FARMERS’ WILLINGNESS TO PAY FOR IMPROVED IRRIGATION WATER USE: THE CASE OF WOLISO DISTRICT, SOUTH WEST SHOA ZONE, OROMIA NATIONAL REGIONAL STATE, ETHIOPIA

As scarcity of irrigation water is rising, pricing of agricultural water and cost recovery can play a significant role in promoting water use efficiency. Hence, the main objective of this study was to analyze farmers’ willingness to pay for improved irrigation water use, and identify its determinants using the contingent valuation method. Both primary and secondary data were used to achieve the objective. Cross sectional data were collected from 251 households using a two-stage sampling technique (purposive and random sampling techniques) from four kebeles of Woliso District through a semi-structured questionnaire. The result of the study showed that 92.43% of the households were willing to pay for improved irrigation water use and only 7.57% were not willing to pay. The mean willingness to pay for the use of improved irrigation water from the double bounded dichotomous question of Seemingly Unrelated Bivariate Probit model was Birr 575.23 per year per timad (0.25 ha). On the other hand, the mean willingness to pay from open-ended questions was Birr 562.25 per year per timad (0.25 ha). The result from the Tobit model revealed that education level of the household head, family size, irrigable land size, number of oxen owned, total annual income, experience in irrigated farming, dissatisfaction with existing irrigation use, credit utilization and cash crops growing are important variables that significantly and positively affect farm households’ WTP for the improvement of the existing irrigation use whereas initial bid was found to have a negative and significant effect on the households' probability of accepting offered bid. Since these variables are identified as major determinants of willingness to pay for improved irrigation water use, policy makers and government should take into account these socioeconomic and demographic characteristics in designing the improved irrigation water supply system for the users