A new study has revealed that Ethiopia has a significant opportunity to play a vital role in the global fight against climate change and could serve as a model for carbon market development across the African continent.
Researchers from Rice University and Deloitte have stated that by utilizing its unique land ownership structure and vast natural resources, Ethiopia can build a “green economy” worth billions of dollars. This would be achieved by sequestering millions of tons of carbon dioxide back into the ground.
The report, published in Climate Action, estimates that if Ethiopia manages its 112 million hectares of land with improved management methods, it has the potential to store up to 700 million tons of carbon dioxide.
Based on the current average market price of $6.97 per ton for nature-based solutions, Ethiopia has a high potential to earn up to $5 billion in annual revenue. Although experts describe this figure as a “theoretical maximum estimate,” the economic implications are immense for a country where agriculture accounts for 50% of the Gross Domestic Product (GDP) and employs 80% of the workforce.
The study argues that, unlike Western countries that struggle with complex legal processes related to private land titles, the fact that land in Ethiopia is owned by the state and the public creates a streamlined path for carbon market agreements.
Specifically, researchers pointed to the 138 protected areas that cover more than 20% of the country as a primary starting point. Since these locations are directly managed by federal and regional governments, the government can easily sign reliable carbon contracts that international buyers seek.
Another key finding of the study is that carbon markets do more than just generate revenue; they can significantly improve food security. By using sustainable land management methods, Ethiopia’s farmlands can become centers for carbon storage.
This increases soil fertility and water-retention capacity, which in turn greatly boosts agricultural productivity. The Humbo Community-Based Natural Regeneration Project, launched in 2006, serves as a prime example of this.
As Africa’s first large-scale forestry project registered with the United Nations, it has sequestered 880,000 metric tons of carbon dioxide to date and has provided increased yields and additional income for the local community.
Despite this great potential, there are challenges to becoming a global leader. Rapid urbanization is a major concern; between 2007 and 2019, the expansion of some regional cities into rural lands grew by 115%, while satellite cities around Addis Ababa grew by over 400%. This urban expansion could lead to the clearing of forests for housing, posing a risk to carbon credit sales. To succeed in this sector, the study recommends that Ethiopia strengthen coordination between the Ministry of Agriculture and the Ministry of Urban Development, make carbon credit measurement and verification systems transparent and reliable, and ensure that carbon market development does not infringe upon the rights or food security of smallholder farmers.
