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An Assessment of Farmers' Willingness to Pay for the Protection of Nyabarongo River System, Rwanda U

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An Assessment of Farmers' Willingness to Pay for the Protection of Nyabarongo River System, Rwanda U \ v AN ASSESSMENT OF FARMERS' WILLINGNESS TO PAY FOR THE PROTECTION OF NYABARONGO RIVER SYSTEM, RWANDA U MSc. THESIS SUBMITTED TO THE BOARD OF POSTGRADUATE STUDIES, UNIVERSITY OF NAIROBI IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN AGRICULTURAL AND APPLIED ECONOMICS NIRERE SYLVIE University of NAIROBI Library 0310853 7 NOVEMBER 2 0 1 2 Declaration and Approval uccarrooi. a This thesis is ray original work and has not been presented for examination to any university. Nirere Sylvie Signature: ------- Date: f Approval: This thesis has been submitted for examination with our approval as supervisors: Dr. John Mburu Department of Agricultural Economics University o f Nairobi Sign 1^ ° / ^ Dr. David 0. Jakinda Department of Agricultural Economics University o f Nairobi Signature: Date: DEDICATION This thesis is dedicated to my Mother Seraphine M. KAYOMBYA whose love has always inspired my life, my brother Eric MUNYESHURI, my sister Triphine HIRWA and my aunt Claire M. N Y1RANEZA for their love and everyday encouragements. iii ACKNOWLEDGEMENT With a heart full of gratitude, I hereby thank all the people who made the entire process of undertaking this research and writing this manuscript successful. I am particularly indebted to my supervisors Dr. John Mburu and Dr. David Jakinda for their invaluable advice, constructive criticisms and interest in my study. My heartfelt appreciation also goes to the African Economic Research Consortium (AERC) for offering me a full scholarship to pursue my coursework and my research and the staff at the Rwanda Environment Management Authority, especially in National Environmental Youth Project for their valuable ideas, material and moral support. The enumerators involved in data collection deserve exceptional thanks for their committed efforts to collect reliable data during fieldwork, under particular sunny conditions. I would also like to appreciate all the farmers who took part in the focus group discussions and survey for willingly volunteering important information for this research. I cannot forget the valuable contribution of my fellow classmates and hostel mates for their continued encouragement and help all through the development o f this work. Finally my sincere appreciation goes to everyone, whose contribution to this work in prayers, encouragement, and moral support helped me hold on throughout my study. All these efforts bore fruit through God’s abundant love, grace and mercy. IV ABSTRACT Nyabarongo River system is an ecosystem that provides goods and services to the Rwandese communities; this river serves as a tributary of the Nile River, an international resource. However, its integrity has been compromised due to increasing pressure for expansion of agricultural land. Against the aforementioned background, the present study was undertaken to assess farmers’ maximum Willingness To Pay (WTP) for protection o f Nyabarongo River system. Further, the study assessed the potential influence of different factors on the WTP estimates. A sample o f 359 households from four Districts in the catchment area was randomly selected and interviewed through household survey questionnaires. The Contingent Valuation Method (CVM) was applied to estimate the amount o f money farmers are willing to pay while the influence o f different factors was assessed using the Ordinary Least Squares regression method. Results showed that the mean household's maximum WTP for the protection of Nyabarongo River system was 486.4 Rwandan francs (Rwf) per household per month over the proposed five years (USDS1 = 607 Rwf). The main factors that were found to have significant statistical influence on the WTP are household income, education of the household head, respondent’s perception of the current quality of water in Nyabarongo River, access to tap water, household size, extension contacts, initial bid amount and knowledge of individual responsibility in wetland protection. Based on these findings, it may be concluded that riparian communities attach considerable economic value to the river system. In order to achieve sustainable management o f the wetland, there is need to increase awareness through radios, trainings, extension services and there is a possibility of raising funds from these communities for continued wetland protection. v TABLE OF CONTENT DEDICATION.......................................................................................................................................... » ACKNOWLEDGEMENT.......................................................................................— .......— ..............iv ABSTRACT.............................................................................................................................................v TABLE OF CONTENT........................................................................................................................... vi LIST OF TABLES................................................................................................................................. viii LIST OF FIGURES................................................................................................................................. ix LIST OF ABBREVIATIONS...................................................................................................................x CHAPTER ONE: INTRODUCTION...................................................................................................... 1 1.1 Background information...........................................................................................................1 1.2 Problem statement.....................................................................................................................2 1.3 Purpose and objectives of the study.........................................................................................4 1 4 Hypothesis of the study............................................................................................................ 4 1.5. Justification of the study................................................................................................................5 CHAPTER TWO LITERATURE REVIEW..........................................................................................7 2.1 Theoretical background of economic valuation of environment................................................. 7 2.2 Review of literature on empirical economic valuation of environment..................................... 12 2.2.1 General literature on economic valuation of environment.................................................J12 2.2 .2 Review of literature on economic valuation of wetlands............................................... 16 2.2.3 Literature review on factors likely to influence the WTP................................................. 19 CHAPTER THREE METHODOLOGY...............................................................................................21 Description of the study area>>***»»**»»a».***»»*ia«**»******a*a»a.21 3 2 Conceptual framework..................................................................................................................22 3.3 Methods and procedure.................................................................................................................24 3.3.1 Contingent valuation method to estimate the WTP............................................................. 24 3.3.2 Empincal model to assess factors influencing the WTP.......................................................30 3 4 Research design, data needs and sources......................................................................................36 3.5 Sampling and data collection procedure.................................................................................... 37 VI 3.6 Data analysis................................................................................................................................38 CHAPTER FOUR RESULTS AND DISCUSSION........................................................................... 39 4 1 Socio-economic profile of farmers in Nyabarongo River catchment area.................................39 4.2 Fanners’ attitudes towards the protection of Nyabarongo River system...................................42 4 3 Fanners’ uses and benefits from Nyabarongo River wetland goods and services.....................45 4 4 Perceived main causes of the degradation of Nyabarongo River system...................................46 4 5 Farmers’ willingness to pay for the protection of Nyabarongo River system............................47 4 5.1 Identification of protest bids.................................................................................................47 4.5.2 Follow-up certainty questions...............................................................................................50 4.5.3 Estimation of mean WTP.................................................... 52 4 6 Factors influencing farmers’ WTP for the protection of Nyabarongo River system................ 53 4.7 Estimation of the compensating variation at District level........................................................ 61 CHAPTER FIVE CONCLUSION AND RECOMMENDATIONS................................................... 63 5.1 Conclusions................................................................................................................................ 63 5.2. Policy implications.......................................................................................................................64
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