The growing demand for water in different sectors of the economy due to populotion pressure,rnexpansion of economic activities combined with the increased cfimatic variabifity calls for thernefficient utilization of the resource. Accordingly, the Ethiopian water policy and strategyrnconsiders water as an important econamic good with some social objectives. To this effect, thernpalicy advocates the introduction of site specific irrigation water fee as a tool to stimulate thernsustainable development of the sector. The most important site specific factor is the willingnessrnto pay of the farmers. Since any irrigation pricing endeavar should consider this factor, thisrnstudy was undertaken in Harari Regional state, Erere Weldia small scale irrigation project, so asrnto provide a baseline information far the local authorities on the willingness to pay of farmersrnfor improved irrigation water services. The study employed a multi- stage purposive samplingrnand random sampling techniques in the selection of the study site and the respondents,rnrespectively. Primary Data was collected through structured questionnaire, in-depth case studyrnand key informant interviews. Relevant secandary data was also collected. Both quantitativern(descriptive statistics and econometric estimation) and qualitative data analysis methods werernemployed. A contingent valuation method was employed to elicit farmers' willingness ta pay forrnimproved irrigation water. The open and cfosed ended elicitation techniques were used tornestimate farmers' willingness to pay. In determining the factors that affect the maximum pricernfarmers are willing ta pay, the OLS method was used. Nine variables out of fifteen werernsignificant. Size of cultivable land, access to cash credit, experience with irrigation, land fertility,rnperception about water scarcity and dissatisfaction with the existing project have a positiverneffect whife age, household size and cultivating water demanding crops have a negative effect.rnIn addition, to determine the factors that affect the willingness ta pay (accept) the bid price, thernLogit model was employed. Seven variables were significant. Frequency of DA visit, experiencernwith irrigation, income and perception about water scarcity were found to have a positiverneffect, while the size of cultivable land, amount of fe rtilizer used and dissatisfaction with thernexisting project have a negative effect. The fact that the variables: the size of cultivable land andrndissatisfaction with the existing project are significant in both models but have 0 different signrnnecessitate further study on the effect of these variables on the decision of the farmers'. Amongrnthe surveyed households, 98% have shown their willingness to pay if the current water supplyrnsituation is improved. And hence this gives good reason for investment to expand the irrigationrnproject and introducing water fee by taking into account the effect of the significant variables inrnboth models.