Willingness to Pay for Malaria Prophylaxis in Ethiopia

In this chapter, we measure how much malaria impacts on farmers’ technical efficiency and the application of these values to present a reliable measure of the farmers’ Willingness-To-Pay for malaria abatement in Ethiopia. Malaria is one of the diseases that has prevented the African continent from achieving its main goal of food availability, security and sustainable development. One major problem policy makers seem to face all the time is the precise amount the households are willing to pay for a prophylactic measure. The epidemiology of the disease on the continent has made this measure difficult and adopting a stated preference approach has not been very helpful. Also, the link between malaria incidence and agricultural productivity has not been fully explored in the literature. We use a dataset from Ethiopia with the corresponding spatial malaria prevalence dataset from the Malaria Atlas Project. We apply this dataset to the envelope theorem to arrive at a reliable estimate of the Willingness-To-Pay and a measure of how much malaria affects farmers’ technical efficiency. The merger of the household dataset, with the spatial malaria dataset and the innovative use of the envelope theorem, is one of the major high points of this chapter. We apply Bayesian Econometrics to our empirical framework. The results show that in Ethiopia, malaria affects efficiency and has an a priori sign. The results further state that for a 100-unit increase in malaria, the household is willing to pay, on average, US$0.12 to purchase prophylactic measures. Policy makers can use these values to introduce minimum prices and gradual repayment schemes for prophylactic measures.