The study was done to determine the willingness to pay (WTP) for improved watershed
services by downstream water users in Babati District using contingent valuation method
in the form of close and open-ended WTP questions. Specific objectives were (i) to assess
the level of awareness of the downstream water users on the importance of watershed in
the provision of sustainable water supply (ii) to estimate willingness to pay for watershed
services by the downstream users (iii) to analyse factors that affect willingness to pay (iv)
to examine the possible operational mode for instituting the payment of watershed
services mechanism. A cross sectional research design was adapted for this study. Both
primary and secondary data were collected from Babati District. Purposive and random
sampling techniques were used to obtain respondents who comprised of 155 domestic
water users and 50 non-domestic water users. The data was analysed using descriptive
and inferential statistics. The results indicated that more than 50% of both water users
have awareness on the importance of watershed in the provision of sustainable water
supply. Also 71% of domestic water users and 82% of non-domestic water users are
willing to pay for improved watershed services with mean WTP of TAS 1 261 per
user/year and TAS 112 322 per user/year respectively. The factors that significantly
influence water user’s WTP include gender, occupation, education and farm size. Income
is significant for non-domestic water users, however it appeared to be insignificant for the
case of domestic water users. The study reveals that, the preferred basis of charging and
collection mechanism of the watershed management and protection fee for both users was
the same amount of payment and a separate agency/office to collect the fee. The study
suggested that the amount respondents are willing to pay may serve as base for water user
fee that may be collected from downstream water users in Babati district as buyers of
watershed services.