Economic Valuation of Irrigation Water in Bahir Dar Zuria Woreda, Ethiopia: The Case of Chilal Abay, Negida and Upper Andasa Irrigation Schemes
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Date
2015-06
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Addis Ababa University
Abstract
This study attempts to determine the economic value of irrigation-water by eliciting farmers’ willingness to pay (WTP) using contingent valuation method in Bahir Dar ZuriaWoreda, Ethiopia. Single bounded and double bounded dichotomous choices with a follow up open ended questions were employed. Primary data obtained from 197 randomly sampled household heads was analyzed using both descriptive statistics and Econometric models. The descriptive analysis indicates that the mean annual income of the irrigators is twice more than that of non-irrigators. And out of the total respondents 95 percent of them are dissatisfied with the existing irrigation water supply.
In this study, Probit and Bivariate Probit model was used to measure WTP and to determine the factors that influence the variation in WTP. To identify the basic determinants of maximum WTP, we also used Tobit model. The result from the Probit model revealed that the bid level, farming income, education, family size, land size, having pumping motor, sex of the household heads, and dissatisfaction with the existing irrigation water supply are significant factors that affect respondents’ WTP for the improvement of the current irrigation schemes. In the Tobit model households' income, family size, land size, and having pumping motor are found to positively and significantly affect households' maximum willingness to pay. In the Bivariate Probit model result, off farm income, initial bid and follow-up bid were found to have a negative and significant effect on the households' probability of accepting that bid. In this model variables such as income, land size, having pumping motor and dissatisfaction with the existing irrigation water supply have a positive effect on the households’ probability of WTP.
The mean willingness to pay for the provision of improved irrigation water is found to be 674.5 and 579 Birr per year/0.25 ha from the double bounded dichotomous and open-ended questions, respectively. The estimated aggregate willingness to pay for improved irrigation water supply using the DBDC and open ended questions is found to be about birr 15,703,709 and 13,480,278
per year, respectively. Among the surveyed households, 99 percent have shown their willingness to pay if there is an improvement in existing irrigation water supply. Thus, it may be a good indicator for the concerned body to invest for expanding the current irrigation projects and introducing proper irrigation water pricing.
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Economics Resource, Environmental Economics, Resource and Environmental Economics