International Economics

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The Effect of Loan Default on Financial Performance of Commercial Banks in Ethiopia
(A.A.U, 2022-06-12) RegassaYadete; Jonse Bane (PhD)
This study aimed to find out the effects of loan default on financial performance of commercial banks in Ethiopia. Using a panel data spanning over the period 2010 to 2020 on seventeen commercial banks operating in Ethiopia, we estimated the effect of loan default on commercial banks financial performances. The data was collected from National Bank of Ethiopia and financial statement of each bank. The analyses were done using summary statistics, trends and fixed effect regression model. The findings show that, on average, about 2% of banks loan resulted in default with a minimum of 0.2 percent to maximum of 8.8 percent whereas the average return on asset (financial performance) is improving by 2.85% in the commercial banks working in Ethiopia. The finding also shows that, loan default is decreasing as financial performance is increasing indicating improvements in both indicators since 2010. Moreover, the result from panel fixed effect regression model revealed that loan default is not statistically significantly affecting the financial performances of the commercial banks in Ethiopia. Nonetheless, other variables including bank size and bank efficiencies are statistically significantly improving the financial performances of commercial banks in Ethiopia. Hence, this study recommends that, commercial Banks operating in Ethiopia should continue minimizing their loan defaults by enduring the creditworthiness (ability of potential customer to repay the loan) to improve their performances while they continue improving banking size and banking efficiencies.
Effects of Exchange Rate Volatility on Employment in Ethiopia: The Case of Manufacturing Sector.
(A.A.U., 2022-06-04) Tolosa Gebisa; Fantu Guta (PhD)
This study examines the effects of exchange rate volatility on manufacturing employment in Ethiopia for the period 1971-2020. Auto-regressive Distributed Lag (ARDL) model was applied for analysis. The study revealed that exchange rate volatility has a negative effect on manufacturing employment in Ethiopia. That means the instability of exchange rate against other foreign currency including US dollar significantly decreases the employment in manufacturing sector in Ethiopia. Similarly, lending interest rate has a negative relationship with manufacturing employment. Real gross domestic product, real private sector credit, inflation and export have a positive relationship with manufacturing employment in Ethiopia. The study recommends that concerned body have to be control the volatility of exchange rate by imposing restrictions on buying and/or sale of currencies. Also, creditors or financial sector should offer long term and low interest rate loans. And similarly, government should give incentive for manufacturing sector such as export incentives, supply low interest loans and provide assurance for high risk investments in order to expand their investment, to attract new capital investment and to inspire new job creation. Furthermore, the relationship between exchange rate volatility and employment will require extra study including the other major sectors of economy. Exchange Rate Volatility, Auto-regressive Distributed Lag Model, Employment, Manufacturing, Bound Test, Ethiopia.
Ethiopian Export Potential and Efficiency: A Stochastic Frontier Analysis Approach
(A.A.U., 2023-04-01) Getinet Kindinew; Worku Gebeyehu (PhD)
The main objectives of the study are to estimate the current level of efficiency, identify the causes of the inefficiency and analyze the possible impacts of country-specific-constraints on Ethiopia’s export. This study used a stochastic frontier gravity model to estimate export efficiency and potential of Ethiopia's bilateral trade with its top 47 trading partners from 2007 to 2020. The findings reveals importing countries' GDP growth had a significantly positive effect, whilst the importing countries' populations had a significant negative effect on Ethiopia's export. Ethiopia's total arable land area which is used as a proxy to measure resource endowments, distance from other countries, and currency exchange rate are found to be statistically significant effects on export flows. On the contrary, Ethiopia's GDP, population growth and inflow of foreign direct investment appear to be statistically insignificant. Trade with APEC and COMESA member countries has a statistically significant impact in reducing Ethiopia's export inefficiency compared to other countries. Importer countries landlocked dummy variable happens to be statistically significant in reducing the inefficiency effect, whereas the coefficient of average tariff imposed by a partner nation is statistically insignificant. In general, empirical findings demonstrate that Ethiopia's actual export is far below the estimated efficient level, and thus there is a significant room to increase it. This finding suggest redemption of policy measures that enable the country to maximize the efficiency of the sector by tapping its potential, particularly through establishing integration with untapped markets potential in the Middle East and Asian countries.
Exchange Rate Pass-Through in Ethiopia: A Vector Error Correction Model
(A.A.U, 2023-06-04) Nuguse Girma; Girma Estifanos (PhD)
Ethiopia is small open economy adapted managed floating exchange rate since 1992 and applied exchange rate devaluation as expenditure switching policy frequently. The domestic prices become further debatable following such change in exchange rate. The main focus of this research work was to investigate the theoretical and empirical impact of Exchange rate change in to domestic prices both on import and consumer price side. To this end, the study adapted Vector error correction model on quarterly data ranging from 2005 to 2022. Furthermore, this study utilized the impulse response function and variance decomposition analysis to discuss weather additional links between domestic price and exchange rate exists. Based on a Vector error correction model analysis the study found that import price and money supply have a significant positive impact on consumer price while the effect of exchange rate change and world commodity price index is positive but insignificant. The impulse response function further shows that ERPT in to domestic price is low, incomplete and higher for import price compared to consumer price (9.1 and 3.08 percent after two years respectively). On other hand the variance decomposition indicates that the higher variation in consumer price and import price arises from their own shock while world commodity price index is the second candidate to contribute higher variation to domestic price in the model. That can be considered as an evidence for the presence of imported inflation in Ethiopia. The factuality of low and incomplete exchange rate Pass through in Ethiopia gives a greater flexibility for policymakers to design independent optimal mix of economic policy.
Determinants of Export Diversification: The Case of Ethiopia
(A.A.U, 2021-09) Gebru, Kuma; Guta, Fantu (PhD)
This thesis focus on examining the determinants of export diversification in Ethiopia for the period ranges from 1985-2019. This paper used time series econometrics model which was estimated by Autoregressive Distribute Lag (ARDL) to analysis the presence of both long-run and short-run determinants of export diversification in Ethiopia. The determinants of export diversification proxies used in this study is number of cooperatives, productive aged 15-64 population, real Gross Domestic Product (GDP), real exchange rate, trade openness, top five exported commodities and top ten exported commodities as control variable. The empirical investigation shows that among the variable used in this study number of cooperatives, productive aged 15-64 population, real GDP and trade openness positively and significantly determine the export diversification. Finally, this study recommends that the Ethiopia government must search opportunity in and surrounding the number of cooperatives and productive age 15-64 population. Keywords: Ethiopia, export diversification, cooperatives, productive aged, Autoregressive Distributed Lag.
Determinants of Agricultural Exports in Ethiopia
(A.A.U, 2005-06) Mulugeta, Mouze; Mekonen, Alemu(Dr)
In addressing the dismal performance of the export sector in Ethiopia, it is important to look at the percentage contribution of each sector and also the factors that affect the growth of the respective sector. Analysis of sectoral contribution to international trade confirms that in Ethiopia agriculture is found to be the single most important sector in terms of revenue generation contributing over 80% of foreign exchange earnings. Thus, in trying to disentangle the effect of each policy instrument, we have used secondary time series data for 30 years where analysis of factors behind growth of the sectoral contribution suggests that output has been responsive both to price and structural factors emphasizing the importance of both factors as a tempo for growth in the agricultural sector. Results from the study indicate that price policy instruments such as real exchange rate devaluation and institutional factors such as fertilizer consumption do have a significant and positive impact on aggregate agricultural exports. Results from individual export product (chat) are also in conformity with the above result suggesting that policy makers should use both to expand export from the sector.
Trade and Industrial Policies in East Asia: In Search of Lessons for Africa
(A.A.U, 2006-07) Samaro, Zinabu; Geda, Alemayehu (Dr)
Most African economies have not achieved any significant level of industrialization and export diversification to date; And so, The continent remains the least industrialized in the world in response, With strong conviction that economic theory has irrefutably Proved the superiority of free trade and Laissez fair industrial Policies, The governments and international economic institutions of the developed countries have been Pressurizing african governments to Fee their external trade and minimize their involvement in the form of industrial Policies. Under such a context, This study analyzes the trade and industrial Policy experiences of three East Asian countries. It also analyzes the terms of trade implications of export diversification in to manufacturing under the context of new export pessimism" Using data for six east Asian countries. the study, finds that the governments of the countries studied deliberately and Consistently employed Policies that are against the Fee trade and laissez-fire paradigms and resorted to a strategic approach to industrial development and international trade. the study also finds that export diversification into manufacturing have had a Positive impact on the terms of trade of the countries studied and therefore. It suggests selective dynamic, Predictable and performances based Protection and Promotion of infant industries conceptualized to the current global conditions and where the government has the willingness and the ability to withdraw the Protection and Promotion.
Measuring the Perceptions for the Attributes of Quality and Safety in Milk and Butter:
(A.A.U, 2008-10) Negus, Osman; Berhanu, Wassie(Dr)
This study measures the perceptions of consumers on quality and safety attributes of milk and Butter in urban Ethiopia taking the case of Addis ababa.The main objective of the study was to Identify the major attributes of milk and butter as perceived by consumers.The study has also Tried to identify the major socioeconomic and demographic determinants of perceptions for Quality and safety of milk and butter. The study is based on a randomly selected 300 households In Addis Ababa. In the analysis, descriptive statistic.conjoinl analysis and order profit model Were used.The research indicated that the most frequently purchased milk products are raw fresh Milk. Packed pasteurized milk and butter. These products are distributed through home delivery Producer gate and corner shop. Among the attributes identified by RMA.Hygiene.Adulteration and small in Milk; And hygiene. Purity and Price in butter. Were the most preferrcd attributes in consumers purchase decion.The result further shows that the demand for quality and safety improvement of milk was relatively price inelastic as compared to butter with regard to socil economic factor, however, variable such as sex, number of schooling family size and duration of stay in Addis Ababa were insignificant. Indicating that rating is not affected by gender, level of education.number of year lived in Addis Ababa though income and age were found to be significant. For butter Age.Sex.Number of schooling. Family Size and income were signification. But the signs of the coefficient of number of schooling and income were contrary to the expection.it indicates that. Unlike milk. Consumers perception for quality and safety of butter differs the different soctoeconm and demographic categories of the consumers it indicates that the younger generations are more consumed about quality and safety of butter Mareover,female respondents shcrcorred and demographic categories of the consumers.It indicates that the younger generations are more concemed about quality and safety of btter Marcovemer. Female residents shoved more conceal compared to the meal respondents. The research gives a clue to producers and regulatory authorities that those factors mentioned Above gives a clue to producers and regulatory authorities that those factors mentioned Above should be taken in to account in their decision making process.The findings of the research Could further be validated by employing more sample size and/or comparing results of different Methodologies.
The Effect of Foreign Direct Investment on Trade Balance: The Case of Sub Saharan Africa
(A.A.U, 2006-07) Bessir, Mengistu; Manohar, J (Dr)
Economists usually consider that FDI affects import share and export share positively. But the nature of FDI flow varies across regions there by having different impacts on the region under study. This paper examined the impact of FDI on trade balance and its components (export and import) for sub saharan africa region . This paper empirically proved that FDI affects import share and export share positively and at a statistically significant level. The results from cross sectional and panel data regression reveal that the impact of FDI up on trade share, import share and export share is strong . Almost all the regression results indicate that FDI affects these variables at a 1 % significance level. However the magnitude of FDI in import share is consistently higher than that of export share; indicating that the net impact of FDI on trade balance is negative. moreover this paper proved that import tax does not affect import share at a statistically significant level in the case of Sub Saharan Africa. This may be due to the fact that most of sub Saharan Africa imports are structural and do not respond sensitively to price increment
The Determinants of Current Account in Ethiopia: Empirical Investigation
(A.A.U, 2006-07) Alazar, Mehret; Rao, J. Manohar (Dr)
This study analyzes the role of fundamental macroeconomic variables in explaining the movements of the current account balance in Ethiopia. The descriptive analysis on the developments of current account balance using the three relationships: external trade, income-absorption and saving-investment in the period 1960/61 - 2002/03 indicates that: (i) Poor export performance due to dependence on primary commodities with unmatched rate of growth with imports is the main reason for the persistence current account deficit; (ii) The increase in budget deficit in addition to the low level of saving is the reason indicated for persistence of current account deficit by saving - investment balance; (iii) Huge military expenditure during the degree régime and 1998 20000 and increase in government expenditure as a result of increase government involvement in the derge regime are implicated for the persistence current account deficit in the income - absorption balance. The estimated model using Johannes’s likelihood ratio test for cointegration indicates that young dependency ratio, openness, financial deepening, terms of trade and real exchange rare affect current account both in the long run and short run; budget balance, parallel marker premium and ODA affect current account only in the long run and domestic output growth rate affect current account in the short run. The policy implication of the findings is that diversifying exports, reducing budget deficit and controlling distortionary policies of exchange rate.
Economic Effects of Progressive Air Transport Liberalization in Africa.
(A.A.U, 2007-07) Abera, Megersa; Estiphanos, Girma (Dr)
Empirical analysis on economic effects of liberalization in the context of African air Transport sector is not much discussed in the literature and the continent's policy makers and The industry operators need such analysis to implement liberalization initiatives. As such, The Purpose of this study is to empirically measure economic effects of progressive air transport liberalization in Africa by taking the case20city-pair routes to/from Addis Ababa for the Period 2000-2005. by employing a Two-stage least square estimation procedure for a Panel data set, passenger demand. fare and departure frequency models are estimated to see the impact of bilateral air service agreement (BASA) liberalization. Liberal policies are assumed to affect the two supply side variables i.e. fare and departure frequency. accordingly, The frequency model indicates that a significant increase in departure frequency is observed in routes that experienced both ' full' and 'restricted ' type of liberalization compared to those governed by restrictive bilateral arrangements. in Addition. Higher increase in the number of departure frequency in routes which experienced restricted liberalization relative to those operated under fully liberalized arrangement is observed. regarding the fare model, a statistically significant negative impact of liberali zation policy on standard economy fare is not found . Finally, It is recommended that liberali zing BASAs, Especially Provisions Pertaining to departure frequency will enhance service quality.
Household Demand for Improved Water Services in Urban Areas: The Case of Addis Ababa, Ethiopia
(A.A.U, 2006-07) Fessha, Medhin; Yesuf, Mahmud (Dr)
This paper analyzes determinates of households willingness to pay for improved water Service, using the Contingent Valuation Method (CVM). The study used cross sectional data collected from 250 households living in different areas of Addis Ababa, Ethiopia through single bounded elicitation format with an open ended follow up question using a face-To face interview. The empirical models adopted by determine factors influencing households' decisions to connect to the pipe water scheme are probate and to bit models. results of the study revealed that respondents' WTP is affected by a number of explanatory variables including sanitation facility, Water related disease and socio -Economic variables like income, Age, Sex, marital status, Education level and family size of the respondent etc. The mean WTP for private Connection Is found 20 cents per bald and 15.79 cents per bald from closed ended and open-ended question respectively, Which are well above the current subsidized tariff. the following policy implications are derived from the study. First, The positive and significant relation between sanitation facility and WTP implies that improving sanitation service could not be done alone rather it has to go hand in hand with improvements in piped water supply provision. Finally, The revenue and households' Welfare gain in changing the existing policy (low trail with limited unreliable private service and hence low level equilibrium) to a new (higher tariff with more and improved private connections) can be huge.
Valuation of Choke Mountain Range Wetland Ecosystem, East Gojjam, Amhara Region, Ethiopia: Application of Choice Experiment Valuation Method
(A.A.U, 2012-06) Berhanu, Getnet; Mekonen, Alemu (Dr)
Choke Mountain Range Wetland Ecosystem is one of the most productive natural resource of the country. The mountain is considered as the water tower of the Upper Blue Nile River (or Abay in Amharic). More than 59 rivers and 273 small springs which are the main tributaries of Blue Nile or Abay originate from this mountain. In addition to approximately 3386 km2 wetland area, the mountain is endowed with resources for potential recreation. The main attractions of the mountain include the existence of an impressive landscape, unique and common biological diversity and the cool temperate agro-ecological (Wurch) zone. However, the resources are facing critical problems of high degree of exploitation and degradation. Some of the responsible factors for the degradation of the area are limited awareness of the society about the multidimensional values derived from these mountain wetlands, ever-mounting population pressure, over grazing and lack of intervention by government. Consequently, 607 km2 of seasonal wetland with low moisture and 22.4 km2 of open water of the mountain have lost within the last 20 years. In addition to this much fauna and flora species also disappeared. To assign monetary values for the multi-functions and services offered by this mountain wetland ecosystem, the study applied choice experiment valuation method by using four identified attributes i.e. biodiversity, water availability, recreational facilities and lastly the monetary payment attribute. Multinomial and random parameter logit models were used to analyze the data collected from a sample of 250 respondents (farmers). All the attributes were significant in affecting the probability of choosing an alternative scenario and had the expected sign except negative effect of biodiversity. The result for biodiversity is perhaps because of farmers' expectations about the negative effects of future policy change on their current consumption of the mountain resources and perhaps limited awareness about the use and non use values derived from biodiversity. But the marginal willingness to pay for availability of water was the highest (birr 155 annually) which was followed by availability of recreational facilities (birr 36 per year). Moreover, the estimated compensating surplus for high impact improvement scen¥io, medium impact improvement scenario, and low impact improvement scenario were birr 444, birr 490 and birr 143 respectively.
The Determinants and Dynamics of Aggregate Merchandise Imports in Ethiopia
(A.A.U, 2005-06) Leggesse, Dejene; Aredo, Dejene (Dr.)
Ethiopia imports goods and service s under serious foreign exchange constraint. Export ",earnings finance less than fifty percent of imports . For this reason there was excess demand for foreign exchange in the past four decades . The purpose of this study is therefore, to characterize the behavior of demand and determinants of imports in Ethiopia . The study used error correction and co integration as well as descriptive analysis. In the short run, one of the most important determinants of aggregate merchandise imports in Ethiopia is found to be foreign exchange availability in the form of international foreign exchange reserves. Economic activity (real GDP) , the relative prices (in this study the real exchange rate) have no significant influence in the short run. However, all together with international reserves have significant influence in the long run . The other important determinant of imports both in the short and long run is trade policy regime. Openness of the economy had given rise to magnified and accelerated growth in imports. One important implication drawn from the analysis is that the need for export promotion and diversification measures in order to fill the fast growing trade deficit.
Analysis of Causality and Export-Led Growth Hypothesis (ELGH) in Ethiopia
(A.A.U, 2005-07) Adem, Mohammed; Yoseph, Getachew ( Ato)
It is generally believed that for a developing country export performance plays a pivotal role in providing the much-needed impetus for economic growth. Export-led growth has been put forward as the efficient alternative to inward- orientation strategies of development. This is because it is believed to lead to higher total-factor-productivity growth and encourage foreign direct investment. In spite of the presence of numerous studies on the relationship between exports and economic growth, empirical investigations to-date have produced mixed or contradictory results; while most cross-section studies have found a positive association between export and growth, a considerable number of time series methodologies found mixed results, either supporting or rejecting the export-led growth hypothesis. This paper examines the Export-led growth hypothesis (ELGH) for Ethiopia for the period 1960-2004. It builds up on Feder's (1983) model to investigate empirically the relationship between exports and economic (GDP) growth using recent data from the National Bank of Ethiopia. The study finds that the ELGH is valid in this particular case but, only in the long run. Although the results of the study suggest that exports have a positive effect on the overall rate of economic growth and could be considered an "engine of growth" as the ELGH advocates, their impact was not, however, statistically supported in the short-run. , Moreover, causality was found running from GDP to Export confirming uni-directional causality.
Valuing Water Supply Service Improvements in Addis Ababa
(A.A.U, 2007-03) G.Egziabher, Kinfe; Adnew, Berhanu (Dr)
Using The Contingent Valuation Method (CV M) the study sets out to analyze determinants of households ' WTP, estimate total 'W'TP, and derive aggregate demand and aggregate benefit for improved water supply service. the study used cross –sectional data collected From 240 households in Addis Ababa, the capital city of Ethiopia through closed-ended Value elicitation Format with open-ended follow up questions. The empirical models adopted by this Study are Probit and tobit models. The tobit Models is used to identify socio-Economic Factors that affects the WTP Of households and to estimate Aggregate demand and aggregate benefits For the Proposed 'improvement Water Supply Service. The Profit model is used to calculate the Mean WTP For the closed-ended format. Results of the Study reveal that about 38.72% of the respondent reported that they do not have Private tap connection to the existing system. The majority of the households (83.82%) also indicate that they are not Satisfied Wife the existing Water Supply Service. the Mean Per capita consumption of water is Fauna to be 37.6 liters Per day Which is for lower the absolute Minimum UN Standards (50 laced)the Mean WTP values are 15.34 and 20.20 cents Per boldi (a 20 liter bucket) for the improved Water Supply Service as calculated from the to bit and Profit model respectively The householdsWTP for improved water service is greater than the existing water tariff rate of the authority. The totalWTP amount from the sample of 126,108 households in Addis Ababa sub-cities was found to be birr 154, 198.26 Per day The area under the demand curve represents the gross value of consumers surplus which is Birr 181,935.36 Per day if water is considered as a Free good but water is an economic good and if a new tariff rate of the authority Proposes to be 8 cents Per bald the consumers' surplus will be reduced to birr 94,397.85 Per a day. The rest of the benefit is distributed to the water autliority birr 80,364.96 in the Form of revenue and birr 7,172.55 as a dead Weight loss Per day. the to bit model shows that there are s searal explanatory variables that affect the WTP value. Income of the household Sex.. of the respondent dummy (Female = 1), education (both secondary and tertiary level), households ' Year of Stay, households not using tank as a Storage, wealth of a households, occupation of the respondent dummy (employed = 1) I household s satisfaction with the existing service, and location of the study site (Addis ketema) have Positive and significant effects on 'willingness to Pay. Family size has negative and significant effect on willingness’s to Pay. the Policy implication of the study is that the inhabitants of Addis Ababa city are witting to Pay for improved water supply Service if it is Provided For an affordable Price. In addition, Policymakers need to be aware that socio economic Characteristics and water use Practices of households influence the willingness to Pay for better water services.
Towards an African Economic Community: A Performance Evaluation of African Regional Economic Communities
(A.A.U, 2005-06) Gebremedhin, Liyousew; Mulat, Teshome (Dr)
Regional integration has always been an agenda for the heads of states of African nations, since it is considered as the major step towards an accelerated and sustained development of the continent. This familiar agenda finally succeeded in establishing the African Economic Community (AEC) in 1994 targeting a continent wide unity in a period of 34 years. Seven regional economic communities (RECs) were chosen to be the building blocs of the AEC. A performance evaluation of these RECs conducted in this study showed that ten years after the birth of the AEC no REC has yet to transform itself into a free trade area. Trade liberalization in terms of tariff and non tariff barrier removal, trade facilitation, and macroeconomic policy harmonization programmers arc all behind schedule. Intra REC trade progressed little and dependence on trade with third country is still predominant. Fitting the gravity equation with panel data and controlling for country pair heterogeneity, this study confltl11s that the standard gravity variables; national income, distance and population (as well as explanatory variables such as contiguity, common language and membership to RECs) determine bilateral trade flows in Africa.
The Sources of the Recent Inflationary Experience in Ethiopia.
(A.A.U, 2008-06) Tafere, Kibrom; Geda, Alemayehu (PhD)
One of the prime objectives of governments is achieving stable macroeconomic condition. This objective requires that prices be kept to a reasonably stable level. High and persistent inflation introduces uncertainties into the economy and may lead to slowdown of economic growth by discouraging domestic as well as foreign investments. It may also cause balance of payments problems by eroding a country's competitive advantage. Moreover, because it hits the poor the most it needs to be tackled. This study aims at understanding the forces behind the current inflationary process in Ethiopia. In order to achieve the stated objective a synthesis model of monetarist and cost-push inflation theories is estimated using vector autoregressive (VAR) and single equation error correction models. The estimated models enable to understand the short run and the long run price dynamics in Ethiopia between 1994/95 and 2007/08. The findings of the study suggest that the determinants of inflation differ between sectors (food and non-food) and the time horizons under consideration. The most important forces behind food inflation in the long run are real income, money supply, inflation expectation and international food price. The long run determinants of non-food inflation, on the other hand, are money supply, interest rate and inflation expectations. In the short run model, wages, international prices, exchange rates and food supply are found to be prime sources of inflation. There is also evidence of cost mark-up in the short run suggesting the presence of strong monopoly power in price formation. To contain inflation, therefore, the government needs to exercise prudent fiscal and monetary policies. Inflation expectations need to be tackled by way of credible government policies to change public opinion_ In this regard it is important to consider targeting of macroeconomic variables and adhere to announced targets.
Valuing Non-agricultural Uses of Irrigation Water: Empirical Evidence from the Blue Nile River-basin of the Amhara Regional State, Ethiopia
(A.A.U, 2005-06) Bane, Jonse; Mekonnen, Alemu (Dr)
Using the contingent valuation method (CVM), the study sets out to analyze detemtints of households WIP, estimate total WIP of and derive aggregate demand for non-crop uses of irrigation water. the study used cross-sectional data corrected from 260 housefiolds in the Blue Nife River Basin of the Amhara Regional State of Ethiopia through double-bounded value elicitation format with open-ended follow up questions under detailed descriptions of two different scenarios, namely, existing and improved irrigation water supply for domestic uses. 'The empirical models adopted by this study are profit and vibrate profit models. Results of the the study reveal that respondents ' WIP is affected by a number of explanatory variables including institution-related variables such as water users associations (WUAS) water father and commtmity-based water management and choices of these institutions, and socio-economic variables like income, wealth, ownership of ox, age, education and family size of respondents. Although females are responsible to fetch water for domestic uses, being a female has no significant effect on the probability of accepting the proposed did. Specific location of users, site, quantity and quality of irrigation water for domestic uses are other explanatory variables that affect consumers ' WIP for non-crop uses of irrigation water. the study also finds that using double-60unded value elicitation techniques does not improve statistical efficiency over sing{e- bounded format. Total WIP for gardenil1iJ and domestic use of irrigation water is estimated 6ased on open-ended and single- 60unded value felicitation formats and our scenarios. Assuming existing irrigation water quality, total WIP for these uses of irrigation water is 'Birr 291, 776 and 363,063.6 per year using open-ended and single-bounded mean WIP, respectively. After proposing quality improvement for domestic uses o/irrigation water but with existing quality for gardening, the respective total WIP increases to 'Birr 361,336 and 409,441.6 per annum. the following policy implications are derived from the study. :First, facilitating establishment and strengthening capacity of WLLAS through decentralization could improve efficient and eqttita6Ce uses of irrigation water. Second, since households are willing to pay for multiple uses of irrigation water, introducing pricing in irrigation water uses may be promising. Finally, considering multiple uses of irrigation water in developing and implementing irrigation water projects ensures sustainability and reduces conflicts among uses and users of irrigation water.
The Value of Water Quality Improvement on Lake Hora-Arsedi
(A.A.U, 2007-03) Legesse, Haymanot; Berhanue, Wassei(Dr)
Surface water quality affects the wellbeing of local community and thus an improvement to Lake Hora-Arsedi would benefit beshoftu residents. An Improvement proposed in this study is improving the quality of waler in the lake one step from how Beshoftu residents perceived the existing water quality. In this study, an attempt was made to elicit the willingness to pay (WTP) of Beshoftu residents to this improvement using contingent valuation method. A total of 250 households from Beshoftu town residents were selected randomly. The study used the single bounded dichotomous choice technique followed by an open-ended question for eliciting the Willingness to pay of household for the lake clean-up. probit and tobit models were applied to identify factors affecting WTP. The mean willingness to pay estimate, birr 11.42, from closed ended format aggregated for the total population and total willingness to pay of the residents was found to be 119, 893 birr per month and 1,438,716 per annum. While the mean Willingness to pay estimate from open-ended mean willingness to pay estimate, 5.02 birr, this total Willingness to pay was found to be 254,152 birr per month and 3,049,825birr per annum. The study revealed that the distance of the respondent's homestead from the lake, perception of the existing lake water quality, awareness of environmental Problems, income of the respondent, sex of the respondent and family size are factors significantly affect the willingness to pay of a household for lake clean-up. The policy implication of the study is the government or any concerned body could have active Participation of local community by enhancing environmental consciousness of residents and creating awareness 011 the benefits associated with improved lake water quality through meetings and seminars. Moreover, the concerned body should consider the case of major sources of lake pollution and take measures without wasting time to improve the lake water quality

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