1.

Introduction

Despite the fact that forests and trees continue to play a crucial role in improving and
maintaining biodiversity and soil fertility, and ensuring sustainability for smallholder
farmers (UNFF, 2013), there is a common pattern of deforestation in African countries. This is
caused by expansion of agricultural land into forested areas as escalating population growth
intensifies demand for arable land and forest and non-forest products (UN
DESA, 2012). From an economic point of view, it is equally important to understand the
contributions of forests to national economies, household incomes and trade. However, there
is a common trend in African countries whereby the economic contributions of forests have not
received the desired attention from policy-makers to ensure budgetary allocations for sustained
growth in the forest sector of these countries (IUCN, 2001). This has led to uncontrolled
reduction of forest cover and increased imports of forest-related products, resulting in
diminishing foreign currency reserves. It was for this reason that FAO commissioned the
Ethiopian Forestry Society (EFS), the Forestry Society of Kenya (FSK) and the Ugandan
Forestry Association (UFA) to prepare a brief study report to assess the economic significance of
forestry in their countries, highlighting the profile of forestry; the economic benefits such as
the synopsis of export and import values of forestry products and its contribution to the national
economy; the economic costs of forestry; as well as a legal and policy analysis of strengths and
weaknesses in the sector. “From an economic point of view, it is important to understand the
contributions of forests to national economies, household incomes and trade.” In Ethiopia, forest
and woody vegetation resources comprise natural high forests characterized by woodlands, bush
lands, plantations and on-farm trees. The forestry sector plays several important economic roles
by earning foreign currency mainly from export of non-wood forest products, by providing
energy and wood products, by generating formal and informal employment and by providing
environmental services that support the sustainable operation of other sectors. Forestry
products in the country are categorized into different subsectors, each contributing to the national
GDP. The timber production subsector represents the main source of raw material that
constitutes most of the total national wood production.

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 1.1. Status of Ethiopia’s forests

Recent data on the forest resources of Ethiopia, documented in FAO’s Forest Resources
Assessment (FRA), puts Ethiopia among countries that have forest cover ranging between 10 to
30 percent of their total land area. According to FRA (FAO, 2015), Ethiopia’s forest
cover is 12.4 million hectares (11.5 percent). Factors that contributed to accelerating the decline
of vegetation cover in the country between 1990 and 2010 include the high level of poverty,
coupled with the increase in human population, the consequent demand for forest products
such as firewood and the subsequent conversion of forests and woodlands into farmlands and
settlements. Between 1990 and 2000, the extent of Ethiopia’s forests (including both forests and
woodland) decreased by 1.4 million hectares. By 2005, the forest cover had further declined and
was estimated to cover 13.0 million hectares. In other words, Ethiopia lost over two million
hectares of forest, with an annual average loss of 140 000 hectares (FAO, 2015), between 1990
and 2005. Currently, the forested area is estimated to be 12.4 million hectares, which represents
11.4 percent of the total land area. The main reasons for deforestation are clearing of forests
and woodlands for agricultural purposes, fuel wood, charcoal production and construction
materials. The fact that plantation forestry has been very far from meeting the country’s demand
for wood indicates the inevitability of deforestation. The underlying causes of deforestation
are closely linked with the vicious cycle of mutually reinforcing factors such as poverty,
population growth, poor economic growth and the state of the environment. The Government of
Ethiopia has devised a strategy to reverse the situation by means of tree-planting activities.
The tree-planting campaign has been conducted throughout the country on an annual basis since
2008 and according to government information, forest cover is increasing. Between 2010 and
2015 an increase in forested area has been recorded, with an estimated gain of 40 000 hectares a
year (FAO, 2015). In order to conserve and protect the forest resources of the country, Ethiopia
has established protected forest areas, which are about 80 in number and represent a total area of
26 879.15 km2.

1.2. Benefits and Significance of Forests in Ethiopia

In Ethiopia the contribution of forests to local livelihoods and the national economy as a whole is
significant, but is largely unrecorded and hence unrecognized. Forest resources are among
several natural resources that have substantial socioeconomic, cultural and ecological

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importance in Ethiopia. There is a growing awareness of the significance of forest resources and
the link between biodiversity, ecosystem services and human well‐being (EFS, 2014). Forests are
also the source of timber and non-timber forest products (NTFPs). The economic value of
Ethiopian forests is not given the proper attention, even if they are sources of ecosystem services,
including NTFPs that sustain rural livelihoods.

The most important NTFPs that generate substantial income for rural households and foreign
currency earnings in Ethiopia are coffee, honey and natural gums and resins. The forestry sector
plays six key economic roles in Ethiopia:

 It provides foreign currency earnings, mainly through export of non-wood forest

products;
It offers import substitution, mainly for energy and wood products;
 It contributes to the gross domestic product (GDP);
 It generates both formal and informal employment;
 It supports the livelihoods of millions of citizens; and
It provides environmental services that support the sustainable operation of other
sectors, mainly agriculture (in particular coffee production by smallholder farmers
from both natural coffee forests and planted coffee farms the latter is traditionally
considered to be part of the agricultural sector in the country’s national accounting
system [EFS, 2014]).

1.3. Forest trade values and interpretations

1.3.1. Wood production and worth

FAO estimates that forest industries contribute more than US$450 billion to national incomes,
contributing nearly one percent of the global GDP in 2008 and providing formal employment to
0.5 percent of the global labour force (FAO, 2012). The forestry sector throughout sub-Saharan
Africa is of great importance, due to its significance in subsistence production in rural
communities which gives forestry a high share of the GDP of these countries. The sector also
provides major sources of income and subsistence benefits, generates informal work
opportunities and constitutes reservoirs of economic value that help ameliorate shocks
to household incomes, particularly in rural areas.

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CONCLUSION

Forestry is crucial to the lives of millions of people, especially the poorest section of the society
who most critically depends on forest resources for their well-being and survival in the absence
of other livelihood assets and opportunities. In order for forests to contribute significantly to
sustainable development, there is a need for countries to practice sustainable forest management
and to adopt an inter-sectoral approach to optimize benefits from forests. This would ensure that
the goods and services derived from forests meet present-day needs while at the same time
securing their continued availability and contribution to long-term development through
securing forest resources, maintaining or enhancing biodiversity and water quality, promoting
healthy and vigorous forests in order to provide protection functions, and promoting alternative
livelihoods. “Forestry is crucial to the lives of millions of people, especially the poorest section
of the society who most critically depends on forest resources for their well-being and survival
in the absence of other livelihood assets and opportunities.

In many countries, the contribution of the forestry sector to GDP has been stagnant or declining
for a long time. This can be attributed to the fact that, with the focus
being mainly on timber production, there is a lack of data and information derived from the
informal forestry sector. This has constrained the full valuation of forest
goods and services. As a result, the contribution of the forestry sector to the economy has been
undervalued.

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REFERENCES

Ethiopian Forestry Society report, 2014: The Economic Significance and Trade of Forest and
Forest Products in Ethiopia (cleared for inclusion in sub-regional publication
for East Africa)

FAO report, 2008: Contribution of the forestry sector to national economies, 1990-2006.
Available at ftp://ftp.fao. org/docrep/fao/011/k4588e/k4588e00.pdf [accessed on
04/02/2015]
FAO FRA report, 2010: Global Forest Resources Assessment 2010. Available at
http://www.fao.org/forestry/fra/fra2010/ en/ [accessed on 04/02/2015]

FAO FRA report, 2015: Global Forest Resources Assessment 2015. Available at
http://www.fao.org/3/a-i4782e.pdf [accessed on 25/11/2015]

FAO report, 2012: State of the World’s Forests. Available at

http://www.fao.org/docrep/016/i3010e/i3010e.pdf [accessed on 04/02/2015]

Forestry Society of Kenya report, 2015: Value of Forests to the Kenyan Economy (cleared for
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019-08.pdf [accessed on 04/02/2015]

Trading Economics, 2015. Available at http://www. tradingeconomics.com/ethiopia/forest-rents-

percent- of-gdp-wb-data.html [accessed on 04/02/2015]

Uganda Forest Association report, 2014: Forestry Contribution to the Economy and Trade in
Uganda (cleared for inclusion in sub-regional publication for East Africa)

UN Comtrade, 2015. Available at http://comtrade.un.org/ data/ [accessed on 04/02/2015] United

Nations Department of Economic and Social Affairs report, 2012: Sustainable Land Use
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