Valuing the Economic Benefit of Irrigation Water: Application of Choice Experiment and Contingent Valuation Methods to Ribb Irrigation and Drainage Project in South Gonder, Ethiopia
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Date
2012-06
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A.A.U
Abstract
This study analyses the determinants of households' willingness to pay for irrigation
water supply by using contingent valuation and choice experiment methods. A sample of
300 farm households living in the command area was interviewed to obtain households'
willingness to pay for irrigation water supply. A single bounded value elicitation format
with an open ended follow up question were used for the CVM and four attributes were
identified with three environmental attributes (irrigation water availability, fish stock
abundance and productivity) and a monetary attribute (annual payment).
Probit, multinomial logit and random parameter logit models were used to analyze the
factors influencing households' willingness to pay and estimate measures of welfare
change for farm households. Results of the study showed households were willing to pay
for the provision of irrigation water. The important variables identified in this study to
determine households' WTP for irrigation water include practical irrigation experience of
households, average annual income, participation in off-farm activities, and market
access,. The mean willingness to pay from the single bounded and follow up open ended
questions were birr 614 and birr 417.49 per 0.25 ha of irrigable land respectively. The
expected aggregate willingness to pay for irrigation water supply for the closed and open
ended questions is estimated to be birr 35,513,760 and 24,147,622 respectively.
Based on the willingness to pay of households for improvement of attributes irrigation
water availability is the most preferred one followed by fish stock abundance. The mean
willingness to pay for fish stock abundance, irrigation water availability and productivity
were 748 , 822 and 1. 2 birr respectively from the implicit price estimates. Compensating
surplus estimates which reflect overall willingness to pay for a change from the status
quo (current situation) to alternative improvement scenarios were also calculated. The
estimate for the high impact scenario was estimated to be 5610 birr, for medium impact
scenario 4090 birr and for low impact scenario it was 2514 birr per annum .
An important policy implication drawn from the study is that farm households are willing
to pay for irrigation water supply. If government designs and implements a proper charge
of irrigation water in the area based on such studies it will avoid or at least reduce
inefficient water use practices and there would be a more sustainable utilization of
environmental resources.
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Keywords
Irrigation Water:, Ribb Irrigation