Accounting for user expectations in the valuation of reliable irrigation water access in the Ethiopian highlands

We estimate the willingness-to-pay (WTP) for reliable access to irrigation water for a sample of farmers in a watershed of the Ethiopian highlands who do not have prior experience with irrigation. To address the lack of previous irrigation experience, we account for underlying expectations of future irrigation productivity using an Integrated Choice and Latent Variable (ICLV) econometric model. We then compare the ICLV estimates with alternative models that do not account for expectations regarding productivity increases with irrigation. Our results indicate that both the ICLV and alternative provide similar conclusions with respect to the mean WTP for reliable irrigation water access. However, ignoring farmers' perceptions would understate the uncertainty of the mean or aggregate WTP.