Hinterland Ecosystem Services Supply for Urban Residents: Application of Heckmans Two Stage Model for Contingent Valuation Study in Mekelle City

Abstract

Abstract Ecosystems provide a slew of benefits, ranging from supporting social and economic growth to mitigating and adapting to climate change. Hinterland ecosystem services are vital for rapidly urbanizing areas, and the people who live within them. The ecosystem services used up in Mekelle city are provided from the adjacent hinterlands. The current situation indicates that the hinterland ecosystem services supply sources and willingness to pay for its sustainable provision of ecosystem services remain unknown. This study was conducted to provide policy decision making and achieve an improved understanding of the causal relationships between the urban residents' willingness-to pay and hinterland ecosystem services sources. Household survey with 384 urban residents from seven Mekelle’s sub-cities was conducted. The study applied Heckman’s two stage model using STATA to analyze the factors affecting the residents’ WTP. To study hinterland ecosystem services satellite images were used and were analysed using ERDAS imagine 15 and ArcGIS 10.5.1. The results showed that 91.7% of the surveyed respondents are willing to pay for hinterland ecosystem services supply and had an average WTP of 2.21 USD per month. This could additionally enhance the perceptions of urban residents on ecosystem services. The factors that significantly influence WTP include variables M1(years of stay in Mekelle city), M2(Sex), occupation(M9), income (M10), family size(M11), water quantity (M12), water reliability(M13) and ecosystem services value recognition(M15).With regard to payout levels, the influencing factors include M1(Years of stay in Mekelle city), M2(sex), M9(Occupation), M10(Monthly income of your household), M11(Family size), M12(Water quantity), M13(Water reliability) and M15(Ecosystem services value recognition) are significantly related to WTP and payout levels. The results of this empirical study could help policy makers to understand better the ways to enhance ecosystem services supply for urban areas from hinterland ecosystem services and to identify effective policy instruments.