WELFARE IMPACTS OF NONFARM LIVELIHOOD DIVERSIFICATION AND PARTICIPATORY FOREST MANAGEMENT IN ILU ABBA BORA ZONE, OROMIA REGION, ETHIOPIA

Abstract

The rural areas of Ethiopia are characterized by low nonfarm diversification and a high deforestation rate. Because these problems are context-specific, this research aims to analyze nonfarm livelihood diversification, participatory forest management and their impacts on the welfare of smallholder farm households in the study area. The study used cross-sectional data collected during 2020/21 production season from a sample of 380 farm households drawn randomly and proportionally from six kebeles in three districts through multistage sampling techniques. The data were analyzed using descriptive statistics and econometric models, including double hurdle, fractional logit, binary logit and propensity score matching. The nonfarm activity participants have more land, better access to market information, nonfarm training, credit and less livestock than their non-participant counterparts. The participatory forest management members have more livestock holdings, social connections, good perception towards participatory forest management, received more training and forest income than the non-members. The double hurdle model results indicate that the decision to participate in nonfarm activities is positively and significantly influenced by dependency ratio, access to market information, access to nonfarm training and credit but negatively and significantly affected by livestock ownership. Moreover, the level of nonfarm income is positively influenced by access to market information, livestock ownership and attitude towards nonfarm activities but negatively and significantly affected by the dependency ratio. The fractional logit model result reveals that economic dependence on forests is negatively and significantly affected by ownership of garden coffee, distance to the market and distance to the forest but positively and significantly influenced by ownership of private plantations and household wealth/assets. The binary logit model result shows that involvement in participatory forest management is positively and significantly influenced by forest income, training, social networks, perceived benefits and rule enforcement, while it is negatively and significantly affected by the education of the household head. The propensity score matching discloses no evidence of welfare improvement due to engagement in nonfarm livelihood diversification and participatory forest management. Based on the findings, the study suggests that the government and other stakeholders should promote access to market information, nonfarm training, credit and create awareness about the importance of xvii nonfarm activities to strengthen rural nonfarm diversification. Moreover, the expansion of garden coffee should be enhanced to minimize destructive forest dependence while the promotion of forest income and social ties should be used to improve households’ engagement in participatory forest management