Willingness to Pay for Forest Management: Experimental Economics Approach

Abstract

The main objective of this study is to explore the major influential factors that affect the WTP of households
to conserve the forest using the Tobit model. WTP is assessed without intervention and with the intervention
of change in the level of deforestation and income with and without awareness creation of the households
regarding the severe consequences of deforestation. The results of the two experiments are then compared
using the experimental economics approach. In order to attain this objective, primary data was collected
using a questionnaire and awareness creation for 100 randomly selected households who live in West
Ethiopia, Oromia region, Suba Forest close to Menagesha- Suba Forest. Data were collected in two rounds.
That is before and after awareness creation. The study comes up with a result that 92% of the respondents
are willing to pay in both experiments whereas the rest 8% are not. The mean WTP is Br 22.11 in cash and
Br50.21in labor. The mean willingness to pay of respondents increases as the level of trees decreases and
as their income increases. However, awareness creation has no significant effect on their WTP. Age, income,
and the total family size are significant variables affecting the mean WTP of households. Since age has an
inverse relation, family size, and income have a direct relation with the mean WTP of households.