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This study aims to analyze farmers’ willingness to pay /WTP/ for improved irrigation water use
systems in Gumara irrigation schemes using double bounded dichotomous choice followed by open
ended questions. The study assesses the status of households’ WTP, identified factors affecting
households WTP, maximum willingness to pay /MWTP/, and quantified households’ mean and
aggregate WTP for improved irrigation water use. For this purpose, a total of 300 HHs were
selected using systematic random sampling. Seemingly unrelated bivariate probit model /SUBPM/
was applied to identify factors affecting HHs’ WTP and to estimate households’ mean WTP from
double bounded dichotomous choice, On the other hand, the Tobit model was utilized to identify
factors affecting WTP from open-ended questions. Besides some descriptive statistics such as mean,
minima, maxima, and percent were used to characterize the sample HH. The result revealed that
98.26% of HHs supported the idea of improving irrigation water use activities of constructing water
storage, allocation, and distribution service. Seemingly unrelated bivariate probit model /SUBPM/
result revealed that bid values, men-headed household, irrigating farm size, extension service
significantly affected households’ WTP in both initial and followed up bid values whereas the age of
the household head, the total annual income level of the household, credit utilization of the
household, distance from the water source and dissatisfaction with the current irrigation water use
system were found to have a significant influence on the probability of willingness to pay in the first
bid response. The mean and aggregate WTP of the household was ETB3802.8 per year per person
per hectare, ETB 6644257.2 per year respectively. On the other hand, the Tobit model result
indicated level of education, initial bid values, extension contact, farm distance from the irrigation
water source, irrigated farm size of household, men-headed household, age of household head were
the factors that influence the households’ MWTP. The Mean and aggregate WTP was also derived
from OE question be ETB 3704 per year per person per hectare, ETB 6,472,327.68 per year
respectively. Therefore, policymakers should be informed that HHs have a high WTP for improved
irrigation water use and consider the important variables identified above in designing policies
related to improvement in irrigation water use.
Keywords: Aggregate willingness to pay, double bounded dichotomous choice, MWTP, and SUBPM. |
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