Abstract

Abdurhman Wariwo and Abrham Seyoum

The paper examines the determinants of farmer’s willingness to pay for the protection of Abay River. A total of 158 randomly selected households were interviewed. Descriptive statistics and Econometrics Models particularly Contingent Valuation Method, Probit and Seemingly Unrelated Bivariate Probit models were applied. Result of the study showed that annual income, education, number of dependents in the household, family size, total cultivated land, awareness trainings, and community bylaw are significant determinants of farmers WTP in cash. Response to the hypothetical scenario revealed that the mean WTP in cash is 74.22 ETB per year for each household with an aggregate value of 171,411.09 ETB per annum. In addition, awareness trainings and age of the respondents were important variables in determining labor contribution. The mean labor WTP of households is 17.46 labor days per year with an aggregate benefit of 41, 291 labor days per year, which is equivalent to 2, 477, 460 ETB Birr. This indicates that aggregate WTP in labor is greater than cash payment. Therefore, river protection efforts should be focused more on labor contribution of rural households than in cash and key socioeconomic and institutional derivers of community participation should also be considered while deigning river protection.