Households’ Willingness to Resettle and Preference to Forms of Compensation for Improving Slum Areas in Addis Ababa City

The spatial, physical and socio-economic condition of Addis Ababa City, in general, is by far behind the requirements fundamental to sustain the livelihood of the City population. The limitations of its current developmental trend and the depth of the existing environmental problems, coupled with the requirements of the projected population of more than 3.5 million people by the year 2010, entail reexamination of constraints and opportunities with the aim of devising appropriate measures and strategies for action. The suggested government intervention strategies, as stated in the report by ORAAMP, include: Relocation and resettlement of residents for efficient utilization of potential sites (basically slum areas) and resources, among others. The suggested relocation and resettlement programs in Addis Ababa, as the literature on urban resettlement dictates can be unavoidable as it can be beneficial and the society, as a whole, can be better off through improved environment and increase opportunities of income and employment that can be realized by involving the private sector and mobilize the potential land value. However, it requires establishment of a policy and guiding framework, which are necessary to create an enabling environment for rehabilitation of resettles. The resettlement practice in the City has been happening in the absence of any policy document, planning framework and assessment of need of the resettlees. Consequently, compensation among the resettlement programs so far undertaken in the City lacks uniformity in type and magnitude. And the compensation mechanism basically fails to consider the needs of the people being resettled. Hence, the question is how to respond effectively to the needs of the people being resettled, how they can be compensated to move voluntarily and how to minimize the magnitude of adverse effect of the resettlement program. And a resettlement without the assessment of these questions is more likely than not to affect decisions made at the expense of the low-income communities who do not have the negotiation means of power, suggesting the need for a better understanding of the possible result that can be achieved by undertaking planned resettlement programs in the slum areas of the City. In the light of the above arguments, this study will attempt to answer the following questions: Will households be willing to resettle from slum areas of the city? What forms of compensation do households prefer to be compensated? What factors (including environmental, demographic, cultural and socio-economic factors, etc.) determine households’ willingness to resettle and preference to forms of compensation? What is the relative strength of resettles\u27 consideration regarding environmental and economic factors in their decision to resettle? The general objective of the study is, therefore, to analyze households\u27 willingness to resettle by taking Addis Ababa as a case. Specifically, it will examine the willingness of households residing in the slum area of the city to resettle and examine the determinants of households\u27 willingness to resettle and preferences to forms of compensation. The study employed contingent valuation method to solicit the respondents’ willingness to resettle. We used a Probit model to estimate a household’s probability of deciding to move to the resettlement area. Multinomial logit model is used in order to estimate and analyze the determinants of a household’s preference to different forms of compensation. The study shows that resettlement is a possible option to improve the socioeconomic and physical condition of the city since households are willing to move to other area if the compensation enables them to restore the existing situation. However, the socioeconomic, demographic, local institutions (such as “Edir” and Ekub”) and environmental characteristics of the displaced people should be taken in to consideration. This requires formulating policies and guidelines that fundamentally aim at least to restore the current standard of living of the resettle