PARTICIPATION IN THE CONSTRUCTION OF A LOCAL PUBLIC GOOD: A CASE STUDY OF WATERSHED MANAGEMENT IN THE ETHIOPIAN HIGHLANDS

This paper is a query about the determinants of individuals contribution to the production of local public goods subject to important indivisibilities. It is based on an econometric study of factors accounting for variations in individual participation in the construction of a central drainage channel in Ghinchi watershed, Ethiopia. Using a tobit model, the paper is able to show that individual contributions are crucially influenced by the personal interests which local farmers have in the drain. These contributions have been sufficient to avoid the Pareto-inefficient outcome in what typically amounts to a coordination game.