ARBA MINCH UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

DETERMINANTS OF HOUSEHOLDS WTP FOR IMPROVED SOLID WASTE

MANAGEMENT ACASE YIRGALEM TOWN, SIDAMA ZONE

A Research Paper Submitted To Arba Minch University College Of Business And

Economics In Partial Fulfillment Of The Requirements For The Award Of Bachelor Of
Art Degree (BA) In Economics

By: Ermias Manola

Advisor: Adugna. E. (Msc.)

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 June, 2018
Arba Minch, Ethiopia
Declaration
This paper is a presentation of my original research work. Whenever contribution of others are
Involved, every effort is made to indicate this clearly, with due reference to the literature;

Information derived from the published or unpublished work of others has been acknowledging
in the text and a list of reference is given. And I declare that this paper has not been submitting
form for another degree or diploma at any university or other institutions of tertiary education.

Name signature date

1.___________________ __________________ ________________

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 APPROVAL SHEET

This is to certify that the thesis entitled determinants of household willingness to pay for
improved solid waste management: A case of Yirgalem town, submitted in partial fulfillment of
the requirements for the degree of Under Graduation with specialization in Economics, the under
graduate program of the Department of Economics and has been carried out by RBE/351/08,
under our supervision. Therefore, we recommend that the student has fulfilled the requirements
and hence hereby can submit the thesis to the department for defense.

By: Ermias Manola

APPROVED BY: BOARD OF ADVISOR AND EXAMINERS

______________ ______________ ______________

Advisor Signature Date

______________ ______________ ______________

Examiner Signature Date

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AKNOWLEDGEMENT

Above all, many tanks go to the Almighty God who always behind every success in one’s
attempt.

This research could not have been possible without the meticulous effort of my advisor. So I
would like to express my heartfelt gratitude to My advisor Adugna E. (Msc) for this contractive
criticisms that help to shape this study in its current form.

I am grateful to Yirgalem local administration office workers for their cooperation in providing
important information. My special thanks also go to My Brothers Mabrat And Eyasu And my
family for judicious support by financial, moral to done this study.

I would like to express heartfelt gratitude to my dorm mate Atota, Zerfu, Eyasu, Arteta Migel
and Kaliab Tefera who have been by my side throughout the challenges and I dedicated this
piece of work to them.

I would like to thank my close friend Zegeye Amanuel for his support any time to done this
peper.

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LIST OF ABBRIVATIONS

AA – Addis Ababa

ETB – Ethiopian Birr

KM – Kilo Metter

LGAs – Low Government Administrative

MSW – Municipal Solid Waste

MSEs – Micro and Small Enterprises

NGO – Non Governmental Organization

SWM – Solid Waste Management

VIF – Variance Inflation Factors

WTP – Willingness to Pay

MWTP- Maximum wtp

UNEP_United nation environmental protection

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Table content page no

Declaration…………………………………………………………………………………….........

Approval…………………………………………………………………………………………..

Acknowledgment………………………………………………………………………………….

Table of content…………………………………………………………………………………..

List of abbreviations………………………………………………………………………………

List of table……………………………………………………………………………………….

Abstract……………………………………………………………………………………………

CHAPTER ONE

INTRODUCTION

1.1 Background of the study………………………………………………………………………

1.2 Statement of the study………………………………………………………………………..

1.3 objective of the study…………………………………………………………………………..

1.3.1 General objective…………………………………………………………………………

1.3.2 Specific of the study…………………………………………………………………….

1.4 Significance of the study……………………………………………………………………….

1.5 Limitation of the study………………………………………………………………………..

1.6 Scope of the study…………………………………………………………………………….

1.7 Organization of the study………………………………………………………………………

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CHAPTER TWO

LITERATURE REVIEW

2.1 Theoretically review literature………………………………………….………………………

2.1.1 Definition of term…………………………………………………………………………….

2.1.2 Sources of solid waste……………………………………………………………………….

2.1.3 Components of solid waste management……………………………………………………

2.1.4 Cause of poor SWM in developing countries………………………………………………..

2.1.5 Conceptual framework of the study…………………………………………………………..

2.2 Empirical Review literature….…………………………………………………………………

CHAPTER THRE

METHODOLOGY OF THE STUDY

3.1 Description of the study area…………………………………………………………………..

3.2 Data type and sources…………………………………………………………………………

3.2.1 Methods of data collection……………………………………………………………….

3.3 Sampling technique and sample size………………………………………………………….

3.4 Methods of data analysis……………………………………………………………………..

3.5 Model specification…………………………………………………………………………….

3.5.1 Theoretical model…………………………………………………………………………….

3.5.2 Empirical model…………………………………………………………………………….

3. 6 Description of variables………………………………………………………………………

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3.6.1 Expected sign of variables………………………………………………………………….

CHAPTER FOUR

RESULTS AND DISCUSSION

4.1 Description analysis…………………………………………………………………………….

4.1.1 Socio-demographic characteristics of respondent…………………………………………

4.1.1.1 Sex distribution of respondents………………………………………………………..

4.1.1.2. Marital status of respondents Education level………………………………………....

4.1.2 Socioeconomic characteristics of respondents……………………………………………

4.1.2.1 Home ownership………………………………………………………………………..

4.1.3 Current situation of SWM………………………………………………………………….

4.1.4 Solid waste storage of household…………………………………………………………

4.1.5 Household WTP for improved SWM……………………………………………………..

4.1.9 Occupation of household…………………………………………………………………

4.2 Econometric analysis…………………………………………………………………………..

4.2.1 Results of Tobit…………………………………………………………………………..

4.2.2 Diagnostic test results of the model………………………………………………………

4.2.3 Regression result interpretation…………………….……………………………………

CHAPTER FIVE

Conclusion and recommendation

5.1 Conclusions…………………………………………………………………………………….

5.2 Recommendation……………………………………………………………………………….

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Reference

Appendix

Lists of table

4.1 Summary distribution of age, family size and education……………………………………….

4.2 sex distribution of the respondents…………………………………………………………….

4.3 Distribution of Marital status………………………………………………………………….

4.4 summary distribution of income, staying year and waste level……………………………….

4.5 Home ownership……………………………………………………………………………….

4.6 Satisfaction distribution of respondents……………………………………………………….

4.7 Water disposal place…………………………………………………………………………..

4.8 Distribution of WTP……………………………………………………………………………

4.9 Distribution of MWTP…………………………………………………………………………

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 Abstract

The study examined socio economic variables and other factors influencing wtp for improved
waste disposal services. Primary data was collected from 100 households by using simple
random sampling technique. It was analyzed using descriptive statistics and Tobit regression
model. The result reveals that 65 percent of the respondents are male while 67 percent are
married with an average household size of 3.07 members. Majority of the respondents are in
their active age with mean age of 36.5 years. Most of the respondents have formal education, the
average years of education is 4 years. About 37 percent of the households dispose their solid
waste through burning. Majority of the households (67 percent) are willing to pay for improved
waste services. The average amounts of money that households are willing to pay for improved
solid waste management in Yirgalem town is 8.51 birr's per month. The tobit result reveals that
sex, household monthly income and years of education, home ownership, level of waste, and age
are statistically significant at 5% of significance level, while other factors are statistically
insignificant. It was recommended that the town municipality needs to undertake educational
campaign in the town on how to deal with solid waste. .

Keywords: contingent valuation method, Tobit regression model.

CHAPTER ONE

1. INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Ethiopia is a poor agrarian country with per capita income of USD 350 (World Bank, 2011).
Recently, however, the country has been achieving a promising economic growth. According to
The Economist (January 6, 2011), the country had the 5th fast growing economy in the world
during the periods 2001-2010 at an average annual GDP growth rate of 8.4% and the 3rd with a

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forecast of 8.1% during the periods 2011-2015. Though majority of the nations society are rural,
the urbanization rate is high due to high rural-urban migration and population growth.

In Ethiopia many cities are faced with the problem of rapid expansion due to population increase
and this, no doubt, brought increasing strain on urban infrastructure facilities. On area in which
this strains has become obvious is in waste management where the existing system appears to be
in capable of coping experiencing an increase rate generated on daily basis the urban centers are
experiencing an increase rate of environment deliration, with return dumped a long drain age
channels.

Solid wastes by definitions include refuse from households, non hazardous solid waste from
industrial and commercial establishments refuse from institutions market waste, yard waste, and
street sweepings. Broadly Household solid wastes refer to refuse from households which result
from domestic and household activities such as food preparation, sweeping, cleaning, fuel
burning and gardening wastes old clothing, old furnishings retired appliances, packaging and
reading materials. Increase in population and urbanization increases the amount of solid waste
generation, and if it not managed properly, it creates serious negative impacts on human health,
environment and also the economy, Hoornweg, D.; Bhada-Tata, (2012).

In early times, authorities transporting the waste out of residential places in order to minimize
the health impacts of wastes. After the end of the Second World War, a high rate of population
and urbanization has brought an increased demand of urban and waste disposal land. In
developed countries, several mechanisms of waste management have been discovered and
applied. However, the condition is different in developing countries (Lindell, 2012).

The people who do not get solid waste collection service either burn the waste on the roadside or
dump it on public places and throw on nearby river (Medina, 2010)11

Solid waste disposal sites turn into the sources of contamination due to the incubation and
production of flies, mosquitoes, and rodents. They, in turn, are the agents of disease that affect
population's health (Abul, 2010). Consequently, solid waste is one of the foremost worries of
developing countries because of inappropriate planning, inadequate governance, resource
constraint and managerial inefficiency (Mary and Adelayo, 2014).

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As of IUCN (2010), it is always the poor who suffer from the effects of living in dirty conditions.
The threat of disease from solid waste mismanagement is ever lasting. It affects workers
productivity, keeps children out of school, lowers resistance to shocks and etc. These put poor
under severe financial constraints and deprive opportunities to improve their standard of living.
As a result, improper solid waste management has very high economic, environmental and social
costs that have not been seriously considered by economic agents. Like the others developing
countries, solid waste management is a serious problems to Ethiopia. This is mainly due to rapid
urbanization and population growth. Many towns in the country lack the financial resources and
institutional capacity to provide the needed infrastructure for adequate solid waste management
(Dagnew et al, 2012). The solid waste management in Ethiopian cities has not been carried out in
a sufficient, suitable and appropriate manner. As a result, the quality of environment in cities has
become more serious from time to time, and people are suffering from living in such condagents
Benja et al.,(2011). Yirgalem, like other towns of Ethiopia, is characterized by high and rapid
population growth. Urbanization and high population growth are responsible for many
environmental problems of which one is solid waste.

Around the streets, market, commercial and residential areas, solid wastes easily appear. Despite
the progress by Yirgalem Town to address the challenges of solid waste management, still there
are unresolved problems like low coverage of solid waste management (SWM) service, absence
of well designed transfer site, and problem of demarcating the final site of disposal. In generally
cost recovery is a serious problem of solid waste management in the Yirgalem town. Therefore,
the aims of the study are to identify the socioeconomic and demographic factors that affect the
household willingness to pay for the environmental quality in Yirgalem town.

1.2 Statement of the Problem

Waste is unavoidable consequence of the consumption and production activities of a society.

Proper handling of waste is becoming a serious problem of a town all over the world especially
in the developing countries where financial and technical scarcity is very serious (Dagnew et, al,
2012).

According to UNEP (2004), risk associated with inadequate solid waste management has human
health, environment and aseptic risks. Human health risks involve disease caused by pathogenic

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organisms, disease caused by insect rodent vectors, water and air pollution related disease.
Environmental risk can be land pollution, water pollution and air pollution. Aesthetic risk may
rise from improper handling of waste which create bad odor.

In this regard, various researchers in different parts of the world conducted their study to identify
and analyze the determinants of household WTP for improved solid waste management in their
perspective countries. Some of the most important works are: Roy et al (2013) revealed that
monthly average household expenditure, household size, environmental awareness and number
of working woman presented in family positively associated with the WTP in India. Khattak and
Amin (2013) in Pakistan show that location and awareness were found to be influencing WTP.
Alhassan and Mohammed (2013), in Ghana also show that family disease and Gender difference
were found to be influencing WTP. Adebo and Ajewole (2012) showed that WTP for waste
disposal is significantly affected by gender, nature of primary occupation, marital status, level of
education and average monthly income in Kenya. Niringiye and Omortor (2010), in Uganda
revealed that the age of the household head is negatively associated with the willingness to pay
for solid waste management.

When we come to Ethiopia, some studies were conducted in this regard. Dagnew et al (2013),
analyzed determinant of household WTP for improved solid waste management by using probit
model and study found WTP significantly related to sex and awareness of environmental quality,
among other factors. As of Tewodros and Samson (2009), WTP is significantly affected by
household income and current access to waste disposal containers after data analyzed by using
tobit model. In the same way Birtukan (2013) shows that households’ WTP is affected by level of
education, family size, number of children, by using the same model.

All the mentioned studies mainly focused on the supply side of solid waste management with
little or no reference to the demand side. Demand side information is what is missing and
desperately needed to design an efficient and sustainable solid waste management strategy. But
this study ties to address the demand sides of household towards environmental quality. The
results from this study have policy implications in the provision of sustainable and improved
solid waste management in Yirgalem town. This study will also tries to fill the gap by
considering some other un studied variable which Determine WTP like years of stay, household
income, Home ownership, Marital status, and age of household by using Tobit model in

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Yirgalem town. It is noted that in Yirgalem town the existing solid waste management is very
poor and it is conducted by only the town municipality having low performance to recycling with
low or at all non involvement of the households. Therefore, the researcher was intending to
identify the socioeconomic and demographic factors that affect the household willingness to pay
for the improved solid waste management in Yirgalem town.

Finally this study will tries to address the following research question

 What are the major socioeconomic, environmental and demographic factors which
affect household willingness to pay for improved solid waste management in
Yirgalem town?
 What is average monthly money amount that household are willing to pay for
improved solid waste management in Yirgalem town?
 What are implications for policy and suggests alternative solution for the existing
problem of solid waste management in the Yirgalem town?

1.3 Objective of the Study

1.3.1 General objective

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The general objective of the study is to identity the determinants of household willingness to pay
for improved solid waste management in Yirgalem town.

1.3.2 Specific Objective

 To identity socio-economic, environmental and demographic factors which affect

household willingness to pay for improved solid waste management in Yirgalem
town.
 To determine households mean (Average) WTP for improved solid waste
management in Yirgalem town.
 To draw concluding remarks and policy implications to the existing situations of the
town.
1.4 Significance of the Study

 The university will benefit from having additional researcher paper for shelve.
 It initials other interested researcher to undertake a better and detail study in the area.
 The finding of this research will be input to policy makers.
 The information can be used to increase people’s welfare by introducing cost
recovery by tapping into households’ willingness to pay.

1.5 Limitation of the study

In doing this paper the researcher face various problem the main problem are as followed.

 Lack of time with academic running

 This study could not take more than 100 households due to shortage of financial
resource.

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  Unwillingness of some target population to fill the questionnaire and to conduct an
interview.
 Due to lack of time study was used only Tobit model.

1.6 Scope and delimitation of the Study

Even though users of the improved solid waste management service include public bodies,
commercials, and industrial users, this study, however, delimited only with demand sides of
household willingness to pay for improved solid waste management in Yirgalem town using
cross-sectional data at a point in time. The target population of the study was all households who
are the major waste suppliers to the town.

1.7 Organization of the paper

The study is comprises five chapter: the first chapter introduces the back ground of the study, the
research objective and questions, significant of the study, the scope and limitation of the study,
and out of the study while the second chapter deals with literature review of the study the third
chapter deals with methodology of the study and data source, the four chapter also deals the data
analysis which contains descriptive analysis and econometrics interpretation and the final chapter
present the conclusion and recommendation drawn finding of the data

CHAPTER TWO

2. REVIEW LITERATURE

2.1 THEORETICAL REVIEW LITERATURE

2.1.1 DEFINITION OF TERM

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Solid waste refers to the range of garbage arising from animal and human activities that are
discarded as unwanted and useless. Solid waste is generated from industrial, residential and
commercial activities in a given area, and may be handled in a variety of ways. As such, landfills
are typically classified as sanitary, municipal, construction and demolition or industrial waste
sites. Waste can be categorized based on material, such as plastic, paper, glass, metal, and
organic waste. Categorization may also be based on hazard potential, including radioactive,
flammable, infectious, toxic, or non-toxic. Categories may also pertain to the origin of waste,
such as industrial, domestic, commercial, institutional or construction and demolition. Regardless
of the origin, content or hazard potential, solid waste must be managed systematically to ensure
environmental best practices. As solid waste management is a critical aspect of environmental
hygiene, it needs to be incorporated into environmental planning.

Solid Waste Management is defined as the discipline associated with control of generation,
storage, collection, transport or transfer, processing and disposal of solid waste materials in a
way that best addresses the range of public health, conservation, economics, aesthetic,
engineering and other environmental considerations. In its scope, solid waste management
includes planning, administrative, financial, engineering and legal functions. Solutions might
include complex inter-disciplinary relations among fields such as public health, city and regional
planning, political science, geography, sociology, economics, communication and conservation,
demography, engineering and material sciences.

Solid waste management practices can differ for residential and industrial producers, for urban
and rural areas, and for developed and developing nations. The administration of non- hazardous
waste in metropolitan areas is the job of local government authorities. On the other hand, the
management of hazardous waste materials is typically the job of the generator, subject to local,
national and even international authorities.

2.2.2 Source of Solid Waste

The materials that are collected under the term solid waste include many different substances
from a multitude of source, the source of solid waste are dependent on the socio economic and
technological level of society. As small rural community in Ethiopia many have knows types of
solid waste from knows source: while a big cities such as Addis Ababa may have many source.

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Most people can identify solid waste management when their empty trash can there are much
more house hold waste that are considers to waste than realized.

In all cases the following are universal:-

1) Besides generated from living household (Domestic) generally contain non hazardous waste,
kitchen waste, and ash are common in Ethiopia.

2) Agricultural solid waste due to agricultural activities: food residuals, animal dung crop
resident etc. such wastes are usually none hazard our negligible in rural Ethiopia.
3) Commercial: waste generates from business establishment, shops etc that generates generally
hazardous waste such as paper car board: wood metal and plastic.
Industrial waste: from various type of industrial process, the nature of the waste depends on the
type of industry and kinds of raw materials involved. There may be toxic and hazard duos waste
that have adverse effect to the environment.

Institution solid waste: generating from public and government institution office, religious
institution, school, university etc, generally not hazardous.

Hospital solid waste: discarded, unwanted solid waste from hospital of both non-hazardous and
hazardous waste, the above classification to identify whether the waste is hazardous or not.

Wish respect to Ethiopia, context, many urban centers are largely characterized by public
provision of urban infrastructure service among the infrastructure service provided by the public
agencies as water supply and soil waste collection are usually poor in quality and quantity. The
reason for the in convenience, particularly in the case of social waste, is mostly related with poor
administration stricture, weak man power/poor intension of local government to participate
private enterprise and inadequate financial arrangement, from 1998 onwards, many
municipalities have started to introduce private enterprise as partner for primary soils waste
collection, such partner are establishing micro enterprises, which organize themselves from street
dwelling, unemployed women and youth, recently, in Addis Ababa, capital of the nation, the
number of micro enter praises who are involved in primary solid waste collection have been
dramatically increasing from 14 in 1998 to 500 microenterprise by 2006 of these a few enterprise

18
have engaged on secondary collection which is transportation of solid waste disposal site
(AAMES: 2006)

2.2.3 Components / hierarchy of solid waste management

The following information taken from different source provided basic insight in to the solid
waste management components and the preferred solid waste hierarchy to address the increasing
volume of municipal solid waste that is generated by household or instruction in the country. The
environment protection agency of the united nation recommendation using hierarchical approach
to waste management with four components: source reduction, recycling, composition and land
filing, environment protection agency has ranked the most environment sound full approach for
municipal solid waste management (www.full.gov, loan, etal 1999.cointreauliven, 2000)

1. Source reduction

This most preferable method to provide basic improvement on solid waste management.
According to cointrealiven, 2000 and haa.et al et al, 1998 source reduction is defined as to any
reduction of waste generated daily in the Town design, manufactures, purchase, or reuse of
materials or products their amount or toxemic before they become municipals waste further they
elaborate that source reduction helps to reduce costs for waste collection transportation and land
filling. It avoids the cost of recycling, compositing and also conserves resource and reduces
pollution.

2. Recycling

According to our environment protection agency municipals solid waste recycling refers to the
separation of collected solid waste and transformed manufacturing of solid waste in to usable or
marketable product. This implies that the recycling program ensures to enable countries to
prevent so much waste from ending up in landfills and incinerators, furthermore, it support low
income household to buy purchase the recycle solid waste at lower cost.

The US environmental protection agency also presented that in developing country besides to
large scale private sector enterprise, many small scale enterprise are engaged on recycling of
solid waste. These small and micro enterprises sometimes belonging to the informal sector, if

19
they operate in unregistered and unregulated way. In the previous, informal waste collection was
seen as social out cost; their businesses are illegal and considered as a problem for urban life.

Compositing:-

compositing is another way of recycling, according to the environment protection agency,

composting is a biological decomposition of organic waste such as animal waste and yard waste
in to humans a soil like materials composition is natural methods of recycling of organic waste
materials, which is used as fertilizer (www.epa.gov). A World Bank paper (2000) argued that
although compositing is an essential element for sustainable development of solid waste
management it is neglected with integrated waste management programs.

Thus, the World Bank recommendation that compositing should a wed speared practice in
developing countries.

3. Land filling

The fact that source reduction (reuse), recycling and composting taken the large protection solid
waste management system; some solid remain to be placed in landfills, land of waste is the most
impotents and widely. Used on solid waste management methods. However, landfills practice
most low and middle income countries are open dumping and burning with very little control
(Hein, et al 1998). The subsequent of waste dispose in open land fill is that problem on public
health.

4. Combustion

For many, in developing countries burring of waste material in the open land fill disposal site has
been a common method of reducing the volume of waste combustion refers to the confined and
controlled burring which helps to decreased the volume of wasted disposed on open land fails,
further, in industrialized countries the waste burring processes recover energy which is used to
produced stream and electric Town (Horn wera, et al, 1998)

2.2.4 Causes of poor solid waste management in developing countries

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There are four major problems faced in developing countries on municipal solid waste
management such as: in adequate service coverage, operating in efficiency in adequate service
management of special waste and in adequate land fill disposal (Zurabug and scheretenlie, 1998)

A) In adequate service coverage

Zurbug and schetenilb 1998 stated that solid, waste collection service cities in developing
countries generally serve only limited part of the urban population which is founded at the heart
of the Town and high income people. Those who are remaining without waste collection service
are usually low-income living at periphery.

B) Operational in efficiency of service and limited use of the informal sector.

According to and schereferileb, (1998) municipal authorities in development countries usually

spend around 20 to 50% of the total municipal expenditure of the whole African cities. Whole
African cities, however, events such expenditure the level service is low. Only 40 to 50 percent
of solid waste is collected and saving less than 50% of the population once collected it is
disposed off in un controlled open dump.

C) In adequate management of special waste (hazardous waste)

Zurbrug and scheretenlib put this as third challenges argument. They argued that waste produced
from hospital and clinic can be regard as special waste non industrial hazardous waste,
Approximately 70% of the total waste generated by hospital and clinic assumed to be non-
hazardous waste, where as 20% of the total regard as hazardous and infection waste.

While the remaining, 10% is considers as non-infections: but hazardous wastes therefore, it is
essential that the generated. Waste be separated the non-hazardous and infection waste are: sharp
needles, scarps, pharmaceutical and chemical residues and other hazardous waste (Zurbruy and
schereterlib, 1998).

D. Inadequate land and disposal

In most developing courtiers solid wastes are deposed off on uncontrolled open dumping sites.

21
These unsafe open dumps lay on large plate, which is un controlled further it is exposed to
scavenger, informal waste pickers, and animals eatery and ingesting of waste birding insects and
usually produces unpleasant odor many authors suggested that the main reason t the inadequate
land fail disposal is due to poor financial and institutional arrangement especially where local
government are under financed and low level of institutional capa Town and rapid population
growth further (Zurbruy and schereterlib, 1998), indicated that inadequate land fail deposal
have acquired in area where appropriate guide lines for sitting lacks design and operation of new
land fails as well as missing recommendation for possible up grading option of gaiting open land
fail disposal sites.

Socio-demographic factor

 Age of household
2.2.5 Conceptual frame  Marital Status work of the study

 Sex of households
 Education Level
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Family related factor

 Family Size
 Number of
Working Woman MWTP
 Disease
 Responsibility of
Solid SWM

EXSTING SITUATION FACTOR

 Satisfaction
 Storage Place
 Staying Year
 Household Area
 Availability Of Waste
Collection Service

2.2 Empirical review literature

Solid waste management is one of the critical issues the in the world, particularly in developing
countries. This had led to the recognition of improved SWM as a central point for international
environmental sustainability and development. Several studies have been conducted to analyze

23
the demand side or households’ willingness to pay for improved SWM system. In India, Roy et al
(2013) examined the WTP for sustainable solid waste management using binary probit
regression. The study revealed that monthly average household expenditure, household size,
average education, environmental awareness and number of working woman presented in family
positively associated with the WTP for solid waste management scheme. The study finally
concluded that if solid waste management scheme is introduced, there is a probability of success.
Anjum (2013), in Pakistan, using logistic and multiple regressions, identified that willingness to
pay for solid waste management is significantly affected by age, household income, educational
and environmental awareness. In the same way, Khattak and Amin (2013) aimed at finding out
the public WTP for the treatment of environmental hazard in the form of solid waste in Pakistan.
Using binomial logit model, the study found that income of household, family disease history,
education and size of households as major factors which affect the household’s decision
regarding WTP. Mustafa et al (2014) shows that education, income, awareness, location and
household size were found to be influencing WTP. Ojo et al (2015), in Nigeria, analyzed
improved household solid waste management system using multiple regressions model. The
study identified that age, income, environmental awareness and household expenditure have a
positive and statistically significant relationship with the willingness of households to pay for
waste disposal in the area. However, household size has a negative and statistically significant
relationship with households’ willingness to pay. In the same country, for Mary and Adelayo
(2014), the households’ willingness to pay is affected by the price of service, age of the
respondents, level of education and household size.

Niringiye and Omortor (2010), however, revealed that the age of the household head is
negatively associated with the willingness to pay for solid waste management. Other variables
(education, marital status, household size, household expenditure and weight of solid waste) are
not significantly associated with the willingness to pay for improved solid waste management.
The study, finally, concluded that there is little chance of success if solid waste collection service
charges are introduced. When we come to Ethiopia, some studies were conducted in this regard.
According to Dagnew et al (2013), residents’ WTP for improved solid waste management is
significantly related to income and awareness of environmental quality, among other factors. As
of Tewodros and Samson (2009), WTP is significantly affected by household income and current
access to waste disposal containers. However, demographic features such as education, age,

24
household size and gender have insignificant impact on the demand for improved services of
waste collection. In the same way, Birtukan (2013) shows that households’ WTP is affected by
level of education, family size, number of children, length of time (years of stay), income and
household work. Family size is inversely related with the probability of saying yes to the WTP.
The remaining variables have a positive effect on WTP amount. But this study will apply Tobit
regression mode by using Stata soft ware package to analyze and determine factors that affect
money amount that households are willing to pay for improved solid waste management
Yirgalen town

CHAPTER THREE

3. RESEARCH METHODOLOGY

INTRODUCTION

25
This chapter gives an outline of research methods that were followed in the study. It provides
information on the participants, that is, the criteria for inclusion in the study, who the participants
were and how they were sampled. The researcher describes the research design that was chosen
for the purpose of this study and the reasons for this choice. The instrument that was used for
data collection is also described and the procedures that were followed to carry out this study are
included. The researcher also discusses the methods used to analyze the data.

3.1 Description of the area

The study was conducted in southern part of Ethiopia, Sidama Zone, Dale woreda special in
Yirgalem town. The town is located 316km from south of Adiss Abeba and 47km south of
Hawassa the regional capital city. The town has 6°45 N latitude and 38° 25 E longitudes and an
elevation of 1776 meter. It has large settlement in Dale Woreda and estimated total population
79101 (50840 are men and 28261 are women). The ethnic groups reported in the town were
dominantly Sidama. Sidamigna and Amharic language are spoken as a first and second language.
Agriculture and trade is the main sources of income conserving the life condition of the people in
the area. In generally low living standers and poor economic circumstance characterize the
people in Yirgalem town.

3.2 Data type and source

To address the research question raised by the study Crosse- sectional data set was used and in
order to attain the objective of the investigation the study was used both primary and secondary
source of data.

3.2.1 Method of data collection

26
During the field of the study, the researcher was used both primary and secondary source of data
so as to obtain accurate and reliable data. The primary data was collected by preparing
questionnaires for sampled households in Yirgalem town and secondary data was collected from
different source like: magazine, published and unpublished documents, etc.

Questionnaire Design

A semi-structured questionnaire was used to collect data from the households, which included
questions related to the socioeconomic, demographic characteristics of the households, current
SWM services provided by the municipality, awareness about the impact of waste on the
environment, and questions related to willingness of the households to pay a fee for improved
waste collection service. The WTP for improved service is mostly reliant on household’s
economic conditions and thus it could also be validated by regressing WTP against
socioeconomic variables of the target group. The awareness of the impact of waste on the
environment was an open-ended question, which allowed respondents to answer based on their
own understanding rather than influencing their decision by providing additional information.
The information was used to identify the current situation of SWM practices and characteristics
of the households that can influence their WTP and the maximum amount they are willing to pay
for the improved waste collection services.

In order to elicit the maximum WTP amount for improved waste collection service, an open-
ended CV method was used in this study.

3.3 Sampling techniques and Sample size

The target population for this study was all households who are major suppliers of waste to the
Yirgalem town.

To develop sample frame for the study, researcher was used probabilistic sampling techniques.
From the probabilistic sampling technique, researcher was used simple random sampling
technique because the target population for this study is homogeneous and a simple random
sampling technique reduces bias by giving equal chance to target population who included in the
sample.

Sample size determination

27
To determine the sample size first we must identify which formula is appropriate for this study.
Therefore to determine the sample the researcher will use Yemane (1967, 886) formula of
sample size determination. Since it expensive to cover the cost of research to address all
elements of the population (total number of all kebeles), the study would be conducted in
selected kebeles by considering the representativeness.

Let apply the Yemane 1967,886 formula of sample size determination:

n=N/1+N (e2)

Where; n – sample size

N – Total population of the town

e2 - sampling error

n = 79101/1+79101(0.12)

e = 10 % of risk of committing sampling error.

n = 99.51~ 100

n = 100

3.4 Data analyses

The study was used both descriptive and econometric methods of data analyses. Descriptive
methods would be to address the first research question of the study that is estimating the
average monthly money amount that households are willing to pay for improved solid waste
management and to summarize the demographic and socio-economic characteristics of the
sample respondents. Econometric method of analysis on the other hand would be used
intensively to address the rest research questions of the study that is to determine factors which
determine household willing to pay for improved solid waste management in study area. This is
for the fact that descriptive method of analysis is dubious to make causal-effect type of analysis.
To this end a multivariate econometric model relating the level of money amount that households
are willing to pay with various characteristics of the household and other potential external

28
variables which may affect household’s decision to pay would be specified and estimated using
Tobit econometric model. Stata software package will use to run Tobit regression model.

3.5 Model specifications

The econometric model specification that was used to empirical identity the factor behind
willingness to pay amount of households is Tobit model. This is because the dependent variable
(MWTP) is limited dependent (partial continues) variable which is measured by money amount
that households are willing to pay for improved solid waste management in the study area. OLS
is both biased and inconsistent when the dependent variable of a model assumes large number of
zeros either for data censoring or truncation problems (Gujarati, 2004). In this study the
dependent variable, willingness to pay amount, can assume large number of zero values as a
result of households optimal decision not pay. Thus, Tobit model is considered as appropriate
model than OLS.

3.5.1 Theoretically model

The main objectives in WTP survey are to calculate mean WTP and estimating parametric model
to allow inclusion of respondents’ socio-economic factors in to WTP function. Incorporation of
individuals’ socio-economic variables into the CVM helps the researcher to gain information on
validity and reliability of the CVM results and increase confidence in practical application of
results obtained from the CVM empirical analysis (Haab and Mc Connell, 2002). Note also that
the issue at hand involves yes or no response, on one hand, and elicitation of specific monetary
value for the yes responses, on the other hand. However, the logit model provides information
only about respondents’ decision to pay or to not pay for the improved SWM service, but not on
the maximum amount of money they are willing to pay. Therefore, the Tobit model was used to
evaluate factors influencing the maximum amount of money that households are willing to pay.

3.5.2 Empirical model

The Tobit Model

29
An alternative method to OLS when the dependent variable response is less or equal to zero for a
significant fraction of the observation is the so-called Tobit model. Tobit econometric model is
used to analyze the determinants of WTP and the maximum amount of money that individuals
are willing to pay. This model has an advantage over other discrete choice models (Linear
probability model, Probit, and logistic) in that, it reveals both the probability of willingness
to30pay and the maximum WTP of the respondents. Following Jhonston and Dindaro (1997) and
Maddala (1997), the Tobit model can be specified as:

MWTPi= β0+ βiXi + εi

MWTP = MWTPi if MWTPi > 0 …………………………….. (1)

= 0, if MWTPi ≤ 0

Where

MWTP is a vector of willingness to pay which is censored at 0;

X is a matrix of explanatory variables that are hypothesized to influence willingness to pay

βi is vector of unknown parameters to be estimated corresponding to the matrices of explanatory

variables X;

εi is a disturbance term which is independently and normally distributed with mean zero and
common variance δ2 With εi ~N (0, δ2) and;

MWTPi is a latent variable corresponding to MWTP.

Remember that a value of MWTP is observed when it is greater than zero. Then, the estimable
model with censored data at 0 is:

MWTPi= β0+ β1Age + β2Sex + β3 MS + β4 Y + β5 Edu + β6HO + β7QW +β8FS + β9SY +

β10 SAT + µi

Where

β0 =Constant

30
(β1 -β10) = Intercept or coefficient

WTP= willingness to pay for improved solid waste management

Age = Age of respondent

Sex = Gender difference

Mrs = Marital status

Fs = Family size

Hhy =Household income

HHE =Household expenditure

Edu =Education level

TS = Time spent in the area.

HO = Home ownership

µi = the random error term, also known as disturbance term is used to capture the unobservable
affect of particular variables. This also accounts for the data errors, no doubt how good the
model is specified, there always exists chances of error. This error term is normally distributed
with 0 mean and has a constant variance.

3.6. Description of variable

Monthly Income of the Household

31
This variable refers to the monthly money income of the household in terms of Birr. It includes
the income of the head and all other members of the household from all sources. There is a
general agreement in environmental economics literature on the positive relationship between
income and demand for improvement in environmental quality. Therefore, study will expect
income to affect willingness to pay and its amount positively and significantly.

Sex of Respondents

This is a dummy variable taking 1 if the respondent is male; 0 otherwise. This study expects
female respondents to be more willing to pay than men, since traditionally it is the role of women
to clean the house and dispose the waste.

Age of Respondents

This refers to the age of the respondent and it is expected to affect willingness to pay negatively.
This is because old people may consider waste collection, as government’s responsibility and
could be less willing to pay for it. While the younger generation might be more familiar with cost
sharing like for education, health, etc and could be more willing to pay32

Marital Status of Respondent

Whether the respondent is currently single or not is expected to influence the value the individual
gives for the proposed change. MSR is dummy variable taking 1 if the respondent is married; 0
otherwise, and it is expected to have a positive sign. This is due to the fact that married people
are likely to be more responsible to keep the environment clean than single ones because married
respondents are likely to have larger family size and hence face higher risks than those not
married.

Staying years

This refers to the number of years the household has been living there. This is expected to
influence willingness to pay in the positive direction, since the longer the year the household has
been there, the more they would understand the problem of solid waste management of that area,
and the more they are expected to pay.

Family size of

32
This refers to the number of children in the family. This variable is expected to have a positive
effect on willingness to pay. This is due to the fact that the more children in the household, the
more willingness to maintain a clean environment in the future in which they will grow with
lesser risk due to cleaner environment.

Year if schooling

The education variable is the total years of formal education attained by the household head.
Educated people are expected to understand the adverse effects of waste on human health and the
environment. This study expects that education will have a positive influence on households’
WTP for improved waste collection services.

House Ownership

This study expects that those who are living in their own house are more willing to pay for the
improved waste collection service than those who are living in a rented property. This is because,
house owners are more concerned about maintaining the cleanliness of their property and
surroundings.

Quantity of Solid Waste Generated

It is one of the continues variable which measured in "kurtu". This variable expected to affect
MWTP positively. This can be explained by the fact that, the more a household produces solid
waste the more the problem in dealing with solid waste and hence the more would be the
willingness to pay.

Level of satisfaction with the existing waste management system.

It is one of independent variable which measured dummy by taking value 1 if the household is
satisfied with existing solid waste management service and 0 otherwise. Since households which
are satisfied with the existing management system are more willing to pay for the improvement,
we expect positive sign. 33

3.5.4 Expected sign of variable and it's measurement.

S. No Variable name Description Hypothesized effect

33
1 Age Continuous -

2 Sex Continuous -

3 Family Size Continuous -

4 Education Level Continuous +

5 Marital Status Dummy +

6 Level of waste Continuous +

7 Staying years Continuous +

8 Home ownership Dummy +

9 Satisfaction Dummy +

Income of household Continues +

Source: Own computation, 2018

CHAPTER FOUR

4. RESULTS AND DISCUSSION

This chapter deals with presentation, analysis and interpretation of data that were collected
through questionnaires. The collected data were analyzed and interpreted using different

34
statistical tools such as frequency, mean, percentage, standard deviation and to determine WTP
amount study used econometric (Tobit model regression model).

4.1 Descriptive analysis

4.1.1 Socio-Demographic characteristics of respondent

Table 4.1 summary distribution of Age, family size and education level of the respondents

Variables Observation Mean St. Dev Min Max

Age 100 36.5 6.92 28 56

Family size 100 3.07 1.56 2 9

Education 100 4 1.94 0 9

level

The average family size of the sample households was found to be 3.06 with minimum of 2
and maximum of 9 members within a single household which is similar to the national census of
3.69, (CBN, 2014). Regarding age of the respondents, the average years of sample households
found to be 36.5 years which ranges from 21 to 56 years of age and as table shows above, the
average years of schooling of sample households was found to be 4 years with its standard
deviation of 1.94 and the minimum and maximum years of schooling of sample households were
0 and 9 grade respectively.

4.1.1.1 Sex distribution of the respondents

Table 4.2 Sex of the respondent

Sex Frequency Average WTP St. dev Min Max

Male 67 8.56 9.15 0 28.96

35
Female 33 21.35 23.73 0 30

Total 100

Source: Own survey, 2018

As table shows out of 100 respondents, 67% of the respondents were male and the remaining
33% were female out of the sample size. In this regard the average money amount that female
households were willing to pay for improved solid waste management was 21.35 birr’s per month
with its minimum and maximum value 0 and 30 birr per month. On average the male households
willing to pay 8.56 birr ranging 0 and 28.96 birr per month. In this regard the higher portion of
female respondents had positive willingness to pay for improved solid waste management than
male.

4.1.1.2 Marital status of respondent

Table 4.3 Distribution of marital Status

Marital status Frequency Average WTP St. dev Min Max

Married 74 9.61 10.54 0 30

Other 26 6.71 8.94 0 28

Total 100

Source: Own survey, 2018

As it shown in the above table, most of households was married which constitutes 74% of
the total sample and 26% of the total sampled respondents were unmarried (other). On average
married households willing to pay 9.61 birr’s ranging between 0 and 30 birr per month for
improved solid waste management in Yirgalem town and unmarried households on average
willing to pay 6.71 birr per month with its minimum and maximum of 0 and 28 birr for improved
solid waste management. In this regard married households had higher positive willingness to
pay for improved solid waste management than that of the unmarried respondents.

36
 4.1.2 Socio-economic characteristics of the respondents

Table 4.4 Summary distribution of income per month, staying years and level of waste of
the respondents

Variables Observation Mean St. Deviation Min Max

Income 100 1537.52 675.977 200 2840

Staying years 100 19.11 10.33 2 40

Level of waste 100 2.5 0.7256 1 7

Source: Own survey, 2018

As table indicate above the average monthly income of sample households were 1537.52 with
minimum monthly income of birr 200 and maximum of birr 2840. The level of income increases
the percentage of positive responses for improved solid waste management system. The average
staying years of household in Yirgalem town was 19.11 years ranging from 2 and 40 years. On
average sample households generate 2.5 kurtus of solid waste per week, with the minimum and
maximum being 1 and sacks per week, respectively.

4.1.2.1 House ownership distribution of the respondents

Table 4.5 Home Ownership

Home Frequency Average WTP St. dev Min Max

37
ownership

Yes 40 18.70 8.29 7 30

No 60 2.29 4.372 0 30

Total 100

Source: Own survey, 2018

In terms of house ownership 40% of households were living in their own house in Yirgalem
town and remaining 60% of household from the total sample living in rented house. As table
shows on average households who currently living in their own house willing to pay 18.70 birr
per month with its minimum and maximum value 7 and 30 birr respectively for improved solid
waste management and households who currently live in rented house willing to pay 2.291 birr
per month ranging 0 and 30 birr for improved solid waste management in Yirgalem town. In this
regard the higher portion of house owner respondents had positive wtp for improved solid waste
management than respondents without any ownership of house.

4.1.3 Current situation of solid waste management

Table 4.6 Satisfaction distribution of respondents

Satisfied Frequency Average WTP St. dev Min Max

Yes 73 8.634 10.36 0 30

No 27 8.6518 9.88 0 30

Total 100

Source: own survey, 2018

As table 4.6 shows out of 100 sampled households, 73% of households satisfied with the existing
waste collection and disposal service provided by the town administration and 27% of
respondents were not satisfied with the existing waste collection and service provided by city
government. On average satisfied households willing to pay 8.934 birr per month with it
minimum and maximum value of 0 and 30 birr for improved solid waste management in

38
Yirgalem town and unsatisfied households willing to pay 8.6518 birr per month ranging 0 and 30
birr for improved solid waste management. In this regard 100% of satisfied households had
higher willingness to pay for improved solid waste management than unsatisfied households.

4.1.4 Solid waste storage of household

Table 4.7 Waste disposal place

Storage Frequency Percentage Mwtp

Near containers 32 32 11.8

Open space 12 13 17.9

Near their home 4 4 8.98

By municipality 52 52 20.52

Total 100 100

Source: Own survey, 2018

Around 32% reported that dispose their solid wastes on the nearby container, 12% of
respondents dispose solid waste on an open space, and 4% on riversides near their home. It was
only for 52% of the respondents that their wastes are collected from home by the waste picker
cooperatives employed by the municipality on contract basis. All most all respondents reported
that they dispose their solid waste altogether be it organic, plastic or galas with no waste
separation at the source. On average households who dispose waste by municipality is willing to
pay 20.5 birr for improved solid waste management with its minimum and maximum value of 0
and 30 birr respectively. On average households who dispose their waste near to the near the
container, open space, and near the home willing to pay 11.8, 17.9 and 8.98 birr for improved
solid waste management in Yirgalem town respectively.

4.1.5 Household WTP for improved solid waste management

Table 4.8 distribution of household WTP

39
WTP Frequency Percentage

Yes 66 66

No 34 34

Total 100 100

Source: Own survey, 2018

As table shows out of 100 Households, about 63% of households were willing to pay for
improved solid waste management in Yirgalem town.

For open ended questions

Table 4.9 Distribution of MWTP

Variable Observation Mean Sad. Dev Min Max

MWTP 100 8.50 3.562 0 30

Source: Own survey, 2018

Out of 100 households surveyed in this study, 63 households, or around 63%, are willing to pay
for the improved waste collection service in Yirgalem town municipality. This study used the
open-ended CV method to elicit the maximum amount those households are willing to pay for
the improved waste collection service. The minimum and the maximum amount that the
households are willing to pay was 0 and 30 birr’s per month, respectively.

The mean WTP amount is calculated using Equation of MWTP = ∑Mi/n. Households. This
study found that the mean WTP amount for the improved waste collection service in Yirgalem
town municipality was 8.5 birr per month.

4.2 Econometrics analysis

Table 4.2.1 summary result of Tobit model on households WTP for improved solid waste
management service.

40
. tobit mwtp age sex ms fs sy ho lev y sat edu, ll(0)

Tobit regression Number of obs = 100

LR chi2(10) = 221.49
Prob > chi2 = 0.0000
Log likelihood = -181.30804 Pseudo R2 = 0.3792

mwtp Coef. Std. Err. t P>|t| [95% Conf. Interval]

age -.1853055 .0807919 -2.29 0.024 -.3458128 -.0247983

sex 4.889445 1.459643 3.35 0.001 1.98961 7.789279
ms .3175598 .9464069 0.34 0.738 -1.562643 2.197762
fs .0675061 .3309776 0.20 0.839 -.5900388 .725051
sy -.0426005 .0476485 -0.89 0.374 -.1372626 .0520615
ho 2.597637 1.252006 2.07 0.041 .1103085 5.084966
lev 1.456831 .2780904 5.24 0.000 .9043555 2.009306
y .0051541 .0009601 5.37 0.000 .0032467 .0070615
sat .251733 .9390151 0.27 0.789 -1.613784 2.11725
edu .9835349 .2683245 3.67 0.000 .4504614 1.516608
_cons -9.139559 4.155338 -2.20 0.030 -17.39486 -.8842551

/sigma 3.407415 .3043055 2.802859 4.011971

4.2.1 Results of Tobit Model

The Tobit results obtained from Stata version 12 are given in table 4.2.1. All 100 observations
were used in this analysis. To censor the zero values for 33 observations, i.e., for the households
who are not willing to pay, a lower limit of 0 was specified and the model was run. The LR chi
square which measures the overall significance of the model, i.e., with the null hypothesis that all
coefficients are zero is rejected at 1% significance level showing that at least one of the
coefficients is different from zero. The pseudo R2 is 39.12%, which implies that percentage of
the variation in willingness to pay amount is explained by the variables included in the model.
Both LR chi square and the pseudo R2 are significant at 1% implying the model is acceptable to
explain the relation between willingness to pay amount and its explanatory variables.

The tobit model results shows that six independent variables, age, sex, education level, income,
level of waste and home ownership are statistically significantly related to the maximum amount
of money that the households are willing to pay for the improved waste collection service.

4.2.2 Diagnostic test results of the Model

41
Test of hetroscedacity

Using cross-sectional data may encounter problem of Hetroscedasticty (Greene, 2008). In order
to correct the Hetroscedasticty problem it is possible to estimate the robust standard errors
instead of the usual standard errors (Wooldridge, 2002). Thus, the Tobit model which is used in
this study is corrected for Hetroscedasticty problem using the robust command in Stata (robust
standard errors are estimated for the Tobit).

Test for multicollinearity

. vif

Variable VIF 1/VIF

sex 3.67 0.272827

ho 3.07 0.325295
y 2.98 0.335114
lev 2.69 0.371451
edu 1.81 0.552026
age 1.67 0.598410
sy 1.30 0.766689
fs 1.11 0.899517
ms 1.07 0.933991
sat 1.05 0.952122

Mean VIF 2.04

An indication for a liner relationship between independent variable is called multicollinearity

(Gujarati 2004). To test the existence or not-existence of multi-collinear problem, variance
inflation factor (VIF) techniques should be employed. The variance inflation factor is a measures
of the reciprocal of the complement of the inter correlation among the predictors. VIF=1/ (1-r 2)
where r2 is the multiple correlations between the predictor variables and other predictors.

A decision rule for multicollinearity test for the model stated is a variable whose VIF value are
greater than 10 indicate the existence of multicollinearity. As it is observed from the above table
there is no VIF value greater than 10. So, model had no problems of multicollinearity.

Link test

42
. linktest, ll(0)

Tobit regression Number of obs = 100

LR chi2(2) = 221.94
Prob > chi2 = 0.0000
Log likelihood = -181.08248 Pseudo R2 = 0.3800

mwtp Coef. Std. Err. t P>|t| [95% Conf. Interval]

_hat .9315935 .105093 8.86 0.000 .7230399 1.140147

_hatsq .0027494 .0040017 0.69 0.494 -.0051917 .0106906
_cons .1138901 .5796035 0.20 0.845 -1.036314 1.264094

/sigma 3.347938 .3030492 2.746546 3.949329

Computed by strata 12, source, own survey 2017.

Link test creates two new variables, the variable of prediction _hat, and the variable squared
prediction, _ hatsq. The model is then refit using two variables as predictors. The _hat should be
significant since it is the predicated value. On the other hand, _hatsq should not because if our
model is specified correctly, the squared prediction should not have much explanatory variable
power. The stata output reveals that our regression model is correctly specified, since the
coefficient of the predicated dependent variables (-hat) 0.000 is statistically significant and the
coefficient of the dependent variable (_hatsq) 0.183 is statistically insignificant.

4.2.3 Regression result interpretation

Age of Respondent

This variable is significant at 5% and as expected has a negative effect on willingness to pay
amount. This shows that as household’s age increase, their willingness to pay amount decreases.
This probably can be the result of older respondents accustomed to free government services- in
the previous government. But, the younger people are likely to be more familiar to cost sharing
like for education, health services etc. similar conclusion was found by Roya et al, (2015).The
coefficient of the Tobit model reveals when the ages of household increased by one year, the

43
maximum money amount that households willing to pay decreased by 0.1855 birr, being other
things remain constant.

Sex of respondents

Sex has negative and significant effect at on the WTP at 5% of significance level. which shows
that female have higher WTP for solid waste management than their male counterparts. This is
because, in Yirgalem town, female are more responsible in the management of household
activities including waste than male. Similar conclusion was found by Awunyo-Vitar et al.
(2013) and Alhassan and Mohammed (2013).

The result shows that male respondents were 4.8 birr less likely to pay for improved solid waste
management than female44being other things remain constant.

Income of household

This variable has a positive and significant impact on the willingness to pay amount at 5% level
of significance as expected. This shows that solid waste management is a normal economic good
whose demand changes in the direction of income change. This implies that solid waste service
charges may need to be a function of income to maximize cost recovery. This finding consistent
with the study Akililu, (2015).

Tobit result showed, one additional birr increase in the income of the household will increases
willingness by 0.005 Birr, keeping all other factors constant.

Years of schooling

Education level has an expected positive sign and significant effects on Mwtp at 5% level of
significance. This means that the higher the number of years for schooling, the more the WTP.
The slope coefficient of education can thus be interpreted as follows, holding everything else
constant; a one-year increase in education level will increase MWTP by 0.938birr. This might be
attributed to the fact that higher level of education enhances consciousness among the people.
This result seems straightforward and reasonable since level of education could be related to a
better understanding of the problem of solid waste. This result is consistent with the findings of
Afroz et al (2009) and Chuen-Khee & Othman (2009).

44
 Quantity of Solid Waste Generated

This has a positive and significant impact on Mwtp at 5% level of significance as expected. This
can be explained by the fact that, the more a household produces solid waste the more the
problem in dealing with solid waste and hence the more would be the willingness to pay.
Coefficient reveals that one “Kurtu” additional generation of solid waste per week would
increase the willingness to pay by 1.45 Birr, keeping all other factors constant. Similar
conclussion was found by Tewdros and Samson, (2009).

House ownership

Households who have their own house are likely to spend more on the waste collection service as
the coefficient is positive and significant at 1% level. The result shows that households who
currently live in their own house are likely to pay 46.3 birr’s per month more than those
households who currently live in rented house. This may be because of those people living in a
rented house considers their residential area as temporary or may be due to the current condition
in the city that only house owners are paying for sanitation.

Dummy variable satisfaction of the respondent has positive influence on household’s maximum
willingness to pay for improved solid waste management services. However, this variable is not
statistically significant.

The continuous variable staying years of the respondent is negatively related to maximum
willingness to pay for improved solid waste management. But this variable is not statistically
significant.

Family size if of the respondent has negative influence upon households’ maximum willingness
to pay. However, it is statistically insignificant.

Dummy variable marital status of respondents, is positively related to households’ maximum

willingness to pay for improved water services. However it is not statistically significant.

45
 CHAPTER FIVE

5. CONCLUSIONS AND RECOMMENDATIONS

5.1 CONCLUSION

Solid waste management is one of a serious confronts to Ethiopia, mainly due to rapid
urbanization and population growth. The solid waste management in Ethiopian cities has not
been carried out in a sufficient, suitable and appropriate manner. As a result, the quality of
environment in cities has become more serious from time to time, and people are suffering from
living in such conditions. This study was conducted in Yirgalem town. The aim of the study was
to determine the amount of household willingness to pay for improved solid waste management.
Primary data was collected from 100 households randomly by using simple random sampling
technique. To elicit the maximum WTP amount for improved waste collection service, an open-
ended CV method was used in this study. Collected data was analyzed by using descriptive
statistics and tobit regression model. The result reveals that 67 percent of the respondents were
male while 74 percent were married with an average household size of 3.07 members. Majority
of the respondents are in their active age with mean age of 36.5 years. Most of the respondents
have formal education, the average years of education is 4 years. About 73 percent of the
households were satisfied with existing waste collection and service provided by town
administration. Study also reveals about 38% of households dispose their solid waste by
municipality. The study informed all respondents about a new system of solid waste
management. Based on that around 66% of the respondents are willing to pay for improved a
solid waste collection service. The average amounts of money that households are willing to pay
for improved solid waste management in Yirgalem town is 8.51 birr per month. The municipality
or the concerned stakeholders may consider this as a reference amount to impose a solid waste
collection fee in Yirgalem town municipal. The Tobit result reveals that sex, household monthly
income and years of education, home ownership, level of waste, and age are statistically
significant at 5% of significance level, while other factors are statistically insignificant.

Tobit result showed, income, education level, quantity of waste, and home ownership has
positive relation with Mwtp while age of household and sex, affect Mwtp negatively.

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5.2 Recommendations

Based on the findings researcher can draw the following recommendation

 Resources spent on education are well spent resources as far as improving solid waste
management is concerned. The town municipality needs to undertake educational
campaign in the town on how to deal with solid waste including the avocation of the three
RS (Reduce, Reuse, and Recycle).
 Concerned stakeholders and policy makers is better to consider significantly variables
traits before enforcing a waste collection fee. For instance, since level of waste is
positively significantly related the maximum amount of waste collection fee they are
willing to pay, the government and concerned stakeholders is better to improve this
service in order to raise more funding for SWM.
 The majority of the respondents were willing to pay for an alternative wasted disposal
service, particularly when it is going to be an improvement on the existing means of
service.
 Government better to take account such important variables like income, education,
marital status, waste generated and house ownership by designing improved SWM
service.
 Finally it must be take in to consideration that this study there to identify the most
important determinants that affect the willingness to pay of households on solid waste
management but due to data limitation, researcher cannot go through while researcher
recommend that this area need further investigation..

References

Abul, S.(2010). Environmental and Health Impact of Solid Waste Disposal at Mangwaneni
Dumpsite in Manzini: Swaziland. Journal of Sustainable Development in Africa (Volume 12,
No.7, 2010). Issn: 1520-5509.

47
Adebo, G.M. and Ajewole, O.C.(2012). Gender and the Urban Environment: Analysis of
Willingness to pay for Waste Management Disposal in Ekiti-State, Nigeria.

Alhassan, M. and Mohammed, J.(2013). Households’ Demand for Better Solid Waste Disposal .

Altaf, M.A. (1996). Household Demand for Improved Solid Waste Management: A Case Study
of Gujranwala, Pakistan. World Development, Vol. 24, No. 5, pp. 857-868, 1996.

Anjum, R.(2013). Willingness to Pay for Solid Waste Management Services: A Case Study of
Islamabad. CEECC Working Paper No. 3.

Birtukan, B.W.(2013). Household Demand for Improved Solid waste Management Service in
Ethiopia: the case of Bahir Dar City .

Dagnew H., Alemu M., and Zenebe G.(2012). Households’ Willingness to Pay for Improved
Urban Waste Management in Mekelle City, Ethiopia. Environment for Development Discussion
Paper Series EfD DP 12-06.

FDRE Nagarit Gazeta(2007). Proclamation number 513/2007, solid waste management

proclamantion. Page Number 3524. Addis Ababa.

Gujarati, D.N. and Sangeetha (2007). Basic Econometrics. Fourth edition. Tata Mcgraw Hill
Education private limited. New Delhi.

Haider, I., Haider, M., and Badami, M.G.(2013). Household Solid Waste Generation in Urban
Pakistan: A Case Study of Rawalpindi. Draft working paper.

Hoornweg, D and Bhada-Tata, P.(2012). What a Waste: A Global Review of Solid Waste
Management.

IUCN Pakistan (2010). Environmental Fiscal Reform in Abbottabad: Solid Waste Management.

Mary, O. and Adelayo, A. (2014). Household Willingness to Pay for Improved Solid Waste
Management in Akinyele Local Government Area. Journal of Biology, Agriculture and
Healthcare Vol.4, No.18, 2014.

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Medina, M. (2010). Solid Wastes, Poverty and the Environment in Developing Country Cities:
Challenges and Opportunities. UNU World Institute for Development Economics Research
Working Paper No. 2010/23.

Mustafa, U., Ahmad, I. and Haq, M.(2014). Capturing Willingness to Pay and Its Determinants
for Improved Solid Waste Management. Pakistan Institute of Development Economics. Working
papers, No. 110.

Tewodros T., and Samson, H.(2009). Demand for Improved Solid Waste Collection Services: A
Survey in Mekelle City. Journal of The Drylands 2(1): 32-39, 2009. United Nations Environment
Program (2009). Developing Integrated Solid Waste Management Plan.

APPENDIX

ARBAMINCH UNIVERSITY

49
 COLLEGE OF BUSINESS AND ECONOMICSDEPARTMENT OF
ECONOMICSRESEARCH QUESTIONNAIRES

Dear RespondentsThis questionnaire’s has been prepared by graduating Economics Student

from Arba Minch University. The purpose of this questionnaire is to collect necessary data for
the study entitled “Determinants of household willingness to pay for improved solid waste
management in Yirgalem”. It aims at determining major factors affecting household willingness
to pay for improved solid waste management and thereby recommending solutions for the
problems identified. Since your cooperation plays a vital role for the success of this study, I
kindly request your cooperation in completing this questionnaire. Your responses will be kept
confidential and will be used only for the purpose of this research. You need not write your name
and any other personal identifier except mark your responses by putting “X” in the boxes
provided. Thank you.

I) Personal information

1. Sex Male Female

2. How old are you? _________ Years old

3. Marital status Married Unmarried

4. Years of schooling __________ year

5. What is the total number of members of your household ________ in numbers?

6. How long have you been staying in Yirgalem town? ________Years

7. How many working woman have in your house? ________ in number

II) Economy related factors

8. What is estimated your monthly income? __________ Birr/month

9. Have you your own house in Yirgalem town? Yes. No

10. Are you satisfied with the existing waste collection and disposal service provided by the city
government? Yes. NO

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III) Current Situation of Solid Waste Management

11. How many ‘Kurtu’ of solid waste are generated in your household per week? _______

12. Do you have a storage receptacle for solid waste in your house or in your compound?
A. Yes B. No If Yes, What is it made of? A. Plastic B. Metal
C. Wood. D. Other Specify____________

If No, What are the main problems you encounter in solid waste storage? __________

13. Where you dispose your solid waste?

A. Near containers

B. Open spaces

C. Near their home

D. By municipality

IV) Dependant variable (Mwtp) information

Scenario description

Assume that the town administration (municipal) of Yirgalem town is planning to provide an
improved solid waste management. Suppose this service involves collecting your solid waste by
the house twice every week, transport the waste safely where it is going to be disposed off and
the disposal involves making quality compost from decomposable solid waste and manage un
decomposable wastes separately by recycling those which can be recycled and the reset will be
land filled properly. But doing all these is beyond the financial capacity of the municipal of
Yirgalem town, hence, household are required to pay for this service.

14. Would you willing to pay monthly for this improved solid waste management service?

A. Yes B. No. 15. What is the maximum money amount that you
willing to pay per month (in Birr)?____________ Go to Question 16, if the maximum
willingness to pay is positive.

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Go to Question 17, if the maximum willingness to pay is 0.

16. In what form should the money be collected? A. With water bill B. With electric bill
C. On its own D. Other_____________________

17. Could you tell me the reason why you’re household does not want to pay anything for this
improved solid waste management? A. We are poor and we cannot pay B. We are satisfied with
the current situation (it does not need improvement) C. Proper management of solid waste is the
responsibility of the government D. Other reasons (specify) _______________________

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