Drivers of land use change and forest conservation under uncertain markets for forest ecosystem services in Ethiopia

Abstract

This study analysed driving forces behind land use change in the Southern Nations and Nationalities peoples’ Region of Ethiopia (SNNPR) where significant changes in forests, agricultural lands, grasslands and shrub land uses are observed. The actors of land use change in the area are small scale farmers and government authorities (social planners) that allocate forest land to large scale commercial plantations. To address the problem of undesirable land use change in the area both types of land use changes were analysed. First the study looked at land allocation decisions by land owners where they maximize private benefits from land allocations in the absence of markets for certain forest services. A number of drivers of land use and cover changes have been identified globally, but they differ according to the context of the specific area of interest and scale of analysis chosen and hence couldn’t explain the land use change observed in SNNPR. Studies carried so far in Ethiopia especially in the south western part of the country have not reached conclusive results and have not looked at the problem as an economic decision making made by land owners. This study applied an econometric framework of land use shares at a scale of a district to test the effects of different socio-economic, bio-physical and climatic factors on the choice among agricultural land, forest land, and grassland and shrub land uses in the SNNPR. Results confirmed the important influences of access to credit, access to market, elevation of an area, road density and population density on conversion of forest lands, shrublands and grasslands to agricultural land uses in the study area. Hence it is recommended that policy makers be cautious when designing incentive structures that are believed to have positive impacts on the rural livelihoods of small scale farmers. These measures could have adverse effect on the environment by making agriculture more profitable than other land uses. The second part of the study looked at land allocation patterns by a social planner when multiple benefits of forests are considered and the future benefits from some of the forest services are uncertain. Studies made previously in the country employed the cost and benefit analysis framework but they haven’t considered the irreversible nature of forest clearing processes and the uncertainty associated with the benefits from preservation of forests. Thus they ignore the value of the option to wait before developing forests, and the results are mainly biased against optimal forest preservation. This study considered the value of the option to wait and used dynamic optimization framework in analyzing optimal land use decisions. Results show that at five percent discount rate there is excessive deforestation in the region. Ignoring the climate change effect on tea production and the forest carbon storage values gives even lower optimal stock levels. The analyses also showed that the optimal forest stock is inversely related with the discount rate. Discount rates higher than 5% suggest complete deforestation as the optimal land use choice. But with incentive mechanisms like reductions in emissions from deforestation and forest degradation further clearing of forests can be prevented.