Abstract:
As scarcity of irrigation water is rising, pricing of agricultural water and cost recovery
can play a significant role in promoting water use efficiency. Hence, the main objective of
this study was to analyze farmers’ willingness to pay for improved irrigation water use,
and identify its determinants using the contingent valuation method. Both primary and
secondary data were used to achieve the objective. Cross sectional data were collected
from 251 households using a two-stage sampling technique (purposive and random
sampling techniques) from four kebeles of Woliso District through a semi-structured
questionnaire. The result of the study showed that 92.43% of the households were willing
to pay for improved irrigation water use and only 7.57% were not willing to pay. The mean
willingness to pay for the use of improved irrigation water from the double bounded
dichotomous question of Seemingly Unrelated Bivariate Probit model was Birr 575.23 per
year per timad (0.25 ha). On the other hand, the mean willingness to pay from open-ended
questions was Birr 562.25 per year per timad (0.25 ha). The result from the Tobit model
revealed that education level of the household head, family size, irrigable land size,
number of oxen owned, total annual income, experience in irrigated farming,
dissatisfaction with existing irrigation use, credit utilization and cash crops growing are
important variables that significantly and positively affect farm households’ WTP for the
improvement of the existing irrigation use whereas initial bid was found to have a negative
and significant effect on the households' probability of accepting offered bid. Since these
variables are identified as major determinants of willingness to pay for improved
irrigation water use, policy makers and government should take into account these socioeconomic
and demographic characteristics in designing the improved irrigation water
supply system for the users
