Planning for ecosystem services compensation in the central highlands of Ethiopia.

This article focuses on the potential of payments for ecosystem services (PES) as a market-based instrument to support sustainable watershed management in the upper Akaki catchment of central Ethiopia, which is critical for Addis Ababa’s water supply. It identifies sellable ecosystem services such as improved water quality and reduced sedimentation, and estimates that a modest increase in domestic water tariffs could generate significant funds to compensate upstream smallholder farmers for conservation-related opportunity costs. The study highlights the importance of legal frameworks, stakeholder collaboration—including government agencies, community organizations, and private actors—and cost–benefit analyses to design effective PES schemes. Implementing such incentive-based approaches is presented as a strategy to mitigate watershed degradation, enhance biodiversity, support local livelihoods, and contribute to meeting global biodiversity targets.