ECONOMIC ANALYSIS OF HOUSEHOLD PREFERECES FOR WETLAND ATTRIBUTES: Application of Choice Experiment to the Case of Lake Tana Wetlands

ABSTRACT This paper aims to assist policy makers in formulating efficient and sustainable wetland management policies by providing results of a valuation study on the Yiganda wetland, one of the segments of Lake Tana wetlands. A choice experiment is employed to understand and identify the preference and values of the wetland community for the various ecological and economic functions of the Yiganda wetland. A random parameter logit model, in addition to the multinomial logit models, is estimated to account for heterogeneity in the preferences of the public for the various functions of the wetland. The results indicate that there are positive and significant economic benefits associated with ecological and economic attributes of the Yiganda wetland. Socio-economic characteristics of respondents have significant impacts on the choice of respondents. Using a random parameter model we find that preserved ecology function surface area and fish stock are the two greatest contributors to welfare. The results also reveal that there is considerable preference heterogeneity across the public and on average they derive positive and significant values from sustainable management of this wetland.