Farmers' Willingness to Pay for Irrigation Water Use: The Case of Agarfa District, Bale Zone, Oromia National Regional State

Abstract

Conceptually correct and empirically accurate estimates of the economic value of water are essential for rational allocation of scarce water resource across locations, uses, users, and time periods. In Agarfa District, there is a water resource, specifically Weib River, which could be suitable for irrigation purpose. Yet, there is no well-constructed irrigation scheme in the area. The objectives of the study were to evaluate their willingness to pay for irrigation water use per hectare of irrigable land per year. Seemingly unrelated bivariate probit model was used to calculate the mean willingness to pay for irrigation water use per hectare per year. Out of the total sample households, 20% of the total households were not willing to pay and 80% were willing to pay for irrigation water use. The result of the seemingly unrelated bivariate probit model showed that households' mean annual willingness to pay amount was Birr 4018.02 per hectare per year, which suggests the possibility of a substantial amount of revenue from local community for development, maintenance and operation of irrigation projects.