Poverty, hunger and demand for agricultural land have driven local communities to overexploit forest resources throughout Ethiopia. Forests surrounding the township of Humbo were largely destroyed by the late 1960s. In 2004, World Vision Australia and World Vision Ethiopia identified forestry-based carbon sequestration as a potential means to stimulate community development while engaging in environmental restoration. After two years of consultation, planning and negotiations, the Humbo Community-based Natural Regeneration Project began implementation--the Ethiopian organization's first carbon sequestration initiative. The Humbo Project assists communities affected by environmental degradation including loss of biodiversity, soil erosion and flooding with an opportunity to benefit from carbon markets while reducing poverty and restoring the local agroecosystem. Involving the regeneration of 2,728 ha of degraded native forests, it brings social, economic and ecological benefits--facilitating adaptation to a changing climate and generating temporary certified emissions reductions (tCERs) under the Clean Development Mechanism. A key feature of the project has been facilitating communities to embrace new techniques and take responsibility for large-scale environmental change, most importantly involving Farmer Managed Natural Regeneration (FMNR). This technique is low-cost, replicable, and provides direct benefits within a short time. Communities were able to harvest fodder and firewood within a year of project initiation and wild fruits and other non-timber forest products within three years. Farmers are using agroforestry for both environmental restoration and income generation. Establishment of user rights and local cooperatives has generated community ownership and enthusiasm for this project--empowering the community to more sustainably manage their communal lands.