Browsing by Author "Mekonnen Alemu"

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    Analysis of Market Power and Competitiveness of Ethiopian Insurance Industry
    (Addis Ababa University, 2012-06) Beyene Shimelis; Mekonnen Alemu
    Competition in the economy can create a positive prospect for economic growth and development of a country. Competition in Ethiopian financial sector in general and insurance industry in particular should be strong enough for enhancement of efficiency, provision of better service to customers, greater innovation and lower prices thus resulting in improvement of consumers welfare and overall economic growth of the country. Since the introduction of modern financial sector in Ethiopia in 1905, the market structure of insurance industry in Ethiopia is characterized by competition and monopoly depending on the financial policies issued by the ruling governments of the country. This paper studies the existence of market power in the Ethiopian insurance industry during 2001-2010, using non-structural measures of market power such as market share and Lerner index. And hence insurance market concentration is measured by using Herfindahl-Hirschman Index (HHI) and four largest insurers’ concentration ratio (CR). These measures suggest the existence of market power in insurance industry of Ethiopia and the sector was dominated by the single state owned Ethiopian Insurance Corporation (EIC). The major source of dominance tends towards government regulation that is prohibition of foreign investors in financial sector of the country in general and insurance sector in particular. The study also reveals that Ethiopian insurance market is highly concentrated and the top four insurers holds above 70% of the market share in terms of gross premium, total asset and capital. Key words: market power, market concentration, market dominance, entry barrier.
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    Analysis of the Determinants of Households' Willingness to Pay and Demand for Improved Water Services.: A Contingent Valuation Study in Harar Town (Ethiopia)
    (A.A.U, 1999-05) Bekele Genanew; Mekonnen Alemu
    In developing countries, Millions of people are facing daily problems In obtaining water for domestic purposes.recognizing the harm to health economic productivity, And quality of living standard tat can result from inadequate water supplies, governments have been establishing policy and planning to correct the problem. the implementation of such policy decisions should focus on demand sides opposed to the traditional focus on supply side, Pricing mechanisms and regulatory measures that have received much less attention. since need to fill the gap of information on the demand side (Such as household socioeconomic and demographic characteristics and characteristics of the existing and new supplies of water) for policy purpose is timely, researching the demand side in order to understand the household improved water demand behavior and what factors determine their illingness to pay verses their affordability for upgraded water service is crutial. this article, Therefore, Tries to asses the determinants of households willingness to pay and demand for improved water services in harar town which will enable policy makers to design an appropriate water pricing structure and viable cost recovery policies lature of the primary cross-sectional data that we got from our contingent valuation survey in the town, this study used only the direct method to estimate households' willingness to pay for ordered probit models. the study shows that the methodology produced some Illuminating Insights Into the relevant information on household willingness to pay, Which is shown to vary significantly according to household level of income, education level and sex of the household head, Starting point of the bidding game, location of study site, main source o water for the household and perceived quality of the existing water. the study also reveals that the mean willingness to pay (Wtp) for private piped improved water connection is more than 15 times the exiting authority's tariff rate. the tariffs for improved water can be increased substantially with unconstrained supply before insignificant numbers of households would choose not to connect to an improved system. The revenue and households' Welfare gains in changing the existing policy (Low tariff with few unreliable private service) to a new policy (Higher tariff with more and Improved private connections) can be huge .
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    Analyzing Household Vulnerability to Climate Change and Adaptation Options: Evidence from Adama and Lume Woredas, Ethiopia.
    (A.A.U, 2010-06) Taye Bedaso; Mekonnen Alemu
    The study assesses the extent of household vulnerability to climate change by applying Vulnerability as Expected Poverty (fIEP) approach. The VEP approach is based on estimating the probability that a given shock or set of shocks moves household consumption below poverty line or force them to stay there if they are already below poverty line. The data is collected from rural farming households in Adama and Lume Woredas of East Shewa zone during 2009 production season. The result shows that about 68 percent of farmers are vulnerable to poverty, while 62 percent of them are observed to be poor. A bout 52 percent of the households are vulnerable to poverty due to low consumption prospect and 16 percent of them are vulnerable due to high consumption volatility. The study also indicates that change of rainfall and temperature from long run averages, frequency of drought and soil characteristics are major reasons for farmers' vulnerability to poverty. On the other hand, education of head, livestock and land size, irrigation size, quantity of fertilizer used and number of extension contacts are found to reduce household vulnerability to climate change. Proximity to facilities such as road and market also reduces farmers' vulnerability. But, higher family size and exposure to non climatic shocks such as death of household head and input price rise increase vulnerability. On top of that, the estimated incidence of poverty is less than the fraction of population that is vulnerable to poverty. This calls for differential intervention for poverty reduction and poverty prevention, in addition to consumption stabilization and increasing measures. On the other hand expansion of extension services, irrigation practices, non farm income opportunities, improving farmers' access to fertilizer use and increasing household capacity to cope or mitigate shocks and risks are important intervention areas to reduce vulnerability.
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    Determinants of Private Saving in Ethiopia
    (Addis Ababa University, 2016-06) Wodamo Ayele; Mekonnen Alemu
    Saving is an important instrument to enhance economic growth by providing sufficient funds for investors. However, empirical literature that relates to mobilizing savings in Ethiopia is in broad aggregate forms and almost no work is conducted on determinants of private savings in Ethiopia. For this reason this study empirically investigates the determinants of private saving in Ethiopia by using annual data over the period 1980-2015. Accordingly to identify the factors that affect private savings in Ethiopia the researcher employs ordinary least squaresand error correction models fitted for time series data. The variables examined are real gross domestic product, inflation, government fiscal balance, real deposit rates, current account deficit and financial development indicators. The results indicate that private saving in Ethiopia is a response for variables, real gross domestic product, government fiscal balances, real deposit rate and financial developments but it is not responsive to inflation and current account deficit in the long run. In addition to this granger causality tests indicate that economic growth causes privates savings in Ethiopia which is in line with Keynesian theory, that it is higher economic growth that leads to higher saving.Finally, the study recommends that policy makers or government work to improve income levels of society to address adverse effects on private saving. Likewise the study suggests that fiscal policy should be designed and implemented in a prudent way such that it cannot lead to crowding out private saving
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    Determinants of Voluntary Environmentally Sound Technology Adoption and an Assessment of Dynamic Inconsistency in Adoption Decision in Industry in Ethiopia
    (A.A.U, 2010-05) Tafesse Bernabas; Mekonnen Alemu
    The assessment of the determinants of the adoption of ESTs and the reasons for not adopting and continuity are explored in this paper. Towards the first question, four dimensions of possible determinants were identified. The variables that came out as most significant in the adoption decision are the ones pertaining to the plant characteristics of the firm. Specifically, the variables in this category are: the environmental commitment of the firm, the form of ownership of the firm as either foreigner owned or not and its arrangement as being either public or private, the technological capability of the firm, the number of years it has been in operation, and the number of employees. This underlines that the diversity of the firms plays a role in determining the EST option they adopt and thus imply the need for environmental policy to account for the heterogeneity of the firms in its design and implementation. This was done using the ordered probit model following the hierarchical nature of the response variables. Towards the second question, the heckman pro bit selection model is used and the results explained in the principal agent framework suggest that the form of management, among other things, does come into play in determining whether the firm continues with ESTs or not once they are adopted. This suggests that incentives or more generally the efficiency of mechanism design determines the effective implementation of a venture embarked upon despite the saving potential promised, and in cases savings earned, following the adoption of the ESTs. This implies the need for environmental policy to take into consideration internal management issues for effective realization of the enviroru11ental policy objectives drawn.
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    Determinants of Voluntary Environmentally Sound Technology Adoption and an Assessment of Dynamic Inconsistency in Adoption Decision in Industry in Ethiopia
    (Addis Ababa University, 2010-06) Tafesse Bernabas; Mekonnen Alemu
    The assessment of the determinants of the adoption of ESTs and the reasons for not adopting and continuity are explored in this paper. Towards the first question, four dimensions of possible determinants were identified. The variables that came out as most significant in the adoption decision are the ones pertaining to the plant characteristics of the firm. Specifically, the variables in this category are: the environmental commitment of the firm, the form of ownership of the firm as either foreigner owned or not and its arrangement as being either public or private, the technological capability of the firm, the number of years it has been in operation, and the number of employees. This underlines that the diversity of the firms plays a role in determining the EST option they adopt and thus imply the need for environmental policy to account for the heterogeneity of the firms in its design and implementation. This was done using the ordered probit model following the hierarchical nature of the response variables. Towards the second question, the heckman probit selection model is used and the results explained in the principal agent framework suggest that the form of management, among other things, does come into play in determining whether the firm continues with ESTs or not once they are adopted. This suggests that incentives or more generally the efficiency of mechanism design determines the effective implementation of a venture embarked upon despite the saving potential promised, and in cases savings earned, following the adoption of the ESTs. This implies the need for environmental policy to take into consideration internal management issues for effective realization of the environmental policy objectives drawn
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    Economic Analysis of Coffee Certification Scheme in Ethiopia: A Case Study from Oromia Coffee Farmers Cooperative Union
    (A.A.U, 2009-06) Jotte Abebe; Mekonnen Alemu
    This paper looks into the economic analysis of coffee certification scheme in Ethiopia.The study examines and compares per hectare productivity difference between farmers growing organic/ fair trade certified coffee and conventional coffee. Household survey data, conducted in four kebeles at Bullie Horra district targeting Killenso Mokkonisa coffee farmers' cooperative, are reported and analyzed using instrumental variables (two-stage least squares) regression and standard linear difference-in-difference econometric model. In the analysis we find that, controlling for a range of factors, there likely are positive productivity effects per hectare for the treatment group but not for the control group owing to the scheme of coffee certification. This study will have policy implications on how best to design programs to link coffee farmers with the international markets
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    Household's Willingness to Pay for Improved Waste Management: The Case of Mekele City, Tigray Region.
    (A.A.U, 2009-01) Hagos Dagnew; Mekonnen Alemu
    The generation of solid waste has become an increasing environmental and public health problem everywhere in the world, particularly in developing countries. In Mekelle city, solid waste management is mainly provided by the municipality and it has been measured and evaluated always based on the role and performance of the service provider (supplier of the service) while demand side i.e. Willingness To Pay (WTP) of the residents is ignored. Therefore, the aim of this paper is to estimate the household's willingness to pay for one aspect of better environmental quality (improved solid waste management) in Mekelle city. [n this study, contingent valuation method (C VM) is used as a method of valuation. The empirical models adopted by this study to determine the factors that influence WTP of household heads for improved solid waste management are, To bit and Porbit models. The results of the Probit model revealed that probability of WTP of households for improved solid waste management are significantly related to three explanatory variables and all of the signs of these three variable coefficients (coefficients of income, awareness of environmental quality and age) make intuitive sense and significant at 1 %, 5% and 5% respectively. [n the To bit model, 8 out of 12 variables have statistically significant impact on the amount of WTP for improved solid waste management system. The current payment for sanitation is below the WTP of the residents and the mean WTP found in this study can be used for decision making in determining the service Fee for improved solid waste management.
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    Household's Willingness to Pay for Solid Waste Management Options: The Case of Yekka Sub - City, Addis Abaha, Ethiopia
    (A.A.U, 2007-07) Tarfasa Solomon; Mekonnen Alemu
    A major implication of the pattern of urbanization and rapid population growth in developing countries, like Ethiopia, is expanding adequate infrastructures, waste management service being one of them. However, it seems that this has not been the case in developing countries in general and in Ethiopia in particular. There is a range of solid waste problems, including inadequate waste collection systems, open dumping and other forms of improper final disposal resulting in environmental pollution. The primary objective of this study is to conduct an economic study on demand for municipal solid waste management (SWM) improvements in Yekka-sub city, Addis Ababa, so that the adverse effects of the solid waste in terms of economic, health and environmental impacts may be minimized. In this study an environmental valuation technique - Choice modeling (CM) was employed on 242 randomly selected urban households in Yekka-sub city to estimate the economic values of household's preferences for improved solid waste management service. This study has obtained estimates of marginal values of improved SWM service attributes and households' WTP for improved MSW management services. Households on average are willing to pay an additional charge of Birr 12.95 per month for a change in collection frequency form once per week to twice per week or from twice per week to thrice, cleric paribus, and that households' net benefit per unit of waste is higher when there is sorting Conspired with the situation when there is no sorting since they pay less per unit of total waste ((i. e. both the recyclable and the non-recyclable solid waste) when there is sorting relative to what they pay for total waste when there is no sorting, ceteris paribus. In conclusion, households are willing to pay a positive amount of 1110ncy for solid waste management service, which implies that any policy to bring about efficient solid waste management service in an area needs to include the demand side information should it yield the needed environmental impacts while yielding the needed environmental impacts.
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    Households’ Willingness to Pay for Environmental Practices: An Implication of Eco-Labeling for Leather Products in Ethiopia
    (Addis Ababa University, 2007-01) Gebreselassie Solomon; Mekonnen Alemu
    Eco-labels are becoming important market based instruments to influence the behavior of consumers and industry in favor of environmentally-friendly products. This study examined households’ willingness to pay (WTP) a premium for environmental attributes of leather products in a hypothetical market. An eco-labeling scheme is used to differentiate leather products. Data was collected using two-stage sampling. First purposive sampling is used to select two kebeles based on their relative distance from the pollution source and polluted river. Next 300 households are selected using systematic random sampling. Descriptive statistics and an ordered probit model are used to analyse the data set. The result revealed that the majority of the households agreed that environmental pollution caused by conventional leather processing is a problem to the livelihood of the people. Besides, almost all respondents acknowledged the importance of the shift of production techniques from conventional to environmentally friendly production techniques. With regard to eco-labeling scheme, almost all respondents supported the programme. About 75% of the respondents are willing to pay a premium for environmental practices. The results suggest that monthly income, family size and location significantly affect willingness to pay. Finally, the findings in this study showed that there is a market for ecolabeled leather products. Therefore eco-labeling could be used as an important market instrument to complement mandatory laws and regulation for environmental protection.
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    Household’s Willingness to Pay for Solid Waste Management Options: The Case of Yekka Sub City, Addis Ababa,Ethiopia
    (Addis Ababa University, 2007-07) Tarfasa Solomon; Mekonnen Alemu
    A major implication of the pattern of urbanization and rapid population growth in developing countries, like Ethiopia, is expanding adequate infrastructures, waste management service being one of them. However, it seems that this has not been the case in developing countries in general and in Ethiopia in particular. There is a range of solid waste problems, including inadequate waste collection systems, open dumping and other forms of improper final disposal resulting in environmental pollution. The primary objective of this study is to conduct an economic study on demand for municipal solid waste management (SWM) improvements in Yekka-sub city, Addis Ababa, so that the adverse effects of the solid waste in terms of economic, health and environmental impacts may be minimized. In this study an environmental valuation technique – Choice modeling (CM) was employed on 242 randomly selected urban households in Yekka-sub city to estimate the economic values of household’s preferences for improved solid waste management service. This study has obtained estimates of marginal values of improved SWM service attributes and households’ WTP for improved MSW management services. Households on average are willing to pay an additional charge of Birr 12.95 per month for a change in collection frequency form once per week to twice per week or from twice per week to thrice, ceteris paribus, and that households’ net benefit per unit of waste is higher when there is sorting compared with the situation when there is no sorting since they pay less per unit of total waste ((i.e. both the recyclable and the non-recyclable solid waste) when there is sorting relative to what they pay for total waste when there is no sorting, ceteris paribus. In conclusion, households are willing to pay a positive amount of money for solid waste management service, which implies that any policy to bring about efficient solid waste management service in an area needs to include the demand side information should it yield the needed environmental impacts while yielding the needed environmental impacts.
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    The Impact of Foreign Direct Investment on Economic Growth: The Case of Ethiopia
    (2016-06) Dessie Betelhem; Mekonnen Alemu
    This paper analyses the impact of foreign direct investment on the economic growth of Ethiopia using Vector Error Correction Model over the period 1981 to 2015. First the study examined the individual growth impact of foreign direct investment. The empirical finding revealed that foreign direct investment has negative significant effect on economic growth in the long run but insignificant effect in the short run. The study examined the causal relationship between foreign direct investment and per capita gross domestic product by using Pairwise Granger causality test. The Pairwise Granger causality test showsthe existence of causal unidirectional relationship from foreign direct investment to per capita gross domestic product. The study also investigates the impact of other macroeconomic variables on per capita gross domestic product. External debt and real effective exchange rate are found to have negative significant effect on per capita gross domestic product in the short run. In the short run, the impact of gross domestic saving on per capita gross domestic product is found to be positive. As that of the first model here also foreign direct investment has negative significant impact on economic growth. The tax incentives provided to foreign investors and the misuse of tax incentives by the investors can be the possible reasons for the negative relationship between foreign direct investment and gross domestic product.
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    The Impact of Government Sectoral Expenditure on Economic Growth in Ethiopia: With a Particular focus on Agriculture, Defense, Education and Health Sectors
    (Addis Ababa University, 2014-06) Berihun Bazezew; Mekonnen Alemu
    This paper investigates the growth impact of government sectoral expenditure in Ethiopia over the period from 1975 to 2013, with a particular focus on sectoral expenditures on education, health, agriculture and defense, by estimating a multivariate co-integration and error correction model to examine the marginal effect of expenditure on each sector on economic growth. The study finds that government spending on education has a positive impact on economic growth in the long-run but an insignificant impact in the short-run. Spending on defense has a negative and significant impact on economic growth both in the long-run and in the short-run. Government spending on agriculture is negatively correlated to growth in the long-run but is insignificant in the short-run. Spending on health and the effect of consumer price index is found to be insignificant both in the long-run and the short-run. Thus, the results suggest that the allocation of government expenditure towards the education sector should be favored in order to enhance sustainable economic growth
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    Impact of Population Growth on the Ethiopian Economic Performance
    (Addis Ababa University, 2014-06) Alemu Kassahun; Mekonnen Alemu
    Ethiopia is the second populous country in Africa while it is one of the Sub-Saharan Countries trapped by poverty. Her population is increasing at an average rate of 2.5%. Thus the objective of this study to examine whether population growth has its own bad effects on the Ethiopian economy Population may be considered a major factor for the abject poverty trap of the country in the period 1970/71-1990/91 since per capita income was very low. Although there has been registered improvement of economic performance since 2004/05, population growth has been still high though the rate has been decreasing. Econometric analysis has shown that population growth has had a significant negative impact in the short run but that of positive impact in the long run on the economic performance of the country. Thus realisticpopulation policies should be designed and implemented to adjust/control high rate of population growth and make it a beneficial resource for the economy. For instance minimizing high birth rate can be an effective policy instrument since high birth rate can be a burden on the economy. Moreover, further research should be done to identify productivity of population.
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    The Impact of Public Final Consumption and Investment Spending on Economic Growth in Ethiopia: An Application of Vector Error Correction Model
    (Addis Ababa University, 2014-06) Abdulaziz Adnan; Mekonnen Alemu
    The objective of this paper was to investigate the impact of public sector investment and final consumption expenditure on economic growth using time series data on Ethiopia (for 54 years). In addition, it intended to explore the pattern and relative impact of public and private consumption and investment decision on the economy. I formulate a simple growth accounting model, adapting Ram (1986) in which total government expenditure is disaggregated into expenditure on (physical) investment and final consumption. The analysis is based on time series data covering the period 1960-2014. The study applies the augmented Dickey Fuller test for stationarity and Johansson co-integration test used to determine whether there is a long run relationship between variables. Vector error correction model is applied to estimate both short and long run models related with Real Gross Domestic Product of Ethiopia. The empirical results suggest that in the long run government investments and final consumption has positive and negative effect on economic growth, respectively. Similarly, private investment, private final consumption and primary education enrolment rate have positive effects on economic growth. However, all variables included in the model except government consumption do not have an impact on economic growth in the short run
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    Impacts of Climate Change, Variability and Adaptation Strategies on Household Food Security in Southern Ethiopia
    (Addis Ababa University, 2014-06) Ginbo Tsegaye; Mekonnen Alemu
    This study presents an empirical investigation of climate change, variability and adaptation strategies’ impacts on households’ multidimensional food security in rural villages of southern Ethiopia. For this purpose, Two-stage Least Square estimation framework is employed based on cross-sectional data collected from 148 households. Food security index constructed from various indicators representing four dimensions of food security indicates substantial food insecurity problem among sample households. Empirical results reveal that climate change and variability affect households’ food security. Higher temperature and unfavorable rainfall conditions have significant negative impact on household food security. Results also show that education, access to agricultural extension, credit, climate information and market significantly enhance adaptation decisions. Moreover, results confirm that climate adaptation strategies namely soil and water conservation, modern varieties and crop diversification are effective in mitigating climatic risks and ensuring household food security. Consequently, programs enhancing households’ skills, awareness, adaptations decision and farm yield would be helpful.
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    Implications of Climate Change and Adaptation Strategies for Household Food Security: Evidence from Panel Data in the Nile Basin of Ethiopia
    (Addis Ababa University, 2016-11) Seifemichael Robel; Mekonnen Alemu
    This study identifies factors that determine decision on adoption of individual/combinations of climate change adaptation strategies. It also investigates whether the type and combination of climate change adaptation practices adopted have significant effect on food security of farm households' and analyzes the possible differences between adopters and non-adopters. The study uses a multinomial endogenous switching regression model of farmers' choice of individual/combinations of climate change adaptation strategies and their impacts on household food security index using panel data collected from 909 farm households in the Nile Basin of Ethiopia. The study has the following three main findings. First, factors that determine the adoption decisions vary across individual/packages of adaptation practices under investigation. Secondly, adoption of climate change adaptation strategies improves the food security of farm households and the highest improvement is achieved when adaptation strategies are adopted in combination rather than in isolation. Lastly, those households who adopt have the advantage of becoming food secure than the non-adopter farm household. Moreover, for farm households who applied the adaptation strategies analyzed, except application of crop rotation in isolation, their food security improved and the likelihood of being food secure increased as farm households adopt practices jointly in their farm plot than adopting in isolation or not adopting at all. Hence, policy makers and other stakeholders should work by promoting the use of combinations of climate change adaptation technologies and also providing households with all the necessary inputs to enhance household food security in the study area. Key Words: Food Security Index, multinomial endogenous switching, Climate Change Adaptation Strategies
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    Market Share, Concentration and Profitability of Ethiopian Leather Industry
    (Addis Ababa University, 2012-06) Yeshambel Kumlachew; Mekonnen Alemu
    Market structure is determined by the entry and exit decisions of individual producers. These decisions are driven by past profit rate and expectations of future profits which, in turn, depend on the nature of competition within the market generally speaking. Profitability is therefore directly dependent on the market structure that the firm has been operating in the defined geographic and product market. There are two influential industrial organization hypotheses that deal with relation between market structure and firms performance. The structure-conduct-performance paradigm believed that firms’ performance is highly related with the existence of concentration which directly leads to collusion among firms in the market and create monopoly power in which all the firms in the industry get monopoly profit. On the other hand, the efficiency hypotheses suggests that firms’ performance is determined by efficiency gain in the market which minimizes costs and expands firms’ market share so that firm with high market share (efficient) will get market power and profit rate to each firm depends on their performance. Based on these classical theories the study examines whether the SCP paradigm or the efficiency structure paradigm determines firm’s performance. The study finds that the structural conduct approach holds true in Ethiopian leather industry. That means, there exists monopoly power in the industry. The concentration ratio proxy for monopoly is significant while the efficiency variable explained by the market share is insignificant. The barrier of market entry and exit is also significant which sustains the monopoly power by avoiding contestability in the domestic market. However the ten year trend of concentration dynamics has been decreasing from 66% to 33%. Thus, if this trend continues the monopoly power may not exist in the near future.
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    Measuring Economic Value of TIS Abay Waterfalls: Comparison of Contingent Valuation and Travel Cost Methods
    (A.A.U, 2000-06) Fanta Terfe; Mekonnen Alemu
    One aspect of sustainable development is the need to retain an "acceptable" level of environmental quality and to conserve nature's assets. Environmental economics literature has therefore developed to encompass a range of monetary valuation methods and techniques designed to value the 5 pectrum of environmental goods and services. The task of monetary valuation of the environment is made more complex by a number of problems. These include the fact that often environmental effects will have no natural units of measurement, and even where physical indices are available these must be related to individual perceptions. Besides, due to their externality and public good characteristics environmental effects do not often directly show up in markets. Extensive use of monetary valuation methods combined with technical improvements in techniques have resulted a large literature that consists a wide range of valuation case studies. There is now a wide range of application of the contingent valuation method (CVM) in developing countries. Most of the studies are concerned with fresh water investments and sanitation However, there are fewer studies that look at forest values, outdoor recreation, sanctuaries and parks. Of course, few limited studies have applied different techniques in valuing different environmental resources. This indicates that both in developed and developing countries more emphasis has been given to the reliability of contingent valuation method (CVM) . This study has attempted to estimate recreation value of Tis Abay Water Falls which is considered nature based tourist attraction area by applying contingent valuation method (CVM) and the travel cost approach(TCM) and evaluated the extent whether different techniques for valuing a given environmental charge will produce similar results. The conflicting interest around Tis A bay Water Falls resource is the background for this study Tis Abay JJ Hydro Power Project is being implemented with the objective of increasing the supply of energy, where as the Tourism Master Plan proposed establishment of Tis A bay national park to enhance tourism industry. However, there is a trade-off between these two proposals, because the implementation of Hydro - electric power project will necessarily involve a significant reduction in the flow of water falls and that may not sustain their aquatic diversity and value of tourism. Though, there is significant difference, both methods have come with substantial consumers' swplus of Tis Abay Wate Falls Park which shows high potential tourism value of the resource. This might help to consider environmental policy issues and the need for the simultaneous pursuit of multifarious development objectives which are often in conflict with each other.
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    Measuring Economic Value of TIS Abay Waterfalls: Comparison of Contingent Valuation and Travel Cost Methods
    (A.A.U, 2000-06) Fanta Terefe; Mekonnen Alemu
    One aspect of sustainable development is the need to retain an "acceptable" level of environmental quality and to conserve nature's assets. Environmental economics literature has therefore developed to encompass a range of monetary valuation methods and techniques de Signed to value the spectrum of environmental goods and services. The task of monetary valuation of the environment is made more complex by a number of problems. These include the fact that often environmental effects will have no natural units of measurement, and even where physical indices are available these must be related to individual perceptions. Be Sides, due to their externality and public good characteristics environmental effects do not often directly show up in markets. Extensive use of monetary valuation methods combined with technical improvements in techniques have resulted a large literature that consists a wide range of valuation case studies. There is now a wide range of application of the contingent valuation method (CVM) in developing Countries. Most of the studies are concerned with fresh water investments and sanitation. However, there are fewer studies that look at forest values, outdoor recreation, sanctuaries and parks. Of course, few limited studies have applied different techniques in valuing different environmental resources. This indicates that both in developed and developing countries more emphasis has been given to the reliability of contingent valuation method (CVM) . This study has attempted to estimate recreation value of Tis Abay Water Falls which is considered nature based tourist attraction area by applying contingent valuation method (CVM) and the travel cost approach(TCM) and evaluated the extent whether different techniques for valuing a given environmental charge will produce similar results. The conflicting interest around Tis Abay Water Falls resource is the background for this study. Tis Abay II Hydro Power Project is being implemented with the objective of increasing the supply of energy, where as the Tourism Master Plan proposed establishment of Tis Abay national park to enhance tourism industry. However, there is a trade-off between these two proposals, because the implementation of Hydro - electric power project will necessarily involve a significant reduction in the flow of water falls and that may not sustain their aquatic diversity and value of tourism. Though, there is significant difference, both methods have come with substantial consumers' surplus of Tis Abay Wate Falls Park which shows high potential tourism value of the resource. This might help to consider environmental policy issues and the need for the simultaneous pursuit of multifarious development objectives which are often in conflict with each other.