Vol. 1, Issue 10, Part G (2015)

Abstract
Payment for Environmental Services is a way to address environmental degradation problems in which those who benefit from the environmental services pay to those who provide these services, which they fail to realize due to public good nature of the services. So, using the contingent valuation survey method, this study established the WTP of domestic water users in Gondar town for improved watershed protection using 245 randomly selected households. Most respondents have given positive WTP response for watershed protection so as to generate solutions to environmental problems associated with Angereb watershed, which would help them to ensure the provision of improved domestic water supply. To analyze factors affecting household’s decision to involve in watershed protection or not Probit and Tobit econometric models were used. The results of Probit model showed that variables education level of the respondent, income of the household, level of satisfaction with the existing water service and awareness of the respondent about watershed benefits influences positively respondents probability of WTP for watershed protection while household size and initial bid value influences negatively. The Tobit model results depicted that WTP amount is positively related to level of education of the respondent, income of the household, level of satisfaction of the respondent, awareness of the respondent and initial bid value offered.