The forest resource in Addis Ababa, particularly the mountainous areas to the north and westernrndirections of the city was once covered with dense natural forests of diverse species. But now arnday only few patches of natural forests are left in this area mainly due to development activities,rnagricultural expansions, over exploitations associated with rapid population growth and too littlernnatural management of forest land. These events have resulted in serious environmentalrndegradation.rnIn view of these problems, a botanic garden is introduced in this area so as to give answer for thernurgent need to conserve and sustain-ably utilize the remaining natural forest and restore degradedrnforest areas through expansion of forest plantations. Therefore, economic analysis is required forrnproper management of urban forests. Such analysis would help to make decisions on varieties ofrnurban land use options and investments. Hence, this paper has examined the application ofrnContingent Valuation Method in measuring the households' willingness to pay (WTP) forrnImproved amenity service of urban forests and tries to identify the factors that may affect theirrnWTP.rnThe total WTP amount for improved amenity service of urban forests through executing thernbotanical garden is estimated to be Birr 4,265,211 per month. The mean WTP for the open-endedrnand dichotomous choice formats are Birr 6.07 and 9.30 per month per household respectively. Inrnaddition to this, above 87% of the respondents have the demand for further improvements. Here,rnthe main values are related to non use values while use values are achieved distinctively lowrnpriority. Households income, above grade 6 level of education and respondents trust for thernreliability of the project implementation are found to be the major determinant factors forrnhouseholds WTP.rnThis study also indicated that households' welfare gains in changing from the current situationrn(poor environmental condition with no payment) to the improved service by subscribing somernreasonable price can be huge. It also suggests that Contingent Valuation survey can measurernamenity values of urban forests with theoretically consistent and sufficiently reliable results.