URBAN HOUSEHOLDS WILLINGNESS TO PAY FOR ELECTRICITY USE: THE CASE OF ANCHAR WOREDA, WEST HARARGHE ZONE, OROMIA, ETHIOPIA

Abstract

Electricity service is a very essential commodity for residential, social, commercial, as well as industrial and it also essential for economic growth. The objectives of this study were to assess urban households’ willingness to pay for electricity use in Anchar Woreda. In the study area unable to get continuous and high-quality electricity services. In this study, two sample kebeles that have electric access were selected purposively and 239 sample households were selected using random sampling technique. The primary data were collected by face to face interview and various documents were reviewed to get secondary data. Double bounded dichotomous choices with follow-up open-ended questions of contingent valuation methods were employed to elicit urban household’s willingness to pay for electricity use. Both descriptive and econometrics models were used for the analysis. Bivariate probit and seemingly unrelated bivariate probit models were used to identify factors affected and to estimate means the household’s willingness to pay for electricity use, respectively. The results of the bivariate probit model showed that household income and educational level had positive and significant effects while the bid price and reliability of the current electricity supply had a negatively and significant effect on willingness to pay for electricity use. On the other hand, the result of the seemingly unrelated bivariate probit model from double bounded dichotomous showed that households’ mean willingness to pay 5.966 ETB per kWh for electricity use, while the open-ended format was to be 5.42 ETB per kWh. The results of the contingent valuation method show that all of the sample household’s heads have a willingness to pay for electricity use. The Government should make efficiency plan invest on infrastructure in the power sector and improvement electricity tariffs more than paying now if they will be provided improved electricity services and other concerned bodies should give attention to better expand awareness of the electricity uses.