Smallholder farmers’ willingness to pay for improved irrigation water use: the case of Menz Mama Midir Woreda in North Shewa Zone of Amhara National Regional State, Ethiopia

Abstract

ABSTRACT The water use practices in Menz Mama Midir woreda are very traditional and inefficient. To lessen this problem, water pricing (valuation) has been considered to be a promising tool. This study, therefore, examined smallholder farmers' willingness to pay and determinants affecting their decisions to pay for improved irrigation water use in Menz Mama woreda, North Shewa zone, Amhara national regional state of Ethiopia. Cross-sectional data collected from 215 randomly sampled irrigation beneficiaries were used for analysis. The mean WTP from double bounded dichotomous elicitation method ranges from 164.027 Birr (4.17 USD) to 221.059 Birr (5.62 USD) per year per hectare of irrigable land. The result from the seemingly unrelated bivariate probit model estimation revealed that the sex of the household head, total annual farm income, size of irrigable landholdings of the household, frequency of extension contacts, amount of credit, and dissatisfaction with the existing irrigation service positively and significantly influenced farmers' WTP decisions. In contrast, off-farm income and bid values were negatively related to WTP decisions. Therefore, the aforementioned factors affecting farmers' decisions to pay should be taken into consideration when constructing irrigation schemes in the study area and areas with similar economic and socio-cultural settings.