The Economic Value of Camel Milk in Aba'ala Woreda, Afar Regional State, Ethiopia: A Contingent Valuation Study

Abstract

Even if camel’s milk is known for its varied economic and health benefits, unlike the live camel, there is no market for it in Afar region in general and in Aba'ala woreda^[1] in particular. In this study, the researcher has attempted to investigate how much  value the households can assign (willing to pay) for camel milk and the determinants of willingness to pay (WTP) for it using a Contingent Valuation Method (CVM). The CVM was based on face to face interview and the surveyed sample households were asked double-bounded dichotomous choice questions followed by an open-ended questions to elicit their WTP for camel milk. Out of the total 250 sample households 3 of them were not willing to purchase but the remainder 247 were willing to purchase camel milk had it been camel milk market in the woreda. In this study, three econometric models; Tobit, Probit and Bivariate Probit models were employed. The result from the Tobit model revealed that households' income, age, remittance and the randomly offered bid positively and significantly affects households' maximum WTP for camel milk. On the other hand, age square affects households' maximum WTP for camel milk negatively and significantly. In the Probit model, the main determinants of the households' probability of accepting the randomly offered bid are income, remittance, age, age square, the randomly offered bid, education level of the household head and adult ratio. Income of the household, remittance, age of the household head and education level of the household head positively and significantly affects the probability of accepting the randomly offered bid. On the other hand, age square, the randomly offered bid and adult ratio negatively and significantly affects the probability of saying "yes". In this study the Bivariate Probit model was employed to verify the statistical efficiency gain of the double-bounded over the single-bounded dichotomous choice model.  Therefore, it is found that the double-bounded dichotomous choice model does not increase statistical efficiency over the single-bounded dichotomous choice model. Hence, we can employ the single-bounded dichotomous choice model instead of the double-bounded dichotomous choice model. Moreover, the mean WTP for camel milk computed from the three models is almost equal.

Key Words: Aba'ala, Afar, Bid, Bivariate Probit, Camel Milk, CVM, Double Bounded, Open ended, Probit, Single-Bounded, Tobit, WTP.

[1] Is an administrative unit in Ethiopia, which is similar to District