Financing sustainable watershed management in Ethiopia: exploring innovative financing strategies for nature-based solutions

Land degradation is a widespread problem in Ethiopia and a major cause of low agricultural productivity, rural poverty, and persistent food and water insecurity. In response, successive governments and developments partners have promoted sustainable land and watershed management programs since the 1970s. However, implementation challenges, unsustainable interventions, and lack of adequate financing are major constraints to tackling land degradation and ecosystem loss in Ethiopia. Combating the rate and scale of natural resources depletion requires funding far beyond that provided by government and donors. There is an urgent need to explore new sources of funding and pilot innovative mechanisms for conservation and NBS. Conservation finance must increasingly look to new strategies that can incentivize long-term, sustainable natural resources management, helping secure conditions for continued investment in ecological protection and complementary livelihood benefits. In this, Ethiopia could learn from the environmental protection experiences of other countries. The present study highlighted that in Ethiopia, finance and policy incentives are critical for scaling conservation efforts and achieving sustainability. To meet the required pace and scale, some of the key considerations and needs must be addressed:
New and diversified sources of funds from public, philanthropic, and private actors, with a greater role for private and blended finance; Long-term funding that can sustain projects from initial capitalization, to operations and maintenance (O&M), through monitoring, evaluation, and learning (MEL). Strong governance frameworks that can increase resource allocation, decision-making transparency, and partner collaboration; Community-led engagement and participation to ensure NBS deliver direct benefits to resource-dependent communities and to increase adoption and upkeep; Landscape-scale interventions that alter the trajectory of watershed and environmental degradation in a meaningful way, while advancing equitable livelihood opportunities.