A contingent valuation of smallholder farmers' willingness to pay for improved irrigation water supply in Egypt

Abstract This study employs a double‐bounded dichotomous choice contingent valuation experiment to investigate the willingness to pay (WTP) of 313 Egyptian smallholder farmers in the Nile Delta region for improved irrigation services. The results from probit and bivariate probit models reveal an inverse relationship between water price and WTP, underscoring the importance of carefully considering farmers' affordability thresholds in water pricing strategies. The probability of smallholder farmers' agreeing to pay for an improved irrigation scheme is positively associated with agricultural income, farm size, distance to the irrigation canal, trust in water institutions and attitudes towards investing in an improved water supply. Conversely, the probability of WTP is negatively associated with farming experience, perceptions and psychological distance. Overall, the empirical findings underscore the need for integrated and holistic approaches that account for the influence of various factors on farmers' decision‐making processes and thus design effective water‐resource management strategies. Highlights Farmers are willing to pay around 7% of their average annual income per feddan for improved access to irrigation water. An inverse relationship exists between water price and WTP, highlighting the importance of careful consideration of farmers' affordability thresholds in water pricing strategies. Farmers' WTP depends on a suite of socioeconomic, technological, biophysical, institutional and psycho‐behavioural factors. WTP is positively associated with agricultural income, farm size, distance to the irrigation canal, trust in water institutions and attitude towards investing in an improved water supply. WTP is negatively associated with farming experience, perceptions and psychological distance.