This study aims to analyze farmers’ willingness to pay /WTP/ for improved irrigation water use systems in Gumara irrigation schemes using double bounded dichotomous choice followed by open ended questions. The study assesses the status of households’ WTP, identified factors affecting households WTP, maximum willingness to pay /MWTP/, and quantified households’ mean and aggregate WTP for improved irrigation water use. For this purpose, a total of 300 HHs were selected using systematic random sampling. Seemingly unrelated bivariate probit model /SUBPM/ was applied to identify factors affecting HHs’ WTP and to estimate households’ mean WTP from double bounded dichotomous choice, On the other hand, the Tobit model was utilized to identify factors affecting WTP from open-ended questions. Besides some descriptive statistics such as mean, minima, maxima, and percent were used to characterize the sample HH. The result revealed that 98.26% of HHs supported the idea of improving irrigation water use activities of constructing water storage, allocation, and distribution service. Seemingly unrelated bivariate probit model /SUBPM/ result revealed that bid values, men-headed household, irrigating farm size, extension service significantly affected households’ WTP in both initial and followed up bid values whereas the age of the household head, the total annual income level of the household, credit utilization of the household, distance from the water source and dissatisfaction with the current irrigation water use system were found to have a significant influence on the probability of willingness to pay in the first bid response. The mean and aggregate WTP of the household was ETB3802.8 per year per person per hectare, ETB 6644257.2 per year respectively. On the other hand, the Tobit model result indicated level of education, initial bid values, extension contact, farm distance from the irrigation water source, irrigated farm size of household, men-headed household, age of household head were the factors that influence the households’ MWTP. The Mean and aggregate WTP was also derived from OE question be ETB 3704 per year per person per hectare, ETB 6,472,327.68 per year respectively. Therefore, policymakers should be informed that HHs have a high WTP for improved irrigation water use and consider the important variables identified above in designing policies related to improvement in irrigation water use.