Valuing Natural Forest Resources: An Application of Contingent Valuation Method on Adaba-Dodola Forest Priority Area, Bale Mountains, Ethiopia

Abstract

This research employs a contingent valuation method (CVM) to estimate the respondents' willingness to pay (WTP) to gain use and control rights to a natural forest resource at the Adaba-Dodola Forest Priority Area (ADFPA) in the Bale Mountains of Ethiopia. The analysis was based on data collected from 295 households residing in and around the forest resource. Both binary probit and ordered probit models were used to examine socioeconomic factors that determine the respondents' WTP to gain these rights. The estimated mean and median WTP were found to be ETB 24.41 (US$2.54) and ETB 22.14 (US$2.30) annually, respectively. Households with more members, have better exposure to education and training, perceive the need for forest conservation, are member of forest dwellers' association, and who are wealthier in terms of ownership of more cultivated land and livestock are willing to pay more; whereas those households characterized by earning better annual household income, those who got higher starting bid value, and those who live farther away from the prime forest resource are willing to pay less. This can be used to signal that there is a considerable non-market value attached to use and control rights to the natural forest. In particular, membership in official forest user groups has shown a strong and positive relationship with WTP in all the models employed. This implies the approach of participatory management using forest user groups is better both for the sustainability of the forest resource and the livelihoods of the people who depend upon it.

Keywords:

• contingent valuation method (CVM)
• natural forest
• probit model
• use and control rights
• Ethiopia

Acknowledgments

The author thanks colleagues at the Division of Resource Economics for their valuable comments on the earlier drafts of the manuscript during the research colloquium. The article has also benefited significantly from the comments and suggestion forwarded by an anonymous reviewer. The author is also most grateful to the Alexander von Humboldt Foundation for the research fellowship at Humboldt University of Berlin.