Willingness to pay for improved watershed ecosystems in southern Ethiopia

This research investigates the factors shaping willingness to pay (WTP) for ecosystem services among downstream communities in the Gamo highlands, located in southern Ethiopia. Data were collected from 381 respondents using a multistage, systematic random sampling technique. The study utilized a double-bounded dichotomous choice method to estimate average WTP, while a Tobit regression model identified the key influencing factors. Findings indicate that around 89.5% of respondents were willing to contribute financially to improved watershed ecosystem services. According to the double-bounded model, the mean WTP of the households was estimated at 144.73 Birr (2.58USD) per year, with a 95% confidence interval ranging from 132.72 to 156.74 Birr (2.37 to 2.80USD). The corresponding z-value was 6.13, and the result was statistically significant at the 1% level (p < 0.01). The findings from the Tobit regression indicate that households possessing more assets, higher levels of education, access to irrigation, and membership in cooperatives are more inclined to pay for PES while a high dependency ratio, livestock ownership, and engagement in non-farm activities decrease the WTP. Respondents preferred annual monetary payments (55%) as vehicle of payment and Woreda Agricultural Office (44%) as a trusted institution to manage the PES program. The preference for annual monetary payments and trusted institutions reflect the need for predictable, cash-based, and locally managed PES schemes. This underscores the importance of establishing locally managed and cash-based PES initiatives which should be strengthened by efforts to raise community awareness and robust institutional backing to enhance participation and boost the program's success.