Profitability analysis and determinants of rural households’ land use decisions: in the case of farmers around Wof-Washa forest, central highlands of Ethiopia

Abstract

Understanding households’ land use decisions is an input to policymakers, and rural land users to raise food security in the face of rapidly increasing world populations. It is also crucial to promote the efficiency households’ land use. This study investigates the profitability and factors influencing rural households’ land use decisions. For this study multistage sampling procedure was employed to choose the study area and 185 sample households were randomly selected. The obtained data were analyzed using financial analysis and a multivariate probit econometric model.The results publicized that the economic profitability of Eucalyptus woodlot land was highly greater than that of other land uses as indicated by the three performance indicators. The multivariate probit eonometric model results indicate that the age of the household head, household size, on-farm income, land tenure security, land size, access to extension services, land ownership, access to the market, and the number of tropical livestock units statistically and significantly affect rural household land use decisions. Therefore, attention should be given to the design of policies and strategies for encouraging Eucalyptus woodlot-based land use which is more economically feasible than other land uses without undermining the food security status of rural households. Clinical trial number: Clinical trial number is not applicable.