Assessing farmers’ willingness to accept compensation for forest restoration in Ethiopia

Community engagement and fair compensation are critical for the success of forest restoration programs that require changes in local land use. However, empirical evidence on how rural households value the opportunity cost of converting marginal grazing lands into forestland remains limited in Ethiopia. This study addresses this gap by estimating rural households’ willingness to accept (WTA) compensation for restoration on marginal lands adjacent to the Hugumbirda forest in northern Ethiopia and by identifying the socioeconomic and institutional factors shaping these preferences. Grounded in welfare economics and stated preferences theory, the study applies a contingent valuation method using a double-bounded dichotomous choice. Primary data were collected from 250 randomly selected households through structured household surveys, complemented by focus group discussions and key informant interviews. A bivariate probit model was used to analyze determinants of households’ willingness to accept compensation for converting marginal grazing land into dryland forest for five years period. The estimated willingness to accept is 119, 661 (USD 3335.60) per hectare per year, which substantially exceeds prevailing compensation rates for land expropriation and grazing land conversion in Ethiopia, indicating existing policy instruments underestimate rural households’ opportunity cost. WTA is significantly influenced by livestock dependence, landholding size, income diversification, distance from the forest, age of the household head, and institutional participation. In conclusion, the findings highlight the need for differentiated compensation schemes, strengthened local governance, and complementary livelihood support to ensure socially equitable and cost-effective forest restoration in Ethiopia and other similar dryland contexts.

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DOI:

https://doi.org/10.1016/j.envdev.2026.101490

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