Assessing the Economic Value of Ethiopia’s Forest Ecosystem

Apr 15, 2015

Ethiopia will be undertaking an assessment exercise to understand better the economic value of the forest sector and feed this information into the development and implementation of the country’s new five year development plan 2015-2020.

The assessment is planned as part of the United Nations initiative on Reducing Emissions from Deforestation and forest Degradation (REDD+) in developing countries that focuses on four major areas, i.e. institutional context analysis in relation to REDD+ readiness; Economic Valuation of Ethiopian Forests; conducting international learning exchanges; and undertaking regional REDD+ readiness under the UNFCCC framework. The project is implemented in partnership with MEF, MoFED and UNEP.

The assessment exercise kicked off at an inception workshop organized by the United Nations Development Programme (UNDP) and United Nations Environmental Programme (UNEP) in collaboration with the Ministry of Environment and Forestry (MEF).

Forestry is one of the economic sector in Ethiopia, identified as one of the four pillars in the Climate Resilient Green Economy (CRGE) strategy. The sector is also identified as having the largest potential in reducing emissions and increasing climate resilience in the country.

The value of forest ecosystem services is currently not adequately captured under System of National Account. Speaking at the workshop, the State Minister’s Adviser at the MEF, Dr. Tefera Mengistu, said, “Even though forests are closely linked to economic growth and well-being of communities, only commercial timber is accounted for in the Ethiopian economy. The other contributions of our forests are missing and the depletion of forest stocks is not captured. Therefore, there is a need to carry out an assessment to understand the economic valuation of the forest sector in the country.”

According to the inception report presented at the workshop, the forest economic valuation study will provide the country with a better understanding how the broad forestry sector contributes to national income. The analysis will focus both on forest ecosystem services that are compatible with the System of National Accounts (SNA), which is a precise manual for countries to calculate their annual national income measured as GDP, and the value of forest ecosystem services that are not compatible with the SNA.

Workshop participants discussed about the various types of valuation methodologies that will be practical in the Ethiopian context. Detailed discussions were also held on the option of linking the Biophysical/economic value of forestry products and services to the community.  

The inception workshop brought together participants from the Ministry of Environment and Forest, Ministry of Finance and Economics, World Bank, Addis Ababa University, Ministry of agriculture, other government organizations working on forestry, and staff from UNDP and UNEP among others.

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