modern energy sources such as petroleum fuels is increasing with increase in populationrnand economic growth. Even though the share of petroleum fuels is about 7% of the totalrnconsumption, the increasing demand for it and the associated price hike have hit thernnational economy very hard. As a net importer of petroleum, Ethiopia is highlyrnvu lnerable to price shocks and supply problems of oil in the world market. It is thereforernthe government's priority agenda for alternative fuels to partially substitute importedrnpetroleum. This is the major reason for the government to include large scalerncommercial production of bio fuels as part of the range of other development programsrnproposed to insure supply of modern energy services.rnBio fuels have a great potential for a number of countries worldwide and have a numberrnof benefits economically, environmentally and socially. On the other hand, it has createdrna large degree of controversy relating to the issues of its usage and the likelyrnconsequences such as loss of biodiversity, deforestation, increased use of fertilizers,rnwhich results in green house gas emissions, and also its effect on food security.rnThis study made a thorough investigation on the existing opportunities and threats ofrnJatropha plantation on the livelihood of rura l community, particularly OffarnWoreda,Wolaita Zone. For this purpose adequate data was generated from bothrnprimary and secondary sources using various techniques. In the primary data collectingrnprocess 100 households and other stakeholders were administered by way of surveyrnquestionnaire. The process was backed by discussion; interview and observation in thernstudy area where the author believed that factual information make the paper morernmeaningful.rnAs has been seen from the practices of bio-fuel development in the study area, almostrnall lands cultivated for Jatropha plantation are mostly farm lands and forest lands.rnProductivity in degraded land is low and as a result developers can hardly be sustainedrnMay 2010 VlIIrnin such situations. The major reason for Sun bio-fuel to leave the plantation site in Offarnis that the land is not suitable for Jatropha. This situation leads the developers to usernfarm lands which get biannual rainfall. Likewise, many out-growers use their crop landsrnfor the production of Jatropha hoping that they will get better income. As a resu lt thernprice of food crops is increasing because the supply of food crops decreased due to thernintroduction of Jatropha plantation. The inappropriate use of fertilizers and pesticidesrnare also affecting the fertility of the land though it needs further research. On the otherrnhand, Jatropha plantation has big job opportunities for those farmers who do not havernenough farmlands. Given all the uncertainties in the benefits and consequences of biornfuel development, large scale development is likely to cause harmful impacts ifrnadequate monitoring methods are not put in place