and fuelwood.
The indigenous species will be managed using selective harvesting method in which after 1015 years, a few mature trees (about 1-3 trees per ha) are identified, singled out and harvested
for timber. Dry/deadwood from the indigenous tree stands can be harvested to supply fuelwood as per agreed management guidelines.
Woodlots
Unlike ANR, which will sit on communal lands, woodlots are to be established mainly on individual’s lands e.g. outfields far away from the farm house along farm boundaries, grazing
lands, and other portions of land. To safeguard food security, woodlots are allocated to potions of land not used or less suitable for crop cultivation. Woodlots establishment will benefit
an estimated 62,500 households dispersed around the OFLP intervention areas.
The main purpose for planting woodlots is to provide a source of woodfuel for the farmers, in
addition to other products such as poles and timber. By definition, about 40 trees when planted on one distinct piece of land can be considered as a woodlot. The tree species to be planted
will be selected according to farmer’s needs and include Grevillea robusta, Sesbania sesban,
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Acacia decurrence, Leucaena leucocephala, etc. The individual farmer has overall responsibility
for woodlot management and fully owns it; OFLP only provides technical support in terms of
guidance on species selection and tree tending practices, and materials inputs in terms of
seedlings chosen for planting by the farmer. Eucalyptus is preferred not only because of fast
growth and ability to yield various products, but also due to its ability to coppice. It is assumed
that on average, woodlots would be harvested every 6 years i.e. initial crop in year 6; then the
first coppice crop in year 12, and the second coppice crop in year 18.
Climate Smart Agriculture
The CSA will promote the adoption of sustainable agricultural land management (SALM) practices on agricultural lands across Oromia using an extension staff combined with a model
farmer pedagogical approach. It will benefit an estimated 62,500 households over five years.
The SALM practices to be promoted include: agroforestry, reduced tillage, retention of crop
residues on crop fields, compost application, green-manure, physical structures and biological
measures for soil and water conservation, row-planting, cover crops, and the use of improved
crop varieties. These practices will be implemented by farmers on their own lands, backed by
quality extension services provided by Bureau of Agriculture of the respective woredas. The
participating households form farmer groups (20-30 people per group). The farmer groups
select practices which they intend to adopt and receive further training and support from extension officers on the same. The goal is to improve agricultural productivity, nutrition, and
income of the households – in addition to carbon sequestration in soils and tree biomass.
Each extension officer works annually with approximately 300 farmers (~10-15 farmer groups)
– providing support in form of technical training on SALM practices, farm-planning and management, and farm enterprise development. Developing the CSA component will involve the
following:

Stakeholder awareness meetings and consent. Goals/objectives, expected benefits, obligations for participating parties, etc. are thoroughly described and discussed during this process;

Registration of participating farmer groups;

Strategic planning with the farmer groups, and regular training and advisory services on
specific SALM practices to members of the farmer group, and support and guidance on enterprise development such as formation of loans and savings schemes;

Guidance and technical support for bulk crop processing, marketing and input purchase
carried out through existing farmer co-operatives or new ones formed by the farmer
groups;

Continuous monitoring and reporting.
The extension/advisory services, therefore, promotes adoption of SALM practices as well farmplanning, farm enterprise and home economics.
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Climate-smart garden coffee business case
Climate-smart garden coffee intensification introduces climate resilient farming techniques while
increasing yield and farmer incomes. Oromia is Ethiopia’s major coffee producing region with over half
of the country’s total production. Best practice coffee management practices such as replacing overmature bushes, incorporating shade trees, mulching, selective picking of ripe berries, and improved
coffee bean processing can significantly improve yields and incomes at the farm level, while sequestering carbon in plant biomass and soils.
Coffee yields can be increased in the garden coffee system from an average of 0.6 ton/ha to 1.1
tons/ha. The increased productivity (yield per hectare) combined with sustainability certification for
all coffee production areas in Oromia will ensure that no additional forest is converted to coffee, thus,
reducing the contribution of coffee production to overall deforestation/forest degradation while
boosting the livelihoods benefits related to garden coffee production. This approach of tackling deforestation will require strong related policy framework so that increased financial flows from coffee
does not end up being used to expand cultivation in forested areas. Hence, appropriate certification
or regulations regarding private sector investment in coffee that reduces deforestation/degradation
need to accompany this private sector investment window.
Based on a feasibility study on the coffee value chain and a financial farm-level assessment, an increase of the baseline yields of coffee from 0.6 t to 1.1 t of sun-dried coffee is economically attractive
to the farmers raising the annual net income from USD 787 /ha/year to USD 1,378 /ha/year. In order
to achieve this higher labor inputs, higher farm input levels and equipment investments would be
required, and supported by an effective extensions system. Furthermore, sustainable coffee intensification would include the planting of shade trees that leads to a mitigation potential (carbon sequestration) of about 5.8 tCO2/ha/yr. Based on an upscaling to 120,000 hectares over 5 years, the total
carbon benefits in the aboveground, belowground and soil would be about 0.86 million tCO 2 over a
period of 5 years.. Besides the carbon benefits, there are significant adaptation benefits – including
protection of coffee crops against hailstones and drought, which are common problems and already
affecting coffee producing areas in Eastern Oromia. A coffee crop hit by hailstones takes a couple of
years to recover without producing any sizeable yield during that time, which severely threatens the
livelihoods of the coffee farmer. The good agricultural practices would thus enhance climate resilience
of the farm.
3.2.4 Potential locations for implementation
There are 39 woredas from Oromia under current SLMP of the MoA – 15 old ones (those that
were also under SLMP I that ran from 2009-2013), and 24 new (additional) woredas (See Annex 1). The figure below shows the SLMP2 woreads in or in vicinity of the Bale forests (1 woreda) and the Jimma forest area (5-9 woredas) are presented. This indicates a limited overlap
and the requirement either to add targeted woredas to SLMP2 or to directly engage the Bureau of Agriculture in the project implementation in the selected or all woredas.
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Figure 2a: SLMP woredas
Data sources: Global Land Cover, 2009/Ministry of Agriculture, 2014
It should be also noted, however, that under the on-going MoA’s SLMP2, the geographic borderline of all SLMP activities is narrowly defined with reference to a selected watershed, and
no SLMP activities can be implemented beyond this watershed boundary. This has limited the
area extents of interventions since the sizes of these watershed intervention areas average
roughly 10,000 ha. For the OFLP, the project boundary could be defined more broadly (See
UNIQUE report on carbon mainstreaming into SLMP2). However, this implies a slight modification of the SLMP2 implementation procedures.
3.2.5 Appraisal
Key performance indicators of the SLMP are presented in Table 5 below. The three components require sizeable investments, but in return will yield large benefits, c.f. section 3.2.6.
Table 5: Key performance indicators of SLMP over 5 years
Indicator/Components
Magnitude
CSA
Woodlots
ANR
Area (ha)
37,500
12,500
62,500
No. of beneficiary (households)
62,500
62,500
12,500
1,050,000
2,916,375
1,851,938
Farm-level investment (USD)
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SLMP investment and programmatic level cost
(USD)
Total project cost: (USD)
Household-level cost (in-kind contributions)
(USD)
Estimated emission reductions potential (tCO2)
Household-level benefits (USD)
Average annual employment generated (full
time equivalents)
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17,151,391
22,969,703
(sum of two above rows)
44,299,500
1,575,500
2,192,750
315,000
1,047,247
2,669,642
59,006,338
16,407
0
(as harvesting
and benefits
start in year
after 5 years)
584
302,250
812
Marginal abatement cost (USD/tCO2)
3.6
*All the three SLMP components are implemented as a package in the same woreda.
3.2.6 Non-carbon benefits
The three SLMP strategy option components are projected to jointly create about 17,803 average annual full time employment over 5 years period. In addition, rehabilitation of degraded
sites will help to reduce soil and water loss, resulting in improved hydrology and water resources as well as soil productivity as witnessed for example in the Humbo ANR Project in
SNNPR. These improvements will help to moderate the impact of climate change on water and
agriculture, and thus are considered a key adaptation benefit. Furthermore, the building of
institutional structures e.g. farmer cooperatives or FUGs to manage ANR sites will involve
transfer of knowledge and training in several aspects of natural resource management (e.g.
tree planting) and local institution building. This is a major social development benefit – and
government and development partners could use the established capacity and institutions for
channeling further community development agenda.
3.2.7 SWOT
A SWOT assessment for the SLMP is summarized in Table 6 below. Proposals for tackling
weaknesses and mitigating threats are outlined in the subsequent section.
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Table 6: SWOT assessment for SLMP
STRENGTHS
 On-going projects exist to learn from
 Is a government/development partners’
priority - indicated by SLMP I/II support
 Extension structure already exists: about 3
DAs per kebele
 Relatively low cost to implement – as farmers
provide large in-kind contributions (labor)
WEAKNESSES
 Farmers are not organized/aggregated, so
community organizations has to be built
 Market access for agricultural and forests
products is under-developed
 Limited capacity/knowledge in at the local
level
 Young generation often has no access to land
and therefore no opportunity to stay on farm
and engage in farming as a business
OPPORTUNITIES
 Has high upscaling potential across the Regional State
 Has political backing from Regional and Federal Governments
 Relative availability of inputs e.g. fertilizers,
seeds.
THREATS
 Price fluctuations of products
 Middlemen exploitation especially if
groups/cooperatives are weak
 Returns may not be immediate – invest and
wait for returns
 Land use conflict among communities
Mitigating SLMP implementation threats/risks
To mitigate threats/risks and tackle weaknesses that may hamper successful SLMP implementation, we propose the following:
1. A strong capacity building effort be undertaken to build very strong farmer
groups/FUGs/cooperatives – which could eventually be unionized.
2. FUGs/Cooperatives/Unions should eventually be supported through credit facilities to be
able to buy products from members and other producers, add value, and provide loans to
members.
3. Land use planning or use of existing plans at local levels in order to allocate lands appropriately especially for the different SLMP components.
4. A system of conflict analysis and resolution pertaining land uses be instituted right away
during SLMP design.
5. SLPM activities should integrate further technical support for business oriented membership-based initiatives such as loans and savings schemes, and fast-return investments such
as bee-keeping or chicken-rearing.
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3.3 Energy sector project component
The objective of this component is to address the deforestation and degradation in Oromia’s
forested landscapes caused by unsustainable biomass energy use. Successful development of
the country’s biomass energy resources has been hampered by a combination of factors including poor institutional framework, inadequate planning, and lack of a nationally adopted
biomass energy strategy. Any energy sector intervention must be contextualized in Ethiopia’s
overall goal of supplying the fast-increasing energy demand through large-scale hydro dam
construction combined with rural electrification. In the short to medium term however, woody
biomass mainly charcoal in urban areas and firewood in rural areas will remain the main energy sources in Ethiopia (MoWIE 2013, GIZ HERA). The following strategy options were initially
considered:
1. Improved cookstoves
2. Improved kilns for charcoal production
3. Off-grid electrification (by providing sustainable energy sources in remote areas where grid
is not viable)
4. Formalize charcoal supply chain
These options were subjected to evaluation based on a set of criteria outlined in section 2.2,
from which improved cookstoves was selected as the most promising option for the OFLP (see
Table 7 and Figure 4).
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Table 7: Assessment of energy sector potential strategy options
Activity/
Investment
GHG mitigation
potential
for upscaling
Marginal
abatement
potential
Government development
priority
Social
acceptability
Private
sector investment
potential
Institutional capacity
1. Improved
cookstoves
Proven ER
potential
and large
upscaling
potential
Low cost
designs
using local
inputs
Numerous
on-going
programs,
mainly Donor-driven
Successful
dissemination variable, market
analysis key
for adoption
Potential
exists for
production
/supply
Existing
distribution
structures
2. Improved
kilns for
charcoal
production
Faces huge
application
hurdle due
adoption
challenges
and cost
High cost
compared to
traditional
methods
Not welltested, although now
proposed in
National
Biomass
Strategy
Moderate
acceptance
due to cost
and technology
adoption
barrier
Limited
potential
unless
backed by
clear government
programs
Requires
aggregation
of producers, which is
hard to
achieve
3. Off-grid
electrification
Potentially
significant
but additionally may
be contested
High cost to
be borne for
infrastructure
High priority
outlined in
GTP and
CRGE
Moderate
acceptance
due to financial
implications
on households
Minimal, as
part of government
budget
Already
being implemented
by MoWE
4. Formalize
charcoal
supply chain
Low potential due to
difficulty of
aggregating
producers/sellers
Creating
necessary
legal
frameworks
likely to be
expensive
No legal
frameworks
Low acceptance
due to unclear legal
implications
to producers/sellers
Can attract
private sector if backed
by clear
incentives
Requires
aggregation
of producers/sellers,
which is
hard to
achieve
Source: TWG, 2014
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Figure 4: Evaluation matrix of energy sector strategy options
GHG mitigation,
potential for up-scaling
Institutional viability/
chances for success
Abatement potential
(low relative costs)
Potential for leveraging
additional finance
Government
development priority
Social acceptability/
livelihood benefits
Rural electrification
Improved cookstoves
Improved kilns
Formalise charcoal supply chain
3.3.1 Improved cookstoves production and distribution
The main source of household biomass energy consumption demand is for cooking. This strategy option addresses this DD driver through Improved Cookstoves (ICS) production, distribution and use. This component builds on the significant potential for efficiency improvement of
traditional cookstoves and three stone fires.
A number of cookstove programs are already underway in Ethiopia, which OFLP can build upon. However, most programs have urban distribution networks at their core; will very limited
proof of concept for business models targeting the rural population.6 Thus, an in-depth analysis of the ICS potential in rural areas requires further assessment as a priority. In the meantime, the World Bank’s Africa Clean Cooking Energy Solutions (ACCESS) upcoming initiatives
may provide the opportunity to test and upscale a range of ICS models based on what is most
feasible for rural areas or smaller towns. With roughly 90 % of Oromia’s population being rural,
the added value of the OFLP ICS component is to integrate market-based advantages to ICS
throughout the value chain, beginning with large-scale rural consumer engagement to drive up
demand.
6
For example, GIZ SUN-E (2005-2009) distributed 160,000 stoves and HEPNR distributed 205,000 (1998-2006) stoves, but mainly
in urban areas.
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According to the Annual Progress Report of GTP 1 implementation, roughly 3.3 million ICS7
have been distributed from 2010 - 2013. The Ministry of Water and Energy (MoWE) current
goal is to distribute 9.4 million ICS by the end of the GTP period in 2015 through the National
Improved Cook Stoves Program (NICSP). This program intends to catalyze, accelerate and harmonize the existing efforts of the government and the private sector by building a sustainable
and vibrant cookstoves market, a wide-spread communication strategy and institutional capacity building. The NICS Program also intends to establish a carbon financing scheme and establish a monitoring, reporting and verification database system. These efforts should be harmonized with the proposed OFLP cookstove interventions.
On the performance-based side there are two registered Clean Development Mechanism Programme of Activities (CDM-PoA) in Ethiopia as of 31.12.2013 in the UNFCCC database. The
Coordinating and Managing Entities (CMEs) are World Vision and Paradigm Renewables Ltd.
Each PoA has one active CDM program activity (CPA) with the plan to distribute 38,868 and
19,804 ICS for the World Vision and Paradigm Renewables Ltd CPAs respectively starting 2013,
although actual figures of ICS disseminated under this CDM projects are not yet known.
3.3.2 Project objectives
The primarily objective of this strategy option is to reduce non-renewable fuelwood consumption, and in so doing reduce the extent of fuelwood extraction, which is a key driver of deforestation and forest degradation. The improved cookstoves are estimated to reduce fuel consumption by an average of about 30 %. Other related benefits such as reductions in effort and
time that households expend in fuelwood collection, expenses in purchasing fuelwood, and
indoor pollution are additional/co-benefits.
3.3.3 Approach and beneficiaries
The improved cookstoves option should be integrated in the woredas where PFM and SLMP
interventions are being implemented. The direct beneficiaries are households that use firewood as a source of energy for cooking and heating purposes. Each household will purchase
two improved cookstoves at a subsidized price: one for traditional Injera baking, and another
for general cooking/heating purposes. The Injera stove is locally referred to as Mirt, while the
general purpose is Tikikil rocket stove (Figure 5). We calculate a cookstove price of USD 12.5
per cookstove delivered at a market, of which USD 6.5 per cookstove is borne by the household, while the remaining USD 6 per cookstove is subsidized. This price level would be required
to entrepreneurs to achieve a 20 % internal rate of return on investment.
7
Different figures for the total amount of ICS distributed can be found in the literature, e.g. Accenture (2011) estimates 1.8 million
have been distributed over the past five years. This discrepancy is largely due to the lack of a comprehensive monitoring system.
UNDP and SE4ALL are currently developing a GIS-based ICS tracking system to address this.
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Figure 5: Improved cookstove types
Left: Mirt stove
Right: Tikikil stove
Photo credits: GIZ
The units are produced within the project woredas by local producers, and disseminated to
participating households at a subsidized price. The ICS dissemination will involve three key
aspects: production; distribution/marketing and active monitoring of user uptake/adoption
(Figure 6).
Figure 6: Improved cookstove value chain
Given the prominent role of women in cooking and wood fuel gathering, the ICS should be
implemented with women as central actors. In urban areas ICS manufacturers directly sell
stoves - but due to transport difficulties and low sensitization, uptake is low. Therefore, the
approach is for local entrepreneurs including women groups/cooperatives within the woredas
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to be trained in producing and disseminating the ICS, in order to support uptake and replacement of traditional stoves in the long-term. Having the production units at the woreda level
allows for better quality control and monitoring. Microfinance combined with training on business skills would be provided to the production units and cooperatives. Financial support for
initial setup of production facilities is provided through the OFLP to cottage industry entrepreneurs. This has the potential to create many jobs for unemployed youth and women. However,
subsidizing production materials should be minimized as GIZ experience in the case of Mirt
stoves has been that subsidizing raw materials for stove production had a negative effect on
the program’s sustainability (Potts 2007).
Initially, the distribution and installation should ideally be organized through existing government structures i.e. the relevant line ministry: Ministry of Energy. However, the Energy ministry is largely unrepresented at the woreda level; therefore, the distribution is proposed to be
arranged through existing extension service officers i.e. Development Agents, of which about
three are already employed per village. Over-time the producers may take over distribution/marketing as consumers’ interest and demand for ICS increase. This is particularly relevant when stoves have to be replaced i.e. if destroyed or have reached lifespan e.g. after ≥3
years.
The producers and distributors should work in a coordinated manner to avoid supply bottlenecks (over/under supply). Assuming a supply volume of 4,500 stoves a year, a production
target of at least 375 stoves per week should be met. The production unit consists of 3-5 artisans that are trained in technical design and best practices. While the distribution is organized
through transportation of the ICS to village distribution centers – i.e. kebele offices or general
purpose cooperatives if these already exist in the kebele. Producers can also form specialized
cooperatives for distribution/marketing of the ICS.
After installation in beneficiary homesteads, usage is followed up through training and household level surveys (usage, potential improvements to the stoves, emission reduction) that
double as individual training and monitoring events. The extension agents/woreda level survey
official will need to be equipped and enabled to run these trainings and surveys.
In summary, the ICS dissemination will involve the following:

Setting up of production units within participating woredas

Registration of participating households in a consultative process that is being undertaken
for the OFLP as a whole

Distribution and installation in selected homesteads – supported by government institutions. This is for initial installation; future purchase, installation should be market/demanddriven.

Documentation of installed units including accurate records of Identification Numbers (IDs)
and GPS coordinates of the locations of installed units

Continuous monitoring and reporting of use and performance
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3.3.4 Potential locations for implementation
To streamline it with other strategy options, it is proposed to disseminate ICS in the 25
woredas selected for implementing SLMP and/or PFM strategy options; but in terms of upscaling, it could be disseminated in all woredas across all of Oromia.
3.3.5 Appraisal
ICS is potentially a cost-effective way to reduce fuelwood consumption and tackle fuelwood
extraction as a driver of DD. As indicated by the key performance indicators in Table 8 below,
project cost over 5 years are very low even when compared to household-level benefits (savings from reduced purchase of fuelwood) alone.
Table 8: Key performance indicators of improved cookstoves over 5
years
Indicator
Magnitude
No. of beneficiaries (households)
129,375
No. of ICS disseminated
258,750
Project cost (USD)
2,137,500
Household-level cost (in-kind contributions) (USD)
1,552,500
Estimated emission reductions potential (tCO2)
1,210,994
Household-level benefits (USD)
13,714,681
Average annual employment generated (full time equivalent)
226
Marginal abatement cost (USD/tCO2)
-10.8
3.3.6 Non-carbon benefits
Key non-carbon benefits associated with the ICS strategy option include:
1. Employment: job creation in production, distribution, installation and maintenance; this is
estimated over 5 years at about 1,030 full time equivalents (which is equal to 206 full time
jobs for 5 years) for production and distribution and monitoring in OFLP intervention
woredas only – installation and repair/maintenance jobs not counted.
2. Health: reduction in indoor air pollution and associated respiratory health concerns, and
general improvement in the cleanliness and living conditions inside homesteads.
3. Development: reduced time spent in collecting or purchasing firewood, which could be
diverted into other productive economic or social development activities. In addition, ICS
implementation also will help in building local organization capacities at woreda and
kebele levels and for other stakeholders to implement alternative energy technology projects.
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3.3.7 SWOT
Table 9 below summarizes a SWOT assessment for the ICS, and in the subsequent section,
proposals for tackling major weaknesses and mitigating threats are outlined.
Table 9: SWOT assessment for improved cookstoves
STRENGTHS
 High upscaling potential over Oromia as large
populations are still fuelwood dependent
 Easy technology to develop and disseminate
 Benefits are fast, easy to point-out during
dissemination and recognize by users
 Negligible running costs for users
WEAKNESSES
 Requires replacements – every 3 years or so
 Proven business model for commercial ICS
distribution in rural area does not exist and
might be difficult compared to urban areas
where charcoal is purchased and hence direct
cash payments will trigger strong incentives
to buy ICS
 Has largely been localized and small initiatives supported by donors or carbon project
developers, so needs to be popularized
OPPORTUNITIES
THREATS
 Has political/policy backing through a newly
 Initial costs, although low, cannot still be
drafted National Biomass Strategy and Action
afforded by many poor households
Plan
 Likely to face adoption barriers across some
 Can attract private investments
populations due to tradition e.g. smoke is still
used as a means of preserving grass-thatched
 On-going projects exist to learn from
roofs/mosquito control
Mitigating ICS implementation threats/risks
1. ICS should initially be subsidized by being delivered within users’ reach e.g. kebele offices
and prized below (urban) market price. But in the future, with increased adoption/demand, consumers should pay real market price.
2. Thorough sensitization about ICS including its demonstration as a worthy replacement of
and benefits over open three-stone fire should be undertaken to demystify any beliefs that
may hold back interest to own/use ICS.
3. Local materials where available should be extensively used in the production of ICS to cut
cost so that prices are more affordable, and to stimulate local interest in ICS production
and use.
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4 Overall implementation framework
These three strategy options should be implemented as packages, with different combinations
of the three carried out within the identified woredas. The choice of the exact location for the
different options will depend on the options being considered, thus:

PFM should target forested areas primarily those under OFWE’s jurisdiction

SMLP: in woredas under SLMP II or directly implemented by Bureau of Agriculture, with
the CSA component targeting agricultural lands belonging to individual farmers/groups;
woodlot on farmers’ and communal lands that are not being used for crop cultivation such
boundaries of homesteads, crop fields, and parts/boundaries of grazing lands; and ANR on
degraded communal lands, which communities collectively agree to set aside for reforestation

In the selected SLMP and PFM woredas and initially targeting those where households
have the highest dependency on fuelwood extraction from neighboring forests/woodlands
and collection costs/time inputs.
These packages are relevant in particular for the first 5 years of the OFLP, where performancebased finance has been committed. Future up-scaling, for example, to achieve climate neutrality of the respective sectors, could involve much larger areas spread across Oromia. For detailed outline of the implementation framework, please refer to the Climate Focus Legal and
Institutional mid-term report. Here we clarify the costing positions for the modeling calculations.
4.1 Scale: area, finance, and GHG emissions reductions
4.1.1 Area
The scale of the OFLP over 5 years has been estimated based on the target to deliver 10 million
tCO2, which would qualify for the USD 50 million results-based payments over a 5-year project
cycle, including advanced incentive payments.
According to WBSIPP, there are 66 woredas in Oromia with natural forest cover greater than
5,000 ha (see list in Annex). Woredas within the two target areas would be chosen from these
for piloting the PFM strategy option and woredas from SLMP II for the SLM component. PFM
and SLMP could be implemented in the same woredas, which would in fact create synergies
and reduce implementation and transaction costs. The energy component would be implemented throughout. Thus, the three strategy options are integrated and implemented as
packages within the same woredas in order to achieve a high overall impact using the available
resources.
Figure 7 shows the projections of area of interventions over a 20-year period based on available land area estimates. We assume that upscaling of interventions integrating PFM, SLMP,
and ICS would be accomplished during a 5-year period, while in the first year we assume no
project activities would be prepared and no field-based intervention occur. Hence, the scale of
interventions for the first five years would be as follows:
1. SLMP strategy option: 62,500 ha of ANR; 12,500 ha of woodlots, and 37,500 ha of CSA.
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PFM strategy option: 125,000 ha including 10,000 ha of commercial sawlog production.
The total project intervention area is 237,500 ha, with ICS annual production and distribution
reaching up to 112,500 units a year. The below calculations are based on interventions in 25
woredas. The project scale may be variable depending on the area covered within the
woredas. However, each additional woreda makes the project more expensive as there is relatively fixed costs for each woreda. In other words, an economy of scale effect occurs if a more
area is covered within a smaller amount of woredas, while upscaling the interventions across
many woredas generates higher overhead costs with the same GHG benefits. There is a tradeoff however as covering more woredas may increase the positive spillover effects of the OFLP.
The scale of interventions required for climate neutrality i.e. to off-set entire emissions of the
respective sectors is described in section 4.2.
Figure 7: Total area under OFLP strategy interventions
hectar
250 000
200 000
150 000
100 000
50 000
0
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
SLMP Climate-smart agriculture area
SLMP Woodlots area
ANR Plantation
Commercial plantation
ANR Enrichment Planting
PFM sustain. forest magt with enrichment planting
ANR Natural Regeneration Only (No Planting)
PFM - sustain. forest magt
4.1.2 Finance requirements
Figure 8 below compares the abatement potential of the main strategy options. Cookstoves
are by far the most cost efficient intervention that also delivers relatively early ERs, assuming
effective uptake. Although PFM is less cost efficient, this is considered an important entry
point for improving forest governance at the local level while fostering significant local buy-in
through generation of non-carbon benefits and local capacity building. SLMP is also less cost
efficient, although integrating OFLP into on-going interventions (i.e. SLMP2) can reduce costs.
Woodlot establishment can generate significant ERs, which can also be achieved in the fiveyear project cycle when fast-growing species such as eucalyptus are planted. Moreover, SLMP
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has the greatest potential employment benefits, which is explained in more detail in section
5.2.3 below.
Figure 8: Abatement costs (USD per tCO2) over 20 years
The yellow bars in Figure 8 depict the estimated finance required, and the annual potential
performance-based payments are in green bars. The total REDD+ program level and farm level
investments amount to USD 49.85 million while the cumulative performance based payment
potential amount to USD 53 million over the first five years, assuming a price of 5 USD/tCO2. As
shown in Figure 8, advance payments are required over the first four years. In year 1, advancepayments would amount to USD 2.29 million. In year two, ERs would begin to materialize,
generating USD 3.88 million (0.78 million tCO2). With year two investment requirements estimated at USD 8.44 million, accordingly the net financing gap of USD 6.85 million would require
additional advance payments. In year three, the finance gap between programmatic REDD+
cost and potential performance-based payments increases to USD 10.46 million. The breakeven would be achieved in year 5 where USD 3.1 million of performance-based finance would
remain for alternative use.
Given the results-based nature of this type of finance operation, the advanced payments are
best used in the strategy options that generate ERs in the quickest and most risk adverse manner. ICS distribution generates ERs quickest. Although this option carries a risk of incomplete
uptake, the majority of investments from year 2 are in ICS. The exact amount of advanced
payments will be decided through a negotiation process between the World Bank and the government. To further reduce the risks involved with advanced payments, the OFLP should build
on existing initiatives.
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Millions USD
Figure 9: Cumulative investment requirements and performance-based
payments (USD)
60
52,98
49,85
50
42,09
40
34,43
30
25,87
20
15,41
10,73
10
2,29
0
3,88
0,00
2015
2016
2017
2018
REDD+ programme finance requirements
REDD+ performance based payments
2019
4.1.3 Emission reductions and employment potential
The strategy options/components have distinct emissions reductions potential. As shown in
Figure 9, the potential for increased carbon removal through woodlot establishment, for example, is very significant in the first five years. This levels off after trees reaching the harvesting age and a sustainable replanting or coppice cycle is established. ANR also has significant
emission reductions, which continue beyond 20 years (project’s lifetime). Overall, an estimated 10.6 million tCO2 could be achieved over 5 years, with the figure projected to reach 54.9
million tCO2 in 20 years.
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Thousands tCO2
Figure 9: Emission reductions potential of OFLP strategy options
4 000
3 500
3 000
2 500
2 000
1 500
1 000
500
0
2015
2017
2019
2021
2023
Participatory Forest Management (PFM)
Woodlot establisment (SLMP)
Energy efficiency (efficient cookstoves)
2025
2027
2029
2031
2033
Assisted Natural Regeneration (SLMP)
Climate-smart agriculture (SLMP)
Figure 0 shows the combined estimations of the potential employment benefits resulting from
the OFLP, which are previous outlined under non-carbon benefits in the sub-sections of respective strategy options. CSA has potential to generate more employment benefits than any
other component. From the 25 woredas, on average annually 23,902 total full time employments are estimated to be generated over 5 years, rising to average annual employing 43,112
people full time over 20 years).
Figure 10: Employment potential
Full time equivalent
80 000
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
2015
2017
2019
2021
Energy efficiency (efficient cookstove)
Assisted Natural Regeneration (SLMP)
Climate-smart agriculture (SLMP)
2023
2025
2027
2029
2031
2033
Participatory Forest Management (PFM)
Woodlot establisment (SLMP)
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4.2 Scale required for climate neutrality
As outlined in the CRGE Strategy, Ethiopia aims to become climate neutral by 2030 while
achieving middle income status. Since Ethiopia provided the first and latest national GHG inventory report in October 2001, the CRGE provides the latest government approved estimates
of Ethiopia’s GHG emissions. The CRGE also developed a national emissions baseline scenario
that projects how GHG emissions are likely to develop over time. In 2010, national GHG emissions were 150 million tCO2. This is projected to increase to 400 million tCO2 in 2030. The
land use sector (forest and agriculture) make up roughly 87 % of the total GHG emissions
(130.5 million tCO2 in 2010 and projected to increase to 275 MtCO2 in 2030). Livestock is the
largest source of GHG emissions in Ethiopia contributing about 40 % of overall emissions (65
million tCO2 equivalent in 2010). About 90 % of the livestock emissions are related to enteric
fermentation, while 10 % are nitrous oxide emissions released during decomposition of manure. Livestock emissions are not directly addressed by the proposed strategy options, but we
highlight the relevance in section 5.4 of this report.
Excluding livestock related GHG emissions, the total annual land use GHG emissions in Ethiopia amount to 65 million tCO2 in 2010 and will increase to 150 million tCO2 in 2030.
As there is no sub-national GHG emissions inventory available, we use Oromia’s land area and
population as a proxy for estimating Oromia’s contribution to national GHG emissions. Oromia’s land area is roughly 32 % of the total land area, and its population is about 37 %. Based
on this we assume that approximately 35 % of total Ethiopia’s GHG emissions originate from
Oromia. This implies annual land use GHG emissions (excluding livestock sector emissions 8)
in Oromia of 23 million tCO2 in 2010 and 52.5 million tCO2 in 2030 according to the CRGE projections.
Climate neutrality of the 2010 land use GHG emission levels
In order to achieve climate neutrality only of the land use GHG emissions (excl. livestock) of
the 2010 GHG emissions levels, an upscaling of the base case scenarios would be required.
This would imply upscaling in terms of areas within each woreda as well as upscaling the number of woredas with the proposed strategy options. In our climate neutral scenario 23.3 million
tCO2 could be achieved by upscaling PFM9 activities to 50 woredas and to 160 woredas with
SLMP and energy efficiency components while at the same time doubling the area within the
woredas for PFM and SLMP and production capacity within the energy efficiency component.
This upscaling increases the average 20 year annual GHG emission reductions/carbon stock
enhancements to the 2010 GHG emission levels (23.3 million tCO2/year). The total area of
activities would amount to 500,000 ha PFM, 1.44 million ha SLMP and 160 cookstove production units (23.22 million efficient cook stoves supplied over 20 years). In order to achieve this,
the net OFLP finance demand (incl. programmatic cost for each component and farm level
investments) amount to USD 695 million over 20 years and about 222 million over the first 5
8
Including livestock GHG emissions, the total land use GHG emissions are: 46 million tCO2/year in 2010 and 96 million tCO2/year
in 2030. And because the OFLP does not directly address non-land use related livestock GHG emissions we have excluded it from
our calculations.
9 We consider that PFM can only be upscaled to about 50 woredas that include natural forest areas.
46
Final Report
Strategy Options for Oromia REDD+ Program
UNIQUE/CONSCIENTIA
years. In-kind contribution amounts to USD 4.42 billion. On average around 413,400 jobs
would be created.
Climate neutrality of the 2030 land use GHG emission levels
In order to achieve climate neutrality for the land use BAU levels in 2030 (52.5 million tCO2)
(excluding livestock sector emissions), we assume, upscaling of PFM to 50 woredas and of the
remaining strategy options to 190 woredas. This would result in 53.7 million tCO2 / year. This
upscaling rises the total activities to 1 million ha under PFM; 3.42 million ha under SLMP and
180 cookstove production units at increased capacities (18,000 energy efficient cookstoves
per year) and total supply of 55.5 million energy efficient cook stoves over 20 years. This results in economies of scale and reduction of the required investment per avoided/sequestered
tCO2. The net REDD+ finance requirement (programmatic cost for each component and farm
level investments) amount to USD 1.2 billion over 20 years and USD 411.6 million over the
initial 5 years. On average around 1.08 million jobs would be created by 2030.
Snapshot – Climate neutral land use sector in Oromia (excl. livestock) over 20
years
Scenarios
BAU 2010 emissions levels
BAU 2030 emissions levels
Key business as usual GHG emissions sources and scenarios in Oromia
Total annual GHG emissions
52.5 million tCO2
140 million tCO2
Total annual land use
(incl. livestock)
45.7 million tCO2
96.3 million tCO2
23 million tCO2
52.5 million tCO2
Total annual land use emissions
(excl. livestock)
Key performance indicators of climate neutral land use sector scenarios (excl. livestock)
Average annual GHG emissions
reduction / carbon stock
enhancement (tCO2)
Scale of strategy options
interventions
Employment generated (average
annual job - 20 years
23.3 million tCO2
PFM: 50 Woredas (500,000 ha)
SLMP: 180 Woredas (1.44 million ha)
ANR: 480,000 ha
Woodlots: 160,000 ha
CSA10: 480,000 ha
EEC11: 160 Woredas (160 production units, each produces
9,000 units/year))
413,400
Investment summary
10
11
Climate smart agriculture
Energy efficient cookstoves
53.7 million tCO2
PFM: 50 Woredas (1million ha)
SLMP: 190 Woredas (3.42 mln
ha)
ANR: 1.14 million ha
Woodlots: 0.38 million ha
CSA: 1.14 million ha
EEC: 180 Woredas (180 production units, each produces 18,000
units/year))
1.08 million
47
Final Report
Strategy Options for Oromia REDD+ Program
UNIQUE/CONSCIENTIA
5 years: USD 221.8 million
5 years: USD 411 million
20 years: USD 695 million
20 years: USD 1.2 billion
In-kind contribution - 20 years
(USD)
USD 4,416 million
USD 10,370 million
Farm-level benefits (USD)
USD 11,349 million
USD 27,831 million
REDD+ programmatic
investment required (USD)
5 Next steps
The main goal of this assignment is to provide the detailed information required for the design
of the Oromia project, more specifically, how and where the advanced payments should be
invested in order to generate Emission Reductions creating a cycle of results-based payments.
This technical report should provide the basis for discussion on the key elements of the World
Bank Project Appraisal Document (PAD). This technical design now needs to be discussed with
implementation partners and a detailed implementation design has to be outlined for the Project Implementation Partner.
48
Final Report
Strategy Options for Oromia REDD+ Program
UNIQUE/CONSCIENTIA
6 References
Accenture Development Partnerships. Enhancing Markets for Delivery of Improved Cookstoves
Development and Promotion Support in Ethiopia: Market Analysis, Recommendations and
Program Plan FINAL. Developed for the Ethiopian Federal Ministry of Water and Energy in
partnership with the BARR Foundation and with the support of the Global Alliance for
Clean Cookstoves. 2011
Ameha, A. 2011. Performance of old PFM sites in Adaba-Dodola, Chilmo, Borana and Bonga
sites: Final report. January 2011.
Amente, G, Huss, J., Tennigkeit, T. 2006. Forest Regeneration without planting: The case of
community managed forests in the Bale Mountains of Ethiopia. Journal of the Drylands,
1(1), 26-34.
Bekele, M. 2003. Forestry property rights, the role of the state and institutional exigency: the
Ethiopian experience. Department of Rural Development. Uppsala, Swedish University of
Agricultural Sciences.
Bekele, 2011: Forest Plantations and Woodlots in Ethiopia.
Elliott, S. D., Blakesley, D. and Hardwick, K. 2013. Restoring Tropical Forests: A practical guide.
Royal Botanic Gardens, Kew; 344 pp.
FAO. Dairy Production System in Ethiopia. Authored by Ketema, H & Tsehay, R. Ministry of
Agriculture, Ethiopia. Available here.
FARM-Africa; SOS Sahel Ethiopia 2007. The Key Steps in Establishing Participatory Forest Management: A field manual to guide practitioners in Ethiopia. Best Practice Series No. 1.
Hurni, H. 1988. Degradation and Conservation of the Resources in the Ethiopian Highlands.
Mountain Research and Development, 8(2/3), 123-130.
Jirane, T., Tadesse, T., Temesgen, Z. PFM in Oromia and SNNP regions of Ethiopia: a review of
experiences, constraints and implications for forest policy. Presentation by FARMAfrica/SOS Sahel, 19 September 2007.
Lemenih, M, and Habtemariam K. "Re-Greening Ethiopia: History, Challenges and Lessons."
Forests 5.8 (2014): 1896-1909.
Lukuyu, B., Gachuiri, C., Lukuyu, M., Lusweti, C. and S. Mwendia. 2012. Feeding dairy cattle in
East Africa. East Africa Dairy Development Project. Available here.
Makoni, N; Mwai, R; Redda, T; Zijpp, A. van der and J. van der Lee (2013) White Gold; Opportunities for Dairy Sector Development Collaboration in East Africa. Centre for Development Innovation, Wageningen UR (University & Research centre). CDI report CDI-14-006.
Wageningen.
MoWIE Biomass Energy Strategy Ethiopia. Supported by European Union Energy Initiative
Partnership Dialogue Facility (EUEI PDF) and Deutsche Gesellschaft für Internationale
Zusammenarbeit (GIZ). Authors: Susanne Geissler, Dietmar Hagauer (PM), Alexander
Horst, Michael Krause, Peter Sutcliffe (TL). 23 December 2013.
Potts, K. Experience Exchange on Marketing of GTZ Household Energy Interventions. Workshop
Report for GTZ. 22-26 January 2007.
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Strategy Options for Oromia REDD+ Program
UNIQUE/CONSCIENTIA
Oromia REDD+ Technical Working Group (TWG) 2014. Workshop report: Oromia Forested
Landscape Project – Report on Technical Meeting to Discuss Drivers Assessment and provide guidance on Strategy Options to address those Aug. 11-12, 2014. Adama.
Tadesse, G., Zavaleta, E., & Shennan, C. 2014. Coffee landscapes as refugia for native woody
biodiversity as forest loss continues in southwest Ethiopia. Biological Conservation, 169,
384-391.
Tefera, B. Nature and causes of land degradation in the Oromiya Region: A review. Vol. 36. ILRI
(aka ILCA and ILRAD), 2002.
Tekle, K. 1999. Land degradation problems and their implications for food shortage in South
Wello, Ethiopia. Environmental Management, 23(4), 419-427.
Temesgen, Z. & Lemenih, M. Refined and Simplified Guideline for Up Scaling PRM in Ethiopia.
November 2011, Addis Ababa.
SNV (2008) Dairy Investment Opportunities in Ethiopia. SNV Netherlands Development Organisation, Addis Ababa.
USAID (2013) Agricultural Growth Project – Livestock Market Development. Value chain analysis for Ethiopia: meat and live animals, hides, skin and leather, dairy.
Yilma, Z., G.B., Emannuelle and S., Ameha. 2011. A Review of the Ethiopian Dairy Sector. Ed.
Rudolf Fombad, Food and Agriculture Organization of the United Nations, Sub Regional Office for Eastern Africa (FAO/SFE), Addis Ababa, Ethiopia, pp 81.
Websites:
Energizing Development (EnDev)
GIZ HERA Cooking Energy Compendium.
50
Annexes
Annex 1: List of SLMP woredas in Oromia Regional State
Annex 2: List of high-forest-cover woredas in Oromia
Annex 3: Maps of Oromia Forested Landscapes
Annex 4: Hectare based financial assessment of proposed interventions
Annex 5: Addressing livestock emissions
Annex 1: List of SLMP woredas in Oromia Regional State
Green Colour = New; Black = Previously under SLMP I
Zone
South West Shoa
Jimma
Illu-AbaBora
West Wollega
East Wellega
West Showa
Guji
Horo Guduru Wellega
Kelem Wollega
North Shewa
East Harerge
Jimma
Nort Shewa
Finfinne Zuria
East Shewa
Jimma
West Wellga
Finfinne Zuria
South west Oromia
Illubbabora
Guji
East Wellega
Woreda
Wanchi
Mana
Goma
Gachi
Mettu
BojiDirmaji
Begi
Kondala
Sibu Sire
Sasiga
Jimma Arjo
Adaa Berga
Ejere
Dandi
AnaSora
Amuru
Abay Choman
Horo
Sayo
Lalo kille
Hawa Wollel
Kuyu
Warajarso
Kersa
Haremaya
TiroAfata
Abote
Degem
Walmara
Gimbichu
Omo Nada
Sigmo
Gimbi
Sebeta Awi
Qarsa Lema
Woliso
Nopa
Uraga
Sayo
Watershed
Tiliku Ameya
Guya
Degeja
Tesa
Konori
Finchea
Tobi
Genafi
Dormu
Guji
Denbi
Kerisa
Huluka
Jemjem
Ababa
Hida
Fincha
Amerti
Bego
Berber
Bole
Dance
Chirecha
Upper diredawa 1
Lake Almaya zuria
Nedi
Alaltu
LagaWarke
Wachacha
Dalecha
Nada Asendabo
Halu Deneba
Gafera
Atbela
Tinishu Lemen
Rebu
Geba
Bangasa
Meki
Annex 2: List of high-forest-cover woredas in Oromia
Woreda
Darolebu
Guba Koricha
Welmera
Fantale
Kofele
Boset
Chiro
Tena
Bedele
Gawa Dale
Gasera Golocha
Kokosa
Arsi Negele
Gechi
Sasiga
Uraga
Merti
Aseko
Teltele
Ameya
Goro
Hawa Welel
Sibu Sire
Limu Seka
Dega
Guto Wayo
Abe Dengoro
Nole Kaba
Agarfa
Munesa
Arero
Hagere Mariam
Dano
Dedo
Bila Seyo
Gura Damole
Jima Gidami
Mena
Nono
Supe & Sodo
Bure
Kersa
Meda Walabo
Yabelo
Berbere
Metu
Bore
Sinana Dinsho
Chora
Setema
Natural forest (ha)
5,016
5,023
5,244
5,357
5,874
6,028
6,578
6,766
7,240
7,252
7,442
7,531
8,031
8,148
8,208
8,483
8,855
10,086
10,180
10,403
10,840
11,048
11,277
12,468
13,304
13,451
13,785
14,360
14,749
15,118
15,188
15,460
16,439
18,224
19,233
22,796
23,516
24,368
24,754
26,984
29,388
31,502
31,812
33,744
36,274
37,060
37,726
40,522
41,400
42,954
Plantation (ha)
845
3,005
1,312
2,117
2,173
984
189
6,282
70
1,830
2,429
4,965
9,370
3,120
-
Woodland (ha)
15,764
79,982
85,336
74,284
34,598
44,475
65,140
61,265
77,160
44,952
56,898
118,594
32,872
59,742
69,916
18,984
9,796
1,042,033
448,340
6,622
16,756
52,610
195,681
254,572
17,311
2,688
85,052
2,107
461,067
448,305
97,724
32,988
10,772
700
-
Seka Chekorsa
Gomma
Anfilo
Dodola
Sigmo
Limu Kosa
Yayu
Adaba
Odo Shakiso
Adola na Wadera
Goba
Ale
Gera
Nensebo
Mena na Harena
Nono
Source: WBSIPP, 2004
44,448
58,327
61,012
66,110
66,755
74,082
79,956
83,677
84,005
88,715
89,147
99,474
103,282
152,324
213,876
269,272
6,832
1,114
-
5,640
725
81,600
93,667
309,886
178,886
2,396
1,812
254,354
6,516
Annex 3: Maps of forested landscapes in Oromia
Forest and non-forest
Source:WBISPP
Deforestation hotspots- Forest Change 2000-2012
Source: Hansen/UMD/Google/USGS/NASA, note 30% tree cover is used as threshold for forest
Annex 4: Hectare based financial assessment of proposed
interventions
In the following sections we present summaries of 1-ha based farm-level business cases for the
activities proposed under each strategy option. First, we present the key variables used, followed by a cash-flow analysis, which illustrates the viability of the proposed interventions, and
finally the estimated carbon benefits. For improved cookstoves, the unit of analysis is the
household rather than hectare. In all cases, institutional set-up and operational costs are not
included in the farm-level assessments as they are taken into account at the programme level.
Participatory Forest Management
Three PFM activities are proposed to be implemented depending on the stocking level of the
forest site:
Table 10: Participatory forest management activities
Proposed activity
Forest condition
Sustainable natural forest management with no planting
Relatively intact forest
Sustainable natural forest management with enrichment planting
Degraded forest
Commercial plantation
Barren land/grassland
Sustainable natural forest management with no planting
In this case, SFM is undertaken in natural forests that are relatively intact and well-stocked,
hence, do not need any form of planting to improve stocking level.
Key variables
The key variables used to model this business case are presented in Table 11 below.
Table 11: Key variables – SFM natural forest with no planting
Production
Unit
Source
Baseline carbon stock
827 tCO2/ha
Based on DNV MRV report,
2014
Annual biomass increment
12 tCO2/ha/year
Moges et al., 2010
Average biomass removals - roundwood
0.6 m³/ha/year
(1.1 tCO2/ha/year)
Humbo and Soddo PDD
Average biomass removals - fuelwood
0.4 m³/ha/year
(0.7 tCO2/ha/year)
Humbo and Soddo PDD
USD 5/ha
Local expert estimate
USD 5/ha
Local expert estimate
Investment cost
Boundary delineation: year 1
Recurrent management cost
Boundary maintenance: annual
Pruning, thinning, climber cutting, etc.: year 2,
USD 25/ha
then every 5 years thereafter
Local expert estimate
Patrol/monitoring and fire protection: annual
USD 10/ha/year
Local expert estimate
USD 36/m3
Adapted from Bekele, 2011
Revenues
Roundwood price
3
Fuelwood price
USD 17/m
Roundwood harvest cost
USD 15/m3
Fuelwood harvest cost
Average harvested NTFPs value
NTFP harvest cost
3
Adapted from Moges et al.,
2010
Local expert estimate
USD 5/m
Local expert estimate
USD 19/ha/year
Adapted from Reichhuber &
Requate, 2006
USD 5/ha
Adapted from Reichhuber &
Requate, 2006
Financial assessment
A cash-flow analysis, which summarizes the net annual and cumulative revenues for one hectare, was estimated from the variables in Table 11 above. We assume that harvest of roundwood, fuelwood and NTFPs for sale is commenced in the second year of project implementation, when FUGs are fully established and operational. In the first three years cumulative cashflows are negative. The break-even point is achieved in year four (Figure 10). Until breakevenpoint, a total investment of USD 131/ha is required. The NPV for this activity is calculated at
USD 57 per ha using a discount rate of 10%, while the IRR is estimated at 43 %.
Figure 10: Annual and cumulative cash flows for natural forest management with no planting (at current costs)
Net revenues (USD)
200
150
100
50
0
-50
Year
Annual cashflow
Cumulative cashflow
GHG mitigation benefits
GHG mitigation benefits have been estimated based on an average ha-model from carbon
stock enhancement potential arising from annual per ha volume increment and from avoidance of deforestation (Table 11). Hence, we assumed:
 Baseline deforestation rate of 2 % per annum.
 Reduction in deforestation compared to baseline in year 2 - 5 of 25 %
 Reduction in deforestation compared to baseline in year 6 - 20 of 50 %
In the baseline scenario, carbon stock would decline at a rate proportional to the deforestation
rate from 811 to 656 tCO2/ha over 20 years; while the carbon stock in the project scenario
would increase equivalent to annual volume increment minus harvests from 827 to 867
tCO2/ha (Figure 10). The annual GHG mitigation benefit of this activity averages 11 tCO2/ha.
Figure 11: Baseline and project scenario carbon stocks for natural forest
management with no planting
Carbon stock (tCO2/ha)
900
800
700
600
500
400
Year
Baseline scenario carbon stock (tCO2/ha)
Project scenario carbon stock (tCO2/ha)
Sustainable natural forest management with enrichment planting
This activity applies to degraded forest, where stocking level is sub-optimal; hence, enrichment
planting is undertaken to improve stocking level. A total of 400 indigenous tree seedlings is
planted per ha. The planted seedlings will reach maturity (for roundwood harvest) after 30
years.
Key variables
Table 12: Key variables – SFM natural forest with enrichment planting
Production
Unit
Source
Baseline carbon stock
662 tCO2/ha
Based on DNV MRV report,
2014
Annual biomass increment
6m³/ha/year
(12 tCO2/ha/year)
Moges et al., 2010
Average biomass removals - roundwood
0.6 m³/ha/year
(1.1 tCO2/ha/year)
Humbo and Soddo PDD
Average biomass removals - fuelwood
0.4 m³/ha/year
(0.7 tCO2/ha/year)
Humbo and Soddo PDD
Boundary delineation: year 1
USD 5/ha
Local expert estimate
Seedlings cost (400 seedlings per ha): year 1
USD 84/ha
Local expert estimate
Investment cost
Recurrent management cost
Boundary maintenance
USD 5/ha
Local expert estimate
Pruning, thinning, climber cutting, etc.: year 2,
USD 15/ha
then every 5 years thereafter.
Local expert estimate
Patrol/monitoring and fire protection: annual
USD 10/ha/year
Local expert estimate
Roundwood price
USD 36/m3
Adapted from Bekele, 2011
Fuelwood price
USD 17/m3
Adapted from Moges et al.,
2010
Roundwood harvest cost
USD 15/m3
Local expert estimate
Fuelwood harvest cost
USD 5/m3
Local expert estimate
USD 19/ha/year
Adapted from Reichhuber &
Requate, 2006
USD 5/ha
Adapted from Reichhuber &
Requate, 2006
Revenues
Average NTFPs value
NTFP harvest cost
Financial assessment
Based on the key variables in Table 12, the net annual and cumulative revenues estimated for
one hectare are shown in Figure 12. Cumulative cash-flows are negative in the first fourteen
years. The break-even point is achieved in year fifteen. To reach breakeven-point, a total investment of USD 640/ha is required. The NPV for this activity is estimated at USD - 42 per ha
using a discount rate of 10 %, and the IRR at 3% - indicating that PFM sites that require a large
amount of planting are not commercially attractive during the first 20-year period; the situation may, however, change in the long-term when planted trees reach maturity i.e. above 30
years, and are harvested for cash sales.
Figure 12: Annual and cumulative cash flows for natural forest management with enrichment planting (at current costs)
Net revenues (USD/ha)
60
40
20
0
-20
-40
-60
-80
-100
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
-120
Year
Annual cashflow
Cumulative cashflow
GHG mitigation benefits
GHG mitigation benefits are achieved annual biomass increment and from avoided deforestation. Hence, we assumed:
 Baseline deforestation rate of 2 % per annum.
 Reduction in deforestation compared to baseline in year 2 - 5 of 25 %
 Reduction in deforestation compared to baseline in year 6 - 20 of 50 %
In the baseline scenario, carbon stock would decline at a rate proportional to the deforestation
rate from 648 to 525 tCO2/ha over 20 years; while the carbon stock in the project scenario
would increase equivalent to annual biomass increment minus harvests – from 664 tCO2/ha in
year 1 to 735 tCO2/ha in year 20 (Figure 13). The annual GHG mitigation benefit in this activity
averages 11 tCO2/ha.
Carbon stock (tCO2/ha)
Figure 13: Baseline and project scenario carbon stocks for natural forest
management with enrichment planting
800
700
600
500
400
Year
Baseline scenario carbon stock (tCO2/ha)
Project scenario carbon stocks (tCO2/ha)
Commercial plantation
Commercial forest plantations are established on bare lands i.e. lands that do not have natural
vegetation and on grasslands. Standard plantation silviculture is applied – including site preparation, planting, and tending of the planted trees. We assume planting of Eucalyptus at a planting density of 1111 seedlings per ha (i.e. 3 m x 3 m spacing), with final harvest at year 15, followed by coppicing12.
Key variables
Key variables including farm-level costs are shown in Table 13 below.
Table 13: Key variables – commercial plantation
Production
Unit
Source
Baseline carbon stock
5 tCO2/ha
WBISPP, 2004 report (unstocked grassland)
Annual biomass increment
22m³/ha/year
(48 tCO2/ha/year)
Moges et al., 2010
Biomass removals – all thinnings
113 m³/ha
(247 tCO2/ha)
Bekele, 2011
12
Note: we assume a well-managed Eucalyptus plantation, where final cut for roundwood is achieved at
age 15; otherwise Eucalyptus rotations in currently poorly-managed forest plantation Ethiopian is usually quoted as 18/19 years (Bekele, 2011; Moges et al., 2010).
217 m³/ha
(475 tCO2/ha)
Bekele, 2011
Site preparation, marking, pitting, planting
USD 754/ha
Local expert estimate
Boundary delineation: year 1
USD 5/ha
Local expert estimate
Seedlings cost (1111 seedlings per ha): year 1
USD 233/ha
Local expert estimate
Boundary maintenance: annual
USD 5/ha
Local expert estimate
Weeding: annual year 1-3
USD 32/ha
Local expert estimate
Thinning and pruning (limited extent); deUSD 60/ha
coppicing: year 4, 6, 9 and 13
Local expert estimate
Patrol/monitoring and fire protection: annual
Local expert estimate
Biomass removals - final harvest
Investment cost
Recurrent management cost
USD 5/ha/year
Project management (administration and techUSD 95/ha/year
nical): annual
Local expert estimate
Revenues
Roundwood price
USD 39/m3
3
Fuelwood price
USD 21/m
Roundwood harvest cost
USD 15/m3
Fuelwood harvest cost
Financial assessment
3
USD 5/m
Adapted from Bekele, 2011
Adapted from Moges et al.,
2010
Local expert estimate
Local expert estimate
GHG mitigation benefits
GHG mitigation benefits are derived from annual biomass increment. In the baseline scenario,
the site is assumed to remain unstocked, therefore, its carbon stock level remains unchanged
(5 tCO2/ha); while the carbon stock in the project scenario would increase equivalent to annual
biomass increment minus harvests – from 5 to 475 tCO2/ha in one rotation, before the cycle is
repeated (Figure 14). The annual GHG mitigation benefit averages 42 tCO2/ha over the initial 6
years until a long-term equilibrium of 251 tCO2/ha is achieved.
Figure 14: Baseline and project scenario carbon stocks for commercial
forest plantation
Carbon stock (tCO2/ha)
500
400
300
200
100
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
-
Year
Baseline carbon stock (tCO2/ha)
Project scenario carbon stock (tCO2/ha)
Sustainable Land Management Project
Five SLMP activities are proposed to be implemented as shown in Table 14 below:
Table 14: SLMP activities
Proposed activity
Site conditions
Climate smart agriculture (CSA)
Agricultural land
Woodlot
Barelands/grassland
ANR - no planting
Degraded forest land with adequate
seed/coppice stumps for natural regeneration
ANR - enrichment planting
Degraded forest sites requiring additional planting to foster adequate regeneration
ANR - plantation
Barelands/grassland
Climate smart agriculture
CSA involves implementing agricultural practices that enhance productivity and sequester carbon e.g. agroforestry and residue management. The activities are undertaken at the farm level.
Key variables
Table 15 summarizes the key variables used to model CSA financial and GHG mitigation benefits. All costs indicated occur at the farm-level.
Table 15: Key variables – climate smart agriculture
Production
Unit
Source
Average baseline crop yield – cereals
1.8 ton/ha/year
Woreda expert estimate
Average baseline crop yield – pulses
1.2 ton/ha/year
Woreda expert estimate
% increase in crop yields in the project case
50 %
Local expert assumption
% of land allocated to cereals
80 %
Based on Berhane et al., 2011;
CSA, 2012.
% of land allocated to pulses13
13 %
Based on IFPRI, 2010.
Average annual carbon stock enhancement
3 tCO2/ha/year
Estimate from SLMP II project
Baseline carbon stock
8 tCO2/ha/year
WBISSP, 2004
Investment cost
Agroforestry seedlings (50 seedlings per year):
10 USD /ha/year
year 1-4
Local expert estimate
Recurrent cost
Labor cost (140 days per ha): annual14
378 USD/ha/year
Local expert estimate
Seed cost: annual
17 USD/ha/year
Local expert estimate
Fertilizers (50 kg/ha/year): annual
25 USD/ha
Local expert estimate
Implements/tools: annual
19 USD/ha
Local expert estimate
Average price of cereals
330 USD/ton
Woreda expert estimate
Average price of pulses
460 USD/ton
Woreda expert estimate
Average yield of cereals from year 5 and above
2.8 ton/ha/year
50% increased assumed
Average yield of pulses from year 5 and above
1. 8 ton/ha/year
50% increased assumed
Revenues
13
The remaining 7% is shared by numerous crops including root crops, which have been excluded from
the analysis due to difficulty in finding reliable data on their average yields and prices.
14
Labor is valued at USD 2.7 per man-day.
Financial assessment
The net annual and cumulative revenues for one hectare under CSA is shown in Figure 15. The
flows are positive starting year 1. The NPV for the CSA is estimated at USD 2,116 per ha with a
10 % discount rate.
7 000
6 000
5 000
4 000
3 000
2 000
1 000
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
-
2015
Net revenues (USD/ha)
Figure 15: Annual and cumulative cash flows for CSA
Year
Annual cashflow
Cumulative cashflow
GHG mitigation benefits
GHG mitigation benefits have been estimated using average annual carbon sequestration rates
achieved in soils and biomass resulting from the implementation of CSA practices such as residue management application and agroforestry. We used a comparable figure for average annual carbon sequestration rates (i.e. 3 tCO2/ha/year) – estimated by UNIQUE in the framework
of the CSA carbon finance project for the second phase of SLMP of the Ethiopian Ministry of
Agriculture. We assume in the baseline scenario, the carbon stock level remains unchanged (8
tCO2/ha); while the carbon stock in the project scenario would accumulate equivalent to average annual carbon stock enhancement from 11 tCO2/ha at the end of year 1 to 65 tCO2/ha in
year 20 (Figure 16). The average GHG mitigation benefit of this activity is 3 tCO2/ha/year.
Carbon stock (tCO2/ha)
Figure 16: Baseline and project scenario carbon stocks for CSA
80,0
60,0
40,0
20,0
0,0
Year
Baseline scenario carbon stock (tCO2/ha)
Project scenario carbon stock (tCO2/ha)
Woodlots
Woodlots are established on individual farmer or communal lands, which are not used or less
suitable for crop cultivation e.g. boundaries of homestead, grazing lands and barelands. We
assume the species planted is Eucalyptus – the most commonly woodlot species in Ethiopia. It
is planted at a density of 1111 seedlings per ha (i.e. 3 m x 3 m spacing), with a rotation of 6
years, followed by coppicing for two more rotations.
Key variables
The key variables including farm-level costs are shown in Table 16 below.
Table 16: Key variables – Woodlots
Production
Unit
Source
Baseline carbon stock
5 tCO2/ha
WBISPP, 2004 report (unstocked grassland)
Annual biomass increment (in the first year)
18 m³/ha/year
and assume growth potential reduction by 20
(37 tCO2/ha/year)
% in each subsequent rotation
Moges et al., 2010
Biomass removals - final harvest at age 6
202 tCO2/ha
Local expert estimate
Biomass removals - final harvest at age 12
162 tCO2/ha
Local expert estimate
Biomass removals - final harvest at age 18
121 tCO2/ha
Local expert estimate
Planting cost: year 1
USD 54/ha
Local expert estimate
Seedlings cost (1111 seedlings per ha): year 1
USD 233/ha
Local expert estimate
Investment cost
Recurrent management cost
Boundary maintenance: annual
USD 5/ha
Local expert estimate
Weeding: annual year 1-3
USD 16/ha
Local expert estimate
Protection from animals and fire: annual
USD 5/ha/year
Local expert estimate
Fuelwood price
USD 17/m3
Adapted from Moges et al.,
2010
Fuelwood harvest cost
USD 5/m3
Local expert estimate
Revenues
Financial assessment
The estimated net annual and cumulative revenues are shown in Figure 17. Cumulative cashflows are negative for the first five years. The break-even point is achieved in year six when
first harvest occurs. To reach breakeven-point, a total investment of USD 901 /ha is required.
The NPV for this activity is estimated at USD 532 per ha at a discount rate of 10 %, and the IRR
is estimated at 26 %.
Figure 17: Annual and cumulative cash flows for woodlots (at current
costs)
Net revenues (USD/ha)
2 000
1 500
1 000
500
0
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
-500
Year
Cashflow annual
Cashflow cumulative
GHG mitigation benefits
GHG mitigation benefits are derived from annual biomass increment. In the baseline case, we
assume the carbon stock level would remain unchanged (5 tCO2/ha); while the carbon stock in
the project scenario would accumulate equivalent to the annual biomass increment minus
harvests – from 27 to 224 tCO2/ha in one rotation, before the cycle is repeated (Figure 14). The
annual GHG mitigation benefit averages 31 tCO2/ha over the first three year until a long-term
carbon stock equilibrium of 93 tCO2/ha is achieved.
Carbon stock (tCO2/ha)
Figure 18: Baseline and project scenario carbon stocks for Woodlot
250
200
150
100
50
0
Year
Baseline scenario carbon stock (tCO2/ha)
Project scenario carbon stock (tCO2/ha)
Assisted Natural Regeneration - no planting
This activity is undertaken on degraded communal lands with ability to naturally regenerate
due to the fact that existing seeds, seedlings, live stumps are adequate for natural regeneration to occur. Hence, regeneration would naturally occur after factors preventing it e.g. animal
grazing and persistent fires have been removed.
Key variables
The key variables including are shown in Table 17 below.
Table 17: Key variables for ANR - no planting
Production
Unit
Source
Baseline carbon stock
13 tCO2/ha
Humbo ANR PPD
Annual biomass increment
Biomass removals – fuelwood starting year 4
Biomass removals – roundwood starting year 11
13.6 m³/ha/year
(28 tCO2/ha/year)
0.6 m³/ha/year
(1.8 tCO2/ha/year)
0.5 m³/ha/year
(1.6 tCO2/ha/year)
Humbo ANR PPD
Adapted from
PDD
Humbo ANR
Adapted from Sodo ANR PPD
Investment cost
Boundary delineation: year 1
USD 1/ha
Local expert estimate
Recurrent management cost
Boundary maintenance: annual
USD 1/ha
Local expert estimate
Weeding: annual year 1-3
USD 32/ha
Local expert estimate
Thinning and pruning (limited extent); deUSD 15/ha
coppicing: year 5, 10, 15 and 20
Local expert estimate
Patrol/monitoring and fire protection: annual
USD 5/ha/year
Local expert estimate
USD 36/m3
Adapted from Bekele, 2011
Revenues
Roundwood price
3
Fuelwood price
USD 17/m
Roundwood harvest cost
USD 15/m3
Fuelwood harvest cost
Average NTFPs value
NTFP harvest cost
3
Adapted from Moges et al.,
2010
Local expert estimate
USD 5/m
Local expert estimate
USD 19/ha/year
Adapted from Reichhuber &
Requate, 2006
USD 5/ha
Adapted from Reichhuber &
Requate, 2006
Financial assessment
The estimated net annual and cumulative revenues for this activity are presented in Figure 19.
In the first four years, cumulative cash flows are negative. The break-even point is achieved in
year five. To reach breakeven-point, a total investment of USD 72/ha is required. The NPV for
this activity is estimated at USD 77 per ha with 10 % a discount rate; while the IRR is estimated
at 44 %.
Figure 19: Annual and cumulative cash flows for ANR - no planting (at
current costs)
Net revenues (USD/ha)
300
250
200
150
100
50
0
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
-50
Year
Annual cashflow
Cumulative cashflow
GHG mitigation benefits
The GHG mitigation benefits estimated from annual biomass increment is shown in Figure 20.
In the baseline scenario, we assume no change in carbon stock; while the carbon stock in the
project scenario would grow equivalent to annual biomass increment minus harvests – from
13 tCO2/ha in year 1 to 262 tCO2/ha in 20 years. The annual GHG mitigation benefit of this
activity averages 12 tCO2/ha/year.
300
200
100
Year
Baseline scenario carbon stock (tCO2/ha)
Project scenario carbon stock (tCO2/ha)
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
0
2015
Carbon stock (tCO2/ha)
Figure 20: Baseline and project scenario carbon stocks for ANR - no
planting
Assisted Natural Regeneration - enrichment planting
This activity applies to degraded sites without the ability to fully regenerate naturally; hence,
enrichment planting is undertaken to complement natural regeneration. A total of 100 indigenous tree seedlings is planted per ha. Such seedlings will reach maturity after 30 years.
Key variables
These are presented in Table 18 below including farm-level costs.
Table 18: Key variables for ANR - enrichment planting
Production
Unit
Source
Baseline carbon stock
13 tCO2/ha
Based on DNV MRV report, 2014
Annual biomass increment
13.6 m³/ha/year
(28 tCO2/ha/year)
Adapted from Humbo ANR PPD
Average biomass removals – roundwood 0.6 m³/ha/year
starting year 11
(1.8 tCO2/ha/year)
Adapted from Humbo ANR PPD
Average biomass removals – fuelwood 0.4 m³/ha/year
starting year 4
(1.3 tCO2/ha/year)
Adapted from Sodo ANR PPD
Investment cost
Boundary delineation: year 1
USD 1/ha
Local expert estimate
Planting cost: year 1
USD 6/ha
Local expert estimate
Seedlings cost (100 seedlings per ha): year 1
USD 21/ha
Local expert estimate
USD 1/ha
Local expert estimate
Recurrent management cost
Boundary maintenance: annual
Pruning, thinning, climber cutting, etc.: year
USD 20/ha
2, then every 5 years thereafter.
Local expert estimate
Patrol/monitoring and fire protection: anUSD 5/ha/year
nual
Local expert estimate
Revenues
Roundwood price
USD 36/m3
3
Adapted from Bekele, 2011
Fuelwood price
USD 17/m
Roundwood harvest cost
USD 15/m3
Local expert estimate
Fuelwood harvest cost
USD 5/m3
Local expert estimate
USD 19/ha/year
Adapted from
Requate, 2006
Reichhuber
&
USD 5/ha
Adapted from
Requate, 2006
Reichhuber
&
Average NTFPs value
NTFP harvest cost
Adapted from Moges et al., 2010
Financial assessment
The estimated net annual and cumulative revenues for this activity are shown in Figure 21. Cumulative cash flows are negative in the first seven years. The break-even point is achieved in
year eight. To reach breakeven-point, a total investment of USD 128/ha is required. With a
discount rate of 10 %, the NPV for this activity is calculated at USD 39 per ha; while the IRR is
estimated at 18.3 %.
Figure 21: Annual and cumulative cash flows for ANR - enrichment planting (at current costs)
Net revenues (USD/ha)
250
200
150
100
50
0
-50
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
-100
Year
Annual cashflow
Cumulative cashflow
GHG mitigation benefits
The GHG mitigation benefits estimated from annual biomass increment is shown in Figure 22.
In the baseline scenario, we assume no change in carbon stock; while in the project scenario,
carbon stock would increase equivalent to the annual biomass increment – and accounting for
harvests (removals) – from 13 tCO2/ha in year 1 to 268 tCO2/ha in 20 years. The annual GHG
mitigation benefit of this activity averages 13 tCO2/ha over 20 years.
Figure 22: Baseline and project scenario carbon stocks for ANR - enrichment planting
Carbon stock (tCO2/ha)
300
200
100
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
0
Year
Baseline scenario carbon stock (tCO2/ha)
Project scenario carbon stock (tCO2/ha)
Assisted Natural Regeneration - plantation
Forest plantations are established on. lands that do not have natural vegetation and/or grasslands; hence, no ability to regenerate naturally. Plantation silvicultural operations including
site preparation, planting, and tending are applied to the planted trees. In this analysis, we
assume native tree species will be used when sites are not suitable for commercial forestry.
Final harvest estimated at year 19, followed by coppicing15.
Key variables
These are shown in Table 19.
Table 19: Key variables – ANR plantation
Production
Unit
Source
Baseline carbon stock
5 tCO2/ha
WBISPP, 2004 report (unstocked grassland)
Annual biomass increment
9 m³/ha/year
(19 tCO2/ha/year)
Adapted from Moges et al.,
2010
15
Note: since the plantation is established on communal lands and managed by communities, we assume it would not perform as a commercial forest plantation would; therefore, it reaches maturity for
final cut at age 19 years, and achieves annual volume increment of 9 m3/ha/year (Bekele, 2011; Moges
et al., 2010).
Biomass removals – all thinnings
113 m³/ha
(241 tCO2/ha)
Bekele, 2011
Biomass removals - final harvest
58 m³/ha
(124 tCO2/ha)
Bekele, 2011
Planting cost: year 1
USD 54/ha
Local expert estimate
Boundary delineation: year 1
USD 1/ha
Local expert estimate
Seedlings cost (1111 seedlings per ha): year 1
USD 233/ha
Local expert estimate
Boundary maintenance: annual
USD 1/ha
Local expert estimate
Weeding: year 1-3
USD 32/ha
Local expert estimate
Thinning and pruning (limited extent): year 4,
USD 60/ha
6, 9 and 13
Local expert estimate
Patrol/monitoring and fire protection: annual
USD 5/ha/year
Local expert estimate
USD 30/m3
Adapted from Bekele, 2011
Investment cost
Recurrent management cost
Revenues
Roundwood price
3
Fuelwood price
USD 17/m
Roundwood harvest cost
USD 15/m3
Fuelwood harvest cost
3
USD 5/m
Adapted from Moges et al.,
2010
Local expert estimate
Local expert estimate
Financial assessment
We present the estimated net annual and cumulative revenues in Figure 23. Cumulative cashflows are negative for the first eight years. The break-even point is achieved in year nine when
the third thinning harvest occurs. To reach breakeven-point, a total investment of USD 972/ha
is required. The NPV for this activity is estimated at USD 171 per ha using a discount rate of 10
%, and the IRR at 15 %.
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
1 600
1 400
1 200
1 000
800
600
400
200
0
-200
-400
-600
2015
Net revenues (USD/ha)
Figure 23: Annual and cumulative cash flows for ANR – plantation (at
current costs)
Year
Annual cashflow
Cumulative cashflow
GHG mitigation benefits
GHG mitigation benefits are derived from annual carbon stock increment. We assume in the
baseline scenario, the site would remain unstocked, therefore, its carbon stock level remains
unchanged (5 tCO2/ha); while the carbon stock in the project scenario would accumulate
equivalent to annual biomass increment minus harvests – from 5 to 124 tCO2/ha in one rotation
(Figure 24). The annual GHG mitigation benefit averages 17 tCO2/ha over the initial 4 year until
a long-term average carbon stock of 68 tCO2/ha is achieved.
Carbon stock (tCO2/ha)
Figure 24: Baseline and project scenario carbon stocks for ANR plantation
140
120
100
80
60
40
20
0
Year
Baseline scenario carbon stock (tCO2/ha)
Project scenario carbon stock (tCO2/ha)
Energy efficient cookstoves
The dissemination of improved energy efficient cookstoves to households aims to reduce
fuelwood consumption from non-renewable sources. Hence, the unit of analysis here refers to
a household rather than a hectare of land. A fuelwood savings of 30 % is assumed due to use
of improved cookstoves16; and each household uses two cookstove types as described earlier
(Section 3.3). In this model we assume that each household purchases two improved cook
stoves (one for injera and one for ordinary cooking) every 3 years which is equivalent to the
approximate lifetime of a cook stove:
Key variables
These are shown in Table 20.
Table 20: Key variables – energy efficient cookstoves
Consumption
Unit
Source
Rural household annual fuelwood consump- 4.6 ton dry biomass/year
tion – non-renewable sources
Based on DNA Ethiopia, 2012
Urban household annual fuelwood consumption - non-renewable sources
4.2 ton dry biomass/year
Based on DNA Ethiopia, 2012
Ratio of non-renewable biomass
88 %
DNA Ethiopia, 2012
Fuel savings per improved cookstove
30 % (0.7 t of dry biomass/year)
Bluffstone, 2014 and
EUEI, 2013
Per household: 1.4 t dry biomass
Household savings of non-renewable fuelwood due to improved cookstove
1.2 ton/year/cookstove
Bluffstone, 2014; EUEI
PDF 2013.
Improved cookstove price delivered to market
USD 12.5/unit
Local expert estimate
Assumed price paid by householder per
improved cookstove
USD 6.5 /unit (difference of
Assumption
USD 6/unit is paid by a subsidy)
Fuelwood price urban setting
USD 38/ton of dry biomass
Adapted from Moges
et al., 2010
Fuelwood price rural setting
USD 27/ton dry biomass
Adapted from Moges
et al., 2010
Rural household expenditure saving (excl.
investment for cookstoves)
USD 37 /year per household
Urban household expenditures savings
(excl. investment for cookstove)
USD 52 /year per household
Investment and recurrent cost
16
Bluffstone, 2014; EUEI PDF 2013.
Financial assessment
The net annual and cumulative cashflows have been estimated as the difference between the
annual household fuelwood expenditure (average of rural and urban) with the use of improved
cookstoves and without it. The estimates are shown in Figure 25. The annual and cumulative
cash flows are positive starting year 1. The NPV is estimated at USD 384 per household at a 10
% discount rate.
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
900
800
700
600
500
400
300
200
100
0
2015
Net revenues (USD/household
Figure 25: Annual and cumulative cash flows for energy efficient
cookstoves (at current costs)
Year
Annual cashflow
Cumulative cashflow
GHG mitigation benefits
GHG mitigation benefits are derived from annual fuelwood savings i.e. 30% reduction of baseline consumption due to use of improved cookstoves. With the saving of 1.4 t/dry biomass per
household of which 88 % is non-renewable biomass the emissions reduction per household
amount to 2.2 tCO2/per household per year, equivalent to 44 tCO2/household over 20 years.
Annex 5: Addressing livestock sector GHG emissions in
Oromia
According to the CRGE Strategy (2011), the livestock sector is currently the largest source of
GHG emissions. In Oromia cattle represents more than 50 % of the livestock population and is
the major source of meat and milk production. Beef consumption with 3.1 kg/per capita per
year is the major source of total meat consumption of 5.3 kg (IFPRI, 201217). However consumption levels are low compared to other Sub-Saharan African countries. With population
growth, and rapid increase of urban population and income levels we estimate consumption to
increase dramatically. Similarly, per capita annual milk consumption is well below the world
average of 105 liters and the African average of about 40 liters, with only 19 liters per annum
(USAID, 201318). This is also expected to increase dramatically with urban development and
increase of income levels.
Meat and milk production systems are very poor and inefficient, based on free grazing, local
breeds, and low input and poor feeding and animal health management. Despite the low production levels, livestock, mainly cattle is the major source of GHG emissions in Ethiopia and in
Oromia. We assume beef and milk production from cattle related GHG emissions at 20.5 million tCO2 in 2013 (and project 22.2 million tCO2 in 2015). Thereby we assume population
growth by 2.9 % p.a. and an annual 3 % per capita increase of meat and milk consumption.
Under the assumed growth scenario cattle related GHG emissions will rise to 47.9 million tCO2
in 2034. In order to increase productivity, resource efficiency of the livestock sector, the CRGE
(2011) proposed value chain efficiency to improve productivity (output per head of cattle) and
support increase of protein consumption by lower emitting source such as poultry (currently at
13 % of total meat consumption mix) as the major two strategies to reduce GHG emissions in
the livestock sector.
Assuming the same meat and milk products consumption patterns as in the business as usual,
and emissions intensity improvement from 7.5 kgCO2/per produced liter of milk to 4.1
kgCO2/liter milk; and 93 kgCO2/per kg cattle meat carcass to 46.5 kgCO2/kg cattle meat carcass;
and a 30 % substitution of the cattle consumption by poultry, would reduce annual GHG emissions by an average of 14.2 million tCO2/year over 20 years. Thereby the annual GHG emissions levels would only slightly increase from 22.2 million tCO2/year in 2015 to 23.1 million
tCO2 in 2034 (Figure 11). The remaining GHG emissions would need to be offset by additional
land-based carbon stock enhancement activities.
17
http://www.ifpri.org/sites/default/files/publications/esspwp38.pdf
Agricultural Growth Project - Livestock Market Development Value Chain Analysis for Ethiopia: Meat and Live Animals Hides,
Skins and Leather Dairy Expanding Livestock Markets for the Small-holder Producers
18
Figure 26: Theoretical GHG mitigation potential in the cattle meat and
milk value chain (tCO2-eq)
There are a few successful models for dairy development, including the East African Dairy Development project (EADD)19 that can be applied. In Kenya the Ministry of Agriculture, Livestock
and Fisheries (MOALF) developed a climate-smart poultry business case aiming to reduce poultry meat prices – through investments in efficient hatcheries and slaughterhouses – to provide
economic incentives to switch from beef to poultry20. Further work is required to adapt those
models, to assess their feasibility and related costs and benefits.
19
http://www.heifer.org/eadd/index.html
Kenya Ministry of Agriculture, Livestock and Fisheries (MoALF) 2013. Climate-smart business case:
Improved indigenous chicken production. Prepared with support from UNIQUE forestry and land use.
20