Water Resources Management Financing in Indonesia

Workshop on IWRM National Water Financing

Country Report on Water Resources Management Financing

Yangon, Myanmar3 October 2013

SutardiIndonesia Water Partnership

Outline of Presentation

1. Scope of Water Resources Management Financing2. Water Resources Financing Policy3. Program & Funding for WRDM4. Analysis of Problems5. Sustainability of Water Resources Ecosystem6. Water Security7. Food Security8. Water Resources Financing Implementation Plan9. Recommendation

1. Scope of Water Resources Management Financing

Objective: To collect data & information on scope and actors of

IWRM Water Resources Financing To analyse financing policies and its implementation Assessment to financing policies and its

implementation Recommendation

1. Scope and Institution in Water Resources Financing

No. Scope of Water Resources Management Sectors/ Related Institutions

1 Urban flood damage reduction DG. Water Resources; BNBP

2 Rural flood damage reduction DG. Water Resources; BNBP

3 Drainage DG. Water Res. and DG. Human Setl

4 Agricultural water supply DG. Water Res. & Min. Forestry

5 Erosion and runoff control Min. Forestry & DG. Water Res.

6 M&I water supply DG.Water Res. ; DG. Human S; PDAM, Private Sector

No. Scope of Water Resources Management Sectors/ Related Institutions

7 Water quality management Min. of Environment & DG. Water

8 Water Recreation Min. Tourism; DG. Water Res.; Private Sector

9 Fishing and hunting Min. Fishery; Private Sector

10 Ecological systems Min. Environmental, Min. Forestry, DG. Water Res.

11 Navigation Min. Communication; DG. Water Res

12 Hydroelectric power and Mining Min. Energy & Mineral, DG. Water Res. \, PLN, Private Sector

1. Scope and Institution in Water Resources Financing (lanjutan)

A. Financing for Water Resources Management & Development· Formulation of laws & regulations on water resources;· Development & management and allocation of water resources;· Provision of raw water supply for DMI, agriculture, environment, etc

Funding by government & managed by DG. Water Resources, Min. P.Ws

B. Financing for provision drinking water & sanitation· Regulating, controlling and fostering drinking water providers· Provision & operating of drinking water and sanitation facilitiesFunding by central and local governments and private sectors. DG. Human Settlements, Min. of PWs carried out government tasks

2. Water Resources Financing Policy

Programs on Water Resources Development & Management :· Development, management & conservation of rivers, lakes,etc;· Development & management of irrigation & swamp systems;· Provision and management of raw water supply;· Provision of flood management and coastal protection measures ;· Institutional and management improvements.

Funding and source of funding;· Total estimated costs for 5 programs (2004-2009) US$4,042 million· Most of funding from central government, funding from local gov’nts. only

very small· About 30-40% from loan of ADB, JBIC, IDB, World Bank, etc

3. Program & Funding for WRDM

4. Analysis of Problems

• For the purpose of analyses financing water resources management are grouped in 3 main themes:

a) Sustainability of function & benefits of water resources ecosystem b) Water Security c) Food Security• To identify problems in three 3 groups above• To analyze financing policy and government program

in respond to problems in 3 themes above• Assesment on enhancement of government policies

implementation

5. Sustainabilty of Water Resources Ecosystem

1) Problems that threathen sustainability of function & benefit of water resources ecosystem

• water pollution and adverse impacts of untreated municipal wastewater discharge, including industrial and mining effluent disposal;

• adverse impacts of watershed degradation such as increasing flood peaks causing economic damages, decreasing dry season flow and sedimentation damages to water infrastructure;• Landslides due excessive heavy rainfall

Watershed and River Condition

1. Increase of critical lands (13,1 mil. Ha in 1992, now (2010) already > 18,5 mil Ha).

2. Increase distribution of critical RCA (22 RCAs in 1984, 39 RCAs in 1992, become 62 RCAs in 2005).

1010

1100112011301130

126020102020204020502080

20902120

2100

21302140

4140

5090

5150

5170

1090

1180

12101240

1290

20702110

5100

402040300

7020

3010

4010 5160

2005 --- 62 Critical RCA2005 --- 62 Critical RCA

1992 --- 39 Critical RCA1992 --- 39 Critical RCA

1010

1100112011301130

126020102020204020502080

20902120

2100

21302140

4010

5090

5150

51705160

1180

1984 ---22 Critical RCA1984 ---22 Critical RCA

Watersheeds conservation program covering 70 DAS of 23 million Ha, since 2012 to 2022

No. Province Name of River Status of Quality

UpStrm Dwns

12. DKI Jakarta Ciliwung HP HP

13. Jawa Barat Citarum HP HP

14. Jawa Tengah - DIY Progo LP PL

15. Jawa Timur Brantas LP PL

16. Bali Tukad Badung LP LP

17. Nusa Tenggara Barat Kali Jangkok LP PL

18. Nusa Tenggara Timur Kali Dendeng Good LP

19. Kalbar Kapuas LP LP

20. Kalteng Kahayan LP PL

21. Kalsel Martapura LP PL

22. Kaltim Mahakam LP LP

STATUS OF WATER QUALITY IN SOME RIVER DI INDONESIA

LP = ligthly polluted; PL = polluted; HP= highly polluted; Good = not yet polluted

6. WATER SECURITY

Definition by Hoffman (2004): “the ability to access sufficient quantities of clean water to maintain adequate standards of food and goods production, sanitation and health”

UN-Water and its Members and Partners (2013):

Water security is defined as the capacity of a population to safeguard sustainable access to: i) adequate quantities of acceptable quality water for sustaining livelihoods, human well-being, and socio-economic development, ii) for ensuring protection against water-borne pollution and water-related disasters, and iii) for preserving ecosystems in a climate of peace and political stability.

Water Storage per person (m3)

43

746

54

1287 1406

3255

4729

6150

2486

0

1000

2000

3000

4000

5000

6000

7000

Plan to achieve MDGs in 2015V. Water Resources Status (5)

Proportion of house hold having access to a safe and clean water in 2009 47.71% to be increased in 2015 68.87%

Policies to Achieve MDGs Target (1)

Policy Direction:

1. Increase coverage and quality of water supply service in consistent and staging manner

2. Decrease water losses level through improvement and rehabilitation3. Priority of water supply development is given to low income community4. Increase allocation of funding for development of water supply system

through alternative funding sources 5. Strengthen financial capacity of local water supply public company

Policies to Achieve MDGs Target (2)

Plan to Achieve MDGs target 1. Plan of achievement based on National Medium Term Development Plan

(2004-2009) or “Interim Achievement of MDGs” 2009:• Increase of coverage of pipe system by 30% in 2009 (in 2004 18%)• Decrease of coverage of protected non-pipe system by 51% in 2009 (in

2004 61%)• Decrease of coverage of unprotected non-pipe system by 19% in 2009

(in 2004 21%) Estimated total cost about US$ 2,500million, 40-50% will be funded by central and local

governments including loans and grants from international funding agencies. The rest is expected from commercial investment schemes

2. Plan of achievement of MDGs by 2015:• Increase of coverage of pipe system by 46% • Decrease of coverage of protected non-pipe system by 36% • Decrease of coverage of unprotected non-pipe system by 18%

Jumlah puting beliung 12x

Watershed and River Condition

1. Decrease of rice production due to floods (about 374,000 ha/yr or equal to 919,000 ton rice/yr) or due to droughts (about 350,000 ha/yr or equal to 700,000 ton rice/yr).

2. Urban floods also caused significant economic lossess due decrease of productivity of service and industrial areas and traffic jams

3. In Jakarta 1 hour traffic jam due to road innudation causes economic loss of Rp 1.5 billion RP

Impact of Floods and Droughts

Apakah dampak dari kerusakan DAS, tanah longsor, polusi, sedimentasi telah menyebakan kenaikan biaya O& M, serata mengurangi pendapatan dalam Penegeloaan Wilayah Sungai??

Financial Performance 2001 - 2010

Impact of the rise of sea water level due to global warming : This will directly affect to socio-economic life of about 16 milion

peoples in 10.666 villages in coastal areas.

More productive areas in coastal area will flooded and this will be occured more frequently and in incrasing intensity.

Erotion and abration of of coastal areas will spread over.

Retreat of coastal line.

Impact of Climate Change

Watershed and River Condition

7. FOOD SECURITY

22

POSISI 2004(SWASEMBADA BERAS)

• Produksi Nasional : 54,01 jt ton GKG

• Luas panen : 11,9 jt Ha

• Laju pertumbuhan : 1,46%

• DAMPAK BENCANA ALAM• ALIH FUNGSI LAHAN• PENURUNAN DEBIT SUNGAI

ARAH KEBIJAKANKETAHANAN PANGAN

• Def : Gizi cukup dan berimbang• Produksi nasional cukup problem pada aksesibilitas

• No global trading (mandiri)

D AT

?

KONTRIBUSI PEMBANGUNAN

IRIGASI PER TAHUN (2005-2009)

• REHAB Eq. 200.000 Ha AT 500.000 Ha• LANJUTAN Eq. 90.000 Ha AT 100.000 Ha• PENINGKATAN Eq.10.000 Ha AT 60.000 Ha

• DEGRADASI PRASARANA (O&P)

SASARAN KETAHANAN PANGAN)

• Laju pertumbuhan 1,46% Eq. 175.000 Ha AT per th

23

BELUM TERBANGUN

0

RUSAK RINGAN

0

RUSAK BERAT

0

BELUM SAWAH

0

LUAS TARGET IRIGASI 2009

7,2 JUTA HA

KONDISI BAIK

7,2 JUTA HA

KONDISI RUSAK

0

TERBANGUN

7,2 JUTA HA

SUDAH SAWAH

7,2 JUTA HA

BELUM TERBANGUN

0,5 JUTA HA

RUSAK RINGAN

1,16 JUTA HA

RUSAK BERAT

340 RIBU HA

BELUM SAWAH

0,3 JUTA HA

LUAS TARGET IRIGASI 2009

7,2 JUTA HA

KONDISI BAIK

5,2 JUTA HA

KONDISI RUSAK

1,5 JUTA HA

TERBANGUN

6,7 JUTA HA

SUDAH SAWAH

4,9 JUTA HA

Countries PlantedArea

(1000ha)

Population(1000)

Ratio planted area &

population

Production(1000 ton)

Rice yield(ton/ha)

(1) (2) (3) (4)=(2): (3) (5) (6)=(5): (2)Brunei 1.30 0.417 0.003 6.37 4.9Cambodia 2,585.91 14,478 0,17 7,315.93 2.83Indonesia 12,993.28 244,769 0.010 64,776.46 4.98Malaysia 670.52 29,322 0,022 2,499.54 3.73Myanmar 8,089.65 46,734 0,172 32,487.08 4.02Lao PDR 818.62 6,374 0.128 3,163.88 3.86Philippines 4,525.51 96,474 0.047 16,940.81 3.69Singapore --- 5,266 --- -----Thailand 11,229.94 69,892 0,160 31,277.35 2.79Vietnam 7,400.20 89,790 0.082 38,800.00 5.24

Ratio of Rice Field and Population (ha/person) and Rice Yield (ton/ha) in 2010

Self-sufficiency Ratio (ratio rice production to domestic utilization)

Unit: Ton

Country

2009 2010

Production Domestic Utilization Ratio (%) Production Domestic

Utilization Ratio (%)

ASEAN 125.449.397 107.867.551 116,30 126.574.564 109.583.196 115,51

Brunei 869 33.797 2,57 4.140 38.056 10,88

Cambodia 4.590.000 2.927.000 156,82 4.682.193 2.961.392 158,11

Indonesia 40.346.922 38.433.251 104,98 40.938.721 38.904.962 105,23

Lao PDR 1.820.750 1.764.642 103,18 1.898.330 1.825.961 103,96

Malaysia 1.585.708 2.531.159 62,65 1.641.985 2.590.004 63,40

Myanmar 20.196.456 19.157.000 105,43 20.466.859 19.346.000 105,79

Philippines 10.737.201 13.163.706 81,57 11.079.288 13.421.363 82,55

Singapore - 262.000 - - 270.000 -

Thailand 20.889.417 11.267.000 185,40 20.643.048 11.767.000 175,43

Vietnam 25.282.075 18.327.996 137,94 25.220.000 18.458.458 136,63

Food Security Ratio(ratio rice stock to domestic utilization)

Unit: Ton

Country2009 2010

Production Domestic Utilization Ratio (%) Production Domestic

Utilization Ratio (%)

ASEAN 20.592.404 107.867.551 19,09 24.781.659 109.583.196 22,61

Brunei 15.505 33.797 45,88 14.871 38.056 39,08

Cambodia 128.000 2.927.000 4,37 320.000 2.961.392 10,81

Indonesia 1.172.435 38.433.251 3,05 3.269.647 38.904.962 8,40

Lao PDR 30.169 1.764.642 1,71 86.276 1.825.961 4,72

Malaysia 275.899 2.531.159 10,90 424.867 2.590.004 16,40

Myanmar 4.345.208 19.157.000 22,68 4.717.664 19.346.000 24,39

Philippines 2.638.287 13.163.706 20,04 1.849.937 13.421.363 13,78

Singapore 55.000 262.000 20,99 40.000 270.000 14,81

Thailand 6.251.800 11.267.000 55,49 7.374.217 11.767.000 62,67

Vietnam 5.680.101 18.327.996 30,99 6.684.180 18.458.458 36,21

9 Water Resources Financing Implementation Plan 2004-2010

Water Resources Investment SourceWater Resource Investment Funding

Source2004 – 2009

(%)2010 – 2014

(%)Government 70 62,33

Loan 25 24,25

Foreign Aid (Grant) 5 4,60

Private Sector (KPS Air Minum) 2.8 8.82

Notes: 1. Increase of 66,5% budget allocation for 2010 – 20142. Food Security Program in 2013 Irrigation improvement Rp19,8 T (111.251 Ha &

275 unit Embung)3. Food Security for increase of food production Rp 63,2 T (3x Tahun 2007)

Water Resources Funding AllocationWater Resources Program 2004 – 2009

(Rp T)2010 – 2014

(Rp T)1 Water Resource 6,29 10,79

2 Irrigation 18,10 29,98

3 Raw Water Supply 1,57 2,40

4 Flood Control Management 10,05 16,79

Total 36,01 59,96

Physical Target of Water Resources DevelopmentWater Resource Implementation Program Target of 2004 – 2009

(Completed)Target of 2010 – 2014(Under Construction)

1 New Construction of Irrigation Networks

494.853 Ha 500.000 Ha

2 Rehabilitation of Irrigation Netwokrs 1.387.968 Ha 1.340.000 Ha

3 Operation and Maintenance of Irrigation Networks

2.002.275 Ha 11.120.000 Ha

4 Upgrading and Maintenance of Swamp Reclamation Networks

1.015.199 Ha 548.500 Ha

5 Operation and Maintenance of Swamp Reclamation Networks

647.895 Ha 5.444.277 Ha

6 Flood Control Infrastructure 9.555 KM 1700 KM

7 Raw Water Supply Capacity 16,13 M3/second 56,3 M3/second

8 Coastal Protection Infrastructure 96,30 KM 50 KM

9 Conservation of Watersource Area - 63 Watersheeds

10 New Construction of Reservoir, Situ, and Embung

- 252 Unit

11 Rehabilitation of Reservoir, Situ, and Embung

- 440 Unit

9. Recommendations (1)

9.1 Identification funding need for water resources management:

• Activities for conservation of upstream watershed to stop degradation of function of watershed

• Management of surface and ground water quantity

• Management of water quality and water pollution control

• Management of flood control

• Management of river environment including biodiversity

• Management of water resources infrastructures for O&M of water sources, river systems, infrastructures

• Capacity building for public participation in inclusive and comprehensive manners

9. Recommendations (2)

9.2 Identification funding need for water service

management:• Agreement in the cost sharing between local & central

governments, public utility in consumers in cost for planning & design, investment and O&M of water service systems

• Activities for planning, design, O&M and monitoring & evaluation of water service systems

• Expanding investment in water service systems that include drinking water supply, waste water and sanitation to achieve the MDGs by 2015

• Extra efforts and funding to settle current outstanding debts of local government drinking water utilities including for cost recovery

• Capacity building for public participation in inclusive and comprehensive manners

9. Recommendations (3)

9.3 Identification of source of funding for water resources and water service managements:• Local governments (province & district) budget and central

government budget • Users and beneficiaries in term of tax, fees, polluter charges

and penalty for party or individual against watershed conservation rules

• Semi and/or private sector investors in term of issuance of bonds and ownership share, etc

• International funding institution in term of grants, soft loans, guarantees, etc

• Innovative funding such as “debt swap mechanism”, and

• Implementation of “Kyoto protocol” especially for develop countries in term of “clean development mechanism” incentives for developing countries to protect natural forest for carbon absorption

9. Recommendations (4)

4.4 Identification of measures to ensure proper fund management:• Implementation of “good governance” principles such as:

effective, efficient, transparency, accountable and participative in a consistent manner

• Implementation of principle: “funds from water must return for water”

• Implementation of assurance of service principle to commensurate amount fees and charges being paid

• Issuance of periodic report to relevant stakeholders on fund usages and services enhanced to public

• Implementation consistent monitoring and evaluation procedures and mechanisms by relevant authorities including public

9. Recommendations (4)

9.4 Identification of measures to ensure proper fund management:• Implementation of “good governance” principles such as:

effective, efficient, transparency, accountable and participative in a consistent manner

• Implementation of principle: “funds from water must return for water”

• Implementation of assurance of service principle to commensurate amount fees and charges being paid

• Issuance of periodic fund usages and services enhanced to public

• Implementation consistent monitoring and evaluation procedures and mechanisms by relevant authorities including public

9. Recommendations (5)

9.5 Identification of institutional issues to be proposed to government:• Formulation of implementing government regulations and other

rules conducive for * participation private sectors, users, and beneficiaries * implementation of “good governance” principles

• Public capacity building programs to ensure improvement and increase of public participation

• Improvement measures to improve performance of water service provider and increase public participation by considering the following model and suggestions

A Model on Urban Water Supply Management for Sustainable Livelihoods

Policy

Makers

Vulnerability

Sustainability Context Context

Urban

Water Supply Households

Providers

Some Key Points

• Participation of the society• Strong commitment from the workers

and management• Independency of the water supply

provider• Taxes based on benefit principle, cost

recovery, polluter-pay principle and solidarity principle in a local or regional catchment area could contribute to IWRM and solve financial problems

A Governance Model for Urban Water Supply Financing

GovernmentsFinancialMarket

share of interest capital subsidies subsidies

loan Urban share ofWater Water Supply HouseholdsBanks Providers ownership

Strategic Business Planning ModelElement 1 Element 2 Element 3Goals and Needs Long-range Short-range Business

Strategic Elements Plans/Implementation Programs

Community

Utility mission/ Overarching utility policies Financial ProgramVision customer needs

Regulatory compliance

Stakeholder Regulatory Master plan& related documents Management

actionsObjectives agencies

requirements Construction projects

Agreement/contracts Public affairs & outreach

evaluation & adjustment

Implementation

improve management ● public participation performances ● public-public

partner- ship (unhealthy

with healthy PDAM)

Regulations improve coverage ● co-operatives● public initiatives

financial resources ● water bank● water taxes or

charges