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The study was conducted to evaluate the effect of khat cultivation on rural households' income in the Bahir Dar Zuria district using cross-sectional data collected from 180 randomly selected respondents, and supported by focus group discussions in two districts of northwest Ethiopia. The data were analyzed by simple descriptive statistics and beta regression. Results from descriptive statistics show that khat contributes the largest (51%) of farmers' income, followed by crop sale (33%), sale of livestock and their products (9%), and off-farm and non-farm activities (7%), Empirical findings from the Beta regression model also show that farming experience, education status, the proportion of land allocated for khat cultivation, total working capital of the household, the density of khat trees planted per hectare, and participation in off-farm and non-farm activity have a significant and positive effect on the proportion of khat income of the households. On the contrary, livestock holding, total asset ownership, and access to mobile phones have a significant and negative influence on the proportion of annual khat income of the households. Hence, the cultivation of khat can have a significant effect on the improvement of rural households' income and standard of living in the districts. However, increased khat production have also serious implications on the market, water resources, and human health. Thus, policymakers need to come up together to understand and devise proper running mechanisms for these controversies of khat production in association with economic, social, and health implications.

The effect of khat cultivation on rural households’ income in Bahir Dar Zuria District, Northwest Ethiopia