This study analyses the determinants of households' willingness to pay for irrigationrnwater supply by using contingent valuation and choice experiment methods. A sample ofrn300 farm households living in the command area was interviewed to obtain households'rnwillingness to pay for irrigation water supply. A single bounded value elicitation formatrnwith an open ended follow up question were used for the CVM and four attributes werernidentified with three environmental attributes (irrigation water availability, fish stockrnabundance and productivity) and a monetary attribute (annual payment).rnProbit, multinomial logit and random parameter logit models were used to analyze thernfactors influencing households' willingness to pay and estimate measures of welfarernchange for farm households. Results of the study showed households were willing to payrnfor the provision of irrigation water. The important variables identified in this study torndetermine households' WTP for irrigation water include practical irrigation experience ofrnhouseholds, average annual income, participation in off-farm activities, and marketrnaccess,. The mean willingness to pay from the single bounded and follow up open endedrnquestions were birr 614 and birr 417.49 per 0.25 ha of irrigable land respectively. Thernexpected aggregate willingness to pay for irrigation water supply for the closed and openrnended questions is estimated to be birr 35,513,760 and 24,147,622 respectively.rnBased on the willingness to pay of households for improvement of attributes irrigationrnwater availability is the most preferred one followed by fish stock abundance. The meanrnwillingness to pay for fish stock abundance, irrigation water availability and productivityrnwere 748 , 822 and 1. 2 birr respectively from the implicit price estimates. Compensatingrnsurplus estimates which reflect overall willingness to pay for a change from the statusrnquo (current situation) to alternative improvement scenarios were also calculated. Thernestimate for the high impact scenario was estimated to be 5610 birr, for medium impactrnscenario 4090 birr and for low impact scenario it was 2514 birr per annum .rnAn important policy implication drawn from the study is that farm households are willingrnto pay for irrigation water supply. If government designs and implements a proper chargernof irrigation water in the area based on such studies it will avoid or at least reducerninefficient water use practices and there would be a more sustainable utilization ofrnenvironmental resources.