Journal of Economics and Sustainable Development www.iiste.org ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.5, No.22, 2014 133 Livelihood Impact of Carbon Sequestration on Local Communities: A Case of Ethiopia Nature Regeneration Project in Wolaita, Ethiopia Alula Tafesse Shirko Msc, Wolaita Sodo University, P.O.Box 138, Wolaita Sodo, Ethiopia Email: alula.tafesse@yahoo.com ACKNOWLEDGEMENTS First of all I wish to thank the lord almighty for giving me strength to carry on even in difficulties. My heartfelt gratitude goes to my main advisor Negussie Semie(PhD) for his scientific guidance, patience and untiring support during the research work. LIST OF ABBREVIATIONS AND ACRONYMS CDM Clean Development Mechanism ETB JFM Ethiopia Birr Joint Forest Management KAs Kebeles Administration NTFP Non Timber Forest Products SNNPRS Southern Nations Nationalities and Peoples Regional State THPs Traditional Health Practitioners TLU Tropical Livestock Unit UNFCC United Nations Framework Convention on Climate Change Abstract A number of carbon sequestration projects were being implemented worldwide to address environmental and economic issues simultaneously. This research paper describes research concerning a carbon sequestration project in Humbo district in Ethiopia. The central research question is: Do the project activities result in improved socio economic aspects of small holder farmers in the area? Questionnaire-based household surveys were the main source of data. Data was collected from 130 randomly selected households by using probability proportional to household size. The key results are as follows.1) Participant households used fodder, fuel wood, medicinal plants, honey and wax forest resources and financial benefit from the project for their livelihood and forgone charcoal, fuel wood, grazing land and poles. 2) Project participation is among determinants of household income. 3) Participant households were different in household head age, family size, per capita expenditures for clothing and footwear as a proxy of per capita income and the numbers of main meals including animal protein (i.e. poultry and beef) during the last seven days taken by participant households were higher than non participant households. INTRODUCTION Background Dry tropical forest is the most widely distributed habitat type in the tropics covering 42% of all tropical vegetation (Jaramillo et al, 2003). Dry forests typically have lower biomass densities than moist or wet forests, but store a significant amount of biomass carbon because they cover large areas. These ecosystems have become increasingly threatened by human intervention: a greater proportion of dry forests have been degraded or cleared than moist forests (Robertson et al., 2004; Jaramillo et al., 2003). The driving forces to this are poverty, hunger and increasing demand for agricultural land that leads local communities to over‐exploit the forest resources. Forests surrounding Humbo, located 430 kilometers south‐west of the Ethiopian capital, Addis, were largely destroyed by the late 1960s and across Ethiopia less than four percent of native forests remained recently (Secretariat of the Convention on Biological Diversity, 2008). It is widely accepted that smallholder, community‐based projects can help to alleviate rural poverty (Tipper, 2002). Based on this understanding, a program of community agroforestry employing a process of community managed natural regeneration project was established in Humbo with a focus on Carbon Sequestration to contribute to global climate change reduction activities through concerns on local community livelihood options. This study examined the case of Humbo project to discuss the contention that forest carbon sequestration related project can significantly improved the economic and social aspects of local communities and direct linkages between the carbon protection and development activities.