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Water-resources development in a decentralizing Indonesia: a challenge for policy design

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Water-resources development in a decentralizing Indonesia: a challenge for policy design

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Content WATER-RESOURCES DEVELOPMENT IN A DECENTRALIZING INDONESIA: A CHALLENGE FOR POLICY DESIGN by Eka Nugraha Abdi ________________________________________________________________ A Dissertation Presented to the FACULTY OF THE SCHOOL OF POLICY, PLANNING AND DEVELOPMENT UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PLANNING AND DEVELOPMENT STUDIES August 2007 Copyright 2007 Eka Nugraha Abdi ii Dedication To Bahdariyah and Thabrani, who taught me to be patient and never give up and To Vini, Ryan, and Dylan, who have always been there for me iii Acknowledgements The highest appreciation goes to my advisor, Professor Tridib Banerjee, who has always been inspirational and encouraging in shaping and guiding me through my doctoral work at USC. Professor Banerjee has done everything he could to make sure the success of my doctoral study. I would like also to extend my deepest gratitude to my doctoral committees: (1) Professor Tridib Banerjee as the Chair, (2) Professor Glenn Melnick as the member representing the School of Policy, Planning, and Development, (3) Professor Najmedin Meshkati as the outside member representing the Viterbi School of Engineering, (4) Professor Koichi Mera as the member representing Professional, and (5) Agusti Anwar, an Official Indonesian Consul, as the member representing Professional. I have been so fortunate to know them and to obtain their advices, encouragements, and transcending know-how. I am truly indebted to a group of individuals who over the years spent in doctoral program in planning and development studies have been giving me their assistances. Even though I cannot name them one by one, I would like to thank the USC School of Policy, Planning and Development faculty members and staffs who have been helping me to accomplish the program. I also would like to extend my thanks to my colleagues and superiors in Department of Public Works who have been very supportive during my study in Los Angeles. Let me also thank the Indonesian citizens who have in part been supporting my funding iv for the program. All in all, I would like to state that without these individuals, I have no idea what my study would be. They have made it possible. v TABLE OF CONTENTS Dedication............................................................................................... ii Acknowledgements...................................................................................iii List of Tables..........................................................................................vii List of Figures........................................................................................ viii List of Boxes............................................................................................ix Abstract.................................................................................................. x CHAPTER 1: INTRODUCTION ........................................................................... 1 Roadmap of the Project Paper .......................................................... 5 Greater Jakarta as a Sample Case of Water Issues in Urban Indonesia...................................................................................... 7 The Wicked Waterborne Disasters................................................... 12 Corollaries of New Decentralization Policy on Water-resources Development in Indonesia ............................................................. 20 CHAPTER 2: INDONESIA.............................................................................. 31 Geomorphology of Indonesia.......................................................... 31 Urbanization in Indonesia and Other Nations in the Less Developed World ......................................................................................... 33 Brief History of Indonesia .............................................................. 39 Brief History of Decentralization in Indonesia.................................... 41 CHAPTER 3: WATER-RESOURCES DEVELOPMENT IN INDONESIA................................. 55 Policies on Water-resources Development ........................................ 55 Organizations of Water-resources Development in Greater Jakarta ...... 58 Efforts Towards Sustainable Water-resources Development ................ 59 CHAPTER 4: WATER AND GOVERNANCE ............................................................ 63 Institutional Arrangement in Water Sector ....................................... 64 Integrated Water Resources Development ....................................... 69 Civic Engagement as a System of Governance for Water Resources Development ............................................................................... 70 CHAPTER 5: RATIONALES FOR DECENTRALIZATION ............................................... 73 Concept of Decentralization ........................................................... 73 Implementation of Decentralization................................................. 78 vi CHAPTER 6: WORLD VIEWS—LESSON LEARNED FROM OTHER NATIONS ....................... 81 Tennessee Valley Authority in United States..................................... 82 Water-resources Management in India ............................................ 85 Water-resources National Policy in Brazil ......................................... 90 Lessons Learned from USA, India, and Brazil.................................... 95 CHAPTER 7: ESSENTIAL REVIEWS OF LAW 7 OF 2004 ON WATER RESOURCES .............. 97 How the Law to Address the Decentralization Policy........................... 98 How the Law to Define Right Over Water ........................................100 How the Law to Deal With Water-resources Development..................104 How the Law to Perceive the Sustainable Development Concept.........105 How the Law to Deal With Waterborne Disasters..............................106 How the Law to View the Climate Change Issue ...............................107 Lessons Learned for the Next Revision............................................107 CHAPTER 8: DISCUSSIONS AND RECOMMENDATIONS............................................109 Decentralization and Beyond.........................................................109 Water-resources Development and Decentralization .........................112 Watershed-Based Decentralization.................................................116 Financing for Watershed-Based Decentralization ..............................128 Intergovernmental Management Challenges for Watershed-Based Decentralization ..........................................................................128 BIBLIOGRAPHY.........................................................................................134 APPENDICES Appendix 1: Management Mandates of Sector Agencies ...................142 Appendix 2: Watershed Boundary.................................................143 Appendix 3: Watershed Boundary Map of Indonesia (Not To Scale)....144 vii List of Tables Table 1: Decentralization and Centralization Measures in Indonesia .............. 45 Table 2: Current Subnational-Based Decentralization (SBD) vs. Proposed Watershed-Based Decentralization (WBD) ...................................124 viii List of Figures Figure 1: The Functioning Urban Region of Greater Jakarta ........................... 8 Figure 2: Map of Indonesia ..................................................................... 31 Figure 3: Schematic Concept of Sustainable Water-resources Development .........................................................................122 Figure 4: The Triple Three-Dimensional View of Power...............................125 Figure 5: Format of Forum for WBD at National Level ................................126 Figure 6: Format of Forum for WBD at State Level ....................................127 ix List of Boxes Box 1: Spain's Water Wars ..................................................................... 22 Box 2: Policy Reforms in Water-resources Development in Indonesia............ 62 Box 3: Forms of Administrative Decentralization ........................................ 74 x Abstract When the world scheme seems to have shifted from the struggle for a separated entity to the demand for a larger, connected system, Indonesia, paradoxically, began, for one more time, a major experiment in decentralization officially started on January 1, 2001. Many previous centrally controlled public entities are being decentralized. Water, viewed by Indonesia as public goods, is being decentralized as well. My project will have 2 main parts: a study of decentralization experiment in water sector and a redesign of decentralization policy within water sector. 1 CHAPTER 1: INTRODUCTION Decentralization has become an agreeable resolution as well as a political rhetoric in many former highly centralized nations. 1 Indonesia, the world’s largest archipelago, located along major sea-lanes from Indian Ocean to Pacific Ocean, is unexceptionally one of those nations. But one of the enormous parts of the issues is not how to secede and integrate this geographically segregated archipelago, but the fact that Indonesia is “archipelagic in more than geography.” 2 The gaps in terms of economy, socio-culture, and way of life have profound impacts on how Indonesians react on any policy changes including the major policy change from centralization to decentralization. Since its proclamation on January 1, 2001, 3 the scheme of decentralization policy has been highly tested by a variety of administrations. These administrations are mainly similar in terms of leapfrogging from the image of a highly centralized structure of government into a more, politically correct, decentralized institution, 1 The decentralization, in this context, is political or administrative decentralization. According to Rondinelli, decentralization can be defined as the transfer of authority and responsibility for public functions from the central government to subordinate or quasi-independent government organization or non-government sector. For further discussion, see Dennis Rondinelli (1999) “What is Decentralization,” in Jennie Litvack and Jessica Seddon (eds.) Decentralization Briefing Notes. World Bank Institute, Washington DC. pp. 2-5. Based on this theory, the form of decentralization supposedly chosen by Indonesia is devolution, the so-called real decentralization, which is a transfer of functions and power from a national unit to subnational political entities, who, in turn, have strong autonomy in many important respects. 2 Clifford Geertz (1973) “The Interpretation of Cultures,” New York: Basic Book. Geertz proposes his interpretive theory of culture with generalization of his empirical studies which much of them are held in Indonesia. Some of his detailed comments that are routinely considered less important for general theory are found to be provocative for the study focusing on Indonesia. 3 The process of the decentralization in Indonesia has been accelerated with the issuances of Law 22 of 1999 on regional governance and Law 25 of 1999 on fiscal balance between the national government and the subnationals. The enactments of these two laws are the watershed moment signaling the beginning of the new era of decentralization. So far, Law 22 of 1999 and Law 25 of 1999 were replaced with Law 32 of 2004 and Law 33 of 2004, respectively. 2 but are intrinsically dissimilar in interpreting the policy. Therefore, it is of the essence to investigate how it has been so far, the progress to achieve the desired results, and what the next steps and better alternatives could be produced. It is acceptable that the policy to decentralize Indonesia is expected to be the prevailing policy reform to heal the so-called fiasco in its previous, highly centralized epoch since the idea of decentralization was developed partly in reaction to the downfalls of many conventional, highly centralized, approaches of governance. However, the implementation of the policy could be a different story. There are many factors and many areas to be explored to explain objectively how the decentralization policy in Indonesia has been so far. Given how little of the reliable data available and the limited fund provided to the researcher, a study for the overall decentralization policy impacts in Indonesia would be too arduous to perform. With many factors and sectors are on the line, it would be too sensitive to error if any conclusions were ever drawn from such study. Thus, it would be practical to narrow the subject to one impacted sector. One of the sectors profoundly affected by the new decentralization policy is water sector. While there are several prima facie evidences that can be seen, the most obvious and essential evidence that can be verified is the enactment of Law 7 of 2004 on water resources. It is clearly stated that the law was produced in the spirit of decentralization. 3 Water sector has been a plausible sector to explore since it has been and will always be an important factor in human life. Any impact on water would be a direct impact on a society. The supply of water is critical to the future of homo sapiens, and indeed to that of the biosphere itself. Every time our attention turns to space exploration, of Mars for instance, we always wonder whether or not water is present, because in its absence, life as we know it is not possible. Technology allows breathable oxygen to be created from water and even soils can be brought to life. To be alive, living things must have water. Inspired by the inquisitiveness to find out how the impact of the decentralization policy over water sector goes so far, this project was initiated. The study aims at, among other things, investigating how profound decentralization impacts over water sector, exploring what water policy changes instigated by decentralization policy are, and sorting out alternatives available for win-win solutions. The policy of decentralization in water sector has led this project to several questions: Is the decentralization of water sector really an appropriate answer in handling the emerging issues and in facing the future challenges in the water sector? Should the water sector be affected by the decentralization policy or should they be mutually adapted? If the latter scenario rules, what could have happened? Due to the ongoing decentralization process has seemingly marked a step backward from a sustainable water-resources development path and has been conducive for water wars, the latter scenario therefore to provide a challenge for the project to find out how far a water sector can put its 4 contribution in the making of decentralization policy. 4 Hence, the hypothesis argued in this project is that the current decentralization policy and practice on water resources in Indonesia will cause more harm than good and for that reason, the policy needs some adjustments and should therefore be redesigned. The methodology applied in this project is analytical synthesis literatures on decentralization and water-resources development and case study analysis on practical applications experienced by some nations with similar characteristics and challenges. Then, as the main part of the policy adjustments, I would postulate, with cautious optimism, a reciprocal reconciliation design of policy that I call watershed-based decentralization to address this conflicting paradox. The true decentralization is an independent nation, but there is no successful nation without any dependency to others. However, this project does not focus on whether or not decentralization that makes Indonesia better-off. The project focuses on, given that the choice to adopt the idea of decentralization has been taken, how to layout a better scheme or strategies for water-resources development for Indonesia in dealing with the complexity of the new decentralization policy implications. 4 I am avoiding the discussion about whether decentralization is good or not for water-resources development in Indonesia. Thus, the decentralization in this project is taken for granted as an idea that is considered to be beneficial for Indonesia and its policy implementation is expected to result in a desirable output. However, I argue that, that is not the case for the current policy implementation since there are some peculiarities in interpreting the idea into the policy. Therefore, to be successfully implemented in the unitary nation like Indonesia, an interpretation of the idea of decentralization into a policy needs to be adjusted sectorally and this project will focus on how decentralization system should be designed in water sector, especially water-resources development. 5 Roadmap of the Project Paper In general, this project paper is divided into three main approaches—descriptions of the issues, literature reviews, and proposed policies. However, the detail roadmap of the project paper can be briefly outlined as in the following paragraphs. Chapters 1 through 3 provide descriptions of key issues in water resources development in Indonesia. Chapter 1 introduces the perennial issues in dealing with water resources in Indonesia represented by Greater Jakarta. The descriptions of the issues are important to put in the beginning to show that the issues are real and complex. This chapter also introduces a new decentralization policy as an influencing factor discussed in the project. Moreover, this chapter demonstrates the intertwined relationship between the ongoing water resources development and the new decentralization policy and shows how the new policy intensifies the water-resources issues. Chapter 2 portrays Indonesia’s current efforts toward obtaining a more comprehensive information system about the subject nation, including its geomorphology, urbanization, and history. Chapter 3 provides a description of the recent and existing policies and organizations for water-resources development in Indonesia. In addition, the chapter also informs the existing effort toward sustainable development for water resources. 6 Chapters 4 through 7 include the literature review and related analysis. The literature study includes discussions on the existing theories, experiences of other nations, and one important legal document. Chapter 4 is an effort to analyze several scholarly literatures and experiences on the linkage between water and governance. In this chapter, the project shows how the institutional arrangement in water sector has been configured, how water is governed, how important an integrated development is, and how important a civic engagement in policymaking for water resources development is in this process. In search of rationales for decentralization, Chapter 5 provides several scholarly theories of decentralization in general. The chapter focuses on the general concept, the types, and the pitfalls of decentralization. Chapter 6 lays out several selected worldviews. The selected worldviews are water-resources development experiences from three nations. The selected nations are the United States of America, India, and Brazil. The main goal of this selection is to find any lessons that can be learned for comparative case study analysis. In Chapter 7, the paper reviews Indonesia Law 7 of 2004 on Water Resources. The new decentralization policy calls for an adjustment in water-resources development. Law 7 of 2004 should have been acting as an evidence of this adjustment. Therefore, a review on the essential articles and clauses related to decentralization is the crux of the matters in finding out how the law shifts its focus from previous centralization policy to the current decentralization one. 7 As the final chapter, Chapter 8 concludes the paper with several discussions and recommendations. The discussions are focusing on what could be done and what should be done in terms of new decentralization policy and water-resources development in Indonesia. In this chapter, the paper exposes in details of the proposed means and its rationales as a reconciliation policy design called watershed-based decentralization. Greater Jakarta as a Sample Case of Water Issues in Urban Indonesia The nature of water issues varies and erratic in appearance. Indonesia cannot escape from this phenomenon. However, it is imperative to present the water issues by a sample case basis by choosing over a place, a city, or a region that is currently dealing with the water issues. Jakarta, the most developed city in Indonesia, and it’s surrounding areas are an excellent example to the case of water-resources challenges in Indonesia since the city region has possibly the most accessible data of which their availabilities and reliabilities in most parts of the nations are notoriously concerning. Moreover, what have been done in Jakarta has frequently set a precedent for other regions in Indonesia. Jakarta, formerly known as Batavia under Dutch colonial government, was founded in the 16 th century 5 at the mouth of the Ciliwung, the largest river crossing through the region, on a flat plain at the north coast of Java. More and more people have chosen to live on the banks of the Ciliwung since then. The city was selected to be the national capital of Indonesia on its independence day, 5 On June 22, 1527, to be official. The date is documented in the official explanation of Law 34 of 1999. 8 August 17, 1945. After the war, the growth of the city continued explosively. Urban population growth in Jakarta has been associated with the overspill of the population into surrounding areas of Bogor, Tangerang, and Bekasi. This phenomenon made the people consider the territories of Bogor, Tangerang, and Bekasi as Jakarta—Greater Jakarta (Figure 1). As an urban agglomeration, Greater Jakarta, also locally known as Jabotabek—“Ja” for Jakarta, “bo” for Bogor, “ta” for Tangerang, and “bek” for Bekasi—has been joining a club of megacities in the less developed world since 1980. 6 Just by looking at the way it grows, this urban agglomeration is expected to spread out to other satellite cities. Figure 1: The Functioning Urban Region of Greater Jakarta 6 Graeme Hugo (1996) “Urbanization in Indonesia: City and Countryside Linked,” in Josef Gugler (ed.) The Urban Transformation of the Developing World. Oxford University Press Inc., New York. pp. 132-183. Source: Hugo (1996) 9 Like those in many megacities in the less developed world, water provisions for Greater Jakarta are an increasingly emerging issue. With the increase in population, property values, and densely built-up areas, the urgency of a response has grown into sharper focus nowadays. The Ciliwung and other major natural waterways were canalized to control and utilize the water. And open- channel structures have become the typical water structures of this tropical region. From upstream to downstream, the water resources of these waterways have been given much attention—concrete-lined, sediment cleaned out and the like. Inevitably, for the rapidly growing Greater Jakarta, the development of water resources needs to be considerably integrated, sustainable, and well maintained. It is thus a challenge to make a sustainable master plan for water- resources development, not a Band-Aid one. While air pollution is a growing concern, Greater Jakarta’s vital environmental challenge is also to manage its water resources. When the Dutch designed the original water supply system, it was planned to serve a region of less than half a million. 7 Approximately, 80 percent of Jakarta's households use water from vendors for drinking and cooking; thirty-eight percent of households also use vended water for cleaning and bathing; fully 28 percent of all households go to standpipes located near their houses; and more than 15 percent of the households rely on neighbors to sell them drinking water from either a piped water connection or private well. 8 More than 57 percent of all households in 7 K.C. Sivaramakrishnan (1986) “Metropolitan Management,” The World Bank, Washington, DC, p. 197. 8 Randall Crane and Amrita Daniere (1996) “Measuring Access to Basic Services in Global Cities: Descriptive and Behavioral Approaches,” Journal of American Planning Association, Vol. 62, No.2, Spring, Chicago 10 Jakarta use well water for bathing and cleaning; the other 43 percent use vended water, 25 percent of them use standpipe water, 17 percent use water purchased from neighbors; and river water, rainwater, and water from other resources are used by 15 percent of households for cleaning or bathing. 9 The study shows that the lack of convenient connections has caused residents in Jakarta to explore a variety of solutions to quench their thirsts. In 1995, only 35 percent of Jakarta's households are served by piped water, most of the inhabitants therefore buy water from vendors, take water from canals, or draw groundwater from private wells. 10 By 2007, this number had only increased by 5 percent. 11 The 1995 survey shows that private wells withdraw almost 80 billion gallons per year from Jakarta’s aquifers, more than twice as much groundwater as can be naturally replenished in a year. 12 The growing human settlements moving into watersheds at Southwest and Southeast of Jakarta are threatening the aquifers even more. By the time the area grow to be an impermeable, concrete jungle, most, if not all, of the rainfall will surely run into the ocean, instead of percolating into the ground and replenishing the aquifers. One of the surveys showed that the land has begun to collapse into the empty aquifers—a broad swath of the northern part of Jakarta has sunk 30 to 70 centimeters, around 12 to 28 inches, in 15 years mainly as a result of the 9 Randall Crane and Amrita Daniere (1996) op cit. 10 John McBeth (1995) “Water Peril: Indonesia's Urbanization May Precipitate a Water Crisis,” Far Eastern Economic Review. June 1, 1995. 11 The Jakarta Post (2007b) “New Investors, Old Problems in Water Industry,” 19 January, by Bambang Nurbianto. 12 John McBeth (1995) op cit. 11 groundwater extraction. 13 The impact would be worsened by the increase of seawater surface elevation. The Intergovernmental Panel on Climate Change’s report released in February 2007 shows that, due to the climate change, global average sea level rose at an average rate of 3.1 [2.4 to 3.8] mm per year over 1993 to 2003. 14 This phenomenon means that seawater intrusion and hydraulic energy line, ceteris paribus, would increase significantly. Greater Jakarta’s water quality is suffering from both domestic and industrial pollution. Approximately, 80 percent of Jakarta’s water pollution comes from domestic wastewater. 15 This study confirms that water quality issues are also anthropogenic. This water pollution takes place because the sanitation system in many parts of Greater Jakarta consists of a network of open ditches conveying wastewater to rivers or to the ocean, so that whenever toilets emptied, it goes directly onto these ditches. Then, the wastewater may leach into the region's drinking water supply. The study also shows that one third of treated water supply samples were contaminated with bacteria from human excrement. 16 One thing that saves the households in Greater Jakarta is that their habits to boil their waters before making use of them for drinking or cooking. Toxic waste discharges from large industries as well as from home industries, such as leather and shoe shops, are also becoming the emerging troubles. 13 John McBeth (1995) op cit. 14 Intergovernmental Panel on Climate Change (2007) “Summary for Policymakers,” Climate Change 2007: The Physical Science Basis. February 2007. <http://www.ipcc.ch/SPM2feb07.pdf> 15 Gordon McGranahan and Jacob Songsore (1994) “Wealth, Health, and the Urban Household: Weighing Environmental Burdens in Accra, Jakarta, and Sao Paulo,” Environment, Vol. 36, No. 6. 16 Gordon McGranahan and Jacob Songsore (1994) op cit. 12 Indonesia has yet to develop any so-called strategic regulations on industrial emissions, so that many industries are hardly checked, if not free, to dump pollutants into the streams. In other words, too many loopholes are left open. To lessen the costs of production is similar to benefits, so that it is rational for these industries and businesses, given too many unidentified loopholes, not to build their own treatment facilities since it will cost them more. The workers in home industries are exposed to high levels of dangerous pollutants and often dispose the waste in unsafe ways, such as combining it with their kitchen garbage or dumping them on the public street. In some areas, groundwater is polluted with nitrates and microorganisms from domestic waste and with toxic leached with industrial landfills. 17 The Wicked Waterborne Disasters The severest waterborne disaster in Greater Jakarta and some municipalities in Indonesia might have been flood. Chronic flooding comes around every year and mostly is the deadly one. In recent years, for example, substantial, incessant flooding occurred in February 2002 and February 2007. During these two occurrences, much of this capital city region was underwater. The latter incidence submerged 40 to 70 percent of the city alone. 18 Most of the flooding occurrence in modern Greater Jakarta is contemplated as anthropogenic—a logical consequence of what people have done to their water-related environment as well as lack of well-designed flood control system. According to some 17 Gordon McGranahan and Jacob Songsore (1994) op cit. 18 The New York Times (2007) “Flood Toll Rises, and Indonesia Braces for Disease,” February 6, p A11 by Seth Mydans. 13 environmentalists, the annual floods had been growing worse due to clogged drains, trash-filled rivers, and deforestation of hillsides south of the city for development. 19 Critics also blame delays in constructing a flood-control canal extension that carries excess water from overflowing rivers. 20 However, the local officials claimed that the flooding was part of a natural cycle. 21 Officials in the Department of Environment came up with a broaden perspective—that the flooding was also caused by climate change, beside also blamed on the ill- managed development in the watershed area. 22 Hence, finding the main culprit becomes a formidable endeavor. As time goes by, Greater Jakarta faces a rapid urbanization. While the root cause of the rapid urbanization is debatable—either due to a centralized governmental administration which makes Jakarta a center point for business deals or of an urban bias which makes rural people have no choice except moving in to the urban area, it is in fact that Greater Jakarta attracts many people more than other Indonesian cities do. Undoubtedly, inhabitants of other areas have a propensity to migrate into Greater Jakarta to eke out a better quality of life or probably just to gamble with their destinies. The corollary of this unbalance of migration is that Greater Jakarta has become a densely populated area. Massive structures, such as highways, large-scale dwellings, and other high-rise buildings, are typical built environments of the region. Since most of 19 The New York Times (2007) op cit. 20 The New York Times (2007) op cit. 21 The New York Times (2007) op cit. 22 Reuters (2007) Climate Change Worsening Indonesian Floods-official,” 7 February, by Ahmad Pathoni <http://today.reuters.com/News/CrisesArticle.aspx?storyId=JAK150971> 14 those structures are made of impermeable materials, consequently, ground infiltration of water is impaired and runoff water is remarkably rising. To make things worse, the floodwaters stagnate in most of the drains because the liquid has been mixed with solid wastes. Being clogged up, raging rivers and waterways burst over their banks and water spreads out all over the place and inundates many valuable properties. People have to stay in the region full time, putting up with the periodic flooding. Each time a flood occurs, nothing can be done but waiting until the floodwaters recede. Beside anthropogenic impacts in water system, the water itself as the media of flood is one of the natural substances that the authorities together with its residents should give more attentions. To protect the residents of Greater Jakarta, the authorities and the affected parties altogether should reconsider any given possible way to cater an appropriate control on water from being like a ticking time bomb, and at the end of the day, to discover a most effective and efficient flood control strategy. In a monsoon country like Indonesia, the biggest volume of water that potentially could be a threat, by far, comes from torrential rainfall that intensely downpours in the wet season every year. Rainfall pours almost like “eight days a week” for six months in that season. This phenomenon takes place not only in the city region, but also in the overall watershed. Rivers are filled up with too much surface runoff that inevitably will be overflowing and spilling out. As a matter of fact, in order to deal with this Mother Nature, there are some existing drainage networks and high storing capacity reservoirs that slowdown the storm water from flooding the region, yet their capacities are no 15 more sufficient to control the floods over the keep-on-growing impermeable concrete jungles. Beside its physical impacts, flood also has an economy implication, because it heightens the costs in line with its negative impacts. Economy impacts of flood are obvious more than ever. February 2007 flooding in Jakarta caused Indonesian shares fell due to persistent worries that floods would hurt economy and companies' earnings. 23 Businesses in the highly impacted areas are stopped from running. The structural damages require repairs and more funding. Another terrible side impact to society is its psychological effects. Among other things, the flood always causes traffic congestions followed by unpleasant psychological effect to the society—the residents get upset easily when flood occurs. Unfortunately, the issues aggravated by too much water are not exceeding those caused by too little water. This dilemma has become a double-edged sword. While flood becomes a big shock in the wet season, drought is a nightmare in the dry season. Many technical efforts have been made possible in order to prevent from too much runoff in the wet season and conserve the water in the dry season, such as constructing ponds, dams, retention basins, spreading grounds, vertical drainage system, and the like. However, not much has been of an effect. These problems still exist and are even emerging. 23 The Jakarta Post (2007c) “RI Shares Fell on Fears That More Floods Could Worsen Economy,” 10 February. 16 In Greater Jakarta and many parts of Indonesia, the approaches to curtail water issues have been a way of the engineers—a way in which the engineers put efforts by thinking that these issues are technical issues and their solutions therefore must have been technical ones only. This approach is not developed just in recent times. It is rooted from the colonial time when this region was ruled by colonial empires—Dutch, British, and Japan empires. The empires showed and taught the indigenous how to deal with nature by engineering approach—how to build dams and canals, but to give less, if any, attentions to future impacts. The attitude was realistic perhaps from the empires’ point of view—the empires focus was not to build a nation, but a temporary quarter as a base to collect the takings, raw materials, free labors and the like, before shipping them to their home nations. The tradition of approaching any water issues from technical, engineering standpoint has become the tradition of Indonesia at the beginning years of its independence. However, this approach should be improved, if not changed, given the challenges that water sector have been presenting. All in all, the approaches, that perceive water issues as only technical issues and give less attention to perceiving the issues as societal issues, have created a wicked issue, to use Rittel and Webber’s term. 24 Water issues are year-round issues in Indonesia and any stakeholders in Indonesia should not see them as benign issues, just because they become regular visitors. In dealing with the wicked problems, the stakeholders should 24 Horst Rittel and Melvin Webber (1994) “Dilemma in general theory of Planning,” Policy Science, 4, pp. 155-169. 17 not act as if they are dealing with the benign ones. 25 In contrast to the wicked ones, most of the benign problems in the water-resources development could be appropriately or temporarily solved. Those classified into the benign problems can be classified to those that can be solved by the technical solutions. For instance, the problem like drought or water distribution in a small region can be technically solved simply by constructing a suitable dam together with its water distribution system. However, when it comes to the problems of finding out who should be receiving more water, how much water should be allocated to certain area, how much the farmers should be subsidized, how much water can be released for flushing sewerage system, how to make an agreement on water bodies crossing states, and the like, political resolutions come into play and tend to undermine any technical solutions offered. Moreover, those problems strongly related to social life of the society and to demands of population over the commons, therefore no technical solution can be offered to those problems. 26 The dependence of the multiple development activities—both land and industrial resources—on the availability of adequate supplies of unpolluted water resources cannot be understated. This key resource is essential for many activities from household consumption to industrial production processes, agriculture, transportation, power generation, and waste disposal. Yet, at present, the inefficient use of water in Indonesia is degrading its supply in both qualitative and quantitative terms—a problem that has already reached a critical level in 25 Horst Rittel and Melvin Webber (1994) op cit. 26 Garrett Hardin (1968) “The Tragedy of the Commons,” Science, New Series, Volume 162, Issue 3859, December 1968. pp. 1243-1248. 18 some densely populated areas. This problem threatens human services provision and economic development in the affected regions with failure or serious disruption. Once believed to be an unlimited resource, the supply and quality of water in the Indonesia’s major cities are now questionable. Growing levels of consumption, environmental damage, and pollution have made it necessary to begin sustainable management efforts so that water will not become a scarce resource in the years to come. The increasing population and the use of irrigation on 70% of paddy fields of Java are expected to yield qualitative and quantitative water demand problems before 2020, as the water carrying capacity of the island is outstripped. 27 Issues of population, consumption and poverty all have important relations to health issues in Indonesia. The pollution of watercourses and aquifers in the centers of high population densities is projected to increase 800% during the same time period. 28 The deterioration of water quality will increase health problems, particularly for the urban poor. The Agenda 21 of Indonesia revealed that the agricultural sector dominates freshwater consumption, using about 98% of the Indonesia's water resources. 1991’s data showed that the national water requirements for irrigation and fish- farming ponds amounted to 74.9 billion cubic meters. 29 This volume was 27 Government of Indonesia (1997) “Indonesian Agenda 21,” A report for the 5th Session of United Nations Commission on Sustainable Development, April 1997. 28 Government of Indonesia (1997) op cit. 29 Government of Indonesia (1997) op cit. 19 projected to rise by an average of 10% per year to the year 2000 and 6.7% per year to the year 2015, for a total in that year of 116.96 billion cubic meters. 30 It is uncertain whether this projected volume can be supplied through existing collection and storage systems. Domestic water use, meanwhile, stood at 3.1 billion cubic meters in 1990 with the projected increases are 10% per year to the year 2000 and 6.67% per year over the following 15 years. 31 Domestic demand is the greatest demand on the islands of Java, Sumatra and Bali, which have the highest populations and are the most urbanized. Water scarcity has already begun to impact on large urban centers in Java, such as Jakarta, Bandung and Surabaya. Groundwater resources are in serious condition, with the level in key aquifers dropping by up to several meters per year. Total industrial demand was projected to increase nine folds to 6.4 billion cubic meters by 1998, and will continue to grow very rapidly in the future. 32 In terms of water quality, industrial waste discharges are damaging water in a number of regions of Indonesia, particularly in Java. An estimated 250,000 tons of industrial waste were released there in 1990; by the year 2010 this is projected to increase to 1,200 million tons per year, including 1 million tons of hazardous materials such as heavy metals, pesticides and highly toxic and persistent organic compounds. 33 The supply of safe water for domestic use is also a critical 30 Government of Indonesia (1997) op cit. 31 Government of Indonesia (1997) op cit. 32 Government of Indonesia (1997) op cit. 33 Government of Indonesia (1997) op cit. 20 issue. At present, a great majority of the poor, particularly those in large cities, live without access to clean freshwater. As urban population grows this will contribute to a significant decline in the quality of life, and the prevention of water-borne diseases by already overburdened public health programs will become even more challenging and pressing. Corollaries of New Decentralization Policy on Water-resources Development in Indonesia In 1999, while the water-resources development was haunted by the problems in coordinating fragmented agency functional mandates, another result of political resolution came into play in Indonesia. The political resolution was decentralization laws, namely Law 22 and 25 of 1999. Many sectors including water sector previously under national provision should be made ready to be decentralized. The laws started to put into effect on January 1, 2001. Today, the decentralization of water sector has become an emerging issue since the ongoing decentralization process seemingly has marked another step backward on the water-resources development and has been conducive for water wars. The questions emerging in some related discussions are: Is the decentralization of the water-resources development really an appropriate answer in handling the wicked problems in the water sector? Has the local governance been prepared and strong enough to cope with those confusing maelstroms in the water sector? The recent tendency towards decentralization of public sector responsibilities in Indonesia has brought about unusual change in 21 the institutional framework of the water-resources development as many new actors enter into the management and the decisionmaking process. The issues with regard to decentralization of the water-resources development are common although the solutions may vary by country. According to United Nation, the picture of water-resources development should be seen in a holistic concept. 34 However, with recent implementation of decentralization in Indonesia, an integrated outcome in the water-resources development can no longer be guaranteed or, at least, may be more difficult to be achieved holistically. For instance, with many streams crossing subnational administrative boundaries and others serving as the administrative boundaries, it is inevitable that disputes over water rights will arise among subnationals. The subnationals and other interest groups at a headwaters part of a watershed may benefit disproportionately comparing to those at the downstream one. In general, as in example above, these disputes take the form of complaint by downstream states, counties, or municipalities that are not getting their fair shares of water from the streams. Many incidences of conflict have shown that this imbalance benefit led to dispute among subnationals, such as, in 1907, a dispute between Kansas and Colorado in the United States of America about water rights to the waters of the Arkansas River and a dispute between Colorado and Wyoming over waters of the Laramie River. In Europe, the case of River Ebro in Spain shows water wars between two regions (see Box 1). 35 34 United Nation (1997) “Comprehensive Assessment of the Freshwater Resources of the World,” Commission on Sustainable Development. DPCSD. 35 The Economist (2004) “Spain's water wars: Ebro eddies," January 8, p. 45. 22 Box 1: Spain's Water Wars Ebro eddies Jan 8th 2004 | MADRID A continuing row about diverting the River Ebro “I WILL not send a single drop of water from the Ebro,” said Pasquall Maragall, the local Socialist leader, before November's Catalan elections. Now that he is head of the coalition government of Catalonia, Mr Maragall hopes to “paralyse” the Spanish government's plan to move water from north to south. The national hydrological plan, Europe's biggest water project, is set to be a big bone of contention in the long tussle between Madrid and Barcelona. The government of José María Aznar is pressing on: Mr Aznar's chosen successor, Mariano Rajoy, has condemned Mr Maragall's stance as “unpatriotic”. Last month the Spanish government formally requested European Union finance to meet a third of the $15 billion cost of the whole project. It claimed a victory when the European Commission conditionally approved €80m ($100m) to pay for a part of it, the transfer of water from Júcar to Vinalopó in the south. Mr Aznar has called the plan “an act of solidarity” between Spain's regions. In the run-up to March's national election, water has become a big political issue. The water balance between the wet north, where a third of Spain's rain falls, and the dry south, where 60% of the land is semi-arid, continues to inflame passions. The national hydrological plan, first proposed by the Socialist government in 1993, envisages 120 dams and 1,000km of pipelines. It would divert a cubic kilometre every year away from the Ebro, of which a fifth would flow to the Barcelona area and the rest to Valencia, Murcia and eastern Andalusia. Critics say the entire plan is outmoded, unwieldy and designed to benefit the government's business friends. They claim it will cost twice as much to transport the water as it would to produce more water through desalination. Asit Biswas, an international consultant recruited by the anti lobby, says it will be “a magnificent monument to bad planning for decades and even centuries to come”. Greens also say it will destroy the Ebro delta wetlands, home to such protected species as spoonbills and egrets. The government of Aragon, through which the Ebro mostly runs, supports the Catalans, calling the project a “method to rob the poor to feed the rich”. An EU that purports to believe in the power of regions may be cautious about being sucked in. Source: The Economist (2004) Lesson learned from the North-to-South water transfer of the Ebro River in Spain is that, if decentralized unit boundaries are referred to existing political entities, there is a tendency for having disputes among regions, regardless the type of governance system, and national government may end up to calm down the 23 disputes. On the other hand, however, if the system is too centralized, there would be a risk of loss of local ideas and opinions. 36 Another closely related example of the counterproductive corollaries of political decentralization policy over water sector is water conflicts following a series of flooding occurrences in Greater Jakarta in February 2002 and in February 2007. 37 These events demonstrate that the Jakarta administration alone is unable to make a comprehensive decision to prevent the flooding mainly because the main rivers conveying the floodwaters have upstream ends in other states—outside of Jakarta’s jurisdiction. Inexorably, conflict over the implementations of the new decentralization policy within water sector rises when an extreme event occurs. The 2002 and 2007 major water disasters in Greater Jakarta have significantly marked a new challenge in Indonesia’s water agenda. These natural disasters have instigated the accusation of the new decentralization policy as a culprit igniting a firewall for efforts toward appropriate handlings of flooding. However, whether the accusation proven right or wrong, the events and the conflicts that follow need to be analyzed on a case per case basis. 36 There are many other examples for this case, such as, among other things, the south-to-north water transfer in China (see The Los Angeles Times (2003) “China sees Grand Solution to Its Water Problem,” 9 March, p A1 by Ching-Ching Ni). 37 The Jakarta Post (2002) “Regional Autonomy May Hinder Jakarta's Action Against Floods,” 14 February, by Bambang Nurbianto and Rendi A. Witular; The Jakarta Post (2007a) “After the Flooding, the Blame Game Begins,” 4 February, by Adianto P. Simamora. 24 The 2002 Flooding In February 2002, Greater Jakarta experienced one of the severest flooding in its modern history. Although the flooding is an annual event for Greater Jakarta, the 2002 flooding was certainly an extreme phenomenon. The floodwaters inundated a huge part of Jakarta and caused as many as 150 people killed. 38 Beside the natural factors, such as rainfall intensity and durations, what makes the 2002 flooding in Greater Jakarta different is that it occurred after the new decentralization policy had been allowed to be implemented. Therefore, it is reasonable, although arguable, when administrative authorities put their blame on the decentralization, such as the one below: The Jakarta administration is unable to make comprehensive decisions to handle the flood problems alone because the main rivers in the city originate in the hills of West Java province, and the areas which are meant to be buffer zones for the city also lie outside of Jakarta's jurisdiction. One of the shortcomings of the Autonomy Law was that there was no central control over issues that affect multiple regencies and provinces, so a comprehensive solution for the floods could be difficult to achieve, a minister said on Wednesday. "Each separate administration has its own interests which could hinder efforts to solve flooding in Jakarta," Resettlement and Regional Infrastructure Minister Soenarno told a seminar which was focused on flood problems in the capital. 39 38 The Jakarta Post (2002) “VP blames New Order for nationwide flooding,” 11 February, by Nana Rukmana 39 Excerpt from The Jakarta Post (2002) op cit. 25 The 2007 Flooding The flooding occurred in February 2007 is similar in nature when compared with the 2002 flooding. The rainfall was measured at up to 250 millimeters. 40 The flood had enormous impacts on Greater Jakarta greatly—economically, socially, and environmentally. It made Indonesia look as if it had never learned from the 2002 flooding. Although most of government structures are same as those in 2002, one of the major differences is that the administrations had been politically changed. However, the conclusions drawn were still essentially similar—that the smoking gun was pointed at the new decentralization policy. One of the examples is below: State Minister for the Environment Rachmat Witoelar insisted the floods were caused by excessive development in the city's water catchment areas. Rachmat said that local authorities had been overzealous in issuing building permits for Jakarta's designated water catchment zones. "Many ignore the (city) spatial plan, especially the authorities that hand out permits, even though they clearly violate environmental impact analyses," Rachmat said. He said that large buildings in drainage areas in the capital had worsened the floods. "There are too many shopping centers in the capital," he said [Governor of Jakarta] Sutiyoso, however, chose to criticize the luxurious villas and residential complexes of Bogor, West Java. "The floods in Jakarta are partly due to environmental damage in Bogor. The Puncak is a water catchment area but there are now many villas there, causing the downpour to run straight into the river," he said during an interview on MetroTV on Saturday. Jakarta is fed by 13 rivers that have their origins in West Java. Sutiyoso said the Bogor administration had sacrificed water catchment areas for economic reasons. 40 Reuters (2007) op cit. 26 "Yes, they'll get the income from the villas to increase their local budget, but they aren't thinking of the impact it has on Jakarta." Sutiyoso said that under his management, the Jakarta administration had done well to balance both interests. "The practice of prioritizing income may occur in Jakarta, but I have managed it well since becoming governor," he said. 41 Another water war during an aftermath coordination effort can be analyzed from the following excerpt: When it comes to achieving a healthy balance between development and the environment, officials' good intentions are not enough. The State Ministry for the Environment on Thursday postponed the planned inspections of properties in South Jakarta because city officials failed to show up. The purpose of the inspections was to identify properties that do not have a percolation pit. The ministry said the delay was due to the absence of Jakarta administration officials. 42 These examples are just a few of many issues that will significantly regain consciousness if the political decentralization policy is, as is, applied in water sector. The reasons behind the statements after the two major flooding events above can be traced historically. Before the new decentralization policy was implemented, the nationally managed administrative entity that has experiences and the expertise in handling the flooding had a strong authority in planning and managing floodwaters and water conservation in Greater Jakarta. After the new decentralization policy was put into practice, however, the functions of this 41 Excerpt from The Jakarta Post (2007a) op cit. 42 Excerpt from The Jakarta Post (2002) “Good intentions not enough to make water solutions work,” 20 March, by Adianto P. Simamora 27 national entity are getting complicated. Not only is the national entity loosing the ground to work effectively, but it also has to inquire for cooperation from the neighboring states. Put differently, not only does the entity have to proceed with old responsibility of handling the technical issue of flooding, but it also has to deal with the coordination issue exacerbated by the increasingly conflicting demands from local entities. In a decentralizing epoch, each state tends to use its strong authorities in fulfilling its local water demands, which are inherently different. In fact, most of demands of a state at the upstream area are against those at the downstream area and vice versa. For instance, an upstream located state needs to drain down its floodwaters as fast and as much of possible, whereas at the same time, a downstream located state wants the upstream located state to drain them as slow and as less as it can. Before the decentralization bandwagon arrived, these demands could easily be negotiated by the national agencies. This is not a case in the decentralization era. This complex situation in which states can easily refuse to comply with any requirements imposed by the national agencies was rarely happening before the new decentralization policy gets underway. In sum, the flooding events have opened a Pandora’s box resulting from the implementation of the new decentralization policy in water sector. In other words, these incidents, although considered as natural phenomena, have revealed some hidden, underlying water wars as a result of the implementation of the new decentralization policy. Indeed, these water conflicts have demonstrated that the institutional arrangements for water sector have been 28 lacking in supporting the policy change for the new decentralization. In short, the water wars, provoked by extreme flooding events, have created an ironclad evidence that the new decentralization policy has worked toward building strong local localities in which one local entity is difficult, if not impossible, to impose a restriction toward the other, even though one entity has a vexing impact on the other. The sudden change from the centralization policy to the decentralization one without a well conceived institutional adjustment could cause unanticipated impacts on water resources governance. Since an integrated water resources management is increasingly a prerequisite to the success of water resources governance, giving too-much and too-fast powers to the state authorities is clearly doing more harm than good. In retrospect, two aforementioned cases have shown that a state could severely impact its neighboring state. The upstream-located state, most of the time, impacts the downstream-located one. Therefore, the focus of actions in general is given to the state in upstream area. This type of approach has caused an unbalance treatment in which a state in the upstream area takes more burdens usually in the form of more environmental regulations that could reduce its capacity to grow economically. The challenge then is to design a reconciliation policy conducive for the formation of regulations or agreements that are capable not only of controlling the state in the upstream area, but also of providing incentives easing the path for the upstream located state to conform to these regulations or agreements. In order 29 to comply with these regulations or agreements, the state in downstream area, on the other hand, has also to share the burdens bear by the state in upstream area. This kind of policy approach may create the balancing act for the neighboring states that share the water resources. In summary, the project is strictly to discuss on what kind of design can be offered within water-resources development policy that fits with decentralization upon which Indonesia, represented by the legislators, agrees to experiment. Although the project differentiates the centralization policy and the decentralization one, the project is not intended to make any policy comparisons of decentralization and centralization as to whether the former is better than the latter or vice versa. In other words, if centralization is the policy upon which Indonesia agrees to be the ruling policy, then the policy design should be regarded as an effort to adapt the water-resources development policy toward the centralization policy; however, if decentralization is taken as Indonesia’s political choice, as it is legally defined in the current decentralization laws, then the focus on this paper should be directed towards the policy design for fitting water-resources development policy onto the decentralization policy and avoiding centralization policy as an alternative policy for water-resources policy design. Abandoning the centralization policy does not mean to discredit the very principle of, or the concept of, centralization. It is more to that the centralization policy means to reject the decentralization policy. However, the goal of the project is to try to improve the current decentralization policy, as well as its practice, to make water-resources development policy work without resorting back to the centralization policy. Therefore, this project, in effect, is to propose a policy 30 design to bridge between water-resources development policy and the decentralization policy without judging that the decentralization policy is better than the centralization one. 31 CHAPTER 2: INDONESIA Since the water-resource issues discussed in this project take place in Indonesia, a reflective portrayal of Indonesia will be of use in comprehending the issues. Geomorphology of Indonesia Located in Southeastern Asia, Indonesia consists of 17,508 islands, which make Indonesia the largest archipelago in the world. However, only 6,000 (35%) of those islands are inhabited. 43 The Indonesian archipelago stands astride Equator along major sea-lanes from Indian Ocean to Pacific Ocean (see Figure 2). Since it is around equator, Indonesia's climate is tropical with hot and humid atmosphere. Source: CIA (2007) Figure 2: Map of Indonesia 43 CIA (2007) “The World Fact Book 2007,” <http://www.odci.gov/cia/publications/factbook/index.html> 32 Of total area 1,919,440 square kilometers—slightly less than three times the size of Texas, 1,826,440 square kilometers are lands and 93,000 square kilometers are water. 44 Indonesia has a 2,830-kilometer borderland, which consists of 1,782 kilometers with Malaysia, 820 kilometers with Papua New Guinea, and 228 kilometers with East Timor. 45 Indonesia is fortunate since it is endowed with a plethora of natural resources, such as petroleum, tin, natural gas, nickel, timber, bauxite, copper, fertile soils, coal, gold, silver, and many more. Based upon data established in 1993, the land use in Indonesia was classified as follows: 10% arable land (11.03 in 2005), 7% permanent crops (7.04% in 2005), 7% permanent pastures, 62% forest and woodland, and 14% other. 46 In terms of agriculture, the irrigated lands changed from 45,970 square kilometers in 2001 to 45,000 square kilometers in 2003. 47 Beside blessed with a flood of natural resources, on the other hand, Indonesia is suffering from many natural hazards, such as occasional floods, severe droughts, tsunamis, earthquakes, volcanoes, and the like. Moreover, other environment issues, such as deforestation, water pollution from industrial wastes, sewage, air pollution in urban areas, smoke and haze from forest fires, and the like, have also aggravated the agonies. 44 CIA (2007) op cit. 45 CIA (2007) op cit. 46 CIA (2001) “The World Fact Book 2001,” <http://www.odci.gov/cia/publications/factbook/index.html>; CIA (2007) op cit. 47 CIA (2001) op cit; CIA (2007) op cit. 33 Urbanization in Indonesia and Other Nations in the Less Developed World Since the biggest problems of water sector are started from urban areas, it is cogent to illustrate Indonesia in terms of urbanization. One better way to illustrate the urbanization in Indonesia is by comparing the urbanization pattern to that of other nations in the less developed world. Indonesia and many nations in the less developed world are heavily rained with so many urbanization-related issues. Such issues are higher crime rate, environmental degradation—both natural and built environment, culture degradation, pressures on infrastructures, and the like. As a matter of fact, there are some principal issues and trends in urbanization of the less developed world for an empirical analysis. Those issues and trends are summarized as follows: Rural-to-urban Migration To discuss the issues and trends in urban areas in the less developed world, there should be also a discussion over those of rural areas and over how rural and urban are related or linked to each. The reason is that most of population in the less developed world still resides in rural areas, such as in populous Indonesia, China, India, and Africa South Sahara, even though major element in urban growth is natural population growth, rural-to-urban migration makes an unconscionable amount of contribution to urbanization. 48 48 Josef Gugler (1996a) “Regional Trajectories in the Urban Transformation: Convergence and Divergences,” in Josef Gugler (ed.) The Urban Transformation of the Developing World. Oxford University Press Inc., New York. pp. 1-14. 34 The Todaro model has demonstrated that a rural-to-urban migration is a rational decision. Among many incentives to the rural-to-urban migration, the major factors are the push factor—constrain opportunities in rural areas—and the pull factor—the charm of modern cities. 49 Another noteworthy incentive is that there are rent-seeking practices taken advantage of the urban bias of economic development, such as what has happened in Africa South of Sahara 50 and partly in Latin America. 51 Such rural-to-urban migrations have brought in some trends in the less developed world. To be able to live in the cities, rural migrants use most of the time, a strategy called temporal migration which, in turn, has caused some specific trends, such as floating population in China, 52 rural poverty migration in India, 53 circular migration that blurring distinctions between rural and urban populations in Indonesia, 54 refugee camp in Arab world, 55 and gender transition and extensive social networks linking rural to urban in Latin America world. 56 49 John Kasarda and Edward Crenshaw (1991) “Third World Urbanization: Dimensions, Theories, and Determinants,” Annual Review of Sociology Volume 17. Annual Reviews Inc. pp. 467-501. 50 Josef Gugler (1996b) “Urbanization in Africa South of Sahara: New Identities in Conflict,” in Josef Gugler (ed.) The Urban Transformation of the Developing World. Oxford University Press Inc., New York. pp. 210- 251. 51 Orlandina de Oliveira and Bryan Roberts (1996) “Urban Development and Social Inequality in Latin America,” in Josef Gugler (ed.) The Urban Transformation of the Developing World. Oxford University Press Inc., New York. pp. 92-131. 52 Xiangming Chen and William L. Parish (1996) “Urbanization in China: Reassessing an Evolving Model,” in Josef Gugler (ed.) The Urban Transformation of the Developing World. Oxford University Press Inc., New York. pp. 60-90. 53 Rakesh Mohan (1996) “Urbanization in India: Pattern and Emerging Policy Issues,” in Josef Gugler (ed.) The Urban Transformation of the Developing World. Oxford University Press Inc., New York. pp. 92-131. 54 Graeme Hugo (1996) “Urbanization in Indonesia: City and Countryside Linked,” in Josef Gugler (ed.) The Urban Transformation of the Developing World. Oxford University Press Inc., New York. pp. 132-183. 55 Janet Abu-Lughod (1996) “Urbanization in the Arab World and the International System,” in Josef Gugler (ed.) The Urban Transformation of the Developing World. Oxford University Press Inc., New York. pp. 184- 208. 56 Josef Gugler (1996a) op cit; Orlandina de Oliveira and Bryan Roberts (1996) op cit. 35 Fertility Total fertility rate has been drastically changed in urban areas. As discussed above, gender transition is reflected in the patterns of the rural-to-urban migration. Thus, whenever more women migrate to urban areas, get educated, and enter employment markets, the average number of children born to a woman during her lifetime for the country will be decreasing. This trend is shown in Indonesia and Latin America and the reverse trend is shown in India and Arab world. 57 Clearly, these trends will contribute a significant effect to the future composition of urban demography. Urban Bias As also discussed as the cause of rural-to-urban migration, urban bias is one of the big issues in urbanization in the less developed world since it is considered to be the cause of rural poverty, which in the long run will increase the regional inequality. The existence of urban bias is revealed whenever there is a region experienced urban growth much faster the other, while its economic performance is the worst among the regions. 58 It is difficult to measure whether an urban bias has involved in urbanization in the less developed world. However, a study in Africa South of Sahara posited that both the industrialization force and the expansion of the government apparatus were carried out at the expense of rural sector and that the system is 57 Josef Gugler (1996a) op cit. 58 Josef Gugler (1996a) op cit. 36 conducive for rent-seeking practices. 59 As well, the paradigm of urban bias was suspected as a root of rapid urbanization in Latin America due to concentrated structural investment in the large cities. 60 The urbanization in other nations in the less developed world has a tendency to get affected by the paradigm of urban bias. Therefore, due to the difficulties in indicating the existences of urban biases in the less developed world, there should be a comprehensive analysis on economic development and political intervention. Urban Primacy One of the major urbanization issues much discussed in the less developed world relates to distribution of the size of urban areas. And, one of the mostly used methods in measuring this urban hierarchy is by calculating the urban primacy index. The urban primacy index has emerged as a reaction to the notion that uneven spatial development in the less developed world has led to overconcentration of urban population in several urban areas, also known as overurbanization. The more centralize the authorities, the more the people concentrate in primate cities. 61 Although there are some practical difficulties in defining boundaries of urban areas, such as whether using administrative boundaries or urban agglomeration boundaries, and some concept disagreements 59 Josef Gugler (1996b) op cit. 60 Orlandina de Oliveira and Bryan Roberts (1996) op cit. 61 Salah El-Shakhs (1972) “Development, Primacy, and Systems of Cities,” The Journal of Developing Areas 7. pp. 11-86. 37 on primacy related to urban size and total population size, the urban primacy remains one of the principal topics of comparative urban studies. 62 In Indonesia, Jakarta has become the primate city even though its level of primacy index is not really high—between 1 and 1.5 since 1961. 63 Historically, unlike many other colonies, the urban hierarchy of the then-Netherlands East Indies was not dominated by a single primate city until the early years of this century with growing sophistication in transportation and communication system. Moreover, the result of the calculations, from 1890 to 1990, shows that the urban system has clearly shown a consistent trend to move toward a primate city size distribution in which Jakarta dominates the urban system. 64 Beside this old Batavia, the other cities in the less developed world that are single-primate cities are many, such as Lagos in Nigeria, Bangkok in Thailand, Cairo in Egypt, and many more. On the other hand, the cases of China, India and Brazil have a potentiality to undermine the notion of urban primacy in the less developed world. However, the concept has been modified to include the notion of two-city primacy, such as Brazil and Sao Paulo in Brazil, regional multiple-city primacy, such as urban system in India and China, and polycentric urban systems so that it can be concluded that the urban systems of the less developed world have shown a consistent trend to move toward a primate city size distribution. 65 62 John Kasarda and Edward Crenshaw (1991) op cit. 63 Graeme Hugo (1996) op cit. 64 Graeme Hugo (1996) op cit. 65 John Kasarda and Edward Crenshaw (1991) op cit. 38 Public Participation The other important issue of urbanization in the less developed world is about socio-cultural. The current patterns of urbanization and political upraising in the less developed world have a significant impact on how people organize their societies, values, ideals, and perspectives. Many nations in the less developed world have been traumatized by highly centralized authoritarianism. As a result, many social movements and democratization process had been held in every corner of the less developed world. One of those movements is public participation in decisionmaking. Public participation has been involved in many policymaking processes. In addition, many transitions from a centralization system of governance to that of decentralization in the less developed world are emphasizing on the public participation. In China, there is a growing variation of structure of urban life where urban residents have been engaged in defining their perceptions on quality of life and creating totally new set of dynamics to substitute the old structure. 66 In India, there is strong motivation to create self-sustaining urban institutions that are responsive to needs of the individual. 67 In Indonesia, looking back to colonial period, according to Raffles, initially the Dutch had no confidence in the natives, so that the Dutch preferred to bring in slaves from elsewhere to work for them and create dessert barriers for their port cities. 68 To some extent, this policy has caused a sort of hindrance for the advancement of the know-how of 66 Xiangming Chen and William L. Parish (1996) op cit. 67 Rakesh Mohan (1996) op cit. 68 Graeme Hugo (1996) op cit. 39 the natives. However, after recent reformation in Indonesia, public participation is hoped to be one of the key elements in most of decisionmakings. Brief History of Indonesia The brief history of Indonesia illustrated in this project focuses on (1) the history of Indonesia in general and (2) the history of its decentralization policies in Indonesia. The histories narrated in this project are intended to create a comprehensive understanding of the background of the subject nation so that any policies taken by its administrations can be discerned appropriately. Although hundreds of ethnic groups have been known as the indigenous of Indonesia for hundreds and thousands of years, Indonesia did not exist in its present form as an independent nation until the end of World War II. Therefore, as also frequently valid in many newly formed nations, Indonesia has faced and still is facing many issues in its search for its true identity. Many archaeologists have hypothesized that the original Indonesian migrated from China thousand years ago and stayed along the archipelago. Then, for centuries, some of them created some inner kingdoms, which only traded with people around Asia. In 1512, the Dutch came as traders under the umbrella of the Royal East Indies Company, also known as VOC—Vereniging Oost Indische Compagnie. Started from the VOC trading, the Dutch introduced a colonization practice for over 4 centuries. There should be many lessons that Indonesian learned from colonization, such as the way of thinking of the colonialists, how to establish their 40 territories, and the like. In terms of urban development, it can be seen that most of big cities in Indonesia are located in coastal areas, which initially developed as the port cities in colonial epoch. Those big port cities are Jakarta, Surabaya, Medan, and Semarang. Looking at the growth of some big cities in the country, there is no doubt that the dominance of port cities was partly attributable to the concentration of colonial activities. This account shows that historical circumstances may have created local disparities. On August 17, 1945, Soekarno and Hatta proclaimed Indonesia as an independent nation. However, the Dutch did not accept the independence until December 27, 1949. Ended in 1967, Soekarno was in power for about 2 decades. Ended 1998, Soeharto, the former Soekarno’s general, took place presidency chair for about 3 decades. Many people suspect the succession and insist for a review on the events surrounding the transfer of power from the founding president Sukarno to Soeharto in 1965, which was overshadowed by the alleged abortive coup attempt by the Indonesian Communist Party. In terms of system of governance, after about half of a century to exist as an independent nation, there were not many crucial changes in Indonesia. The paradigmatic centralism as a mode of governance was mostly chosen to be the approach to govern the newborn nation. In 1997, the economic crisis was rolling over South East Asia. The economic crisis that hit strongly in mid-1997 turned into political chaos—mostly due to a legitimation crisis. Indeed, the economic crisis originated from the neighboring nations might have not deeply shocked to the extent causing the collapse of the system, had an effective normative structure been 41 internally maintained and established. 69 Massive uprisings following the crises signaled Soeharto to step down. Soeharto left the palace and gave the mandate to B.J. Habibie, his then vice president. However, the turmoil continued unfolding. Shortly after his presidency, Habibie was replaced by Abdurrahman Wahid who then replaced by Megawaty Soekarnoputri. The biggest change in those succession periods was the opportunity for Indonesia to exercise robust regionalism signified by the enactment of several laws that can be called the embodiment of political decentralization discussed in this project. After only one period, Soekarnoputri was replaced by Susilo Bambang Yudhoyono, the former general who became Indonesia’s first directly elected president in 2004. In summary, the history illustrated briefly above functions as a bridge to understand more of Indonesia, so that it would be of help in approaching its interconnected issues and realpolitik of water-resources development and decentralization policy. It also functions as a description of how Indonesia is expected to be in the near future and to find out if there are any broad patterns that can be discerned. Brief History of Decentralization in Indonesia Since the issuance of the two new decentralization laws in 1999, decentralization policy has been gained so much attention in many decisionmaking processes in Indonesia. However, decentralization is nothing new for Indonesia. A better picture of decentralization in Indonesia can be portrayed by looking back and analyzing carefully the history and types of decentralization. The roots of today’s 69 Jürgen Habermas (1973) “Legitimation Crisis,” Translated by Thomas McCarthy. Beacon Press. Boston. 42 decentralizing pressures can be found in Indonesia history of territorial fragmentation and overlapping layers of cultural, social, economic, and political differentiation. From historical perspective, decentralization policy in Indonesia has served as a political resolution for growing issues, in which political unification could not overcome. Not only has been in Indonesia, but much of decentralization that has taken place in other nations in the past decade has been driven by political concerns. 70 The history of the decentralization in Indonesia can be traced as far back to the past as a century. The first decentralization was formulated as far back as 1903 by Netherlands Indies Government. On July 23, 1903, the final proposals of Minister of the Colonies Idenburg for decentralization of authority to colonial government—Netherlands Indies including Indonesia—were accepted by Parliament of Netherlands and become law. 71 As commonly stated in many so- called goals of decentralization policy, this transfer of authority from the higher- level government to the lower-levels was intended to gain cooperation of the inhabitants in order to sustain the public interest. However, the pressure towards this outcome had originated in the Western business world within colony where the increasing conflict between business enterprises and colonial 70 James Ford (1999) “Rationale for Decentralization,” in Jennie Litvack and Jessica Seddon (eds.) Decentralization Briefing Notes. World Bank Institute, Washington DC. pp. 6-8. 71 Indisch Staatsblad, No. 329 (1905) “Decentralisatie Wet, 23 July 1903,” in Eduard J. M. Schmutzer (1977) “Dutch Colonial Policy and the Search for Identity in Indonesia: 1920—1931,” E. J. Brill, Leiden, The Netherlands. 43 bureaucracy has caused social friction. 72 As frequently repeated in many reasons for the importance of decentralization of authority, the rationale of this decentralization was that the higher level government—in this case was the Netherlands government—had less, if not nothing at all, information or knowledge about what was actually going on in the lower levels—in this case was the Indies. As elaborated above, it is cogent that decentralization is nothing new in Indonesia. In modern Indonesia, the decentralization of responsibility originally set underway by Law 5 of 1974 supplemented by a series of regulations—the most prominent one was National Government Regulation, or PP, No. 45 of 1992— specifically allocating and clarifying government responsibilities in several areas. However, the strong force and the demand from the people, mostly from those who are strong advocate of decentralization, have pushed legislative to promulgate new laws with stronger emphasis on decentralization. Hence, the initial legal basis for current efforts of political decentralization was given by two major laws—Law 22 and 25 of 1999—which have been followed by PP 25 of 2000. The recent change in Indonesia, therefore, can be said as a change in way of governance and its politics. With this change, the old development paradigm rested on centralized decisionmaking might have been fading to pave the way for a new paradigm rooted in decentralized one. 72 Eduard Schmutzer (1977) “Dutch Colonial Policy and the Search for Identity in Indonesia: 1920—1931,” E. J. Brill, Leiden, The Netherlands. 44 Started in 1987—the pass of PP 14—and further in 2000—the pass of PP 25— under a policy of an acceleration of decentralization, many responsibilities, which were previously held by the national government, will be undertaken by subnationals. At the subnational levels, complaints continued over the difficulties in obtaining well-motivated staffs, coordinating the growing number of subnational department units, controlling the activities of deconcentrated national bodies and local-owned enterprise units, and dealing with the financing functions. Nevertheless, the dominant constraint could be found in the national government. Despite broad awareness of the need to improve the institutional framework, there was no unity of vision at the national level, no consensus about a plan of action that would, over time, give greater autonomies to subnationals. Decisionmaking was a long and laborious process. Disagreement about the goals and strategies, conflict of interest, and actions to defend vested interests were all obstacles that have to be overcome before real action could be taken. An observation of the decisionmaking process regarding the decentralization shows that often the arguments are not so much about delegation of responsibilities to subnationals but more often about the transfer of authority among departments. 73 In a different way, the history of decentralization policy in modern Indonesia can be seen as a pattern between centralization and decentralization. One study 73 Hendropranoto Suselo, John Taylor and Emiel Wagelin (1995) “Indonesia's Urban Infrastructure Development Experience: Critical Lessons of Good Practice,” Jakarta. 45 shows a comparison of the policies on regional arrangement. The result can be seen in Table 1. Table 1: Decentralization and Centralization Measures in Indonesia 74 Period Law Political Administrative Fiscal Indicator 1945 Constitution Unitary republic Centralization Law 22 of 1948 Delegation of democratic principle Delegation of authority Fiscal devolution Revolution (1945-49) Federal Policy 1948-49 Federal states Administrative decentralization Fiscal decentralization Decentralization Unitary Unitary state Administrative centralization Fiscal centralization Centralization Law 1957 Division of powers Administrative centralization Fiscal centralization Old Order (1949-65) Presidential Edict 1959 Guided Democracy Administrative centralization Fiscal centralization Law 18 of 1965 Devolution of Power Administrative centralization Fiscal centralization Centralization New Order (1965-98) Law 5 of 1974 Centralization of power under army and civil bureaucracy Administrative centralization Fiscal centralization Law 22 of 1999 Devolution of power; democratization; strengthening of local legislation Redistribution of authority and responsibility Expenditure devolution; revenue centralization Decentralization Reform Order (1999- 2004) Law 25 of 1999 Law 32 of 2004 Revision of Law 22 of 1999 Revision of Law 22 of 1999 Revision of Law 22 of 1999 Quasi Decentralization 75 United Order (2004- present) Law 33 of 2004 Revision of Law 25 of 1999 Revision of Law 25 of 1999 Revision of Law 25 of 1999 74 Adopted and modified from Wihana Jaya and Howard Dick (2001) “The Latest Crisis of Regional Autonomy in Historical Perspective,” in Grayson Lloyd and Shannon Smith (eds.) Indonesia Today: Challenges of History. Institute of Southeast Asian Studies, Singapore. pp. 216-228. 75 After observing the current laws of decentralization, I came to the conclusion that the spirit light of decentralization is dimming. By taking a glance at, for instance, Article 198, Law 32 of 2004, on Conflict Resolution as opposed to Article 89, Law 22 of 1999, on the same account, it shows clearly that the road is back to “old road” where the conflict among states is handled by Secretary of the Interior, and it is final, while, in the Law 22 of 1999, it was previously handled by Supreme Court. By design or not is arguable, but the centripetal force is ipso facto getting stronger than the centrifugal one. 46 Table 1 shows that since a century ago, the authority has used decentralization and centralization policies erratically. The back-and-forth pattern has been chosen, either by coincidence or by design, in facing regional problems in Indonesia. Looking at Indonesia history and political choices, the idea of decentralization for Indonesia is considerably an oxymoronic idea. It shows inconsistency in implementing the policies or perhaps the pattern is a result of merely a political necessity. However, it is crucial to describe to some extents the fundamental facts of this groundbreaking decentralization policy inasmuch as it functions as one of the main parameters in this project. Consequently, the descriptions will function as the bridge to evaluate comprehensively the relationships between the new decentralization policy and water-resources development in Indonesia. Although this project scrutinizes more on the practices of the new decentralization policy, it will be beneficial to describe this new policy in terms of its legal concept. The legal concept of the new decentralization policy refers to the two laws passed in 1999, namely Law 22 on subnational governance and Law 25 on monetary balances between the national government and the subnationals. As proclaimed in its preamble, one of the reasons of the making of Law 22 of 1999 was intended to replace two obsolete laws—Law 5 of 1974 on local governance and Law 5 of 1979 on rural governance. By the same token, the existing Law 25 of 1999 was intended to replace the outdated Law 32 of 1956 on fiscal balance between the nation and its subnationals that have autonomous rights. Therefore, the passing of these two laws had signaled the 47 beginning of an era of the new decentralization. Indeed, it can be called the new decentralization era due to the significant changes made in the laws. In addition, the revisions of Law 22 and 25 of 1999, namely Law 32 and 33 of 2004, respectively, are also briefly discussed within. In short, the fundamental changes as legally defined in the legislations are discussed below. Changes in Autonomous Authorities Vitally positioned in the new decentralization policy, Law 22 of 1999 highlights so many changes in terms of a decentralizing process of governance system in Indonesia. According to Law 22 of 1999, most of the autonomous authorities should be transferred to county and municipal governments, except the authorities related to intercounty or intercity affairs and over-capability matters, which should be handled by state governments (Article 9). Article 11 of Law 22 of 1999 establishes the details of the autonomous authorities, which are in public works, health, education and culture, agriculture, transportation, industry and trade, capital investment, environment, land use, community-based enterprise, and workforce matters. In comparison with Law 5 of 1974, this provision is still in line with the old clause focusing on the second tier governments (Article 11 of Law 5 of 1974). In Law 32 of 2004, on the contrary, these autonomous authorities were separated into two: mandatory and optional authorities. Although the optional authorities are vaguely defined, Law 32 of 2004 defines clearly as to which mandatory authorities for state government and which ones for county and municipal governments. According to Article 13, the mandatory authorities for a state government are the following state level matters: 48 a. Development planning and management; b. Spatial planning, utilization, and monitoring; c. Enforcement of public order and community tranquility; d. Delivery of public facilities and infrastructures; e. Health management; f. Administration for education and allocation of human resources potentials; g. Containment of intercounty or intercity social issues; h. Intercounty or intercity workforce support services; i. Facilitation for the development of community-based enterprises, small and medium businesses including those of intercounty or intercity; j. Environmental management; k. Land use services including those of intercounty or intercity; l. Public records and public notary services; m. General public administration services; n. Capital investment administration services including those of intercounty or intercity; o. Other basic services yet to be completed by county or cities; and p. Other mandatory matters as established by legal documents. As for a county or municipal government, the mandatory authorities are the following county or municipal level matters (Article 14): a. Development planning and management; b. Spatial planning, utilization, and monitoring; 49 c. Enforcement of public order and community tranquility; d. Delivery of public facilities and infrastructures; e. Health management; f. Administration for education; g. Containment of social issues; h. Workforce service; i. Facilitation for the development of community-based enterprises, small and medium businesses; j. Environmental management; k. Land use services; l. Public records and public notary services; m. General public administration services; n. Serving capital investment administration; o. Other basic services; and p. Other mandatory matters as established by legal documents. Except on the intercounty and intercity matters, the differences between the mandatory authorities for a state government and those for a county or municipal government are only based on the level of the issues. Categorizing which issue for what government level could be another sources of conflict. The other change of authorities in Law 22 of 1999 is that there is no hierarchical relationship among state, county, and municipal governments (Article 4). This was a far-reaching change in comparison with Law 5 of 1974 in which a state government, which is the first tier of subnational government, is hierarchically higher than county and municipal governments, which are the second tier of 50 subnational governments. 76 However, according to the currently ruling law, Article 2 of Law 32 of 2004, this relationship is set to the situation similar to that of Law 5 of 1974. Changes in National-Subnational Power Map According to Article 7 of Law 22 of 1999, the national government affairs are limited to international affairs, defense and security, judicial, national monetary, religious, and policymaking on overall national planning and development control, fiscal balance fund, national system for administrations and economic institutions, human resources development, natural resources development with strategic high technology, conservation, and national standardization. This list has been revised with Article 10 of Law 32 of 2004 by which the national government affairs are limited to only 7 matters: international affairs, defense, homeland security, judicial, national monetary, and religious. Changes in Distributions of Wealth Funding for the new decentralization policy, as a consequence, creates a new challenge. According to Article 78 of Law 22 of 1999, all the autonomous undertakings of subnationals should be budgeted by the subnationals and all national tasks within subnationals should budgeted by the national. Law 32 of 2004 also ratifies this provision. Although Law 22 of 1999, then confirmed by Law 32 of 2004, outlines the fiscal arrangement among autonomous 76 The institutional arrangement set in Law 22 of 1999 had created a conflicting administrative boundary. Unlike county and municipal boundaries, which are always separated, the state administrative boundary covers both county and municipal boundaries. 51 subnationals, such as the arrangement of financial sources and incentives, the detailed fiscal balance arrangements are not documented. The detailed documentations are more to see in Law 25 of 1999, then confirmed by Law 33 of 2004. All in all, the distribution arrangements, as legally defined in Law 25 of 1999, are as follows: a. Revenue from land and property taxes is distributed into 10% for the national government and 90% for the subnationals. In Law 33 of 2004, the distributions are set at the same ratio, but the law regulates the distributions within the subnationals in more detail manners. b. Revenue from fee on ownership of land and property rights is distributed into 20% for the national government and 80% for the subnationals. In Law 33 of 2004, the distributions are set at the same ratio, but the law regulates the distributions within the subnationals in more detail manners. c. Revenue from natural resources, which are obtained from forestry, general mining, and fishery sectors, is distributed into 20% for the national government and 80% for the subnationals. In Law 33 of 2004, the distributions are set at the same ratio, but the law regulates the distributions within the subnationals in more detail manners. d. Revenue from reforestation fund is distributed into 60% for the national government and 40% for the subnationals. In Law 33 of 2004, the distributions are set at the same ratio, but the law regulates the distributions within the subnationals in more detail manners. 52 e. Revenue from natural resources, which are obtained from oil mining, is distributed into 85% for the national government and 15% for the subnationals. In Law 33 of 2004, the distributions are slightly changed into 84.5% for the national government and 15.5% for the subnationals. f. Revenue from natural resources, which are obtained from natural gas mining, is distributed into 70% for the national government and 30% for the subnationals. In Law 33 of 2004, the distributions are slightly changed into 69.5% for the national government and 30.5% for the subnationals. g. Revenue from natural resources, which are obtained from geothermal mining, is not regulated in Law 22 of 1999. In Law 33 of 2004, the revenue generated from the mining is distributed into 20% for the national government and 80% for the subnationals. h. General allocation fund, which is nationally budgeted, is derived from at least 25% of domestic revenue. The general allocation fund is distributed into 10% for the state governments and 90% for the county and municipal governments. In Law 33 of 2004, the fund is derived from at least 26% of net domestic revenue. The distributions of this fund is not precisely stated as in the Law 22 of 1999, but calculated with the basis of the fiscal needs and capacities of the subnationals. i. Domestic and foreign loans initiated by a subnational government are permitted as long as they are carried out through the national 53 government. In Law 33 of 2004, the limit of the domestic loan is set to 60% of the gross domestic product of the borrowing subnational government, but no limit is set for the foreign loan. In retrospect, one legal issue that should be investigated in relation to this project paper is a cross-boundary issue. Although both Law 22 of 1999 and Law 32 of 2004 have defined the authorities over the intercounty or intercity governance issues, which fall onto state government’s hands, they both lack legal bases for defining the authorities for interstate governance issues which this project considers in several occasions. Moreover, due to the water nature that does not recognize political or administrative boundaries, lack of interstate jurisdictional or governance provisions in legal documents supporting the new decentralization policy opens up loopholes vulnerable to water conflicts. Examining at the arrangements of authorities for intercounty or intercity governance affairs upon which the state government as the higher hierarchical entity holds the authority, as defined in Article 9 of Law 22 of 1999 or Article 13 of Law 32 of 2004, one could easily interpret that the same situation will apply for the case of interstate governance affairs upon which the national government as the higher hierarchical entity should hold the authority. This is the notion that currently tends to be the guiding assumption when the interstate governance issues, like the interstate water resources issues, arise. In contrast, however, due to lack of the provisions regulating the interstate governance issues, one could also interpret that, in handling the interstate governance issues, powers and authorities should be shared between or among the states where the underlying conflicts occur or potentially occur. This notion 54 is reasonable because any interstate governance issues that are not falling into the seven aforementioned exclusive-for-the-national-government categories should be handled by the neighboring states where the issues are aggravated or may potentially become so. This notion also becomes the basis of the proposed reconciliation model discussed later in this project. 55 CHAPTER 3: WATER-RESOURCES DEVELOPMENT IN INDONESIA Policies on Water-resources Development In 1997, Government of Indonesia, under its Directorate General of Water- resources Development, developed a strategic policy and goals for the water- resources development. With the spirit of decentralization, the development of structures and infrastructures for the water-resources development, “as far as it could,” is delegated to subnationals—both states, also known as the first tier authorities, and counties or municipalities, also known as the second tier authorities. 77 The policies over the organizational structure signal the importance of delegating authorities from national to subnationals. As stated in PP 45 of 1992, a national regulation on local autonomy, the emphasis of the local autonomy is in the second tier authorities. The regulation portrays the rule of the game of the local autonomy in Indonesia. The function of: (1) national government is to be responsible in the construction and authorization of policies, programs, management and evaluation; (2) state government, the first tier authorities, is to be responsible in monitoring, regional planning, controlling, counseling, and reporting; and (3) county or municipal government, the second tier authorities, is to be responsible in the operational implementation in line with the programs and 77 Director General of Water-resources Development (1997) “Strategic Policy and Goals in the Water- resources Development,” Directorate General of Water-resources Development of Republic of Indonesia. 56 counseling from the national government and the first tier authorities. At the ground, except for special cases, whenever possible, the water-resources development projects are directed to be implemented by the first tier authorities. In the event that the second tier authorities are considered to have enough capacity, the projects are delegated to the second tier authorities. Almost all of government bodies have a link to the water-resources development. In 1999, a study conducted by the World Bank shows this intertwined governance system (see Appendix 1). The current system is not so far from that. However, in general, the relationship could be described as follows: 1. Department of Public Works, has a primary responsibility to the overall management of water resources and water quality as well as the administration of surface water coordination policy. This responsibility has been divided into: a. Directorate General of Water-resources Development is responsible for regulating the raw water supply. b. Directorate General of Urban Development, once called Directorate General of Human Settlements, is responsible for technical policy and guidance as well as the construction of the facilities. 2. Department of Health is responsible for water quality standard for various purpose and public health promotion. 3. Directorate General of Public Administration and Regional Autonomy, one of Directorate Generals in Department of the Interior is 57 responsible for legal, managerial and administrative guidance for water provision of subnationals. 4. Department of Finance is responsible to promote the financial management of the government-owned water enterprises through equity, loan, grant or other forms of subsidies from national to subnationals, PDAMs—local-owned enterprises for drinking water, and PD PALs—local-owned enterprises for wastewater treatment. 5. BAPPENAS, National Planning and Development Agency, has a responsibility to coordinate any planning for the development of those enterprises in coordination with the related institution in national and subnationals. This includes the decision of financing arrangement, level of services, estimation of investment, and mode of investment for various types of PDAMs. 6. Subnationals, both states and counties or municipalities, are responsible for the overall management and accountability of those enterprises in all aspects among others corporate management of water supply and sanitation enterprises. The responsibilities among other things are: regrouping of the entire PDAMs in Indonesia, management-consumers relations, benchmarking of objective, efficiency of operation, responsible to promote human-resources development, and technological development. The head of the county or municipality, Bupati or Mayor, respectively, is usually ex- officio as the chairman of Board of Supervisors. This board is 58 authorized to appoint the directors of water supply and sanitation enterprises. Organizations of Water-resources Development in Greater Jakarta In Greater Jakarta, Directorate General of Water-resources Development formed a project called the Ciliwung-Cisadane Watershed Development Project. The main assignment of the project is to conserve water and to control floods, especially those related to the Ciliwung, as well as to the Cisadane—the other major river crossing through the region. The primary function of the project, established by a presidential decree in February 1965, is to assist Jakarta in dealing with water issues in the region. In order to guarantee its compatibility with the other city's projects, the project is also put within the frame of the master plan for Greater Jakarta. In the past, the provision of freshwater supply for the residents of Jakarta is carried out by the state-owned PDAM Jaya. However, in 1997, questionable contracts for water supply privatization were signed for two multinational utility companies—Thames Water and Suez Lyonnaise des Eaux. It is questionable in terms of the policies on water provision at that time. According to Ahmad Lanti, the Indonesian government representative during the negotiation, these private companies were as inefficient as the previous publicly managed agency and their added values were only to improve the bill collection system and shutdown illegal private wells; therefore, Lanti suggested, the contracts should be cancelled. 78 78 International Consortium of Investigative Journalists (2003) “Water and Politics in the Fall of Suharto,” by Andreas Harsono. <http://www.publicintegrity.org/water/report.aspx?aid=52> 59 For the reason that the urban wastewater infrastructure is under supervision of the local or city government, the projects, therefore, are normally attributed to urban development. Jakarta is the only state that has its own wastewater treatment enterprise, called PD PAL Jaya. Its service areas, however, cover mainly the business districts and commercial buildings. Like the provision of freshwater supply, there is a plan to expand the services to cover domestic uses through private investment. Efforts Towards Sustainable Water-resources Development In order to achieve the goals of the sustainable water-resources development in Indonesia, various efforts have been implemented by the Government of Indonesia. For instance, the Ramsar Convention on Wetlands came into force in Indonesia on 8 August 1992 by the enactment of PP 27 of 1991—national regulation on wetlands. As well, Indonesia has become part of Agenda 21 set by United Nation so that Indonesia must create its own version of Agenda 21. One of the sectors proposed in the Agenda 21 of Indonesia is the water sector. Among key proposals in the Agenda 21 of Indonesia for the upgraded water- resources management are the encouragement of a reduced use of water supplies, the provision of the safe potable water throughout the country, and the development of additional laws, regulations and control policies for the water- resources management. The following four program areas or priority areas are further elaborated within the Agenda 21 of Indonesia: (1) availability of and requirement for water resources, (2) water-resources quality, (3) water- resources distribution, and (4) integrated water-resources management. 60 The Agenda 21 of Indonesia proposes that water-resources be managed in a much more coordinated manner, and be planned on a watershed basis. It also proposes a shift from a research orientation to one of more active management of the water resources. In addition, the Agenda 21 of Indonesia proposes that policy changes commence with the agricultural sector due to its predominant role in overall water consumption. The proposal also provides a variety of recommendations to promote the development of better liquid and solid waste treatment facilities in major centers throughout the country. These recommendations require the commitment of significant capital resources. From a public administration perspective, it is also recommended that development in highly populated areas be coordinated with accurate estimate runoff water and groundwater carrying capacity. The Agenda 21 of Indonesia suggests that most of these water-resources management measures should be paid for, based on the quality and quantity of water required, by water users. A pollution prevention approach is recommended for all users, and whenever water quality is damaged, a “polluter pays” principle would be applied—Law 23 of 1997 on water pollution control fee. In another effort, the water-resources management activities have been oriented more toward baseline researches than toward demand management or rehabilitation programs. Among the major activities are Prokasih and Proper 61 Prokasih. 79 By 1995, 31 watersheds in 13 states were involved in the program, with participation from 1395 industries. Since most parts of Jakarta are industrial areas, by all means, the Prokasih and Proper Prokasih standards are being implemented. The standard basically aimed at reducing the pollution load from industries entering the rivers and improving quality of the rivers. Like other cities in Indonesia, most industries in Jakarta fall into the middle categories and none of the industries has reached the top level. However, so far, this program seems to be the best alternatives to reach the sustainable development goals in the water-resources management. The Agenda 21 of Indonesia recommends that the existing Prokasih and Proper Prokasih be continued and upgraded. In line with the program reform, a policy reform has also been made in the water-resources sector. In the policy reform, there are four schemes to be apprehended as follows: (1) establishment of the framework of the water- resources development and management, (2) establishment of organizational and funding resources frame of river basin management, (3) establishment of effective institutions in water resources, implementation of proper water quality management, and (4) reformulation of irrigation management (Department of Settlement and Regional Infrastructure, 2001). This policy has been supported by the World Bank by creating a water sector adjustment program, also know as WATSAP. The new paradigm underlying this policy reform constitutes in Box 2. 79 Prokasih stands for Program Kali Bersih—the Clean River Program—launched in 1989. The Prokasih Program is basically aimed at reducing the pollution load entering the rivers and improving river quality. The enhancement of this program is called Proper Prokasih—the Evaluation Program of Prokasih for Businesses and Industries—launched in 1994. The Proper Prokasih is aimed at promoting the compliance of businesses and industries to environmental regulations through classifying performance into five categories of compliance—from a category of “no efforts at environmental management at all” to a category for industries that “have met all the requirements indicate serious and significant efforts in air pollution control, zero discharge and cleaner production.” 62 Box 2: Policy Reforms in Water-resources Development in Indonesia Environmental friendliness. To achieve a sustainable development, the existence and function of water resources must be appropriately maintained for the purpose of utilization by all water-related sectors today and future and for the welfare of Indonesia people in general. Change in Government's Role. In the past, in terms of water resources development and management, the role of government is dominant as “provider”, from now on this role is changed to be “enabler”; therefore, the government will only be a facilitator. Decentralization of Authority. Water resources development and management must sufficiently consider provincial, district and city government authorities. In the past, water resources development was based on nature of the rivers i.e. by using river basin boundary (hydrological boundary) approach, besides the central government role is dominantly exist. By the promulgation of Law No. 22 Year 1999 regarding Local Government Administration, and to condense the complexity of water management and water resources development, it is proposed that water resources development and management applies local, regional and national policies. Human Right. It must be admitted that so far, an unfair water distribution is exist, particularly in the urban area. Actually, every single person has the same right in accessing water resources. Democratization. During the past period, approach in development was dominated by top-down process, this included water resources development. Nowadays, this approach is no longer appropriate to be applied, although not all of the top-down approaches are inappropriate. Consider this thinking, a proportion approach pattern must be developed by combining top-down and bottom-up approaches. All stakeholders must have the same right and responsibility to contribute in water resources development and management from the very beginning stage of development Globalization. New paradigm has given a new color in the water resources development policy reforms. The review and reformulation of water resources policy is directed to, among others, reform of Law No. 11 Year 1974 regarding Water Resources, by considering the present needs, constraints, challenges and new opportunities. This policy reform is in line with the global water-related issues, as was declared in Den Haag during the Second World Water Forum. The Forum itself has agreed 7 challenges, those are: fulfilling the basic needs of water, a continue food supply, protection of ecosystem, sharing water resources, flood risks and drought management, value of water, and appropriate water management. Source: Department of Settlement and Regional Infrastructure (2001) 63 CHAPTER 4: WATER AND GOVERNANCE Traditionally, water-resources issues divided into dichotomous issues—too much water and too little water. In modern times, issues on water resources have increasingly complicated. Environment impact caused by water pollution, for instance, is modern addition to water-resources issues. Social impacts caused by water distribution and water right issues are also other examples of water issues in modern times. Therefore preparing a system for water resources that is ready to face the challenge of the future issues is very essential. Approaches in finding solutions for water-resources issues have varied due to these differences in how water is perceived as an issue. When water is too little, some suggest to see water as non-collective goods. Therefore, some even suggest to privatize water provision due to the increasing demands on water during too-little supply situation. On the other hand, when water is too much, some suggest to see water as public goods; therefore, efforts to contain or control it, in effect, should be on the hands of public entities. In addition, efforts to govern water thus also vary—as an individual or a group. As David Hume put it: “There is no quality in human nature which causes more fatal errors in our conduct, than that which leads us to prefer whatever is present to the distant and remote, and make us desire objects more according to their situation than their intrinsic value. Two neighbours may agree to drain a meadow, which they possess in common: because it is easy for them to know each other’s mind; and each must perceive, that the immediate consequence of his failing in his part, is the abandoning of the whole project. But it is 64 difficult, and indeed impossible, that a thousand persons should agree in any such action; it being difficult for them to concert so complicated design, and still more difficult for them to execute it; while each seeks a pretext to free himself of the trouble and expense, and would lay the whole burden on others. Political society easily remedies both these inconveniences. …” 80 Institutional Arrangement in Water Sector Ideas on water sector have been seen as a dichotomous set of concepts of two important sciences—political science and economic science. Many experts in political science have suggested seeing water as a game of politics associated with conflict among the interests involved in the water-resources development. On the other hand, many economists have shown water in relation to the appropriateness of market mechanism for allocating the resources among competing users and urge a more economic criteria approach in reaching decisions over the water-resources development. As a result, there are many ideas in finding the basic configuration of organizational and institutional arrangements. In Indonesia, land, water, and benefits generated therein are legally defined as public goods and shall therefore be controlled by the government and shall as much as possible be utilized for public welfare. 81 As a consequence, rights over land and water are rested on, and regulated by, the government. This kind of constitution is nothing new for societies similar to Indonesia. 82 In the 80 David Hume, A Treatise of Human Nature, quoted in Mancur Olson (1965) “The Logic of Collective Action,” 1971 Revised Edition, New York: Schocken Book. pp. 33-34. 81 Indonesia Constitution of 1945, Article 33. 82 Wittfogel called this kind of society as "hydraulic society." For further discussion, see Karl Wittfogel (1963) “Oriental Despotism: Comparative Study of Total Power,” Yale University Press, New Haven. 65 centralization epoch, the majority of the water matters is carried by national agencies and managed by publicly liable officials, and consequently, water for private or commercial control is limited. The so-called “basic agrarian” Law 5 of 1960 provides for basic water appropriation rights for specified needs. However, there is no legal regulation exists to implement the concept and establish the rights of water use license holders. In economic point of view, a basic configuration of organizations and institutional arrangements is obtained by dividing the role of water into two—consumptive and nonconsumptive uses of water. 83 Consumptive use implies that water is taken off its natural course and is used on the land. The examples of consumptive uses of water are irrigation, industrial uses, and domestic consumption. On the other hand, nonconsumptive uses are water uses in the waterway. Navigation, recreation or water sport, fish husbandry or aquaculture, wildlife habitat, conservation, flood control, and sewerage are among the nonconsumptive uses. The different conditions of use that apply to consumptive developments as against the nonconsumptive ones appear to lead quite different patterns of institutional development as follows: (1) the consumptive development is more amenable to market-type organization, while the nonconsumptive one seems to require more general political considerations; (2) the consumptive development 83 The ideas thoroughly familiar to those working in water sector are stressed by Vincent Ostrom (1962) “Political Economy of Water Development,” The American Economic Review, Vol. 5, Issue 2, pp. 450-458. Ostrom also stressed that this set of concepts has no direct relationship to the concept of consumption viewed as reducing or exhausting the utility of a good. Rather it is a concept used in the legal administrative language regarding water development and seems to be more closely related to the economic concept of appropriability. 66 is largely defined in terms of the community of interests shared by local water users, at the same time, the nonconsumptive one is in terms of wider regional and national interests; (3) the consumptive development emphasizes the retail or distribution function, on the other hand, the nonconsumptive one emphasizes overall productivity; (4) and the consumptive development is largely organized through the political agency of the states, however the nonconsumptive one is through the agency of the national government. 84 Both provide for complementary sets of functions in the political economy of the water-resources development. Moreover, there is no necessity to the absolute priority of consumptive uses over nonconsumptive uses, or vice versa. Based on the consumptive-nonconsumptive concept, it is obvious that, in the decentralization epoch, the task of making decisions regarding the allocation of water-resources to the nonconsumptive uses or making allocations among the nonconsumptive uses is the most wicked problem in the water-resources planning in Indonesia exacerbated by Indonesia’s position as one of monsoon nations in Asia. Deeper attention should be given to the way the organizations are constituted and related to one another as a political framework for decisionmakings and exercising control over events. Since the patterns of organization have a fundamental influence upon the development of perspectives, values, and ideas with regard to water-resources policies and development patterns of the water-resources development, any question of 84 Vincent Ostrom (1962) op cit. 67 comprehensive planning must necessarily include questions about design of institutional arrangements. Institutional arrangements for the water-resources development in Indonesia have been thoroughly scrutinized and criticized by World Bank since its mandates on the water-resources development was fragmented over many ministries (see Appendix 1). According to World Bonk, these fragmented agency functional mandates with overlapping subsector jurisdiction, lack of coordination, and conflict of interests are considered to have unfavorable effects on the efficacy of economically efficient water allocation to subsector, water pollution control, environmental conservation, and watershed management. 85 However, Lindblom suggests the opposites: “fragmentation is an aid to freedom and a guaranty of government by consent … the potential of political fragmentation, once investigated, undermines to a degree one’s confidence in the contemporary case for central policy-making and for a comprehensive overview of large national economic policies. Fragmentation would seem to substitute politics for brains in problem of co-ordination that run beyond human intellectual capacity.” 86 An integrated approach requires institutional changes that aim to modernize and strengthen the legal, policy, and administrative arrangements governing water sector as a whole. 87 Indonesia is one of agricultural based nations. As in most 85 World Bank (1999) “World Bank Report No. P 7304-IND,” (Report and Recommendation of the President of the International Bank for Reconstruction and Development to the Executive Directors on a Proposed Water Resources Sector Adjustment Loan in the Amount of US$300 Million to the Republic Of Indonesia on April 23, 1999). 86 Charles E. Lindblom (1958) “Tinbergen on Policy-Making,” The Journal of Political Economy, Vol. 66, Issue 6, The University of Chicago Press. pp. 531-538. 87 Maria Saleth and Ariel Dinar (1999) “Water Challenge and Institutional Response: a Cross-Country Perspective,” The World Bank, Washington D.C. 68 less developed nations that are agricultural based, there is inherent conflict between the need for water to supply irrigation and supply drinking water. Moreover, the benefits of the water-resources development spread across the environment, social, and economic sectors. Therefore, the issue of water cannot be studied separately or in a narrow sectoral fashion. 88 Recently there has been an increased emphasis on institutional reforms for development projects in the water sector in many nations around the world. These changes have been caused by several factors, including (1) increasing awareness regarding water availability, (2) most of the suitable sites for the construction of large dams and reservoirs have already been developed, (3) the increasing demands for fiscal austerity in most nations have resulted in growing interest in least-cost alternatives for meeting water needs, (4) increased awareness about the environmental impacts related to the construction of hydraulic infrastructures; and (5) competition by various sectors for scarce water resources has increased as a result of growing population and increased economic activity. 89 These changes have caused a fundamental shift from relying on additional physical infrastructure as a means for solving water issues to improving the water-resources managements and institutions of individual nations. 88 Gourisankar Ghosh and Sadiq Rasheed (1999) “Integrated Water-resources Development: A Community- based Approaches” in Expert Group Meeting on Strategic Approaches to Freshwater Management. United Nations Department of Economic and Social Affairs. 89 Ariel Dinar, Trichur Balakrishnan and Joseph Wambia (1999) “Political Economy and Political Risk of Institutional Reforms in the Water Sector,” The World Bank, Washington D.C. 69 Integrated Water Resources Development Almost all of worldviews suggest that the water resources development should be planned and managed in an integrated manner. Some suggest the integration in terms of relation between upstream areas and those of downstream. Some suggest in terms of management of water resources development and that of land development. Some suggest more general term, which is to integrate three main sustainability factors—environmental protections, social equity, and economic growth. Almost any government is beneficial to its citizens. Although this is also true in terms of governing its water resources, many have often misallocated and wasted their water as well as permitted destruction to the environment. World Bank has formulated the issues in managing water resources of its donor recipients and has categorized them into three: 1. Fragmented public investment programming and sector management, that have failed to take account of the interdependencies among agencies, jurisdictions, and sectors 2. Excessive reliance on overextended government agencies that have neglected the need for economic pricing, financial accountability, and user participation and have not provided services effectively to the poor 3. Public investments and regulations that have neglected water quality, health, and environmental concerns. 90 To deal with the aforementioned issues, World Bank, based on its experience, suggests governments to adopt a comprehensive policy framework, to treat 90 World Bank (1993) “Water Resources Management,” International Bank for Reconstruction and Development, Washington D.C. 70 water as an economic good, to decentralize management and delivery structure, to rely greatly on pricing, to promote fuller participation by stakeholders. 91 Civic Engagement as a System of Governance for Water Resources Development The importance of the involvement of stakeholders in the decisionmaking process has been known by many agencies in Indonesia. However, according to World Bank, there is no institutionalized public forum available for receiving stakeholder views and lack of transparency in decisionmakings. 92 As a consequence, only government officials make the entire decisions on the water-resources development. This situation has clearly created a great challenge to formulate a sort of design or model for civic engagement in Indonesia. Thus, stakeholder involvement in any decisionmakings over water has to be channeled and encouraged, if not required, since appropriate and comprehensive consultation with all stakeholders is essential. The advocacy for civic engagement or community involvement or public participation in decisionmaking is nothing new. The smaller the unit, obviously civic engagement is much easier. Everybody knows everybody and it is easy to discuss issues and arrive at a consensus. In fact, there are many rural schemes that are successful precisely because of this type of civic engagement. However, as the units get bigger, other factors come into play. Not only is it difficult to develop a decent forum, but the facilities themselves also become more complex. 91 World Bank (1993) op cit. 92 World Bank (1999) op cit. 71 Furthermore, the traditions and cultures also have a big influence in decisionmaking process. Most areas in Indonesia are unfamiliar with bottom-up initiatives. In these areas, citizen participation in decisionmaking is difficult to put into practice because of the cultural tradition. One reason is that people in some cultures are socialized to be much more respectful of, and deferent to, authority than are people in other culture. 93 Such people, like those at most areas in Indonesia, will be uncomfortable when they actually have to make decisions themselves or disagree with people of authority in contrast to talking about their desire to make decisions. However, democratic decisionmaking requires a stronger competition of ideas. As Lindblom and Woodward put it: People participate if taught to believe it matters, if helped to acquire verbal and other skills of citizenship, if indoctrinated with aspirations and expectations that stimulate rather than paralyze, and if taught to see themselves as members of the political community. Citizens not socialized in these ways are not likely to vote or otherwise participate in politics. 94 The statement above shows clearly that the civic engagement in water sector, as in any other sectors, is so much important even though it is arduous to achieve. Traditions and cultures in Indonesia might be a hindrance, but an effort to involve civic engagement in any policymaking process for water resources development should be made possible. In Indonesia, the efforts to put civic engagement concept into practice is nothing new. Moreover, the public 93 Richard Brislin (2000) “Understanding Culture’s Influence on Behavior,” 2 nd Edition, Harcourt, Inc., Orlando, Florida. 94 Charles E. Lindblom and Edward J. Woodhouse (1993) “The Policy-Making Process,” 3 rd Edition, Prentice Hall: Englewood Cliffs, New Jersey. p 109. 72 participation in decisionmaking is one of the main ideals declared in Pancasila— the five basic philosophical principles conceptualized by the founding fathers of Indonesia. Yet, whether putting the public participation concept into practice has been effective as it is desired so far is still questionable. Public participation program that has so far been implemented in Indonesia may have only been a public awareness program. 95 Thus, a study to find an effective mechanism for the embodiment of civic engagement concept in a democratic water resources decisionmaking in Indonesia should be sought after. 95 See Sherry R. Arnstein (1969) “A Ladder of Citizenship Participation,” Journal of the American Institute of Planners, Vol. 35, No.4, pp. 216-224. 73 CHAPTER 5: RATIONALES FOR DECENTRALIZATION Concept of Decentralization According to Rondinelli (1999), decentralization—the transfer of authority and responsibility for public functions from the central government to subordinate or quasi-independent government organizations or the private sector—covers a broad range of concepts. 96 Each type of decentralization—political, administrative, fiscal, and market—can appear in different forms can combination across nations, within nations, and even within sectors. 97 The highlight of the different types of decentralization is as follows: Political Decentralization Political decentralization aims to give citizens and their elected representatives more power in public decisionmaking. The concept implies that the selection of representatives from local electoral jurisdictions allows citizens to better know their political representatives and allows elected officials to better know the needs and desires of their constituents. Political decentralization often requires constitutional or statutory reforms, development of pluralistic political parties, strengthening of legislatures, creation of local political units, and encouragement of effective public interest groups. 96 Dennis Rondinelli (1999) op cit. 97 Dennis Rondinelli (1999) op cit. 74 Administrative Decentralization Administrative decentralization is the transfer of responsibility for planning, financing, and managing certain public functions from the central government and its agencies to field units of government agencies, subordinate units or levels of government, semi-autonomous public authorities or corporations, or areawide, regional, or functional authorities. Administrative decentralization has three major forms—deconcentration, delegation, and devolution—each with different characteristics (see Box 3). Box 3: Forms of Administrative Decentralization There major forms of the administrative decentralization: 1. Deconcentration. Deconcentration, the redistribution of decisionmaking authority and financial and management responsibilities among different levels of the central government, is often considered the weakest form of decentralization and is used most frequently in unitary states. Within this category, however, policies and opportunities for local input vary: deconcentration can merely shift responsibilities from central government officials in the capital city to those working in regions, provinces, or districts, or it can create strong field administration or local administrative capacity under the supervision of central government ministries. 2. Delegation. Delegation is a more extensive form of decentralization. Through delegation central governments transfer responsibility for decisionmaking and administration of public functions to semi-autonomous organizations not wholly controlled by the central government, but ultimately accountable to it. Governments delegate responsibilities when they create public enterprises or corporations, housing authorities, transportation authorities, special service districts, semi-autonomous school districts, regional development corporations, or special project implementation units. Usually these organizations have a great deal of discretion in decisionmaking. They may be exempt from constraints on regular civil service personnel and may be able to charge users directly for services. 3. Devolution. Devolution is the transfer of authority for decisionmaking, finance, and management to quasi-autonomous units of local government with corporate status. Devolution usually transfers responsibilities for services to municipalities that elect their own mayors and councils, raise their own revenues, and have independent authority to make investment decisions. In a devolved system, local governments have clear and legally recognized geographical boundaries over which they exercise authority and within which they perform public functions. It is this type of administrative decentralization that underlies most political decentralization. Source: Rondinelli (1999) 75 Fiscal Decentralization Financial responsibility is a core component of decentralization. If local governments and private organizations are to carry out decentralized functions effectively, they must have adequate revenues—raised locally or transferred from the central government—as well as the authority to make expenditure decisions. Fiscal decentralization can take many forms, including: • Self-financing or cost recovery through user charges • Co-financing or co-production, in which users participate in providing services and infrastructure through monetary or labor contributions • Expansion of local revenues through property or sales taxes or indirect charges • Intergovernmental transfers of general revenues from taxes collected by the central government to local governments for general or specific uses • Authorization of municipal borrowing and mobilization of national or local government resources through loan guarantees. Economic or Market Decentralization The most complete forms of decentralization from a government's perspective are privatization and deregulation; they shift responsibility for functions from the public to the private sector. They allow functions that had been primarily or exclusively the responsibility of government to be carried out by businesses, 76 community groups, cooperatives, private voluntary associations, and other nongovernmental organizations. Privatization and deregulation are usually accompanied by economic liberalization and market development policies. • Privatization. Privatization can range in scope from the provision of goods and services based entirely on the free operation of the market to public-private partnerships in which government and the private sector cooperate to provide services or infrastructure. Privatization can mean allowing private enterprises to perform functions that had previously been monopolized by government. It can also mean contracting out the provision or management of public services or facilities to commercial enterprises. There is a wide range of public- private institutional forms and of ways in which such functions can be organized, particularly in infrastructure. Privatization can also include financing public sector programs through the capital market, with adequate regulation or measures to ensure that the central government does not bear the risk for this borrowing, and allowing private organizations to participate. And finally, it can mean transferring responsibility for providing services from the public to the private sector through the divestiture of state-owned enterprises. • Deregulation. Deregulation reduces the legal constraints on private participation in service provision or allows competition among private suppliers for services previously provided by the government or by 77 regulated monopolies. In recent years privatization and deregulation have become more attractive alternatives to government provision in less developed world. Local governments are also privatizing by contracting out service provision or administration. According to United Nation HABITAT (1996), a number of arguments can be put forward to explain why so many nations have adopted decentralization strategies, i.e.: 1. Diversity between localities, i.e. the only decentralization of the provision for these service can ensure an efficient response to this variation in demand. 2. Efficiency, in that locally financed and provided services can be produced at a lower cost—and with subnational government also able to work more easily with local community-based or voluntary sector organization in ways that allow significant cost reductions. However, it is still prevalent that larger units of service provision that achieve greater efficiency than smaller units at the lower level. 3. Accountability, i.e. decentralized institution should in principle be more accountable to its constituents. 4. Coordination, because coordination can considerably reduce cost. This cost-saving coordination can more easily achieved whenever it operates over a smaller, more local area. 98 As a consequence, to most of less-developed nations, decentralization is considered to be the best policy choice in facing the confusing maelstrom of developments. 98 United Nation Centre for Human Settlement (HABITAT) (1996) “An Urbanizing World: Global Report on Human Settlement,” New York: Oxford University Press. 78 Implementation of Decentralization The principles and practices of the government intervention, and their application to the planning and management, have evolved over time. The problems confronting the urban planners and managers are not simply technical ones, to which there is an objective solution. Most of the issues, in fact, involve political choices: choices between competing interest or claims, choices between alternative policies with varying consequences for different groups, and choices between alternative uses for scarce resources. 99 There are clearly many different individuals with interests, which compete and conflict. Each may have its own agenda, and may pursue policies for reasons which have more to do with their individual or group interests than with the public goods. The most obvious area of conflict in implementing decentralization policy is within distribution authorities between national and subnationals. But this conflict may not arise as much as that of among subnationals since the authority of the subnationals increases. 100 It is rational that decentralization is the result of political resolution and this resolution is considered to be the best policy reform to heal from the government failure in the highly centralized epoch. Moreover, it is 20/20 that decentralization concept is imported as “a good idea” because the idea was developed partly in reaction to the failures or inabilities of many conventional approaches of governance to deliver prosperities to local constituents. 101 In sum, it is the 99 Nick Devas and Carole Rakodi (1993) “Planning and Managing Urban Development” in Managing Fast Growing Cities. Longman Scientific & Technical, New York. 100 Nick Devas and Carole Rakodi (1993) op cit. 101 William Dillinger (1993) “Decentralization and its Implication for Service Delivery,” Urban Management Programme Discussion Paper No. 16, The World Bank, Washington DC; United Nation Centre for Human Settlement (HABITAT) (1996) op cit. 79 concept of decentralization of authority that has been considered to be a reasonable way in many efforts to bring government more closely to people, with local demands and preferences and to build a more responsive and accountable government from below with bottom-up, subnational-national governance system approach. It is, however, imperative to keep in mind that decentralization also has its pitfalls which can lead to serious problems, including the possibility of increased disparity across region in service provision, loss of macroeconomic stability, and misallocation of resources as a result of institutional capture by local faction, especially in highly unequal societies. 102 The lesson, here, is that there must be a clear rule of game specifying how decentralization concept is supposed to be implemented, especially in dealing with those pitfalls. Centralization and decentralization are not either-or conditions, since, based upon showcases, in most nations an appropriate balance of centralization and decentralization is fundamental to the effective and efficient functioning of government. 103 The example for this situation is Italy and Spain. In 2002, Amoretti wrote a paper describing the situation in Italy, where, early that year, the Berlusconi government is about to present a new bill of constitutional reform. 104 This bill promises to foster decentralization. This proposal seems to envision a system of asymmetrical federalism similar to Spain’s, in which those 102 World Bank (1997) “World Development Report 1997: The State in a Changing World,” Oxford University Press for the World Bank, New York. 103 Dennis Rondinelli (1999) op cit. 104 Ugo Amoretti (2002) “Italy Decentralizes,” Journal of Democracy Volume 13 Number 2, April, pp. 126- 140. 80 regions that want to acquire new powers and duties can opt in, while the others can opt out. 105 This type of optional devolution may well turn out to be a wise choice. 105 Ugo Amoretti (2002) op cit. 81 CHAPTER 6: WORLD VIEWS—LESSON LEARNED FROM OTHER NATIONS Like often faced by other nations, the water-resources development in Indonesia has been heavily swamped by many problems. The problems themselves by all means are a function of time and space. A different time has a different solution as well as a different place has a different solution. Thus, the solutions for the problems in water resources may vary by country or by time frame. However, in terms of having lesson learned, it is worthwhile to try to adopt the efforts or experiences of other nations that are leaders in certain aspects of water- resources development and have done well in facing similar problems, especially in dealing with decentralization or regional issues and to take a look back at history of water to find any missed opportunities that are now worth a try or any best practices that have ever been successful. To analyze the case study in this project, any experience from a decentralized nation in designing its water resources development is beneficial. As designed in the project, choosing a nation with federal system is favorable because, by design, the nation does not, or is least likely to, have a choice to resort to a centralized system. A federated nation has to keep trying on how to make the water-resources development work in the midst of conflicts between and among its decentralized states. Each state in the nation with federal system has strong local politics in which any interstate water-resources development may face a strong political challenge from each local jurisdiction through which the water 82 system crosses. For that reason, the project chooses several federal nations. In doing so, the selected nations should represent both developed and less developed nations. The reason to choose a developed nation is to gain a lesson on how a complex decentralized system handles its water resources. On the other hand, lessons from a less developed nation may provide an experience with typical constraints facing a less developed nation. Therefore, the project chooses the United States of America, Brazil, and India. Tennessee Valley Authority in United States Tennessee Valley Authority, TVA, is a special national agency fortified with the power of the U.S. government but possessed of the flexibility and initiative of private enterprise to nationally plan a complete river watershed across many states. In other words, TVA is a federal autonomous agency with authority to make its decisions in the region. The idea first came from then-U.S. President Franklin D. Roosevelt as documented in the President's message to Congress on April 10, 1933, “It is clear that the Muscle-Shoals development is but a small part of the potential public usefulness of the entire Tennessee River. Such use, if envisioned in entirety, transcends mere power development; it enters the wide fields of flood control, soil erosion, afforestation, elimination from agricultural use of marginal lands, and distribution and diversification of industry. In short, this power development of war days leads logically to national planning for a complete river watershed involving many states and the future lives and welfare of millions. It touches and gives life to all forms of human concerns. I, therefore, suggest to the Congress legislation to create a Tennessee Valley Authority—a corporation clothed with the power of government but possessed of flexibility and initiative of a private enterprise. It should be charged with broadest duty of planning for the proper use, conservation, and development of natural resources of the Tennessee River drainage basin and its adjoining territory for the general social 83 and economic welfare of the Nation. This authority should also be clothed with the necessary power to carry these plans into effect. Its duty should be the rehabilitation of the Muscle-Shoals development and the coordination of it with wider plan,” The message was clear that TVA recognizes the regional character of water- resources problems and the fact that they do not follow local and state political boundary lines. It cuts across jurisdictions of existing government institutions, and in some extents, affects the economy and socio-cultural of the region. During period of great change in national and regional affairs, TVA has some noteworthy institutional characteristics that determine its approach in dealing with regional problems. As elaborated by Clapp and Menhinick (1941), the institutional characteristics of the TVA are: the unity of the program, the decentralization of administration, the interrelation between planning and action, and the cooperative approach to the solution of regional problems. 106 These institutional characteristics are discussed briefly in the following paragraphs. Unity of the Program One of the obligations of the authority is to integrate or to unite its activities and programs with proper regional development. The integration of the program has created values that could not have been the concern of an ordinary regional- based agency. One of the illustrations is the effort of the authority to facilitate multiple use of its reservoir area. The conservation of the reservoir has opened 106 Gordon Clapp and Howard Menhinick (1941) “The Approach of the TVA to the Solution of Regional Problems,” Journal of Educational Sociology, Volume 15, Issue 3, The TVA Program—The Regional Approach to General Welfare, November, American Sociological Association. 84 up entirely new field of delight and economic opportunity in supplying amenities for recreation for visitors. Decentralization of Administration The decentralized administration of federal functions and its corporate form of organization is one the features of TVA concept. Since its programs and activities are adapted in accordance with local conditions and desires, the TVA has the power to make decision in the field where the issues occur and where adjustment can be realistically attained. The flexibility of decentralization of authority is exercised in the TVA operations. Interrelation between Planning and Action The closeness of interrelationship between planning and action is one the fundamental characteristics of the TVA. There is no sharp distinction administratively between the formulation and the execution of plans. Planning has meant the process of identifying regional problems or unrealized opportunities and of securing the maximum available technical contribution to bear on them. Administrators who are responsible for execution of plans directly participate in the general planning of the program so that decision will not only have the benefit of intensely practical experience, but will be administered with a willing and full understanding of what they are intended to accomplish. Thus, through collaborative planning, regional problems may have effectively been envisioned. 85 Cooperative Approach to the Solution of Regional Problems The formal and informal cooperation with state, local, other federal agencies in the approach to the solution of regional problems is the most significant institutional characteristic of the authority. The cooperative action includes civic engagement upon the initiative and responsibility. The right to help formulate plans and recommendations, to accept or reject recommended programs and courses of action, or to seek other alternative, or to do nothing at all rests on the local community and its representatives. The authority's role as so-called democratic regional development institution has been that of encouraging and facilitation of the participation of existing agencies in the interest of the more effective and efficient results. Water-resources Management in India India, one of nations in the less developed world, faces an increasingly urgent situation: its finite and fragile water resources are stressed and depleting while demand from various sectors ranging from agriculture to industry are growing rapidly. Water is rapidly becoming a scarce resource in India yet continues to be used inefficiently. In July 2000, India's Ministry of Water Resources launched a series of six reports on water-resources management in collaboration with the Ministry of Urban Affairs, the Ministry of Rural Affairs, and the World Bank. 107 As illustrated by the World Bank, next are the descriptions of the report. The first report is about 107 World Bank (2000) “The India Water Resources Management Reports,” Allied Publishers Limited, India. 86 initiating and sustaining water sector reforms. The report assesses the existing framework and mechanisms for water-resources allocation and management and focuses on service delivery in the water subsectors—irrigation, urban water supply and sanitation, and rural water supply and sanitation. It proposes a process for change to build upon existing positive initiatives, strengthen management capabilities and processes, and improve the quality of service delivery. It also provides an action plan of fundamental reforms that are currently needed in India in how water is captured, allocated between sectors, delivered to users, and managed. A comprehensive approach that simultaneously combines mechanisms in policy, institutions, legal and regulatory framework, economic and financial incentive framework and the strengthening data, technological and information systems is recommended. The second report is about the intersectoral water allocation, planning and management. The report examines existing water-resources issues and constraints and assesses options in terms of policies; legislation and regulation; institutions; economic incentives; technology; and data, analysis, and public information. The report identifies two broad issues that need to be addressed and proposes an action plan. First, solutions must be found for competing intersectoral demands. Mechanisms must be developed for allocating scarce water resources between competing uses such as irrigation, rapidly expanding domestic and industrial needs, hydropower, and environmental requirements. Second, water must be managed on a river basin basis, including states sharing the same river basin. 87 The third report is about the groundwater regulation and management. The report reiterates the importance of groundwater to India's economy and development prospects. Groundwater is an important source of drinking water and food security for India's 1 billion inhabitants, supplies 80 percent of water for domestic use in rural areas and perhaps 50 percent of water for urban and industrial uses. Over the last three decades, the rapid expansion in use of groundwater primarily for irrigation has contributed significantly to agricultural and overall economic development in India. This rapid development in groundwater, however, has had a price. In many arid and hard-rock zones, increases in overdraft areas and associated water-quality problems are emerging. Sustainability of the resource base is thus critical for meeting an array of basic needs—from health to economic development. Groundwater cannot be managed in isolation of critical considerations such as: integration with surface water; incorporation of water quality, pollution, environment, and health issues; and a broad array of resource allocation, economic and social concerns. User involvement is essential for effective management. The report presents a reform agenda and action plan concentrating on reorienting the approach to groundwater management, creation of legal and regulatory mechanisms, reform of institutional structures and operations and introduction of techniques and incentives for sustainable groundwater management. The fourth report is about the irrigation sector. The report reviews the role of irrigation and drainage in Indian agriculture and provides an analysis of agricultural growth prospects from expansion of irrigation and performance improvement. The report identifies three broad areas of reform: (1) institutional 88 reforms to involve farmers and restructure Irrigation Departments to client- driven commercially operated and autonomous entities; (2) restoring the sector's financial viability and cost effectiveness including measures to enable private sector financing; and (3) improving technical performance through upgrading irrigation systems and agricultural extension. The fifth report is about the rural water supply and sanitation. The report shows that more than 75 percent of the rural population, some 520 million people in India, do not have access to public water supply facilities. Achievements in sanitation coverage have been even less extensive, with only 3.6 percent of the rural population covered at present. While actions to improve coverage of sanitation have been stepped up recently through provision of subsidies and technical assistance for household construction of sanitation facilities, national guidelines and investments in the rural water supply and sanitation sector neglected to ensure that the quality of services to rural areas remained adequate. Furthermore, public services do not adequately serve the needs of user communities because of such factors as poor design and construction, lack of attention to user needs, or lack of financial viability. The report argues that there needs to be a transfer of ultimate ownership and responsibilities from the government to the users and their communities in order for the assets and services to be sustainable. It also calls for a shift to a demand-driven approach, which provides users with the services they want and are willing to pay for. The sixth report is about the urban water supply and sanitation. The report shows that the Government of India's economic policies are aimed at increasing 89 economic growth, improving market efficiency and competitiveness, and integrating the Indian economy with global markets. The changes required to achieve these objectives will have great implications for urban centers where much of the population and industrial growth is expected to occur. The demands on the urban water supply and sanitation sector, which serves both urban domestic and industrial needs, will be tremendous. To date, the sector has under-performed against expectations, the report says. Quantities of water delivered are inadequate and service is unreliable, requiring consumers to make alternate arrangements, which are more costly in terms of time and money, particularly for women and the poor. Low quality of service is endemic, resulting in harmful impacts on consumers, especially the poor, and on the environment. The report argues that the sector needs urgent attention both to meet the new demands and to ensure that all city-dwellers have access to basic services at reasonable costs. The core reforms recommended are: devolution of the urban and water supply and sanitation responsibilities to municipal authorities, separation of policy and regulatory functions from operations at the state-level, commercialization/privatization of entities, rationalization of tariff structures and tariff-setting procedures, reform of financing systems to enable direct financial market access for local authorities and enterprises, implementation of local innovations and demand-led capacity building. The report also includes a discussion of international experience in decentralization and private sector participation; Indian experience in community participation; and the municipal bonds experience from the U.S.A. 90 Water-resources National Policy in Brazil Brazil passed a legal text, the Federal Law No. 9.433/97 on Water-resources National Policy. The final text can be explained by dividing it into three main sections: (1) sector principles; (2) management instruments; and (3) an institutional framework for the operation of the principles and implementation of the instruments. 108 As explained by Garrido, the next three section is discussing each one of these elements, explaining how they have been practiced in Brazil, the main difficulties involved and perspectives for success. Sector Principles Some water-resources management principles, considered also by other nations, are present in the Brazil policies, either in the Federal water policy or in the state water policies. They are: (1) the river basin as the territorial unit for the implementation of the National Water Resources Policy; (2) management of water resources should allow for multiple uses of water; (3) water is a limited resource, which has economic value; (4) the management of water resources should be decentralized and should involve participation by the Government, the users and the community; and (5) when there is a shortage of water, priority is given to human consumption and watering of animals. In Brazil, opposition of the first principle—the river basins regarded as the unit for territorial planning—came from the hydrogeologists who argued that river basin boundaries are determined by topographic crests and that aquifer limits are 108 Raymundo Garrido (2000) “Water Resources National Policy in Brazil,” in Thematic Review of the river basin-institutional frameworks and management options. World Commission on Dams. 91 set by high groundwater flow potential. Since these limits never coincide, accepting river basins as units of territorial planning would not be accurate. More opposition stemmed from supporters of Brazilian states’ rights, arguing the federative principle. They wanted homogeneous geographical regions to be used as water resource planning units. They claimed water has fundamental relations with most of the elements, physical and anthropologic, which should be considered to define homogeneous regions. According to Garrido (2000), the debate about the river basin principle did not find any solution until a new concept was introduced. This is known as the “holistic” approach in which the river basin could be the territorial unit for water- resources planning and management, provided that neighboring areas and groundwater were considered in terms of the effects they have on the selected river basin unit. In other words, the river basin would in fact be considered the central element in any analysis process, a process that would include all demand, problems and targets in that region. To further strengthen the new principle, it was agreed that river basin was the easiest unit for water-resources planning, both to use and to see. Neighboring watersheds and aquifers as well as states and municipalities should be taken into consideration when using river basin as the unit for water- resources planning. The second principle—the multiple uses of water—establishes equality of opportunity among users. Group and individual cost-benefit analysis, together with cost-effectiveness, linear programming, game theory, decision trees and 92 other scientific techniques, are the means to decisionmaking with regard to sharing water resources among users within the river basin. The third principle—the water as an economic good—was decided to be implemented in Brazil in order to revert the lack of balance between water supply and demand in some river basins in the country. This action has taken the form of water tariffs—a direct consequence of the water-as-an-economic-good principle. The secret of the success of water tariffs was that everyone was convinced that typical Brazilian attitudes regarding water use had to be changed. The next step was then to transform the typical water user into a rational user. The philosophy behind the forth principle—decentralization and participation for water-resources management—is that no decision should be taken at a higher level of government, when they can be decided satisfactorily at a lower, appropriate level. In Brazil, it means that no decisions should be taken in Brasilia, when they can be taken in the watershed regions where the people involved know their own needs and problems best. The decisions that would have to be taken in Brasilia, are likely to be more complex than the ones taken at the river basin level. The fifth principle—priorities during water shortages—refers to extreme conditions of water scarcity. It establishes that during water shortages, priority should be given to human consumption and watering of animals. According to the Brazilian legislation, under such condition human beings and animals have to be protected, while all other water uses become secondary. 93 Water-resources Management Instruments The water-resources management instruments implemented in Brazil are: river basin master plans, water permits, water tariffs, water resource information systems, classification of bodies of water, and compensation for municipalities. One of these instruments, the water-resources master plan, represents a planning tool, which is also considered as a managerial one within the sector. While some instruments, e.g. water permits and water tariffs, affect the water users directly, others act more like control and decision-making instruments. The water-resources information system provides information to the water agency and the public manager and allows them to take decisions in particular situations. The classification of bodies of water is, actually, an instrument that comes from environmental management. The objectives to classify the bodies of water according to their main uses are: (1) to ensure a level of quality that is compatible with the most demanding uses for which the water is intended; and (2) to reduce the cost of combating water pollution through constant preventive actions. The classification of bodies of water is applicable both to surface water and groundwater. What is really relevant in the classification of the bodies of water is the fact that this instrument does not mean that rivers, lakes and aquifers will be classified only according to what is known about their water quality. Far more important is the target quality that must be defined by the river basin committee and achieved within a set period of time. 94 The water permit system aims at ensuring the qualitative and quantitative control of water according to its use, as well as ensuring water use rights. Diversions and other types of water uses that alter hydrological regimens are subject to water permits. However, the award of water use rights does not imply any alienation of the water itself. As a public good the water is inalienable. The permit merely awards a right to use the water. The existence of water tariffs encourages rational water use and raises revenues for financing programs and activities within the water-resources plans. Water uses subject to tariffs are the same as those that are subject to water permits. This means that if a certain use of water does not require rights to use it, it will not be subject to fees, either. Water use charges in Brazil have been hotly debated. One problem is that those who will pay the charges in the future now see them as just another tax. The credibility of this management instrument will depend on its use. In sum, the water tariff has the following goals: (1) managing water demands; (2) redistributing social costs; (3) improving effluent quality; (4) raising funds for sector investments and O&M of hydraulic equipment and construction; and (5) giving global planning, social and environmental dimensions. Institutional Framework for the Operation The institutional framework for the operation of the principles and the instruments is embodied in the National Water-resources Management System. This management system pursues several important goals. Some of its objectives are: (1) the coordination of integrated water management, taking into 95 consideration their multiple uses at the river basin level, water as an economic good, decentralization and involvement of the government, users and communities; (2) arbitration at an administrative level of disputes related to water resources among water users, water agencies, committees, states and municipalities, etc.; (3) implementation of the National Water-resources Policy, with special attention to principles, management instruments, projects and programs; (4) planning, regulation, and supervision of the use, conservation and recovery of water resources; and (5) enforcement of water tariff rules. Lessons Learned from USA, India, and Brazil Even though the three nations have different ways in their ways of making the policy details over water resources, they, essentially, show that an integrated approach in handling water-resources development has been the chosen policy, especially for the cross jurisdictional water issues. The case study also shows that an integrated water resources management is possible in the midst of the separation of political power. The selected case studies demonstrate that the initiatives and key players in running the integrated water-resources managements usually are from national agencies. Even in the context of the current trend of decentralization practices in Indonesia, the initiatives from the national agencies could be welcomed. However, continuing involvement of key players from the national agencies to handle the interstate water-resources development could be easily regarded as centralization in practice. There are no definitive reasons as to why all three selected nations chose their integrated water resources developments to be run by the national agencies. 96 However, the choices are made and they seem working well. The national agencies in these nations found the way to develop institutional arrangements with their states in which water-resources development jurisdictions are politically intertwined. During its centralization era, Indonesia would be easily adopting these approaches and implementing them with players installed from national agencies. This is not the case in a decentralizing Indonesia. In its newly conceived decentralization policy, the involvement of national agencies could face a bumpy road in the success of water-resources development. In conclusion, if Indonesia is to adopt the integrated approaches demonstrated by the three aforementioned nations, it should also be prepared with a well- conceived adjustment in which key players are mainly from local agencies. The key players could be exclusively from the states that are jurisdictionally involved in water-resources development or from the collaborations of state and national agencies with appropriate balance of power sharing. 97 CHAPTER 7: ESSENTIAL REVIEWS OF LAW 7 OF 2004 ON WATER RESOURCES There are many water policy changes instigated by the new decentralization policy, but the major policy change was revealed by the enactment of Law 7 of 2004. However, whether or not the law reflects the decentralization policy as conceived in Law 22 of 1999 is arguable. Therefore, in light of the project topic, there should be a review as to how the new law shifts its focus from previous centralization policy to the current decentralization one. Beside as a reaction from water policymakers over the new decentralization policy, Law 7 of 2004, conceptually, came into existence as a replacement of Law 11 of 1974. After 30 years as a beacon for water resources management and development in Indonesia, Law 11 of 1974 had finally decided to be revised. After so many issues happening with regards to water resources, Indonesia had finally realized that the old legal document was no longer up to the challenges given by the current water resources issues. Since this new law is the essential foundation from where Indonesia will direct its policy on water resources, the revisions that had been made, in comparison to Law 11 of 1974, should therefore be analyzed. But more importantly, the rationales behind the modifications need to put into closer look so that it can be determined whether or not the new law has addressed all crucial water-resources development issues that had been severely accumulated for around 3 decades. 98 The review is also to evaluate whether or not lessons can be learned from the transformation of these legal documents, then to set aside the issues left unaddressed for future improvement. Looking at the time span needed for the current revision, the next revision for the law will be at least a decade to stay unrevised. Hence, it is crucial for an early review in considering any possibility for immediate revisions. How the Law to Address the Decentralization Policy It is stated that the law supports the decentralization policy. The statement is as follows: in line with the spirit of democratization, decentralization, and openness in the way of life as a community, as a society, and as a nation, therefore citizens shall be bestowed upon with their stakes in water-resources management. This statement is confirmed in Clause 3 of Article 11 Unlike Law 11 of 1974, in which the law authorizes the government to decide on water-resources development, Law 7 of 2004, in Article 13 through 19, regulates more in detail of the authorities and responsibilities in implementing the water- resources development. The law regulates authorities and responsibilities of national government (Article 14), state governments (Article 15), county or municipal governments (Article 16), and village governments (Article 17). Basically, the law uses watershed as the unit base for the integrated water resources management. The management responsibility of a watershed is given to a state government if the whole watershed area located within the state boundary. Correspondingly, the management responsibility of a watershed is 99 given to a county or a city if the whole watershed area located within the county or city boundary. The management for an interstate watershed is given to the national government and, correspondingly, the management for an intercounty or intercity watershed is given to the state government. The law, in Article 13, requires the creation of National Water Resources Board. The board role would be central. One of the board functions, as required by the law, is to provide recommendations to the President of Indonesia in establishing watershed area boundaries and groundwater area boundaries nationally and internationally. According to the law, the creation of National Water Resources Board shall be decided by the administration overseeing the water-resources development—currently held by the Secretary of Public Works. Article 18 is for special case. In this article, the law regulates that the state government can obtain some of the authorities of national government mandated in Article 14. At the same token, in Clause 1 of Article 19, the law regulates that, in the case they are incapability occurs, state governments can transfer their authorities mandated in article 15 to national government and county or municipal governments can transfer their authorities mandated in article 16 to their state governments. In Clause 2 of Article 19, stronger authorizations are mandated that in the case of (1) the incapability causing public endangerment and (2) intergovernmental conflict, the lower governments, in the hierarchical order, must transfer the authorities mandated by the law to the hierarch governments. 100 Clearly the law still applies the hierarchical centralized system. National government role is still dominant, even to the level of the village. The signal also can be clearly seen when it comes to regulating the international water-resources system. Watershed and groundwater boundary will be decided by President based on advises from National Water Resources Board. There is no example of collaboration effort as prerequisite in policymaking. How the Law to Define Right Over Water Constitutionally, Indonesia perceives water as a common good, public therefore is the ultimate holder of the water right. 109 This claim is confirmed in Article 6. The principle that regards water as a birthright is nothing new. Bollier suggests that the principle that water is a common good must be established so that water should be left to its natural flows whenever possible and should be conserved and treated as a public trust. 110 The notion of water right was not addressed in Law 11 of 1974. Although it is arguable whether or not the new law has conveyed what Indonesians perceive their right over water, water right is clearly stated and defined in the new law. The law divides the water right into three rights: 1. Water Right, defined as a right to get and to use or utilize water for various needs (Clause 13 of Article 1). 109 Indonesia Constitution of 1945, Article 33. 110 Bollier, David (2002) “Silent Theft: The Private Plunder of Our Common Wealth,” Routledge, New York. 101 2. Water Use Right, defined as a right to get and to use water (Clause 14 of Article 1). 3. Water Utilization Right, defined as a right to get and to utilize water (Clause 15 of Article 1). The use of these water rights is illustrated in Article 7, 8, 9, and 10. Article 7 describes that (1) Water Right is divided into Water Use Right and Water Utilization Right; and (2) these rights, either as a part or as a whole, cannot be leased or handed over whatsoever to other parties. If the right is not exercised by the right holder, the national or subnational governments can take the right away. Article 8 describes about Water Use Right, that (1) the right is obtained without permit for individuals as long as it is for daily basic needs and for people-owned farm plant 111 as long as it is in the existing irrigation system; (2) the permit is needed, if it is required a change of the natural set of water course, if the amount of water is in significantly large, and if the location of the people-owned farm plant is outside of the existing irrigation system; (3) the permit-giving is exercised by national or subnational governments as authorized by law; and (4) the right includes the right to change direction of water flow through someone else’s property, based on agreement, onto the right holder’s property. Article 9 describes about Water Utilization Right, that (1) the right can be bestowed upon individuals or profit-oriented companies, with permit from 111 This policy is part of the long-term commitment to subsidize the small-scale farmers. However, the small-scale farmer is unclearly defined. 102 national or subnational governments as authorized by law; (2) the right holders can change direction of water flow through someone else’s property, based on agreement, onto the right holder’s property; (3) the agreement for waterline crossing can be in the form of land acquisition agreement or compensation payment. Article 10 pronounces that a Government Regulation would give details of Water Right as described in Article 7, 8, and 9. Aside from the defined water right, the law, in Article 5, also guarantees the right of each individual to get water for daily minimum use in order be healthy, clean, and productive. After observing the clauses on water right, the project concludes that several Articles on water right are severely contradictory, if not mistaken. First, governments should not be allowed to take the water right away, as authorized in Article 7, just because the right is not exercised. This policy could create conflicts in the future—after the rights are taken away, the right holders decide to exercise their rights. 112 Second, if Indonesia wishes to hold steadfastly on its own established policy, the clause in Article 9, which authorizes to privatize the provision of water, should be revised. It is clearly against, if not violates, Article 6 within the law itself and more importantly the Constitution of 1945. 113 112 I understand that the idea of the taking is coming from the negative precedent created by many small- scale farmers who, whatever the reasons, abandoned their land. However, there should be better alternatives than the taking. 113 I understand that there are always conflicting values. One of the other should be adjusted so that that they provide consistency—revising either the clause in the new law or that of the constitution. 103 As aforementioned in the Organizations for Water-resources Development in Greater Jakarta section, the questionable contracts for two multinational utility companies—Thames Water and Suez Lyonnaise des Eaux were signed in 1999. With this law, the contracts become retroactively legal. Based on what has happened during the economic crisis and overwhelmed by many comments in major news media in Indonesia, privatization has been thought of as a thief in Indonesia and the public is more willing to trust the public sector to be good stewards. Any official trying to privatize any public entities tends to be accused of selling the nation. Any idea of privatization of public goods in the future should thus be thoroughly scrutinized by the public. With no substitute, and with supply is constrained by geography, water supply is a natural monopoly. Even though the rules of the game have been well defined in order to reduce the risk, there is still a public antipathy to the very idea of privatized water supply provision. Moreover, under-regulated private companies are prone to corruption as well. Thus, for even in some nations that might have been suggesting of natural markets, the powers-that-be are skeptical of such ideas. Inefficiency of public entities due to lack of qualified public staff and chronic-but- systemic corruption does not justify for privatizing the provision of water supply. According to Stiglitz, privatization has made matters so much worst, in contrast to what it was supposed to do—to reduce the “rent-seeking” activity of government official. 114 Therefore, Stiglitz proposes: “The analytic propositions are clear: whenever there is imperfect information or market (that is always), there are, in principle, interventions by the government—even a government that suffers 114 Joseph E. Stiglitz (2002) “Globalization and Its Discontents,” New York: W.W. Norton & Company. 104 from the same imperfections of information—which can increase market’s efficiency.” 115 If Indonesia, as stated in its constitution, commits to regard water as a public good, which is as much as possible for the public welfare, public institutions should therefore be technologically and intellectually supported and should therefore be given a second change. It does not have to take a privatization to recognize water as an economic good. Eating is not the only way to prove banana is banana. How the Law to Deal With Water-resources Development It is stated that the law agrees on an integrated approach for water-resources management. The statement is as follows: water-resources management shall be directed to the embodiment of harmonic of interregional, intersectoral, and intergenerational synergy and integration. This statement is also confirmed in Article 3. In Clause 10 of Article 1, the law defines river basin as an integrated water- resources development in one or more watershed area and/or small islands with each area is less than or equal to 2,000 square kilometers. The law differentiates between river basin and watershed, which their use is mostly interchangeable in the other part of the world. In Clause 11 of Article 1, the law defines watershed as a land area in which a river and its tributaries are integrated and have function to hold, to store, and to flow gravitationally rainwater toward a lake or an ocean. The boundaries of the watershed are 115 Joseph E. Stiglitz (2002) op cit. p 219. 105 defined into two categories—land boundary and ocean boundary. Land boundary is topographical boundary. Ocean boundary is ocean area affected by [human] activities in the land. The law, in Article 11, requires the creation of framework for water-resources management. A follow-up Government Regulation on which rules in the making of the framework shall be made available and shall be based on this law. In Article 26 through 50, the law regulates on the pendayagunaan 116 of water resources. According to the law, the pendayagunaan of water resources shall be implemented through the following activities: administration, supply, use, development, and business of water resources. In Article 59 through 62, the laws conceptualized the planning for water- resources management. Regulations for stakeholder participation is also incorporated in the law—Article 82 through 84. How the Law to Perceive the Sustainable Development Concept It is stated that the law incorporates the sustainable development concept. The statement is as follows: in facing the unbalance between the continuously depleted water supply and the increasingly high water demand, water resources must be managed with giving comprehensive attentions toward the functions of 116 Currently, there is no official translation of the Indonesian word pendayagunaan to English. The use of prefix pen- combined with suffix -an to a verb to form a noun is commonly used in Indonesian grammar. The verb dayaguna is literally a combination of two verbs daya and guna, meaning empower and use respectively. Based on these meanings, the verb dayaguna should be translated into a combination of to empower and to make use. Consequently, the meaning of pendayagunaan is a combination of empowerment and making use. 106 social, environment, and economy. This statement is confirmed in Article 3, Article 4, and Clause 4 of Article 11. Since the preamble of the law, the law considers sustainable development principle as the reason for the water-resources law to exist. This means that the law acknowledges the sustainable development as the foundation of the law. Commitment toward sustainable water-resources development also stresses in Article 3. Water conservation is regulated in Article 20 through 25. In these articles, the law regulates the water conservation activities: protections and conservation of headwaters, water preservations, water quality management, and water pollution control. The regulation on water conservation becomes one of the references in spatial planning. How the Law to Deal With Waterborne Disasters In dealing with waterborne disasters, Article 51 through 58 of Law 7 of 2004 regulates waterborne disaster control. According to law, the water borne disaster control shall be comprehensively accomplished and shall include prevention, mitigation, and rehabilitation efforts. According to the law, waterborne disasters are: (a) flood, (b) erosion and sedimentation, (c) landslide, (d) cold lava flood, (e) water-induced land subsidence (f) change in the chemistry, biology, and physics of water, (g) water induced extinction of flora or fauna, (h) waterborne disease, (i) seawater intrusion, and/or (j) seepage. 107 How the Law to View the Climate Change Issue Although the law regulates the so-called local climate change—man-made rainfall regulation in Article 38, it fails to address the global climate change issues and local watershed efforts with regard to the issues. Officials in Indonesia Department of Environment have confirmed that one of the causes of the series of recent flooding in Jakarta is climate change—the warming of the climate system. 117 It is clearly implied that the traditional engineering approach to rationalize hydrologic cycle is not enough. Climate change factor therefore is a prerequisite for any sound planning of water resources development. The notion of climate change is real and imminent, so that it has to be addressed in the future revision of the law. Collaboration efforts within the institutional arrangements should also be established to deal with this inconvenient truth of anthropogenic global warming. Lessons Learned for the Next Revision Surely, as in any law, it is a man made. It therefore has loopholes. Continuous revision, based on the growing issues, has to be established. This is to conclude that perpetual review and revision should be the agenda of the nation to keep up with the challenges of development. One point that can be learned from the review is that the water-resources policy should include more provisions on how to make decentralization policy works within water sector or how to work around the new decentralization policy 117 Reuters (2007) op cit. 108 without drastically changing the very meaning of decentralization itself. Clearly, the law suggests more to centralize than to decentralize as it was intended to make. Attention to other important issues shall be included in the law. Climate change issue is global issue that needs local action. Water-resources issues more than ever have closely related to climate change issue. The next revision of the law should address the climate change issue as a commitment from Indonesia toward global issues. 109 CHAPTER 8: DISCUSSIONS AND RECOMMENDATIONS The arguments in this project does not aim at addressing the water-resources development issues caused by lack of infrastructure and maintenance or lack of funds, but their primarily goals are to offer alternative designs, concepts, or policies in achieving the holistic, if not sustainable, water-resources development, especially in facing the new decentralization experiment. After the literature studies and information gathering, it is hoped to find some findings about how the water-resources development should be in a decentralizing Indonesia. Whether to choose the water-resources management of TVA in United States, or that of India, or the one that Brazil has is not the concern, since the lesson learned is that both developed nation and less developed one with fully decentralized systems show that water-resources development is possible to be dealt with. Decentralization and Beyond One of the reasons why the current decentralization policy is difficult to work in Indonesia is that it has been inspired and initiated by the national government. Many guidelines on how to implement the idea of decentralization have been prepared by the so-called experts from national administration to help to give a clue on how to put the policy to work. Thus, the concept was not coming from 110 the grassroots, so that it is more to how the national government conceived the decentralization. Moreover, the main reason for the Congress to pass the decentralization laws was not because of the readiness of regional governments to bear the new responsibilities, but more of the urgent need to ease the local uprisings demanding the national government be just and accountable. These strong centrifugal forces had been intensified by the independence of one of the states— East Timor. These primordial sentiments however are no new phenomena in Indonesia. 118 They are bombs waiting to go off. Beside the internal forces, the reasons for decentralization are also external forces. Indonesia is exposed to external forces over which it has little control, such as the progressive globalization of decisionmaking and the economic crisis currently affecting the country. What made Indonesia's crisis so much worse than other East Asian nations were critically weak institutions and endemic corruption. 119 In general, these wicked issues actually are the ultimate challenges for Indonesia. Many of international development and lending agencies, for instance, suggested Indonesia to activate a decentralization policy as a solution for the nation multidimensional chaos occurred prior to the proclamation of the decentralization 118 Clifford Geertz (1973) op cit; G. McT Kahin (1958) “Major Governments of Asia,” Ithaca, New York; H. Fieth (1959) “Indonesia,” in G. McT Kahin (ed.) Government and Politics of Southeast Asia. Ithaca, New York. pp. 155-238. 119 World Bank (1999) op cit. 111 laws. Affected by progressive globalization of decisionmaking, decentralization policy was adopted. Based upon the observation to the previous similar policies, the decentralization practice in Indonesia had been used more often as a means for political matters and it has been very discouraging. This provides a realistic reason to be pessimistic on the successful of the current policy due to the possibility to follow the old paths. There are real dangers, however, to being excessively pessimistic at this juncture. Growing numbers of people in Indonesia conclude that the decentralization experiment has failed. 120 But the conclusions could have been drawn too early. The virtues of democracy are embedded in decentralization. It just takes patience for decentralization to work. Decentralization in Indonesia is a work in progress. This new checks and balances experiment is to begin to be tested. In general, democracy in Indonesia is still young and sprouting. Some constitutional fine-tunings are very much needed. Therefore, the decentralization concept should not be taken for granted, but there should be also a thorough analysis of the detrimental effects of this policy so that the choice that had been made could be comprehensively understood. Unless the progressive improvements are implemented, the inconvenient history tends to repeat itself. 120 The Economist (2007) “Old soldiers who refuse to fade away,” February 3, pp. 41-42. 112 If the decentralization still does not work, a necessary review over the basic concept, as the last resort, must be conducted. Decentralization policy is one of the ways to achieve a democratic society. Hence, as long as the goal of democracy is reached, a revision of the concept is always appropriate. It is comprehensively understood that this phenomenon will help institutions of governance to be closer to the people. However, decentralization is no panacea. If decentralization is everything, it is nothing. Water-resources Development and Decentralization In terms of water issues, Indonesia has a propensity to misapprehend a political decentralization as something that makes a decentralization of all sectors including water sector desirable, if not necessary. Just because political power is devolved to subnational level, it does not mean that the development of water resources should be a subnational responsibility. Likewise, if political power is highly centralized, it does not mean that the responsibility for water-resources development should not be left on the subnationals. Misapprehension of decentralization policy by all means will bring a competency among subnationals to appropriate maximally their resources. It will be advantageous if the appropriated resources are not closely related to each other or the stakes involved are not that high so that any changes in one part do not really influence the other parts, such as those of non-natural resources. However, water is among those natural resources that are highly interconnected so that those who want to treat each water-resources element independently would find more troubles out of it. 113 The evidence on the ground suggests that this misapprehension is exactly what happened. A series of out of control flooding occurrences—the 2002 and 2007 incidents—in Greater Jakarta, for instance, has been followed by the blame games among states. 121 The finger-pointing games would not have happened if the jurisdictions were clear. These incidents ipso facto show clearly that the interpretation of the new decentralization policy into a day-to-day management of water resources has been off target, if not counterproductive, so that a new way of understanding of the new decentralization policy is urgently required. Rationally, however, subnational governments from the regions in the upstream watershed area are acting in the best interests of their regions. If their regions are not flooded, there is no apparent reason for them to join the flood control efforts of other states outside of their jurisdictions. The incentive to break the unrealistic enforcement is higher than the incentives currently available. Unless the incentives or arrangements are clear and just, they will not waste their time and energies to benefit other states’ constituents. 122 This lack-of-incentive phenomenon may be similar to what economists refer to as the rational ignorance effect. The future follow-up study, therefore, is to investigate any alternative incentives or arrangements that are available or can be created for the flood control agenda to be rational and successful. The proper question thus is not about whether to decentralize or not in general, but rather about what functions to decentralize, in which sectors, and which 121 The Jakarta Post (2002) op cit; The Jakarta Post (2007a) op cit. 122 For more discussion about this issue, see Olson, Mancur (1969) “The Principle of Fiscal Equivalence: The Division of Responsibilities among Different Levels of Government,” The American Economic Review, Vol. 59, Issue 2, pp. 479-487. 114 regions. 123 This project is therefore intended to be restricted from any ideas about selecting between decentralization and centralization, even though it would have seemed to advocate the previous scheme of the former centralized system by scrutinizing the current decentralization practice. Nor is it to propose to replace the decentralization policy to any form of centralization policy. It is not about questioning the validity of the decentralization concept, but it is about investigating an alternative policy design in which a program, in this case, of the water-resources development, could optimize the benefits within the new decentralization policy. In other words, whether or not the decentralization policy is only political solution or true answer to the demands of the Indonesian citizens, the design of the policy should be made satisfactorily enough that it would not be abortive and create an adverse effect, in this case, on water- resources development. Hence, it is not just about distributing power or fiscal authorities to the subnationals, but more to ensuring that impacts of the decentralization policy are addressing the demands and not worsening the current best practices. Ostrom, Schroeder, and Wynne, with their analysis of the structure of authority, show that it is not about centralization or decentralization, if the decisionmaking system is organized within a hierarchical chain of command, with a single, ultimate center of authority, any of the two systems would not be successful in meeting desired goals. 124 123 Rémy Prud’homme (1995) “The Dangers of Decentralization,” The World Bank Research Observer, Vol. 10, No.2, August, 1995. 124 Eleanor Ostrom, Larry Schroeder and Susan Wynne (1993) op cit. 115 Given an uncertain political situation in Indonesia, it is realized that searching for an alternative policy design of water-resources development suitable for the current decentralization system in Indonesia would take a risky, trial-and-error experiment and may create a more uncertain political situation. Therefore, extreme adjustment is not preferable. If a vague political situation is to be left open, like ongoing intergovernmental situation in Indonesia, substantial elements of independence need to be structured into the decisionmaking process, so that those who are concerned with the intelligent organization and the formulation of rationales with regard to different ways of action are free to pursue their interests without constraints. 125 Otherwise, the numerous sets of consequences that may flow from various programs of water-resources developments cannot be effectively and efficiently reviewed. It is worthy to note that in the absence of agreed intergovernmental rules, subnationals may benefit or lose from water resources that have not been formally allocated to them under a decentralized water-resources scheme. Inevitably, a strong legal framework in which subnationals and any other interest groups can coexist without many, if not nothing at all, influences by national authorities is needed. Ostrom, Schroeder, and Wynne suggest, if there is no central authority, an independent system of forum plays the crucial role for dispute resolution in maintaining both coherence of law and a rule of law. 126 For Indonesia, an effective democratic forum is central in facing a crisis. 127 Hence, 125 Eleanor Ostrom, Larry Schroeder and Susan Wynne (1993) op cit. 126 Eleanor Ostrom, Larry Schroeder and Susan Wynne (1993) op cit. 127 Amartya Sen (1999) “Democracy as a Universal Value,” Journal of Democracy Volume 10 Number 3, pp. 3-17. 116 an independent forum with a strong legal framework shall be made significant for the water-resources development in Indonesia. The question then is how exactly this independent forum works. Is it fully independent—distribution of powers in, among, and with other existing institutions? How does it relate to the ongoing decentralization issues? Is a model similar to TVA good for the answer? Mirroring TVA experiences may be regarded as if looking up at an ivory tower. A combination of TVA and best experiences from other nations in the less developed world, such as from those discussed above—India and Brazil would thus be more appropriate to answer the challenge of policy and institutional design for water-resources development in Indonesia. This project would be regarded as reality-disconnected study without an effort to design a policy model of what will be an ideal example of an independent system of forum. The model could be made permanent institution or temporary board meeting, but certain establishments should be made legal by strong legal documents. Although the recommended model would be based on an ideal scheme to challenge all water-resources issues in a decentralizing Indonesia, it is a proposed system model and is consequently open to criticism for future improvements. Watershed-Based Decentralization In light of finding a new way of interpreting the new decentralization policy into water-resources development, this project proposes a policy model called watershed-based decentralization (WBD) as opposed to the current 117 decentralization policy—subnational-based decentralization (SBD). 128 Watershed defined in this project is the area of land where water collects and drains onto a lower level part of the land or drains into a river, ocean or other body of water. 129 The idea is similar to the concept of TVA. 130 Besides, the idea also is rooted from the one-watershed-one-management principle—the concept that has been abandoned, if not neglected, in SBD scheme. However, instead of using one management, WBD concept proposes one collaboration—one-watershed-one- collaboration principle. In terms of authority and decisionmaking process, the proposed WBD is somewhat similar to the existing concept of SBD. However, it is based on watershed boundary (see Appendix 2), not on political boundary as SBD is. Complete comparison between political boundaries and watershed boundaries in Indonesia can be seen in Appendix 3. 128 As opposed to my proposed watershed-based decentralization, I call the current decentralization policy as subnational-based decentralization due to the use of subnational boundary as the base of the current decentralization policy. 129 According to Wikipedia <http://en.wikipedia.org/wiki/Watershed>, watershed may refer to: a) a drainage basin or river catchment, especially in North American usage, meaning the region of land whose water drains into a specified body of water, and b) a drainage water divide, especially in Britain and other Commonwealth countries, meaning the ridge of land that separates two adjacent drainage basins. I use the the former in my proposed WBD concept. As a supplement, Wikipedia <http://en.wikipedia.org/wiki/Drainage_basin> expalines more as follows: “A drainage basin is a region of land where water from rain or snowmelt drains downhill into a body of water, such as a river, lake, dam, estuary, wetland, sea or ocean. The drainage basin includes both the streams and rivers that convey the water as well as the land surfaces from which water drains into those channels. The drainage basin acts like a funnel - collecting all the water within the area covered by the basin and channeling it into a waterway. Each drainage basin is separated topographically from adjacent basins by a ridge, hill or mountain, which is known as a water divide or a watershed. Especially in North American usage however, watershed refers to the drainage basin itself. Other terms that can be used to describe the same concept are catchment, catchment area, catchment basin, drainage area, river basin and water basin.” 130 For more discussion with regard to the rationales behind why to use watershed as the base for water resources planning and management could also be found in National Research Council (1999) “New Strategies for America’s Watersheds,” Washington, DC: National Academy Press. 118 To be properly functional, appropriate institutional arrangements are a necessary. As a central in the new institutional arrangements, an independent democratic forum, as suggested by Ostrom, Schroeder, and Wynne, 131 and also Sen, 132 could be the best fit with WBD concept. This forum could be made in a form of permanent institution, temporary board meeting, and any other democratic institutional arrangements. The forum structure may vary in accordance with the subnational’s capacity and circumstances, but WBD framework has to serve as its foundation in dealing with water-resources issues. All in all, however, the decision to choose the type of institutional arrangements of WBD including its who’s who should be discussed and shared among the subnationals within the watershed as well as national institutions. The decision then should be embedded onto an intergovernmental agreement supported with an appropriate legal framework and sufficient regulatory capacity. By all means, in its operational, each forum is not pure single integrated institution. But in terms of the values related to navigation, flood control, and power production, the forum should be fully integrated. Basically, one- watershed-one-collaboration principle has to be embodied even in day-to-day operational of the forum. This project argues that the ongoing realization of decentralization concept will make water-resources development unsustainable, especially for the nonconsumptive uses. It needs holistic approaches involving all aspects and 131 Eleanor Ostrom, Larry Schroeder and Susan Wynne (1993) op cit 132 Amartya Sen (1999) op cit. 119 sectors. Therefore, the holistic, one-watershed-one-collaboration principle has to be integrated in WBD concept in order to alleviate conflicts of interests and coordination issues among related subnational authorities. Other values related to recreation, fish and wildlife habitat, pollution abatement and the like, can be realized with cooperation of other agencies willing to collaborate their programs within the organization. A rich variety of agencies would seem to be required for the political economy of water-resources development. The WBD concept is capable in minimizing any potential water wars that are likely to happen in the political-based decentralization. If a watershed-based in intergovernmental agreement can be established, the subnationals in which a watershed shares its area will be living in mutually respect, if not in perfect harmony. The other benefit using the WBD is that there will be less ineffective water laws. Having a plethora of ineffective water laws can be detrimental to water development. All laws and regulations with regard to water affairs among states in the watershed should be made in an intergovernmental agreement. The most compelling reason is that WBD is the most compatible concept with the primary goal of decentralization, which is less involvement of central authority. Since these special-area-management institutions are designed to be not to have much involvement of central governments, the structures should be also designed to tolerate conflict. The intelligent unit should be built-in for consensus building or alternative dispute resolution in relation to the diverse conflicting 120 interests. Recourse to central decisionmaking is essential only when an agreement cannot be satisfactorily negotiated. As discussed in the review of Law 7 of 2004, it can be said that the law has somewhat addressed the idea of WBD, but the law does not convey the spirit of decentralization, if not too centralized, as it should have been conceived. The law suggests using watershed as the basis for water-resources development (Clause 2 of Article 11), but endorses hierarchical authorities to determine and control the design, planning, and management of water-resources development (Article 13 through 19). In other words, the law regards a watershed as a tentacle of national government, but WBD regards it as a haven for reciprocal intergovernmental system of decentralization. Looking at the institutional arrangements constituted in the law, it is déjà vu all over again because history shows that Indonesia has been down this road before and the journey has demonstrated an inconvenient ending. Clearly, this is the reversed path toward decentralization. Designing the policy toward preference for command-and- control regulations will stultify the spirit of decentralization. Achieving sustainability in development is a final crosscutting theme in WBD concept. Sustainable development defined here is a dynamic process in which communities anticipate and accommodate the needs of current and future generations in ways that reproduce and balance local social, economic, and ecological system, and link local action to global concerns. 133 This is in 133 Philip R. Berke and Maria Manta Conroy (2000) “Are We Planning for Sustainable Development? An Evaluation of 30 Comprehensive Plans,” Journal of American Planning Association, Vol. 66, No.1, Winter, Chicago. 121 accordance with the recommendations of the United Nations Conference on Environment and Development in 1992, known as the “Earth Summit,” and the Second United Nations Conference on Human Settlements in 1996, Habitat II. In terms of water-resources development, by all means, sustainable water- resources development is the final goal. At the macro level, one of the advantages of WBD concept is that it allows and paves the way in targeting the goal of sustainability in water-resources development. The sustainable relation can be described in Figure 3. 122 Figure 3: Schematic Concept of Sustainable Water-resources Development Berke and Conroy also offer six basic principles of sustainable development for evaluating local comprehensive plans that can be incorporated into WBD concept: 1. Harmony with nature. Land use and development activities must support the essential cycle and life support functions of ecosystem and preserve biodiversity. 2. Livable built environments. Creating physical spaces adapted to desired activities inhabitants; fostering access among land uses; and supporting a sense of place. Adapted from Source: United Nations Division for Sustainable Development (1999) Environment Hydrosphere Atmosphere Land Biota Minerals Social Equity Population Lifestyle Culture Social Organization Economy Agriculture Households Industry Transport Services 123 3. Place-based economy. A local economy must strive to operate within natural system limits and produce built environments that meet locally defined needs and aspirations. 4. Equity. Land use patterns must recognize and improve the condition of low-income populations and provide equitable access to social and economic resources. 5. Polluters pay. Polluters must be required to bear the cost of pollution and other harm, with due regard to the public interest. 6. Responsible regionalism. Communities must be responsible for the consequences of their actions. A local jurisdiction has a duty to minimize the harm it imposes on other jurisdictions in pursuit of its own goals. 134 In summary, WBD would be the best fits in searching for substantial elements of independence discussed previously. As opposed to SBD, WBD sheds more promising lights. 135 A systematic comparison shown in Table 2 summarizes the aforementioned ideas. The way of comparisons in Table 2 adopts the successive limited comparisons method suggested by Lindblom. 136 134 Philip R. Berke and Maria Manta Conroy (2000) op cit. 135 The contrasting account is intended for conceptual comparison purposes only. In practice, the proposed WBD should be a counterpart of the current SBD concept. 136 Charles E. Lindblom (1959) “The Science of Muddling Through” Public Administration Review, Volume 19. pp. 79-88. 124 Table 2: Current Subnational-Based Decentralization (SBD) vs. Proposed Watershed-Based Decentralization (WBD) Concerned Issue Current SBD Proposed WBD Management Politically and institutionally fragmented, and lack of coordination Politically fragmented, but institutionally united. System Change Too extreme—inconsistent with the natural rules) Adhere to the nature. Holistic approach. Upstream-downstream collaboration Approach to System Too sensitive to conflict— unnecessary water wars Easy to be integrated Legal Ineffective regulations (not conducive to currently less developed system of governance in Indonesia) Effective regulation (less likely to have conflicting regulations). Institutional Arrangement Need for national government coercion, which should be reduced. (Most likely to reach Conflict Resolution approach stated in Law 32 of 2004 Article 198 Clause 2) Agreement with states (No need to reach Conflict Resolution approach stated in Law 32 of 2004 Article 198 Clause 2) Problemsolving Likelihood of coercion as a solution is high Consensus building or negotiation much likely to be a regular solution Sustainability Conflict-ridden coordination (offer a bumpy road to sustainability) Straightforward to perform (offer a required path to sustainability) Although the project sets a boundary on diagnosing and conceptualizing the alternative decentralization policy design for water resources development in Indonesia, it also tries to conceptualize an institutional format to give a sense of how the policy design suggested in the project might be seen from the implementation point of view. In formatting or structuring the institutional relationship, Crosby and Bryson come up with a concept called the Triple Three- Dimensional View of Power—a flexible procedural rationale focused on the design and use of three shared-power settings—forums, arenas, and courts. 137 This 137 Barbara C. Crosby and John M. Bryson (2005) “Leadership for the Common Good: Tackling Public Problems in a Shared-Power World,” 2 nd Edition, Josey-Bass, San Francisco. 125 concept offers an alternative relationship in the forum suggested in WBD. The complete diagram of Crosby and Bryson concept can be seen in Figure 4. Figure 4: The Triple Three-Dimensional View of Power 138 Based on Crosby and Bryson concept, the project suggests that the format for implementation of the policy design of WBD is the forum of local leaders. Local leaders are the official representatives of the political administrative areas or regions. The official representation is required for the legitimation of decisions 138 Barbara C. Crosby and John M. Bryson (2005) op cit, p. 409. Policy making and implementation Policy making and implementation capabilities Domain Agenda Planning, budgeting, decision making, and implementa- tion method Access rulers Principles of domination Creation and communication of meaning Communicative capability Interpretive schemes Relevance Norms of pragmatic communication Modes of argument Access rulers Principles of signification Management of residual conflict and enforcement of underlying norms Conflict management and sanctioning capabilities Norms Jurisdiction Conflict management methods Access rules Principles of legitimation Human action 1st dimension of power Ideas, rules, modes, media, and methods 2nd dimension of power Deep structure 3rd dimension of power Social, Political, Economic, and Natural Environments The Use of Forums The Use of Arenas The Use of Courts 126 made in the forum. The official representatives in the forum should represent the same hierarchical levels. In the case of a conflict occurring beyond the forum, the court should function as the last resort. Figure 5 depicts a forum in the national level. Figure 5: Format of Forum for WBD at National Level National Supreme Court Forum of Governors Governor Advisory line when needed Instruction line when litigation occurs National Institutions Dealing With Related Issues Governor Governor Governor 127 For the state level can be seen in the Figure 6. Figure 6: Format of Forum for WBD at State Level The question then is how to ensure the stakeholders’ representation in the forum. The project suggests that it is the responsibility of governors and mayors to create a system of governance that legitimates a representation of the stakeholders. One of the ways of legitimating the stakeholders’ representation is the collaborative inclusionary argumentation technique proposed by Healey. 139 Although citizen participation in decisionmaking is difficult to put into practice due to, for instance, culture, Healey’s inclusionary scheme is worth trying. 139 For more information with regard to this concept, see Patsy Healey (2006) “Collaborative Planning: Shaping Places in Fragmented Societies,” 2 nd edition, Palgrave Macmillan: New York. State Supreme Court Forum of Mayors/Bupatis Mayor /Bupati Advisory line when needed Instruction line when litigation occurs State Institutions Dealing With Related Issues Mayor /Bupati Mayor /Bupati Mayor /Bupati 128 Financing for Watershed-Based Decentralization In supporting the WBD concept, financing the water-resources development also needs big attentions. Most of water-resources investments were relied on external aid sources even before the 1998 crisis. Competition for water requires public recognition of water as economic good because evidence shows that in 1992, before the crisis, investment in irrigation, excluding flood control, created about twice that of urban water resources notwithstanding the higher economic value of water in non-agricultural uses—3 to 250 times higher. 140 Hence, a strategic reordering of priorities for urban and irrigation needs is urgently needed. Not much analysis on finance is explored in this paper. However, in general, it can be concluded is that financing the water-resources development needs a critical attention and it can be done by researching and selecting best practices among alternatives available with the aims of creating a self-financing scheme and escaping from full dependency to external donor agencies and from the tragic horror of the commons. Intergovernmental Management Challenges for Watershed-Based Decentralization It is expected that, institutional arrangements for WBD will pose immense intergovernmental management challenges. The obvious challenge is how the institutional arrangements might be optimally combined into truly integrated governmental systems. As also suggested by Geoff Mulgan, the kinds of 140 World Bank, 1999, op cit. 129 intergovernmental system that we need are less permanent, less fixed, less brittle, and more open to change; reciprocal, not hierarchical, open, and not secretive. 141 In other words, the intergovernmental system should make things predictable, but somewhat can evolve and adapt. In implementing the WBD in every layer of government, there are, by all means, some consequences and conflicting agendas. The complex relationship of nature has changed how the world scheme from the struggle for separated entity to the need for a larger, connected system. 142 In terms of local area, the notion of the connectedness among states, regions, and cities has undoubtedly created some conflicts of interest among the local governments or among other jurisdictional entities—the complex relationships of national, state, and local governments. However, it has also formed some greater opportunities for cooperation in achieving their common goals. Thus, it is imperative for the proposed decentralization system not only to maintain internal unity but also to develop a strong intergovernmental system that addresses the interregional conflicts and acts as a venue coordinating various levels of stakeholders to resolve the conflicts with the principles of democracy so that the local stakeholders will realize that they exist in the decisionmaking process. The notion of democracy is important in the intergovernmental system because if the stakes are high, the interest low; the choices narrow, the outcome would potentially be democracy’s 141 Geoff Mulgan (1997) Connexity: How to Live in Connected World, Boston: Harvard Business School Press. 142 Geoff Mulgan (1997) op cit. 130 disconnect. 143 As also argued by Amartya Sen, the financial meltdown in Indonesia is indicating a penalty for undemocratic governance. 144 Reciprocity In order to be success in a democratic society, Geoff Mulgan argues that reciprocity, the idea of give and take, should be actualized in the governmental system. 145 The principle of reciprocity demands a different way of governance— instead of depending on blue-prints and plans, and top-down command and control, more complex and highly educated society should be provided not only with a framework of predictability, but also with space for people to organize themselves in flatter, more reciprocal structure. 146 The challenge is to develop new forms of connection and shared institutions that draw our inherent sociability and our instinctive dispositions to act ethically. 147 The fact is that today’s world is characterized by vast and interdependent organized systems. It is imperative that a contemporary leadership necessitates the leaders to work with and through extremely complex organization and institutions. In addition, there are several conflicting pluralistic pressures. The decisions that endear the leaders to one stakeholder may disappoint another. 143 The Los Angeles Times (2002) “A Disconnect With Democracy,” 30 October, p B13 by John Balzar. 144 Amartya Sen (1999) op cit. 145 Geoff Mulgan (1997) op cit. 146 Geoff Mulgan (1997) op cit. 147 Geoff Mulgan (1997) op cit. 131 Thus, this phenomenon has caused the leaders to show different face to different stakeholders or one enigmatic face to all. 148 Collaboration Building In managing growth, there is often time a conflict of interest. Instead of forcing collective interests to be the winner, one alternative way that can be proposed in this project is by offering non-governmental organizations to work together hand in hand aiming at the win-win ends. One of the forms of win-win resolution is collaboration building. Collaboration builders seek to formulate goals and values that lift all stakeholders out of their separate preoccupations by gaining their commitment to larger objective. 149 This encourages the system to set priorities in decisionmaking as well as establish trust among the stakeholders in the collaboration. In handling some regional issues, holistic approach should be introduced, especially to those that have a strong interdependence to each other. Networks of Responsibility The other form of win-win resolution in facing pluralism is by building networks of responsibility to appraise and seek to resolves the larger problems in community, region, nation or world. 150 The networks should permit continues collaboration among government, business and the nonprofit sector, identify issues and move toward consensus. As well, there must be access and openness to participation. One of the features of a network of responsibility is that it does not need to have 148 John W. Gardner (1990) On Leadership, New York: The Free Press. 149 John W. Gardner (1990) op cit. 150 John W. Gardner (1990) op cit. 132 any official standing—in fact, according to Gardner (1990), the network may be better off without it. Thus, it remains free to approach broadest problems and its future freely and flexibility. In sum, a strong legal framework that ties local authorities and any other interest groups is inevitably needed without many influences by national authorities. In addition, in polycentric institutional arrangement, an independent system of forums for dispute resolution plays the crucial role in maintaining both coherence of law and a rule of law. 151 Aging Intergovernmental System A system of governance, especially the one that has reached heights of excellence, may already be caught in the red tapes that will bring it down so that the renewal actions must be implemented. 152 However, an institutional system is different with the human lifecycle because it has possibility of rejuvenation and transformation. An institutional system may go through a number of waves of decline and rejuvenation and may keep going that way or transformation when it realizes an end approaching; otherwise, the system will follow the final declines as experienced by the Ancient Greece or Roman Empire. After process of maturing, any intergovernmental system will face a problem of outgrowing the policies and rules of behavior. If the system continues in its old way or staying in status quo, it becomes ungovernable, unmanageable, and 151 Eleanor Ostrom, Larry Schroeder and Susan Wynne (1993) “Polycentric Institutional Arrangements,” in Institutional Incentives and Sustainable Development: Infrastructure Policies in Perspective, Boulder: Westview Press. 152 John W. Gardner (1990) op cit. 133 uncontrollable; therefore, needs to be structured. 153 As well, Drucker argues that two key instruments in intergovernmental restructuring are continues improvement and benchmarking, which both require radical changes in policies and practices that the bureaucracy would all fiercely resist. The other ideas of “truly-reinventing government” that can be adopted from Drucker ideas are, inter alia, rethinking of the mission of the intergovernmental system, abandoning unproductive or counterproductive program and activities, and excluding any “crusade agenda” from the rational analysis involved in rethinking. 154 153 Peter F. 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Water Resources Sector Activities/Responsibilities Pro Us Oth Pro Us Oth Pro Us Oth Pro Us Oth Pro Us Oth Pro Us Oth Pro Us Oth Pro Us Oth Pro Us Oth Pro Us Oth Pro Us Oth Pro Us Oth 1 Overall water resources and quality management (instream) as well as administration of surface water coordination policy. 2 Overall management and guidance of irrigation. 3 Management of catchment areas of upper river basin areas. 4 Water use management power generation and management of goundwater. 5 Water use management for industry and industrial waste water/pollution) mitigation. 6 Water and resource use management for water transportation. 7 Pollution control of waste water from industries (off stream pollution). 8 Water quality standard management for various purposes. 9 Water and resources policy looking for security and defence of the country 10 Budget planning and programming for WRDM. 11 Control and coordination of Co- Administration and autonomous tasks related to water resource management. 12 Land provision and administration in water resources areas. Notes: Provider (Pro) = Water Resources Provider for concerned use User (Us) = Water Resources for related purpose Other (Oth) = Administration/Management/Supervision Black = Task Obligation Grey = No Obligation World Bank User April 8, 1999 No Appendix 1: Management Mandates of Sector Agencies (Source: World Bank (1999) "World Bank Report No. P 7304-IND") Ministry of Home Affairs National Land Agency Ministry of Security & Defense National Planning Board Ministry of Environment Ministry of Health Ministry of Industry Ministry of Transport Public Works Agriculture Forestry Ministry of Mining Ministry of Ministry of Ministry of ! " !# # $%& ’()*+,-*. 144 Appendix 3: Watershed Boundary Map of Indonesia (Not To Scale) (Source: Indonesia Department of Public Works) 1. Watershed boundaries around the islands of Irian (West Papua) 2. Watershed boundaries around the islands of Jawa (Java) and Bali 145 3. Watershed boundaries around the islands of Kalimantan (South Borneo) 4. Watershed boundaries around the islands of Maluku (Moluccas) 146 5. Watershed boundaries around the islands of Nusa Tenggara (Timor) 6. Watershed boundaries around the islands of Sulawesi (Celebes) 147 7. Watershed boundaries around the islands of Sumatera (Sumatra)

Abstract (if available)

Abstract When the world scheme seems to have shifted from the struggle for a separated entity to the demand for a larger, connected system, Indonesia, paradoxically, began, for one more time, a major experiment in decentralization officially started on January 1, 2001. Many previous centrally controlled public entities are being decentralized. Water, viewed by Indonesia as public goods, is being decentralized as well. My project will have 2 main parts: a study of decentralization experiment in water sector and a redesign of decentralization policy within water sector.

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Asset Metadata

Creator Abdi, Eka Nugraha (author)

Core Title Water-resources development in a decentralizing Indonesia: a challenge for policy design

School School of Policy, Planning, and Development

Degree Doctor of Planning and Development Studies

Degree Program Planning

Publication Date 08/01/2007

Defense Date 04/10/2007

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag decentralization,Indonesia,OAI-PMH Harvest,Politics,Water resources

Place Name Indonesia (countries)

Language English

Advisor Banerjee, Tridib (committee chair), Anwar, Agusti (committee member), Melnick, Glenn (committee member), Mera, Koichi (committee member), Meshkati, Najmedin (committee member)

Creator Email abdi@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m737

Unique identifier UC1287533

Identifier etd-Abdi-20070801 (filename),usctheses-m40 (legacy collection record id),usctheses-c127-541002 (legacy record id),usctheses-m737 (legacy record id)

Legacy Identifier etd-Abdi-20070801.pdf

Dmrecord 541002

Document Type Dissertation

Rights Abdi, Eka Nugraha

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Repository Name Libraries, University of Southern California

Repository Location Los Angeles, California

Repository Email cisadmin@lib.usc.edu