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Mid-term reportReport No. 2: Legal and institutional framework for the Oromia REDD+ program(Draft)

Dr. YitebuMogesNational REDD+ CoordinatorMinistry of Environment and Forest Addis Ababa, Ethiopia

15 October 2014

Climate Focus North America, Inc.1730 Rhode Island Ave, NWSuite 601Washington, DC 20036U.S.A.

FranziskaHaupt (project leader)Charlotte Streck (supervision)Darragh ConwayAlemayehuZelekeMelleseDamtieMelakuBekele

Contents

Executive Summary

1. Introduction 14

1.1 Background and Context 131.2 Objective and Status 13

2. Legal and institutional framework for land use in Oromia 15

2.1 Overview of law and policy on land use 152.2 Land use law 172.2.1 Land-use planning 172.2.2 Land and forest tenure and user rights 202.2.3 Participatory forest management 252.2.4 Rights to carbon/emission reductions 302.2.5 Implementation of law and policy 332.3 Relevant Institutions 362.4 Relevant projects and initiatives 422.4.1 Bale Project 422.4.2 Sustainable Land Management Program 44

3. Oromia REDD+ Program493.1 Operational framework 493.2 Financial management 583.2.1 Measurement, reporting and verification 653.3 Designing REDD+ policies for Oromia 683.3.1 Sectoral strategy options 683.3.2 Cross-sectoral strategy options 81

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3.4 Allocation and distribution of REDD+ finance: benefit-sharing 86

ANR Assisted Natural RegenerationATA Ethiopian Agricultural Transformation AgencyBERSMP The Bale Eco-Region Sustainable Land Management

ProgramBOFED Oromia Bureau of Finance and Economic DevelopmentCBE Commercial Bank of EthiopiaCCB Climate, Community and BiodiversityCIDA Canadian International Development AgencyCRGE Climate Resilient Green EconomyCSA Climate Smart AgricultureCWT Community Watershed TeamDA Development AgentEE Executing EntityEIA Ethiopian Investment AgencyEIAR Ethiopian Institute of Agricultural ResearchEPLAU Environmental Protection and Land Administration UnitESIF Ethiopian Strategic Investment FrameworkEU European UnionFIE Federal Implementing EntityGEF Global Environment FacilityGGGI Global Green Growth InstituteGIZ Deutsche GesellschaftfürInternationaleZusammenarbeitGoE Government of EthiopiaIFAD International Fund for Agricultural DevelopmentILUP Integrated Land Use Planning JICA Japan International Cooperation AgencyJFMA Joint Forest Management AssociationsKfW KreditanstaltfürWiederaufbauKWT Kebele Watershed TeamsM&E Monitoring and EvaluationMEF Ministry of Environment and ForestMERET Managing Environment Resources for Transition Project MOA Ministry of AgricultureMOFED Ministry of Finance and Economic DevelopmentMOU Memorandum of UnderstandingMOWIE Ministry of Water, Irrigation and EnergyMRV Measurement, Reporting and VertificationNGO Non Governmental OrganisationNRM Natural Resource ManagementNSC National Steering CommitteeNTFP Non-Timber Forest ProductsOBA Oromia Bureau of AgricultureOBEF Oromia Bureau of Environment and ForestOBLEP Oromia Bureau of Land Administration and Environmental

ProtectionOFLP Oromia Forested Landscape ProjectOFWE Oromia Forest and Wildlife EnterpriseOIA Oromia Investment AdministrationOromia RL Oromia Reference LevelPDD Project Design DocumentPEFA Public Expenditure and Financial AccountabilityPES Payment for Environmental Services

Acronyms

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PFM Participatory Forest ManagementPFRA Public Fundraising Regulatory AssociationPIM SLMP Project Implementation Manual- Sustainable Land

Management ProgrammePSNP Productive Safety Net ProgramREDD+ Reducing Emissions from Deforestation and Forest

Degradation and the role of conversation, sustainable management of forests and enhancement of forest carbon stocks in developing countries

RFPA Regional Forest Priority AreasRIE Regional Implementing EntitiesRSLM Regional Sustainable Land ManagementRTC Regional Technical CommitteeRUSACCO Rural Savings and Credit CooperativeSESA Strategic Environmental and Social AssessmentSFI Specialist Financial IntermediarySLMP Sustainable Land Management ProgrammeSMNR State Minister for Natural Resources UNDP United Nations Development ProgrammeUNFCCC United Nations Framework Convention on Climate ChangeVCS Verified Carbon Standard WB The World BankWOFED Woreda Finance and Economic DevelopmentWTC Woreda Technical CommitteesZOFED Zone Finance and Economic Development

Executive SummaryThe Government of Ethiopia has identified Oromia as pilot region for REDD+. The Government supports a jurisdictional approach that allows the nesting of regional reference levels in national programs, and emission reduction and stock enhancement projects in regional programs. The World Bank is supporting the development of the jurisdictional program in Oromia and contemplates results-based payments that would support activities that address drivers of deforestation.

This report presents the interim results of our legal and institutional analysis in support of the Oromia REDD+ Program. It analyzes the status quo, identifies requirements, gaps and weaknesses and develops recommendations on how create the regulatory and institutional conditions for Oromia to receive international REDD+ finance.

The report is divided into the following parts:1. Development of recommendations on how to improve the legal and

institutional framework in the view of a jurisdictional REDD+ program

2. The establishment of the operational frameworkfor REDD+ in Oromia

3. Implementation arrangements for sectoral strategy options in the forestry, agriculture and energy sector (in coordination with UNIQUE)

4. Cross-sectoral strategies covering land use planning, tenure certification, strengthening of institutions and governance

5. Allocation of REDD+ finance (benefit sharing)

Strengthening the legal and institutional framework for land use in OromiaOromia has a relatively well-developed legal framework supporting sustainable land use and forest protection. In some important aspects, it seeks to improve on some of the deficiencies considered to exist in the Federal legal framework with respect to promoting sustainable land and forest use, for example when it recognizes community land rights or bans agricultural development in forest areas. Significant efforts have also been undertaken to implement provisions on land-use planning and land right certification, among others. At the same time, the system suffers from important weaknesses.

The implementation of existing laws is often insufficient and compliance low Almost all laws lack the requisite implementation frameworks they require for successful implementation. Institutions in the forest sector are weak and characterized by a high staff turnover. They lack expertise, staff and equipment to successfully implement legal mandates. Additional problems relate to conflicting or poorly defined mandates among forest and agricultural institutions and a general lack of coordination among different sectoral agencies. There are frequent overlaps between institutional responsibilities between the Federal and State levels (vertical conflicts) and between state-level institutions (horizontal conflicts).

More specifically:

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Land use planning.The Oromia Bureau of Land and Environmental Protection has been piloting land use planning initiatives and has made significant progress in registering and categorizing land. To-date, 46 percent of the region has been incorporated in the land resource mapping process. In these areas, land designated for respective activities such as forestry and agricultural investment is demarcated, and it is reported that this has substantially resolved potential conflicts between forest protection and investment activities. In the remaining areas, however, the process remains incomplete, and here conflicts remain to be resolved. Among the various micro level land-use planning activities in Oromia, the Sustainable Land Management Programme (SLMP) is the most significant initiative promoting micro level land-use planning.

A multi-sector coordination process for the development and implementation of land-use planning would help to integrate various interests and help to clearly delineate the roles of the respective institutions concerned.To improve the land planning process, we further recommend the establishment of clear guidelines and a multi-sector coordination process for the development and implementation of land-use planning. Similarly, a multi-stakeholder process for planning, implementation and enforcement of land use-related decisions (e.g. for land-use planning and demarcations) would increase the acceptance of the processes and compliance with decisions.

Land tenure.As with Federal legislation, Oromia legislation provides for land use rights holders to be provided with holding certificates demonstrating proof of right. Implementation of land registration and certification in Oromia began in 2004 following the establishment of Regional Land Administration, Environmental Protection and Use Bureau, which was mandated to measure and register as well as distribute land certificates. Relative to other regional states, the Oromia land and forest legislation is often considered as the most advanced in providing for tenure security and facilitating sustainable and productive land management. Nonetheless, several gaps and weaknesses remain.

Clear guidelines on the implementation of the land certification process would help to ensure a consistent process, which would increase acceptance of the outcomes at the Woreda and Kebele levels. The adoption of guidelines should be accompanied by outreach and training to ensure that the guidelines are sufficiently understood and coherence in processes is achieved.We also propose to improve the ongoing land certification process by raising awareness among communities of their land-use rights. Involving communities in decision-making process regarding land-use planning from the early stages can help to a cultivate sense of ownership.We further suggest providing greater certainty to investorsby including provisions in concession agreements that limit their risks in circumstances of public entities rescinding agreements.

Participatory forest management (PFM), PFM has been adopted by the Government of Oromia as an official strategy for sustainable forest management and OFWE has institutionalized PFM internally as a standard approach to sustainably manage forest. To-date, however, Oromia has not adopted any specific regulations setting out procedures for PFM. Instead, PFM establishment strategies, guidelines and modalities have been developed by NGOs such as Farm Africa, SOS Sahel, GIZ, and JICA, all following slightly different approaches.

Early lessons from PFM in Oromia thus far indicated a positive impact of PFM. Initiatives have resulted in higher conservation outcomes including reduced deforestation, improved overall forest conditions increased wildlife populations and reductions in illegal logging. The conservation outcomes have not, however, been matched with improvements in livelihoods, which so far failed to fulfil their estimated potential.

To further improve PFM, we recommend placing more focus on the facilitation of forest-based income and livelihoods. This requires assigning communities more rights to utilize the forest to develop livelihoods, though subject to clear sustainable use limitations.We also suggest the adoption of common guidelines for the development and implementation of PFM, through a regulation or other legal instrument. PFM schemes also have to devolve more authorities and powers to communities, reducing over time the relevance of NGOs and other implementation agencies.

Rights to carbon or emissions reductions. Oromia has not specifically regulated ownership or other rights over emission reductions or similar environmental services. Defining carbon rights is rarely straight-forward, and experience in other jurisdictions teaches that even seemingly well thought-through regulatory efforts may not always achieve the desired results. The Government of Oromia should therefore carefully weigh up the respective costs and benefits of specifically regulating carbon vs. continuing to implement REDD+ through concluding relevant agreements to regulate emission reductions when required by a given donor or carbon standard.

Institutions. Successful REDD+ implementation in Oromia requires effective cross-sectoral coordination among institutions that have competing or overlapping mandates impacting land use. Mandates will need to be clarified and where de jure conflicts exist, legislative changes will need to be introduced. Overlaps may be solved through adopting regulations setting out the processes for implementing those activities and clearly defining the roles of respective entities. Sectoral entities should be incentivized to coordinate their activities with one another. The Oromia Government should strive to achieve continuity in institutional mandates, allowing institutions to build capacities and relationships over time without disruption. The relationship between OFWE, as a parastatal enterprise engaged in commercial activities, and sectoral bureaus, whose focus is on public sector administration, should be clarified, including their respective utilization of local-level government implementing entities. In addition, the high turnover in government bodies needs to be addressed to ensure continuity in implementation and enforcement.

Designing an operational framework of the Oromia REDD+ Program

The Oromia REDD+ program will be embedded in the national REDD+ program. The pilot character of the Oromia REDD+ program will, however, require the fast-tracking of some implementation arrangements at the state-level.We propose to establish the following operational functions:

1. Adopt a strategy that formulates policy priorities and an operational framework for REDD+

2. Define and adopt the bundle of policies and measures that support REDD+; it will have to assign institutional, human and financial resources that support the implementation of the Oromia REDD+ strategy

3. Designate institution(s) to manage international REDD+ funds and the accounts in which they would be managed. This can be done at

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the national level, but there would still need to be an institution that oversees the use of funds in Oromia.

4. Collect and analyze state emissions and other monitoring data, while analysis and reporting will happen at the national level.

5. Implement and monitor in compliance with national REDD+ safeguards. Before the national safeguards system is established, Oromia will provide for compliance with World Bank safeguards.

At the current stage, the Oromia REDD+ program is still lacking political commitment and functional links to ensure high-level decision-making and cross-sectoral coordination. In its current plan, the institutional REDD+ structure does not provide a clear link to executive institutions that would lead the implementation of policies. Institutional functions, authorities, roles and procedures for remain to be defined. To further develop and strengthen the operational framework, we propose the following:

Institutional arrangements. The Oromia REDD+ Program should to the extent possible rely on existing institutional structures and arrangements, including donor initiatives. We propose the Steering Committee to be coordinated by the President’s Office with a dedicated focal point person ensuring the effective functioning of the Steering Committee.

The focal point could be established at the Oromia President’s Office to ensure high-level political commitment and cross-sectoral recommendations. Such focal point would link high-level executive powers with the REDD+ implementation institutions. It would serve as link between the president and the cabinet, the REDD+ Coordination Unit and the Steering Committee. The REDD+ Steering Committee should be vested with the relevant political powers to ensure horizontal coordination. It is important that the heads of relevant Bureaus and the Oromia Forest and Wildlife Enterprise are represented on the Steering Committee and that decisions taken by the Committee are implemented by the respective institutions. The Oromia President should adopt modalities and procedures that regulate the operations of the REDD+ focal point, the Coordination Unit, the Steering Committee and the Technical Working Group. In addition, clear institutional mandates need to be issued for REDD+ operational functions and policy implementation. To coordinate various operational functions of REDD+ the Oromia REDD+ Coordination Unit will require significant administrative and technical capacity.

Finance.The Oromia REDD+ Program’s financial management should find a compromise between (i) building on existing and tested structures, especially where it builds on existing donor-financed programs with well-established procedures and institutions; (ii) allowing for REDD+ to be integrated within broader socio-economic development; and (ii) keeping the funding flow with as few as possible intermediaries between the donor and the final beneficiary.

In the medium term the CRGE Facility potentially provides the most promising option for channeling finance to the Oromia REDD+ Program. While it is not yet fully operational at regional level, attention should be focused to testing the processes set out in its Operations Manual and strengthening capacities where they remain lacking.

In the short term the most promising option for channeling REDD+ finance is through the Oromia Bureau of Finance and Economic Development due to the cross-sectoral and multi-institutional nature of REDD+. For activities implemented through existing initiatives, e.g. SLMP, finance could be

managed based on established arrangements. For forestry activities, channeling funding directly through OFWE can be a viable option.

Measurement, reporting and verification. The reference level and MRV will have to be developed in close coordination with national authorities and nested within the national framework. We propose to develop a region-wide MRV framework while the national framework is still under development. Fast-track functions include region-wide forest monitoring, activity monitoring, and third party verification of strategy options that have a clear link to REDD+”. In addition, Oromia would have to adopt legal definitions and procedures for reference levels, MRV, safeguards, and approval criteria. It is proposed to establish an MRV team within the REDD+ Coordination Unit partnering with a research institution for technical implementation. REDD+ institutions (e.g. Technical Working Groups), local and regional implementing organization and local beneficiaries should also be involved in monitoring and reporting. In addition, a registry will need to account for results and payments. While a national system is not yet developed, an interim solution could be considered which could later be nested in an emerging national REDD+ registry.

Sectoral strategy optionsParticipatory forest management. This strategy option provides a common implementation model for a wide range of activities in state forests. It presents a dual strategy option for REDD+: First, it can improve forest governance by devolving forest user rights to local communities and by strengthening the local institutional framework and enforcement. Second, PFM can contribute to REDD+ by protecting forests and increasing carbon stocks, provided it gives sufficient incentive to the local population for sustainable management. We propose developing a PFM REDD+ strategy that both builds and improves on existing initiatives and approaches. Technical implementation will be led by local communities in partnership with OFWE and the Oromia Bureau of Agriculture, while the program provides financial and technical incentives. We provide concrete recommendations to develop common procedures for the PFM REDD+ process. REDD+ finance should be conditional on the implementation of these procedures. In addition, procedures should provide flexibility for already established schemes.

Adding REDD+ to SLMP II: assisted natural regeneration and climate smart agriculture, including woodlots.We suggest adding a REDD+ component to the SLM program. The strategy option includes various activities and tree planting outside the forest, which can address drivers of deforestation by reducing pressure on existing forests and trees outside the forest. Activities will be implemented by user groups, assisted natural regeneration on communal land and climate smart agriculture on individual farm land. The program will provide technical and financial incentives. In addition, specific activities such as tree planting and replacement of non-renewable energy sources, improved soil management can lead to emissions reduction and carbon sequestration benefits. Technical implementation of this strategy option would be initiated at Woreda level and follow the SLMP’s watershed approach, with slight modifications to link to REDD+ and to integrate OFWE for providing technical advice in forestry activities.

Improved cookstoves production and distribution.This strategy option seeks to reduce household biomass consumption for cooking by promoting the production, distribution, and use of improved cook stoves. It directly

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targets emissions attributable to unsustainable fuel wood collection. It also contributes to health and livelihood benefits of reducing indoor air pollution, predominantly for women and children. Implementation arrangements and recommendations will be further developed once these existing initiatives are better understood. The strategy option could be implemented via the Oromia Improved Cookstoves Development and Promotion Program, or existing initiatives of non-governmental organizations.

Private sector window for investments in sustainable land use and value chains. This strategy option supports innovative private sector investments that contribute to REDD+ objectives in the forestry, agriculture and energy sector. Implementation will be led and facilitated by the Oromia Investment Agency. It will build on existing modalities for investments in Oromia and on a competitive call for innovate private sector investments. Proposals should be selected based on a set of defined criteria that include expected benefits, capacities and track record of the investor to carry out the investment and value-for-money of the proposal for the Oromia Government. We propose two models: (i) Passive government investment, where the investor takes the bulk of responsibility, and the government provides incentives and support, and (ii) active government investment, where the government acts as a joint-investor and shares responsibilities, risks and profits.

Cross-sectoral strategy optionsStrengthening and expanding participatory land use planning, a pre-requisite for sustainable land management and therefore key element of an effective REDD+ strategy. We propose to expand, strengthen, and harmonize existing processes by developing comprehensive land use planning guidelines. A draft guideline should be piloted and implemented in the region. The development of these guidelines should be led by the Oromia Bureau of Land and Environmental Protection in close coordination with the Oromia Bureau of Agriculture and Rural Development and Oromia Forest and Wildlife Enterprise and under the oversight of the President’s Office.

Expanding land registration and certification. This strategy option seeks to scale up the registration and certification process across the Oromia region. By incentivizing sustainable land management improved tenure security can reduce pressure on forests. Tenure certification is currently undertaken under several different initiatives, most notably the SLMP and PFM. This strategy applies the design of the second level certification process for which implementation has recently started under the SLMP II. For state forest, certification could be integrated in the PFM process of formalizing forest management agreements between the local community and the Government.

Institutional strengthening and improving forest governance.Institutions responsible for land use management, decision-making and enforcement in Oromia suffer from several structural weaknesses. Staff turn-over is high resulting in a lack of experienced and well trained work force. Generally, there is a lack of enforcement officers, combined with a lack of incentives, and insufficient equipment. There is also a general lack of expertise around REDD+ relevant knowledge areas. This strategy option builds on the SMLP II and successful REDD+ strategies from other countries. We propose to embed additional and REDD+-specific institutional strengthening measures in the SMLP II.

Allocation and distribution of REDD: benefit sharingIn a regional REDD+ program, results-based payments will be allocated at the regional level among strategy options and operational framework. There will be no sharing of carbon payments at the local level. Benefits allocated to communities could take into account opportunity costs for forest protection and could also include additional allocation of funds for training and extension focused on the provision of livelihoods and economic viability of land use or forest management models, in order to provide economically viable opportunities that address drivers of deforestation. Considering that REDD+ payments are not permanent and support only the transition to more sustainable land use models, strategies that have the potential to become financially sustainable should be targeted. For example, PFM will only be sustainable if economic incentives are generating direct returns for communities. In addition, funding should be allocated for the ‘enabling framework’.

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Oromia REDD+ Program

1.1 Background and Context

The implementation of REDD+ is embedded in Ethiopia’s Federal Climate Resilient Green Economy (CRGE) Strategy that seeks to limit Ethiopia’s emissions bringing the country to middle income status by 2025 through an environmentally sustainable and climate resilient economy while maintaining zero net GHG emissions. In July, the Government of Ethiopia (GoE) mandated the MEF to facilitate the implementation of the CRGE Strategy, including through development programs in environmental management and forestry. Ethiopia is receiving international support to achieve REDD+ readiness and prepare the country for receiving results-based payments for emission reductions in the forestry sector. The GoEhas identified Oromia as pilot region for REDD+. The Government supports a jurisdictional approach that allows the nesting of emission reduction and stock enhancement projects in state (Oromia) programs. The subnational reference regions are the Federal States of Oromia, whose reference levels add up to the national REDD+ reference level.

The development and eventual execution of the Oromia REDD+ program is led by the Regional State government and includes the achievement of REDD+ readiness at the state-level to receive results-based payments for emission reductions as well as the development and execution of policies and measures that reduce GHG emissions from deforestation and forest degradation and increase forest carbon stocks. In Ethiopia REDD+ is further integrated in the country’s strategy to reduce emissions from the land-use sector in general, which demands to look at forest emissions in conjunction with agricultural and other land-use emissions.

The World Bank’s Oromia Forested Landscape Project (OFLP) will be implemented in the context of the Oromia Regional REDD+ program. The World Bank supports the development of the state-wide REDD+ institutions (MRV, cross-sectoral measures) and provides initial investment for REDD+ incentive programs in selected Woredas. The concrete details of the OFLP are still under development, but it is expected that the suggested measures will draw on those presented in this report. Detailed implementation arrangements for the OFLP will be developed based on the feedback on this report, the stakeholder consultations in November 2014, and pending expert interviews.

1.2 Objective and StatusOn April 25, 2014 the World Bank contracted Climate Focus for an assignment “Analysis of the Legal and Institutional Framework for a National

1.Introduction

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Introduction

and Regional REDD+ Program in Ethiopia” (the Assignment). The GoE has identified REDD+ as an opportunity and viable source of sustainable finance for investments in forest management, conservation and restoration to enhance multiple benefits of forests. The assignment pursues the double purpose of supporting the national government in achieving REDD+ readiness and creating a framework for the implementation of REDD+ and of preparing a results-based transaction of the World Bank’s BioCarbon Fund in support of the Oromia REDD+ program, and specifically the Oromia Forested Landscape Project.

This report marks the midterm of the project’s implementation. It consists of two parts, the present document discussing theOromia REDD+ context, focused on analyzing local laws and institution and the implementation of an Oromia REDD+ program (which represents the second part), and a first part that covers the national REDD+ program that was submitted to the Ethiopian Government on in September 2014.

It is important to note that this report is unable to answer all pending questions. Areas for further investigation and questions are identified. Lack in information will sought to be covered during interviews and document review in November 2014. The strategy options will be further refined in coordination with UNIQUE and their team’s final data and findings. Details on the implementation of OFLP will be addressed in our final report.

This report is structured as follows: Section 2 will describe and discuss the existing legal and institutional framework relevant for REDD+ in Oromia. It will identify gaps and develop recommendations on how to improve the administrative and regulatory context for an effective implementation of REDD+. Section 3 will discuss institutions and programs that support the implementation of a Regional Oromia REDD+ program. In this section, we will develop recommendations for an operational framework, REDD+ policies and benefit-sharing strategies.

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This chapter analyses the overall legal and institutional framework applicable to forestry and land use in Oromia Regional State. It begins in section 2.1 with providing a brief introduction to the mandate of the State to

address forestry and land use, identifying

the most relevant legal instruments and highlighting several key differences with Federal land use laws. It then goes on in section 2.2 to analyze specific areas of forestry and land use law that are of particular importance to REDD+, in each case firstly assessing what is required of a sound legal framework before going on to describe the current status quo and identifying gaps and recommendations. Section 2.3 takes the same approach to assessing institutional arrangements for forestry and land use in the state, while section 2.4 describes a selection of initiatives within the Regional State that have been important in developing the legal framework.

1.3 Overview of law and policy on land useThe Ethiopian Federal system devolves significant power to Regional States. Under the Federal Constitution, all powers not expressly vested in the Federal Government are vested in the Regional States.1Specific powers assigned to the Regional States include the power to raise revenues, formulate state-level economic, social and development policies and administer land and other natural resources “in accordance with Federal laws”.2Both Federal and Regional laws apply directly in the Regional State, and in practice Federal laws on forestry and land use are designed as framework laws, leaving Regional States to enact more specific laws to fill the gaps which are not covered by the former.3 Federal laws may set out the leeway that is provided to Regional States to diverge from their provisions in adopting corresponding Regional laws. Even in cases where regional laws are required to be consistent with Federal Laws, however, the wording of the Federal law may provide scope for the regional laws to adapt them or fill gaps.

All the most important Federal laws on forestry and land use have been mirrored with corresponding regional laws in Oromia State, and on the whole the state has a relatively well-developed legal framework covering

1 Constitution of the Federal Democratic Republic of Ethiopia (1995): Article 52(1).http://www.refworld.org/docid/3ae6b5a84.html. Note that some powers may also be vested jointly in the Federal and State governments. (October 2014).2 Constitution of the Federal Democratic Republic of Ethiopia (1995): Article 52(2).http://www.refworld.org/docid/3ae6b5a84.html (October 2014).3MelleseDamtie, Analysis of the Organisation, Formulation and Application of Forest Laws in Relation to the Implementation of PFM in Ethiopia, Report for Ethiopia Ministry of Agriculture, August 2012.

2.Legal and institutional framework for land use in Oromia

http://www.refworld.org/docid/3ae6b5a84.html

http://www.refworld.org/docid/3ae6b5a84.html

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these sectors. Error: Reference source not found provides a summary of the most important laws and policies related to sustainable natural resources management in Oromia Regional State.

Table 1Overview of policies and proclamations on land use in Oromia

Instrument Main elements relevant to REDD+

LawsOromia Forestry Proclamation (2003)

Recognizes not only state and private, but also community forest.

Gives priority to community if designation and demarcation of state forest results in eviction of the local community

Emphasizes the participation of local communities in the management of, and sharing of benefits from, State forests.

Forest rights may be granted to communities or investors and are similar in substance to general land use rights. Forest Management Plans must be prepared.

Oromia Rural Land Use and AdministrationProclamation (2007)

Provides framework for proper management and utilization of land and land resources,

Entitles peasants and pastoralists whose livelihoods depend on farming the land with rural land for free of charge.

Provides private investors the rights to use rural land in accordance with the investment policies and laws at the Federal and State levels.

Obliges private investors to plant indigenous trees at least on 2% of their land

Investment land should be allocated in a way that protects the natural resources of the region

Provides framework for transferring land rights to individual users, communities, and private investors through the issuance of land holding certificates, concessions, or other agreements.

Provides for the rights of transfer, lease or compensation for land and properties developed on it.

Explicitly prohibits redistribution of rural land except for irrigated lands

Mandates the Bureau of Agriculture and Rural Development to develop a guiding land use master plan with a watershed-based approach (a mandate later given to the Oromia Bureau of Land and Environmental Protection – OBLEP)

Users are obliged to conserve and protect mother trees on their holdings

Oromia National Regional State Environmental Impact Assessment Proclamation No.176/2012

Provides framework for investment licensing and procedures for environmental impact assessment (EIA)

Prohibits any licensing organ from issuing any kind of operational license to investors without fulfilling the requirements of the Proclamation

Policies, strategies and initiativesOromia Forestry Action Program (OFAP)

Study funded by UNDP to address forest and forestry related policy; proposes institutional reforms and investment programs in Oromia Regional State

Five year development plans (1996-2000) and (2000-2004)

Focus on intensive yearly tree planting for the development of farm forestry

Defining Regional Forest Priority Areas (RFPAs)

Demarcation and management plans have been established for Identified 37 RFPAs

Development of industrial and fuel wood plantations

The region has established industrial and peri-urban plantations withinregional forest priority areas

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Establishment of forest enterprises (OFWE)

With an objective of protection, development, utilization and marketing of forest resources in the region through self-financing forest enterprises

Participatory Forest Management (PFM)

Oromia has been one of the front runners in adopting PFMs as innovative approach to sustainable forest management

Reestablishment of check-points

The region established several check-points to minimize the flow of illegal forest products to urban centers, particularly the capital Addis Ababa

The legal framework in Oromia has diverged from the Federal legal framework in a number of significant aspects (see section 2.2 below). Several of these changes have sought to improve on some of the deficiencies considered to exist in the Federal legal framework with respect to promoting sustainable land and forest use. The majority of differences between the federal and regional proclamations do not indicate any legal conflict.4In some cases, however, conflicts have arisen.For instance, as will be discussed further later, penalties for forestry infringements in Oromia are significantly greater than those prescribed by Federal law, and in this case judges have refused to apply them.5

1.4 Land use law

1.4.1 Land-use planning

RequirementsLand-use planning forms part of an effective REDD+ strategy. The objective of achieving emissions reductions from the land use sector should be incorporated within broader efforts of land-use planning in order to synergistically promote environmentally sustainable, socially sound and economically viable land uses, directing economic activities to where they are most suited and avoiding conflicts between land uses. The ability to ensure coordination of sectoral land-use activities and avoid conflicts with REDD+ actions is crucial in this respect.

Effective land-use planning in Oromia Regional State requires planning at the macro (i.e. State) and micro (i.e. local) levels. In undertaking macro-level planning policy-makers need to ensure that the development of common rules is balanced with flexibility for micro-level planning to be adapted to local conditions and thus be practically feasible to implement.

Status quoThe Oromia Rural Land Use and Administration Proclamation (2007) provides an umbrella framework for rural land administration in the region. It sets out a number of rules on the types of activities that may be permitted on specified categories of land, and provides for the preparation of a Guiding Land Use Master Plan that sets out more specific rules on land use in the region, taking into account regional environmental and socio-economic conditions.The task of developing the Master Plan is assigned to the Oromia Bureau of Land and Environmental Protection(OBLEP), established in 2009.6OBLEP is similarly charged with implementing the Master Plan, following up on implementation and, where necessary, taking

4Mellese, D.(2012): Analysis of Legal Aspects for Participatory Forest Management Implementation in Ethiopia. Ministry of Agriculture-Natural Resource Sector. Addis Ababa, Ethiopia.5Ibid.

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legal action to enforce its terms.OBLEP, in coordination with the Federal Government, has been piloting land-use planning initiatives7as that would feed into a Regional Master Plan that would align with the Federal Land Use Master plan. OBLEP has also made significant progress in carrying out land resource mapping with a view to facilitating the process of developing the Regional Master Plan.8 This is undertaken through a participatory process that includes a broad number of stakeholders. The key regional-level stakeholders are:

OBLEP Oromia Bureau of Agriculture (OBA) OromiaPastoral Area Development Commission OromiaWater, Mine and Energy Bureau (OWMEB) OromiaAdministration and Security Bureau OromiaInvestment Commission Oromia Urban Planning Institute Oromia Disaster Prevention and Preparedness Commission

There is also substantial participation at local level, including

Communities at local level (5 participants) Land Measurement Committee (composed of local people trained in

land measurement) Local elders Kebele law enforcement personnel Kebele administration

To-date, 46 percent of the region has been incorporated in the land resource mapping process. In these areas, land designated for respective activities such as forestry and agricultural investment is demarcated, and it is reported that this has substantially resolved potential conflicts between forest protection and investment activities. In the remaining areas, however, the process remains incomplete, and here conflicts remain to be resolved.9

Among the various micro level land-use planning activities in Oromia, the Sustainable Land Management Programme (SLMP), described in detail in our national report (Mid-term National Report 1)and further elaborated on in Section 2.4, is the most significant initiative promoting micro level land-use planning.

According to the Oromia Forest Proclamation, management plans are required to be developed for all state forests.10With the exception of forests under PFM, however, management plans have not been prepared for the majority of state forests.11

Gaps and weaknessesMore than half of the Oromia territory remains to be mapped and the resource mapping as well as the demarcation conducted by OFWE form only one part of a more comprehensive land-use planning 6Proclamation No. 1.1712009, A Proclamation to Provide for the Establishment of Oromia Bureau of Land and Environmental Protection, Article 5(3).7IntegratedLand-use planning (ILUP) Project.8 Interview with AbebeMulatu, Property rights Lawyer at Land Administration for Nature Project.9 Interview with AtoAmanMude, Rural Land Administration Process Owner (October 2014).10Oromia Forest Proclamation 2003 : Article 9(1).11 Mellese Damtie, supra.

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process. In areas where land that has yet to be mapped often conflicts exist over the use of land, leading to uncertainty and insecurity, and the completion of resource mapping is considered crucial to the development of the integrated Regional Master Plan.

Challenges constraining land-use planningin Oromia include:12

1. While processes have been broadly participatory, there exists a lack of consistency in processes for participation and overall mandates are not clear and coordination has been weak.

2. There are also differences in interest between the Federal and Regional Governments over land.

3. Differences between customary land use systems with the modern land use system developed by the region.

4. Limited human and technological capacity and high staff turnover within OBLEP, limiting abilities to undertake the detailed studies and data analyses required for resources mapping.

5. Disagreements regarding the balance between economic growth and environmental and social sustainability in planning.

6. As already indicated in the Mid-term Report 1, the lack of appropriate strategies to harmonize the variousexisting processes(including the OBLEP participatory resource mapping process, OFWE’s demarcation process, and various donor initiatives such as SLMP), which currently follow divergent methodologies and technologies to pilot land use plans. This causes inefficiencies and conflicting demands on regional bureaus dealing with land and land resources.

RecommendationsA multi-sector coordination process for the development and implementation of land-use planning would help to integrate various interests and help to clearly delineate the roles of the respective institutions concerned. This could take the form of a regulation establishing a coordination platform, establishing processes and assigning responsibilities.

A consultative policy process would help to clarify the purposes and processes of land-use planning and create a common understanding among various stakeholders. Efforts have to be geared towards reaching a consensus among institutions on the need for a harmonized land use plan, which offers a win-win scenario with economic, social and environmental considerations. There has to be a common understanding in the definition for forest, woodland and agricultural land, a pre-requisite for land-use planning and demarcation.

Similarly, a multi-stakeholder process for planning, implementation and enforcement of land use-related decisions (e.g. for land-use planning and demarcations) would increase the acceptance of the processes and compliance with decisions. It would also give marginalized groups a voice. The forest and woodland demarcation process currently underway in Oromia could, for example, be harmonized with the SLMP’s land certification process. Participatory Forest Management (PFM) would present a strategy to undertake greater community involvement in management planning for forest areas.

12 Report on the Oromia Land-use planning Exercise Experience sharing Workshop. Dire Hotel, Adama, August 30-31- 2013. Interview with AbebeMulatu, property rights lawyer at land administration for Nature Project. (September 2014); Interview with AtoAmanMude, Rural Land Administration Process Owner (October 2014).

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The capacities of OBLEP in key areas such as land resource mapping and data analysis would have to be strengthened and increased. The reasons for high staff turnover should be analyzed and addressed.

Finally, donor coordination should be strengthened with a view to consolidating the processes used under their respective land-use planning initiatives and integrating them with the land resource mapping process.

Questions for further research and consultations To what extent does the land-use planning process in Oromia take

into account the REDD+ program and the investments it foresees? What are the precise capacity constraints of OBLEP with respect to

the land-use planning process and why is staff turnover so high? Further develop strategy options that canreduce conflict between

economic development and environmental protection goals.

1.4.2 Land and forest tenure and user rights

RequirementsInsecure forest tenure has long been associated with deforestation.13 Combined with incentives to protect the forest, clarifying forest tenure is one of the conditions that support REDD+. An effective land tenure system includes providing clarity over ownership and other land rights, allowing the identification of relevant actors, incentivizing long-term investments (financial or otherwise) in sustainable management and enabling actors to successfully manage their land without interference from intruders. REDD+ implementation is also supported by clear and legitimate property right framework that can incentivize communities to protect forest in a sustainable manner.

Status quo

The Oromia Rural Land Use and Administration Proclamation sets out the overall legal framework for land administration in the State, while the Oromia Forest Proclamation (2003) sets out the relevant framework for the administration of forests. Since land and forest administration is closely linked these laws should be read closely together.

The Oromia legislation broadly follows the framework set out by Federal land and forest law with respect to forest tenure and rights. As under Federal law, all land and natural resources in Oromia is administered by the State on behalf of the people. Similarly, rural farmers and pastoralists are entitled to receive land use rights on rural land free of payment, though in Oromia this is restricted to those persons resident in the State.14 This right only applies to agricultural land, and no equivalent right to receive forest land exists, though land holders may develop forest on parts of their land that cannot be used for agriculture. Land-use rights cannot be sold or exchanged, though they may be bequeathed and up to half of the land may be leased.15

13Sunderlin, W., Larson, A., Cronkleton, P. (2009): Forest Tenure and REDD+. In:Arildsen, A. Brockhaus, M. (ed.):Realising REDD+: National Strategy and Policy Options.14 Oromia Rural Land Use and Administration Proclamation (2007), Article 515Ibid, Article 6.

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As indicated in section 2.1, however, the Oromia legislation diverges from the Federal legislation in several important respects (see Table 2). In the first place, the Oromia Forest Proclamation recognizes, in addition to the state and private forms of forest ownership recognized by the Federal Forestry Proclamation, community forest ownership.16 Community ownership can apply to state forests that are granted to community organizations, or on land already under communal ownership. Community organizations have the right to use the forest sustainably (in accordance with agreed utilization schedules and use right certificates) and protect it from encroachment.17

A second difference found under Oromia law is that private forests may only be developed on landholdings for which individuals or organizations already have land use rights.18 The Federal law by contrast appears to allow for forest areas to be allocated to private users.19

A third difference is that state forests may not be cleared for agricultural practices.20 As discussed below, this is implemented through the integration of OFWE in land investment decisions.

A fourth difference is that Oromia legislation explicitly prohibits redistribution of land use rights unless the land is needed for irrigation infrastructure development, in which case the legislation provides for payment of compensation.21

Finally, the regulation establishing OFWE22 clarifies that both designated and non-designated forests are included within the legal definition of state forest, resolving confusion that has sometimes arisen under the Federal law and ensuring that the law can be implemented regardless of whether a given forest is demarcated.23

Table 2Comparison of national and Oromia Forest Laws

Proclamation Federal OromiaForest Proclamation

Recognizes private and state ownership only24

Recognizes communal forest ownership as well as private and state ownership

Private forests may be allocated to individuals or organizations

Private forests are those developed on individuals’ or organizations’ own lands

No specific provisions on forest clearance for agriculture

Prohibits forest clearing to plant coffee, Khat and agricultural products

Land Proclamation

Disputes to be solved by negotiation, arbitration or general laws of the jurisdiction

Provides a specific, accessible legal procedure for resolving land disputes (though other forms may also be used)

16 Oromia Forest Proclamation (2003): Article 3.17 Ibid, Article 618Ibid, Article 2(4)19 Federal Forest Proclamation (2007): Article 2(9)20 Ibid, Article 14(1)(a)21 Oromia Rural Land Use and Administration Proclamation (2007): Article 14(1)22Oromia Regional State Regulation № 122/200923Damtie, M. (2012). Analysis of Legal Aspects for Participatory Forest Management Implementation in Ethiopia. Ministry of Agriculture-Natural Resource Sector. Addis Ababa, Ethiopia. 24Note that private ownership may include ownership by formalized community associations.

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Redistribution permitted for irrigable land or other land where Regional residents in favor

Only irrigable land may be redistributed

Land may be redistributed where holder leaves locality

Right to land will not be terminated if holder leaves locality

Land certification.As with Federal legislation, Oromia legislation provides for land use rights holders to be provided with holding certificates demonstrating proof of right. Implementation of land registration and certification in Oromia began in 2004 following the establishment of Regional Land Administration, Environmental Protection and Use Bureau, which was mandated to measure and register as well as distribute land certificates. Implementation of the land registration and certification process was facilitated through the SLMP program (see Mid-Term Report No 1and Section 2.4 below).

The land proclamation does not distinguish between different forms of land, such as forests, agricultural land and watershed land. In principle, therefore, all rights holders are entitled to certificates. In practice, however, certification efforts have focused on agricultural land, and the majority of what are commonly referred as 'communal lands' has not been issued with certificates, though certification may cover some private forests, since these are planted on land already held by individuals or organizations. For instance, the communal lands such as watersheds and area enclosures have not gone through the land certification process. However, since the introduction of PFM, use rights of some forests in Oromia has been transferred to communities through certificates and forest management agreements arranged by OBLEP and OFWE, respectively.

Agricultural concessions.Under Ethiopian law large-scale land deals, defined as those involving land over 5,000 ha, are under the jurisdiction of the Federal Government, under the Ministry of Agriculture and Rural Development (MoARD). Deals for smaller portions of land are under the authority of the Regional States.25 In Oromia, allocations of 200-500 ha are formally under the authority of zonal investment committees, with smaller areas under the authority of Woredas. In practice, however, the majority of decisions on land allocation for investment, even those relating to land under 500 ha, are undertaken at Regional level.26

Regional-level land decisions are under the authority of the Board of the Oromia Investment Administration (OIA). Currently the Oromia Bureau of Agriculture and Rural Development (OBA), the Bureau of Oromia Bureau of Land and Environmental Protection (OBLEP), OFWE and other sectoral Bureaus sit on this Board. This provides a form of ‘one-stop shop’ for investors, which seeks to streamline investment processes. Within this structure, OBLEP is assigned specific responsibility for identifying the investment land, gathering the necessary land information, reviewing and approving the environmental impact assessment for the investment in question, and providing periodic follow-up on the implementation of investment activities. Woreda administrations are then engaged to facilitate the transfer of the land in practice. 25Getnet A. (2012): Rural Land Policy, Rural Transformation and Recent Trends in Large-scale Rural Land.26Personal communication with AtoBekeleAseffa, owner of Investment Land and Document Issuance Work Affair.

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The integration of OFWE within the Board of the OIA has been an important step in ensuring the protection of forests in investment decisions in the State. The affirmative vote of OFWE is required for any investment decisions to be made, and it has been reported that OFWE has consistently acted to prevent the approval of agricultural investments in forest areas.27 At present OFWE does not have a seat on zonal and Woreda investment committees; however, to-date this has had limited relevance, since most investment decisions are taken at Regional level.28

Gaps and weaknessesRelative to other regional states, the Oromia land and forest legislation is often considered as the most advanced in providing for tenure security and facilitating sustainable and productive land management. Nonetheless, several gaps and weaknesses remain.

Firstly, implementation of the land registration and certification process in Oromia has been constrained by a range of factors, including:

1. Lack of clearly defined guidelines for implementing the registration process, leading to haphazard approaches being followed (though it is reported that this has been improved in the second phase of the SLMP);

2. Insufficient finance being allocated, leading to understaffing of the Woreda office responsible for executing the registration and certification process;

3. Inadequate staff training leading which, in combination with the lack of clear guidelines, leads to knowledge gaps about the interpretation of regulatory provisions that are relevant for Woreda, Kebele and community levels. It was reported that in most cases, dissemination of information on the legislation to the local communities were poorly conducted, and often communities are not aware of the differences between previous and current land rights, nor do they have access to policy documents; and

4. The focus of the process on agricultural land, effectively excluding forests (with the exception of private forests planted on individual lands) and watersheds.

Secondly, some of the restrictions placed on the land use rights in the Oromia Land Proclamation combined with the implementation constraints of the land certification process raise tenure security issues that may present challenges for REDD+. Despite the prohibition on redistribution of land in Oromia, a number of insecurities remain:

1. From a legal perspective the Regional State still retains the power to redistribute land if there is irrigation infrastructure development. Given the current emphasis both by the Federal and Oromia Governments to expand irrigation infrastructure both for small and large scale agriculture, there is a risk that landholders will be displaced, whether to give wayfor irrigation infrastructureor throughredistributionaimed at ensuringequal distribution of irrigated land;

2. Despite the prohibition on redistribution of non-irrigated land, knowledge of communities on their legal rights remains low and the mindset that land is subject to continuous redistribution remains

27Interview withAtoDegefaNegera (August 2014)28Ibid.

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prevalent among both landholders and local authorities. This results, on the one hand, in the prohibition on redistribution at times not being respected by Woreda and Kebele authorities and, on the other hand, on landholders being unaware of, and thus unable to enforce their rights.

3. The legislation imposes obligations on land management practices (such as use of intensification of agricultural inputs, planting trees, and maintaining soil and water conservation structures) as a precondition for the land use right. Where landholders are unable to meet these, they risk losing their land. While these requirements are prima facie positive, the risk of land redistribution means the incentive to implement improved farming practices is reduced. Combined with the high cost of inputs such as fertilizer and improved seeds, this encourages landholders to ignore these provisions and risk losing their land.

Thirdly, the inability to transfer ownership creates some insecurity for private investors, which can hinder efforts to promote REDD+-related investments. This is particularly so for investments with a long time-horizon, for example timber plantations, where the risks represented by tenure insecurity are magnified. It is, of course, possible for the Government to enter into agreements for the long-term transfer of land rights. Such agreements are, however, by virtue of one of the parties being a public entity, classified as administrative contracts. Under the Civil Code, a public entity may terminate any administrative contract without a breach having occurred, whenever the contract is no longer in its favor. While compensation must be applied and, in practice, it is rare for public entities to exercise this provision, this clearly reduces security for land investors, since their rights to the land exist only in contract.

RecommendationsInvolving communities in decision-making process regarding land-use planning from the early stages can help to a cultivate sense of ownership. Tenure security is also a product of perceived notion of security and sense of ownership. Failure of past natural resources initiatives in Ethiopia has often been correlated with lack of asense ofownership among communities.

Clear guidelines on the implementation of the land certification process would help to ensure a consistent process, which would increase acceptance of the outcomes at the Woreda and Kebele levels. The adoption of guidelines should be accompanied by outreach and training to ensure that the guidelines are sufficiently understood and coherence in processes is achieved. The process could further be strengthened through providing for an appeal process that would allow landholders to appeal decisions on the redistribution of land where they claim that this has been done outside of the scope of the legislation.

We further propose to undertake community outreach to facilitate awareness of land-use rights. This should include: (i) information on the scope of the prohibition on land redistribution; (ii) clear guidance on the circumstances in which land may be redistributed; and (iii) guidance on the land certification process, including their participation rights.

The certification process would also benefit from the inclusion of more forest areas. Since private forest only exists where landholders plant forest on land they already own (and can be separately certified), this is primarily

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relevant to community forest. This goal can therefore be achieved through expanding PFM and requiring that communities that are allocated land under PFM are issued with land-use certificates.

Greater security should be provided to private investors.Two options that would ensure this include allowing private ownership of land or changing the rules on government prerogatives to terminate administrative contracts. Both of these steps, however, would require major changes to the Ethiopian legal system. Any change regarding ownership would likely require a constitutional amendment, while changes regarding administrative contracts would require amending the civil code. Given that the Government rarely exercises its prerogative to terminate agreements, such changes may not be necessary. Compromise solutions to enhance investor security may be to provide include provisions in agreements protecting investors, such as requiring consultation and best efforts to resolve any difficulties before termination, and providing for damages that would adequately cover any loss (and potentially also opportunity costs) suffered by the investor.

1.4.3 Participatory forest management

RequirementsPFM presents an opportunity for REDD+ as it facilitates forest conservation, development and utilization through community participation. For REDD+ implementation to be effective, it has to follow a participatory path that engages local communities whose livelihoods are directly dependent on the forest. In short, PFM combines objectives of sustainable forest management with secure rights, local forest governance and secure livelihoods for local communities. It has also broadly been considered by Oromia forest experts as constituting one of the most promising strategy for REDD+.29 This necessitates that appropriate institutional arrangements are put in place, and that lessons are learned from existing PFM initiatives to ensure that this mechanism is used to the best of its ability.

Status quoOromia is among the pioneers among the national Regional States of Ethiopia in adopting PFM. The first PFM in the State (and nationally) was piloted in AdabaDodollain 1994 by GIZ (formerly GTZ). Since then PFM has received a significant amount of attention as a viable strategy option for sustainable forest management in Oromia, with particular focus on its promise to remedy past top-down and conservation-focused approaches in the region that resulted in massive deforestation.30To-date, Oromia hosts 14 out of the total 22 PFM initiatives in the country under both natural and plantation forests in the covering forest area of more than 829,606 hectares.31Most of these PFM initiatives in Oromia have been implemented in collaboration with NGOs, and in recent initiatives OFWE has taken on the leading role.

As discussed in section 2.2.2, the Oromia Forest Proclamation provides for community ownership of forest resources, providing an overall legal framework under which PFM can be developed. Meanwhile, PFM has been 29 Interview with AtoMenberuAlebachew, Land Administration Specialist and Consultant (September 2014)30Ameha, A, Larsen, H.O., Lemenih, M. (2014): Participatory forest management in Ethiopia: learning from pilot projects. Environmental management, Vol.53, no. 4., pp. 838-854.31Temesgen, Z., Lemenih, M. (2011): Refined and simplified guideline for up scaling PFM in Ethiopia. Addis Aababa, Ethiopia

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adopted by the Government of Oromia as an official strategy for sustainable forest management32 and OFWE has institutionalized PFM internally as a standard approach to sustainably manage forest.

To-date, however, Oromia has not adopted any specific regulations setting out procedures for PFM. Instead, PFM establishment strategies, guidelines and modalities have been developed by NGOs such as Farm Africa, SOS Sahel, GIZ, and JICA,33 all following slightly different approaches. Some of the differences of the different PFM initiatives are:

Whether or not PFM arrangements include only forest-dwelling communities or also communities from surrounding areas;

Whether or not forest use is regulated; Whether livelihood strategies are followed; and Whether PFM initiatives take the form of cooperatives, associations

or another legal form (see Table 3).

Despite their differences they also include a range of common elements, including:

Organizing communities into various user groups and associations; Establishing forest user groups as legal entities; Development of by-laws under which the user groups or

associations abide by; Implementation of participatory forest resources assessment and

forest management planning, and Forest management agreements specifying the roles and

responsibilities of both community and the state

32Damtie, M. (2012): Analysis of the Organisation, Formulation and Application of Forest Laws in Relation to the Implementation of PFM in Ethiopia. Report for Ministry of Agriculture.33FARM-Africa/SOS Sahel Ethiopia (The key steps in establishing PFM – A field manual to guide practitioners in Ethiopia); AMBERO-GTTEC (Guidelines for Implementation of the WAJIB Approach in Ethiopia developed based on experience of the integrated Forest Management Project (IFMP) AdabaDodolla; JICA (Different PFM (WaBuB Field Manual)

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Table 3Comparison of PFM implementation structures

Legal Entity Strengths Weaknesses

Associations Independent legal personality Limited liability Tax exempt Autonomous, subject to supervision by government

regarding conformity of activities with association’s purpose

Survival of the association in cases of death, absence, etc. of members will not be affected unless the remaining members are extremely few for fulfilling the objectives of the association.

One person-one vote system Usually only one association (or cooperative) in

each area dealing with same type of activities, hence less susceptible to competition than partnerships or companies

May not engage in income generating activities with the exception of incidental income. No income may be distributed among members

Government may revoke association agreement for various minor reasons.

Articles of association prepared by government offices with little input from members

Membership not transferable to heirs or representatives

Cooperatives Independent legal personality Limited liability Tax exempt, though members pay income tax on

their dividends Members can coordinate their knowledge, wealth

and labour. One person-one vote system Members receive dividends from profit according to

shares and contribution. Autonomous Membership right can be transferred to heirs or

even others Less susceptible to competition that partnerships or

companies

Shares may be sold to outsiders when the society faces shortage of capital, diluting local ownership

Government retains supervision over financial management, which some communities have taken issue with34

Ordinary partnerships

Independent legal personality May engage in income generation activities. More autonomous from government than

associations or cooperatives Power of members in determining the contents of

article of association is very high. There is no predetermined content for the partnership agreement.

Equal distribution of profits irrespective of contributions, with possibility to alter by agreement

Weight of vote is same as association, with possibility to alter by agreement

Membership transferable to heirs or representatives

Members may not privately engage in activities similar to those of partnership

Subject to income tax Tend to be more subject to competition than

associations or cooperative License may be revoked for various minor

reasons Partners are jointly and severally liable for

company debts, though potential to avoid through partnership agreement, provided this is made known to third parties, such as creditors

Death, insolvency or bankruptcy of partners causes the dissolution of a partnership, unless otherwise agreed through partnership agreement

Private limited companies

Independent legal personality Limited liability Can engage in income generation activities More autonomous than associations or

cooperatives Autonomy in determining the contents of articles of

association Death, insolvency or bankruptcy of partners will not

affect survival unless otherwise expressly provided Transferring membership right to heirs or

representatives is possible if decided by vote

Subject to double taxation a) The PLC in its firm capacity and b) the individual in his personal capacity

Government officials may allow other business organizations to involve in similar activities in the area, which may lead to severe competitions

Contribution in skill by members is not allowed, it is an association of capitals.

Weight of vote is according to the contribution of members

34 Some communities have taken issue with this and based on this have chosen other forms of legal entity. At the same time, government supervision can be deemed an advantage in that it helps to ensure more sound financial management.

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Private trade similar to that of the firm is allowed

Gaps and weaknessesOromia’s forest legislation provides a relatively favorable legal framework for PFM due to a number of factors. First and foremost, the recognition of community forests as a distinct category of ownership provides a clear and secure form of forest right that can be used for PFM. This has been considered more favorable than the Federal legal framework, which recognizes community ownership only under the umbrella of ‘private forests’.35 In addition, the prohibition on conversion of forest land to agriculture also provides an important protection for land under PFM.36

Early lessons from PFM in Oromia thus far indicated a positive impact of PFM. Initiatives have resulted in higher conservation outcomes including reduced deforestation, improved overall forest conditions increased wildlife populations and reductions in illegal logging. The conservation outcomes have not, however, been matched with improvements in livelihoods, which so far failed to fulfil their estimated potential.37The minimal livelihood benefits of PFM is explained through the policy contraints encountered during the implementation of PFMs in Oromia.

Despite their relative successes, PFM initiatives in Oromia have been constrained by a range of factors, most notably the following:

Implementation of PFM has been influenced by more conservation-oriented models – hence restrictive use right arrangements – rather than an optimal sustainable forest management model. The opportunity forests present for enhancing livelihoods of local communities is hardly considered. Forest use rights in most PFM arrangements have been limited to alternative livelihood outcomes and extraction of Non-Timber Forest Products (NTFPs), and most PFMs prohibit productive use of forest products such as timber. This has been reported as preventing communities from committing to sustainable forest management, in particular since many forests in Oromia are limited in commercially-valuable NTFPs.

As discussed in section 2.2.2 above, administrative contracts give the Government party with the prerogative to terminate. Though compensation is payable, this creates significant insecurity for community associations and other entities entering into PFM agreements with OFWE or other government organs.

Differences among PFM initiatives pose a challenge in establishing a consistent benefit-sharing mechanism for communities. This could be a valid concern especially in a larger landscape REDD+ programs. It is, however, reported that OFWE has taken efforts to harmonize benefit-sharing across Oromia.

Implementation of PFM often suffers from reluctance to devolve powers to communities. In pilot PFM initiatives communities have often

35Damtie, M. (2012): Analysis of the Organisation, Formulation and Application of Forest Laws in Relation to the Implementation of PFM in Ethiopia. Report for Ministry of Agriculture.36 Ibid. 37Tesfaye, Y.,Roos, A., Campbell, B.M., Bohlin, F. (2010): Forest Incomes and Poverty Alleviation Under Participatory Forest Management in the Bale Highlands, Southern Ethiopia.International Forestry Review, vol. 12(1). pp. 66-77.

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only been involved in implementation but not in decision making. These initiatives remained dependent on external support to the detriment of community empowerment and capacity-building.38This appears to stem from a lack of trust in communities to successfully achieve PFM objectives. Given that OFWE does not have a local level structure to manage the sustainable functioning of PFM schemes its reluctance to devolve responsibilities to communities to manage these PFM schemes raises questions on the long-term sustainability of these schemes.

Regional institutions working on PFM initiatives have limited human and logistical resources and often lack an institutional structure at the local level, affecting the sustainability of both ongoing and new PFM initiatives. The lack of capacity both by OFWE and Regional bureaus has been presented as one the challenges in NGO-initiated PFM schemes, not only affecting the transition of PFM initiatives to public institutions but also undermining the long term sustainable functioning of those initiatives. OFWE’s lack of institutional structures at local level are a particular concern here, while the lack of coordination between OFWE and Regional public implementing institutions at local level creates confusion over who is responsible for managing PFM schemes.

RecommendationsDespite its difficulties PFM has generally been a success in Oromia and its expansion, if properly executed, has the potential to bring significant benefits. To mobilize the REDD+ potential of PFM, we recommend the following:

PFM agreements could be structured to place more focus on the facilitation of forest-based livelihoods. This requires assigning communities more rights to utilize the forest to develop livelihoods, though subject to clear sustainable use limitations. At the same time, agreements could provide for training of communities to engage in forest-based livelihood activities, drawing on the experience that has been generated by OFWE’s Woreda-level enterprises. Agreements could further establish links with the commercial operations of these enterprises, providing communities with routes to market, while providing the enterprises with both labor and local expertise.OFWE could work with community entities to integrate and develop economically viable business models around eco-tourism, NTFPs, and value chain and market development.

Theadoption ofcommon guidelines for the development and implementation of PFM, through a regulation or other legal instrument, is recommended. Such guidelines would need to balance the need for harmonization and ensuring certain common goals are met, with providing flexibility to adapt to differing circumstances and local priorities. More detailed recommendations on the content of such guidelines are provided in section 3.3 below. At a minimum, they would identify the different forest types in the region based on their potential, including productive and environmental uses; provide basic, ecologically sound forest management guidelines upon which PFM schemes could be built; and determine the kind of rights that should be granted to communities in each forest type. In addition, while communities should be free to determine their own by-laws, limited safeguards may be adopted to provide against capture by elites.

38 Harrison, E. (2002): The problem with the locals’: partnership and participation in Ethiopia. Development and Change.vol. 33. no. 4. pp. 587-610.

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It is crucial to develop ecologically sound harmonized forest management plans applicable to the forest types. Some forests have high potential for commercial NTPFS, while others offer high environmental importance. Hence it is crucial that PFM schemes are organized based on a comprehensive forest management plan. PFM agreements could include processes for developing these plans jointly between OFWE and community groups, and such provisions should ensure equal participation of both parties, in order to ensure plans enjoy community ownership, and are thereby more likely to be implemented locally.

We further recommend the strengthening of the technical capacity of implementers, forestry staff (e.g. OFWE, OBA, etc), local level administrators and extension personnel on PFM processes as well as for developing value chains and business models, with a view to promoting financial sustainability and incentives for sustainable forest management.One option for this could be the establishment of local Forestry Development Agents. It is also crucial to clarify overlaps and confusions in the mandates of local level implementers.

While the choice of institutional and organizational structure of PFM implementation will depend on the decision of the community in question, the model of cooperatives offers perhaps the best compromise between associations and business organization, including the ability to generate profit but also remain tax exempt and relatively independent from government entities.

OFWE and other Government entities entering into PFM agreements can reduce the contractual uncertainty inherent to administrative contractsto communities through agreeing to include provisions in agreements that restrict the ability to terminate, such as requiring good faith consultations or mediation, and specifying the compensation that will apply. While government entities will still have the mandate to terminate, this would serve to demonstrate their good faith and give communities confidence.

PFM agreements should to the greatest extent possible be accompanied by the issuance of land use certificates to community entities, in order to provide greater security of tenure.

1.4.4 Rights to carbon/emission reductions

RequirementsWhile not a condition for REDD+, the establishment to rights to (the benefits of) emission reductions become important where market-based approaches to REDD+ are implemented. Where these approaches are taken it is necessary to undertake specific assessments of carbon rights in the project or program area. Consequently, it is important in the context of REDD+ investments and projects (such as the World Bank’s Oromia Forested Landscape Project or the Bale Mountains Eco-Region REDD+ Project) to establish which entity is holding carbon rights and who is authorized to sell them. It is also important to establish rights of communities to be compensated or to benefit from REDD+ payments. Finally, the accounting for emission reductions is important to avoid double counting and double selling of emission reductions.

It is also important that Ethiopia develops a system that attributes emission reductions between the national and regional level, as well as to sub-

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regional projects and programs such as the Oromia Forested Landscape Project or the Bale Mountains Eco-Region REDD+ Project. As discussed in Mid-Term Report 1, such attribution should take into account factors such as the roles and responsibilities of actors at different levels in achieving the emission reductions, how to best target incentives to the most important actors and who has rights over natural resources involved.

Status quoIn common with most countries and regions, Oromia has not specifically regulated ownership or other rights over emission reductions or similar environmental services. In terms of the ownership over the natural resources from which emission reductions can be attained, Regional States are charged with administering forests, and this could give them a claim to the forest carbon sequestered in those forests. At the same time, the Ethiopian State as a whole (together with the people of Ethiopia) owns the land, and individuals and organizations may hold use rights. These multiple rightsmay result in competing claims over land and trees.

Regardless of the right to the land and the (carbon stored in) trees, the entity that achieves emission reductions or an enhancement of stocks provides an environmental service that could result in the right to the emission reductions. In most cases the entity that invests and executes the activity that yields the environmental benefits will be advised to enter into an agreement with the asset-holder (e.g. the forest) and reserve the right to monetize these benefits (e.g. the emission reductions). In the context of forests under OFWE management, OFWE may claim rights to the emission reductions resulting from its forest management activities, a claim strengthened by specific references to the implementation of carbon trading in OFWE’s founding instrument (and supported by the legal analysis undertaken for the Bale Mt Project).39 In the case of PFM, climate-smart agriculture or other tree-planting activities, the right to the emission reductions would be assumed to fall with the entity executing these activities. If there are legal insecurities, these could be solved through contractual arrangements and clarifications.

In the end the right to monetize emission reductions will depend on the specificities of the situation. In each case factors to be assessed include the ownership of the land (invariably the State)the rights to trees, timber and other tree products, the entities undertaking the activities leading to the emission reductions and any other entities who may have an interest in the land or forest in question.

Gaps and weaknessesWhile the regulation of carbon rights is not strictly necessary for the advancement of REDD+ in Oromia, the absence of clarity over the right to emission reductions may create complications in the implementation of market-based carbon projects and potentially in some payments for results programs.

Firstly, the ownership of all land in Oromia, as in Ethiopia more broadly, greatly limits the potential for private sector participation in carbon projects. Even land given to investors for long periods remains owned by the State. Moreover, the highly one-sided nature of administrative contracts, whereby public bodies are permitted to rescind without breach where the contract ceases to be favorable, severely limits the security that can be provided to 39O’Sullivan, R., Damtie, M.(2010): Bale Mt. Eco-Region REDD Project. Legal Due Diligence Report.Washington DC.

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private parties even where they enter into agreements with the State for the transfer of carbon rights. In the event that Oromia wants to promote private investment in carbon projects, therefore, the present framework would be found to be rather unfavorable in this regard.

Secondly, while the Ethiopian State is the prima facie owner of all land and the Regional States are the chief administrators of land in their jurisdictions, several factors may complicate the ability of either entity’s ability to enter into emission reduction purchase agreements:

1. The overlaps between institutional mandates concerning the management of certain forests (see section 2.3 below);

2. Individuals or communities that have been allocated rights to use land and/or forest may have valid claims to carbon;

3. While individuals cannot own land they can own trees they have developed on that land, creating uncertainty regarding the relative ownership of carbon on such land between the State and tree owners.

These complicating factors do not present an absolute barrier to the State entering into agreements for the sale of emission reduction rights. However, they do mean that to do so securely, the State will need to enter into agreements with any entities with potential claims under which all potential rights are transferred to the State. This can be complicated and costly to implement, in particular where there are large numbers of parties with potential claims. In the case of overlaps between institutional mandates letters of no objection may be sufficient for this purpose, as was undertaken in the Bale Mt project.

RecommendationsDefining carbon rights is rarely straight-forward, and experience in other jurisdictions teaches that even seemingly well thought-through regulatory efforts may not always achieve the desired results. Regardless of any regulation, it is generally the entity that achieves and invests into emission reductions that needs to be compensated for the environmental service it provides. Considering that the environmental service needs to be attributed in each case, definition and regulation of carbon rights rarely in itself solves problems created through insecure land and timber rights.

The Government of Oromia should therefore carefully weigh up the respective costs and benefits of specifically regulating carbon vs. continuing to implement REDD+ through concluding relevant agreements to regulate emission reductions when required by a given donor or carbon standard. In taking this decision, the Government should consider, among others, the following factors:

1. The role it foresees for carbon market-based approach under the Regional REDD+ program;

2. Which categories of forests it foresees developing for private carbon projects or programs that require secure transfer of emission reduction rights, and the number of actors that have potential claims to emission reductions within these areas;

3. If opportunities exist to regulate environmental services within ongoing legislative processes, rather than necessitating a stand-along legislative reform;

4. Whether the national Government plans to issue climate change, forest carbon or environmental services regulation that would prevail over any Oromia regulation.

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In the event that the regulation of forest carbon is sought, the following recommendations should be kept in mind:

1. Regulation should clearly differentiate between the right to land, to timber, to NTFP, and to environmental services, such as emission reductions. Rights to “carbon” and “carbon ownership” are often ambivalent and run the risk that ill-defined rights create more confusion than clarity.

2. Since ownership of land and forest are dealt with through multiple proclamations, it is important that any regulation of rights to emission reductions and other climate benefits is reconciled throughout these various instruments;

3. Any regulation of climate benefits, environmental services and forest carbon should be participatory, including involving forest-dwelling communities. Failure to do so may result in legal challenges, and very significant reputational damage, risking international investment.

In the case that the Government decides not to specifically regulate carbon ownership and continue to regulate carbon through agreements with relevant entities, lessons can be drawn from early experiences in Oromia. JFMAs created under the Bale Mt Project establish shared forest management rights between OFWE and local forest cooperatives, with all carbon rights transferred to OFWE and the cooperatives granted the right to benefit from ecosystem services. In addition, letters of no objection from government entities with overlapping responsibilities were used to clarify OFWE’s authority to enter into emission reduction purchase agreements.

1.4.5 Implementation of law and policy

RequirementsEven a well-designed legal framework for forestry and land-use is of little benefit if it is not adequately implemented. The absence of effective implementation not only renders the law in question ineffective in achieving its aims, but at the same time calls into question the legitimacy of the legal and policy framework as a whole, reducing respect toward the law and inviting corruption and a culture of impunity. Effective implementation requires:

1. Well-designed laws. This includes taking into account the capacities of relevant institutions to implement them. It also includes being sensitive to cultural factors that may affect implementation – where laws diverge from cultural norms, implementation is likely to be a greater challenge, and extensive outreach and awareness raising will be required.

2. Clearly defined implementation frameworks. First and foremost, this requires clearly identifying the institution(s) responsible for implementing the law and addressing any overlaps with existing mandates. Secondly, where high-level laws are not sufficiently precise so as to provide for clear implementation pathways, regulations and directives should be adopted specifying clear steps to implementation.

3. Compliance checks and reviews. Laws and policies should be reviewed regularly to assess implementation progress, ideally be an entity other than the one charged with implementation. It is important that there are sufficient resources for compliance management, and that the responsible organizations are well trained and staffed. Access to justice and an effective judiciary is

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important in holding both the public and the private sector accountable under the law.

4. Non-compliance is addressed. In the case of breach of clear legal obligations, consequences should be consistently applied and sufficient to act as a deterrent. In the case of obligations that are more general or progressive in nature (e.g. duty of government organization to undertake certain actions) or implementation deficits arising out of capacity issues corrective measures should be taken that address the reasons for non-compliance.

Status quoThe status of implementation of laws and policies in Oromia is decidedly mixed. As can be gleaned from the other sections under this chapter, significant efforts have been undertaken to implement provisions on land-use planning and land right certification, among others. At the same time, many laws lack the requisite implementation frameworks they require for successful implementation.

While there exist a large number of proclamations in the State, the majority of these have not been complemented by regulations, directives and decrees setting out in detail the processes they provide for or providing clear pathways to implementation. For instance, as discussed in section 2.2.2 above no clear and consistent guidelines have been adopted for land certification, leading to the adoption of haphazard and at times inconsistent approaches.

Oromia has taken a number of steps to enhance implementation and enforcement of forest and land-use laws. One consistent problem in enforcing forest laws in Ethiopia has been the reluctance of judges to convict persons for forest crimes in forests that were not demarcated, arguing that conviction could only be applied for crimes in demarcated forests. The regulation establishing OFWE has sought to address this through clarifying that state forest includes both demarcated and non-demarcated forest, thus reducing any uncertainty on this matter.40

Oromia has adopted specific procedures for resolving disputes over land.41 Land disputes in the first instance are taken to arbitration by elders before taken to the civil court system of the Kebele administration. The disputing parties elect two elders serving as arbitrators each, whose chairperson will be elected by both parties and the arbitrators, if not resolved by arbitration, the dispute goes to Kebele administration to be included in the formal court. If the dispute is still not resolved to the satisfaction of the parties, they can proceed to the Woreda court, and from there to regional courts.42 By providing for disputes to first be resolved at local levels seeks to make dispute resolution more accessible.

Gaps and weaknessesThe following issues have been identified as among those presenting significant obstacles to the effective implementation of land and forest laws in Oromia:

40Regulation No. 122/2009 A Regulation to provide for the establishment of Oromia Regional State Forest and Wildlife Enterprise, Article 2(1).41 The Oromia Rural Land Use and Administration Proclamation (2007): Article 16(1).42Oromia Rural Land use and Administration Proclamation No. 130/2007 (2007).

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There are frequent overlap between institutional responsibilities at national and regional level. Overlaps apply between the Federal and state levels (vertical conflicts) and between state-level institutions (horizontal conflicts). These issues are described more fully in section 2.3 below.

As discussed above, the State’s proclamations – including the land and forest proclamations – remain relatively general and lack regulations and directives to support their implementation. This absence of more specific regulation often leads to difficulties in adapting high-level frameworks to local realities. At the same time, it means that most proclamations and policies lack monitoring and evaluation as well as accountability mechanisms.

The system of sanctions applying to forest offences is considered unfair and poorly enforced. The penalties for forest offences set out in the Oromia Forest Proclamation are very harsh. The legislation does not differentiate between different forest crimes, with 5-15 years imprisonment being prescribed for all offences. In addition, these penalties are inconsistent with those set out in the Federal Forest Proclamation, and are thus arguably invalid. These factors have led to courts being reluctant to convict alleged forest offenders, or refusing to apply penalties even where offenders are convicted.43 In addition, judges do not appear to be willing to apply civil penalties to forest offenders. There also remains a widespread view that forest crimes are petty crimes and therefore not worthy of significant attention. This is so despite the harsh penalties provided for in regional legislation. Awareness-raising activities seem to contribute toward shifting these attitudes, but this appears to often be short-lived.44

The legal framework is predominantly focused on restricting and penalizing forest use, with little focus on incentive-based forest resource management and utilization or active community participation. This makes the legal framework difficult to enforce, since it is both resource-intensive and alienates communities who could otherwise play a productive role in sustainable management and protection. This trend is evidenced by, among others, early approaches to PFM (discussed further in section 2.2.3).

Institutional capacities are low. The high turnover of staff in government bodies leads to capacities being lost and a lack of continuity in implementation and enforcement. It also means that the effects of training and awareness raising efforts can often be short-lived.

The effectiveness of the land dispute resolution mechanism has been undermined by range of factors. First, there is no legal provision on whether the elders approach the dispute as arbitrators or conciliators, which has a significant impact on the force of the verdict they provide. Second, there no legal provision on how the decisions made by elders is incorporated in the civil court if, for instance, the parties take the case to the civil court system.45

RecommendationsThe adoption of clear regulations and guidelines that are designed with local contexts in mind could play an important role in ensuring effective implementation.46 Specific recommendations for where

43Input from Mellese Damtie (October 2014).44 Ibid.45Beyene, B. (2012): The Oromia Rural Land Dispute Settlement Scheme, so ambiguous and expectedly not working. http://ssrn.com/abstract=2193420 or http://dx.doi.org/10.2139/ssrn.2193420 (October 2014)46Ludi, E., Belay, A., Duncan, A., Snyder, K., Tucker, J., Cullen, B., Belissa, M., Oljira, T., Teferi, A., Nigussie, Z., Deresse, A., Debela, M., Chanie, Y., Lule, D.,

http://dx.doi.org/10.2139/ssrn.2193420

http://ssrn.com/abstract=2193420

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regulations may be beneficial are set out in other sections of this chapter, for example for land certification and land-use planning processes. As a general rule, regulations should set out clear steps and guidelines for implementing legal provisions, and include effective review frameworks.

The Oromia Forest Proclamation should be amended to bring the penalties for forest offences in line with the Federal Forest Proclamation, including the introduction of differing prescribed punishments for respective forest offences.

Continuous awareness-raising efforts are likely to be required to engineer a shift in attitudes towards forest crimes. This shift should begin in government bodies, where lower level administrations should be issued with clear instructions on the treatment of forest crimes, and regular oversight should be conducted by higher-level bodies to ensure these instructions are complied with. The instructions should be designed to ensure consistency and fairness, including ensuring that large-scale infringements by companies or wealthier infringements are punished proportionately. Government bodies should then clearly publicize the fact that forest crimes will be addressed henceforth, alerting the public to the change in policy and allowing them to adjust behavior.

The Oromia Land Proclamation should be amended to clarify the role of elders in the land dispute resolution mechanism and the relationship of the mechanism with the civil court system.

Communities should be empowered to resolve land and forest disputes internally where possible. Taking action through the courts can be costly and vulnerable to corruption. Providing for alternative mechanisms that are accessible and trustworthy is there recommended. Such mechanisms could build on dispute resolution mechanisms established under some PFM initiatives, as well as drawing on emerging international experience with dispute resolution for REDD+.

Areas for further investigation Analyzewhy judges are reluctant to apply civil penalties for forest

offences

1.5 Relevant InstitutionsRequirementsEffective REDD+ implementation requires not only coherence in policy and regulations but also vigorous cross-sectoral coordination and the development of relevant capacities among institutions overseeing various activities affecting forest activities across the different levels of government. The success of REDD+ implementation in Oromia is dependent on institutional arrangements with coherent functional linkages among the various institutions relevant in the forest, agriculture and energy sectors.

Status quoOFWE is the leading entity mandated for demarcation, development and conservation of forest resources in the State. It is an autonomous public

Samuel, D., Lema, Z., Berhanu, A., Merrey, D.J.(2013):Rhetoric versus realities: a diagnosis of rainwater management development processes in the Blue Nile Basin of Ethiopia. Colombo, Sri Lanka: CGIAR Challenge Program on Water and Food (CPWF). pp.58.

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enterprise with legal personality. It integrates eight regional forest enterprises. It is primarily self-financing through revenues from its commercial operations. It has over 2,000 staff.47

OFWE’s mandate currently includes some 2.3 million ha.48This includes 1.7 million hectares that are specifically assigned to it under its establishing regulation, and 600,000 ha that have been assigned to it since. The majority of this (1.2 million ha) is natural forests, while it also includes 74,000 ha of forest plantations and 470,000 ha of ‘other lands’, as well as several national parks, wildlife sanctuaries and hunting grounds.49 Processes are underway to increase this concession, and it is expected that it will increase significantly.50 Pursuant to instructions from the State Government, OFWE has started to demarcate woodlands as per its mandate, thus adding to the forest areas within its concession.51

OFWE’s responsibilities include the overall protection and development of forest resources within its mandate, the development and implementation of management plans for those forests, and the development and operation of a timber industry within the state, including supply, processing and trade of wood products. It also manages the region’s Forest Fund, which is financed by OFWE’s profits and carbon trading revenue, and to be used for supporting forest and natural resource development work, financing studies; and funding investments and technological development.52Other important entities relevant to the forest sector in Oromia are described in Table 4.

Table 4: Institutional mandates relevant for REDD+

Institution MandatesPresident’s Office Highest executive entity, chairperson to the

Regional council Oversight to the effective implementation of

Regional policies and legislations by monitoring implementer bureaus

Oromia Bureau of Agriculture Responsible for executing the Oromia Rural Land Use and Administration Proclamation (2007)

Mandated to increase agricultural production through intensification

Coordinates the preparation and implementation of development projects required to implement food security program

Gives professional support for the expansion of private forest development and cause establishment and expansion of ecotourism areas

Oromia Bureau of Land and Environmental Protection

Administers land resources in the region Prepares and submits rural land and

environmental protection laws, policy and strategy Prepares rural land use plan and implement the

same upon approval Solve disagreements regarding rural land and

environmental protection with concerned body

47 O’Sullivan, R., Damtie, M. (2010): Bale Mt. Eco-Region REDD Project. Legal Due Diligence Report.Washington DC.48 Interview with DegefaNegera, REDD+ Focal person at OFWE. (August, 2014)49 ‘OFWE in Brief’, Information note, available: file:///C:/Users/dconway/Downloads/ofwe%20in%20briefe.pdf. 50Regulation No. 122/2009 A Regulation to provide for the establishment of Oromia Regional State Forest and Wildlife Enterprise.51 Interview with DegefaNegera, REDD+ Focal Person at OFWE (August, 2014).52Regulation No. 122/2009 A Regulation to provide for the establishment of Oromia Regional State Forest and Wildlife Enterprise.

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Enforces legal measures for misuse of natural resource and promote natural resource conservation and rehabilitation

In collaboration with concerned organs, determines compensation for landholders displaced for development purposes

Takes legal action against individuals who illegally utilize natural resources of the region

Oromia Bureau of Finance and Economic Development

Prepares, administers and coordinates annual budgets once approved by the Regional council

Allocates budget for Regional bureaus, zones and Woredas based on established criteria

Establishes government financial accounting systems, monitors and controls its implementation, including evaluation and audit

Oromia Water, Mineral and Energy Bureau

Promotes the development of water resources, mines and energy in the region

Promotes the development of alternative energy sources and technologies

Oromia Agricultural Research Institute

Delivers technologies increasing production and productivity of agricultural and raw materials for industrial and contribute to the improvement of overall livelihoods of society in Oromia on sustainable base

Oromia Investment Administration

Designs policies, strategies, directives and regulations on investment issues and executes investment decisions approved by the Regional cabinet

Composed of investment Board, Investment Commission, Zonal investment committee and Investment Committee of towns and Woreda Investment Committee

Coordinates allocation of land for investmentsOromia Livestock Development and Health Agency

Design and implement strategies that increase the production and productivity of the livestock sector in sedentary agriculture and pastoralist areas of Oromia

Specifically works on animal health, production and pastoral areas development with focus on feed and pastures, breeds and production

Oromia Cooperative Promotion Agency

Prepare policy, strategy, programs and laws regarding cooperative association and implement upon approval

Register cooperative associations, give authentication certificate, renew, cancel, cause them to enter into work, follow up and control.

The Ethiopian Wildlife Conservation and Development Authority

Develop and administer wildlife conservation areas established under it and control illegalactivities committed in the areas

Issues Hunting permit for tourists Administers national parks, including the Bale

Mountain National Park

Gaps and weaknessesSimilar to most Regional States of Ethiopia, effective implementation of land and forest administration in Oromia is hindered by lack of cross-sectoral coordination and overlapping mandates of the different regional institutions.

On the one hand, a range of de jure conflicts between the mandates of Oromia institutions exist (see Table 5).

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In other cases, mandates do not conflict but are closely related. Here problems arise from the lack of coordination between institutions. The design and implementation of cross-cutting activities under sectoral bureaus, where undertaken at all, is generally done in fragmented manner, and synergies among the different sectors are rarely exploited. Decisions made by various regional institutions such as by bureaus of agriculture, investment, and administration lack functional linkage and coordination, and frequently conflict. For instance, investment decisions are often informed by the assumption of excess arable land in the region, which are not supported by evidence gathered from relevant sectors. Similarly, within the same sector, such as agriculture, synergies among crop, livestock and trees are often not exploited during design and implementation of initiatives. Further, most forest development activities (except for those by OFWE) are merged with other sectors and often stand as sub-components in a more agriculture-oriented structure. The delay in streamlining the newly established MEF to the regional and Woreda level structures exacerbates this problem, since those levels therefore remain dominated by institutions with a predominant focus on agriculture.

Institutions in the land use sector have undergone frequent changes and restructuring, but these changes are often not adequately implemented in practice. Shifts in mandates from one entity to another are often not sufficiently clear or mutually understood by both entities, leading to overlaps in the execution of mandates in practice even where they are legally clear. In addition, the continual restructuring also undermines institutional relationships as well as sense of ownership of initiatives that have implication to land use. These difficulties are particularly pronounced at Woreda and Kebele level. An example can be seen in the transfer of authority over land administration from OBA to OBLEP in 2009. There was no coordinated handover process, and it is understood that OBA has not fully relinquished its role in practice. In practice, therefore, multiple institutions retain de facto roles over land administration. For instance, since the establishment of OFWE management and conservation of all forest has been given to OFWE. In practice, both OBLEP and OFWE rely on Development Agents (DA also- local extension agent) to fulfill their objectives, where in practice, DAs report only to OBA. Lessons from the JICA PFM project indicated that OFWE’s lack of local (community level) structure means day-to-day management of the PFM initiatives falls under DAs, who have little forestry experience and often have other responsibilities under OBA (such as crop and livestock improvement, natural resource management, etc) than PFMs.

Institutions in Oromia, or individuals within those institutions, are not incentivized to coordinate or engage in activities outside of their mandates reinforcing weak cross-sectoral coordination. Most institutions receive annual budgets by the regional government to undertake specific mandates, yet there is no legal requirement, precondition, or additional incentive in place to coordinate or integrate activities overlapping in intent or outcome.53 There is no system that makes regional institutions accountable either to each other or to the community they provide service for. Implementation frameworks of flagship programs such as the SLMP and the Productive Safety Net Program (PSNP) rely on regional and Woreda level stakeholder platforms as mechanisms to coordinate with various institutions. Facilitation of such platforms is, however, constrained by

53 Zeleke, G., Kassie, M., Pender, J., Yesuf, M. (2006): Stakeholder Analysis for Sustain-able Land Management (SLM) in Ethiopia. Assessment of Opportunities, Strategic Constraints, Information Needs, and Knowledge Gaps. Second Draft Addis Ababa.

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intensive resource demand and incentives required to engage other institutions.Table 5 illustrates some of the main overlaps that exist between the mandates of the respective institutions both in law and in practice.

Table 5Overlap between institutions in Oromia

Issue Institution Legislation Activities in relation to the issue

Overlaps

Allocating agricultural land for investment

OBLEP 170/2012 Administers land Prepares land use plan Issue rural land investment

holding certificate Estimates compensation

Land allocation for investment is mainly under the Oromia Investment Board. But the Board does not go to the ground to identify such land. It uses other organs, such as people/experts from OBLEP, OBA, Administration and Security Bureau and others. Then the identified parcels of land shall be placed in the land bank. Hence, this process is relatively well coordinated.

OBA 163/2011 No direct activity related to land allocation

Oromia Investment Commission

138/2008 Shall cause the concerned organs to prepare land for investment

Administering and managing forests

OBA 163/2011 Supports expansion of private forests, gives licenses for forest producers

Undertakes watershed management activities

Implements land use planning

A clear overlap of powers exists here, especially among OBA, OBLEP and OFWE. All are engaged in managing and conserving natural resources. Watershed management, for instance, includes administering and managing forests.

OBLEP 170/2012 Engages in natural resource management and protection activities and biodiversity conservation

Prepares and implements land-use plan

OFWE 122/2009 Protects and conserves forest and wildlife resources under its jurisdiction

Allocating and certifying forest use rights

OBA 163/2011 Involved in certification of rights on agricultural land

Powers of OBA and OBLEP may overlap in this regard. OFWE allocates its own forests. But OBA and OBLEP usually work on degraded lands.

Several organizations have powers over the same resources,

OBLEP 170/2012 Allocates and certifies forest use rights

OFWE 122/2009 Enters into joint forest management agreements with communities

Actively participates the local people in the management of forests

Many regional institutions are constrained by instability, lack of capacity, limited budgets and high staff volatility. Both OBLEP and OBA have undergone several changes that have contributed to staff turnover and creating capacity constraints to the newly structured bureaus. In addition, it was noted that OBA has been continual staff turnover impacting its achievements. Similarly, institutions at Woreda level also suffer from instability due to staff turnover. OFWE in turn has insufficient capacities to manage the forests under its mandate. It currently relies on development assistants to enable implementation at Kebele levels, but these DAs do not report directly to OFWE.

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RecommendationsSuccessful REDD+ implementation in Oromia requires effective cross-sectoral coordination among institutions that have competing or overlapping mandates impacting land use. Specific coordination mechanisms for REDD+ are discussed in section 3.1 below. It is equally important, however, to ensure coordination is achieved with respect to the management of forest and land-use more broadly. This has several aspects:

Where de jure conflicts exist legislative changes will need to be introduced to clarify the division of mandates between entities. In the case of clear and direct conflicts this may require altering the regulations or even proclamations establishing those mandates.

In the case of de facto conflicts, such as where multiple entities have concurrent powers over certain activities, overlaps may be solved through adopting regulations setting out the processes for implementing those activities and clearly defining the roles of respective entities. Specific activities for which this would be beneficial are discussed in section 2.2 above. In other areas, inter-sectoral coordination bodies may be necessary. For instance, the integration of multiple sectoral bodies within the Oromia Investment Agency has facilitated coordination with respect to allocating land for investments. Similarly, under the SLMP multiple organizations collaborated through an inter-sectoral coordination unit, facilitating the employment of a landscape approach. These mechanisms need to ensure sufficiently high-level representation, and should be monitored by high level executing organs such as the Oromia President’s Office.

Sectoral entities should be incentivized to coordinate their activities with one another. These incentives can be positive and negative. Positive incentives may include making the facilities or capacities of one institution available to fill gaps experienced by the other. This is already applied, for example, through the use by OFWE of the development assistants under OBA. However, establishing formal procedures for such utilization of capacities would put them on a surer footing and avoid uncertainties with regard to who DAs should report to. Negative incentives can include requiring that certain institutions be consulted in carrying out specified activities and allowing those institutions to enforce their right of consultation.

The Oromia Government should strive to achieve continuity in institutional mandates, allowing institutions to build capacities and relationships over time without disruption. The recent establishment of the MEF and the expected replication of this structure at regional level will further affect continuity in land-use governance in the State. While this change may be unavoidable, the Government should take the opportunity offered by the REDD+ process to ensure this is undertaken smoothly and to consolidate the institutional arrangements with a long-term view, committing to avoid reshuffling in the near to medium term unless absolutely necessary.

The relationship between OFWE, as a parastatal enterprise engaged in commercial activities, and sectoral bureaus such as OBA and OBLEP, whose focus is on public sector administration, should be clarified and capacities strengthened. This includes the extent to which OFWE can rely on the local level institutional infrastructure of these institutions.

The high turnover in government bodies needs to be addressed to ensure continuity in implementation and enforcement. Further research

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is needed to examine the causes of high turnover and provide specific recommendations. It is also important to build capacity of institutions to collect, store, manage and effectively communicate information and data on land use. This not only makes information readily available but also encourages these institutions to share information. Specific capacity constraints and means to overcome them need to be further investigated.

Areas for further investigation Determine specific capacity constraints of Oromia institutions, in

terms of numbers of staff, qualifications etc. Understand why turnover in government bodies is so high and

determine strategies to reduce this

1.6 Relevant projects and initiativesA significant number of projects and initiatives already exist in Oromia that seek to promote sustainable forestry and land management. Experience and lessons learned from these initiatives should be integrated and built upon in the design of the Oromia REDD+ Program. This section therefore describes some of the most relevant of these initiatives, with a particular focus on the legal and institutional structures they have established.

1.6.1 Bale ProjectThe Bale Eco-Region Sustainable Land Management Program (BERSMP).BERSMP was initiated in 2006 by Farm-Africa and SOS Sahel-Ethiopia in collaboration with OFWE primarily focusing on capacity building of local communities for sustainable management of land and forest resources in the Bale Eco-Region through PFM, land rehabilitation and developing Non-Timber Forest Products (NTFP) with government support. These include bee keeping, forest coffee production, processing and marketing, agroforestry and sustainable land management practices. The overall objective of BERSMP is to promote livelihood diversification, strengthening institutional capacity for sustainable land management and establishing a sustainable financial, legal, policy and regulatory framework for the region.

BERSM is implemented in six priority forest areas in 14 Woredas of Bale and WestArsi zones of Oromia with total area of 784,000 hectares impacting a total population of almost 1,2 million. The program is funded by the Irish, Netherlands, and Norwegian embassies.Farm Africa and SOS-Sahel introduced Payment for Environmental Services (PES) as a mechanism to ensure financial sustainability. Towards the end of BERSMP, financing PES through REDD+ has been considered as the best possible scenario, which led to the development of BERSMP to Bale Eco-Region REDD+ pilot project with funding from the Norwegian Government.

The Bale Eco-Region REDD+ Project.As a REDD+ pilot project, the BERSMP continues its activities relating to PFM within the framework of a REDD+ project developed under the Verified Carbon Standard (VCS) and the Climate, Community and Biodiversity (CCB) Standard. The project was initiated by BERSMP and OFWE following the feasibility studies. The conclusion of the feasibility also led to the development of Project Design Document (PDD), which is currently under validation. The Norwegian government has awarded Farm Africa/SOS Sahel Ethiopia EUR6m to develop and implement the project.

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The REDD+ project is developed under the VCS and CCBA by Farm Africa and SOS Sahel Ethiopia. Community Based Organizations or Cooperative Societies act as the grassroots managers and implementers of project activities. OFWE is the regional implementing agency and works to scale up the PFM initiatives which have been rolled out by BERSMP, entering into agreements with local cooperatives (see Figure 1). It also assumes ownership of the emission reduction rights, enters into agreements for the sale of carbon credits and is responsible for providing benefits to local cooperatives. The Arsi and Bale Forest Enterprise branches of OFWE support the project at the community level by supporting forest cooperative societies with technical training to manage forests. The Woreda administration oversees OFWE’s work by monitoring their work plans on a quarterly basis.

Figure 1Institutional arrangement of the Bale Mountain Ecoregion REDD+ Project54

Benefits under the BERSMP include those derived from carbon and those derived from forest products. Benefits from forest products are mainly facilitated through PFM arrangements. As discussed in section 2.2.3, most PFM arrangements thus far, has been restrictive and focused entirely on the use of NTPFs by communities. The only exception is the AdabaDodolla PFM whereby communities are said to have been given access to forest products such as timber of dead or naturally fallen trees. In such cases, income from the sale of such timber is shared between communities and OFWE based on a 70% and 30% shares respectively.

The distribution of benefits from the sale of carbon credits is in many cases still under negotiation. It has been proposed that at a high level benefits be divided 50-50 between the Government and forest management communities.55 The precise amount that would be awarded to each community group would be calculated pursuant to a formula based on the following factors and weights assigned to each (see Table 6)

Table 6 Proposed formula for calculating benefit sharing arrangements

Avoided Emissions 60%Size of population who are beneficiaries in the kebele

30%

Size of the forest under REDD+ Management in the kebele

10%

54 O’Sullivan, R., Damtie, M. (2010): Bale Mt. Eco-Region REDD Project. Legal Due Diligence Report.Washington DC.55Proposed Carbon benefit sharing arrangement for Bale Mt Eco-Region REDD+ Project.

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Within community groups, the following distribution is proposed:

50% of total revenue is divided among members based on established and agreed criterion, such as level of participation;

30% will be part of deposited financial that may use for business running, creating access for small and medium enterprises;

20% of total benefit sharing will be allocated for community development at Kebele level.

While it is too early to assess the performance of the project’s REDD+ component, based on experience with BERSMP as a whole the following lessons can be identified:56

Central to the eco-regional approach in the BERSMP was the importance given to participatory planning processes that involve communities and cross-sectoral coordination of stakeholders towards sustainable land management;

The strong emphasis placed on capacity building and knowledge sharing for communities and relevant government institutions has been among its successes. Local government and OFWE have ensured success through providing technical backstopping to the project;

The introduction of PFM (later scaled up by OFWE to other Woredas) is reported to have contributed to improved forest conditions.

1.6.2 Sustainable Land Management ProgramThe Sustainable Land Management Program (SLMP) commenced in 2009 as part of the Ethiopian Strategic Investment Framework (ESIF). The objective of SLMP is to reduce land degradation, improve productivity of smallholder farmers, and protect and restore the ecosystem functions and diversity in agricultural landscapes.

SLMP has three overarching components: (i) integrated watershed management, aimed at supporting scaling up of best sustainable land management practices57in high potential and high-risk areas;(ii) expand and enhance rural land certification and administration, including cadastral surveying, parcel-based land registration and the development of registries; (iii) a project management component that provides financial and technical assistance to MOAand institutions at State, Woreda and Kebele levels responsible for sustainable land management.

The implementation of SLMP58is led by the natural resources management directorate of MOA. SLMP is currently in its second phase (2014-2019) where it will expand and consolidate the successes of phase 1 to an additional 90 watersheds (for a total of 135 watersheds) and reaches out close to 2 million people as direct and indirect beneficiaries. SLMP-2 has also expanded its scope in response to CRGE and development plans such as the Growth and Transformation Program to include a wide range of forest (forest management, forestation, protected areas) and agricultural (climate-56Flintan, F.(2013): Plotting progress: integrated planning in the drylands of Kenya, Ethiopia and Uganda. Regional Learning and Advocacy Programme for Vulnerable Dryland Communities.57This refers to Scaling up of SLM practices which were previously implemented by development partners such as, GIZ and WFP (MERET).58SLMP is financially supported by World Bank and other international development partners such as, KFW, CIDA, Government of Finland, GIZ, EU, IFAD, and GEF. Among the development partners, GIZ and CIDA provide technical support to SLMP

46


smart agriculture, improved tillage, seeding and crop protection practices, etc.) activities.

SLMP puts strong emphasis on the institutional and financial sustainability of the program and emphasizes active community participation. The choice of technologies and incentives provided under SLMP are designed to both provide immediate and tangible benefits for communities and to institute practices that will ensure benefits are sustained in the long term without the need for continued donor finance. Both direct and indirect benefits are provided, and project documents broadly consider the implementation of watershed management plan itself stood as benefit to communities in respective watersheds.

The following are the chief benefits considered to emanate from the SLMP:

Development incentives: Supply of drinking water for humans and animals(hand dug wells,

springs) Livelihood improvement Financing micro-irrigation facilities through small water diversions and

canals Modern beehives and improved honey production technologies Livestock fattening, improved pasture technologies Promotion and supply of agroforestry, fruit trees and vegetables Supply of better breeds of small ruminants and poultry Promotion of rainwater harvesting technologies

Financial incentives: Access to credit and loan arrangements for most of income generating

activities

Legal and institutional incentives: Facilitation of land certification process Establishing the institutional and implementation framework for SLM Provision of training and capacity building packages for stakeholders at

different levels of the implementation structure including community members, development agents, Woreda specialists, etc.

SLMP implementation follows a watershed approach and is based on a community mobilization process to ensure community engagement. Woreda Technical Committees(WTC) organize meetings between the different sectors in the agriculture office (NRM, livestock, agronomy) and other sectors such as water, land administration, roads, and women’s affairs, for orientation and training to build capacity for SLM interventions.

At Kebele level, identified watersheds are delineated. Planning teams known as Kebele Watershed Teams (KWTs) that include farmers, local knowledgeable persons and community eldersare set up inKebeles falling under selected watersheds. Regional and Woreda experts provide orientation and trainings for the KWTs. The general community meeting (the general assembly) on watersheds provides for the participation of all landowning households. The general assembly determines, based on consensus, the needs and major problems in line with SLM targets, as well as defining watershed development guidelines.

Implementation of SLMP relies on the development of a participatory watershed plan under ownership of the community and with support from a Community Watershed Team (CWT). The watershed development plan

47


strictly follows the community-based participatory watershed development guideline and is approved by the community’s general assembly. Once the prioritized actions and activities are approved and the budget is estimated, plans are submitted to the CWT. The process follows a similar process across the different levels of governance structure, e.g. involving the KWT and the WTC. A cascade approach is used for trainings: Regional institutions train WTC and the DAs, who in turn provide training to community institutions (CWT, KWT) and beneficiaries.

Among the many contributions of SLMP, the land registration and certification component stands out as the most significant. SLMP has been instrumental in the implementation of land certification process and thereby institutionalize it in most parts of the country (including as one way of improving tenure security.as it helped to institutionalize land certification process in most parts of the country, including Oromia. Land certification has been implemented with an objective of establishing effective land administration framework at local level and thereby improving tenure security.59

The process of land registration and issuance of certificates has also been seen as one mechanism that reduces land disputes in rural areas. SLMP has adopted a two-level certification process: first and second level land certification processes. The First level land certification involved registration, demarcation and certification of plots using simple local technologies that required minimal trainings. Following lessons from its predecessor, the Second levelland certificationinvolves registering the precise spatial locations and plot sizes using technologies such as GPS and satellite imagery. Institutional arrangement for certification follows similar arrangement as other SLMP components (see Figure 2 below), starting with training of trainers and public awareness campaign that is cascaded down to lower government administrative structure to make the implementers clearly understand the rights and obligations of land users, implementers, and judiciaries, on the regional land administration and use proclamations and regulations, which enhance tenure security and good governance. Training themes include: trainings on planning and implementation processes, land administration, certification and use, land-use planning, photogrammetric techniques, soil and water conservation, conflict resolution, co-operatives promotion and gender equity.

Figure 2 depicts the institutional structure under the SLMP, while Figure 3 shows intervention areas.

Figure 2 Institutional structure under SLMP60

59Rahmeto, D. (2009). Land rights and tenure security: Rural land administration in Ethiopia60 Adapted from SLMP PAD Phase II

48


Federal Ministry of Agriculture (MOA) State Ministry for Natural Resources

National Technical Committee (NTC)MoA, MoFED, MWIR, MoEPF, EAIR,

etc.

Bureaus of Agriculture (BoA- RSLM )+

Bureaus of Land Administration and Environmental Protection Unit

Consolidate and submit annual work plans and

implementation progress reports from the

Woredas to SLMSU

Zonal Agricultural offices and EPLAU Technical support, extension and M &E

Regional Technical Committees (RTC)Existing or ad hoc committee.

Membership and mandates similar to

NSC

National Steering Committee (NSC)SMNR, MoFED, MWIR, MoEPF, EIAR,

BoA, etc.SLM Support Unit (NSLMSU)Day to day program managementAnnual work plan and progress reportsMonitoring / supervision of overall

implementation progress; impacts evaluationFinancial administration (w/DoF),Procurement of Goods and ServicesAdministrative support to NTC and NSC

Policy guidelines for SLM projects coordination and harmonizationOverall supervision for implementationAnnual work plan, procurement plan & budget approvalAnnualimplementation performance report review ; oversee corrective actions implementationApproval of best practices

Advice to MoA on technical quality of implementation of SLMP

Advice on issues related to coordination and synergies

Address emerging technical issuesValidate prioritize BPs

Advice to BoA on technical quality of implementation of SLM programs across the region

Advice to BoA on issues related to coordination and synergies at the region level

Address emerging technical issues relating to SLM at the region level

Pre-screen BPsDisseminate BPs

Consolidate and submit annual work plans

and implementation progress reports from

the Woredas to SLMSU

,

Pilot Coordinator,

International TA

Regional Steering Committees (RSC)Existing or ad hoc committee. Membership

and mandates similar to NSC

Woreda Agriculture Office

supervision for program implementation Annual Regional work plan, procurement

plan & budget approval;annualimplementation performance report

review ; oversee corrective action implementation

Policies for coordination and harmonization;

Leadership to mobilize additional funds for SLM expansion

Woreda Steering Committee Woreda Technical Committee

Kebele Watershed TeamCommunity Watershed Team

General Assembly

Annualwork plan developmentSubmit of annual work plans to BoA

for approvalFacilitate community participation in

watershed planning and rehabilitation

Organize training for communitiesProgram M&E on the groundDissemination of SLM innovations on

the ground

Define watershed development guidelinesDevelop and implement participatory watershed plan

Collaboration for on-the-

ground program

implementation

49


Figure 3SLMP intervention Woredas in Oromia61

61Source: Sustainable Land Management Program (2014)>Geospacial Information. SLM Woreda in Oromia.https://sites.google.com/site/slmethiopia/slm-woreda-in-oromia-region (October 2014)

https://sites.google.com/site/slmethiopia/slm-woreda-in-oromia-region

https://sites.google.com/site/slmethiopia/slm-woreda-in-oromia-region

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1.7 Operational framework

RequirementsThis chapter will discuss this allocation of tasks for REDD+ in the context of Oromia and present options on how a Regional Oromia REDD+ program could be structured and implemented.

The Oromia REDD+ program will be embedded in the national REDD+ program. To avoid unnecessary incurrence of human and financial resources, a duplication of functions should be avoided. We therefore recommend for Oromia to rely to the extent possible on national REDD+ functions and for the whole system to rely to the extent possible on existing functions and institutions. The pilot character of the Oromia REDD+ program will, however, require the fast-tracking of some implementation arrangements at the state-level while the national arrangements are still under development.

The implementation of an Oromia REDD+ program requires a review and possibly modification of existing institutions to enable them to successfully implement REDD+ measures and account for emission reductions achieved against a State reference level. The extent to which the various roles and functions of REDD+ implementation will be executed at the national and state-level depends on the legal context of the country (see Table 6).

Table 6 Execution of REDD+ functions across different levels of government (X = main responsibility; (X) = secondary responsibility)

Function National StateUNFCCC negotiations XInternational reporting XNegotiations with donors X (X)Adoption of REDD+ strategy X (X)Definition of policies X XImplementation of policies (X) XMRV coordination XMRV implementation X XDefinition of safeguards XImplementation of safeguards XREDD+ finance X X

Table 7 summarizes the status of the implementation of REDD+ at the national level (drawn from Mid-Term Report1) and the functions that need to be developed and executed by an Oromia REDD+ program, either

3.Oromia REDD+ Program

51


permanently or on an interim basis. In the short-term the priority is to put in place the institutions and legal arrangements necessary to support the BioCarbon Fund and World Bank Oromia Forested Landscape Project.

Table 7 Functions of the Oromia REDD+ ProgramFunction Federal Interim State

REDD+ strategy The National REDD+ Strategy is currently under development. A draft is planned for November.

Based on existing studies and discussions with donors and investors, Oromia should define short-term policy priorities and investment strategies.

As a REDD+ pilot region,it is recommended for Oromia to develop a State REDD+ strategy which summarizes the operational framework for REDD+ and priorities as well as justifies the choice of policies to be implemented in Oromia. This strategy should be based on the National REDD+ Strategy.

Policies (formulation)

A drivers assessment just started, which will provide the basis for policy formulation. In the meantime, the NationalREDD+ Strategy will provide some guidance.

Oromia has to identify measures that can be supported by the Oromia Forested Landscape Project.

Oromia will have to define and adopt the bundle of policies and measures that support REDD+ in Oromia. These should be based on an assessment of emission reductions, costs and political feasibility.

Policies (implementation)

REDD+ policies implemented directly by the national government will be mostly limited to planning, zoning and institutional strengthening measures. Most policies, including those based on national laws, will be implemented by the Regional States.

Oromia has to fast-track the implementation of policies financed by the Oromia Forested Landscape Project. A coordination and oversight function needs to be put in place. There needs to be cooperation between international and national actors on MRV, implementation and finance.

Oromia will have to assign institutional, human and financial resources that support the implementation of the Oromia REDD+ strategy. It will have to decide which policies are supported by international REDD+ finance and for which private sector investment is sought.

Finance The Federal Government will lead negotiations with donors and establish modalities and procedures for the management of international (and national) REDD+ funds. It will allocate funds to the Regional States via budgetary processes.

Oromia has to agree with the Federal Government on the management and allocation of funds of the Oromia Forested Landscape Project.

To the extent that Oromia will manage REDD+ funds directly, it needs to designate the institution(s) that would be able to manage international REDD+ funds and the accounts in which they would be managed. If funds flow directly from donors or the national level to programs and projects in Oromia, no separate fund management systems need to be in place. However, there would still need to be an institution that oversees the use of funds in Oromia.

MRV (implementation)

The fational level needs to put in place a reference level and MRV system in compliance with international and national requirements. A three-year program with FAO support to establish the MRV system started in July 2014.

Oromia will have to establish reference levels for the Oromia Forested Landscape Project. It needs to build monitoring capacities and ensure that the emissions and emission reductions associated with early REDD+ investments are tracked and reported.

Oromia is likely to continue to collect and analyze state emissions data; however, analysis and reporting will be undertaken at the national level.

Safeguards (implementation)

The Federal Government will formulate safeguards in compliance with international and national requirements; implement the World Bank SESA and define implementation arrangements for States and Woredas. The Federal Government will also implement a national safeguards information system.

Oromia will provide for compliance with World Bank safeguards.

Oromia will make the arrangements to implement and monitor compliance with national REDD+ safeguards. It will support the safeguard information system through reporting.

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Status quoThe readiness process involves the design of an institutional structure for REDD+ in Oromia. Such institutional structure will provide a framework for decision-making, coordination and technical advice with the different sectoral bureaus and their equivalents at Zonal, Woreda and Kebele levels, who arethe main implementing organizations of the REDD+ program.

According to the Memorandum of Understanding between the Oromia Regional State and the Ministry of Environment and Forests (MEF), REDD+ in Oromia ought to be based on the following institutional arrangements (see Figure 2)62:

National lead:MEF through the REDD+ Secretariat, currently operational, supports the design of the Oromia REDD+ Pilot and is responsible for the fiduciary management of the preparation grant. According to the Memorandum of Understanding the MEF will have the following roles for the Oromia REDD+ Program, mainly through its National REDD+ Coordinator and Pilot Coordinator:o Oversee the design of the Oromia REDD+ Program;o Guarantee alignment with the national REDD+ process;o Participate in the Oromia REDD+ Steering Committee;o Play supervisory and monitoring roles;o Provide technical backstopping for the Oromia REDD+

Coordination Unit; ando Ensure that lessons from the pilot are generated, consolidated and

shared with relevant stakeholders and partners. Regional lead: the Oromia President’s Office. The functions of the

President’s Office have yet to be further specified. Regional implementation is to be coordinated by the Oromia REDD+

Coordination Unit, reporting to the President’s Office, administratively housed by OFWE and currently staffed with one coordinator and two experts. Additional staff is to be hired.The REDD+ Coordination Unit was established in July 2014 following the execution of an MoU between MEF and the Oromia Regional State Government to coordinate the regional REDD+ process across the different sectors including agriculture, forestry and energy.The Oromia REDD+ Coordination Unit also coordinates the design of the REDD+ pilot activities across all sectors including agriculture, forestry, energy and livestock. According to the planned structure, the REDD+ Coordination Unit will be supported by a Steering Committeeand a Technical Working Group. The Steering Committee will be chaired by the Oromia Vice President and represent high-level officials, e.g. heads of sectoral bureaus, to support coordination and provide strategic advice for the implementation of REDD+ in Oromia. The Committee has neither been formally established nor are its roles and responsibilities clearly defined. The Technical Working Group willbring together experts and provide methodological and technical advice.The World Bank workshop in Adama in August 2014 constituted the first Technical Working Group Meeting. Since it was held without clear procedures, it is difficult to draw conclusions from this meeting on the functioning of the working group.

Local implementation:The Oromia REDD+ implementation will further be facilitated by Woreda-level Technical Working Groups, comprised of community delegates and representatives from local government.

Figure 4 summarizes the planned institutional structure for REDD+ in Oromia.

62Complemented by personal communication with the Oromia REDD+ Coordination Unit.

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Gaps and Weaknesses1. Functional Gaps

A high-level function that ensures cross-sectoral coordination is still lacking. This function could be fulfilled by the Oromia President’s office or by the planned Steering Committee supporting the REDD+ Coordination Unit. In principle, the Steering Committee would be well placed to assume this function, however, it is not yet operational and it is not clear whether it carries the political weight to ensure effective coordination.

The planned REDD+ institutional structure does not yet integrate the main implementing institutions, with the exception of OFWE. In its current plan, the REDD+ institutional structure is still limited to the forestry sector and does not provide a clear link to or integration of the institutions that would lead the implementation of sectoral and cross-sectoral policies, e.g. the sectoral Bureaus, including their mechanisms and structures at Zonal, Woreda and Kebele level. At the same time the integration of the Coordination Unit with OFWE’s institutional structure and links to other institutions is still unclear, e.g. the link with the OFWE multi-stakeholder Board or Advisory Board at zonal level, which could play an important role for coordinating REDD+.

The Regional Bureau of Environment and Forests (OBEF) has not yet been created and it is not clear how it will relate in mandate and capacity to OFWE. The role of OFWE in relation to the OBA and the future OBEF need to be clarified and institutional inter-linkages established.

Formalized processes need to guide REDD+ implementation. It is currently not entirely clear which functions, authorities and roles fall upon the different entities and institutions of the REDD+ operational framework. There are no written modalities and procedures. To ensure that the different entities can fulfill their roles, the division of responsibilities regarding REDD+ implementation would need to be formally clarified and basic procedures set out for their cooperation.

Oromia Regional State President’s Office

Oromia REDD+ Coordination Unit Oromia REDD+ Technical Working Group

Oromia REDD+ Steering Committee

Overall oversight of implementation of the Oromia Forest Landscape Project

Day-to-day coordination and management of the OFLP on safeguards, MRV

REDD+ Focal PointsR-PP Focus specific topics groups

Woreda REDD+ Technical

Working Group

Figure 4 Planned REDD+ institutions and roles in Oromia Regional State

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The link between policy making, implementation and coordination of REDD+ activities is not clear. One of the first steps in operationalizing REDD+ in Oromia is the formulation of policy priorities and an operational framework for REDD+ in Oromia, these two elements defining the core of the Regional REDD+ strategy. It is not clear from the current review of institutions, which would take the lead in this process and how it would be linked to higher levels of policy making (President and Regional Assembly). Currently the link between the REDD+ Coordination Unit and the office of the Oromia President is relatively weak and not formalized.

There is no MRV institutional framework. While there is a technical working group, it is not clear by whom and how REDD+ monitoring is organized at the State level and how it is linked to the national MRV system. While the Technical Working Group can support the MRV processes, the actual implementation needs to be anchored within a permanent, capable and resourced institution.

The relationship to or integration with the CRGE-led processes needs to be clarified. This is important to the extent that the CRGE structure is already replicated and mirrored at the Regional Oromia level.

1. Weaknesses

While there have been some advancements, slow staff procurement has been one of the key limitations to speeding up the readiness process in Oromia.The Oromia REDD+ Coordination Unit is just starting to be operational, with procurement processes being slower than planned, which makes an assessment of its effectiveness difficult. The processes for its creation have been delayed (e.g. legal and institutional specialist should have been hired).

OFWE and the REDD+ Coordination Unit are constrained by capacity limitations. Compared to other regional organizations OFWE has relatively high capacity, but lacks sufficient numbers of staff. In our interviews, several officials mentioned the capacity limitations of OFWE at local level. Currently, OFWE relies on support from two NGOs, SOS Sahel and Farm Africa. At the same time, capacities of the BOA and other relevant organizations need to be strengthened.

The REDD+ Steering Committee and Technical Working Group are still at very initial stages with their functions not yet clearly defined. Their operationalization for decision-making, coordination and technical advice will require high-level political investment that is currently still lacking. Committees are very common institutions in the country, but in order to be functional and draw attendance of members, they need to be supported by high level political functions and political leadership (such as the CRGE Inter-Ministerial Steering Committee).

Table 8 presents a summary of needs and gaps for the different functions required for the Oromia REDD+ program.

Table 8Operational framework needs and gaps for REDD+ in Oromia

Function Needs GapsStrategic level High-level political commitment,

executive power Formulation of REDD+ strategic

priorities for the region

High-level commitment and power is not linked to REDD+ operational framework, especially not in non-forestry sectors

No clear process or mandate to decide on policy priorities

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Limited political buy-in or incentive from non-forestry sector institutions

Policy formulation Strong executive, informed legislators

Complementary and coherent policies

REDD+ institutional structure not linked with executive (in all sectors)

Lack of mechanisms to ensure intersectoral coordination and policy coherence

Policy implementation Enforcement and implementation capacities = powers, personnel, funds

Strong intersectoral coordination

Structural limitations of institutional capacities REDD+ implementation arrangements not linked to

implementing agencies in different sectorsOFWE mandate limited to forestry

Finance mobilization and allocation

Robust budgetary processes, low levels of corruption, fiduciary competences

Link to national REDD+ system

No decision on financial management of REDD+ funds

Unclear link to national REDD+ institutions and CRGE framework and investment plans

MRV Designation of a lead institution Technical capacities and funds

No institutional anchor for MRV system Lack of technical and administrative capacity for a

state-wide MRV systemSafeguards Ability to conduct meaningful

consultations, and participative processes, formulation of adequate safeguard policies and procedures

Lack of adequate safeguards policies, procedures and experience

Lack of enforcement of existing relevant policies (EIA)

RecommendationsWe propose the Steering Committee to be coordinated by the President’s Office with a dedicated focal point person ensuring the effective functioning of the Steering Committee.Establish a focal point at the Oromia President’s Office that ensures high-level political commitment and cross-sectoral recommendations.Such focal point would link high-level executive powers with the REDD+ implementation organizations. It would serve as link between the president and the cabinet, the REDD+ Coordination Unit and the Steering Committee. It would also exercise oversight over REDD+ finance in Oromia and ensure coherence with CRGE implementation in Oromia.

The REDD+ Steering Committeeshould bevested with the relevant political powers to ensure horizontal coordination. It is important that the heads of relevant Bureaus and OFWE are represented on the Steering Committee (through direct participation and/or designating high-level officials with authority to act on their behalf) and that decisions taken by the Committee are implemented by the respective institutions. The focal point for REDD+ (see above) at the President’s Office would chair the Steering Committee. The focal point could be supported by an assistant that would ensure that the Committee convenes regularly and follows established procedures.

The Oromia President should adopt modalities and procedures that regulate the operations of the REDD+ focal point, the Coordination Unit, the Steering Committee and the Technical Working Group. The procedures should establish the periodicity of meetings, the process for setting agendas,decision-making processes and dissemination of decisions. All institutions should make their proceedings publicly available, which would help to promote synergies, avoid overlaps and confusion in the implementation of REDD+ in Oromia.A funding line could be established to support logistics of committee and working group meetings.

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Clear institutional mandates need to be issued for OFWE and other institutions, clarifying their role in the implementation of REDD+ policies. The various institutions should be mandated to support REDD+ according to their respective mandates, whereby OFWE focuses on forestry, BOA on agriculture and forestry [in fact the BOA through the DAs already does a lot of the ground work for PFM, in the forestry sector], the Water and Mineral and Energy Bureau on the energy sector, while BOLEP and the Bureau of Justice and Security could be facilitators of cross-sectoral strategy options. Establishing institutional responsibilities would ideally be achieved through regulation; however in the event that any conflict with existing mandates as defined by the Executive Organs’ Proclamation a proclamation would likely be required.

The Oromia President should designate an institution to lead the MRV of REDD+ in Oromia. This institution would involve a coordination function, potentially through an MRV team as part of the REDD+ Coordination Unit and a technical function, for which several research institutions, such as the Agricultural Research Institute, and universities including Addis Ababa, WondoGenet University have acquired relevant capacities.

To coordinate various operational functions of REDD+, such as MRV, safeguards of a multi-sectoral program and potentially function as an implementation unit for a results-based World Bank operation, the Oromia REDD+ Coordination Unit will require significant administrative and technical capacity. Limitations in capacity and barriers for the staff procurement process need to be identified and addressed. Hiring a long-term, international expert (similar to the CRGE support provided by GGGI) could be an option to strengthen the Unit’s capacity.

Sectoral institutions could be incentivized to actively coordinate with one another on an ongoing basis not only in the context of REDD+ but with respect to land use policy more broadly and at sub-regional levels.This is discussed in more detail in section 2.3.

Coordination bodies for REDD+ at any level should be coordinated with existing institutions such as the CRGE Steering Group and the SLMP platform.

Based on the foregoing discussion and recommendations the institutional structure depicted in Figure 5emerges as that which is recommended for the Oromia REDD+ Program. The proposed staff (focal points) that should be established in the regional Bureaus, OFWE, and the President’s Office would be in charge of day-to-day operations for REDD+ are also described in this figure.

Oromia REDD+ Steering Committee

Focal Point

Bureau of Justice & Security

Bureau of Land & Environment

Protection

National REDD+ Secretariat

Oromia Forest & Wildlife Enterprise

Sectoral Bureaus

Oromia Regional State President’s Office

Woreda Officese.g. agriculture, finance &

economic development, land

administration

OFWE Branch Offices

Community/User groups Farmer groups; Forest User Groups, women’s

groups, youth groups,Cooperatives

Lead implementation of strategy options in the respective sectors or fields; Compilation of monitoring reports, procurement and work plans, and budgets; Enforcement in other sectors (e.g. BOLEP leads enforcement of safeguards);

Oromia REDD+ Coordination Unit

Focal PointFocal Point

Focal PointsFocal Point

Woreda Council

Kebele Development Agents

Focal Point

Focal PointKebele Council/Kebele Administration/community representatives/Facilitators

57


Figure 5 Recommended institutional structure for the Oromia REDD+ Program

Oromia REDD+ Technical

Working Group

Woreda REDD+ Technical Working Group

Composed of the heads of Woreda offices, chaired by the Woreda Administration; Provide oversight and monitoring for effective implementation of REDD+ activities; ensure coordination during implementation,

Composed of Regional implementing institutions’ high-level officials and chaired by President’s Office Focal Point: Oversight, decision-making, guidance and feedback for REDD+ program. Oversight of vertical implementation from Regional to local level; Approval of budgets, procurement, work plans and monitoring plans; Horizontal coordination; Reports to President’s Office and gives feedback to Coordination Unit.

Ensure alignment with the national REDD+ strategy; Ensure that MRV, RL, and benefit sharing are compatible with national policies; Participate in the Oromia REDD+ Steering Committee; Ensure the lessons from the pilot are integrated in the national program.

Establish REDD+ Focal Point to chair Steering Committee of Regional institutions, and to liaise with REDD+ Coordination Unit to coordinate with Regional Bureaus and OFWE; Ensure that Steering Committee and Technical Working Group convene and follow procedures.

Act as high-level executive power and political support for implementation; Ensure institutional coordination, horizontal and vertical; Adopt modalities and procedures for REDD+ institutions. Designate operational functions to institutions (e.g. MRV).

OFWE provides administrative support/management for REDD+ coordination unit

Develop annual workplan and submit to the Regional-level structure for approval; Technical implementation of strategy options; Disbursement, monitoring and reporting, procurement, extension services, Facilitate training for communities necessary for effective implementation

Provide extension services relevant to specific locality; Facilitation of communities local level planning and implementation of specific REDD+ activities; Facilitate local level monitoring and reporting; Closely coordinate with and report to the Woreda structure

Closely coordinate with Woreda and Kebele offices for planning, implementation, monitoring and evaluation of REDD+ activitiesProvide technical support;.

Liaison between President’s Office, Steering Committee and Working Group, and Regional Bureaus’ and OFWE’s Focal Points; Day-to-day coordination of all REDD+ operational functions (including MRV coordination) and strategy option implementation; Accountable to the President’s Office (Focal Point) and technical report the National Secretariat; Administrative support to Steering Committee and Technical Working Group; Participation in national-level Steering Committee.

Composed of technical experts, NGOs, OFWE: Provides technical advice for local implementation; Monitoring of PFM

Composed of technical experts, NGOs, research institutions, donor organizations, cooperatives/user groups organizations, and other relevant institution: Provide technical guidance and reports to Steering Committee;

Composed of community representatives, heads of Kebele offices of land administration, Kebele administration; Facilitates on the ground implementation; Support DAs for effective implementation

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Assigning identified REDD+ functions to existing institutions, the following picture emerges (See Table 9).

Table 9 Recommendations for operational functions of Oromia public institutions

Functions Institutions Next steps for operationalizationOVERSIGHT

High-level decision-making and political support for REDD+ policies and operational functions

Promote efficient vertical and horizontal coordination among the various REDD+ implementing institutions

President’s office through a REDD+ Focal Point

Steering Committee, under chairpersonship of REDD+ Focal Point

Appoint focal point and specify functions and powers

Establish Steering Committee and Working Group, designate powers and adopt procedures

Establish budget line for operational expenses of Steering Committee and Technical Working Group

Promote horizontal coordination at Woreda level

Provide feedback to the Regional Steering Committee via the REDD+ Coordination Unit

Woreda Councils, via the Woreda Administrator

Establish modalities for undertaking coordination (e.g. inclusion on agenda of relevant Council meetings);

Establish feedback modalities, including frequency, content etc.

FINANCE Manage and disburse results-based

payment and technical assistance Provide standard template for financial

flow management, including audits and monitoring mechanisms

Oromia Bureau of Finance and Economic Development

Establish authority (of President’s Office and/or Steering Committee) for issuing instructions on distribution of REDD+ finance and modalities for issuing instructions

Develop or clarify procedures applicable to management of REDD+ finance (including establishment of separate accounts or budget codes)

Ensure procedures to meet donor requirements Audit and monitor financial

management Office of Regional

Auditor General Clarify authority to audit REDD+ accounts Ensure that procedures meet donor requirements

Manage and report on finance allocated to them

Sectoral bureaus; OFWE

Clarify reporting obligations and procedures

IMPLEMENTATION Coordinate cross-sectoral

implementation of REDD+ REDD+ Coordination

Unit Establish modalities for coordination with different

sectors and institutions Clarify authority of REDD+ Coordination Unit

Implement REDD+ policies in the agriculture sector

Facilitate REDD+ policy implementation through existing mechanisms (e.g. SLMP)

OBA Clarify responsibilities for REDD+ relative to other institutions

Appoint representative on Steering Committee

Implement cross-sectoral strategies regarding land use

OBLEP Clarify responsibilities for REDD+ relative to other institutions

Appoint representative on Steering Committee Implement REDD+ policies in the

energy sector Water, Mineral and

Energy Bureau Clarify responsibilities for REDD+ relative to other

institutions Appoint representative on Steering Committee

Promote REDD+ policies related to investment

Allocate land to REDD+ investors

Oromia Investment Agency

Establish processes for ensuring appropriate land is allocated for REDD+ investments

Promote REDD+ policies related to investment

Oromia Investment Administration, including the Investment Board, Investment Commission, at regional, zonal and Woreda level

Assign mandates regarding promotion of REDD+ investment

Implement cross-sectoral strategies regarding implementation

Oromia Bureau of Justice and Security

Establish coordination with sectoral bureaus on implementation of REDD+ strategies

Establish whether expansion of mandate neededSAFEGUARDS

Enforce REDD+ safeguards in line with national safeguard systems

OBLEP

Develop interim safeguards system based on Strategic Environmental and

MEF in coordination with donors

Establish interim Regional REDD+ safeguards Establish modalities for safeguards reporting

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Social AssessmentMRV

Coordinate MRV and accounting function for Oromia

REDD+ Coordination Unit

Establish and coordinate with the national level, which MRV function would be coordinated at the Regional level

Establish relevant definitions and modalities (e.g. reference levels) in coordination with the national level

Technical implementation partner of MRV system

Research institutions or universities

REGISTRY Establish a Regional REDD+ or a

Regional account within the national registry system

Coordinate registry functions and link to REDD+ program operational functions

MEF in coordination with donors

Establish and coordinate between Regional and national level, which registry function would be managed at Oromia level

1.8 Financial managementRequirementsFinancial management for a cross-sectoral program, including its operational framework and implementation of cross-sectoral policies is a complex task. Given limited capacities, to the extent possible the program’s financial management should find a compromise between (i) building on existing and tested structures, especially where it builds on existing donor-financed programs with well-established procedures and institutions; (ii) allowing for REDD+ to be integrated within broader socio-economic development; and (ii) keeping the funding flow with as few as possible intermediaries between the donor and the final beneficiary.

The overall financial management requirements for a REDD+ program are described in more detail in Mid-term Report 1. When channeling funding to the regional level and from the regional level to local levels a few additional considerations should be kept in mind.

1. Firstly, capacities at regional and local levels to adequately manage large financial flows can be even more limited than at national level. As funding flows further down the chain, it is more likely that it will need to be centrally managed, with fewer roles for sectoral entities.

2. The more intermediaries funding needs to flow through to reach its final destination the higher transaction costs will be, while funding will take longer to flow and transparency becomes more difficult to ensure. Reducing these steps should be sought where possible.

3. Transparency concerns dictate that finance should as much as possible be managed centrally at higher levels, and periodically transferred to lower levels on a needs basis.

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Status quoExisting channels. Current donor finance in Ethiopia primarily flows to the regional and local levels through one of three defined channels, depicted in Figure 6.

Figure 6 Financing channels in Ethiopia

Channel 1 represents the standard government budgetary mechanism, whereby funding is centrally managed by the Ministry of Finance and Economic Development (MOFED) which in turn allocates budget to Regional States. In the case of donor finance, funding is directly deposited with MOFED, which allocates funding to relevant sectoral ministries, and to the regional level. At regional level, funding is managed by BOFED and from there distributed to relevant sectoral bureaus, and finally to WOFEDs. Channel 1 is typically preferred by the Government,63 and is the most frequently used channel for donor finance in Ethiopia as a whole.64

Under Channel 2 finance is deposited directly with the relevant sectoral ministry, who in turn directly allocates finance to sectoral bureaus in the regions. In principle sectoral bureaus can allocate finance directly to sectoral Woreda offices; however, in practice due to low financial management capacities in these offices finance at Woreda level is managed by WOFEDs under pooled accounts. Where more than one sectoral bureau is involved in implementing a program an MoU is typically signed between them specifying the terms of their cooperation; however, financial management is concentrated within one bureau.65 Channel 2 is currently used by several donor programs, such as the SLMP, which channels finance through its SLM Support Unit.

63 Interview with Oromia Regional Bureau of Finance and Economic Development (June 2014)64 Federal Government of Ethiopi, Ministry of Finance and Economic Development (2010): Oromia Regional Government PEFA Assessment Report. http://www.pefa.org/en/assessment/et-oromia-region-apr07-pfmpr-sn-public-en (October 2014).65 Interview with Meron Tadesse, World Bank (June 2014).

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Under both Channels 1 and 2 it is possible for donors to by-pass the Federal level and provide finance directly to BOFEDs or sectoral bureaus. In this case Channel 1 funds are reported within State-level budget execution reports; however, Channel 2 funds are not required to be reported to BOFEDs.66Channel 3 involves the direct provision of finance by donors to implementing entities such as NGOs, contractors etc. Expenditure is not reported to Government accounts. This form of finance can be used for targeted projects where Government involvement is not necessary; however for broader Government programs it is likely to be less feasible.

Funding to semi-autonomous state enterprises such as OFWE does not flow through the Government channels, since they operate outside of the government budget structure. OFWE itself is largely self-financed through revenue from its forestry activities. OFWE also operates the Forest Fund, to which 95 percent of annual net profits and any carbon trading revenue are to be directed. This fund can be used for operations, natural resources development and other similar activities.67 The extent to which OFWE can receive funding from Government entities under the respective channels and can itself channel funding through Government entities at local levels remains to be explored further.

As indicated above, finance at Woreda level is typically managed through pooled accounts located in WOFEDs. As noted, OFWE sits outside of regular government structures, and so it channels Woreda-level finance through its nine branch offices. Branches are allocated funding by OFWE’s head office based on approved budgets.68 OFWE does not have institutional structure at Kebele or community levels, but can enter into benefit sharing agreements with community associations. Local levels are also served by self-managed rural savings and credit cooperatives (RUSACCOs) and Microfinance Institutes (MFIs), which receive finance from the Government-owned Commercial Bank of Ethiopia (CBE) and provide direct finance to individuals and households.69

Emerging channels.The newly emerging CRGE Facility structure provides an alternative funding channel that could be considered for the Oromia REDD+ Program. The overall structure of the CRGE Facility is described in more detail in the Mid-term Report 1. Below we discuss its mechanisms for channeling funding to the regional level.

The flow of funding to regional and Woreda levels under the CRGE Facility is depicted in Figure 7. All funding flows through Federal Implementing Entities (FIEs, typically sectoral ministries) and is then channeled to Regional Implementing Entities (RIEs, typically sectoral bureaus), which in turn channels funding to Woredas. Both FIEs and RIEs can engage Executing Entities (EEs), which may be NGOs, private entities or parastatals such as OFWE. It is by these EEs that the bulk of implementation is expected to occur. Where EE are non-state entities, funding must be disbursed through approved Specialist Financial Intermediaries (SFIs).26 SFI’s are responsible for applying equivalent rules

66 Federal Government of Ethiopia, Ministry of Finance and Economic Development (2010): Oromia Regional Government PEFA Assessment Report. (October 2014)67Regulation № 122/2009, A Regulation to provide for the establishment of Oromia Regional State Forest and Wildlife Enterprise, Articles 20-21.68Financial Management Assessment Report of Oromia Forest and Wildlife Enterprise (OFWE), 2014.69 IFAD, Federal Democratic Republic of Ethiopia (2011): Rural Financial Intermediation Programme, available: http://www.ifad.org/evaluation/public_html/eksyst/doc/prj/region/pf/ethiopia/rfip.htm.

http://www.ifad.org/evaluation/public_html/eksyst/doc/prj/region/pf/ethiopia/rfip.htm

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and regulations to ensure the utilization of all funds can be accurately and consistently controlled and reported on.

Figure 7Operational structure of the CRGE Facility70

BOFEDs will be responsible for financial oversight at regional and Woreda levels, with support from ZOFEDs and WOFEDs as needed. However, FIEs remain ultimately responsible for financial reporting to the CRGE Facility, and thus oversee and direct the activities of BOFEDs in this regard. BEFs, meanwhile, are responsible for supporting RIEs in preparing SRAPs and investment plans. CRGE Units within sectoral bureaus acting as RIEs, as well as those within BEFs and BOFEDs, will provide technical support and help ensure coordination.

All FIEs, RIEs, local implementing entities and public EEs are bound to apply government rules and regulations on fiduciary management, including those on procurement, budgeting, internal control and auditing. In the case of non-state EEs, implementing entities engaging them must ensure that EE’s have adequate internal control systems in line with international best practice. Guidance on due-diligence to be undertaken by implementing entities in this regard will be provided by MOFED and the Facility in line with best practice.71

AssessmentCRGE Facility. The model adopted by the CRGE Facility has a number of potential strengths in terms of channeling REDD+ funding to regional and Woreda level:

1. It allows for REDD+ funding to be integrated within the broader context of the CRGE, helping to ensure consistency with related policies across Government sectors.

2. It provides defined mechanisms for cooperation between bureaus and both public and private entities for the implementation of programs. This facilitates sectoral bureaus to work with OFWE, as well as NGOs with experience in the region, such as Farm Africa and SOS Sahel and private sector entities.

70Government of the Federal Democratic Republic of Ethiopia.Climate Resilient Green Economy (CRGE) Facility. Operations Manual. 71 Ibid.

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3. It allows for finance to flow to a range of sectoral bureaus to implement REDD+ activities. This could include, for instance, OBA (e.g. climate-smart agriculture), OBLEP (e.g. land planning and certification) or Oromia Water, Mineral and Energy Bureau (biomass projects). In all cases, however, the close involvement of the future Oromia Bureau of Environment and Forest (OBEF) can serve to ensure that all these sectoral activities are coordinated with the overall REDD+ Program of the State.

4. The broad reach of the CRGE Facility coupled with its flexible design provides it with the potential to assume the central role in managing and channeling donor finance to the regions. If it gains the confidence of donors, it can serve as the primary facility for managing donor finance, helping to ensure continuity and avoid duplication of efforts.

For the time being, however, the CRGE is not yet operational at regional level, and its structures have yet to be comprehensively tested. While positive progress has been made on developing its fiduciary management capacities at Federal level, some of its key regional level components are not yet even in existence in Oromia. Crucially, the OBEF has not yet been established. In addition, modalities for financial reporting through the respective governance levels have not yet been adopted or tested.

As such, the CRGE Facility remains a promising medium-term option, but does not appear to present a viable option for channeling finance to the Oromia REDD+ Program in the immediate future.

Existing channels – 1, 2 and 3.Both Channels 1 and 2 present potentially viable mechanisms for channeling finance to the Oromia REDD+ Program in the short term. Given that REDD+ is intended to be implemented in multiple sectors under the guidance of the REDD+ Steering Committee, and given that the OBEF has not yet been established, Channel 1 would appear to present the more appropriate option. This would allow finance to be centrally managed by OBEFED, which would in turn distribute finance to relevant sectoral bureaus and to WOFEDs.

Channel 1 has been successfully utilized in a number of large-scale and multi-sector donor programs, indicating that in principle it could support a program such as the Oromia REDD+ Program. The Productive Safety Net Program (PSNP), for instance, shifted from its original use of a hybrid model (known as Channel 1.5) to utilizing Channel 1 in 2006 in order to reduce the number of steps involved and establish a more direct chain of accountability.72

Utilizing Channel 1 also has the advantage of building Government financial management capacities, necessary if the CRGE Facility infrastructure is to become capable of being utilized in the medium term. It also offers the most continuity with the CRGE Facility system, making a smooth transition to that system more feasible. On the other hand, some donors have expressed concerns with MOFED and BOFEDs’ capacities to manage finance under large sustainable land-use programs.73

72 Wiseman, W., Van Domelen, J.,Coll-Black, S. (2009): Designingand implementinga rural safety netin a low income setting: Lessons Learned from Ethiopia’s Productive Safety Net Program 2005–2009.73 World Bank, Sustainable Land Management Project II, Project Appraisal Document, October 2013.

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Channel 2 also presents a potentially viable option. Using this channel would raise the question of which bureau finance would be channeled through. Both OBA and OBLEP have functions closely related to REDD+, and OBA has gained substantial experience in managing international finance through the SLMP program, and is currently receiving further capacity building under Phase II of the program to address remaining deficits. At the same time, neither entity plays a central role in forests. A future OBEF may be a more viable candidate. However, it remains unclear when it will be established, and it is likely to take some time before it builds up sufficient fiduciary management capacities to enable it to take the lead on managing REDD+ finance in the state.

Whether Channel 1 or 2 is used the option exists to channel funding directly to Oromia without passing through Federal institutions. This has the potential to significantly reduce transaction costs and bureaucracy, allowing funding to flow more directly to the Oromia REDD+ Program. While in the long-term greater consistency and integration may be achieved by channeling funding centrally through the CRGE Facility, during the pilot phase there is a strong case for channeling funding directly toward Oromia. Under this approach Channel 1 again emerges as the preferable choice, since, as discussed above, funding directly provided to sectoral bureaus is often not reported and can create inefficiencies and coordination issues.74

Under either Channel 1 or Channel 2 the pooled account system operated by WOFEDs appears to be the most viable options for managing finance at Woreda levels. However, it is reported that WOFEDs are frequently understaffed, and therefore may experience capacity constraints in adequately managing REDD+ finance, though capacity building efforts are underway.75

The use of Channel 3, with funds directly allocated from donors to OFWE may be a viable complementary option for targeted programs specifically directed to the forestry sector. This appears to be viable due to OFWE’s status as a semi-autonomous enterprise, though further investigation is needed to determine the full implications of this. The clear advantage of this option is that it avoids funding flowing through multiple entities, thus reducing bureaucracy and transaction costs. Financing can be directly channeled by OFWE to its operations and Branch Enterprises. Government officials with OBOFED have expressed support for this option, noting the reduction in bureaucracy it would entail.76

A number of limitations are nonetheless evident. In the first place, while OFWE has a reasonably complete set of fiduciary management arrangements in place, a recent assessment of these arrangements found weaknesses throughout.77 The chief issues identified include a high level of staff turnover and overstretched capacities of both accounting and internal auditing staff; weak fixed asset and stock controls; unreconciled differences between central and branch accounts; differences between reported and verified cash-on-hand; deviations from income tax proclamation with regard

74 Federal Government of Ethiopia, Ministry of Finance and Economic Development (2010): Oromia Regional Government PEFA Assessment Report. http://www.pefa.org/en/assessment/et-oromia-region-apr07-pfmpr-sn-public-en(October 2014)75 Ibid.76 Interview with Ato Edema, Oromia Bureau of Finance and Economic Development, June 2014.77Oromia Forest and Wildlife Enterprise (OFWE) Financial Management Assessment Report, 2014.

http://www.pefa.org/en/assessment/et-oromia-region-apr07-pfmpr-sn-public-en


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to valuation of plantation; and existence of suspense accounts. Efforts are reportedly underway to address these deficiencies through training and other measures, though the report did not indicate whether there is a clear action plan or timeline for addressing these measures.

A second limitation is that OFWE does not currently have any infrastructure at Kebele levels. As discussed in section 2.3, they currently rely on Kebele Development Assistants, but this carries with it its own issues. Questions remain over OFWE’s ability to contract or otherwise channel finance to local levels absent these local networks. At the same time, other options exist. Under the Bale Mt Project OFWE established the Bale Mountains Eco-region Fund, from which funding was distributed to community forest cooperatives, and such model could potentially be replicated in other areas.78

An additional complementary option that may be considered is the use of RUSACCOs and Microfinance Institutes to provide direct finance to households. This could potentially have value in programs seeking to develop alternative livelihoods for communities or provide upfront capital for small-scale timber plantations. The mechanics and implications of such a mechanism warrant further analysis.

RecommendationsIn the medium term the CRGE Facility potentially provides the most promising option for channeling finance to the Oromia REDD+ Program. While it is not yet fully operational at regional level, attention should be focused to testing the processes set out in its Operations Manual and strengthening capacities where they remain lacking. In Oromia, pending establishment of OBEF it may be worth piloting its use on a small scale through OBA, working in collaboration with OFWE as Executing Entity. This could serve to test the practicalities of cross-sectoral coordination under the CRGE Facility.

In the short term Channel 1 appears to present the most promising option for channeling REDD+ finance. Finance at regional level would be managed by BOFED and distributed to sectoral bureaus and WOFEDs pursuant to instructions from the Oromia REDD+ Steering Committee and/or the President’s Office. OBOFED should also coordinate with the Oromia REDD+ Coordination Unit. In implementing this option, it is likely that certain capacity concerns will have to be addressed:

1. At regional level, further investigation is necessary to determine precise and up-to-date capacity constraints in financial management. A 2010 analysis identified, among other weaknesses: budget comprehensiveness and transparency (including insufficient contextual information in budget reporting, multiple projects not reported using standard budget classification codes and inadequate procurement processes); gaps in external scrutiny by the Budget and

2. Finance Committee in the Regional Council and insufficiently long-term budgeting.79

78Oromia Forest and Wildlife Enterprise (OFWE), Farm Africa and SOS Sahel Ethiopia(2014): Bale Mountains Eco-region Reduction of Emission from Deforestation and Forest Degradation (REDD+) Project- ETHIOPIA. Project Design Document.79 Federal Government of Ethiopia, Ministry of Finance and Economic Development (2010): Oromia Regional Government PEFA Assessment Report. http://www.pefa.org/en/assessment/et-oromia-region-apr07-pfmpr-sn-public-en(October 2014).



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3. Capacity building for WOFEDs is crucial, including the provisions of more human resources and providing additional capacity (e.g. equipment) at WOFED to manage accounts for REDD+ and expanding and consolidating Integrated Budget and Expenditure Systems.Given the large numbers of Woredas, this could begin with priority Woredas and expand from there. In Woredas with very low capacity, channeling finance through NGOs may be a feasible interim solution.

For specific, forestry-focused programs in the short-term channeling funding directly through OFWE can be a viable means to provide targeted financing while reducing bureaucratic burdens. Capacity building should be provided to OFWE to address current deficiencies in fiduciary management, and a realistic timetable adopted for addressing these issues. Further analysis is required to determine the scope for OFWE to engage and fund Kebele-level Development Assistants. If required, formal arrangements for OFWE to use DAs should be considered until Forestry DAs are established in the future.

The role of RUSACCOs and Microfinance Institutes in providing loans and other forms of non-grant finance to households and communities should be explored further.

Questions for further investigation1. To what extent can OFWE receive funding from Government

entities under the respective channels and itself channel funding through Government entities at local levels?

2. Can OFWE receive funding directly from donors, and what reporting to Government entities is it obliged to comply with?

3. What specific measures are being taken to address the deficiencies in OFWE’s fiduciary management capacities, and what is the timeline for implementing these?

4. Which entities (government and donor) could provide finance to RUSACCOs and Microfinance Institutes for on-lending to communities and under what conditions?

5. Determine precise and up-to-date capacity constraints in financial management in Oromia.

1.8.1 Measurement, reporting and verification

RequirementsThe Oromia State REDD+ Program will have to be nested into the national REDD+ program. This implies that the State reference level (RL) and MRV framework will have to be coordinated with national RL/MRV frameworks.

Reference levels.As a general rule, subnational RLs should be developed according to the same rules and principles as national RLs. Subnational RLs should follow a common set of criteria that facilitate the subsequent reconciliation of RLs on the national level. Countries may further define methodologies for use in the development of subnational RLs. Such methodologies should also include guidance on how to account for leakage.

Similarly subnational jurisdictions, such as Oromia, have to developed criteria and methodologies for projects and programs that are nested within the subnational REDD+ program. The World Bank’s Oromia Forested Landscape Project, for example, will be nested within the subnational, Oromia RL.

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MRV.A national forest MRV system will be established over the course of the next three years, launched by FAO in September 2014. Oromia’s MRV system will have to be developed in coordination of the national system. Data that will be collected in preparation of the State-MRV system can also inform the national system. While the national MRV framework is still under development, Oromia will fast-track the following MRV functions:

Region-wide monitoring of forest based on remote-sensing and ground-truthing;

Monitoring of strategy option implementation, including carbon, biophysical, socio-economic and safeguard indicators linked to implementation status and performance, i.e. for advance and results-based payments from donors; and

Detailed monitoring of strategy options that have a clear link to deforestation or forest degradation, based on a combination of remote-sensing and detailed sampling strategy.

Legal implications.The Government of Oromia will also have to adopt guidelines and approval criteria for project-level REDD+ activities to ensure that they fit into the national or subnational REDD+ strategy, the MRV framework and the adopted RL.

RecommendationsOromia should develop a jurisdictional RL in close coordination with national authorities. The Regional State should ensure that the regional RL is approved at the national level and get the assurance that the RL will be integrated into the national RL.

Oromia should also adopt criteria and guidelines for project and program-level RL that would be based on the jurisdictional, state RL. All project-based RL would have to be approved by the Oromia Government.

To provide a coordinated basis for MRV systems at regional level, Oromia should develop a region-wide MRVframework, including detailed guidance on data collection, sampling and (third party) verification, self-assessments of local participants and reporting channels from local to regional and national institutions. The regional MRV framework should be coordinated with the Federal MRV and SESA processes and take into account existing monitoring systems and reporting channels for each strategy option. For example, in the SLMP local-level monitoring of implementation is done by the extension service (the DAs) that have therefore acquired capacity for agricultural monitoring and evaluation, complemented by self-assessments of farmers and communities.

To facilitate the implementation of projects and programs within the jurisdictional REDD+ program, Oromia would have to adopt the following legal definitions and procedures:

Criteria and guidelines for project-level RLs (based on the regional RL);

Criteria and guidelines for project-level MRV, including monitoring requirements and reporting templates to ensure that the regional State benefits from the full set of monitoring data collected within REDD+ projects;

Social and environmental criteria for REDD+ projects and programs in line with national safeguards for REDD+; and

Approval criteria that ensure that REDD+ projects meet all relevant requirements; but also that – once investments have been approved

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– project developers have the assurance and legal security that their project is accepted by law and emission reductions are assigned to the approved investor (see section 2.2.4 above).

We propose the following MRV components: Measurement, reporting and verification according to the criteria

and guidelines described above by an MRV team within the Oromia REDD+ Coordination Unit partnering with a research institution or a university for technical implementation (e.g. Addis Ababa University, Wondo Genet College of Forestry, Madawalabu University could with additional capacity building provide technical expertise);

Communities, user groups and investors conduct self-assessments and report to the extension systems (DAs, OFWE branch offices) that in turn conduct monitoring and report to the Woreda Offices and the OFWE branch offices. Institutions at Woreda level aggregate monitoring data and report to their regional Counterparts, who in turn report to the REDD+ Steering Committee, with facilitation by the REDD+ Coordination Unit;

In parallel, the Woreda Technical Working Groups conductsperformance monitoring of local implementation and sendreports to the REDD+ Steering Committee with facilitation by the REDD+ Coordination Unit and a MRV team established for this purpose;

Regional institutions implementing cross-sectoral strategy options report to the REDD+ Steering committee, with facilitation by the REDD+ Coordination Unit; and

Third party verification is conducted for “flow” activities that can be clearly linked to emissions reductions (or carbon sequestration).

Finally, a REDD+ registry needs to be established for the Oromia REDD+ program to align the technical and financial resources provided by public and private funding sources with the modalities of result-based payments.80More details on the functions and options of a REDD+ registry at national level are described in Midterm Report 1. Oromia could establish a regional REDD+ registry that would be integrated and linked with an emerging REDD+ registry at national level. While a national system is not yet developed, an interim solution could be considered which could later be nested in an emerging national REDD+ registry.

80 Reed, D. (2010): A Registry Approach to REDD+. Technical Working Group. www.climateregistryoptions.org(September 2014)

http://www.climateregistryoptions.org/

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1.9 Designing REDD+ policies for OromiaThis section draws on the results of the UNIQUE Oromia analysis of drivers and strategy options, including the opportunity costs assessment conducted for different deforestation drivers. In the following we discus the institutional arrangements that could support the activities prioritized by UNIQUE and its partners. To the extent possible, we draw on existing institutions and arrangements. Considering the overall challenge associated with implementing REDD+, we limit our recommendations for new arrangements to the minimum needed to implement a state-wide Oromia REDD+ program.

1.9.1 Sectoral strategy options

Strengthening and expanding participatory forest managementStrategy. This strategy option is building on PFM activities currently implemented in a large share of forests in Oromia. PFM can provide a common implementation model for a wide range of activities such as forest management for conservation or for production purposes, including NTFPs, tree planting, or other integrated (e.g. silvopasture, forest coffee) or agriculture-focused systems. In addition, forestry activities can be integrated with other economic activities, such as small businesses for NTFP processing (e.g. honey) and marketing, ecotourism, hunting etc.

PFM presents a dual strategy option. First, it can improve forest governance by allocating forest user rights to local communities and by strengthening the local institutional framework and enforcement. Second, PFM can address the drivers and underlying causes driving deforestation and forest degradation, provided it provides sufficient incentive for the local population to protect forests rather than encroaching on them. In addition, specific activities such as tree planting outside the forest, enrichment plantings and improved management in existing forests can promote carbon sequestration. This strategy option does not have a clear link to the reduction of specific deforestation drivers. However, it holds the potential to increase forest carbon stocks and to reduce pressure on forest by drivers. The emission reduction and costpotential remains to be established (See UNIQUE Final Report).

Approach. We propose developing a PFM strategy that both builds and improves on existing initiatives and guidelines. This would comprise a coherent strategy for expanding PFM and a common normative framework for its implementation. This common framework could be adopted through a regulation or directive setting out common guidelines (as recommended in section 2.2.3 above). Common guidelines would be applicable to all new PFM initiatives, while mechanisms could be put in place for existing initiatives to come into compliance with the common guidelines over time.

It is proposed that the PFM manual81 developed by SOS Sahel and Farm Africa serve as a starting point for developing common PFM guidelines for Oromia, given the close cooperation with both SOS Sahel and Farm Africa. Alternatively the national guidelines82 could be used as a starting point.

81Farm Africa/SOS Sahel-Ethiopia (2007). The Key Steps in establishing Participatory Forest Management: A field manual to guide practitioners in Ethiopia.82Ministry of Agriculture (2012). Guideline for Participatory Forest Management in Ethiopia.

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Existing PFM schemes, e.g. the national guideline and the Manual used as a starting point for this report are very similar. While they differ in the number of steps and terminology, they generally cover the same processes. Specific arrangements developed for the Bale Eco-Region REDD+ Project, as a large-scale REDD+ pilot project within Oromia, could also be drawn upon to inform the formulation.83 Common PFM procedures should be developed, while they should allow for flexibility in accommodating different schemes in existing projects. This should take into account the results of the on-going CIFOR review of PFM best practices, which will be published by the end of the year.

The PFM REDD+ strategy option would be implemented on forest land and woodlands by OFWE with support from the OBA, possibly integrated with the SLMP program (see strategy option below). Based on these existing schemes, technical implementation will be led by local communities with extension services by OFWE and OBA. Based on governance arrangements proposed in the Bale Eco-Region REDD+ Project, institutional arrangements would be linked with REDD+ institutions.84

To incorporate PFM activities into the REDD+ program, the scope of OFM schemes would have to be expanded to include the following operational functions:

A monitoring plan; Reporting requirements; and Strengthening the REDD+ focus of PFM and establish PFM

incentives by REDD+ benefit sharing.

Given the economic importance and the large efficiency and emissions reduction potentials of improved charcoal making, pilot activities could be implemented in PFM to explore controlled and sustainable charcoal. Charcoal making and marketing is widely perceived as an illegal activity in Ethiopia, however the Oromia Forest Proclamation specifically allows for charcoal making if a written permission was obtained.85 There is however no detailed regulation available for the permitting process.

Institutional arrangements. We propose to develop common procedures for the PFM REDD+ process, defining institutional roles and arrangements for decision-making, coordination, participation, grievance and sanction mechanisms. REDD+ finance should be conditional on the implementation of these procedures, based on the definition of specific milestones and performance indicators. In addition, these procedures should provide flexibility for already established schemes to gradually come into line with this harmonization. Recommendations for adapting the Farm Africa and SOS Sahel Manual for REDD+ are outlined for each of the eight steps of implementing PFM in Error: Reference source not found.

83OFWE together with Farm Africa and SOS Sahel is currently developing the Bale Eco-Region REDD+ Project, which involves the establishment of 62 cooperatives for joint forest management with OFWE. A Project Design Document was submitted to CCBA/VCS is currently in the validation process. The project is embedded in the Bale Eco-Region Sustainable Management Programme.84Governance arrangements proposed in the Bale Eco-Region REDD+ Project involve REDD+ institutions at Woreda level (Technical Working Groups), Zonal level, and the Oromia REDD+ Coordination Unit.85 Oromia Forest Proclamation, Article 14(5).

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Table 9 PFM investigation, establishment and implementation steps based on the SOS Sahel and Farm Africa PFM Guideline and recommendations for the PFM REDD+ strategy option86

Stages and Steps Elements relevant for REDD+ Recommendations

I. INVESTIGATIONStep 1: Stakeholder analysis and forest use / user information

Identifies forest users Identifies interrelations and

addresses social structures Provides information on

forest uses (products and practices)

Needs to identify all forest users and uses, not only those that live in the Kebele but also from other areas

Step 2: Setup of forest management institutions

Formalized Forest User Groups by incorporating a legal entity (e.g. cooperative) and adopts processes and bylaws

The institutional structure of Woreda Technical Working Groups needs to be strengthened and clearly linked to the organizations implementing PFM on the ground: OFWE branch offices, the WOA, the Kebele administration, DAs, Forest User Groups and other community institutions

A “Forestry DA” could be supported jointly by the Woreda Offices (e.g. administrative management) and the OFWE Branch Office. While reporting to the OFWE branch office, this Forestry DA could improve the link between the two sectors, reporting to both agencies and financed jointly with support from the REDD+ program

Forest users (and other beneficiaries of incentive programs) to be included in decision-making bodies should be representative and selected based on participatory, gender-sensitive, and transparent procedures to avoid elite capture and exclusion of marginalized groups (e.g. women). Eligibility should not be limited to the Kebele population, if there are forest users from other areas, since exclusion could have a negative effect on their livelihood

Cooperative bylaws that define responsibilities, costs and benefit sharing, and decision-making processes should be defined based on clear, participatory, transparent and fair procedures with particular attention given to marginalized groups; Bylaws should also include a definition of the accountabilities, reporting and leadership, including a definition of corruption

Cooperative bylaws should define user group responsibilities related to monitoring, evaluation and reporting requirements for REDD+

The selection of forest users and the formulation of cooperative bylaws should take into account the results of steps 1 and 3

Step 3: Participatory forest resources assessment and mapping (PFRA)

Assesses the basic state of forest resources and drivers of deforestation

Proposes management measures to improve forest management

Include assessment of deforestation and forest degradation, including drivers, underlying causes and leakage

Include assessment potential for different forest/land management models, including their costs, benefits, economic viability and REDD+ potential (including carbon sequestration)

Assess limitations in PFM potential to provide sufficient community incentives for its sustainable management and identify additional and less land intensive business models (i.e. livelihood opportunities) to fill any gaps

This step should be linked or integrated with the participatory land-use planning process

II. NEGOTIATIONStep 4: Forest management planning

Addresses improvement of forest condition and reduction of deforestation

Ensure that bylaws devolve use to communities Include an assessment of how the results of the PFRA and

stakeholder mapping are taken into account and addressed

86First and second column adapted from Bale Mt’s REDD project: Structuring, marketing and development preparation phase. Progress report and explanatory notes. Bale Eco Region Sustainable Management Program with TerraCarbon LLC, Unique Forestry Consultants and Climate Focus.

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based on PFRA Simplified management plan

is developed by the community with support from extension service

Provide a detailed plan with clearly defined timelines and responsibilities based on simplified forest/land management models

Include an assessment of how these models can address drivers and underlying causes of deforestation and forest degradation

This step should be linked or integrated with the participatory land-use planning process

Step 5: Forest management agreement formulation

Establishes responsibilities, sharing of costs and benefits

Describes the roles of the agreeing parties

Describes decision making processes and dispute-resolution mechanism and consequences of non-compliance

Should be accompanied by a formal certificate of user rights Agreements that transfer the rights to monetize emission

reductions to the government Provide clear provisions on compensation payable to

communities if government rescinds contract without community fault

Should define responsibilities for REDD+ requirements for reporting, monitoring and evaluation, and safeguards

III. IMPLEMENTATION Step 6: Developing the roles of community and foresters

Prepares and capacitates the communities to professional foresters to adopt technical innovations in forest management.

Provides the human resources with the respective technical skills to implement REDD related activities

Step 7: Developing skills for forest management

Implements improved silvocultural activities based on PFRA

Communities implement the activities advised by experts

Ensures implementation of REDD activities

Trainings should be conducted with a focus on the provision of economic incentives for communities

Step 8: Participatory monitoring and management

Prepares human and technical resources for REDD monitoring

Ensures regular monitoring of activities, leakage and carbon stock.

Forest management should be adapted based on results of participatory monitoring and evaluation

Monitoring of performance jointly by the Woreda Technical Working Group and the Regional Working Group to provide the basis for performance-based payments

Monitoring should ensure that the PFM process is conducted in its entirety and in line with PFM policies and procedures, including REDD+ requirements for reporting, monitoring and evaluation, and safeguards

Figure 8 provides an overview of institutions that will be involved in the implementation of this strategy option. The Woreda REDD+ Technical Working Group is the main body for the coordination of decision-making between the implementation organizations OFWE Branch Office and WOA, and the government at the local level. The Committee reports to the OBA and OFWE.

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Figure 8 Proposed implementation arrangements for PFM strategy option

Flow of funds. There are several options for the flow of funds. Local disbursement could be through the WOA and WOFED or directly through OFWE branch offices. Purchases for inputs (e.g. seedlings) should to the extent possible be made by the DA or directly by the OFWE branch office, to limit bureaucracy. At Woreda level, financial management could be done by WOA and WOFED, or by OFWE, or by a combination.

Woreda REDD+

Committee

Woreda Offices

e.g. agriculture, finance & economic development, land administration &

cooperatives

OFWE Branch Offices

Development Agents for Crop, Forestry, Livestock

etc.

Community groups (Farmer groups; Forest User Groups, women

groups, youth group,Cooperatives)

Kebele Administrations

OFWE

Woreda Administrations

Bureau of Agriculture

Federal and Regionalgovernment

Regional-level REDD+ Institutions

Provides administrative and technical support for PFM; develop harmonized forest management plan upon which PFM is built on

Closely coordinate with Woreda and Kebele offices for planning, implementation, monitoring and evaluation of PFM; Provide technical support to public institutions and communities under PFM; ensure PFMs membership is inclusive and not taken by elites in the community

Provide administrative and decision support for DAs and communities under PFM for effective implementation; provide effective local level law enforcement mechanisms to address any disputes related to PFM; ensure PFMs membership is inclusive and not taken by elites in the community

Provide technical supervision for DAs, Kebele administration and communities under PFM; Coordinate with OFWE for effective implementation of PFM; Coordinate planning, implementation, monitoring and reporting of PFM activities with both bureaus and kebeles; ensure PFMs membership is inclusive and not taken by elites in the community

Manage forest resources based on user right certificates and forest management agreements signed with OBLEP and OFWE respectively; ensure PFM membership is inclusive

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The financial sustainability of PFM schemeswithout results-based payments, in particular the coverage of transaction costs, should be considered. An important question in this context is why local institutions in various PFM initiatives are still largely dependent on NGO and donor funding, despite extensive capacity building efforts from NGOs. Dependence on outside actors and financing should be limited.

Table 10 provides a summary of proposed arrangements.

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Table 10 Summary of proposed arrangements for Participatory Forest Management in the Oromia REDD+ Program

Participatory Forest ManagementPractices Forest management for conservation, production, restoration, tree planting, NTFPs including

grass use, forest product processing and marketingLand ownership Community forestInstitutional structure for implementation

Joint forest management by forest user cooperative (or other legal entity such as association) and OFWE branch offices and/or Woreda Office of agriculture

Legal mechanism Forest management agreement, a legally binding contract, is signed by the forest user group and OFWE (either the Regional office or the branch office) that defines rights, responsibilities and benefit sharing

User group obtains user rights certificates from OBLEP and Woreda equivalent in coordination with OFWE (either the Regional office or the branch office)

Cooperatives register with the Cooperative Promotion Office at Woreda level Cooperative by-laws govern responsibilities, forest product use and benefit sharing within

the group, sharing with communities, share-holding etc. Agreements transfer the rights to monetize emission reductions to the government.

Facilitators of implementation and extension services

Forestry, agronomy and other DAs; OFWE OFWEBranch Office, Forestry DA, WOA

Cost sharing and disbursement

Forestry, agronomy and other DAs; OFWE Program and OFWE provide physical inputs (e.g. beehives), technical support and trainings. theInputs would be procured by the OFWE Inputs would be procured by the OFWE branch office, or alternatively through the WOA.

Benefit sharing As defined in the forest management agreement.Monitoring and Evaluation Community monitoring and evaluation complemented by monitoring through the Forestry DA.

Examples for milestones and performance indicators include area of forest under PFM management, number of forest management agreements established, household income, etc.

Areas for further investigation: The integration of various existing PFM schemes will need to be

discussed with stakeholders, including how to bring existing initiatives in line with new common guidelines.

The integration of PFM with public-private partnerships could be explored. Investors could obtain concessions for production on adjacent barren land or could obtain licenses for processing facilities (e.g. coffee, timber, dairy; See strategy option for a private investment window)

The forest management agreement could be signed either with OFWE at regional or with the branch office. Both options should be explored considering that procedures should be well-connected to the local level on the one hand, while ensuringregional oversight on the other.

Adding REDD+ to SMLP II: on assisted natural regeneration and climate smart agricultureStrategy. We suggest adding a REDD+ component to the SMLP II, which would focus on Assisted Natural Regeneration (ANR) and Climate Smart Agriculture (CSA), including woodlots:

ANR rehabilitates degraded lands through regeneration and the planting of naturalized fast growing tree species on sites that may not naturally regenerate due to the barrenness of the lands. The objective is to regain the vegetation cover and improve landscape hydrology so as to create favorable ecological conditions for farming and supply of forest products e.g. timber, NTFPs and non-destructive forest benefits, and carbon sequestration.

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CSA seeks to consolidate mitigation benefits, adaptation needs and food security. The objective of CSA practices is to improve agricultural productivity, nutrition, and income of the households – in addition to carbon sequestration in soils and plant biomass. CSA activities would include agroforestry and woodlots, reduced tillage, retention of crop residues on crop fields, compost application, green manure, physical structures and biological measures for soil and water conservation, row-planting, cover crops, and the use of improved crop varieties. Tree planting would be promoted on lands unsuitable for crop cultivation, or along farm boundaries as well as on grazing land.

ANR and CSA activities can address drivers of deforestation by reducing pressure on existing forests and trees outside the forest. In addition, specific activities such as tree planting and replacement of non-renewable energy sources, improved soil management can lead to emissions reduction and carbon sequestration benefits.

Approach. It is proposed to implementANR and CSA as part of SLMP, based on the design of the program’s second phase (SLMP II) that started in May 2014.87 The SLM REDD+ program could be implemented in Woredas that are already part of the SLMP program, currently mainly in woodlands and not the high forest areas, or in Woredas where the watershed process would still need to be conducted and SLMP institutions would need to be established. In order to achieve REDD+ benefits we recommend implementing carbon sequestration activities in the existing SLMP Woredas in Jima and add new Woredas, closer to the high forest (and deforestation) areas in Jima and Bale.

In the SLMP II design, the option of generating carbon credits under the Clean Development Mechanism or the Voluntary Carbon Standard is already considered and a draft operational plan was developed. To provide for the ability to engage in carbon finance activities, this draft proposes to add additional resources to the SLMP Coordination Unit and at the level of Woredas and Kebeles. For the inclusion into a Regional REDD+ program, the draft SLMP II carbon management and monitoring arrangements would have to be expanded to account for REDD+ benefits and report them to the institution that manages REDD+ accounting at the regional level.

Institutional arrangements. Technical implementation of this strategy option would be initiated at Woreda level and followthe SLMP watershed approach. SLMP implementation is based on a comprehensive mobilization process to ensure community engagement and ownership. Community institutions are established to facilitate planning and lead implementation, such as a General Assembly of the community and technical teams of knowledgeable community members and elders (e.g. the Kebele Watershed Team). For the REDD+ program, SLMP institutional arrangements would have to be expanded in scope to include the following operational functions:

a monitoring plan; reporting requirements; and the support of ANR and CSA incentives by REDD+ benefit sharing.

87 Ministry of Agriculture and UNIQUE forestry and land use (2013). Draft plan: Mainstreaming carbon finance into the Sustainable Land Management Program. Operational Plan for Climate Smart Agriculture and Assisted Natural Regeneration components.December 2013.

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REDD+ safeguards should be sufficiently addressed in the SLMP environmental and social management framework, while their compatibility should be reviewed once a REDD+ safeguards has emerged.

Implementation would be facilitated by the extension system of the WOAs and the DAs at Kebele level. Given its role in the demarcation of forestland, OFWE could also provide additional technical support to the local land planning processes on forest land. presents the regional-level implementation structure with OFWE included in the institutional arrangements (in red our additions to the existing structure). REDD+ Woredas of SLMP would have to implement a (community) monitoring system and report activities and results to the MRV unit within the REDD+ Coordination Unit.

The SLMP REDD+ program should provide additional capacity building in particular to extension services. This includes hiring ofadditional DAs and specifically for tree-planting a “Forestry DA” possibly with a link to the OFWE branch office. Here a cost sharing between the government, OFWE and the project could be an option. In addition, the program can support trainings and transport (e.g. motorcycle, horse), a major constraint for many DAs (see cross-sectoral strategy option for institutional strengthening).

Flow of funds. As in SLMP, the funds would flow from the Ministry of Agriculture and OBA to Kebeles through the Woreda pool system (Channel II), based on SLMP disbursement, accounting and control modalities. Budgeting is structured in a two-way process: (1) upstream, with Woredas and Kebeles preparing annual work plans and budgets that will be submitted through the Woreda and OBA to the SLMP Project Coordination Unit who submits to the National Steering Committee and (2) downstream from Federal to local level. Local Credit and Savings Associations could be involved in the coordination of loan repayments and collection of funds for the Woreda Office of Finance and Economic Development (WOFED) that allocates funds for purchases (e.g. of technical input) by the WOA. Given the bureaucracy involved in financial management, additional staff or other incentives (e.g. technical capacity) should be provided to WOFED.

The level of financing and the type of support that the participating Woredas receive should be designed to maximize REDD+ benefits. This would most likely result in a prioritization of Woredas in areas with high levels of deforestation, whose proposed management plans could be prioritized. Benefits allocated to communities could take into account opportunity costs for forest protection (see UNIQUE final report). They could also include additional allocation of funds for training and extension focused on the provision of livelihoods and economic viability of ANR and CSA models, in order to provide economically viable opportunities that address drivers of deforestation. In addition, funds may be needed to support the control of grazing, in particular for tree-planting activities. In addition to technical options (e.g. fencing, including natural fencing), the program can promote zero-grazing by the community, while ensuring that sufficient fodder is available or its production promoted through the strategy option.

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Figure 9 Proposed implementation arrangements for strategy options building on the existing SLMP structure at regional level (modifications of the existing structure in red)88

88Adapted from Draft Project Implementation Manual of SLMP II.

Bureau of Agriculture +

Bureau of Land Administrationand Environmental Protection

Woreda Offices of Agriculture (WOA) and EPLAU

Regional Technical Committees (RTC)

Existing or ad hoc committee. Sectoral Bureaus, OFWE, Regional equivalent

of EIAR, MNR

Collaboration for on-the-

ground program

implementation

Kebele Watershed TeamCommunity Watershed Team

Community Facilitators

Regional Steering Committees (RSC)

Existing or ad hoc committee.Sectoral Bureaus, OFWE, Regional equivalent

of EIAR, MNR

Zonal Agricultural officesTechnical support, extension and

M&E

Woreda Steering Committee Woreda Technical Committee

OFWE Branch OfficesTechnical support

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Table 11 summarizes the proposed arrangements for an SLMP REDD+ component, adapted from existing SLMP arrangements89.

Table 11 Summary of proposed arrangements for Assisted Natural Regeneration and Climate Smart Agriculture activities in the SLM REDD+ program

Assisted Natural Regeneration Climate Smart AgriculturePractices Reforestation through assisted natural

regeneration, complemented by replanting; Support of NTFPs.

Agroforestry, tree-planting, reduced tillage, retention of crop residues on crop fields, compost application, green-manure, physical structures and biological measures for soil and water conservation, row-planting, cover crops, and the use of improved crop varieties linked to drivers of deforestation.

Land ownership Communal land Individual farmlandInstitutional structure for implementation

Forest user groups/cooperatives register, open a financial account and receive user rights, develop bylaws and a management plan, including cost- and benefit sharing arrangements

Farmer user groups of 20-30 participants developing business plan to be approved by the Woreda Technical Committee and establised; democratically elect a member to lead and support them i.e. Farmer Group Resource Person. Informal agreements between farmers. Cooperative bylaws could be established for activities such as marketing, processing etc., where members invest shares and share costs and benefits.

Legal mechanism

Cooperative bylaws, governing responsibilities, forest product use and sharing

Agreements that transfer the rights to monetize emission reductions to the government

Informal agreement between the users of a group MOU between user groups on implementation of

activities and cost-sharing with the Kebele Watershed Team

Agreements that transfer the rights to monetize emission reductions to the government


Forestry DA at Kebele/Watershed level, or NRM and agronomy DAs provide: Simplified forest management planning

with the user groups/cooperatives Technical training and guidance of user

groups/cooperatives on forest management, forest enterprise development, project management

Technical supervisionCoverage of extension per fulltime trainer: 300 farmers or 10-15 groupsCommunity facilitator supports

NRM or Agronomy DAs, or for tree-planting activities Forestry DA provide, Participatory planning of practices Regular training and advisory services Support and guidance on enterprise development

(e.g. access to finance) Trainings on processing, marketing, input

purchase for cooperatives by existing cooperativesCoverage per fulltime trainer: 300 farmers or 10-15 groups


Forest user groups provide labor, while the program provides physical inputs (e.g. seedlings), technologies (e.g. beehives) and trainings. Inputs would be procured by the Woreda Agriculture Office and disbursed at Kebele level with facilitation of the DAs.

High value crops and planting materials, like fruit tree seedlings, vegetable seeds, spice seeds and forage species will be covered by the program, depending on local context. User groups will provide the labor and in-kind inputs, depending on local context. The project will finance 30% of the physical input and technology cost while the user groupscontribute 30% of the cost at delivery, and sign an agreement with the KWT to return the remaining 40% in kind or cash within two consecutive years. This share will be reinvested in a revolving fund. The Group Resource Person with facilitation of the DA will organize the collection of funds for investment and repayment.

Benefit sharing Direct benefits include fodder, NTFPs, grazing, wood and timber. Sharing of products will be defined in the cooperative bylaws agreed on by the forest user groups. The forest user group can decide to share benefits in kind or cash for communal investments.

Based on land ownership.

Monitoring DAs will conduct monitoring. Farm monitoring will be conducted by communities and supported by the DAs complemented by self-

89Draft Project Implementation Manual of the SLMP II.

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assessments of farmers groups, reported to the DA.Additional activities:

Farmers Field Schools could be revitalized and strengthened as training facilities run by DAs. Schoolsare established in every Kebele but are in many cases not operational due to the lack of funds. Training opportunities are announced to interested farmers. Trainings are organized in small groups (around 30 participants, selected by draw if the number of applications is higher) and run over the course of a longer time-frame (e.g. a year). The REDD+ program could provide additional resources and capacity building to support targeted trainings for CSA. The provision of inputs (e.g. seedlings) could be organized via the extension system and funded by the project. This could present an opportunity for a region-wide intervention.

Additional activities to support practices that do not require much land should be explored, e.g. nursery development (to produce seedlings for ANR and CSA) bee keeping, small poultry operations, and tourism operations. This could be targeted toward landless households that are in need of livelihood opportunities and that are involved in activities which represent the underlying causes of deforestation and forest degradation. Such activities could be included in the SLM REDD+ program or based on the extension systems with additional capacity and funding provided by the program. Support for the provision of inputs will be essential in such intervention, while participants could contribute labour and locally available inputs, depending on the individual context. For this intervention, the program could partner with micro finance institutions, such as the Local Credit and Savings Associations.

Promoting improved cookstoves production and distributionStrategy. This strategy option is addressed to the reduction of household biomass consumption for cooking by promoting the production, distribution, and use of improved cookstoves (ICS). The strategy option directly targets emissions attributable to unsustainable fuel wood collection, by improving the efficiency of its use. In addition, the health and livelihood benefits of reducing indoor air pollution, predominantly for women and children, are often cited as a primary objective of cookstove programs.

Approach. We propose to build this strategy option on existing ICS activities in Oromia, working with implementing institutions that already have acquired relevant experience in rural areas. We propose to integrate ICS with the SLMP or PFM strategy options, and integrate implementation arrangements to the extent possible. Synergies could also be explored with public health institutions, e.g. health extension services could play a role in promoting and distributing ICS at the local level.

An Oromia ICS Development and Promotion Program has recently started; however the institutional arrangements developed for this project could not yet be assessed in detail due to lack of documentation.90In addition, several other donors and NGOs are engaged in ICS projects. While usually at a smaller scale, they could be potential partners for the implementation of this strategy option and their implementation arrangements could serve as a starting point for developing this option. Two Clean Development

90The Project Implementation Plan does not provide sufficient detail on implementation arrangements and additional interviews will be conducted for the final report.

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Mechanism Projects were developed and registered by World Vision and Paradigm Renewables Ltd.In addition, HOAREC is a potential partner. Implementation arrangements and recommendations will be further developed once these existing initiatives are better understood.

In many countries, cookstove programs have a mixed track record. Plagued by adoption barriers, failing technology and high costs, their deployment has been less successful than their social development benefits would suggest. While for many existing projects in Ethiopia, information is available on the number of ICS planned to be distributed or already distributed, but information on adoption rates, or a discussion of other factors limiting the effectiveness of ICS as a social development and emissions reduction strategy is limited (e.g. with respect to cost-sharing with beneficiary households, quality standards, monitoring and evaluation mechanisms).

Creating a private sector facility for investments in sustainable land use and value chainsStrategy. This strategy option supports innovative private sector investments in the forestry, agriculture and energy sector that promote sustainable land use and value chains. Possible investment models include:

Climate-smart coffee intensification; Timber and NTFP production and processing; Improved dairy production and processing; and Off-grid energy production, including cookstoves, charcoal, micro-

hydro installations.

Approach. This strategy option will build on the existing modalities for investments in Oromia. It would be based on the issuance of one or more competitive calls for innovative private sector investments under one or more themes (including the models set out above). Proposals would be selected based on a set of defined criteria that include expected economic and environmental (GHG emissions and other) benefits of the investment, capacities and track record of the investor to carry out the investment and value-for-money of the proposal for the Oromia Government (funding required vs. return expected). In addition, integration with similar investment windows that mobilize the private sector, e.g. the CRGE and the Energy+ initiative should be considered.

A number of models are possible for the arrangements that could be entered into with investors under the facility, with varying degrees of government involvement. Given that the respective strengths and assets that the government and the private sector bring to the table will vary depending on the type of investment involved, each call for proposals could set out the type of arrangement(s) that would apply. Two broad models could be used, though the details could vary depending on the type of incentive involved:

Passive government investment. Under this model the private investor would take on the bulk of the investment responsibility, with the Government providing incentives and support. Support could include financial incentives such as grants, tax breaks or concessional loans, administrative support in arranging land rights and licenses, and technical support (e.g. extension services). In return, investors would agree to conditionalities that could include sustainability commitments, amount of local employment and livelihood benefits, reaching certain milestones, and potentially royalty payments.

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Active government investment. Under this model the Government and the investor would become joint-investors, thereby sharing risks and responsibilities. An agreement between Government and investor (e.g. a joint venture agreement)would set out the distribution of responsibilities between the parties. Government roles could include providing the land (which could remain under Government control) and a share of labor, technical expertise and existing business contacts through its state enterprises. Under this model profits and costs would be shared, though the Government could agree to assume additional risks depending on the risk-profile and attractiveness of the investment to private investors.

Under either model, the primary targets would be medium and potentially large investors who can provide sufficient capital to make the investment viable. However, variations could also be envisaged whereby medium or large investors partner with local landholders and share inputs and risks. This would likely fit best under the passive government investment model, since under the active model risks and inputs are already shared between the Government and investor. An example of how this model has worked in Lao PDR is provided in Box 2.91

Regardless of which model is followed (or if both are) investments supported under the private investment window should be based on sound environmental and social policies (e.g. definition of sound standards, implementation of monitoring plans) and ideally require the participatory land-use planning process. As such, and land that is allocated for a given investment (whether through concession or use of state land) should have already been zoned for that purpose. Coordination can be ensured through requiring OBLEP to confirm that the land proposed has been zoned and that the investment conforms with the land-uses assigned for that land.

Box 1 Cooperative investment models in LAO PDRA number of cooperative investment models have been developed for agriculture and other land-intensive investments in Lao PDR. These models are based on distributing the following inputs between investors and local land holders:Land, labor, capital, technology and marketing.In the most common model promoted in Lao PDR land and labor are provided by the land holder, while the investor provides capital, technology and marketing (the so-called ‘2+3 model’. Here, the landholder retains the majority of the profits. A ‘1+4’ model whereby the land holder only provides land is also used, in which case the investor retains the majority of the profits. While investors tend to prefer the 1+4 model, the 2+3 model is actively promoted by the Government as the preferred model for achieving local benefits.

Table 12 sets out some of the potential arrangements that could be applied under each of these broad models.

Table 12 Summary ofproposed arrangements for a Private Sector Investment Window

Passive Government Investment Active Government InvestmentActivities Business models that can address drivers of deforestation and forest

degradationLand ownership Private concessions and leases; use of

pooled land resources of peasants/pastoralists

State land/forest; potentially also private concessions

Institutional structure for implementation

Call for proposals by the Oromia Investment Agency, which would

Call for proposals by the Oromia Investment Agency and/or OFWE or

91Information drawn from GIZ, Foreign Direct Investment (FDI) in Land in the Lao PDR (December 2009).

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facilitate obtaining suitable land and licenses and potentially enter into agreements with investors; OFWE or sectoral bureaus could provide technical support and supervision through Woreda-level structures

relevant sectoral bureau; Agreements entered into with OFWE/relevant sectoral bureau

Legal mechanism Grant or loan agreement specifying support provided, payment milestones and conditions

Joint venture or similar agreement specifying respective responsibilities, revenue sharing and risks of parties


Forestry activities: OFWE, including Regional institution, branch offices, DAsAgriculture activities: OBA, Woreda Agriculture Offices, Agriculture DAsEnergy activities: OBWME, Woreda Water, Mineral and Energy Office


Grants and/or concessional loans, depending on risk profile and IRR of investment. Disbursements based on project implementation milestones and compliance with conditions

Co-investment, with respective investment depending on inputs required (e.g. land, expertise, capital, route to market) and extent to which government can provide

Benefit sharing Majority of returns retained by investor. Government may also require payment of share of profits to Government and/or communities (in latter case especially where communities provide inputs or are otherwise affected)

Profits are shared between Government and investor according to agreement. Provision may also be made for sharing profits with communities where they provide inputs or are otherwise affected

Monitoring and Evaluation Periodic inspections carried out to ensure conditions are met and for REDD+ MRV requirements; Local monitoring by the DA

Close Government involvement ensures continuous monitoring of activities; Local monitoring by the DA

1.9.2 Cross-sectoral strategy options

Expanding and strengthening participatory land-use planningStrategy. This strategy option supports the participatory land-use planning process. Implementation will be led by OBLEP in close coordination with and technical support by OFWE and OBA.

Land-use planning is a pre-requisite for sustainable land management and therefore key element of an effective REDD+ strategy. This is particularly important in the context of underlying causes for deforestation that cause increasing pressure on land, such as demographic growth, an increasing number of unemployed and land less youth, and conflicts due to resettlements. While it cannot be directly linked to emissions reductions, participatory land-use planning is therefore essential to consider tradeoffs and synergies across different objectives of land use, such as economic development or environmental protection.

Approach. A participatory land use resource mapping process has been implemented by OBLEP as a first step for land-use planning on nearly half of land in Oromia, mainly agricultural land, while OFWE is leading the demarcation of forests (nearly complete) and woodlands (recently started).

First, this strategy option should support the development of a comprehensive and clear guideline for a participatory land-use planning process. This guideline should:

Harmonize existing procedures of OBLEP and OFWE, and develop them in more detail. Neither the OBLEP planning process nor the OFWE demarcation process follows detailed procedures and modalities. According to OFWE officials, the OFWE demarcation

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process involves community representatives and land users, if present. The OBLEP process is described in Chapter 1 and also does not follow established consultation guidelines. It is therefore not clear to what extent these processes in practice have been participatory, fair, transparent, gender-sensitive or include grievance mechanisms in the case of eviction.

Harmonize with the Draft Land-use planning Guidelines for Ethiopia92, developed by the Ministry of Agriculture with FAO support.

Integrate lessons from the SLMP’s micro level land-use planning activities. A Local Level Participatory Land-use planningmanual adopted nation-wide in 2012 can provide the basis for concepts, technical approaches, tools, detailed steps, and needs for institutional structures, arrangements and coordination at different levels of government. As the application of this manual has just started, there is no information available on lessons from the application of this manual in SLMP Phase 1. It should also be taken into account that SLMP activities are implemented based on a comprehensive community mobilization and watershed approach, which would not be the case in a standalone land-use planning process.

Link and integrate with relevant institutional structures and processes (existing and new/emerging), in particular forest management planning undertaken under PFM

Take into account the process of defining forests and land uses at the national level.

Ensure that processes and guidelines are compatible with REDD+ safeguards and, where necessary, link to emerging REDD+ safeguard systems. This should include any requirements for safeguards related to vulnerable groups, resettlement,93 transparency, stakeholder participation and grievance mechanisms.

Ensure coordination with the SESA process. Link and integrate with the land certification supported by the

SLMP, e.g. by making sure that procedures, newly established institutions, meetings and consultations are integrated.

Take into account the differences between customary and modern land use systems, in particular for pastoralist areas of Oromia.

Be sufficiently user-friendly to allow for a streamlined, scalable and replicable process.

Once the draft guideline is available, it should be piloted in selected Woredas, and revised according to any findings e.g. related to the feasibility and capacity needs. Based on these revisions a detailed plan should be developed to implement participatory land-use planning in existing forests in the region.

Institutional arrangements. The development of these guidelines should be led by the OBLEP in close coordination with OBA, OFWE under the oversight of the President’s Office.The formulation should be based on consultations with regional, Woreda, and Kebele officials, Ethiopian and international experts, community institutions and NGOs. In addition, consultation should involve donors that support various land-use planning

92Ministry of Agriculture and FAO 2013.Land-use planning Guidelines Ethiopia. Draft 2. 93 For example, within the existing OFWE demarcation process, farmers that have illegally used forest land for less than 20 years are evicted. While the process is to some extent participatory, as it involved community representatives, such procedures need to be adapted.

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initiatives in Ethiopia, in order to improve coordination. The piloting and implementation of this process would involve additional institutions as identified in the draft guidelines.

Expanding land registration and certificationStrategy.This strategy option seeks to scale up the second level certification process across the Oromia region. Tenure certification can improve land governance by establishing effective land administration frameworks at local level and thereby improving tenure security.94 It has also been seen as an important mechanism to reduce land disputes in rural areas. By incentivizing sustainable land management the improved tenure security can reduce pressure on forests, as it improves land efficiency of existing land use. For example, by reducing the risk of land reallocation, farmers are more likely to invest in intensification.

Approach.Tenure certification is currently undertaken under several different initiatives, most notably the SLMP and PFM, each described in earlier sections of this report. This strategy apply the design of the second level certification process for which implementation has recently started under the SLMP II. For state forest land, certification could be integrated in the PFM process of formalizing forest management agreements between the local community and the Government.

As a key facet of tenure security – which is itself an important enabling condition for a range of strategy options identified in this report and for sustainable land management more broadly – enhancing and integrating tenure certification is an important cross-sectoral strategy for the REDD+ Program. This requires improving on existing processes and ensuring they are integrated, or at least coordinated.

Specific approaches to enhance certification are detailed in sections 2.2.2, 2.2.3 and 3.3. To briefly summarize, the following is recommended:

Adopt clear guidelines on implementing certification, potentially through a regulation

Undertake community outreach to promote awareness on the certification process

Require (though PFM rules or guidelines) that communities under PFM initiatives are provided with certificates

Link and integrate the land certification processes for forest (PFM) and non-forest land (primarily through SLMP); these processes should also be linked to forest and woodland demarcation and to the land-use planning process.

Consider certification of trees on private farmland. While the existing certification process covers

Institutional arrangements and flow of funds will not be modified from the SLMP arrangements, described in Chapter 2, or will be integrated in the PFM strategy option (see sectoral strategy options above).

Institutional strengthening and improved forest governanceStrategy. The institutions responsible for land-use management, decision-making and enforcement in Oromia suffer from several structural weaknesses. Staff turn-over is high, resulting in a lack of experienced and

94Rahmeto, D. (2009): Land rights and tenure security: Rural land administration in Ethiopia.

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well trained work force. Generally, there is a lack of enforcement officers, combined with a lack of incentives, and insufficient equipment (see section 2). There is also a general lack of expertise around REDD+-relevant knowledge areas (accounting, MRV, safeguards). The objective of this strategy is to improve institutional capacity among forest institutions in Oromia by building on the SMLP II program and including successful REDD+ strategies from other countries.

Approach. The SMLP II program includes several strategies to improve institutional capacity at all levels, which could be expanded to support REDD+ in Oromia. In terms of building REDD+-relevant capacities, lessons can be drawn from forest governance and institutional strengthening projects implemented in other REDD+ countries.For example, in the context of supporting Guyana´s REDD+ efforts, the Inter-American Development Bank has launched an Institutional Strengthening Project with the objective to increase the technical and administrative capacity to successfully implement REDD+ (see Box 2)

Box 2Institutional Strengthening in support of Guyana´s Low Carbon Development Strategy

The Inter-American Development Bank supports Guyana’s REDD+ efforts through an Institutional Strengthening Project. One of the project´s objectives is to increase the technical and administrative capacity of the principal institutions responsible for implementing Guyana’s Low Carbon Development Strategy (LCDS), namely the Office of Climate Change (OCC), the Project Management Office (PMO) and the Guyana Forestry Commission (GFC). The conditions prior to the first disbursement were (i) the appointment of a full time, competent finance officer in the OCC; (ii) the appointment of a competent procurement officer at the GFC; (iii) the Operating Manual for the Project approved.

Besides the strengthening of the institutional capacities of the OCC, PMO, REDD-Secretariat and the GFC, institutional diagnostics of the Guyana Environmental Protection Agency (EPA) and the Guyana Geology and Mines Commission (GGMC) are financed. It included the following activities: (i) recruitment and training of 33 specialized technical and 22 administrative personnel in order to assist OCC, PMO, REDD Secretariat and GFC in fulfilling their respective mandates; (ii) outreach activities with potential forest investors; (iii) training to assist junior staff of the PMO in project management skills; (iv) office equipment for the OCC, PMO and REDD-Secretariat; and (v) a diagnostic to assess the institutional capacities of Government agencies other than OCC, PMO and GFC whose responsibilities are related to the LCDS and REDD+ activities and the needs for future institutional strengthening.

The project includes on the job training of national staff together with short-term hiring of experienced MRV experts, as previous project demonstrated that this is an effective and efficient way to build government capacity to develop and implement MRV systems. Training of the GFC is focused on creating in-house capacity to implement the MRV system while the short-term specialized consultant should guide and guarantee the delivery of the annual report on deforestation.

The results show an increase in the execution capacity of the two main execution agencies responsible for the implementation of the Program. The OCC´s capacity increased from 55%- 72% and the GFC´s capacity from 76% to 85%. This was calculated as the difference between 2011 and 2013 in the execution capacity score as measured using the methodology of the Institutional Capacity Assessment System.95

To increase capacities, it is suggested to conduct job training, increase overall staffing levels combined with short-term hiring of experienced experts. To further target the institutional strengthening efforts, it is proposed to conduct a diagnostic to assess the institutional capacities of the public agencies and Regional offices in Oromia whose responsibilities are related to REDD+ activities and to identify the needs for future institutional strengthening.96Table 13 summarizes the activities that may increase and REDD+ capacities in Oromiaoverall,building on SLMP activities.

95Inter American Development Bank (2014): Institutional Stregthening in support of Guyana’s lowcarbon development strategy (LCDC). Annex II Results Matrix. http://www.guyanareddfund.org/images/stories/pdffiles/Institutional%20Strengthening%20Project%20Document%20%28final%29.pdf (October 2014)96 The World Bank PROFOR program has developed a diagnostic tool that may be adapted to the purpose. Guyana as part of the IDB-supported program has also applied such diagnostic.

http://www.guyanareddfund.org/images/stories/pdffiles/Institutional%20Strengthening%20Project%20Document%20(final).pdf

http://www.guyanareddfund.org/images/stories/pdffiles/Institutional%20Strengthening%20Project%20Document%20(final).pdf

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Table 13 Summary of proposed activities for institutional strengthening for the REDD+ program

Relevant activities in SLMP II Associated, additional REDD+ activities Implement a trainings need assessment,including follow-up

trainings, and developing techniques to measuring the extent to which the trainings help to attain and sustain the intended results

The first stage of the process will be to carry out training of trainers (ToT) programs at the national level through organizing Regional and national workshops both for the Woreda level landscape management and Land Administration and Certification and Land Use Plan (LACLUP)

Identify REDD+ specific areas of activities through initial diagnostic

Train trainers in MRV, carbon accounting, nesting, safeguards. Train extension officers

Organizing targeted capacity building (e.g., training, induction, dissemination) in the different areas identified and required

Organize capacity building in the areas relevant for REDD+ (MRV, accounting, safeguards)

Empower formal community institutions including the task, traditional, religious and economic oriented institutions to support the implementation of sustainable watershed management through equipping them with knowledge and skill in respect to concepts, roles and responsibilities, groups and peer groups accountability and transparency

Support community institutions with documents to record and keep the process for scaling-up best practices, in the process of developing byelaws that will help the institutions to obtain legal recognitions by the relevant government offices

Train community institutions in forest and activity monitoring

Strengthen community organizations by integrating them into REDD+ monitoring

Building capacity of Regional Bureaus, project Woredas, and the National Directorate to regulate and supervise service providers, monitor land use, and collaborate with each other and other partners for effective implementation of relevant regulations regarding land use and operation of a comprehensive, current, and cost-effective land administration system across different parts of the country

Clarifying the roles and responsibilities within each institution relating to REDD+

Reduce staff turnover by improving the capacity and add resources to OBA and OBLEP

Support collaboration through inter-sectoral committee coordinated by the Oromia President’s office

Monitoring mechanisms need to be developed to ensure active participation, provision of ‘energizers’, daily recap and documentation of the practice

Monitoring should include carbon (possibly through proxies: trees), activity and safeguards

Additional REDD+-relevant activities Recruitment specialized technical and administrative personnel to add REDD+ relevant expertise Procure relevant office and field equipment (computers, vehicle, hand-held monitoring devices, phones) Address high staff turn-over: offer leadership training for managers, ineffective leadership is one of the primary reasons

for high turn-over of staff, consider increase in salary, enact reward systems

Institutional arrangement. We propose to embed the additional and REDD+-specific institutional strengthening measures in the SMLP II program. REDD+ implementation will benefit from the coordinated improvement of the capacity of specific institutions such as OBA and OBLEP in Oromia. It is proposed to strengthen the efforts within the SMLP II program to support community institutions with documents to record and keep the process for scaling-up best practices. The lessons learnt could provide valuable practices for Regional Bureaus and help to increase collaboration between institutions at different levels. The training initiatives in SLMP II should be supported as a REDD+ strategy, as it could help to improve the qualifications of employees at all levels and to select more qualified personnel. In addition, the potential for advancement could avoid high staff turn-over. We suggestsupporting the component of the SLMP II to use the print media for each level of implementation – Kebele, Woreda, region and Federal, and systematically and officially distribute information to partners. This could improve the institutional cooperation and communication between the different institutions at the regional level relevant for REDD+.

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1.10 Allocation and distribution of REDD+ finance: benefit-sharing

Benefit-sharing generally refers to the allocation of international REDD+ finance among programs and actors contributing to REDD+. REDD+ payments are expected to cover readiness costs in addition to the financing strategies that reduce emissions or increase carbon storage. Governments will have to allocate international REDD+ funds among different programs and pay for set-up and implementation costs. Additional funds should be used to create incentives for protecting forests and increase forest carbon stocks among affected stakeholders and communities.

Based on existing studies and policy priorities, the Oromia Regional Government will have to prioritize REDD+ strategies and allocate resources among those strategies. In doing so, the government should prioritize actors whose land-use behaviors will need to change in order to achieve emission reduction goals. Actors that traditionally have been good forest stewards may also feel entitled to REDD+ benefits. Considerations that will play a role in the allocation of REDD+ finance include:

Emission reduction potential Opportunity costs Political and institutional feasibility Donor preferences

The emission reduction potential of an activity is an essential factor as it has direct bearings on the results achieved and hence on results-based payments. Strategies should be prioritized that yield a maximum of emission reductions or enhance the sequestration of forest carbon stocks, at the lowest cost. Governments naturally also have to consider legal and institutional feasibility, where the support of functioning existing programs and institutions is generally preferable over setting up new structures. Finally, the allocation of finance and benefits will have to be closely coordinated with donors. Donors, whether engaging in results-based or program finance, often have clear parameters in which their funding can be applied.

The Oromia government, in cooperation with donors, will also have to decide on how to tailor and deliver benefits. This means how to structure programs to create incentives or compensation sufficient to motivate a change towards a more sustainable behavior. The question on how to deliver benefits relate to the governance and financial structures supporting the incentive programs.

This means for Oromia:

It has to take a decision on how to allocate resources among the different prioritized strategy options. In taking this decision, the Government will have to consider different sources of finance (e.g. World Bank, bilateral partners, private sector) and how they may link to the financing of different strategy options. This is particularly relevant for the private sector window (suggested as a strategy option) which should be based on an economic analysis of the different investment opportunities to ensure that funds are used effectively.

The Oromia Government will have to develop a strategy on how to finance the implementation costs for REDD+ strategies, in particular in cases where results-based payments do not include advance payments. Implementation costs cover incentives and

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program costs, e.g. OFWE receiving sufficient funding for PFM implementation and transaction costs, while communities are effectively incentivized to manage forest resources sustainably. In these cases the Government will have to decide on the allocation of benefits between OFWE and participating communities.

Within the different strategy options, areas where deforestation is particularly high should be targeted through corresponding levels of incentives. In respect to the proposed strategy options based on SLMP and PFM, Woredas or forest communities in areas with high deforestation should be prioritized. Benefits allocated to communities could take into account opportunity costs for forest protection and could also include additional allocation of funds for training and extension focused on the provision of livelihoods and economic viability of land use or forest management models, in order to provide economically viable opportunities that address drivers of deforestation.

Considering that REDD+ payments are not permanent and support only the transition to more sustainable land use models, strategies that have the potential to become financially sustainable should be targeted. Sometimes changes in the set up and delivery of REDD+ finance may increase the financial viability of REDD+ strategies. For example, giving forest communities more autonomy and ability to benefit from PFM activities, will make these schemes financially sustainable and end their continued dependence from NGOs and international finance. PFM will only be sustainable if economic incentives are generating direct returns for communities.

International experiences from a number of countries suggest that outcomes with respect to sustainable forest management are highest when communities are fully enfranchised with regards to land use and forest management rights.97 The involvement of women who are often the main producers of agricultural products can further increase program effectiveness.

Box 4Comparison of benefit sharing under the BERSMP and SLMP projects

The BERSMP and SLMP present two rather distinct concepts of benefit sharing. Under BERSMP tangible property or property rights are transferred to communities, both financial (timber and carbon revenues) and non-financial (rights to collect NTFPs). Theses represent ‘direct’ benefits that fit a more traditional concept of benefit sharing. Under the SLMP, by contrast, the improvement in livelihoods and social and ecosystem services are considered benefits. These represent more ‘indirect’ or ‘in-kind benefits. Both benefit models are relevant in establishing the Oromia REDD+ Program. Direct benefits are important for incentivizing active forest management and the achievement of results. On the other hand, indirect benefits may be more sustainable in the long-term, and are not dependent on carbon markets or donor budgets. In addition, it is worth noting that distinctions are not always clear cut. For example, the SLMP includes land certification, which in practice results in a transfer (or at least strengthening) of rights.

97 FCPF Carbon Fund Methodological Framework Discussion Paper#9: Benefit Sharing

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