Surface water quality affects the wellbeing of local community and thus an improvement to LakernHora-Arsedi would benefit beshoftu residents. An Improvement proposed in this study is improving thernquality of waler in the lake one step from how Beshoftu residents perceived the existing water quality.rnIn this study, an attempt was made to elicit the willingness to pay (WTP) of Beshoftu residents to thisrnimprovement using contingent valuation method. A total of 250 households from Beshoftu townrnresidents were selected randomly. The study used the single bounded dichotomous choice techniquernfollowed by an open-ended question for eliciting the Willingness to pay of household for the lakernclean-up. probit and tobit models were applied to identify factors affecting WTP.rnThe mean willingness to pay estimate, birr 11.42, from closed ended format aggregated for the totalrnpopulation and total willingness to pay of the residents was found to be 119, 893 birr per month andrn1,438,716 per annum. While the mean Willingness to pay estimate from open-ended meanrnwillingness to pay estimate, 5.02 birr, this total Willingness to pay was found to be 254,152 birr perrnmonth and 3,049,825birr per annum. The study revealed that the distance of the respondent'srnhomestead from the lake, perception of the existing lake water quality, awareness of environmentalrnProblems, income of the respondent, sex of the respondent and family size are factors significantlyrnaffect the willingness to pay of a household for lake clean-up.rnThe policy implication of the study is the government or any concerned body could have activernParticipation of local community by enhancing environmental consciousness of residents andrncreating awareness 011 the benefits associated with improved lake water quality through meetingsrnand seminars. Moreover, the concerned body should consider the case of major sources of lakernpollution and take measures without wasting time to improve the lake water quality