African J. Economic and Sustainable Development, Vol. 3, No. 4, 2014 273 Copyright © 2014 Inderscience Enterprises Ltd. Farmers’ willingness to pay for rehabilitation of degraded natural resources under watershed development in Ethiopia (case study in Dejen Woreda) Abdrohman Ebrahim Department of Economics, Aksum University, P.O. Box 1010, Ethiopia E-mail: abdx2010@gmail.com Abstract: This study goes to identify factors that affect farmers’ WTP and estimating the TEV. The Bivarite Probit model is used for the estimation of the parameters using 185 sample size. The mean WTP from DBDCV is 28.48 ETH Birr per annum; is higher than the open ended CVM (i.e., 24.8 Birr). The TEV is estimated to be 105,148.16 ETH Birr. Education, fertiliser expenditure and land per capita are statistically significant and positively affecting farmers’ WTP. Age is negatively affecting farmers’ WTP due to longer time horizon of the returns of soil and water conservation works. The policy should consider farmers’ age, fertiliser expenditure and land per capita for proper design of watershed development guidelines. Government should encompass adults’ education which has an effect on farmers demand for natural resource conservation in terms of the higher possibility of accepting new technologies and family planning (implicit effects on land per capita.). Keywords: willingness to pay; double bound dichotomous contingent valuation; watershed development; bivarite probit; total economic value. Reference to this paper should be made as follows: Ebrahim, A. (2014) ‘Farmers’ willingness to pay for rehabilitation of degraded natural resources under watershed development in Ethiopia (case study in Dejen Woreda)’, African J. Economic and Sustainable Development, Vol. 3, No. 4, pp.273–287. Biographical notes: Abdrohman Ebrahim is currently a Lecturer of Economics in Aksum University, Ethiopia. He holds Bachelor of Art degree in Economics from Wolaita Sodo University in 2009 and Master of Science degree in Economics (Environmental and Natural Resource Economics) from University of Gondar, Ethiopia, in 2012. This paper is a revised and expanded version of a paper entitled ‘Farmers’ willingness to pay for rehabilitation of degraded natural resources under watershed development in Ethiopia (case study in Dejen Woreda)’ presented at the 5th Annual National Research Symposium of the University, Debremarkos University, Debremarkos, Ethiopia, 5–6 April 2014.