The agriculture sector is still the backbone of Ethiopia’s economy (32.8% of GDP and employing over 67% of the working population), particularly in the rural areas where 85% of the population lives.
In the context of the Russian invasion of Ukraine, food prices are set to increase further due to the import dependency for wheat, maize and sunflower oil, as well as fertilizers for agricultural production. Estimates indicate that about 10% of the country’s population are chronically food insecure, rising to more than 15% in drought years. More than 95% of Ethiopia’s agricultural output is generated by subsistence farmers who, on average, cultivating less than 1 hectare of land.
Livelihood security, particularly in rural areas, is closely linked to natural resources. However, because of population pressure, unsustainable use, inappropriate management, expansion of planned development, weakness in enforcing environmental policies, etc., there is considerable depletion of natural resources and environmental degradation. The major environmental issues that increase the vulnerability of Ethiopians include land degradation, climate change, deforestation, water scarcity and biodiversity loss.
CompensACTION will contribute to the implementation of the PACT interventions which is targeting five Regions (Amhara, Oromia, Somali, Southern Nations, Nationalities and People’s Region (SNNPR) and Sidama). PACT’s development objective is to “enable 152,250 rural households (men, women and youth across different rural livelihoods inclusive of persons living with disabilities)’ in selected kebeles to sustainably build their resilience to climate change, improve production, participate in markets and be able to access and consume nutritious diets”.
CompensACTION resources will complement PACT’s existing activities, indicatively in three target regions, by designing a carbon farming scheme (including a monitoring, reporting and verification mechanism) and implementing it (including registration and verification by voluntary certification scheme) as well as distributing monetary benefits to targeted small-scale producers.
The estimated mitigation potential of the CompensACTION component is of 923.000 Mt/CO2e with 5 years of implementation. It is anticipated that at least 30% of GHG emission reductions (308.000 Mt CO2 eq) could generate carbon credits marketable in voluntary carbon markets. The project aims to adopt sustainable land management (SLM) practices on 25.000 ha, sequestering at least 2.2t CO2 eq/ha/yr. The CompensACTION component is targeting at least 8150 households to increase their income from carbon credits over a period of 5 years.
household targeted with the CompensACTION component
of CompensACTION GHG emission reductions could generate carbon credits marketable in voluntary carbon market
under sustainable land management practices
The project is supported by key partner organizations e.g., in the setup of an agroforestry and carbon farming fund as well as the implementation of an improved cook stove program. For voluntary carbon certification scheme the project uses the verified carbon standard (VCS) by Verra, which is known as one of the highest quality standards.
In order to ensure the sustainability of the carbon farming fund, the structure is designed to match supply and demand for carbon credits in an open voluntary market. A minimum carbon price per ton is guaranteed to ensure adequate incentives are provided to farmers to implement mitigation activities such as agroforestry and conservation agriculture. The climate smart landscape approach ensures that carbon credit benefits will be distributed across upstream and downstream users. IFAD also assesses the potential for replicating and upscaling the carbon farming fund in other projects in Ethiopia and elsewhere in the region, as well as using the experience to inform and strengthen national policy dialogue and development on the topic of carbon farming.
In order to ensure the sustainability of the results of the carbon farming investments, the fund pilot ensures inclusive and transparent governance, ownership, and active participation of beneficiaries throughout the project cycle (including in M&E activities).
How To Get Involved?
CompensACTION is an open space to collaborate on the implementation of projects and to provide exchange on compensation mechanisms. If you are interested to connect, please contact us at