Households’ Willingness to Pay For Restoring Environmental Resource: A Case Study of Forest Resource from Dire Dawa Area, Eastern, Ethiopia

Abstract

This paper assesses households’ perceptions on forest lose and presents empirical results of households’ willingness to pay for restoring forest resource in Dire Dawa area, Ethiopia. Probit and Tobit models were applied to determine the mean and factors affecting willingness to pay for forest restoration, respectively. A sample of 393 households was randomly selected, and the survey was used a face to face interviews. However, after checked for sample selection bias 10 protest bidders were excluded from the data set. The descriptive analysis shows that the forest resources have been cleared. That is, 82% of the respondents reported that the reasons attributed to the forest lost were population pressure, overgrazing, soil and water degradation and agricultural expansion. The econometric result shows that the mean willingness to pay from double bound elicitation method was computed at 94.09 ETB with the total willingness to pay 2,026,604.51 ETB (1 US$=18.44 ETB) per annum for five years. Whereas, the mean willingness to pay from open ended elicitation method was computed at 64.82 ETB with aggregation value of 1,396,157.98 ETB per  year. The result from double bounded elicitation method is greater than open ended elicitation method. This might be due to anchoring effect from the double bounded method. The result suggested that any forest restoration intervention in the study area needs to consider monthly income, initial bids, perception, educational level, ownership type and access to extension services for successful forest restoration activities. Total farm land holding and sex are also significant variables needs to consider.

Keywords: Willingness to Pay, Contingent Valuation Method, Forest Restoration, Probit Model, Tobit Model