Ethiopia has lost 90% of its forest extent. Remnant patches in the southwest are often semi-forest coffee (SFC), a system whereby coffee is managed beneath the canopy. Here, we (1) quantify aboveground live carbon (AGC) stored by trees in SFC and other land use types in the Jimma Highlands; and (2) determine coffee farmers’ preference for canopy shade trees, and the resulting differences in carbon storage. We surveyed twenty coffee farmers and assessed thirty-one 1-ha vegetation plots across a 23.6-km transect. The most preferred shade species were Albizia gummifera, Acacia abyssinica, Millettia ferruginea and Cordia africana, which together accounted for 42% AGC in SFC and 12% in natural forests. These species had broad size class distributions, while the least preferred had scant representation in lower size classes. SFC stores significantly more AGC (61.5 ± 25.0 t ha−1, mean ± SE) than woodland, pasture and cropland, significantly less than plantation and slightly less than natural forest (82.0 ± 32.1 t ha−1). If SFC was converted to cropland, then 59.5 t ha−1 would be released, at a social cost of US$2892–4225 ha−1. Carbon-payment schemes (e.g. REDD+) may, therefore, play a role in conserving these forests and associated biodiversity and livelihoods into the future.