Birhanu, Wassie (PhD)Seyoum, Milkessa2018-11-142023-11-042018-11-142023-11-042015-02http://etd.aau.edu.et/handle/123456789/14228The thesis assessed the compensation needed by small scale land holders to voluntarily protect degraded natural forests on the land they held in hypothetical protection program. Protection of the existing degraded natural forest brings cost to the holders as they lose benefits they have been getting if protected. Creating incentives (compensation) to the local people to voluntarily participate in the conservation and restoration of natural forests is important. This study developed a hypothetical market in which the ‘Kuyu Woreda’ small scale land holders are given compensation incentives to voluntarily stop the natural forest degrading activities and leave their lands for natural regeneration of indigenous forests and conservation of the remaining wild animals. The study used contingent valuation survey to identify factors affecting the WTA compensation of the small scale farmers and estimate their minimum WTA. It found that bid levels, livestock wealth, size of degraded forest land, sex of the household head, availability of substitutes, and the existence plan to change the land into farm land are significant factors affecting WTA. The mean minimum WTA is 1,170 birr per-hectare per year using single-bounded binary question and 3,073 birr per-hectare per-year using open-ended follow up questions. The ratio of open ended follow up mean to binary question mean is 2.63, which inflated the WTA. Totally, 168 households asked a compensation of 74,660.6 birr per year for about 63.8 hectares of degraded natural forest land using mean 1,170 birr per-year per-hectare.enVoluntarily Protect Natural ForestThesis