The spread of conflicts, wars and natural disasters engender millions of refugees all over the world. The situation is particularly critical in the Horn of Africa where no sustainable solution has been found for the root causes of the problem. The Republic of Somalia, which gained independence in 1960, has been far from secure foundation and a hot bed for humanitarian crises. Thus, the spillover effects of the country''s internal problems have; among others, manifested themselves in refugee and refugee related crises. Ethiopia, which shares the largest border with Somalia have been a victim of these crises since 1988. Refugees have been associated with environmental degradation, water depletion, the spread of HIV/AIDS, higher levels of crime, including theft, drug and small arms trafficking, illegal trade, ambush and banditry. Moreover, Camps become safe havens for insurgents, transnational transfer of arms, recruitment of soldiers and spreading of ideologies conducive to conflicts. Generally, the influxes of Somali refugees have a significant impact on the political, social, economic and environmental aspects of the local community in particular and the Ethiopian state at large.