Addis Ababa, the capital city of Ethiopia, is a diplomatic center for African union, United nationrnand also regional head quarter for big organizations like, UNDP, UNICEF, and FAO etc. Hencerngreat focus must be given to the city in order to keep the attractiveness and wellbeing of thernenvironment. But now a day, plastic shopping bags which are used to carry goods from therngrocery and supermarkets are causing major problems. Their nature which is light weight, easyrnto carry and freely provided at the point of purchase contributed to the mismanagement andrnirresponsible disposal of these bags, which in turn caused plastics to be everywhere like in thernstreets of Addis Ababa. Hence this adverse effect must be alleviated through either shifting tornusing other environmentally friendly bags or proper management through intervention ofrnappropriate policies to manage plastic bag wastes. The study has attempted to investigate thernwillingness to pay for plastic bag tax and the determinant of willingness to pay for the tax usingrnContingent Valuation Method. Additionally, the study employed three econometric models. Thesernare Tobit Model, Probit Model and Bivariate Model. The mean willingness to pay for a tax onrnsingle use plastic shopping bags was obtained using the three models. Furthermore, the studyrnfound that tax rate on plastic bags to be highly elastic and for a higher tax on plastic bagsrnpeople tend to switch to other bags which have comparatively less price.