Farmers‟ Willingness to Pay for Improved Irrigation Water Use: The Case of Meskan District, Guraghe Zone, Southern Ethiopia

Abstract

The economic value of water is essential for rational allocation of scarce water resource as its availability has become a problem in many countries of the world. Even though there are four major water resources which could be suitable for irrigation purpose in Meskan district, there is no well-constructed irrigation scheme and regulation. However, there was demand for improved and sustained irrigation service in the area. The study was conducted in Meskan district, Guraghe Zone, Southern Ethiopia with specific objectives; to estimate farmers’ willingness to pay for improved irrigation water use and to identify determinants of farmers’ willingness to pay for improved irrigation water use. The study was based on primary data collected from 210 sample households selected through two-stage sampling technique while it was also supplemented by secondary data. Double bounded dichotomous choices with follow up open ended questions of contingent valuation methods were employed to elicit farmers´ willingness to pay for improved irrigation water use. Both descriptive and econometrics models were used for the analysis. Multiple linear regressions model was used to identify the major determinants of farmers’ willingness to pay for improved irrigation water use. Whereas seemingly unrelated bivariate probit model was used to estimate the mean willingness to pay for improved irrigation water use. The result of multiple linear regressions showed that households’ sex, age, educational level, credit use, distance to market and irrigation scheme, and dissatisfaction with the existing irrigation scheme significantly affected the willingness to pay for improved irrigation water use. On the other hand, the result of the seemingly unrelated bivariate probit model from double bounded dichotomous showed that households’ mean annual willingness to pay amount was Birr 3317.84 per hectare of irrigable land, while open ended format was to be 2906.20 birr per hectare. The respective total aggregate value of improved irrigation water use in the study varies from 33,421,300 birr in open ended to 38,155,160 birr from double bound. The result of the contingent valuation survey revealed that all of the sample household heads have shown their willingness to pay for improved irrigation water use. Therefore, as the result of the study suggests good indicator for the concerned body to invest for expanding the current irrigation projects and introducing proper irrigation water pricing, policy and program intervention designed to implement improved irrigation water supply in the district should take in to account factors determining households' willingness to pay