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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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.



Irrigation Water:, Ribb Irrigation