33129VOL.2

THE WORLD BANK

INDONE WATER USE RIiS S*UDY

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THE WORLD BANK

INDONESIA: WATER USE RIGHTS STUDY

STAGE 2

FINAL REPORT

Volume II

(ANNEXES)

February 2005

*Z SANYU CONSULTANTS INC.

LP3ES

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c) Legal and Institutional Context - The Capability of the PresentSystem to Support WUR

d) Outline of Licensing Surface Water Usee) Review of National Legislation on Groundwater

Annex 1 Terms of Reference for Stage 2

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Annex 1

10/22/2003INDONESIA

Water Resources and Irrigation Sector Dialogue

Water Use Rights in IndonesiaANALYSIS OF TRADITIONAL ALLOCATION AND CONFLICT RESOLUTION MECHANISMSAND STUDY OF OPPORTUNITIES UNDER THE NEW SECTOR REGULATORY STRUCTURE

Stage 2

Terms of Reference

Purpose and Context

1. The World Bank has supported a series of initiatives in the water sector in Indonesia overthe past five years, both at the policy and regulatory level, and in investment programs. Theseactivities form a broad-based Water Policy Dialogue. The efforts are geared to modernize thelarge and strategically important sector, which has a strong impact on sustainability and povertyalleviation efforts, and should be strengthened to spur economic development. These initiativesare comprehensive and internally coherent. They also create the framework that isaccommodating and streamlining the investment and advisory activities by all other donors activein this sector.

2. A serious and as yet unresolved issue is the institution of a regulatory system that is ableto allocate water to the users in an environment that is already over-used and highly competitive.Water use rights (WURs) are potentially a critical component of an effective water allocationsystem. However, the nation, nor the Bank, have prior experience with the nature and applicationpotential of WURs in Indonesia. Because WURs are highly sensitive to local cultural conditions,the Bank, in its dialogue with the government, should not rely solely on international experienceas this cannot be transplanted to Indonesia, which is a large sprawling country with a highcultural diversity. Future Bank supported programs, such as the new APL Water Resources andIrrigation Sector Management Program, as well as water supply programs, will have to graduallyaddress the issue of competition for water in a more comprehensive fashion. In the longer run,allocation systems must be introduced that are more flexible and efficient than the top-downprescriptive ones the government typically applies. The proposed study will allow to acquire anoperational understanding of the traditional water allocation and conflict resolution mechanisms,and of the opportunities created by the new sector structure.

Background

3. The Indonesian water sector is going through major reforms since 1998, after the demiseof the strongly centralistic Soeharto government that has governed the country for the past threedecades. In 1999 and 2000, Parliament adopted a series of laws that outline the administrativeand fiscal decentralization. The new administrative framework establishes empowered localgovernments at the levels of districts (kabupaten) and provinces, besides central government.Notwithstanding numerous exceptions, the new decentralized administration generally attributesauthority and managerial responsibility over irrigation schemes to the districts, and that overriver basins to provinces. Districts and provinces receive substantial block grants from the centerto execute their new tasks.

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Annex 2 List of Persons Contacted

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List of Persons Contacted (1/8)No. I Namne Position / Office/Address 0T Phone / Fax (Office E-mail Address

The World BankI Guy Alaerts Sr. Water Resources Specialist, Ph: 021-5299-3000 galaerts@worlbank.org

World Bank Office, Jakarta Fax: 021-5299-3111Jakarta Stock Exchange Buildign Tower 2 12th floor,Ji. Jenderal Sudiman Kav. 52-53

_ _ _ _ _ _ _ _ _ _ ___ Jakarta2 Rahul Raturi Sector Manager, Ph: 021-5299-3000 rraturinworldbank.org

Rural Development and Natural Resources Sector Unit, Fax: 021-5299-3111East Asia and Pacific Region,World Bank Office, JakartaJakarta Stock Exchange Buildign Tower 2 12th floor,Jl. Jenderal Sudiman Kav. 52-53Jakarta

3 Shobha Shetty Senior Economist, Rural Development, Ph: 021-5299-3000 sshetty I worldbank.orgWorld Bank Office, Jakarta Fax: 021-5299-3111Jakarta Stock Exchange Buildign Tower 2 12th floor,Jl. Jenderal Sudiman Kav. 52-53Jakarta

4 lIham Abla Operations Officer, Ph: 021-5299-3000 iabla@worlbank.orgWorld Bank Office, Jakarta Fax: 021-5299-3111Jakarta Stock Exchange Buildign Tower 2 12th floor,Jl. Jenderal Sudiman Kav. 52-53Jakarta

5 Kikkeri V Ramu Consultants, Ph & Fax: +1-301-990-9564 kvramu@alo.comThe Worlbank, kvramu@hotmail.com1811 H Street, N.W.Washington, DC 20433 U.S.A.

6 Paul Van Hofwegen World Bank Consultant p.vanhofwegen@World Water Council, delft. The Netherlands worldwatercouncil.org

7 Theodore Herman World Bank Consultant therman@netvision.net.il

8 Datin Yudha Visiting Mission Service, Ph: 021-5299-3000 dyudha@worldbank.orgWorld Bank Office, Jakarta Fax: 021-5299-3111Jakarta Stock Exchange Buildign Tower 2 12h floor,Jl. Jenderal Sudiman Kav. 52-53_Jakarta I

List of Persons Contacted (2/8)No. I Name Position / Office/Address l Phone /Fax (Office E-mail Address

Kimn raswil (Ministry of Settlement and Regional Infrastructure)9 H. Basuki Director General

10 Soekrasno Kasubdit Wil. Barat m, Ph: 021-7203951

Ministry of settlement and Regional Infrastructure Fax: 021-7201292

Directorate General of Water Resourdces, Mobile: 081-1109784

Derectorate of Water Resouces Management,Jln. Pattimura No.20/7. Kebavoran Baru. Jakarta _

I1 Suharto Sarwan Chief of Sub Directorate for WR Institutional, Ph & Fax: 021- hartosarwan@yahoo.com

Ministry of Human Settlement and Regional Infrastructure, 7221907/7396616(ext. 633)

Directorate General of Water Resourdces,Derectorate of Water Resouces Management,

_ _ _ _ _ _ _ _ __ _ _ _ _ _ _ T1 Psdtim nrsi on Thksrnt .9e1s~trni _ _ _ _ _ _ _ _ _ _ _ _ _

12 Imam Anshori Ministry of Human Settlement and Regional Infrastructure, Ph & Fax: 021- imasriO09@yahoo.com

Directorate General of Water Resourdces, 7221907/7396616(ext. 633)

Derectorate of Water Resouces Management,Building G-8. Jn. Pattimura 20, Jakarta

13 Mohd Ali Chief of Sub-Directorate for Water Resources Conservation, Ph: 021-7221907 ali_12110@yahoo.com

Ministry of SetPhement and Regional Infrastructure, Fax: 021-5299-3111 fulazzaky@hotmail.com

Director Genreral of Water Resources, Mobile: 081-867775

Directorate of Water Resources Planning and Management,Jalan Pattimura No. 20 Jakarta

14 Tsutomu Asada JICA Expert on Irrigation Planning, Ph & Fax: 021-7260218 asadatom@cbn.net.id

Ministry of SetPhement and Regional Infrastructure,Director Genreral of Water Resources,Main Building, 3rd Floor, Jl Pattimura No.20 Kebayoran Baru

15 Shuichi Maeda Jica Expert on Water Resouces Policy, Ph & Fax: 021-7229588 shunshun@cb)n.net.id

Ministry of SetPhement and Regional Infrastructure, Mobile: 081-28000845

Directorate General of Water Resources,Directorate of Technical Guidance Building. I st Floor,P1 Pattimura No. 20, Kebayoran Baru, Jakarta

List of Persons Contacted (3/8)No. Name Position / Office/Address Phone / Fax (Office) E-mail Address

KiiMD aswil (Ministry of Settlement and Resional Infrastructure)(Continued)16 Dr. Sutardi, M. Hidrologi directorate, Ph:021-7247807 s sutardi@hotmail.com

Kimpraswil, Fax: 021-7221907 HP: 0816 973 963JI. Patimura No. 20 Gedung VlII Lt. 2, Kebayoran Baru-Jakarta

17 Daniel A. Crickx Central Co-ordinator, Ph & Fax: 021-72794767 ggwrmncbn.net.idThe European Union/Ministry of Settlement & Regional Mobile: 081-28698162Infrastrucure,Good Governance in Water Resource Management Project, Ministryof Settlement and Regional Infrastructure, Directrate General ofWater Resources

Banaenas

18 Donny Azdan Dir SDA, BAPPENAS Ph: 021-391-5254 dmazdan@bappenas.go.idJl. Taman SuroDati 2. JakartaDirector, Water Resources Ph: 021-392-6820

19 Basuki Yusuf iskandar BAPPENAS Fax: 021-390-5649 basukibappenas.go.idJl. Taman Suronati 2 Jakarta

E ast J~ava _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

20 Syamul Bachri Kepala Divisi Jasa ASA IV, Ph: 0341-551971 pjt@malang.wasantara.net.idPerusahaan Umum (Perum), Jasa Tirta I (PJT-1), Fax: 0341-551976Jl. Surabaya 2 A Malang

21 Tjoek Walujo Subijanto Director of Operation for Brantas River, Ph: 0341-551971(Ext. 300) pjt@malang.wasantara.net.idGovernment of Indonesia, Jasa Tirta I Public Cooperation, Fax: 0341-565531/551976 tjjoek@yahoo.comJl. Surabaya 2A PO. Box. 39 Malang

22 Sudjali (Home) Ds. Tampungrejo Kec. Puri, Ph: 0321-511987Mojokerto

23 Aris Harnanto Kepala Biro Penelitian & Pengembangan, Ph: 0341-551971 pjt@rmalang.wasantara.net.idJl. Surabava 2A PO Box. 39. Malang Fax: 0341-551976

24 Suliyas Chief of the division, Ph:8294809East Java Provincial Office Fax: 8280630

25 Pudjo Buntro Chief of operation section, Ph:8294809 pudjo_buntoio@yahoo.comI East Java Provincial Office (Operation & maintenance division) Fax: 8280630

26 Zainal Arifm Operation section, Ph:8294809East Java Provincial Office (Operation & maintenance division) Fax: 8280630

List of Persons Contacted (4/8)No. Name Position / Office/Address Phone / Fax (Office) E-mail Address

27 Yoshi Widio Sujoso General Affair & Personal Department, Ph: 0321-361710 w_suryoso@yahoo.com

PT. Ajinomoto Indonesia / International (Surabaya) Fax: 0321-361708

28 Fahmi Hidayat Water resources engineer, Ph:0341-551971 fahmi hidayat@Phkom.net

PPJT-i (Ji. Surabaya 2A PO.Box 39 Malang (65115) Fax:565531

29 Imnam Paski Secretary,Sumber Lancan Jaya WUAF,Mojokerto District

30 Sudjali Technical Staff, Ph:0321-511987

Sumbara Arun WUAF, Mojokerto District

31 RF Barsono WK StafAhli Direksi, Ph: 341-551971

Jasa Tirta I Public Cooperation (PJT-I), Fax: 341-551976

JI. Surabaya 2A PO. Box. 39 Malang

32 Sunu Suprapto PJT-I, Ph: 031-828-0138 pitsby@surabaya.wasantara.net.id

I IJI Surabaya 2A PO Box.39 Malang 65115 Fax: 031-828-6291

West Ematra

33 Ismet Head, Ph: 0751-57801

Water Resource Development Service, Fax: 0751-50424

West Sumatera Province,Ti Khatih Sulaiman Nn 1 O6 Pl2nodn

34 Oyong Andawarneri Government of West Sumatra Province, Ph: 0751-57801

Provincial of Water Resource Management, Fax: 0751-50424

Water Resource Development Service, West Sumatera Province,JI. Khatib Sulaiman No. 106

West Java35 H. Danaryanto Hydrogeologist, Ph: 022- geoling@dgtl.dpe.go.id

Ministry of Mineral Resources and Energy, 7274676/7274677(Ext. 459)

Directorate General of Mineral Resources and Geology, Fax: 022-7206167

Directorate of Geology Environment Management and Mining Area

Subdit. Konservasi Airtanah DTLGKP, JI. Diponegoro No. 57,

Bandung

36 Satriyo Hadipurwo Hydrogeologist, Ph: 022- satriyo@dgti dpe.go.id

Ministry of Mineral Resources and Energy, 7274768/7274676/7274677

Directorate General of Mineral Resources and Geology, Fax: 022-7206167

Directorate of Geology Environment Management and Mining AreaJ1. Dinonezoro 57. Bandun_ I_ I

List of Persons Contacted (5/8) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _

No. Namne Position / Office/Address Phone / Fax (Office) E-mail Address37 Maksum Hidayat Sadeli Dinas Pengelolaan Sumber Daya Air, Ph: 022-4215242/4233401

Propinsi Jawa Barat,JI Braea No. 137 BandunR-

38 Lex Laksamana Regional Environment Control Body of West Java Province, Ph: 022-4204871 bplhdjabar@bdg.centrin.net.idJI. Naripan No.25 Bandung Fax: 022-4231570

39 H. Yulianto Secretary, Ph: 022-2507133 pamjabar@bdg.centrin.net.idCouncil of Teritory Management Association of Water Corporation, Fax: 022-2508063West Java,JI. Badaksinga No. 10, Bandung

40 Syaiful Ruchijat Section Head of Ground Water Conservation Guidance, Ph: 022-7274676/4677(Ext. syaiful@dgtl.esdm.go.idMinistry of Mineral Resources and Energy, 457)Directorate General of Mineral Resources and Geology, Fax: 022-7206167Directorate of Geology Environment Management and Mining Area,Sub-Directorate of Ground Water Conservation,

lAlest.hva _Continued~ Jl. Diponegoro No. 57, BandungWest Java (Continued)

41 Sri Hemowo Technical Director, Ph: 0264-201971 dirteksri,jasatirta2.co.idPerusahaan Umum (PERUM), Fax: 0264-201979Jasa Tirta II (PJT-2),Jl. Lurah Kawi - Jatiluhur. Purwakarta. Jawa Barat

42 Edi Mulyadi Chief of operation section, Ph: 022-4210756Dinas PSDA Jawa West Province

43 Dadan Hermajanda Institutional Specialist, Ph/Fax: 022-4235409 dhvcon@bdg.centrin.net.idJIWMP IDTO West Java Provincail Team (Gd. Kerta Mukti Lantai IIJl. Braga 137-Bandung 40117 . -

44 Abubakar Chief of Program sub-division,Dinas Agriculture Dept. West Java

45 Reny Researcher,Center for Development Dynamics, Gandjar Kumia University,Bandung

46 Sungai Indah P.T. Sepec,Water and Water Treatment Section (textile industry),Majalaya, Kab. Bandung

47 Suganda Chairman of Industry Association in Bandung capital

| | . .

List of Persons Contacted (6/8)

No. Name Position / Office/Address Phone / Fax (Office) E-mail Address

48 Ms Ermi Murniati Assistant for Technical Director, Ph:0264-201979

PJT-2 (Ji. Lurah Kwi Jatiluhur Purwakarta West java

49 Endu Suhari Head of Water Resource Section, Bandung District

50 Jumhana Head of Paddy & Polowija section, Bandung District _

51 Agus Setiyawan Research and Development, Ph: 022 2509030

Perusahaan Daerah Air Minum Kota Bandung, Fax: 022 2508063

JI Badaksinga No. 10 Bandung 40132

52 Syani Widia Fausani Director of Clean Water, Ph: 022 2509030

City Government of Bandung Water Supply Enterprise, Fax: 022 2508063

Ji Badaksinga No. 10 Bandung 40132

53 Dasuta Kerala, Water Permit Division, Jalan Braga No 137,

West Java Provincial Dinas Bandunu Ph (O22' 42v9347

54 Ruchimat Head or Balai PSDA Citarum,________________________ West Java Citafnm Ralai pnd0ing West Java

55 Ahmad Chairman, Water Users Federation,

lWanpiseQara Irrivation Scheme56 Sunanda Chairman. Industries Association, Kabupaten Bandunp,

57 Azhari Dwikora Section Head. Citarum Balai. Bandung

58 Bunbur Sabur Operations Head. Kab. Bandung Dinas (Irripation) _

West ava (Continued)59 Herman Idrus PJT-2, Ph: 0264-201972 litbang@jasatirta2.co.id

___________________________ Jl Tnrah Kawi Jatiiiihiir Purwakarta West-Java

60 Tatang Hidayat PJT-2, Ph: 0264-215382

____ _________________________iJi Bink R/l 6 Sadana - Pnrwakarta West-Java

Consu Itants61 Anthony R. Kemur Kasubdid, KIMPRASWIL Ph: 021-722-1907 reymond kemur@hotmail.com

fax )01-722-1907

62 Bryan Bruns Sociologist, Ph: +1-850-231-1787 bryanbruns@bryanbruns.com

84 West Grove Avenue, Seagrove Beach, Mobile: +1-850-217-0677

P.O. Box 4614 Santa Rosa Beach FL 32459 USA

63 Heru Emanda Universitas Jumber, Ph: 0331-338014 heruernanda@binanusa.net

Gunung Baru Permai 6 - 18, Jl.Kolimantan I No.37, Jember Fax: 0331-338014

64 Hiroshi Kuronuma Team Leader, Nippon Koei Ph:021-726-0556 ext 4329 aO816@n-koei.cojpFax: 021-7279-6082

List of Persons Contacted (7/8)Nito. PersonsContacName Position / Office/Address Phone / Fax (Office E-mail Address

LP3ES65 Imam Ahmad Director, LP3ES Ph: 021-567-4211 lp3es@lp3es.or.id

Fax- ()21-i6H 179S66 Sudar D. Atmanto Vice Chair, LP3ES Ph: 021-567-4211 psdal@lp3es.or.id

Fax: 021-568-3785

NGO & Others67 A. Hafield A. Gany President, Indonesian Chapter of INPIM, INPIM-INA, Ph: 021-7230317 inacid@kimpraswil.go.id

Vice President, INACID for International Affairs, INPIM, Fax: 021-7200930JI. Pattimura No. 20-perc. 7, Kebayoran Baru, Jalkarta Selatan

68 Cecep Aminudin Assistant Researcher, Ph: 021-7262740/7233390 icel@indonesia.net.idIndonesian Center for Envirownental Law (ICEL), Fax: 021-7269331 aminudin98@yahoo.comLembaga Pengembangan Hukum Lingkungan Indonesia, Mobile: 0812-185-9676Ji. Dempo II No. 21, Kebayoran Baru, Jakarta

69 Budi Santosa Wignyosukarto Program Coodinator, Ph: 0274-901170/901172 Ipm-ugm@ugm.ac.idIntegrated Regional Development Program, Fax: 0274-515391Institute for Cummunity Services Gadjah Mada University (ICS

4_ GMU),70 Gil P. Porras Chemical & Pulp Prod. Manager, Ph:0321-591377-9 Fax:591376

PT. Pabrik Kertas Indonesia (paper factory Moiokerto District)71 Sutarjo Technical Chief,

PT. Krembung (Sugar factory, Sidoario District)72 Tri Nugroho OHS Coordinator, Ph: 021-5724410 tri.nugroho@palyja.co.id

I_______________ PT. PAM LYONNAISE JAYANGO & Others (Continued)

No. Name Position / Office/Address Phone / Fax (Office) E-mail Address73 Taco de Vries JIWMP Bangda, Jl. Taman Makam Pahlawan 20, Jakarta ph/fax: 021-791-82471 tacodevries@yahoo.com

74 Herbin Marulak Siahaan Prog Off, The Asia foundation Jl. Darmwangsa raya 50, Kb Baru, Ph: 021-726-1860 herbin@tafmdo.orgJakarta Fax: 021-726-2834

75 Agus Loekman Prog Off, The Asia foundation Ji. Darmwangsa raya 50, Kb Baru, Ph: 021-726-1860 loekman@ta1indo.orgJakarta Fax: 021-726-2834

Donol 76 Yuki Lida Assistant Programme Officer (CNSF), UNICEF Ph: 021-570-5816 yiida@unicef.org

Wisma Metropolitan n1, 10-1 1 floor, Kav 31. Jl. Jend Sudirman Fax: 021-570-55167 7Yoshiharu Kobayashi Senior Specialist, ADB Gedung BRI II, 7th floor, Ji. Jend Sudirman Ph; 021-5798-0600 Ykobayashi@ADB.org

L ________________ _ 1 |Kav 4446, Jakarta Fax: 021-251-2749

List of Persons Contacted (8/8)No. Name Position / Office/Address Phone / Fax (Office) E-mail Address

78 Junichi Akiyama JICA Plaza BR, Tower II 27th Floor. J3. M.H. Thamrin 51 Ph: 021-390-7533 akiyamaj@jica.or.id

___________________________________________________ _ .~~ 021Fax -390-7536779 Tomoyuki Naito JICA Plaza BI1, Tower nI 27th Floor. J3. M.H. Thamrin 51 Ph: 021-390-7533 naito@jica.or.id

Fax_ t)a 1-190-75367

8 Inaba Makoto JICA Plaza BR Tower II 27th Floor, 3 M.H. Thamrin 51, Jakarta Ph: 021-390-7533 inaba@jica.or.idFaxn 021-390-75367

81 Motoo Taki JICA Plaza BRl, Tower n 27th Floor. J1. M.H. Thamrin 51 Ph: 021-390-7533 taki@jica.or.idFaxr 021-390-75367

8. liroshi ERami Expert. JICA Ph: 021-726-0218 epamirnipu.go.id

83 Jaco Mebius First Secretary, Ph: 021-5241060/5251515 jaco.mebius@minbuza.nl

Water Resouces Management, Fax: 021-5275976

Royal Netherlands Embassy,Jl. H.R. Rasuna Said Kav.s3 Kuningan, Jakarta

84 Shin IMAI Regional SPFS Coodinator (Special Programe for Food Security), Ph: 021- shin.imai@fao.or.id

Food and Agriculture Organization of the United Nations, 3141308/3905448(Direct)

14, Jl. M. H. Thamrin, 3rd floor, Jakarta Fax: 021-3922747

85 Machiko Kainiya Assistant Resident Representative, Ph: 021-3907533 kamiya@jica.or.jp

oo Japan International Cooperation Agency Indonesia Office, Fax: 021-3907536Plaza B 11 Tower 27th Floor J1. MH.Thamrin 51, Jakarta Pusat

86 Michino Yamaguchi Country Officer, Division 2, Development Assistance Department I Ph: +81-3-5218-3628 mi-yamaguchi@jbic.gojp

4-1 Ohtemachi 1- Chome, Chiyoda-Ku, Tokyo Fax: +81-3-5218-3970

87 Shiro Nakasone Assistant Resident Representative, Master of Town Planning, Ph: 021-3907533 nakasone@jica.orjp

Regional Planner, Fax: 021-3907536Japan International Cooperation Agency Indonesia Office,Plaza B II Tower 27th Floor J3. MH.Thamrin 51. Jakarta Pusat

88 Shigeru Yamamura Representative, Representative Office in Jakarta, Ph: 021-5220693 s-yamamura@jbic.gojp

Japan Bank for International Cooperation, Fax: 021-5200975

Summitmas 1, 7th Floor, J3. Jenderal Sudirman Kav. 61-62Jakarta

89 Keon Overkamnp Associate Proffesional Officer, Water Management, Ph: 021-3141308(ext. 711) koen.overkamp@fao.or.id

Food and Agriculture Organization of the United Nations, Fax: 021-3922747

114. Jl. M. H. Thamrin. 3rd floor. Jakarta I

Consul tants90 AartR. van Nes Team Leader, Ph: 021-7211235 dhv wismp@cbn.net.id

Food Management in Selected Basin, Fax: 021-7206449

Project Preparation Technical Assistance,KIMPRASWIL, Gedung 11, Lantai 2,

_ ___________________ _ T1 ~Pstiimursu Wn on IRkart_

Annex 3 List of Materials Collected

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Annex 3List of Materials Collected (1/5)No. Title Publisher Author

Surabaya Urban Development Project (TA from *Ministry of Public WorksIBRD Loan No. 3726-IND), Surabaya River Directorate General of HumanPollution Control Action Plan Study, March 1999 Settlements East java Water Supply

Project1*Ministry of Public WorksDirectorate General of WaterResource Management PerusahaanUmum Jasa Tirta

The Study on Comprehensive Management Plan for *Ministry of Public WorksThe Water Resources of the Brantas River Basin in Directorate General of Water

2 the Republic of Indonesia, Oct 1998 Resources Development*JICA

Socio Ecponomic Analysis of Farm Households in Sumaryanto, Masdjidin3 Irnigated Area of Brantas River Basin Siregar and Wahida M.

Usulan Komprehensif Pembiayaan Pengelolaan PJT-I Tim Evaluasi Tarip DasarSumberdaya Air Di Wilayah Sungai (WS) Kali (Tariff evaluation team of

4 Brantas (Comprehensive Proposal Water Resource Kimpraswil)Management Finance, jan 2002)

Pola Operasi Waduk & Alokasi Air Di Dps Kali PJT-1Brantas Musim Hujan 2003/04 (Operation of damand Water Allocation River Brantas area RainySeason 03/04, Dec 2003)

Monthly Statistical Bulletin Economic Indicators, Badan Pusat Statistik (BPS)6 October 2003 Indonesia

Farm Wage Statistics in Rural Area, 1996-2002 Badan Pusat Statistik (BPS)7 Indonesia

8 Company Profile of Perum Jasa Tirta II, 2002 PJT-2

Java Irrigation Project and Water Resources *Ministry of Public Worksmanagement Project, Basin Water Resources Directorate General of Water

9 Planning, Integrated Water Management Plan for Resource Developmentthe Citarum River Basin, June 1997 -The World Bank

Indentification of National Policy for Intersectoral JICA10 Water Allocation Study, March 2001

Jatiluhur Water Resources Management Project Ministry of Public Works -1 1 Preparation Study, 1998 Annex K Raw Water and NEDECO

Hyfro-power Tariffs and Related Operational Issues

Jatiluhur Water Resources Management Project Ministry of Public Works -12 Preparation Study, 1998 Annex G O&M Jatiluhur NEDECO

Irrigation System

Jatiluhur Water Resources Management Project Ministry of Public Works -

13 Preparation Study, 1998 Annex H Turnover of NEDECOIrrigation Management

14 Jawa Barat In Figures 2002 BPS

hIrigation Investment, Fiscal Policy and Water ADB/IFPRI Charles Rodgers, Claudia15 Resources Allocation in Indonesia and Vietnam. Ringler and Mark

Country Report Indonesia, 2003 Rodegrant

Konservasi Airtanah Daerah Bandung Dan Direktorat Geologi Tata Lingkungan Agus Taufiq Nz. & Nanar16 Selitamya Iskandar

A3-1

List of Materials Collected (2/5) .No. Title Publisher Author

Pola Operasi Citarum - 2004 Secretariat Pelaksana Koordinasi

17 Tata Pengaturan Air Sungai Citarum

18 Surat Keputusan Direksi Perum JASA Tirta II Perum JASA Tirta II

Nomor: 1/609/KPTS/2003

Keputusan Gubemur JAWA BARAT Gubemur JAWA BRAT

19 Nomor: 521/Kep. 1088 - Binprod/2003

Surat Keputusan Direksi Perum JASA Tirta II Perum JASA Tirta II

20 Nomor: 1/423.1/KPTS/2002

Jatiluhur Water Resources Management Project Ministry of Public Works -

21 Preparation Study Annex J -Optimal Integrated NEDECOCitaraum Reservoir Cascade Operation

Integrated Water Resources Management in the JASA TIRTA I PUBLIC Socheh, Soekistijonoand

22 Brantus River Basin: Water Quality Management CORPORATION Aris Hamanto

WELCOME TO JATILUHUR JASA TIRTA II PUBLIC23 CORPORATION

Nutrient budget for Saguling Reservoir, West Java, Water Reserch (36) Barry T. Hart, Wendy van

24 Indonesia Dok, Nani Djuangsih

Identification of National Policy for Intersectioanl JICA

25 Water Allocation Study (Final Report)

Basin Water Resources Planning Ministry of Public Works

26 Integrated Water Management Plan for the CitramRiver Basin (Draft)

Perusahaan Umum (Perum) JASA TIRTA II JASA TIRTA II PUBLIC27 CORPORATION,

28 Peta Sekma Eksploitasi Cabang Dinas Pengairan Proyek Irrigasi Jawa Timur

Sekma Kontruksi Bangunan Dinas Pekeijaan Umum Pengarian

29 Daerah Propinsi Daerah Tingkat IJawa Timur

30 Laporan Akhir Tahun Anggaran 2003 Balai PSDA WS Citarum

Jatiluhur Water Resources Management Project Nedecon Netherlands Engineering

31 Preparation Study Annex L - Institutional and Legal Consultants BV

ssues Feasibility Report Draft

32 Company Profile Jasa Tirta I Public Corporation

One River, One Plan, One Integrated Management Jasa Tirta I Public Corporation

33 (Brochure)

Draft Persiapan Penataan Kelembagaan tentang Dinas PU Pengairan Propinsi Jawa

Perangkat Daerah Berdasarkan PP 8 Th. 2003 Timur

34 Dilingkungan Dinas PU Pengairan Propinsi JawaTimur

Memori Balai Pengelolaan Sumerdaya Air

35 Wilayah Sungai BuntungPeketingan Surabaya

Ringkasan Bahasan Outline of Brantas Basin Case Dinas PU Pengairan Propinsi Jawa

36 Study Background Paper Dr Karin Kemper (World TimurBank)

Tugas Pokok & Fungsi dan Jabatan non Strucktural Sub Dinas PenatagunaanSumberdaya Air (East Java)

38 Pengelolaan Sumberdaya Air Propinsi Jawa Timur Dinas PU Pengairan Propinsi Jawa

(copy of powerpoint) Timur

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List of Materials Collected (3/5)No. Title Publisher Author

Data Inventarisasi Daerah Irigasi Pemerintah, Dimas Pekerjaan Umum PengairanPedesaan & Tada Hujan, Tahun 2001 Pemerintah Kabupaten Daerah

39 Tingkat II Bandung, Seksi Operasidan Pemeliharaan

Annual State of the Environment Report 2002 West Java Environmental Protection40 Agency

Perum Jasa Tirta II Dalam Pengelolaan Kualitans Perusahaan Umum (Perum) Jasa41 Air dan Lingkungan Sungai - Sungai Citarum Tirta II

Bagian Hulu

2 Pengelolaan Lingkungan Daerah Aliran Sungai Pemerintah Propinsi Jawa Barat42 Citarum (copy of powerpoint)

Data Inventarisasi Perkumpulan Petani Pemakai Kabupaten Bandung Periode TahunAir (P3A) 2001

44 Peta Sungai Sumber Air Baku PDAM 'Delta Tirta' PDAM 'Delta Tirta' SidoarjoSidoarjo

Peta Distribusi Air PDAM Delta Tirta Sidoaijo PDAM 'Delta Tirta' Sidoarjo45 Bulan Desember 2003

Peta Stasiun Hujan Dan AWLR Wilayah Balai Balai Pengelolaan Sumerdaya Air46 PSAWS, Buntung Peketingan Surabaya Wilayah Sungai Buntung

Peketingan Surabaya

Peta Perusahaan Pengambil Air Permukaan Di Balai Pengelolaan Sumerdaya Air47 Wilayah Balai PSAWS, Buntung Peketingan Wilayah Sungai Buntung

Surabaya Peketingan Surabaya

Peta Lokasi Bendung Wilayah Balai PSAWS, Balai Pengelolaan Sumerdaya Air48 Buntung Peketingan Surabaya Wilayah Sungai Buntung

Peketingan Surabaya49 Peta Saluran/Afour DPU Pengairan Daerah Dinas PU Pengairan Kabupaten

SidoarjoPeta Distribusi Air PDAM Delta Tirta Sidoarjo PDAM 'Delta Tirta' Sidoarjo

50 Tahun 2003

Laporan Penangana, Ijin Pengambilan dan Dinas Pengelolaan Sumber Daya51 Pemanfaata Air Permukaan, Bulan Desember 2003 Air, Pemerintah Propinsi Jawa Barat

52 Negotiating Water Rights IFPRI, ITDG Publishing, 2000 Bryan Randolph Brunsand Ruth S. Meinzen-

53 Water Law and Land Management Lecture Papers, IDI, Japan, Prof. Kenji SanbongiNovember 1999

Intemational Comparison Of Irrigation Sector JBIC, December 2002 SAPS Team54 (Final Report) (Sanyu Consultants Inc.)

55 Legal Reform in Indonesia TAF, 2000 The Asia Foundation

River Basin Management Corporations An Paper, World Bank, 1999 Kikkeri V. Ramu, T56 Indonesia Approach Hemnan, G. Alaerts

Proposed Legal Empowerment Component For The Papers, The Asia Foundation The Asia Foundation57 Participatory Irrigation Sector Project (PISP)

58 River Basin Management Corporations An Paper, World Bank, 1999 Kikkeri V. RamuIndonesia Approach

59 Water Allocation and Pricing Srategies in the Paper Charles Rodges, RizaldiBrantas River Basin, East Java, Indonesia Zaafrano

Formal Water Use Rights System For Indonesia Paper, DGWRD-JICA-INACID, Kikkeri V. Ramu, Soediro60 1996

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List of Materials Collected (4/5)No. Title Publisher Author

Some Thoughts on Establishing and Administering Paper for Workshop of Water Brian Haisman61 Water Rights Reform Task Fsorce, Jakarta, 2001

62 Initiating The improvement Of River Sub-Basin, Papers, Ch 6 Helmni

West Sumatra, Indonesia

63 Water Resources Sector Strategy: Strategic World Bank, 2003 World Bank

3 Directions for World Bank Engagement

Water Rights and Multiple Water Uses Kluwer Academic Publisher, Ruth Meinzen-Dick,64 Netherlands, 2001 Margaretha Bakker

Recognizing Multiple Water Uses in Intersectoral Paper, Asian Institute Technology, Ruth Meinzen-Dick,65 Water Transfers Bangkok, 2002 Rajendra Pradhan

The River Law Infrastructure Development institute, River Bureau, Ministry of66 Japan construction Japan

67 Water Rights in Vietnam Paper, IFPRI-INWENT-ADB- Pham Xuan Su, Vu TienBNWPP Lue

TOR for The Study On Empowerment Plan For JICA JICA

68 Regional Water Resources Development andManagement System

Inter-states Water Dispute in India : An Analysis of Water Policy, World Bank, 2002 Salman M.A. Salman69 The Settlement Process

Country Background of Laos Paper for Workshop of Water Phalasack Pheddara70 Reform Task Fsorce, Jakarta, 2001

Water Rights Reform m South Africa Draft Ashwin R. Steetal, Gavin71 Quibell

72 Kajian Hak Guna Air hrigasi Laporan akhir, 2001 KP4-UGM

Surat-surat PERMEN PU, Keputusan Gubernur PU Pengairan Jabar, 2000 Dinas PU Pengairan Jawa

73 tentang: Pembentukan PTPA & PPTPA Prop Jabar Barat

74 Buku Data cabang dinas Banjaran PU Kab Bandung, 2002 Dinas PU Kab Bandung

75 Data Jaringan Irigasi Ciherang dan Baros EH, 2001 EH

JABOTABEK Flood Control and Water draft, EASRD Consultant, 2002 K. Ramu, T. Herman76 Management Project

Java Irrigation Improvement and Water Resources Main Report, Water Use Rights DHV Consultants

7 Management Project System Vol I, 1994

Sistem Hak Guna Air Untuk Solusi Konflik Air DI PDP Unpad, 1997 Ganjar Kurnia, Teten W.

78 Irigasi Ciwalengke Avianto

79 Jaminan Air Bagi Petani "Water Use Right" PDP Unpad, 1997 PDP Unpad

Peraturan Pemerintah RI No: 77 Tahun 2001 BAPPENAS, Jakarta, 2002 Sekre Tim Koordinasi

80 Tentang Irigasi Pengelolaan SDA,BAPPENNAS

Water Allocation and Management in The Western Paper Douglas S. Kenney81 U S: An Overview

Frameworks For Water Rights An Overview of Conference draft, 2003 Bryan Randolph Bruns

82 Institutional Options and Ruth S. Meinzen-

Administrative and Implementation Concems of Paper, Hanoi, 2003 Charles L. Abemethy

83 Water Rights

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List of Materials Collected (5/5)No. Title Publisher Author

Water Rights and User-Oriented Policies paper Rutgerd Boelens, Axel84 Inmproving Water Allocation for Water User Dourojeanni, Paul

Communities and Platform In The Andean HoogendamCountries

85 Inter-state Basin Management in federal Countries Water & Development, 2003 John Briscoe, SalmanSaan, Walter Garvey

86 Multi-Sectoral Approaches in River Basin Water & Development, 2003 Nagaraja HarshadeepManagement

87 Integrated Water Management: Yemen Sana'a Handout, 2003Basin Water Management Project

88 Water Rights Implementation In Mexico Handout, Hanoi, 2003 Hector Garduno89 Impact of Water Rights Reform In Australia Handout, Hanoi, 2003 Brian Haisman90 The Political of Water Reform Handout, Hanoi, 2003 Edella Schlager91 Challenge Program on Water and Food Handout CGIAR92 Skematik Pengambilan air oleh Perusahaan tekstil92 DI Wangisagara

93 Skematik Pengambilan air oleh Perusahaan tekstilDI Kali/Sungai

94 Daftar Inventarisasi Areal irigasi Teknis DI Cab Dinas PU Pengairan, MajalayaWangisagara

Surat: Data Kondisi air waduk Sutani, Selorejo, JASA TIRTA I95 Bening, Wonorejo dan Pemberian Air Irigasi

Bulan Maret 2003

96 Pola vs Aktual Operasi Waduk Sutami-LahorTahun 2002-2003

97 Data: Debit Sungai Cisangkuy

Peta Wilayah Kerja Cab Dinas Pengairan Wilayah98 IV Banjaran

Peta Balai Pengelolaan Sumberdaya Air Wilayah99 Sungai Sampean Baru Bondowoso

Realisasi dan Rencana Pendapatan/Biaya Tahun100 1991 s/d 2002

Special Assistance for Project Sustainability Final Document, JBIC Sanyu Consultants Inc.101 (SAPS) for Comprehensive Study on Irrigation

Sector

Role of Stakeholders in Rurak Poverty Reduction - Paper presented at ADBI Workshop Hatsuya Azumi102 Basin Principales on IFAD, "Rural Growth as a key to

Urban Peace?", Jaipur, India, Oct.2001

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II

I

Annex 4 Record of the First National Workshop (March2004)

zIiIi

Annex 4

INDONESIA: WATER USE RIGHTS STUDY, STAGE 2

MINUTES OF FIRST NATIONAL WORKSHOP

Date: 25 March 2004

Place: World Bank Jakarta Office

Agenda: See Attachment 1

Participants: See Attachment 2

Opening remarks by Rahul Raturi, Sector Manager, Rural Development and NaturalResources Unit, East Asia and Pacific Region, World Bank.

After emphasizing the importance and complexity of the issues surrounding water use rights, Mr.Raturi said that one of the purposes of this meeting was to realize the Bank's genuine desire tounderstand the issues together with a wide range of stakeholders. Water is a social good and wehave to protect the rights of the poor from whom too often water is taken without compensation.We also have to protect the environment: the heavy extraction of spring water for bottle water,for example, can affect groundwater levels.

He reminded the meeting that we are looking for mechanisms that will support the best possibleuse without damaging the historical rights of water users. Rights must be protected but a countrymust also move forward, and historical patterns cannot be cast in stone. The findings from thisworkshop will be helpful for the Government. The Bank wants to work closely with allstakeholders. It is a demanding challenge. It will take time, input, and active engagement;however, it is also very important.

Briefing on the workshop by Hatsuya Azumi, Team Leader

Mr. Azumi explained the objectives, agenda and schedule of the workshop and mentioned that themost important beneficiary of this workshop would be the Study Team itself, which consisted ofnine international and nine Indonesian members who had worked together for one month.

The objectives of the workshop are to (i) share the Study Team's findings to date, and (ii) gatherthe views of stakeholders on those findings. The team will not present any recommendations atthis stage. The team's findings are still developing and their eventual recommendations will bepresented at the next workshop in June, to which all the participants of this workshop will beagain invited.

Mr Azumi then introduced the team to the participants.

Presentation of the Preliminary Findings

The Study Team made their presentations in the following order:

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1. PCM (Project Cycle Management) findings

2. Social and demographic context

3. Hydrological context

4. Economic context

5. Institutional context

The PowerPoint presentation of the Study Team is shown in Attachment 3.

This was followed by a session presented by Brian Haisman entitled "Putting It All Together" in

which he focused on the key issues for water allocation in Indonesia. The PowerPoint of this

presentation is also shown in Attachment 3.

During the presentation he made the following points.

1. Institutional coordination is a major challenge.

2. There is shrinking availability of water.

3. The only choice is re-allocation of water but this is not occurring in a planned way and

farmers are 'taking the damage' in the changes that are occurring.

4. Assessments made for water use permits are currently done on a broad scale, which does

not address the local impact at the point of extraction or how the level of availability foreveryone as the flow goes down. The largest set of rights (customary rights) is not well

specified and, by default, such right-holders are suffering.

5. There are water scarcity pressures and social/economic pressures on farmers.

6. Irrigation farming is changing. There is no longer the same extent of purely subsistenceirrigation farming. Almost all irrigation schemes have commercial elements in them.

7. Other sectors have problems too. A lack of access to water could provide difficulties for

industrial growth that needs water.

8. The combination of pressures means that better allocation and re-allocation of water isthe number one goal for water resources management. New uses are being created fromexisting uses - what is the right way of doing this? The new Water Resources Act is

restrictive about the possibility of transferring rights. The universal first step is better

quantification and specification of rights to abstract water. There is no single recipe, only

principles. We need to consider what is most appropriate for the Indonesian context.

Plenary Discussion on the Study Team's Presentation

Pk Helmi (Andaras University, West Sumatra) had an impression that there was a mixing up of

issues. The level of the river basin and the level of irrigation systems should be separated. Why

not have WUR at each level? Transfers can be discussed at each of these levels. Industry can take

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water from both the river and irrigation channel and this has different implications. We can havea matrix as follows:

IRRIGATION

WUR ASPECTS RIVER BASIN

Primary Secondary Tertiary

Legal

Social

Hydrological

Economic

We also need to consider where industry gets its water from:

o 75% from natural sources (rivers)

o 25 % from irrigation canals

Both Pk Azumi and Pk Haisman stated that Stage 1 Report recommended a two-tier system: oneset of rules and administration systems at bulk water allocation from natural sources, and theother within schemes.

Pk Tjoek Walujo Subijanto (Technical Director PJT-1, East Java) agreed with the two-tier idea.

Pk Sri H Hernowon Sasjhudi (Technical Director, PJT-2, West Java) said that there are twodifferent types of irrigation schemes in the Citarum Basin (upper and lower basins). In the lowerbasin, 90 per cent of the water in the basin goes to agriculture and only 10 per cent goes toindustry and PDAM, mostly from irrigation canals. In the upper basin, 90 percent is being usedby agriculture and only 10 percent by the rest, but only one quarter of industry uses water fromirrigation systems, the rest use water from natural sources, that is, the river.

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Pk Haisman added that in the Citarum, there are 246 permits for industry and PDAMs. Less than60 come from irrigation systems, the rest come from the river.

Pk Bambang Adinugroho pointed out that, in the Citarum Basin, the biggest irrigation area is inthe downstream - 240,000 hectares, and asked what would be the priority use of water in thisarea.

Pk Sri H Hernowon Sasjhudi answered that the main aim of water allocation was to enhance riceproduction. But if we look at the current plan, it is multipurpose. First, it regulates floods.Second, it provides water for irrigation systems. Third, it provides water for power. Fourth, itprovides water for Jakarta. The Bekasi - Jakarta channel used to be aimed for irrigation but nowit is simply for urban water supply to Jakarta.

Pk Tjoek Walujo Subijanto opined that if farmers' rights were clearly written down, farmerswould be able to get compensation. There are three requirements before a rights system canwork:

a. quantification of water balance (with good water quality management)

b. necessary infrastructure

c. monitoring

It should be done in stages. One area should be selected, where there are regulated flows. Thepolicy of government should not be full-cost recovery but only for operation and maintenancesufficient to give a reliable service.

Three roles need to be distinguished:

* Regulator (the level of government)

* Operator

* User (individual/group)

The details of who is to carry out each of these roles will differ between the regions but the rolesshould be kept distinct.

In establishing rights, both rights and obligations need to be considered. It is very important tounderstand that whoever provides the service guarantees water supply.

Pk Satriyo Hadipurwo of Ministry of Mining and Energy, Bandung asked how groundwater canbe brought into this arrangement. Definitely the conduct is different. Also the tax is different inamount. He informed the meeting that his Ministry is preparing a PP on groundwater.

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-~~~ ~ ~ l_______ -

Pk Azumi confirmed that the Stage 2 Study would have to refer to groundwater and that was whythe Team went to visit the Ministry of Mining and Energy in Bandung. The study has to deal withsurface water, groundwater, water quality and water quantity, at the national, provincial anddistrict/municipal levels. There is lack of coordination among those concerned agencies. Forexample, the team learned from KimPrasWil that they are drafting 9 Government Regulationsbut the team does not know how they relate to groundwater. Pk Satriyo mentioned that Pk Basukifrom KimPrasWil will discuss this with the Ministry of Mining and Energy on March 26. Tillthen, he said that his ministry is not clear if they will have an input into the 9 regulations underpreparation by KimPrasWil.

Pk Sudar of Ministry of Agriculture referred to the presentation of Pk Akihiko Hata (theEconomic Sub-Team of the Study Team) and pointed out that the cropping pattern isrecommended by the Dinas: this is done by way of presenting options to the WUAs to choose.Referring to Ibu Sarah Wsaddell's presentation (legal and institutional aspects), he mentionedthat in his opinion the highest priority in water use must be drinking water even though the NewLaw seems to support two highest uses, namely, water for basic daily needs and water forfarming communities.

Pk , Chairman of a WUAF at Mojokerto, East Java, shared his WUAF's situation with themeeting. Their system takes water from the Menturus Weir. The system is 3,000 ha. They onlyget 60 percent of the water they need in the wet season and in the dry season the situation isworse. They have three problems:

1. They are dependant on PJT-I for water supply. The gate master simply tells them thatwater allocation is all decided, but does not tell them how much they will receive.

2. Since 1977, when the government introduced agricultural intensification, their croppingpattern has been unclear.

3. Their channels at upstream and downstream are well constructed thanks to a centralisedrehabilitation project in 1989-1993. However, there is a bottleneck in the channels inbetween. This is partly due to changes in the area of coverage.

The workshop then broke up for lunch.

Briefing on Small Group Discussions

Pk Azumi provided an explanation of the topics allocated for each group and the questions thataccompanied each topic. The three topics posed for discussion are attached as Attachment 4.The workshop then divided into three groups.

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Plenary Discussion on the Results of the Small Group Discussions

Group One - How to Protect Customary/Non4ormalised Rights?

1. Should such rights be "formalised" scheme by scheme in a documented way so that impacts

can be better known and negotiated? If so, how? If not, why not?

The group began by discussing the concept of customary usage and whether that was the

same or included the rights of 'indigenous people' as adat already has a special place in the

legal system. Three situations were identified where people take water from:

(i) natural source

(ii) infrastructure built by themselves

(iii) infrastructure built by government.

It was decided that the best way to think about it was in terms of what is not formalised, that is,

the majority of irrigators, "basic needs" use and adat.

The group then considered the question of the degree of formality. It was suggested that the

planting schedule is a form of record of how much the group gets and is set out in a Decree of the

Mayor (Surat Keputusan Bupati). It allocates a certain amount of water to a system but does not

provide a guarantee. Usually the same amount is set out every year. If the water does not arrive,

farmers can complain but there is no standard procedure. The Chairman of the WUA can go to

the Dinas and have more water released or simply make a call to the Bupati. Farmers are often

told that the water is enough but it may not be in reality due to illegal water taking or not

following the cropping pattern.

The question was raised whether this was formal enough? It was pointed out that it only covers

the surface area not volume in litres/second. The test (as suggested by Pk Hatsuya Azumi) is its

reliability when water gets short - is the water still assured and delivered?

It was agreed that the Decree is not the same as an industrial licence and that it should be 'the

same but different'. Some commented that if it is 'different' it might not be as strong. Some

other commented that farmers do not have strong bargaining power.

A question was posed - 'what is a licence'? It was said to

* Guarantee the availability of water

* Protect the environment

* Provide equity in access to water

* Provide a basis for compensation for non available water and re-location of water.

The meeting appeared to be of the opinion that if this is the definition of a licence then non-

formalised users should be able to get one. Then it was suggested that compensation could be

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obtained through other means and that the most important thing is that farmers are to beprotected.

Taking this into account it was agreed that a licence would not be necessary and what is moreimportant is the public recognition of the water use right - including irrigation, basic needs andthe environment. Pk Helmi presented a sequential development as follows:

Stage I Open resources

Stage II Recognition of rights - irrigation, basic needs, the environment

Stage mI Water use licence - with economic consequences

It seemed to be agreed that the level of formality should only extend to Stage II with theconsequence that the protection of such rights would still be heavily dependant on government.

2. How should such rights be quantified - historical use, likely future needs, the river basinplan? Other? What equity issues arise with each option?

It was agreed that rights should be quantified based on water balance and future protections ofneed. It requires a system of water accounting (in both the river and irrigation system), whichwill include historical use and forecasting and consider the level of the river, the level ofirrigation and water availability.

3. How should right holders be able to assert their rights against parties that disturb their rightto use water? In particular, what should be the process to ensure protection of farmers'srights in the case where a new industry seeks to access waterfrom the canal system?

It was clearly agreed that government must get the agreement of farmers before farmers's wateris taken for other uses. The emphasis in addressing these issues was on the need for publicconsultation with farmers and putting the 'formalisation' on the public record. It was suggestedthat the PPTPA should be developed further. It was also stressed that the rights and obligationsbetween farmers and other users of irrigation systems should be written down.

Discussion by the plenary meeting:

Pk Bambang Adinugroho questioned if the findings of Group 1 were realistic: should not theGroup have taken a more strategic approach?

Pk Helmi replied that it would be difficult for farmers to go through the process of licensing. It isbetter that the government protect the farmers's rights through a Decree and then the governmentcan battle for the farmers. We need recognition of collective rights through a Decree issued bylocal government stating the size of the area and the water balance.

Pk Bryon Bruns, currently ADB Consultant for Flood Control Study, added that in Japan there isa rule to the effect that a farmers' group will be treated as having a licence even if they don'thave one (formerly). This protects farmers who do not have a licence.

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Pk Tjoek Walujo Subijanto expressed a view that a water use right should be in a formalised

licence so it is enforceable and specified in case the rights stated in the Decree are not specified.

The utilisation often involves change. If it is not formal, how can the community know the

quantification of their rights? It should be transparent for the public.

Pk Helmi counter-argued that a right should be stated in a legal document, not changed from year

to year. It should be publicly announced. The main difference between a licence and Group l's

proposal is that the government will defend the farmers.

Group Two - How to Manage Water Use Rights for ParticipatorvyDelegated Irrigation

Management?

1. Some competent body needs to be at least the custodian or, preferably, the holder of the bulk

water right created by such a document. Who or what should that be?

Before answering the question directly, the group discussed the importance of classifying the

management pattern of irrigation systems in Indonesia. There are at least four types of irrigation

systems (the first three are basically run-of-the-river types and the fourth one involves a

reservoir):

Type I: Large irrigation systems, where there could be three stages of farmers' organization, from

P3A (WUA for tertiary blocks), GP3A (WUAF for secondary canals) and IP3A (WUA

for Primary canals)

Type II: Medium scale irrigation systems, where there could be two stages for farmers

organization, from P3A (WUA for tertiary blocks) and GP3A (WUAF for the whole

system).

Type DI: Small scale irrigation systems, where there could be only one single farmers'

organization, P3A Mandiri.

Type IV: Irrigation systems that are supplied by a reservoir (like Jatiluhur or Downstream

Citarum system)

The holder of water rights for those types of irrigation systems depends on the capability of the

organization. Based on their capabilities IP3A (for Type I), GP3A (for Type II) and P3A

Mandiri (for Type III) may hold the water use rights on behalf of collective irrigators.

There should be some conditions if an industry wants to get a license to use water from an

irrigation system:

* The industry should have a "specific recommendation" from the IP3A/GP3A/P3A. This

recommendation should be binding legally.

* There is a need to construct a "democratic procedure" that involves farmers in providing

a "recommendation" or "agreement" for new water users within their system.

* IP3A/GP3A/P3A do not have a "right" to subdivide their water use rights to other users

within the system.

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* The license is given only by the authorized government at the basin level, eitherprovincial basin or district basin.

2. What are the pros and cons of creating an irrigators/government partnership model to carryout both tasks in an integrated manner?

This question was not discussed in detail. However, given the acceptance of licensing a farmers'association at one single irrigation system, group members supported the partnership irrigationmodel that empowers farmers in irrigation management.

3. What are the group's views of the pros and cons of such rights subdivision, and what are thegroup's views about who or what might be the holder of such component water use right?

There was no objection to subdividing rights for water user association/federation in large-irrigation systems. But, it was thought that there is a need for further investigation (or study) onhow to subdivide rights within one large system. One option for subdividing is: the right given toone system is a big bulk right that clearly lists all subdividing rights within the system (eg. eachWUAF in the system is listed in one document including the specific volume of rights).

Discussion by the plenary meeting:

It was acknowledged that there is uncertainty in addressing these issues, if PP77/2001 is nolonger operative.

Pk Tjoek Walujo Subijanto commented that the licence should be given, not by the DistrictGovernment, but by the authority in charge of managing the basin. In large-scale irrigation, itdoes not matter if there is a WUAF or not, they should still have a right. Licences could be sub-divided within the intake. It is important that a new licence should not change existingallocations. The WUA should be able to make recommendations, but about what? It should onlybe about the irrigation infrastructure. Other issues can be dealt with by an agreement betweenfarmers and industry within the system.

Group Three - Municipalities and industries need more water: how do we allocate/re-allocate water?

Topics include interpretation of rights under transfers accompanying structural changes in waterdemand, emergency (scarcity-induced) transfers and issues of compensation. Pk Hata introducedthe topic to the group including: (i) interpretation of the new Water Resource Law regardingtransfer of WURs under various situations (e.g., structural changes in water demand andemergency or scarcity-induced transfer of water, and (ii) the issues related to compensation.

Pk Tjoek told that (reading from copy of law and elucidation in Bahasa Indonesia) water rightscannot be transferred or rented either in whole or in part; elucidation states that rights cannot betransferred to any other party. He also said that when rights are not utilized, they may bereclaimed by the Government.

Pk. Tjoek further explained the positions appear to be taken by the new Law that:

* With respect to land transfers out of irrigated agriculture, if a farmer (irrigator) presumedto hold a water use right chooses to sell land to a non-irrigation purpose (e.g., PDAM), then

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the Government reclaims the right (or the water associated with the right). However, if theland is sold to another farmer, then the new owner acquires the right. Thus, the water useright adheres not (necessarily) to the land, and clearly not to the owner of the land, but israther contingent on the use to which the land is put.

* Another point is that transfers are indeed permitted under the new law, but only throughthe agency of the Government (appropriate level), which re-acquires the right when sawah isconverted to other uses and is then free to re-allocate it via the appropriate statutory process.

A question was raised: what about the issue of food self-sufficiency? This is (apparently)national policy, and the (unrestricted) transfer of land out of irrigated agriculture and into otheruses would appear to work at cross-purposes with this goal.

Also, another question was raised concerning compensation, when water is transferred out ofagriculture. The scenario is that farmers (locally, with their own resources) increased irrigationsystem efficiency, which resulted in reduced effective demand for water below their historicaluse right level. Pk Tjoek said that under those circumstances there is a case for compensation(presumably from Government to farmers). Pk Rodgers commented that it is not clear to himwhether or not this is explicit in the law.

Pk Hata summarized three central points in Pk Tjoek's comments:

(1) Irrigation water rights disappear (revert to Government) when sawah is transferred out ofirrigated agriculture

(2) The new law prohibits direct (private) transfers of water use rights, or water itself

(3) Water released from irrigated agriculture through improved irrigation efficiency is(potentially) eligible for compensation

Pk Sapiful raised the distinction between farmer-owned irrigation systems ("village" or "simple"systems constructed without government assistance, or systems transferred under IMT programs)and publicly-owned systems: could not water controlled/managed by private systems be subjectto private transactions? Pk Tjoek explained that this was discussed, but rejected under the newlaw.

Pk Hata told that the study team observed no concrete practice of water trading in the Brantas,but in the Citarum (near Bandung) there are in fact documented cases of private water trades,which have taken place for some time, e.g., industries utilize water from secondaries, and givecompensation to irrigators not necessarily in cash but in some other forms such as contribution tocanal maintenance or rehabilitation. He asked the Group if this kind of arrangement is allowedunder the new Law.

Pk Tjoek commented that if such arrangements pre-dated the new law, they would probably beallowed to continue, but new such arrangements would probably not be allowed under the newlaw. An important question is, who is responsible for guaranteeing the water delivery? Does theWUA or WUAF guarantee water to the industry under these circumstances? Then he said basinoperator is responsible for delivering water, so compensation between farmers and industryshould be for the service but not for water. This is in fact a two-tier arrangement, in which the

A4-10

Basin Authority provides water to the WUA inclusive of the industry's share, and the WUA thenprovides it to the industry.

Question was raised if actual contracts would be required in such arrangements? That is, wouldthere need to be a formal contract between the industry and the WUA, and the industry'sabstractions (quantitative) be reflected in the WUA's "contract" (use right, more properly)? PkSaiful also indicated that in Wanisagara transfers of water have taken place based on informalagreements with WUAF. Pk Tjoek answered probably yes and PJT would license WUA andWUA would effectively "license" industries.

Pk Tri from municipal water supply company provided an example of multi-tier contracting thatthe company contracts with PAN Jaya (cooperation which supplies water from Citarum basin toJakarta), but not with PJT-2. Therefore, if there is a system default in PJT-2 and consequentlytrouble in delivering water, the operation of the company is affected but they cannot take anycontractual action against PJT-2. PAM Jaya delivers water to many PDAMs (and other parties)in Jakarta, but it is all handled through a single license between PAM Jaya and PJT-2.

Pk Tjoek noted that from PJT-1 experience it is extremely difficult to provide adequate quantityor quality of water if the basin infrastructure is in poor condition or poorly maintained. In thiscontext, the inability of PJT (or similar Basin management organizations) to recover O&M costsfrom farmers (irrigators) presents a problem, since irrigation is by far the largest user of water.Thus the rationale for cross subsidy is accounted (note: this is practiced in the Brantas, whereelevated industrial tariffs in part compensate for the lack of irrigation tariffs). However,commercial users complain about cross-subsidy, and argue that the Government (and notthemselves) should pay for the O&M share associated with irrigation, since it is by Governmentregulation that PJT is not allowed to charge irrigation tariffs (PP81). Pk Tjoek howeverrecommends that under expanded water use rights for irrigators, the possibility of cost recoveryshould be considered.

Pk Tjoek also noted that in the context of the question: who is responsible for water deliveries insituations such as that described previously (industries abstracting from irrigation secondaries) itis encouraging that (in West Java) the head of Provincial Dinas has issued instructions thataffected farmers should be consulted whenever new licenses are applied for. Under the new law,however, there is no explicit role for this kind of farmers' consultation.

After these discussions, it was proposed that when basin operator contracts with industry ormunicipality who will abstract water from irrigation canal, there should be a subsidiary contractbetween three parties, namely basin operator, industry (municipality) and the farmer group. Withrespect to the observed trading near Bandung, under the new law, this practice would not bepermitted, since only the appropriate Government agencies can issue licenses. However, PkTjoek actually approves of such three-party configurations, e.g. PJT to WUAF, WUAF toIndustry.

Pk Maeda, JICA expert attached to KimPrasWil raised a question concerning the requirementthat all unused rights be returned to the Government: what about the case where private investorsbuilt a reservoir - what should their rights be? That is, should they not be free to reallocate thewater they store/control in whatever way they consider appropriate?

Pk Tjoek doubted how such arrangements would comply with the law. He said that there existcases where industries construct storage, then go bankrupt - do the new owners automatically get

A4-1 1

the license? What this hinges on is the fact that licenses refer to specific purposes, so that a

switch in owners of facilities is less significant than a switch in the uses to which the water is put.

Then Pk Tjoek reasserted that a water use right is not about ownership, but about usage; and only

one type of use is stipulated on the license.

With reference to Pk Tjoek's comments, Pk Maeda expressed a view that this provision of the

law will certainly discourage private and foreign investment in Indonesia's water resources sector.

Pk Rodgers questioned: prior to the new law, the priority under scarcity was established primarilyon the basis of licenses - those who held them (industries, PDAM) were favoured over those

who did not (irrigators). How will these issues be decided once water use rights for irrigators are

established, and they are on an equal (or superior) footing with commercial license-holders?

Pk Tjoek replied that the "default" allocation under these circumstances would likely beproportional sharing of shortage. However, there is a body envisioned under the new law that

would significantly expand the representation of the PTPA (PPTPA) as a water resourcesgovernance body - the Dewan Sumber Daya Air, or Water Resources Council. This wouldcontain academics and other shareholders in addition to the current members of PTPA/PPTPA.In the event that proportional sharing is not satisfactory, or can be improved upon, this body

would be well positioned to make such decisions.

Wrap Up Session: Hatsuya Azumi, Team Leader

Pk Azumi wrapped up the workshop by thanking all the participants for providing most useful

views on WURs in Indonesia at this delicate point in time. He was convinced that, despite all the

prevailing uncertainties of the election time, the Study's timing was good in the sense that it

could provide clarity on existing issues and present options for long-term solutions as well as

practical immediate steps.

Among many issues discussed at the workshop, Pk Azumi specifically referred to the question of

licensing customary rights. While he personally thought the lack of clearly quantified rights is the

single important reason for customary right holders to lose out, the study team would have to

think more about options between licensing customary rights and let farmers depend on the legal

strength that such license gives them, or (local) government issuing a Decree through which the

government battle for the farmers.

Pk Azumi promised that the record of this workshop would be prepared within days, which willbe sent to the participants electronically or by other means.

Finally he regretted that the participation of one of the most important ministries, KimPrasWil, in

this workshop was almost nil as there was a seminar about dam safety hosted by them at the

same time. He said he would try to brief them about the outcome of this wonderful workshop.He thanked again the participants for their high quality contribution and also mentioned thatthose attended this first national workshop would be invited again to the second one planned forJune, where the study team's recommendations will be presented.

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Attachment 1

INDONESIA

WATER USE RIGHTS STUDY, STAGE 2

FIRST NATIONAL WORKSHOP

March 25,2004

Jakarta

AGENDA

08:30 Registration

09:00 Opening Remarks

a) World Bank: Rahul Raturi, Sector Manager

b) Ministry of Settlement and Regional Infrastructure: Basuki, Director General

09:20 Briefing on the Workshop: Study Team

09:30 Presentation of the Preliminary Findings: Study Team

10:45 Coffee Break

11:00 Plenary Discussion on the Study Team's Presentation

12:30 Lunch

13:30 Briefing on the Small Group Discussions: Study Team

13:40 Small Group Discussions:

Group 1: "How to protect customary/non-formalized rights?"

Group 2: "How to manage WURs for participatory/delegated irrigation management?"

Group 3: "Municipalities and industries need more water: how do we allocate/re-allocatewater?"

15:00 Coffee Break

15:15 Plenary Discussion on the Results of the Small Group Discussions

16:15 Wrap Up Session: Hatsuya Azumi, Team Leader

16:30 End of Workshop

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Attachment 2

List of Participants

No 3 Name J Institution/Position Tel./Fax

Government of Indonesia

1 Bekty S Kimpraswil 7221907

2 Sadar Purwanto Ministry of Algiculture 7805268

3 Iwan Kurniawan Menisty of Home Affair 08129546605

4 Bakti Nusarwan Menisty of Home Affair 7942645

5 Yossy Suzanna Ministry of Environmennt (KLH) 85904934

6 Tjeok Waluyo Operation Director, PJT 1 0341551971

7 Sri Hernowo Technical Director, PJT-2 0264201979

8 Syaiful Ruchyat ESDM/Ground Water (022) 7274677

9 Satrio Danaryanto ESDM/Ground Water (022) 7274677

10 Yustisia Dinas Pengairan Jatim (031) 8292047

11 S.Priambodo Dinas Pengairan Jatim 0811340812

12 Tinuk Ekawati PMD

13 Ruchimat BPSDA Citarum (022) 4215241

14 Linda Al Amin Bappeda Jabar (022) 2516061

Other Agencies

15 Bryan Bruns Consulting DHV 08128943003

16 Soleh Hadisutisna LPSL Bandung 08122199422

17 Tri Nugroho PT Palija PDAM 5724410

18 Jaco Mebius NL Embassy 5241060

A4-14

19 Koen Overkamp FAO 3141308

20 Indro Tjahjono SKEPHI 7981766

21 Tashudi SKEPHI 7981766

22 Maeda Syunichi JICA 7229988

23 Reniyasih PDP UNPAD (022) 2507966

24 Sadi HIPPA

25 D. Crickx European Comution 081311212320

26 Cecep Aminudin ICEL 7262740

27 Rahul Raturi Sector Manager, World Bank 52993000Jakarta

28 11ham Abla World Bank Jakarta 52993024

WURs Study Team

29 Hatsuya Azumi Team Leader / InstitutionSpecialist, Sanyu Consultants

30 Bambang Adinugroho Deputy Team Leader / WaterResource Management, LP3ES

31 Tomoko Nishigaki Logistic Support Coordinator /Institution Specialist, Sanyu

32 Brian Haisman WURs Specialist, SanyuConsultants

33 Rudi Febriamansyah WURs Specialist, LP3ES 08163254055

34 Sarah Waddele Legal Advisor, Sanyu Consultants 0274882050

35 Sigit Rianto Legal Advisor, LP3ES

36 Hideyo Shimazu PCM Facilitator, SanyuConsultants

37 Saiful Rochdiyanto PCM Facilitator, LP3ES 08122940848

38 Toshinobu Nakano Hydrologist, Sanyu Consultants

A4-15

39 Munawir Anthropologist, LP3ES 5674211

40 Akihiko Hata Economist, Sanyu Consultants

41 Agnes Mawarni Economist, LP3ES 08121586512

42 Charles Rodgers Hydrology / Economics Advisor, 08148170609Sanyu Consultants

43 Helmi Water Resources Management 08126604703Advisor, LP3ES

44 Sudar DA LP3ES 5674211

A4-16

Attachment 3

Three Discussion Topics.

GROUP ONE - HOW TO PROTECT CUSTOMARY/NON-FORMALISED RIGHTS?

Customary or non-formalised rights are rights to water use that do not rely on a licence and arenot quatified. The right to use water without a licence for basic daily needs for life and the needsof animals has been long recognised in Indonesian water law. Although not stated in law, thisright has been applied broadly to include water used by family-based irrigation farmers (for non-commercial uses) and this interpretation has now been given official support in the new NationalWater Resources Act (art 8(1)).

However, in practice such rights are weak in comparison to rights to use water obtained under alicence, which are quanitified and officially recognised user by user. It is generally agreed thatcustomary/non-formalised rights need protection against stronger, formalised rights. Formalisedrights are increasing in number and volume and, little by little, they are slowly altering reliabilityof non-formalised rights. This is happening over broad areas and also in local situations such aslimited capacity canals.

Questions that arise in seeking to protect customary/non-formalised rights include:

1. Should such rights be "formalised" scheme by scheme in a documented way so thatimpacts can be better known and negotiated? If so, how? If not, why not?

2. How should such rights be quanitified - historical use, likely future needs, the river basinplan? Other? What equity issues arise with each option?

3. How should right holders be able to assert their rights against parties that disturb theirright to use water? In particular, what should be the process to ensure protection offarmers' rights in the case where a new industry seeks to access water from the canalsystem?

GROUP TWO - HOW TO MANAGE WATER USE RIGHTS FOR PARTICIPATORY/DELEGATED IRRIGATION MANAGEMENT?

To answer this broad question, the group needs to assume that a decision has been made thatprotection of irrigation water use rights will be made by the formulation and issue of somedocument that lists a specific quantified volume and/or flow rate for each recognised irrigationscheme. That is, a single, bulk allocation of water computed and applied at the offtake from theriver to the scheme.

The following questions are designed to gain information on implementation issues should thisoption be eventually followed.

A4-17

1. Some competent body needs to be at least the custodian or, preferably, the holder of the bulkwater right created by such a document.

Who or what should that be? - Maybe water user federations, perhaps along the model of

those currently in existence? - Or some other (public?) body acting as trustee of the right on

behalf of the collective irrigators?

2. The operation of distributing such a right throughout an irrigation scheme is closely

associated with the management, nature and condition of the water distribution infrastructure.

What are the pros and cons of creating an irrigator/government partnership model (ie some

form of participatory/delegated irrigation management) to carry out both tasks in an

integrated manner?

3. On at least the larger irrigation schemes, there may be merit in subdividing the bulk

allocation into smaller parcels - for example into internal bulk allocations at the offtake of

each secondary canal.

What are the group's views on the pros and cons of such rights subdivision; and what are the

group's views about who or what might be the holder of such component water use rights.

GROUP THREE - MUNICIPALITIES AND INDUSTRIES NEED MORE WATER:

HOW DO WE ALLOCATE / RE-ALLOCATE WATER?

In both Brantas and Citarum basins it is projected that water demand will increase especially for

municipal and industrial uses. Also there is competition over water during dry season amongsectors (irrigation, municipality, industry). With limited potential of water resource developmentor even degradation of basin capacity by deforestation, re-allocation of water use from one userto other either permanently or temporarily could come up as an idea for optimum water use.

1. In the long run projection, demand for permanent reallocation of water use (rights) would

inevitably gain force. If land is taken out of irrigation, what happens to the associated water

use right? Does it revert to the Government, or does the structure of use rights stipulate

ongoing compensation from the new beneficiaries of the water by virtue of land ownership?If so, does this require a contractual arrangement? What role does the Government (or Basin

management entity) play in these transactions?

2. What are the rules that are used to reallocate water during shortage? What are the respectiveroles of the parties involved (PDAM, irrigation system, Provincial Government, Basin

management unit)?

3. Shall compensation be awarded to rights-holders who suffer economic damages in the event

of re-allocation? What is the appropriate level for such compensation, if awarded?

A4-1 8

Attachment 4

WATER USE RIGHTS STUDY STAGE-2FIRST NATIONAL WORKSHOP

MARCH 25, 2004tCompetitionftLWater W orkshop Agenda

Obiectives of the Workshop

Water Use Rights Study* Share the Study Team's findings Stage-t2to-dateStg 2

* Discuss identified issues* Gather views of stakeholders Preliminary Findings

BUT* Our findings are still developing

and our eventualrecommendations will bepresented in the next workshop

Team CompositionManagement: Component Findings

H. Azumi, B. AdinugrohoLegal and Administration:

B. Haisman, W. Martin, R. Febriamansyah, 1. PCM findingsS. Waddell, S. Rianto

PCM: 2. Social & Demographic ContextH. Shimazu, S. Rochdiyanto, T. NishigakiSocial issue: 3. Hydrological Context

D. Guillet, Munawir 4 Economic ContextHydrology:T. Nakano, Heru 5. Institutional ContextEconomy:A. Hata, A. Mawarni 6. Putting It All TogetherAdvisor:

C. Rodgers, Helmi

A4-19

1. PCM Findings 1

__________ tigr77SPCM Workshops Held

r.7L -1. Six PCM workshops at province, districtand village / WUAF level were held.

Province District VillageIProvince Basin level level WUAF level

____ ; . . East Java Brantas Surabaya Sidoarjo Tempel

7- v; ail M t - ' * West Java Citarum Bandung Bandung Wanir

-= Ft[ ff; si s .Ir > ¢ 2. Participants were 11 to 50. (Over 30 exceptvillage / WUAF level workshops)

3. It took about six hours for each workshopand way forward in this study. except Tempel Village (two and half hours).

, ---.

Fundamental Questions Comparison of Two BasinsCommon problems Solutions (implomentod or future)

1.1s water use really a life-or-death problem for farmers? (East) Law enforcement and public awareness

1. Cropping pattem by govemment.i~~~~Irn1 ~does not meet(including third crop ise o*ntms

farmers' needs. (West) Farmers decided the cropping pattern

2.What is farmers' perception of and reported to district. Farmers adjusted it

water where water is abundant? to meet water shortage.

(East) Govemment to make rule and duty of

3.1s water use by industry & 2. Water masters water masters.

PDAM the problem or lack of do not follow thecoordination the problem? rules. (West) Govemment water mastenr were

replaced by WUAF's water rnastcrs.

A4-20

Comparison of Two Basins IssuesCommon problems Solutlons (rmphrionted or future)

1. Are there more conflicts and are things(East) Government to givc enough funding for more complicated in West than East?

3. Maintenance of fulil ftunctioning of ca,,,primary and - Difference in IMT policies, O&M of canals,secondary canals. (W-0ti WUAF mointained several secondary (history of) farmers' organiization, kind ofc.nals. WUAF had a formal meeting with problems, NGOs and others.

qg-ern-enit -ff'cc, Lu1VCrS1tiCS nnd NGOs.

2. Relationships among different farmers'(East) Law enforcement by government. organizations.

4. Illegal logging. - WUAsIWUAFs, cooperatives, occupationalfWesti WUAF. coordinating with offices. associations, village representatives etc.implement public awareness and lawenforcement. WUAF buy seeds for forestation.

Social & Demographic contextEl Perception: "Javanese" values are

different from "Western logic" of2. Social & rights/demand managementDemographic Context .gotong royong, self-help

.reciprocal rights and obligations;a wakaf "gifts" of water* "land can be private but water belongs

to Almighty Allah". "right" and "wrong" collusion and water

theft* musyawarah, conflict resolution through

discussion and consensus.

Social & Demographic context Social & Demographic context

LO Given "Javanese" concepts l Farmers in traditional or villageof rights/demand, how canOFamrintdtoalrvlagwe convts/dertncustom right irrigation schemes also wantwe convert customary rights clear WURs.into recognized and certifiedwater use rights? LI During water short period,

. Refer to hydrology and farmers consider both licenseinstitution discussions holders and rights holders should

accept proportionate reduction.

A4-21

Social & Demographic context

El If (a) traditional customary rightsare converted into recognized 3. Hydrological Contextand registered WURs, and, (b)responsibility and authority formanagement of physicalinfrastructure at thecorresponding levels (secondary,tertiary) is also transferred,reallocation of water withcompensation will likelyincrease without externalintervention.

Registration of Customary Rights Sample Areas & Methods

* How to determine historical * East Java (Pehngaron):irrigation water use?- Actual flow measurement - Actual flow data (2003)- Calculated demand based on cropping - LPR-FPR method

patterns* Where no actual flow data are * West Java (Wangisagara):

available, one can use calculated -Actual flow data (1999)demand based on cropping patterns(for which data are usually -Factor K methodavailable)

Water Use Rights Pattern for PehngaronWater Use Rights Pattern for Wangisagara

District Irrigation (A=978ha) District Irri ation (A=1.718 ha)

Or.qflll

1 < r ~~~~~~~~- I-. h

I MII-DTINj 13.05,CM,YMMonth

A4-22

Water Allocationl Reallocation

* Municipalities and industries4. Economic Context need more water: How do we

allocate / re-allocate water?

* Legal, institutional,hydrological, social andeconomic considerations

Economic Factors for Water Allocation TDa-I Reallocation Water_ E

Causes Drivinga Factors Issyes Allocation I IIrtLong-term -Rural-Urban Migration -Rights with Land or Reallocation ionsmscStructural -Growth in Income Farmers?

-=

Trends -Conversion of Savali (or revert to Gov't?) |

-Environmental Concerns Land price S nOTemporary -Dry Season, Drought -Compensation for Structural Trend JScarcity -Basic Needs take priority affected rights- In Two Basins 2S0 T. _ l

-Permits, Licenses, holders?honored -Water Banking? -|-riftT6io

Economic *Declining profitability of -OpportunisticOpportunity farming exploitation of rights Rushing

(Rent-Seeking) by wLrn >tcFarmers? u == _Against Food Self- se usSufficiency? 2 BW2-------_________j____I_______-________ _____________n W_ow Dorrand Pro.)Cttin (PJT-2 20

Sensitivity Analysis: Economic Opportunitv Sensitivity Analysis: Economic Opportunitv% of sample (total 610 In Brantas) who would beneflt from % of sample who would benefit from transferring water moretransferring water more than growing paddy (s.t. Water than growing paddy (s.t. Water charge and Rice producercharge and Off-farm wage) price)

a' - _ = I s-'----f ; i; S C-1

oo~ ~ ~~. Ch, 1. RPOWO * 0520 25 X0 15 4 45 ro *5 50 oS 00 75 50 r r3 oo

SIas Chug. In ApiS' 0 5 10 is 20 25 x 55 40 25 53 55 60 65 70 75 so 55 30 s5 0o-- 0-FKO,f -1o00%O0-E.n r W.. Ch"lu Rp/ MI-750%on-!r.nhO 200%On-F5077

" -'A 4-- 23

A4-23

Issues for Water Allocation IReallocation

* Water reallocation with compensation isindeed being practiced between industry 5. Institutional & Legaland farmers in Bandung: Is such aLeapractice fair? Context

* If farmers reduce paddy cultivation toobtain compensation for water transfers,is it not contradictory with national foodpolicy?

* If farmers conserved water by improvingefficiency and as a result returned WURs(to Government), should they becompensated, if so how?

Legal Context: Uncertainty in 2004 Act Institutional issues

1. Administration of highest priority use isnot clear: human needs vs. farming 1. There is poor coordination betweencommunity vs. PDAM institutions.

2. Where permanent transfer of WURs is 2. Overlap in functions results from a lacknot possible (tidak dapat disewakan atau of clear delineation between servicedipindahtangankan) (Article 7(2)): are delivery and regulatory functions.there any circumstances in which water 3. Uncertainty is created by budgetcan be transferred? constraints and limited human resources.

3. Commercial Irrigation must be licensed 4. The level of mobilization of farmer(Article 8(2)): is Government authorized organizations is still quite low.to pass regulation on "licensing" tofarming communities?

WUR framework6. PUTTING IT ALL TOGETHER

1. Revenue considerations appear todrive water use licensing policiesand priorities.

2. There is little consideration ofenvironmental requirements in KEY ISSUES FOR WATERlicensing. ALLOCATION IN INDONESIA

3. There is no formal provision forpublic participation in water uselicensing.

A4-24

SCATTERED WATER ADMINISTRATION WA TER RE-ALLOCATIONBoundaries + decentralisation have tended to - effects of water scarci#y

spread administration non-uniformly * Some heavily-allocated riversSSurface Ground Water * Some over-allocated groundwater basinsNationl water water qualitv * Poor water quality in many rivers andNational MSRI MME EPA aquifers

Prov'Bafa, ? ? * No specific allocation of water flows forDistnict ? ? the aquatic environment ('healthy rivers')

l__ __ __ __ RESULT:

- and this doesn't show the layer of PJTs... * Sustainability goals and restoration ofRESULT: 'balance' will lead to a potential decreaseCoordination is a major challenge, of total water available for all users.

WA TER RE-ALLOCATION WA TER USE PERMITS- effects of other factors - Assessing applications

* Rising demand for non-agricultural water * Only about 10% of total use is licensed.* Non-agricultural water mostly has higher * The rest is "unspecified" irrigation rights.economic value * New permits are assessed principally on* Inter-sectoral re-allocation has no clear or water balances (tends to mask local

strongly defined processes as yet. effects & gradual erosion of the reliability* Farmers' access rights to adequate flows of al rights).

are not formalised or well defined. (Though * Rights often continue to be issued down to'Water for life" has top priority). historical recorded minimum flows.RESULT: * Nil, or limited, irrigator input to process.* Local re-allocation is by default - RESULT:

sometimes ad hoc, and sometimes at * Irrigator rights tend to suffer becauseexpense of farmers. quantification of impacts is not easy.

IRRIGATION FARMERS FEEL SQUEEZED IRRIGATION FARMING SLOWLY CHANGING

Avg farmer age increasing. * Original irrigation schemes were genuinelyOver-allocated Next generation turning to non-commercial subsistence farming.season scarcity other ways o life First landholders paid nothing for water.

I Commodiy -* New landholders have paid for someGrowth in water prices failing. scheme costs capitalised into land values.demand by I input costs * Increasing off-farm work and sharehigher value uses rising, cropping.

* Pressures to grow more commercial crops.Demands for Maintenance of t Generational changes.

environmental and irrigation assets RESULT:flushing flows deferred. Service

levels falling. * Blurred subsistence & commercial mixes.

A4-25

INDUSTRIES, TOWNS & GOVT 'UMBRELLA' CONCLUSIONSCORPORATIONS ALSO HAVE ISSUES concerning WATER ALLOCATION

* Many towns have exhausted locallyavailable water sources. * Due to combined economic, social

* Water supply operations worldwide are and environmental pressures, adominated by capital costs and renewals - more holistic and internallybut towns and PJTs struggle to meet O&M. consistent system of allocation and

* Reliability of water supply affects re-allocation is a desirable goal.investment.Exeineesweeugst

* As irrigation slowly tends to commercial, * Experience elsewhere suggestspriority of water access rights Is unclear. that clearly specified and well

RESULT: defined rights to abstract water* Risk of increased constraints for economic can provide a useful step toward

growth . meeting such a goal.

ISSUES in EXPANDING the COVERAGE of the ISSUES in EXPANDING the COVERAGE of theEXISTING WATER RIGHTS SYSTEM EXISTING WATER RIGHTS SYSTEM

If codified rights equivalent to otherwater abstraction permits are to be

For customary users, how should: issued to Irrigators, what are the

* their share of water be defined? options?* Bulk permit for each scheme? If so,

* their overall rights and who will be the 'owner' of the permit?obligations be expressed? * What options exist for better defining

rights within schemes, say at* their right to use water be secondary or even tertiary levels?

protected? (Note - It is assumed that issuing

rights to individual irrigators isunworkable)

ISSUES in EXPANDING the COVERAGE ofthe EXISTING WATER RIGHTS SYSTEM

__ _

The big issue that shows up in thisstudy is the growing need for an - -

orderly way of re-allocating water tomeet emerging demands whilst -protecting the interests of all parties.

The big question then is:* what is the most appropriate way to

accomplish such re-allocations?

A4-26

-- l-

1. LPR-FPR M ethod in East Jaw a FPR (Faktor Polowtijo Relatip) shos daharge water taken IrIo FntababLPR (Lu.. Polot io. R.ltip) d P I t5 I weirn one hectares POIowIJO.

The formul FPR[Ce, . l e o,.. FPR -Q. -d-

LPR,- ro.where FPR = Faktoe PoPl-jo Relatbp (/Ils/Ha.p1)

LPR, LPR primay caal) w, FPR Iuen

ce by caractharaticrstoilI and anallabel aternerR -~' Based type of soil, FPR opbmum Is

Whe, A ., Clo 0105(Hal FPR Heavy Soil Z7 1s/HaHpoiCr0, .015 Poo1io 1': 1 ::-r.rJ). .r (ira .. ln Medium Soil 0.32 I/s/Ha.pIl[rr. [5 ' uulo 0.11rr.rnlr (ia 201) Light Sod 0.42 I/s/Ha.pol

irfa.H,e bonreli,one. stofr thase QW fOwtil IPhehgarnonb dist-ict rIgat.on included medium il, so FPR Pehngaron DabictPa.dd(,.i.ao Irrigation s0n.32 llsilHa.

iRure,r lSOI 20 .vale FPR b used as refr-ence to applied water albcaton system in PehngaronC u,Oeerr i tlo n oFPR >0.70 . 0.32 Irrbation canQ vot by continuoes fl0wSn ,. se cs0 > 0.224 All area gie all ble0,, sernlss nlh 20 FOR 0.15O-0224 Irrlgationcanyotpbyttrmmiltednowe.- ,eet 4 WUA and WUF plans octudo water alocauSc

. ..ttneot .a. t Fs FF 0.10 WUA and WUF 50bMit to Dras, r order to get.Id o water supply I'nm, Bacem Dam (arns-basin)

Irrigation Water Requiremnent Q=LPR x FPR

2. Factor "K" Method in West JawaCak ai,o- OH WVeo Rit-u/-int Water AllocationThe e5.laHr.ls - bOor,5se5 0uag 0 smr05s.HI IqJie°_nlt 5 Water allocaton on Wo ngWsagara eh.e- is operated based on 'K'. u,Hms.s.H,.merHSHi Factor thmdo.

.mT I. .5,50, o .. ron.

lZu.eroa.I nes ttses,. c uses t.s.es The 'K' Factor is shown by propon on ti botmoen the aOaliabelOseomls lili a9hi ef 1 dindhbHge 0t the weir end the meter requirement

ralar 12iO5 i 07ts IrIS IOn ,i O0 I Fon. - On W r I m n.,i,*pi OxY oX9 os oYo | oxe j ozoo K"Fiittor _ Qdt *.-Oh-Cl

005,05.555H,SaHdS%sheHb,Hi5H.I1O%.In,HSo 0,0 sl5I 01) nI th. 'K'Facro, 0 1, sothat waterdisthiotionforthawhoocropcanbeI w..araO e F99s t r I _ o o .( 100% of the pioo (nonti no. s flow)

roanu no. it , It tho 'K'Fator < 1, so lhat water ditributon tor the whole Crop shailbe mHltiplhid by the 'K'Fotor (mterrmntd lino)

..t....,. ~ ~ ~ ..... ......, .o

Sensitivity Analysis: Economc Opportunity

Bratntas Basin Farm Economy Survey In 1999/2000

Distribution of 610 Stampla PlotS by Net InCome per ha

A4-27

------- , -

Annex 5 Record of the Second National Workshop (June2004)

PRESENTATION OF THE MAIN FINDINGS BY PAK HATSUYA AZUMI, TEAMLEADER

Pak Azumi used PowerPoint to make his presentation (see Attachment 5). At the outset, hementioned that the word 'rights' could be emotional in some ways, and it would have been betterif this study were said to be about 'water sharing' for the benefit of the community.

Indonesia has made a policy decision in favour of 'one management, one basin, and one system'- how much of this is the reality? How are we to reflect the community's wish to participate inthe management of water resources, in particular irrigation? What is the meaning of'participation'? Kimpraswil and the World Bank may not think the same way on this. During thefield study, particularly through the PCM workshops, we found out that farmers also had theirown ideas. There is no single correct answer as a 'one size fits all' solution for water resourcemanagement related WURs. We need to be flexible and to reflect the local needs. We neednegotiations, not just rules.

There are, however, some trends that are developing worldwide: one is the recognition of the

public ownership of water by the people: water itself is not a private good, although it should be

distinguished from the right to abstract and use it (for which costs are associated and someonehas to pay for them).

There is also a consensus that water use rights are not permanent. Transparency is becomingmore important, through the issuing of notices and registers. Provision for transferability isgetting a generally accepted principle in other countries. Within irrigation schemes, there is alsomore acceptance of participatory irrigation management. Public participation in licensingprocedure is another trend. Also 'legal pluralism' is being increasingly recognised. In thisregard, Pak Azumi recognized the presence of Pak Bryan Bruns, the author of "NegotiatingWater Use Rights", where the idea of 'legal pluralism' is promoted, as well as Pak Willem VanDiest, another author of a paper on water use rights in the SWS Kamper river basin.

Coming back to Indonesia and its definition of water rights, Pak Azumi continued, if we seearticles 5-9 of the new Law No. 7 of 2004, we see the distinction between a water use right (theright to get and use water to fulfil daily needs plus rights of irrigation farmers without a permit,tax or fees) and a water exploitation right (the right to exploit water for commercial purposes,which needs a permit and the payment of a tax or fees).

In Stage 2, the Study Team selected the Brantas and Citarum river basins for detailed survey.Since both were under a PJT, they were not really representative of Indonesia but were the bestcompromise for the Study as more data were available on these river basins than others. We alsospent more time on conflict resolution, and re-allocation of water as well as on groundwatercompared to Stage 1. He mentioned that the Team would submit the Draft Final Report on oraround 20 July 2004.

Pak Azumi then explained the composition of the Team, the pairings between Indonesian expertsand international experts and introduced the members present at the workshop.

Finally, Pak Azumi expressed three specific concerns that the Team had on the Study, namely, (i)the timing of the study, (ii) water trade, and (iii) IMT.

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(i) Timing.

The Parliament election was over but still Presidential election was near. Depending on whowins, the current policies of Gol may change. Was this study ill timed? Should we have waited?It could be said that for the same reasons we should not wait so that WURs could be discussed inmore systematic way based on more information available.

(ii) Water Trade

Two hotly debated issues in the Parliament debate were water trade and irrigation managementtransfer (IMT). Certain NGOs and politicians felt that, as water was not a private good it shouldnot be valued, let alone traded. If it were traded, multinational companies might come in and buyup water and sell it with a high profit margin to farmers, who should be guaranteed free access inthe first place. Reflecting this opinion, the Law No. 7 of 2004 provides an outright ban on theleasing or transfer of any kind of water use rights in whole or in part. But in reality, such transferis going on. Farmers are giving up farming not because of shortage of water but because theirkids are not succeeding them. If government does not regulate, informal transfer will still go on.So we should discuss this issue more (and more openly) so that we can set up an equitable, fairand transparent system of water re-allocation.

(iii) Irrigation Management Transfer

As mentioned earlier, there seems to be difference of opinion on the wisdom of continuing theeffort on IMT. The Study team noted a definite shift of attitude by Kimpraswil on this question.Aside from whether to promote IMT further, an important question is about whom to give theWURs to. For example, when the Team discussed it with Kimpraswil, Pak Imam and PakSoekrasno said WURs should be given, under certain circumstances, to the Pengamat (watermaster). We want to know your views.

In concluding his presentation on the Team's findings, Pak Azumi reiterated that the StudyTeam's client is the World Bank, although no doubt the Bank will use the report for the benefitof their client, i.e., Indonesia. The Bank wants to know the facts and the Team wants to knowyour views. The Team will express its views on what is best for Indonesia as a group ofprofessionals. He mentioned that Pak Brian Haisman would present the Team'srecommendations.

Discussion on presentation by Hatsuya Azumi

Pak Mahally (BPPT)

Is there scope to discuss weather modification as it has implications for increasing the price ofwater?

Pak Azumi

Our time today is limited; we are loaded with heavy agenda. Cloud seeding is a very specifictopic. I am afraid we cannot set aside time for this topic. [Brian Haisman then volunteered thathe has experience with this topic and is available to discuss it at lunchtime].

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Pak Jamal Gawi (CIDA)

I have a question about the selection of the location of the field surveys. You said that 90% of

water users are customary users. This depends on how you define customary. I am concerned that

both the river basins are in Java.

Pak Azumi

We had five candidate basins, namely, Ombilin (West Sumatra), Ciujung-Cidurian (Batten),

Jratun-Seruna (Central Java), Brantas (East Java) and Citarum (West java). The Ombilin sub-

basin in West Sumatra has already been written about by Pak Helmi. He has written a nice paper

on this, which crystallised the issues on competition for water in that sub basin. We are going to

annex this paper to our report. DG Basoeki of Kimpraswil suggested we go east to ENT, but it

was difficult to obtain data there within the limited time and budget. Also Cinju-Cidurian was a

serious candidate but there were also problems with data and local support. Indonesia is a large

and heterogeneous country and unless we select a large number of basins in wide areas, there is

always a limitation about how representative our choice could be. There is provision under

WISMP, a World Bank loan, and we hope further studies are conducted under this program.

Pak Soekrasno - Kimpraswil

I apologise that the Director General is not able to attend this event today. I am also sorry that I

was late; I had to attend an official function. I would like to read out the Key Note Speech

prepared by the Director General, Dr Basoeki. Pak Soekrasno then read the statement, which is

shown in Attachment 4.

PRESENTATION OF THE RECOMMENDATIONS BY BRIAN HAISMAN

Pak Haisman mentioned at the outset that this was a complicated study. The recommendations

are general and apply across Indonesia. Those who have worked in water resources management

in other countries - Mexico, South Africa, Vietnam - will know that the issues, problems and the

way ahead are similar.

Pak Haisman then proceeded to present his PowerPoint presentation (Attachment 6). Among

others, he presented action programs on six fronts:

1. Creating enforceable, formalized rights for customary water users

2. Establishing orderly, equitable and transparent process of water re-allocation

3. Strengthening a basin-based, participatory approach to water resources management

4. Establishing improved enforcement and conflict resolution mechanisms

5. Reserving river flows to sustain the aquatic environment

6. Reducing groundwater use to match long-term sustainable aquifer yields

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The recommendations presented were much more specific (and within the framework of the NewWater Resource Law) than those of the broad WURs framework and administration systemsgiven by the Stage 1 Study. Especially noted were several new and specific recommendationsincluding:

* Establishment of Basin Community Reference Committee to provide a focus for farmerparticipation, guide implementation, give advice on equity issues and inter-scheme matters,all of which related to protection of customary rights

* Participatory implementation of irrigation scheme Certificates of Water Entitlements(CWEs) with specific steps

* Formulation and implementation of orderly, equitable and transparent processes for water re-allocation in order to under pin economic growth as well as to protect customary rightholders

Further details are given in the Attachments 6.

PLENARY SESSION - DISCUSSION OF THE RECOMMENDATIONS

Ibu Renyasih J (PDPJUNPAD)

WUR should not only be based on current conditions but must be related to the development planof regional government even though water has a hydraulic boundary. On another point, it is notclear from your presentation how water quality criteria fit in with the water use entitlement. Forexample in Wangisagara in Bandung, irrigation water is used by industry and agriculture gets badwater downstream.

Pak Imam - Kimpraswil

I have questions on six aspects of your presentation:

1. Under what conditions will a water right be considered invalid?

2. How is the certificate of entitlement to be issued? In irrigation this is a special issue asirrigation water is not constant. The law says irrigation water does not need a permit.

3. Is the water use right to be held by the owner or by others? We need information on theobligations of the holder of the right if it is to be held by a WUA.

4. If the holder of the right does not do the right thing, intentionally or negligently, and ifagreement cannot be reached through consensus, should the court handle it as a criminalor civil matter?

5. Where new licenses are given to industry within an irrigation system by a WUAF, is thelicence to use the water or to use the facility? In our opinion, the WUAF should not belicensing water use as such but only the use of the irrigation infrastructure.

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6. You said there are no community representatives on the PPTPA but the law already

accommodates the participation of farmers. We need recommendations on the transition

phase. We need concrete recommendations and suggested concrete changes to the

regulations and also on empowering the PPTPAs and on the obligations of right holders.

7. My impression is that you have been more focused on WUR in irrigation and not on the

administration of WUR.

Pak Tjoek Waluyo

I did not catch clearly your views on the institutions that are involved. There are three types:

regulators, operators and users. It would be useful to set the role of each in terms of rights,

obligations and sanctions. What will happen if one does not fulfil its obligations such as an

operator who cannot provide water?

Pak Haisman

These issues are complex and cannot be dealt with in one hour. One recommendation is that it is

time to do it. We cannot answer these questions until designing the implementation. The

answers will be unique to the situation. Our recommendations try to answer critical details.

In regard to the question from Ibu Reni:

The comment on water planning: I agree that we need to make provision for growth. This is

what the Water Council will do. If priorities and allocation do not provide for spare water,

problems will start. It is easy when there is plenty of water. Our recommendations are on what to

do when water runs out.

On water quality, this is managed through the environmental institutions. We discuss water

quality in our report, in reference to the licensing process and attaching water quality conditions

to the water use licence, including water given back to irrigation canals. We recommend that the

environment agency and the water agency get together so the two permits are in harmony.

In regard to the questions from Pk Imam:

1. This concerns when rights are effective and under what conditions. There are two types -

those that shift water in time and those that don't. If a river is unregulated usually a

permit will have rules for water sharing under drought. In regard to regulated rivers, I

will cover that under Pk Tjoek's question.

2. There is no format for a water entitlement. What I showed was a simplification and it will

be different in each basin. It may be done month-by-month. Don't discard water delivery

planning. You will need to build on it with written quantities for each scheme. You need

also to involve water users so it makes sense for the users in the basin.

3. In regard to obligations of right holders, especially the WUAF, it is a big question. There

are two quick things that can be said. First, don't do much work on the second tier unless

the first tier is working, as it is more complicated to compute and work. In effect, you are

already doing the first tier. Obligations include water delivery obligations, to take enough

water at the intake and deliver the rights to users within the system. This needs to be

developed in the contract between the WUAF and the members.

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4. In relation to the actions of a holder of a water right if negotiation fails; I will refer toSarah Waddell, the Legal Advisor.

Sarah Waddell: There are criminal provisions in Law No. 7 of 2004; however, theyconcern aspects such as damage to water resources, infrastructure or transfer of rights. Toprosecute you also have to establish intention or negligence. It is difficult to succeed incriminal prosecutions with the courts in Indonesia at the present time and, in addition,there is the burden of proof, which means an offence has to be established beyondreasonable doubt. Although this is not common in Indonesian law, there are goodarguments to develop systems of civil enforcement. This is the way that has beendeveloped in some other countries, particularly in environmental law.

5. I agree on your comment on the purpose of the licence issued by the WUAF - it wouldnot be to use the water but to use the facilities of the irrigation system.

6. In relation to the PPTPA, it may be better if farmers form their own organization, whichthen coordinates with the PPTPA.

Sarah Waddell: I would like to clarify the point about there being no provision for farmerparticipation in PPTPAs. Actually the law allows it but is very non-specific and it is not arequirement. In some PPTPAs there is a lot of farmer involvement: according to what wewere told in Bandung, the meetings are very well attended.

7. Detailed regulations on the administration of WUR would be best done as part of a pilotstudy. We were not able to go into this level of detail in the study.

In regard to the questions from Pak Tjoek:

The institutional arrangements are not clear. I find the law and its consequences worrying.Everybody gets to do everything depending on the geographic boundary. There needs to be moreorder and less chaos. The underlying principle is that regulatory functions are visibly separatedfrom operation. It is a fundamental principle behind our recommendations.

The issue of sanctions is a difficult one - for example, when there are difficulties in delivering anauthorised volume of water. The contract and its surrounding laws govern this. It would be usualto protect the organization although this is an area that is not well developed. There may be alaw that says anything we do is not our fault. If an officer fulfils his/her duty it is critical thatthey be protected by an indemnity.

Pak Soekrasn, Kimpraswil

We are now finalising the irrigation regulation: we are considering WUR to what point and towhom? This has been discussed and put in the draft. Water is still under government control. Ifcontrol is given to the WUAF, government will give up water management so we need a WURrepresentative. Responsibility and authority for irrigation water is still with government tomanage - to service the farmers based on the WUR.

Our problem is now with the WUAF. In regard to customary rights, if water is not utilised by theowner efficiently, government should have the capacity to review it.

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In regard to the entitlement and maximum flow, I suggest that monthly flow be noted, based onthe area and capacity. Cropping pattern should also be put in the entitlement. This will meanthat there is a note in the entitlement if the farmer changes the pattern. In addition, the time ofcultivation should be mentioned and continuous flow or rotation should be a condition in theentitlement.

I agree with Pak Imam on the use of water in canals: this needs permission. Where there is lackof water, I do not agree with proportional reduction as sensitivity differs between users - considerwater for drinking compared to water for crops. Also, regarding timing, use of water for a cropcan be postponed for 3 days but people only 3 hours.

Regarding the constitution of the members of the Water Council, I suggest that it should be abalanced membership and that farmers should not be the majority.

Pak Tjitjin - Farmer, WUAF/WUAF, Kabupaten Bandung

Since 2000 we have had a WUAF. Irrigation management was transferred and we hired agatekeeper and scheduled the planning. This has worked well. We still have a problem becausePJT-2 collects a fee from industry and so does the WUAF; this needs to be sorted out.

I do not agree with the proposal to accelerate the process of forming WUAF without irrigationmanagement transfer. This is important for us as its part of the reformasi of irrigation. We arenot interested in transfer for the tertiary level, which is not new - we have had that for ages.

Pak Haisman

In regard to the comments of Pak Tjitjin:

On the collection of fees, in our fieldwork we discovered that the use of water and use of permitsattracts fees by everyone. Its not organised. It would be best if the bulk permit attracts a fee forservice to the PJT and the WUAF obtains a fee for water distributed within the tertiary system.

In relation to IMT, we made a separate recommendation that IMT should accompany WUR.This is necessary to make rights effective, to give economic choice and power to irrigators. It isdifficult to have a bulk water permit, and obligations to deliver, if the permit holder is not alsothe manager of the system. If there is no WUAF, the government will need to hold the right.However, the two belong together - managing the system and holding the right.

In regard to the comments of Pak Soekrasno:

The law requires efficient use. This makes for equity issues if a scheme is inefficient. Should itbe built into the entitlement? I agree there are other factors to influence the entitlement. Whenthe role of the operator and regulator are separated out, water resources management becomesmore and more about water - not irrigation. At present, in Indonesia, it is intertwined - as in allcountries. Eventually, it will separate out.

On proportional reduction, we made an umbrella comment; in reality, it is not that simple. It willbe done sector by sector; we have oversimplified. On our recommendation that the majority ofwater council members be farmers, we have said provocatively that it should be the majority. Itshould be balanced.

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LUNCH BREAK

After lunch the workshop broke up into three groups to discuss three prepared questions. Thequestions and the explanation of each question are presented in Attachment 8.

After one hour and 15 minutes of small group discussions, the participants gathered again in aplenary session and heard the report from each small group.

GROUP A - WHO SHOULD RECEIVE THE WUR AND WHAT DOES IT MEAN FORMANAGING IRRIGATION?

1. To whom should Water Use Rights (WUR) be given?

In the explanation it was said that WUR refers to basinlevel water use rights for irrigationschemes. They would apply at the point of intake from the river and cover volume, flow andauthorised water use. It was suggested that basically, there are two alternatives in deciding whoshould receive the WUR:

(a) a government representative of water users or

(b) water users themselves

Group A agreed that each beneficiary of water use should have a WUR. The system of WURsshould cover all users with none being left out. It was suggested by one participant (Kimpraswil)that where farmers are concerned, a representative of water users could hold the right, who wouldbe responsible for irrigators. The group did not accept this proposal. It was suggested that, forlegal reasons, an individual or a legally recognised entity should hold the right; it would not fitwith the concept of a right for it to be given to a community representative

The question arose regarding where the right should arise for farmers' use of water - the entrypoint to the primary irrigation system? The farmers' representative pointed out that his WUAFhas been managing irrigation water from the point of intake of the primary system to the tertiarysystem. At the intake point for the tertiary system, the WUAF has had management responsibility.They guarantee the water for industry and, likewise, industry is a member of the WUAF. Themembers of the WUAF set the program of water flow.

In regard to the location of the right, it was agreed that it should be operative from the entry pointto the primary irrigation system. The conclusion was not expressly reached that the right shouldbe given to the WUAF; however, this would follow from the conclusions of the group on thelocation of the operation of the right and farmers as the direct holder of the right.

2. If water use rights are to be given to Water User Associations (WUA) should the WUAalso be given authority and responsibility for managing irrigation?

In the explanation it was suggested that authority and responsibility for managing irrigation refersto the management of irrigation systems after the point of intake from the river, so it coversprimary, secondary and tertiary systems. It was also suggested that it includes financing and

A5-9

managing water distribution (cropping patterns, rotations, etc) operation and maintenance ofschemes.

Agreement was not reached on this issue.

It was stressed by the farmer representative that it should follow automatically that if the WUAFheld a water use right it should also have authority and responsibility for operation andmaintenance.

The Kimpraswil representative stated that authority and responsibility for primary and secondaryirrigation could not be given to the WUAF under the Act No. 7 of 2004 on Water Resources.

The group asked what should occur if a WUAF was capable and willing? They were of the viewthat in such circumstances it should be able to take responsibility for managing the irrigationsystem.

Reference was made to article 64(6)(a) in the Law. The group also looked at the elucidation,which refers to public participation in the operation and maintenance of primary and secondaryirrigation.

The farmers' representative said they were very willing. If rehabilitation costs were expensivethey could meet the costs through cooperation with government. They could make a proposal forfunds from government to carry out the work themselves and because they have a feeling ofownership it would surely be done. He also said they will want to do it if they also have authorityand responsibility; but it is not the same thing as simply having the permission to do somethingsuch as to rehabilitate a damaged structure.

The representative of Kimpraswil said there were 5 aspects that will be handed over to WUAFunder the new regulation:

(a) Water scheduling

(b) The cropping pattern

(c) Development priorities

(d) Rehabilitation

(e) Raising the fee for irrigation management from its members.

Finally, the majority group was of the view that the WUAF should get authority andresponsibility for operation and maintenance where a WUAF was capable. However, the groupalso realised that this position does not deal with the obstacle against transfer of authority andresponsibility for operation and maintenance that arises from the Law itself.

AS-10

I

GROUP B - HOW CAN THE RE-ALLOCATION OF WATER RESOURCES BE BESTADMINISTERED?

How can water resources be re-allocated in an orderly, fair and transparent manner inview of the statutory prohibition against transfer of water use rights (WUR)?

The views of the group were presented as follows:

Water use, as a first priority and a basic need (water for domestic use and farming), cannot betransferred under Law No. 7 of 2004 on Water Resources.

Internal transfers of bulk water received through the point of intake should consider seniority.

The first priority water use must be protected and the water use rights are not absolute. Wherewater is scarce, the basic human needs must come first. The right to use water is not an absoluteor strict (mutlak).

When a new request for water is received, compensation should be decided upon throughnegotiation between the users.

The mechanism for a permit (non farmer) such as industry or other must be clear. It is importantthat the licence for the activity itself should also have a condition on water availability.

Government should mediate compensation for loss of water and obtain agreement from theWUAF. If rights are lost then, to ensure a level of transparency, it should be managed throughthe Basin Water Resources Council, who considers the water allocation plan.

According to the Kimpraswil representative, rather than a version of water trading, transferscould take place in the same way in which government acquires land for use in the public domain,that is, acquisition with compensation.

GROUP C - HOW CAN RIVER BASIN MANAGEMENT AND INSTITUTIONS FORWATER ALLOCATION BE STRENGTHENED?

How can current institutional weaknesses in river basin management be rectified? Should

(a) the role of the Balai be expanded

(b) the role of the Perum Jasa Tirta be expanded or

(c) a new river basin organization be created.

The group was concerned with relations between the river basin and the water use right: theutilisation of the right should be based on river basin management.

The regulator should process the application for the licence with technical recommendation fromthe technical unit not just on water availability but also the level of agreement from the farmers.

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Implementation should be based on the real condition of water availability. After the allocationplan has been devised, there is a responsibility to implement according to the pattern.

There should be a condition to the effect that if there is a water shortage then a coordinationboard is to negotiate between the regulatory, operator and user.

The Balai should only assist provincial government.

Questions:

Pak Van Diest

If an irrigation scheme straddles more than one province, which level of government manages it?

Answerfrom thefloor

Central government, Kimpraswil will establish a central operating section.

Brian Haisman

Currently there is institutional chaos. There is a change of level if a boundary accidentally crossesa line on a map. The ideas put forward by Group C are completely destroyed by the present legalarrangements. If a boundary crosses provincial borders there should be the option for centralgovernment to re-delegate down, create joint ventures and have a single basin run it. Ourrecommendations are about using common sense and having a consistent role. WUR can't workproperly under the existing legal arrangements.

The recommendation to split the operational and regulatory functions and to let the Balai be theoperator - does it mean separation from the Dinas, if so, who will issue the water permits?

Representativefrom PSDA, Citarum

It's a different situation if the Balai just operates. At present, it is set up as a technical unit - tomake technical recommendations. To whom would they be responsible? This is difficult toanswer.

Pak Jamal Gawi (CIDA)

There are categories of operator, regulator or quasi-regulatory. In the end there is a cleardistinction between regulator and operator. Operation and regulation is now part of the Dinas butthey say they are the regulator. The PJT on other hand (in comparison with the Balai) is clearlyan operator.

Pak Azumi

I note that Group A did not come to a conclusion on the question if water use rights are to begiven to WUA should the WUA also be given authority and responsibility for managingirrigation. If there is a functioning WUAF, there seems to be broad agreement in the group thatthe WUR should be given to the WUAF. However, if there is no WUAF, who should hold theWUR?

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Pak Paul Van Hofwegen - World Water Council

The grant of a right means that there are reciprocal obligations to meet the right. A right becomesuseful when the right holder can insist on certain things happening so that the right is fulfilled.This can be developed step by step - if the right is there.

CLOSURE - PAK HATSUYA AZUMI

It looks Group A could not come to a complete agreement on the question, if a capable WUAF isgiven a WUR, whether it should also be given the responsibility and authority to carry outoperation, maintenance and management of the irrigation facilities (not only in the tertiaries butalso in the secondary and primary canals). Indonesia has already achieved a lot withdecentralisation. The important thing is not to give up in the middle. In looking at how to re-allocate rights,

Group B have suggested that an applicant come with a special proposal and negotiate. Thequestion is, when and where to start such a negotiation? How could we do it under the restrictionof Law 7/2004? What the group is suggesting appears to be touching on legal pluralism. We needto be pragmatic on this.

In Group C there was lively discussion on separating the role of operator and regulator. This isvery important. But there is still the question of the cross-boundary cases; this is a 64 milliondollar question. There is no clear answer. Study Team has a consensus that the level ofgovernment responsible should not automatically go up, as this would mean the status quo.History has proven it does not work so well.

In concluding the Workshop, I would like to thank the World Bank, Government of Indonesiaand Kimpraswil. The people who attended today are the people who really count.

Above all, I want to thank the participants who came today, some from other provinces far away.We have received constructive criticisms to our recommendations. For example, that we have notreferred to non-irrigation sectors sufficiently. Although we still believe that it was not a mistaketo focus on the sector, which uses 90 percent of the water resources, and there are manyreferences to other sectors in our Draft Final report, we would make sure either we explain moreclearly why we have concentrated in irrigation or try to introduce more balanced handling ofvarious sectors. The two workshops, in March and this one have been extraordinarily useful to us,and I thank you all for that. You will all receive a copy of the minutes shortly.

ATTACHMENTS:

1. Agenda

2. List of participants

3. Main Conclusions and Recommendations from Stage One (hand out)

4. Key Note Address, Pak Basoeki, Director General, Water Resources, KimPrasWil

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5. PowerPoint presentation, Hatsuya Azumi

6. PowerPoint presentation, Brian Haisman

7. Three discussion topics - handouts provided to Groups A, B and C.

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Attachment 1

INDONESIA

WATER USE RIGHTS STUDY, STAGE 2

SECOND NATIONAL WORKSHOP

June 30, 2004

Jakarta

08:30 Registration

09:00 Opening Remarks:

a) World Bank Jakarta Office

b) Directorate General, Kimpraswil

09:20 Briefing on the Workshop: Study Team

09:30 Presentation of the Findings and Recommendations: Study Team

10:45 Coffee Break

11:00 Plenary Discussion on the Study Team's Presentation

12:15 Lunch

13:15 Briefing on the Small Group Discussions: Study Team

13:30 Small Group Discussions:

Group A: Who should receive the WUR and what does it mean for managing irrigation?

Group B: How can the re-allocation of water resources be best administered?

Group C: How can river basin management and institutions for water allocation bestrengthened?

15:00 Coffee Break

15:15 Plenary Discussion on the Results of the Small Group Discussions

16:30 Wrap Up Session: Hatsuya Azumi, Team Leader

17:00 End of Workshop

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Attachment 2

List of Participants

DAFTAR UNDANGAN WORKSHOP NASIONALSTUDI "WUR" TAHAP II

NO. NAME INSTITUTION T i F / HP1 Soleh Hadisutisna Lembaga Pengembangan T/F: 022-7802306

Sumberdaya Lokal (LPSL)2 Ir. Sadar Purwanto, MM. Kasubdit Kelembagaan Pemakai T: 021-780 5268

Air Dep. Pertanian F: 021-782 39753 Yusuke Maruno Sanyu +81-3-5394-8992

4 Maksum PSPK-UGM T: 0274-521318F: 0274-564463

5 Saiful Rochdayanto FH-UGM T: 0274-550328HP: 08122940848

6 Sigit R. FH-UGM

7 Tri Nugroho PALYJA T: 5798526HP: 08161905259

8 Tjichi M. GP3A DI WANING T: 022-59570719 Ahmad P3A DI Wangisagara HP: 081320302831

Jawa Barat10 Darman S. GP3A T: 022-595695311 Asmah Yani Universitas Nasional Jakarta T: 78833384 F: 7802719

Hp: 0815184484312 Gatot Eko S. Kepala Bidang Infrastruktur T: 3456714

Pengairan F: 345681713 Sri Hernowo Direktur T: 0264-201 979

PJT R F: 0264-201 97114 Brian Haisman Sanyu +81-3-5394-899215 Hatsuya Azumi Sanyu +81-3-5394-899216 Mahally K. BPPTUPTHB T:021-316883017 Gunawan Djoko BPPT UPTHB T: 021-316883018 Djoko Djatiroso Kepala Balai PSDA Butung T/F: 031-501 8512

Peketingan, Surabaya19 Yustisia Dinas PU Pengairan T: 031-8292419

Jawa Timur F: 031-829204720 Titie Hadiyati World Bank Consultant21 Sarah Waddel Sanyu T: 0274-882050

Hp: 08562862331

22 Afsdyah Eki PPA Consultant T: 8311566F: 8291096Hp: 08151865587

23 Tjoek Waluyo PJT I T: 0341-551971F: 0341-551976

24 Sadi Wakil Petani DI MenturusJatim

25 Sarwoko Konsultan EU Hp: 0812291009126 Williem Van Diest ADB Consultant T/F: 7231784

A5-16

27 Satrio Subdit Konservasi Air Tanah T: 022-72746 76/77 ext. 457F: 022-720 6167

28 Paul Van Hofwegen World Water Council

29 Bryan Brun F: 021-722 156030 Renyasih J. PDP-UNPAD T: 022-2507966

Bandung F: 022-253369031 Suliyanti Ka.Dinas PSDA Jawa Barat F: 022-421 5242 / 9848

32 Rudi F. UNAND33 Djoko Sembodo EU T: 252659234 Maeritta Representative Indonesia, T: 7392540

______ ARCADIS Euroconsult F: 739555135 Judith Kasperma Representative Indonesia, T: 7392540

ARCADIS Euroconsult F: 739555136 Ilham Abla World Bank T: 021-52993024 /52993000

F: 021-5299311137 Sudarmanto Tenaga Ahli T/F: 7918274138 Agus Rachmat Bappeprop Jawa Barat (Bappeda) T: 022-251 6061

F: 022- 251 073139 Sudar D.A. LP3ES40 Jamal Gawi CHDA-PSU T: 5251773

HP: 081114425741 Shunichi Maeda JICA T: 021-390 7533

F: 021-390 753642 Umirusyansusti KLH T: 8590453443 Sabariddin BPPT 316984044 Tusy A.A. BPPT 316984045 Sudaryono BPPT 316983346 MohIskandar EPA Bandung, Bapedalda Jabar T: 022-420 4871

F: 022-423 157047 Dedy Djunaedi Kepala Balai Desa PSDA T/F: 0224215241

Citarum, Bandung48 Darismanto Kepala Bidang Data, T: 7511844

Dokumentasi dan Diseminasi F: 751184649 Soekrasno Direktur PSDA T: 021-722 1907

Dep. Kimpraswil Hp: 081110978450 Hasudungan S. Kasubdit Irigasi T: 021-3926186

F: 021-314 9641HP: 08129212567

51 Imam Anshori Kasubdit Perencanaan T: 021-722 1907F: 021-720 8285

52 Mohd Ali Chief of Sub-Directorate for T/F: 7221907Water Resources Conservation HP: 081867775

53 Munawir LP3ES T:5674211

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Attachment 3

Main Conclusions and Recommendations of Stage 1

WURs are, in essence, simple organized means of managing a planned sharing of water for the

benefit of the community. For such a diversified country as Indonesia, there is no such thing as one size

fits all principle. Judging from other countries' experiences, however, there are general principles that

are being increasingly accepted worldwide and that offer principles and guidelines that could be applied

in Indonesia. Those are:

(1) WURs are rights to use water that:

* Are recognised by the laws of a state/nation

* Are protected against damage caused by the actions of third parties

* May be regulated by the state/nation

* May be managed by the state directly, or by the community, or by market forces, or by a mix ofany of those.

(2) Sharing of water for the greater benefit of the whole community requires:

* Water rights that are clearly defined as to quantity and reliability of water supply

* Knowledge of the full range of water users within a basin

* Planning on a basin-wide basis

* Unified management of the basin

* Maximum participation of the community in planning

* Reliance on negotiations not just on rules

(3) The general principles being adopted world wide now are:

* Recognition of the underlying public ownership of water resources

* Rights issued for limited duration

* Transparency (e.g. public registers of rights)

* Customary rights changing to specified rights

* Provision for transferability

* Customary rights within irrigation schemes managed by farmers' organizations

* Public participation in licensing processes

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-F-

Legal pluralism: various types of institutional arrangements may be used to regulate sociallyaccepted claims to water, including user-based self governance (e.g. the importance of WaterUser Associations - WUAs - and Water user Associations Federations - WUAFs), agencyadministration and water markets. In practice, different types of institutions are often combined,and a suitable combination may be more workable than imposing a single type of allocation.'This implies the importance of negotiations among stakeholders and not just relying onregulations.

The most important issues facing the WURs in Indonesia currently are:

(1) Unclear farmers' customary rights vis-avis relatively clear license holders' entitlements

(2) Unclear rules and administration systems

(3) Lack of institutional mechanism for conflict resolution

(4) Lack of formal mechanism of shifting water from one use to another while protecting the rights ofaffected parties (basically, fair water trade mechanisms)Given the above general principles, the

Stage 1 study recommended the following specific principles to be adopted for Indonesia WURs:

(1) Clearly acknowledged, defined, quantified, and registered customary rights

(2) A two tier administration system

(3) Effective conflict resolution through Expert Water Tribunals

(4) Gradual introduction of water trade

(5) People's participation in planning and implementation to reflect legal pluralism

Of the abovementioned specific issues, the most critical one that requires urgent attention is theunclear farmers' customary rights vis-avis relatively clear license holders' rights. Water users can bedivided into license holders and non-license holders. The license holders are formal entities such asindustries, municipalities, and power companies, while non-license holders can be grouped into two sub-categories: (i) farmers under public irrigation schemes, and (ii) traditional users with basic needs such assmall village irrigation, religious attributes of water bodies (adat), plus subsistence fishing.

The license holders' entitlements are clearly defined by license agreements. On the other hand,while the customary rights of non-4icense holders are recognized by the Constitution and the Water Law(UUl 1 of 1974), their rights are not well defined, let alone quantified. Because of this reason and the factthat water fees from license holders usually constitute the major or the only source of income to the waterallocation agencies (and customary water users are normally exempted from paying water fees), underwater short circumstances, the water allocation agencies always give de facto priority to license holders.Consequently, the farmers get the residual water and thus have been marginalized systematically.

The first order of priority, therefore, is to make the customary rights of the non-license holdersclear and quantify them. While there could be various ways of achieving this, one way is to introduce a

' Bryan Bruns and Ruth Meinzen-Dick, "Frameworks for Water Rights: an overview of institutional options", apaper presented to the Water Rights Workshop in Hanoi, February 2003.

A5-19

basin-wide (and eventually nation-wide) public register of historical water use at specified water intake

points. Although the transaction costs would make it virtually impossible to quantify each farmer's

historical water use, there appear to be record of water quantity passed through certain intake points such

as the main canal outlet into secondary canals. Provincial Dinas seem to have been keeping such records

for many years. We could possibly use such data as proxies to the customary rights of a group of farmers

(say, of WUAFs). By registering such "rights", nonlicense holders can quantify their entitlements just

like the license holders. Thus, during the water short period, water allocation agency can reduce all the

water users' allocations proportionately. Where such system give undue difficulties to certain water users,

e.g. the industries, water trade can take place between stakeholders, e.g., between a WUAF and a factory.

The abovementioned system of public register requires the presence of strong WUAs/WUAFs,

which is not yet a reality in the country. The strengthening of WUAs, however, is one of the current

priority strategies of the government. Therefore the proposed principle would be compatible with the

current government policy, and the adoption of this principle should be made carefully by taking account

of the status of the capacity building of those farmer organizations (more on this in the two-tier system).

A two-tier system is gaining support amongst officials and others as a potentially

workable approach. The two tiers would comprise (i) a basin-level permit system from

natural watercourses, and (ii) a within irrigation district/scheme permit system. A basin-

level permit system for all abstractions and discharges to and from natural watercourses

would allow the water resource authority to analyze basin and sub-basin water balances

and to make plans as mandated on a basin basis and the basin operator to effectively

manage resources in real time.

A5-20

Attachment 4

KEYNOTE SPEAKDIRECTOR GENERAL OF WATER RESOURCES

Distinguish guest, ladies and gentlement.

Along with the change in the paradigm and to anticipate complexity inthe development of issues on water resources we need to put water inharmoniously social, and to give better attention to the basic human rights towater; to put the mechanism and process of formulating policies and a moredemocratic plans of WRM in place, it is necessary to enact a new law in place ofLaw Number 11 of 1974 on Water Resources.

Base on philosophic consideration, the new Law on WaterResources declares that water resources are a blessing of the One andOnly God that give benefits for the welfare of the whole people ofIndonesia. Water resources shall have social, economic and environmentalfunctions and shall be implemented and realized in a balanced manner.

Water Use Right (WUR) is an organized means of managing aplanned sharing of water for the benefit of a community. WUR in Indonesiais the rights are only limited to use and to utilize the amount ofwater for various purposes that user is allowed to take at any particulartime from common water resources such as river, and lake.

The new law states that WUR does not mean the right to ownwater, but the right to obtain and use or utilize water an amount (quota)of water following the allocation determined by the Government for thewater users, comprising users required to have permits and those whoare not so required. The volume of allocation determined in this respectis not conclusive and must be in compliance with the volume stated inthe permit, but this may be reviewed if the requirements and conditionsused as the basis for determining the permit and the condition of wateravailability in the related source has changed significantly compared withthe water availability condition at the time the allocation was decided.

The community's growing need of water effect the increasingeconomic value of water compared with its social functions. Such acondition will potentially create conflicts of interests between sectors,regions, and between various parties engaged in water resources.

A5-21

2

Meanwhile WRM that rests more on the economic value tends to favorthe capital owner and may ignore the social functions of water resources.Based on these considerations, this law gives more protection to theinterests of weak economic groups of the society, by applying theprinciples of WRM that will ensure the balance of social, environmentaland economic functions.WUR to fulfill the basic daily needs of individuals and the people'sagriculture activities located within an irrigation system will be protectedby the Government or the regional governments.

The new act also reconfirms the importance of water's socialfunction. The use of water (from the natural resources) by individualcitizens for their daily necessities of life is free. No license is thereforerequired. All other forms of water use are subject to license, except ofwater use for people's irrigation within the existing irrigation system.

Water supply to serve the human basic needs shall be the toppriority in the provision of water resources over all other needs. Thesecond priority given to the people's irrigation within existing irrigationsystem. The order of priorities in the provision of water resources for theother uses of water shall be determined in each river basin by theGovernment or the respective regional governments in accordance withtheir authorities. If the determinations of the order of priorities in theprovision of water resources produce adverse effects on the existingusers of the water, the Government or the regional governments shallarrange for the compensation to the users.

Reforming WRM policies and strategies as stated in the new waterresources law is an important way in achieving sustainable development ofwater resources in Indonesia. Sustainable development of water resourcesin Indonesia can only be fully realized through implementation new policies,strategies and systematic programs. It is necessary that the governmentand the community be understand on substantive of law and given arole in WRM in a consistent manner. Ruling on the implementation ofWRM scheme shall be further determined in a government regulation.

From this seminar I wish to get some input from the participant'toshare the most idea in improving the result of the World Bank study onWUR and of course some of substantive will be elaborated on followingthe government regulations that we are going to be prepared.

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3

On this occasion, I would like to extend my sincerest gratitude to theWorld Bank and The WUR Study Team for their valuable assistance tomake this study a succesfull end. I would also extend my appreciationto all participants in supporting the study and participating in thisseminar.

Finally, I wish you all success in your deliberations. Thank you.

A5-23

Attachment 5

INDONESIA STUDY OBJECTIVESWATER USE RIGHTS STUDY

STAGES 1 &2 * To help World Bank (the Client) acquireoperational understanding of traditional waterallocation and reallocation, and conflict resolution

OVERVIEW mechanisms* To create common language for the Bank,

Government and other stakeholders

Sanyu Consultants, Inc. Through

& LP3ES * Conceptualization of WURs framework, and

June 30, 2004 - Conceptualization of administration systems

l 2

FOCUS OF THE STUDYSTUDY IMPLEMENTATION

* Study deals with all sectors/users:a. Customary uwers/non-formalized uwer such as users

(2003): Pr.liminary Study (mainly of water for basic needs and religious purposes, andStage 1 (2003): Prelmunary Study (mainlY irrigation fawmers

desk study and small sample field surveys) b. Commercial users such as industries, municipalities,power companies, fisheries, and

c. Environmental needsStage 2 (2004): In depth field surveys in * Study focuses more on the first (a) customary users,

two river basins (Brantas and C,tarum) because it uses almost 90% of water, and yet lttletwo river basins (Brantas and Citarum) regulated and therefore lttle protected compared to the

rest of the uers: highest pnority in law, lowestpriorityin practice

34

WHAT ARE WURS? PROPER SHARING OF WATERREQUIRES

* Rights to abstract and use water that are: Rights that are clearly defined and quantified

- Recognized by laws of a state/nation * Knowledge of the full range of water users within

- Protected against damage caused by third a basin

parties - Basin based planning

- Regulated by state directly, or by community, * Unified management

or by market, or by a mix of any of the above * Maximum participation of the community in

* In fact, organized sharing of water for the planning

benefit of the community - Reliance on negotiations not just rules

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GENERAL PRINCIPLES BEING ADOPTED MORE on DEFINITION inWORLD WIDE INDONESIA

* Recognition of public ownership of water * New Water Resources Law (UU07/04), Art. 5-9* Rights issued for limited duration distinguish Water Use Rights (hak gunapakai air)* Transparency (e.g., public register & public notice) and Water Exploitation Rights (hak guna usaha* Custonary rights changing into specific rights air)* Provision of transferability * WUJR = the right to get and use water resources to* Within irrigation schemes, managed by farmers' fulfill daily needs plus rights of irrigation farmers;organizations no permits needed; no tax/fees* Public participation in licensing proces * WER = the right to exploit water resources for* Legal pluralism: allow various types of arfangements: commercial purposes all users need permitsirnportance of negotiations cmeca upss l sr edprntissued by Government; users must pay tax/fees

7 .

Main Issues Identified by Main Principles Recommended byStage 1 Study Stage 1 Study

1. Clearly acknowledged, defined, quantified, andI . Unclear farmers' customary rights registered rights2. Unclear rules and administration systems 2. A two-tier administration system (bulk water

allocation from natural sources and within3. Lack of institutional mechanisms for schemes)conflict resolution 3. Conflict resolution through Expert Water

4. Lack of formal mechanisms for water Tribunalreallocation 4. Gradual introduction of water trade

5. Peoples' participation in planning andimplementation to reflect legal pluralism

9 10

STAGE 2 Stage 2: Work Plan

* To test the feasibility or appropriateness of Jan-Feb 04 Preparatory MissionStage 1 recommendations by carrying outfurther detailed studies and simulations in * Feb-Apr 04 First Fieldworktwo river basins covering many more * Jun-Jul 04 Second Fieldworksubjects than Stage I * 20 Jul 04 Draft Final Report

* More studies on water re-allocation, conflict * Aug 04 * Final Reportresolution, groundwater than Stage I * *Depenlding on the receipt of the WB's comments

11 12

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Stage 2 TEAM COMPOSITIONManagement:

H. Azumi, B. Adimugroho BASIC METHODOLOGIESInstitutional and Legal:

B. Haisman, W. Martin, IL Febriamansyah,S. Waddell, S. iianto Literature surveys and interviews

Project Cydce Management (PCM}): Detailed field surveys in Brantas andH. Shimaza, S. Rochdiyanto.

social: Citarum river basins

Hydrology Project Cycle Management (PCM)T. Nakano Workshops (two national workshops and

Economics. many field workshops)A. Hata, A. Mavwarni

Advisors: - Interdisciplinary and multi-national expertsC. Rodges, Helmi (intemnational/national pairing of experts)

Logistic Support:T. Nishigaki, Deepink, Y.Maruno 13

14

OUR SPECIFIC CONCERNSABOUT THE STUDY

* Timing of the Study: Given the elections, ill-timed?

* Two most contentious issues at the Parliamentary

debates:- Water trade/ transfer of WURs

- Iruigation Management Transfer (WlvT)

Hence the choice of topics for small goup discussions thisaftemoon.

* Study Team is a group of professionals. We will

express our honest and professional views

11

AS-26

Attachment 6

INDONESIA WUR 11 - RECOMMENDATIONSTHE WORLD BANK The Way Forward - Our Main RecommendationINDONESIA WATER USE RIGHTS STUDY

PHASE 11 Indonesia should progress towards aSecond National Workshop comprehensive, all-inclusive system of

Jakarta - 30 June 2004 consistent rights-based water sharing:

- Formulated on basis of river basinboundaries;

Recommendations - Implemented in a highly participatorymanner.

SANYU CONSULTANTS INC. and LP3ES

INDONESIA WUR It - RECOMMENDATIONS INDONESIAWUR 11 - RECOMMENDATIONSAction on Six Fronts Action on Six Fronts

1. Creating enforceable, formalised 4. Establishing improved enforcementrights for customary water users and conflict resolution mechanisms

2. Establishing ordery, equitable & 5. Reserving river water flows to sustaintransparent processes of water the aquatic environmentre-allocation

3. Strengthening a basin-based, 6. Reducing groundwater use to matchparticipatory approach to water long-term sustainable aquifer yieldsresources management

INDONESIA WUR 11 - RECOMMENDATIONS,. P g C y Rr INDONESIA WUR 1 - RECOMMENDATIONS1. Protecting Customary Rights Customary Rights - a two-tier system

Q: Are all water users treated equally andfairly in access and abstraction of water? Bae n Wv r Sharing Irrigaton Scheme

Finding: No. Water_Sharing- People with hak guna pakai air have no Compremnsrw rn4ide Defind group water righ

formalised, wrtten record of quantity of their Descnpflon Be of buU wste rvignht ar sezndery and tertiryright and get low priority and security of right, of rights: mciudig an alkoczbon for nllakes mcluing shareddespite law giving them top priority. is1rearuses canal loses

Rec'n: Customary rights to be included in G agnq at o level "atin schernbasin-wide allocation and rights system Managed bt Incragre sin coopeaans elIgI F arewith formal, registered rights parallel to sustnabl opimuro WUA) for the bnfit ofrights of existing water use permit holders. e_u_y members

A5-27

INDONESIA WUR I1 - RECOMMENDATIONS

Customary Rights at Basin Level Participatory Implementation of Irrigation SchemeCustomary Rights at Basin Level ~~Certificates of Water Entitlement

* Consultation and participation from the start.

* Need Basin Community Reference Committee Prvksclal Govwnor dCV%E probI I Issue

- Operating under auspices of Water Resource Council EArse, *a m, rAsouresu CWEs to

- Comprises customary water users ______4Y__ _ Swk_ schernes

(Other bodies have insufficient water users) Subnit for

- Uniform representation upstream/downstream I Ng*

- Access to all official papers Basn r rrrn ndudf

- Will require capacity building Rdx n re r an

- Include other interests - eg environmental NGOs w p d c

- "Sunser body. Close down when WUR complete pIlflfw e.&e v ,. usr f

* Task is to provide focus for farmer participation, Cr n

guide implementation, give advice on equity C 0echnical

issues and inter-scheme matters stues ocal consu toaon ans adsfce

INDONESIAWUR II - RECOMMENDATIONS INDONESIA WUR II- RECOMMENDATIONS

Customary Rights at Basin Level Customary Rights at Basin Level

* Each irrigation scheme to be given authorised Same status as permits issued under UU7/04

Certificate of Water Entitlement

* Specifies maximum quantities/flows at intake - means these water use rights are:

• Same status as permits under UU7104 Equally enforceable

* Recorded on open, public Register of Rights Quantity cannot be decreased without

* Certificate should list: consent (except for provisons of UU7/04)

- Authorised water uses

- Tertiary areas * Have a right to apply for more water.

- Industry WUR Permits within scheme

INDONESIA WUR 11 - RECOMMENDATIONS

Customary Rights at Basin Level Customary Rights at Basin Level

* Govemment automatically registers schemes incooperation with Basin Community Reference * Water use rights are meaningless and of no

Committee (no need for schemes to apply) real effect if they are not held by the body

• Require regulations to authorise formal process (person or organisation) that uses the water.* Therefore, Certificate of Water Entitlement

* Regulations should include 'safety net': must be held by water user association or

- Decree that schemes not on Register (for any reason) federation of associations as applicable.have equal status to those registered; and have

- A continuing right to apply for registration at any time. teDuring a y trasin,cul be helinrust-~~~~~~

temporarily by provincial water resources* Certificate of Water Entitlement to be issued in service (or similar body distant from scheme)

perpetuity with 5-yearly reviews. * Therefore -need to accelerate formation of

* Certificates would attract small water resource WUAF at same time as developing WURs

management fees based on service received.

A5-28

INDONESLA WUR 11 - RECOMMENDATIONS INDONESIAWUR I1 - RECOMMENDATIONSCustomary Rights at Basin Level Customary Rights within Irrig'n Schemes

Need discussion paper and consultative process Second tier of rights within basin-level rightsto enable Basin Community Ref Committee to in Certificates of Water Entitlementmake informed choice between:* EntRlements based on recent historical flows * To be held, controlled and managed byEntitlements based on recenthisor ical flowsscheme federations and associations

or* Entitlements based on scheme design factors Second-tier entitlements to be computed at

eg - commandable area, intake capacity etc same time as bulk entitlements

Help will be needed to uncover and negotiate Scheme management should be transferredthe equity issues within this choice. at same time as formal water rights are given.

INDONESIA WUR 11 - RECOMMENDATIONS INDONESIAWUR 11 - RECOMMENDATIONSNew Permits within lrrig'n Schemes Elements of Irrigation Scheme Water Entitlement

CERTIFICATE OF WATER ENTITLEMUNT* New hak guna usaha air permits can only be PEMUrHroLW *ULLAMANKAIRRlUAncNscHEFEFMERATI0N

used to abstract water from scheme canals EULKIWRENTff'EENt -Etmlknscwndwith the concurrence of scheme federation. Wa,erU, UseTyp. Purpa MuaFlew MaVlume

Teliary area A Basi Ingigcan and domnoic -Us Not appica e* Therefore a new industry would need both: Teary ara B Basic Imgeien and drnesmbc -1Us Not appicable

- SIPPA from Provincial Government; and Telary area C Basc Inigan nd domesfic -Us Not appicatle- Supply agreement from WUAF det

* Certificate of Water Entitlement amended at .. X Cmmnnr Totel - Vs -same time to show additional water permit. Compny Y Commeral PapTe manxsfcn - VI -_ndt(Quantity not deducted from irig'n quantity) MrZ Cmonerii Fcish taning - Vs - WuMn&ft

etc

INDONESIA WUR 11 - RECOMMENDATIONS INDONESIA WUR II - RECOMMENDATIONS2. Re-allocation of Water Resources Re-allocation of Water Resources

Q: Is there a fair way of transferring water Within-season 'temporary transfers' of watercnhanging communty needs? (not transfers of rights) are commonplace

Finding: No. between neighbours- Direct transfers of rights are banned by law. * These are negotiated under traditional- But no altemative method yet available that methods and should be left alone without

meets test of protecting individual rights, govemment interventionfacilitating economic development, & servingpublic interest. * For permanent re-allocation of rights, need

Rec'n: Formulation and implementation of regulations that enable govt to acquire waterorderly, equitable and transparent and re-allocate it in a way that will:processes required without delay in order optimise water use and share the benefitsto underpin economic growth.

A5-29

INDONESIAWUR 11 - RECOMMENDATIONS INDONESIA WUR 11 - RECOMMENDATIONS

Re-allocation of Water Resources 3. Strengthening River Basin Management

Questions that need answering when formulating water Q Is water management participatory andrights re-allocation regulations include: bsdo ie aisa eurdb U/4

* Which govt body should plan and control?* How to serve public interest - a common pool Finding: Not sufficiently.

'water bank' or more direct re-allocation? - PPTPA have no water user members.

* How do people register to give up water? - Balai under-resourced and still connected to

How do people register to acquire water? central govt.

* Should 'compensation' payable be made by govt or - PJT role in basin management unclear

made by holders of new water entitlements? - No public participation in permit issue

* Should amount of compensation be set by govt, or Rec'n: Basin management institutions andmutually agreed between water users? capabilities to be strengthened. Long-term

* How can the community be properly involved in goal of integrated RBO responsible for allthe process? water and related resources.

INDONESIA WUR II - RECOMMENDATIONS INDONESIA WUR II -RECOMMENDATIONS

Strengthening River Basin Management Strengthening River Basin Management

* RBO (ie enhanced Balai) should establishbasin-wide allocation and licensing system, Water resource councils and all other

including all uses coordinating bodies should have majority of

* Water allocation should move to probabilistic water user membersbasis, using enhanced river simulation models

* At times of water shortage, RBO empowered Regulations should be amended to allow

to reduce entitlements proportionally so public participation in water licensing

reductions shared fairly - Permit application to be advertised for 4 weeks

* In long-term, new RBOs needed: - citizens have right to make objections

- Attached to provincial govt - Permit issuing authority (RBO eventually) must

- Responsible for managing sustainability of water take objections into account.and related natural resources, including waterplanning, allocation and licensing

INDONESIA WUR 11 - RECOMMENDATIONS INDONESIA WUR 11 - RECOMMENDATIONS

4. Improving Enforcement & Conflict Resolution Improving Enforcement & Conflict Resolution

Govemment and Agencies need to createQ Is compliance with water use permit culture of support for compliance field officers

conditions adequate, and are mechanismsavailable to resolve water disputes? Capacity building required for compliance

officers (civil servants, police and Courts)

Finding: Not really.- Field staff not well trained or supported In compliance. * Courts also need development so that WUR- Polke and courts not equipped or experienced In this tasai holders aggrieved by third party actions (incl

- No established forum for conflict resolution by govt) can seek redress.

Rec'n: Capacity building required to implement * Administrative sanctions applied by restricting

new Investigation and criminal provisions of access to water should be properly authonsed

UU7104. An expert mediation" capability * Water use permits should link with discharge

should be established in province level. permit administration and include waterquality conditions on return water

A5-30

INDONESIA WUR 11 - RECOMMENDATIONS INDONESIA WUR 11 - RECOMMENDATIONSImproving Enforcement & Conflict Resolution 5. Reserving an Environmental Allocation

* Established capacity for settlement of Q: Is the sustainability of the aquaticdisputes outside court (Art 88 (3)) needed environment protected through adequate

residual flows in rivers* 'Expert mediation' panel recommended Finding: Not really.* Panel comprises mediation expertise plus - Water allocated davwn to historic minimum flowswater management expertise - Abstraction limits not linked to river heights* Goal is negotiated settlement

Rec'n: Basin-wide water allocation and licensing* Strength of Indonesian traditional conflict practices should be amended to provide anresolution should not be lost environmental water allocation.

INDONESIA WUR 11 - RECOMMENDATIONS INDONESLA WUR 11 - RECOMMENDATIONSReserving an Environmental Allocation 6. Reducing Groundwater Use to Match

Sustainable Yields* Research required to determine acceptableenvironmental water allocation and flow regime Q: Is groundwater allocation planning and water

use permit issue aligned with the long-term* Environmental flows should include: recharge capacity of aquifers?- Protection of low flows- Water for wetlands and estuaries Finding: Rarely but progress is being made.- Maintenance of flow variability - Groundwater 'mining' is common

* Environmental allocation should be legally - Significant problem of illegal bores and wellsrecognised Rec'n: All groundwater allocation planning andWater use permits should contain conditions water use licensing should be based onthat prevent abstraction that would impact on atesse lonterm sustainable aquifercritical natural low flows. abstraction rates.

INDONESIA WUR 11 - RECOMMENDATIONS

Reducing Groundwater Use to Match INDONESIA WUR I -RECOMMENDATIONSSustainable Yields

*No new abstraction permits should beissued in groundwater basins where waterlevel is falling

* Water entitlements on existing abstractionpermits should be gradually decreased tosustainable levels

* Rate of entitlement decrease:- determined in consultation with water users,- financially absorbable by the water-using

enterprises*Surface and groundwater management

should be coordinated - includingconjunctive use policies where applicable.

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Attachment 7

QUESTIONS FOR GROUP ONE -

WHO SHOULD RECEIVE THE WUR AND WHAT DOES IT MEAN FOR MANAGINGIRRIGATION?

1. To whom should Water Use Rights (WUR) be given?

2. If water use rights are to be given to Water User Associations (WUA) should the WUAalso be given authority and responsibility for managing irrigation?

EXPLANATION

1. To whom should Water Use Rights (WUR) be given?

WUR refers to basin-level water use rights for irrigation schemes. They would apply at the pointof intake from the river and cover volume, flow and authorised water use.

Basically, there are two alternatives in deciding who should receive the WUR:

(a) a government representative of water users or

(b) water users themselves

The choice between (a) and (b) is one of principle: (a) relies on the goverrnent acting in the bestinterest of water users whilst (b) enables water users to act independently of government andgives them responsibility to look after their own interests.

If the group is of the opinion that it is sufficient for a government representative to hold WUR onbehalf of water users, the next issue to be considered is which agency in government should holdthe right - the Balai, the Water Master or some other agency?

If the group is of the opinion that the water users themselves should hold the WUR,consideration has to be given to the different levels of organization amongst the water users,which range from totally unorganised to legally constituted WUAF/GP3A .

The holder of the right must be a recognised legal entity. Therefore, if the water usersthemselves are to hold the right, then they will need to have formed a legally recognised entitysuch as a Federation of Water User Associations (WUAF)/(GP3A). What is to be done if thewater users have not formed a legally recognised body? Should there be some kind of interimarrangement whereby the government can hold the right on their behalf for a limited period?

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2. If water use rights are to be given to Water User Associations (WUA) should the WUAalso have authority and responsibility for managing irrigation?

Here again there are basically two alternatives:

(a) WUA have a WUR without authority and responsibility for managing irrigation or

(b) WUA have a WUR with authority and responsibility for managing irrigation.

Authority and responsibility for managing irrigation refers to the management of irrigationsystems after the point of intake from the river, so it covers primary, secondary and tertiarysystems. It includes financing and managing water distribution (cropping patterns, rotations, etc)operation and maintenance of schemes.

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QUESTION FOR GROUP TWO -

HOW CAN THE RE-ALLOCATION OF WATER RESOURCES BE BESTADMINISTERED?

How can water resources be re-allocated in an orderly, fair and transparent manner inview of the statutory prohibition against transfer of water use rights (WUR)?

EXPLANATION

There is a growing demand for water by municipal water supply companies, power companiesand industry. At the same time, traditional farmland is being converted to other forms of landuse. This means that permanent re-allocation of water is being made away from customary non-formalised uses (basic human needs and irrigation farming) to new uses of water (urban watersupply, power supply and industrial water use).

Re-allocation of customary non-formalised rights is occurring now; however, at present there isno formal arrangement for the re-allocation of water use. It happens in an uncontrolled,untransparent way, with little monitoring or publicly available information on trends andpractices. In addition, there is no protection for customary users who, in a re-allocation of wateruse, give up traditional WUR.

Act No. 7 of 2004 on Water Resources states that a WUR cannot be transferred in part or in full(art 7(2)). Some argue that the ability to transfer a WUR would empower customary non-formalised users and, in addition, it would give a financial value to a WUR.

In view of the reality that re-allocations are taking place now, how can water resources be re-allocated in an orderly, fair and transparent manner?

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QUESTION FOR GROUP THREE -

HOW CAN RIVER BASIN MANAGEMENT AND INSTITUTIONS FOR WATERALLOCATION BE STRENGTHENED?

How can current institutional weaknesses in river basin management be rectified? Should

(a) the role of the Balai be expanded

(b) the role of the Perum Jasa Tirta be expanded or

(c) a new river basin organization be created.

EXPLANATION

It is widely acknowledged that the current institutional arrangements for the management ofwater resources within the river basin suffer from overlapping functions, a lack of roledefinition and a failure to achieve coordination between relevant sectors.

If basin-wide allocation and management of water use rights is to be introduced the followingadditional tasks have to be assigned:

* comprehensive water allocation and licensing to incorporate all water uses

* review of hydrology and hydrogeology within the watershed

* planning, including the conduct of simulation models and adoption of probabilisticconcepts in water allocation

* implementation of proportional reductions in basinlevel water entitlementsthroughout the basin at times of scarcity or drought

* ensuring adherence to water use priorities

Balai as the technical units within the Dinas Pengairan or Dinas Pengelolaan Sumber DayaAir have wide ranging responsibility including management of irrigation, water allocation,water quality standards, control of floods and droughts and protection of the river basin.Should these responsibilities be expanded?

The role of Perum Jasa Tirta includes bulk water supply, operation and maintenance of waterinfrastructure, collection of fees for these services, expansion of water use as well asmanagement and protection of the river basin. Should these responsibilities be expanded?

Alternatively, would a better solution be to establish a new river basin institution with wideresponsibilities for management of water and related resources.

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Annex 6 Case Study: Ombilin Sub-Basin, West Sumatra

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Annex 6

WATER DEVELOPMENT AND WATER USE COMPETITION ATOMBILIN RIVER SUB-BASIN, WEST SUMATRA, INDONESIA:

Relevant Issues for the Development of Water Use Rights Concept

Prepared by: HelmiThe Center for Irrigation, Land and Water Resources,

and Development Studies,Andalas University, Padang, Indonesia

1. Intoduction.

This paper attempted to discuss water development and the dynamics of wateruse and management at Ombilin River Sub-basin, West Sumatra, Indonesia'.River basin management and water allocation from the source has increasinglybecoming issues in West Sumatra in last decade. The development of hydro-electric power plant and the growth of settlement area of cities in West Sumatrahas increased demand for water, which in turn increased competition for wateruse between irrigated agriculture and other sector of the economy. The case ofOmbilin River Sub-basin provide an illustration of water use competition andwater allocation in a river (Ombilin River) as water availability has changed afterthe development of hydro-electric power plant at the Singkarak Lake, the sourceof water for Ombilin River.

The first part of the paper presented the settings and hydrological aspects ofOmbilin River Sub-basin. It then followed by stakeholders identification; riverwater balance; the issue related to the changing pattern of water use and itsimpacts on the poor and other downstream users; and the issue related to thenon-existence of a framework for river basin management. Based on thepresentation issues and implications for the development of water use rightsconcept are then identified.

IThe area of West Sumatra province fall into six (6) river basins. These river basins are: Upper Inderagiri River Sub-basinwhere Ombilin River is belong to; Silaut River Basin; Anai-Sialang River Basin; Rokan River Basin; Kampar River Basin;and Batang Hari River Basin. Two of these basins fully located in West Sumatra province territory (Silaut and Anai-Sialang River Basins) and the rivers flowing down to west-coast of West Sumatra. While the other four are upstream partof river basins which flowing to the east-coast of Sumatra in the province of Riau and Jambi. According to the PublicWorks Ministerial Decision on the division of the river basins area, the Inderagiri River Basin is fall under the authority ofcentral government because the whole basin located in two provinces. It is the upper part, which is located in WestSumatra Province while the lower part located in Riau Province.

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2. The Upper Sub-basin of Inderagiri River Basin and Its Hydrology.

2.1 Demographic and Employment Features.

The total population occupying the sub-basin area in 1997 was 662,425 with theaverage population density 408 persons per square kilometer. The urban-ruralpopulation ratio is 0.28. This reality implies that the water supply for urban needswill be one important issue in the near future. In term of household, thepopulation data shows that in 1997 there were 150,466 households in the basinarea with the average household's size was 4.59. It is estimated that only around12.56 percent (or some 18,898) households that have been served by pipe-bornwater. This data reflects there are still a large number of households that need tobe served with pipe-born water in the future. Aside from household, there arealso some industries, offices, and other social facilities that have been served bypipe-born water.

With regard to the employment pattern, around 67.59 percent (or 94,508 out of139,831 households) were categorized as farm household2. The figure indicatedthat majority of the households in the basin area engaged in agricultural sectoras their main type of occupation. It is reasonable enough to expect that waterdemand for agricultural-related activities will be one of the major issues in thebasin area.

2.2 The Ombilin River Sub-basin and Its Area.

The sub-basin consist of three major rivers, namely: Lembang/Sumani, Sumpur,and Ombilin, and two lakes: Danau Dibawah Lake and Singkarak Lake. Waterfrom Lembang/Sumani and Sumpur rivers flows into Singkarak Lake, while theOmbilin river originated from Singkarak Lake and flows eastward to InderagiriRiver. The altitude varies from 164 m above sea level at the lowest point (nearconfluence of Ombilin River and Sinamar River) to 1,200 m at the highest pointwhere the Lembang River originated from the Dibawah Lake. In other words,water supply in Ombilin river is depended largely upon the outflow of Singkaraklake, while Singkarak water supply is influenced by inflow from Lembang/Sumaniand Sumpur rivers. Moreover, water supply in Lembang/Sumani river is largelydetermined by the outflow from Danau Dibawah lake. In sum, it can be said thatthese three main rivers (and their tributaries) and two lakes constitute ageographical area of a water sub-basin.

The total area of the upper Inderagiri sub-basin was estimated at 3,059.67 sq.km. As a whole, the basin area includes a total of 400 villages within three

2 This data is taken from agricultural census conducted in 1993. There was no data available on the recentnumber of household by the type of livelihood or occupation. Therefore, data from agricultural census

conducted in 1993 were used to estimate the number of household engaged in agriculture and non-agricultural sectors. Assuming that the percentage of people engage on both sectors is the same as before,the number of farm household in the basin area for the year of 1997 would be 97,742.

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districts and three municipalities. Of these villages, the majority (around 87percent) were considered as rural.

The distribution of this area within each individual basin of the river in the sub-basin are as following: around 48 percent is under the basin of Lembang/SumaniRiver; around 13 percent is under the basin of Sumpur River; around 30 percentis under the basin of Ombilin River.

2.3 The Climate and Rainfall.

Another important factor influencing agricultural production of the region is itsclimate, particularly the amount and distribution of rainfall. The basin area isgenerally falling under the typical humid tropic climate covering almost entireregion of Sumatra. However, a closer look at the climatic features of the basinwill raise the point that the differences do exist among regions covered by thebasin area. An agro-climatic map of West Sumatra (see, Oldeman3, at. al., 1978)shows that there are five types of climatic zones -composed on the basis ofconsecutive wet and dry month4 -found in the basin area. Based on the climaticzone a large part of area of the sub-basin under Lembang/Sumani and SumpurRivers belong to the wettest zone, while a vast majority of the sub-basin areaunder Ombilin River is the driest zone which constituted around one-third of thesub-basin area. Consequently, changed in the outflows from Singkarak Lakewould affect water availability for the sub-basin area under Ombilin River.

Rainfall pattern in the basin area tended to follows the above mentioned of agro-climatic zones. Average rainfall in the sub-basin area was 2,025.91 mm per year.However, there are also differences in term of rainfall pattern between the area ofthe sub-basins under different river. The data shows that the sub-basin areaunder Sumpur River is the wettest with the average rainfall of 2,484.3 mm peryear. This is slightly higher than the sub-basin area under Lembang/Sumaniriver with the annual average of rainfall of 2,200.64 mm. Whereas the sub-basinarea under Ombilin River is the driest area with annual average of rainfall of1,789.34 mm per year.

3Oldemann, L. R., Las, I., and Darwis, S. N. An Agroclimatic Map of West Sumatra. Bogor, CentralResearch Institute for Agriculture, 1978. Climatic zone Type A has 9 consecutive wet months and less than2 consecutive wet months; Type BI has 7 - 9 consecutive wet months and less than 2 consecutive drymonths; Type Cl has 5 - 6 consecutive wet months and less than 2 consecutive dry months; Type D2 has 3- 4 consecutive wet months and 2 - 3 consecutive dry months; whle Type E2 has less than 3 consecutivewet months and 2 - 3 consecutive dry months.4 Oldemann et.al. (1978) defined wet month as having monthly average of rainfall of 200 mm and above,while, dry month was defined as having monthly average of rainfall of 100 mm and less.

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3. The Sub-basin Under Stress: The Construction of HydroelectricPower Plant (HEPP) at Singkarak Lake and Its Impacts on the Poorand Other Water Users along Ombilin River Sub-basin.

3.1 Identification of Stakeholders along Ombilin River Sub-basin andWater Balance.

Stakeholders identification. There are four major groups5 from various sectorshaving direct interests over the water from Ombilin River. These arefarmers/irrigators which used waterwheels to lift the water from the river; the coalmining company which used water for coal washing; domestic water supplierswhich provide water for Sawah Lunto town and their and consumers; andelectricity company which used water from Singkarak Lake for hydro-powergeneration (for which the outflows from the lake to Ombilin River need to bereduced) and for two thermal power plants located along the Ombilin River6. Thenext paragraphs provide description of hydrological settings which then followedby the Ombilin River water accounting to show how the water being allocatedamong the major users.

The Hydrological Settings of Ombilin River. This section provide a descriptionof hydrological settings of the sub-basin which consists of: the origin of and inflowto Ombilin River; rainfall and zoning of the sub-basin; and water uses. (Pleasesee Figure 1 for schematic presentation of the sub-basin which illustrate thefollowing description).

There are seven major rivers flowing in to Omblin Rivers which influence thedischarge flow of this river. They are (in the order of upstream downstream): (1)Bengkawas River, (2) Katialo River, (3) Silaki River, (4) Selo River, (5) MalakutanRiver, (6) Lunto River, and (7) Lasi River. Among these rivers, Selo River hasthe biggest inflow to Ombilin River, while the lowest from Silaki River. The otherrivers fall between these two rivers (see Figure 2).

Zoning of Sub-basin and Water Uses. Based on the type of water uses part ofthe Ombilin River, which is discussed in this section can be divided into threezones: Zone A (upstream), Zone B (midstream), and Zone C (downstream).

Zone A is from the Singkarak outlet to the confluence with Selo River. In thiszone the use of water mainly for irrigation where water lifted by usingwaterwheels. Three rivers flowing in to Ombilin River in this zone: BengkawasRiver, Katialo River, Silaki River. In this zone, there were found 58 waterwheelswhich currently only 30 of them functioning.

5 There are other groups, which do not use water but used the river for various activities. They are fisherfolks; users of river for bathing, washing, and other personal needs; other users to include people collecting

the building materials such as sand, gravel, and stone from the river. This paper mainly deals with the four

major groups.6 A more detailed description on each user is provided at the section about the impact of Singkarak HEPP

on the poor and other users.

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Figure 1: Inflows, water uses, and zoning of part ofthe Ombilin River (under study).

Lake Singkarak

Irrigation (water wheels)Irrigation (water wheels)

Irrigation (water wheels) - _River Bengkawas

|Zone A | River Katialo

River Silaki

River Selo

Irrigation (pumps) '41Irrigation (water wheels)

RIrrigation (waterwheels) _ V Domestic water supply

_ E- 0, Ombilin Steam Power PlantR

Irrigation (water wheels= Coal washing

M Domestic water supilyZone B B

I Domnestic water supplyRiver Malakutan

River Lunto NIrrigation (water wheels)

River Lasi I Zone C

- Irrigation (pumps)Irrigation (water wheels)

River Sinamar

River Ombilin

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Jan Feb Mar Apr Mei Jun Jul Ags Sep Old Nop Des

-4- Bengkawas -- _ Lunto - Malakutan X Katialo + Selo i Lasi -*- Silaki

Figure 2: Graphs showing the dependable flow of seven rivers flowing in toOmbilin River.

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Zone B is from the confluence with Selo River up to the confluence withMalakutan River, which both of them flowing in to Ombilin River. There are threetypes of water use in this zone: irrigation, domestic, and industrial. From theinventory, 77 waterwheels for irrigation are found and only 38 functional. Inaddition to the waterwheels, 5 pumping stations for irrigation are also found inthis zone. For domestic and industrial purposes, there are two pumping stationsfor drinking water and one pumping station for coal washing.

Zone C is from the confluence with Lunto River and confluence with SinamarRiver. In this zone water use is mainly for irrigation by using waterwheels to liftwater from the river. Two rivers flowing into Ombilin River: Lunto River and LasiRiver. In this zone there are 231 waterwheels for irrigation which only 1 16functioning. In addition, 9 pumping stations for irrigation are also found in thiszone.

Water Balance. The results of water balance computation for each zoneshowed that the discharge flow in each zone still higher than the outflows orwater uses for different purposes (see Table 1). In Zone A, Zone B, and Zone Conly about 5.4 percent; 30.6 percent; and 12.7 percent of the water being usedrespectively. The data tended to suggest that in Zone B pressure on waterresources is the highest, followed by Zone C, and Zone A.

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Table 1: Results of water balance computation for Ombilin River.1 Zona A Zona B [ Zona C

Items | Inflow [ Outflow 1 Inflow | Oufflow Inflow | Outflow lm3/det _[m3/det m3/det j m3/det [ m3/det j_m3/det_J

Singkarak Lake 3.333 _ l l

Bengkawas River 1.19 I I IiKatialo River 2.97 lSilaki River 0.07 - _ l l _ _l

Irrigation (Agric.) - 0.41

Water Balance 7.563 [ 0.41 7.153 _ __ ! !11ISelo River 3.96 | ___l l l

Irrigation (Agric.) lI - X 0.92 waterTalawi Domestic - 0.04 wateWS Company _ l l __ l flowingdown-PLN Thermal - 0.005 stream

Power PlantTBO Thermal - 1.9Power Plant l_l____| ___l____

Coal washing l_l_____ - 0.14 11 1 1 I

Rantih Pump - 0.4Station (Domestic

[ Water Balance !i I _ 11.113 3.405 7.708

Malakutan River 1. _3|2l

I Lunto River l jl |I 0.64 - l

!Lasi River Hlll I2.02 - lI Irrigation (Agric.) !| ! I I 11 - ! 1.489

[ Water Balance li | 31 11.688 1.489 10.199

3.2 Issue #1: The Impacts of Construction of Hydro-electric PowerPlant at Singkarak Lake on the Poor and Other Water Users.

The development of Singkarak Hydro Electric Power Plant has caused a drasticreduction in the discharge flows of Ombilin River because a large amount ofwater from Singkarak Lake is drained out to other river, which flowing to the westcoast against the Ombilin River that flowing to the east coast of Sumatra. Apermanent weir has been built at the outlet of Singkarak Lake to the OmbilinRiver, and outflow of Singkarak Lake to the studied river has been reduced andkept at a range of 2-6 m3 per second from the average around 40 m3 per second.In other words, the development of Singkarak HEPP has increased the scarcityof water, and therefore, competition over water use at the Ombilin River.

Changing amount of water supply has, certainly, brought about a number ofchanges in the water use pattern of the basin. It has also brought about severalproblems to the water users along the river.

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(1) Reduction in the number of water wheels and irrigated area.

Irrigation systems existed along the Ombilin River are traditional water wheelsand pumps, and no surface system was found. This method of irrigation is felt bythe farmers as the most suitable system under the physical condition of Ombilinriver. The limited rice fields available; their locations which are scattered over thenarrow flat area along the river; and the average width of river which is around50 meters would make the construction of weir for surface irrigation would bevery costly. In addition, the porosity of the soil is required continuous flows ofirrigation.

Field inventory, found some 184 water wheels serving a total of 333 hectarescommand area and 463 farmers. This data indicates that, in average, a waterwheel serve an area of 1.8 hectare with 2.5 farmers involved. However, the exactcapacity of water wheels as well as serviced area and number of farmersinvolved vary depending on the size of water wheel which is determined by thelength, number, and diameter of its water tube.' In general, it can be said that thecapacity of a water wheel increases as the length, number, and diameter of watertubes increases. In reality, there are water wheels that could irrigate up to 15hectares command area, which involve some 30 farmers.Pump irrigation technology has just started to be used since the last few years.This is especially true for those whose land, which can no longer served by waterwheel irrigation systems. At the time when field inventory was conducted therewere 14 units of pump irrigation found along the Ombilin River course with a totalcommand area of 138.5 hectare involving some 200 farmers. Most of thesepumps were provided by either government or non-government agencies likeagricultural service and other related agencies. Pumping machine is usuallygiven to the farmers that grouping themselves into an organization such asfarmer organization (FO). In this instance, pump irrigation is owned by a groupand not by a farmer personally. In sum, it can be said that there has been achange in the institutional form of irrigation ownership following change in theirrigation technology from traditional water wheel to pump irrigation system.

However, some farmers whose land served by pump irrigation complained aboutthe cost of operation and maintenance of pump compared to water-wheel.Another problem is the soil type of agricultural land in the site which is mostlyporous and need continuous inflow of water to maintain the soil remain wet andcrop water requirement fulfilled. This is, in fact, a weakness of pump irrigation thetechnology of which oftentimes is not mastered by the farmers and its operatinghour is limited. Waterwheel on the other hand has a comparative advantage,where it can be operated continuously without a significant additional cost.

7 Water tube (locally known as galuak-galuak) is part of the water wheel, which functioning to tap water.Normally, the larger the size of water wheel the higher the number of water tubes it has. However, undera certain condition _for example, when the river water discharge is low_ system operator might reducethe number of water wheel to allow it keep on operating.

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As mentioned earlier, irrigation has been severely affected by reduction in thedischarge of Ombilin River. Looked at the recent number of water wheel,command area, and farm family serviced during the period of post SingkarakHEPP development, it can be concluded that their number has declined markedly.The number of currently existing water wheels is only around 50 percent of thatin 1996 (before the operation of the Singkarak HEPP started). Whereas currentirrigated area is approximately 61 percent of that in 1996. Table 5 below showschanges in the number of water wheels, service area, and farmers at the OmbilinRiver during the period of last 5 years (1996-1999).

Table 3. Number of water wheel, service area, and farmers in the Ombilin Riverfrom 1996 to 2000

Year Number of water wheel Total service area fTotal numberiof Notefarmers Involved

1996 366 549 729

1997 296 469.75 621

1998 237 404.7 556

1999 195 342.95 478

2000 184 333 463

Source: Field inventory

(2) Increased 0 and M Costs of Water Wheel Irrigation Systems.

For owners and operators of water wheels, reduction in the water discharge ofOmbilin River has caused several problems in the system operation andmaintenance (O&M). Firstly, the current discharge flows of Ombilin River,especially in the dry season, oftentimes can not rotate the waterwheels and if itcan usually with a very low rotation per minute (rpm). Consequently, operatorshave to lengthening the traditional weir as a way of increasing water depth anddirecting water toward the wheel so as to make its rotation faster. Another way ofmaking water wheel keep on operating under such a condition is by reducing thenumber of water tubes so as water wheel becoming lighter and easier to move.Nevertheless, the consequence of both choices is increased in the workload andcost of operation and maintaining of the system, and reduction in the capacity ofwheel to supply water which mean decreased in the number of land can beirrigated and reliability of irrigation water.

Secondly, increased intensity of damage on traditional weir and water wheel dueto drastically increases of river discharge resulted from suddenly opening of thegate at the Singkarak outlet. According to the farmers, gate keeper usuallyopened it during the rainy season to avoid flooded on the settlement and irrigatedarea which are located in the low land surrounding Singkarak Lake.

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Consequently, Ombilin River discharge increased during rainy season becauseof the additional inflow coming from Singkarak Lake.It is clear enough that, to the owners and operators of water wheel irrigationsystems, increased damage intensity means more labor capital and costs ifsystem to be repaired. Result of socioeconomic survey shows that on averagethe intensity of water wheel damage increased from 1 per season before theoperation of Singkarak HEPP to 2.5 per season since it operation.

Table 4. Damage intensity, and average rehabilitation costs of water wheeland weir before and after development of Singkarak HEPP.

Average intensity/cost (per PercentageItems season) of increase

Before HEPP After HEPPWater wheel damage 1 2.5 150Weir damage 1 4.5 350Rehabilitation costs of water wheel Rp.150,000 Rp.1,1 00,000 633Rehabilitation costs of weir Rp.50,000 Rp.425,000 750Source: Socioeconomic survey.

(3) Unreliability of irrigation water and declined rice yield rate.The problem of a higher intensity of damage on water wheel has resulted insome problems in term of irrigation water supply. Most farmers reported thatirrigation water supply has been unreliable during the period of post developmentof Singkarak HEPP due to the above-mentioned problems in the systemoperation and maintenance. As a result, the growth and yield rate of rice on landirrigated by water wheels declined markedly. Some farmers reported a lightereffect while; some other noted a considerable decline. Nonetheless, the result ofsocioeconomic survey shown that as a whole, yield rate of rice has dropped froman average of 4.2 ton per hectare in the period before the development ofSingkarak HEPP to 3.1 ton per hectare in 1999.

(4) Impact on Domestic Water Supply and the Industry.The reduction of the discharge flow in Ombilin river has also affected the watersupply of the pump station for coal washing and water quality domestic watersupply. However, the coal washing company only experienced it initially. ThePLN (the company operated the Singkarak HEPP) has built a weir to improvewater level so that problem is solved.Declined water quality of Ombilin River has also brought about some problems tothe domestic water suppliers and consumers. The main problems facing thedomestic water suppliers (in this case was PDAM) is increase operation andmaintenance costs. Domestic water company manager estimated that water

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treatment cost increased by almost 100 percent. However, at the time when rawwater quality was very low, the domestic water suppliers did not perform watertreatment since it would not bear any improvement in the quality of water. In sucha condition, the domestic Water Company would distribute the raw water directlyto the customers without treating it. So far, there is no health-related problemsreported by the domestic water consumers, which is caused by the low waterquality.

The latest data shows that in 1999 the company served approximately around 27percent (or 15,042) people of Sawahlunto municipality. This figure indicates lowpercentage of people which having access to pipe-born water in Sawahluntotown. Therefore, it is reasonable enough to expect a growing demand for pipedwater in the near future, and a greater amount of water from Ombilin river to betaken by PDAM since no other water sources in the area.

3.3 Issue #2: Strengthening Organization for River Basin Managementand Framework for Water Rights Licensing.

As has been mentioned earlier, the incorporation of idea of river basinmanagement into policy and action are relatively new to Indonesia. Furthermore,the management framework is not yet developed except in two basins in JavaIsland which managed by publicly own corporation. These two basins areBrantas River in East Java under the management of Jasa Tirta PublicCorporation, and Citarum River in West Java under Otorita Jatiluhur PublicCorporation.

In other provinces of Indonesia, the idea of river basin management is newlyintroduced. As the responsibility for water management are fragmented betweena number of government agencies a provincial water management committee (inIndonesian language abbreviated as PTPA) supposed to be set up in allprovinces8. In West Sumatra the PTPA has been set up in 1994. Thecharacteristics of this committee are as following:

* its main function is to assist the governor in coordinating water managementat the provincial level.

* the specific tasks are: (1) data collection, processing, and preparing materialsto be used to formulate provincial policy on water management coordination;and (2) provide consideration and/or advise to the governor on mattersrelated to water supply, waste water drainage, and flood control.

* the members of the committee are the staff from agencies related to watermanagement (other stakeholders are not considered as the members of thecommittee).

8 This is based on the Public Works Ministerial Decision No. 67/PRT/1993 on the Provincial Level WaterManagement Conmmittee.

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There was no specific budget allocated for this committee, so that the activitywas much more on an ad hoc basis. When there were problems related to watersupply, drainage or flood a meeting of provincial staff would be held but it wasnot very clear whether the meeting was a PTPA meeting or just a meeting relatedto the performance of general government task.

The government regulation related to the provincial PTPA is also has an articleswhich stated that the governor could set up basin level water managementcommittee (PPTPA) to assist the PTPA in performing its tasks. However, up untilnow this committee has not been set up in any of the six river basins located inWest Sumatra Province. As the conflicts over water allocation and use tendedto increase in West Sumatra, as illustrated with the case of Ombilin River there isclearly a need to strengthen organization for river basin management in theprovince. The case of Ombilin River can be used as the pilot activity to developthe framework and capacity for integrated water resource management at thebasin level.

In terms of priority of water use, GR No. 22/1982 underlines that water fordrinking is the highest above all priority because drinking water is the very basichuman need for survival. This essentiality water for human life seems to be thebasis for the prioritization so that the order of priority can be seen, as one sourcesaid, in order as water for life, water for livelihood, and water for amenity. It is tobe noted that environmental need for water is not included in the list. However,since there are inter-regional differences in the purpose of water use and in thecapacity to make water available, the order of priority below drinking water maybe arranged differently in different regions of Indonesia. PTPA is the coordinatingbody tasked with making such prioritization.Also the prioritization still leaves questions such as how prioritization would beapplied in decision making in time of short term or long term water shortage?What about the right of old irrigation systems over water if higher priority usesexert their right over water of the same source? Clarification on these remain tobe desired.

With regards to water rights, it is to be given in the form of use rights andallocated by the government through the mechanism of licensing. Since waterand source of water are considered embodying social functions, there are usesof water that required license, and there are not. Tapping water for non-commercial drinking water and other individual domestic uses are allowedwithout license as long as they do not harm the source of water and other waterusers' interests. According to MR No. 48/PRT/1 990, government license isrequired for the uses like domestic water supply, municipality and real estate,irrigation, animal husbandry, plantation, fishery, industry, mining, energy,navigation, disposing of waste, etc.The Minister of PW or the governor are authorized to issue licenses for water userights within their respective basins. License for groundwater use is issued by theMinister of Mining and Energy. License for water use may be given to individuals

A6-13

or groups of individuals or any legal entity. Group having license to use water isauthorized to arrange water distribution among its members based ongovernment regulations. Those granted license must pay fee to the ministry or tothe governor depending on whose water the license is about. According to MRNo. 48/PRT/1 990, the fee is to be used for financing O&M of water structuresand maintaining the sustainability of water source. Every license on water usehas time frame depending on the kind of use. No general reference for this yet,but the fee is supposed to be set every five year.

Transfer of water license is prohibited. Article 18 MR 48/PRT/1 990, however,states that giving up water license or selling it to other parties may be allowed ifagency issuing license gives its permission. The MR, however, is not explicit onthis exception.

This formal water use rights and its allocation are hardly implemented, exceptperhaps to some extent in two basins managed by the publicly own company.The problems are not only the existence of gaps and inconsistencies in theformal regulations, policies and organizations; the lack of consensus on somekey concepts (Pusposutardjo 1993; 1996) and the lack of hydrological data inmost of the basins (Hehanusa, et al. 1993) makes it impossible for thegovernment to make basin-level planning or even to make the right decisions onwhether or not new uses of river water justifiable.

Regulation provides that licenses for water uses that potentially affect waterbalance must be based on general basin-level plans on development, protection,and utilization of the basin water. In cases where such plans have not beenmade, the issuance of the licenses must be based on consensus made in thecoordinating body PTPA. But, what would be the basis for such a consensus?

In most of the basins, however, water allocation is governed by whatever localcommunities have to accept as rules. In predominantly agricultural basins,traditional adat may govern water allocation. Where nonagricultural sectors haveexerted their interests, claims over water may be based on political or economicpower leading to transferring water from agricultural sector (Kurnia, et. al. 1996).Nevertheless, government wields, and capable of exercising, the authority inwater allocation, including inter-basins water transfer. Transferring water fromOmbilin River to Anai-Sialang basin is an example. The decisions about thistransfer, it seems, have been made on the basis of studies done by thegovernment. The original water users must adjust to the new situation. One ofthe impacts of the government action to farmers in Ombilin River is that it hasaffected the operation of their water wheels in supplying water to their paddyfields due to lower river discharge flow. Moreover, the lower flow has also causeddomestic pollution more felt in the downstream Ombilin River. This underlines theimportance of formalization of irrigation water rights in order to protect theinterest of the poor and small farmers. Also, it is important to assess thetechnologies used by the existing water users in order to predict the impact ofriver water reallocation and the consequent reduced water supply to them.

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4. Conclusions and Relevant Issues for the Development of Water UseRights Concept.

The discussion on the preceding sections illustrated that in the situation where"lwater scarcity" has emerged a careful water allocation is required to fulfill theneed of the users. The construction of hydroelectric power plant at SingkarakLake has significantly reduced the outflow from this lake to Ombilin River which inturn has affected the users along the Ombilin River. Among the impacts were:(1) the cost of operation of waterwheels has been increased and the number ofwaterwheels for irrigation has going down by around 50 percent; (2) productivityof irrigated rice reported has decreased; and (3) water quality for domestic watersupply has decline and increased of the cost for water purification;

All of those indicated that water allocation matters need to be done systematically.Stakeholders proposed that a kind of water board which consist of all of them beset up and given authority to regulate water allocation especially from SingkarakLake to Ombilin River. At this moment Balai Pengelolaan Sumberdaya Air(BPSDA, water resources management Coordination Body)has been set-up forKuantan Inderagiri (which also cover Ombilin River Sub-basin), however, BPSDAjust newly set-up and in the process of preparing itself to perform the tasks.

In relation to the water use rights there a number of relevant issues as following:

• Data on hydrology and stakeholders. Water allocation can only be done in abetter way if information on water and users/stakeholders are sufficientlyavailable. Identifying and have a record of users with small quantity of waterrequirement is equally important with the users of large quantity of waterrequirement. If they are not identified and properly recorded, then, theirneeds could easily ignored in the even of water development or water scarcity.

o There is a need to calculate and allocate based flow in the river to maintainthe health of environment.

L There is a need for a clear institutional arrangements for water allocation andobtaining water use rights.

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References cited.

BAPPENAS. 2000. Letter of Sector Policy: Water Resources and IrrigationSector: Policy, Institutions, Legal and Regulatory Reform Program. Jakarta:Pokja Reformasi Kebijakan Sektor Sumberdaya Air, Bappenas.

Hehanusa, P.E. et a/. 1994. Kebutuhan Riset dan Koordinasi PengelolaanSumberdaya Air di Indonesia. (The Research and Coordination Needs of WaterResource Management in Indonesia). DRN Kelompok II, Sumberdaya Alam danEnergi. Jakarta.

Kurnia, Ganjar, et al. 1996. Persaingan dalam Pemanfaatan Sumberdaya Air(Competition in Water Uses), dalam Hermanto, et. al, Persaingan dalamPemanfaatan Sumberdaya Lahan dan Air. Bogor: PPSEP dan Ford Foundation.

Molden, David. 1997. Accounting for Water Use and Productivity. SWIM Paper1. Colombo, Sri Lanka: International Irrigation Management Institute.Pusposutardjo, Suprodjo. 1996. Rancangbangun dan Sistem Jejaring Irigasiserta Agihan Air dalam Kaitannya dengan Gerakan Hemat Air. (Design, IrrigationFacilities System, and Water Distribution in Relation with Water ConservationMovement). In Hidayat Pawitan dkk. (eds) Prosiding SeminarNasional "Pemantapan Gerakan Hemat Air untuk Mengoptimalkan PemanfaatanSumberdaya air." Lemhanas, Perhimpi, Peragi, Perhepi. Jakarta.

Oldemann, L. R., Las, I., and Darwis, S. N. 1978. An Agroclimatic Map of WestSumatra. Bogor: Central Research Institute for Agriculture,

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Annex 7 Demography in Brantas and Citarum Basins

Annex 7

Demography in the Brantas and Citarum Basins

Brartas BasiiVDiurictfMuscqlity Area PoPuolatin p op.Dlnsiti GroeU:

1S99 l 991 1997 t 290 0999 22001 00 202M tm)Ws5-0rhn2 pA ~ % peryr

Trensgalek 1,20t222 647.4e8323 S24.9 6261594 .63. 63.B6 67 24t4 5 8O.61Tukmna,4L 1,046.22 926 878 9W,432 941i 8EK 947,79 955 4S1 9f34,1t27 922 C 7931^ar 1.51 1 46.239.9 131.92834 1 2 1 3.7S 690 O S

Malanrt 3,072.19 2 267,21 2.39.54 7 2 333,C15 2.34,567 2 9362654 2,382.267 775 1.0BSidpario 634.39 1,52.2629 1 243 164.646 1.1923165 ,232.52 t.2B776 1,9971 2.42101ookeft 692 t5 t 33.6S1 E147,94E S59-290 Bf,60 8S1 .98t NOW,S l1,27: 1.'t Jombag 90390 1 078,8S5 t1.09S.6 1 2I6,441 12,11 4.837 2142370214 1 72 .1.91Ngtanuk 1,224.33 9643.16 996,91 1 1 0O2109 10 3 1.65 ,13.8O1 17 1.02Kota Kedta E3.40 234.1445 235136 23S,614 236.3074 236157S 2301535 372 B 35Sota rWRar 32 S7 1 a9 s 755 120,056 12000 121ar b C7 122P ,17 123C9s 3,782 s.57Dsta Mala i 110.c6d 7ct,673 707.790 714,32S M ovr.5v 7t0,744 7 o30.76 S 6,64D O.S3

Krta Uopkerto 16 46 104.41 103421 10B6.1 34 107,1230 15.0827 1908 04 4 6,851 7.74Koa Sura4aya 327.37 2 329,598 2,34465a 2 356,4E1e 2373,082 24013104 2,4149 97 9 7 492 0 193Bltiar 543.n. 12.309 13,717 2036 563.918.712 t0_ 32 1.7 335.282 18 427,26n 184.423.17 4 1,172 t18 0 3Tt Ead t Ja6a 49,54287 32.969.11 33 18969326 _2f2_ 34 30 3.B4.521 346000 697 43 2 78 4.% to East Jaa 26.5 42.0 4Z1 42.16 426 0 42.3 4274 1Source East Jw>za in Fklwes 2D02, BPS: Popufatios in 1995 ad 2COOD are basett on Popubbion C:ensus

Ctaumr i3asin: O i 'afulv located winhin the basin),ft ! "Aclmeliy Area P13opiion Pop. omfl l- Srt

1995 242 1 2Ei.1 2 702 9230027 1,72544krn2 PFTv, % per XTr

Banc3 2.324.84 3,398 3 42146..97 4,235,i 4.320344 14,865 3.61SU#WM 1.85SQ1 1.339.285 1 3193,24 1,328.521 1 352,354 721 8.56PKowakaria 757.1 7 902 711 6984 711033 724 193O g 7 1 2.17Koawana 1,533.88 1 584,921 1,766 1, 9 337g3 301 43.422 0.7030 1191 2.1Kota 27,91 2.3S 2120 21 21,637 2142310 2142.914 1 8ITola3t r D. 9.165 74 4496 t4 2810,333 1,6 ITota WestJava Z51 35951 I 36.07,3221 36,14,2034 1926. 2 01

DistricISMAtuciotafty *ialLd wbcnthte basn: BwWAnV Subm% Purtakwm Karma. andt Kota BanidugSource Wesl Java in FtEas 2aa02. 3PS- opt20 Popin 198S and 200n aee basedsS East oa aus

(BCar Sasin Dt Data = 2Distrct! murscpality EconorriOaIvA hve over 10 vas Old ______nSector aid sharel _

Wor_um seeij io Totalactrie % of,ee wn A,rcftie |dust|Servces TOW Axuiure ndus_ Servces

Trengaiel15 334, 341 94.42 34 4.1 21960 2650821 581306379 334, 3s 73 27.01Tuk la 479.715 29.530 .8 923, 59.7346 191,582 47977156 47461 Z3 39.96EPar 543.2aa 29041 409 5.002 36 301.274 27,2368 180.1274 2439211 340 2.4 332Kefi -M6690 42.96 718 6.04 309428 52,219 309,t207 61916677 432 7.231 44OMag 1,204,259 71,83 1,272,081 165 ,374 82.469 5315243 1.8004259 41.82 9 443Sdoano 727.381 36,01 t Jfi33921 4.71 81.37C| 240,67sl 405.33S1 7227 3gt1 tl 21 33.1| 5 7MoiLbsto 420,974. 2QS1 441.8SS 4-7 1550.271 953,007 172,9401 420,9741 363.81 Z.1 41.1lJanst 496M81 32.625 S9,511 fi2| 207,34 48.785 240,7531 496,8B 4t.1 J l8| 48.51N kap 469.3441 38,NO SM83341 7.71 242,7sc t8a03sl 208.ss91 4fi93441 51.71 381 44 4KotaKeirimG 4 10371 9.717 1137624 161 61360 1,37| 7485397 101,1074001 20 t.27 7406Kota Sliar St3,780 4.3M SS.0e; 7 9 4.3371 S.C21I 43,4221 50.7831 a 59 S 1 6 61Kota sbJaa 2183.70 2.,46 321.232 7152 1249 .6 37526. 24707218 12340 32 27 42533KotnaLpnkrt uy 44c941 3.S69 481te 74ba1. td3 5'51n4 P s741 44.94 20.8n 7drlIKott SLabava 1W,1U,7' 2611570 5.21 22,7S0| 210.2391 91156 ssaLI ,44:5751 ZO, t841 7s.el

gotalEsast Java 1,66b.782 -845ssso t7,sts,3721 4.81 8,29&,6441 1,465 464| 6.sos6741 16.66e97821 49.81 1181 41 41Source PWealtion fa EastfSwa -RBsults Po the 280 P19atin 20 ae base anan Census

Distfic3amMDanCtia;myt t Abe Poulonovert yews old | byn Sectr No. nd sha|~~~~~~~~osn I W seeki ob Total arbse| % ofveng Agicudttre| be st | Sewitces Tota IAanulurel Industry Se;mces|

IB° | 1.&-10208| 334 3341 1,se4.1542 l 16.s| 413sB. 55s,ts71 bs6911 1.660,208| 2S t 33.e 13]ISU an 581,07 69.3131 6,4101 to. 29eo96 .76.05¢1 20639491 591,7 51.3l 131 35slPun*akarna | 296.04t1 46.9l61| 34A.e2| t3.S1 101,2741 s4.,ss3 11t2.1741 299041l 3401 2a41 3761IKarawanaX I M.408l 160.99B6 SM.404l i9.4l 2167741 154,8s9 297.7431 63s,40sl 324T 23A1 44 slIKotaBadn Bwx04,5591tS9.J13| 963.27tl 165| 9.3U| 242.7691 55243S1 s04s558 1.21 30 21 6 S7

T lahrDimrs*| 403121 773.317 473s;l t6t . 1 t133,4S5| t.s3s14,¢.t2 s 27.81 4821iToaWsJa I 11%7SM44s 263,7781 t6,2t26 MI214,sss3 .1.s61.470,7891 15 ID.0 30.21 Z3 2s'DistntsJunKoa5yful ocatedvg§ithe bash: 3andurg, ubang. Purwt$a Karawarng,andKotaBan&ung

Some: West Jav in FVunes 2C0. 9PS: PopuWbfis in 1ss arxt 200 are basec on PopulaRon Cemsu

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Annex 8 Regional Gross Domestic Products of Brantas andCitarum Basins

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Annex 8

Gross Regional Domestic Products in Brantas and Citarum Basins

RGDP in 1995 and 2000

(Brantas Basin)GRDP (Billion Rp) GRDP (Billion Rp) Annual

District/Municipality Current Price Constant Price at 1993 Growth Rate1995 2000 1995 2000 (1%)

Trenggalek 505 982 473 512 1.6Tulun gagung 976 3,013 909 1,113 4.1Blitar 1,037 2,471 937 1,099 3.2Kediri 1,407 3,242 1,264 1,478 3.2Malang 2,888 7,500 2,587 2,780 1.4Sidoarjo 4,203 10,708 3,829 3,841 0.1Mojokerto 1,319 2,834 1,222 1,267 0.7Jombang 1,269 3,205 1,093 1,082 -0.2Nganjuk 1,151 2,442 1,049 1,134 1.6Kota Kediri 5,768 13,319 4,735 6,163 5.4Kota Blitar 167 37611 149 170 2.7Kota Malang 2,569 6,597 2,089 2,429 3.1Kota Moiokerto 206 542 202 237 3.2Kota Surabava 15,554 41.000 13,232 13,455 0.3Total of Major Districts. 39,019 98,231 33,770 36,760 1.7Total East Java 65,883 169,911 57,041 56,857 -0.1% to East Java 59.2 57.8 59.2 64.7uS$ Exchange Rate 2,305 9 385 2,118 2,118RGDP (billion US$ 16.9 0.5 15.9 17.4Source: Gross Regional Domestic Product Regencies/Municipalities in Indonesia 1993-1998, and1995-2900, BPS,Jakarta

(Citarum Basin: Districts/Municipality fully lo ated within the basin)GRDP (Billion Rp) GRDP (Billion Rp) Annual

DistncVMulnicipality Current Price Constant Price at 1993 Growth Rate1995 2000 1995 2000 l%l

Bandung 6,804 19,978 6,097 6,872 2.4Subang 1,706 4,468 1,553 1,795 2.9Purwakarta 1,066 4,452 911 1,953 16.5Karawang 2,942 7,315 2,559 2,794 1.8Kota Bandunq 1 6,833 14,423 5,766 5,738 -0.1

Total ot Major Distrs i 19, 351 50,636 16,886 19,152 2.6Total West Java 76,197 174,649 62,492 55,569 -2.3% to West Java II 25.4 29.0 27.0 34.5 US$Exch2angeRate ,3 9,3818 2,118 ________

RGDP (billion Us$) I[ 8.4 5.4 8.0 9.0oSource: Gross Regional Domestjc Product Regencies/Municipalities in Indonesia 1993-1998 and1995-2000, BPS

RDGP by Sector (Provincial Level) in 1995 and 2002

Current PriceProvince Unit cl GRDP by Sector in 1995 GRDP by Sector in 2002

|_ Agriculture - Industry Services I Total Agriculture Industry I Services I TotalEastJava bil.Rp 11,165 25,580 29,138 65,883| 47,361 80,658 98,9381 226,957____________ 16.9 38.8 44.2 100.0ff 20.9 35.5 43.6 100.0West Java bil.Rp 11,453 36,764 27,980 76,197 33,391 114,162 66,7481 214,301I___________ I °/__ 11 15.0 48.2 36.7 100.0 15.6 53.3 31.1 100.0

I IL Constant Price at 1993Province Unit r GRDP by Sector in 1995 GRDP by Sector in 2002j__________ _______ Agriculture Industry Services I Total AgricuLture Indust Services TotalEast Java bil. Rp 9,8661 21,640 25,535 57,041 10,462 20,8801 29,412 60,754____________ 17.31 37.9 44.8 100.01 17.2 344 8. 100West Java bil. Rp 9,351 29,513 23,6281 62,492 7,655 30,863 21,195 59,713I___________ ____11__ 15.0k 47.2 37.8 100.0 12.8P 51.7 35.5 100.0Source: Gross Regional Domesbc Product by Pnoince in Indonesia, BPS, Jakarta

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Annex 9 Crop Production in Brantas and Citarum Basins

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Annex 10 Record of PCM Workshops

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Annex 10-a) Results of the Workshops

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Annex 10 a) 1) Participants of PCM Workshop at Sidoarjo Dinas (Water Resources Office) on 4 March 2004

Farmers (9 participants) Government Officials (13 participants) | Industry (9 participants)Name Organization Name Organization Name Orzanization

Tarmudji Leader of WUA Federation in Praptopo Suhudi DINAS (Tax Office) Agung Krembong Sugar cane FactorySidomukti Secondary____Canal_Subiyantoro ________________

Supeno Leader of WUA Federation in Delta Sutrisno Sub-District Resources Services Heru Prastowo Krembong Sugar cane FactoryMandin Secondary CanalNgadino Leader of WUA Federation in DINAS (Environment Impact Moh Sidoarjo District Municipal WaterBambir-anom Secondary Canal Eddy Herwanto Assessment Office) ochtar CooperationKasdam Leader of WUA Federation in Budi DINAS (Tax Office) Lukman Hakim Taman Tirta Municipal WaterKa>amPelayaran Secondary Canal BuiDNS(a fie umnHkm Company

Province Water Management Sidoarjo District Municipal Water0 Waridb Kontaktani Farmer from Prambon Sub-District Samsul Anan Project Edi Sucipto Cooa tion

Adjemain Farmer from Prambon Sub-District Taufiq Grogol Water Management Ari Watoetulis Sugarcane Factory_______________ ~~~~~ ~~~~CooperationH. Sukardi ACH Leader of WUA Federation in Subaudi Sidoarjo District Development Ismoyo Tjiwi Kimia Paper Company_____________Ketawang Secondary Canal Planning Office________

Thowaf Farmer form WUA Federation Tirto Hadi Prastowo DINAS (Sidoarjo Agriculture Office) Widodo Tjiwi Kimia Paper Company___ ___ ___ ___ Barokah

Kanam ~Leader of WUA Federation in Juwet AknSub-District Water Resources KucrPeriParCopnKanam Secondary Canal Askan Office Kuncoro Pekerin Paper Company

M. Moe n Porong Sub-District WaterM. Moezaini Resources Office

NGO (2 participants) Sujat Mangetan Sub-District Water__________ ~~~~~~~~~~~~Resources OfficesZaihul Bahri NGO, a farmer Mardjikin Grogol Sub-District Water

Resources OfficesH. Ahy Communication Forum for Fish i Mangetan Sub-District WaterH. Ach Syarief Culture Community Jziwanto Resources Offices

Annex 10 a) 2) Sub-Basin Level Stakeholder-Problem Analysis at Sidoarjo Dinas (Water Resources Office) on 4 March 2004 (1/3)

Stakeholders Problems Since When? Why? Solutions

Many Canal damages at Sidomukti Secondary Canal. farmers can do 1. Canals are old. / 2. Much Scouring. i smpyrovement of infrastructure

Small shops occupy the banks of Sidomukti anything without 2. Improvement of waterSecondary Canal. sanction.) management (more efficient).

Diversion gate is damaged at Ketawang SecondaryCanal.

Downstreamers can not get the enough water.

PhysicalProblems Sedimentation near the secondary canals.

Farmers can not get the water because canal floor is Government removal of sedimentation (bytoo low at Pelayaran Secondary Canal. machine) is too deep.

Pelayaran secondary canal farmers can not getenough water sometimes in dry season.

Quality of water is getting worse.

197O SThe canali . S om a (rer seal 1. Improvement of law enforcement.t.version gates ..r.re /'2. Tomk. mk duty and respdo hsibilttyHuman Relaupstretd : not satiasiedtwith the, -were ,4'rnplerzed.) . of iovernmenrt oMfcials (especiall'y

Farmers go _arbage rototihe rule oairrs wat.tp

_ Increase in~~~~~~~~~~aser9 i cmear Pypo ubion

hvgutar-gat~ ~ ~ ~ ~ ~ ~~~~~~frmr dori nota ipay~ fe o tecaimno

. 1rto. Exarintake, ba cessie at use oe amre f farmers.farmersSar ity bfate asier to renart c . oep ent recoamends secondrycraop0mechanizatiol)

Human Related . I~~~~c. psreamiMhi)-daon't. .sider te:situation.. ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~te d1ownsteaersn"M 3. Cropping p'atterns

Problems________

People dump garbage into the secondary canal.

Increase in income by production

1. The incentive to chairmen is low because increase.farmers do not pay fee for the chairmen of

Water user's associations are not operating properly. Water user's associations since 1998. / 2.Government and village chiefs do notsupport associations.

Improvement of water management1. Excessive water use of farmers (more efficient).

Problems in Dry Scarcity of water at Porong secondary canal. (especially upstreamers). / 2.Season Sedimentation. / 3. Capacity of canal is not

enough.

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Annex 10 a) 2) Sub-Basin Level Stakeholder-Problem Analysis at Sidoarjo Dinas (Water Resources Office) on 4 March 2004 (2/3)

Stakeholders Problems Since When? Why? SolutionsScarcity of water in dry season gets worse by hugeProblems in Dry intake of water by PDAM.Farmers Season

Flooding in rainy season.

.1. ,.,rmanagement of oatc~mint area. /21. Lmanrvement of land constrv

Water Ncarolty av K)rembop sureaa $ Water-.user do noy compliant to the law logging at the cato / (Sep- .,N ' .), . . . ,. and rogultions.' Pub,li awareneos on illegal ,logging.

IndustryWater for irrigation is taken by industry from farmers.

Water pollution occurs in Borong River.

> It is not clear who (District or Province) should- control and give the sanction to the pollutingO) factories.

Turbidity (A lot of small particles) at the intake ofPDAM is getting worse.Illegal construction of weirs redues the amount of Water competition among water users Consensus on water managementintake of PDAM in dry season. " etting more severe. among farmers industry and PDAM.

1. Miny faetoies;do.not have the. waste Law enforeement on waterPDAM Water quality at the intake of PDAM is getting worse. watertrestment plants. / 2. Factories are pollution.bypassing the watpr treatment plmnts. / 3.

_____________ No law enforement on pollution.

PDAM uses discharge water, but dischargeWater quality of discharge canal is very bad. water has more water quality problem. ItWater qualiy of dischrge canal i very bad.also takes big amount of flushing water

away from the irrigation system.I..-- -. .i.~~~~~~.,. . - - .. - '. ~~~~~~~ Cleow definktion of responsibility of

NGO' cannot know whom to report when farmers meet Unclearnesa of' tesponsibility of lawI ' each govrnmnoffice rlatingNGO poemschpqIuon. ..... *. efoemn : water issuea..*inoludiing allocation ofproblemns,such No 0lu,tlon', - -.. onforoomont . ,. water. polution, land conservation____ ____'__.

etc.1. Limitation of water availability. / 2. 1. Law enforcement and landLimited information of water availability conservation (forest protection). /

Government Sedimentation is high in the main river. (supply of water) also cropping pattern 2. Public awareness on water(demand of water). availability and cropping pattern.

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Annex 10 a) 2) Sub-Basin Level Stakeholder-Problem Analysis at Sidoarjo Dinas (Water Resources Office) on 4 March 2004 (3/3)

Stakeholders Problems Since When? Why? Solutions

Water is not enough in dry season, and too much in Poor management of the catchment area.rain season in the main river.

1. Sedimentation rate is very high in the 1. Normalization of canal. / 2.

Many damages in the primary canal. secondary canals. / 2. Villagers dump Government give enough funding forMany damages in the primary canal. garbage into the secondary canals. / 3. normalization of canal. / 3. Illegal

Small shops occupy the banks of the shops must be banned.

Sedimentation in the primary canal.

Highway from Surabaya to Malang causes aCapacity of secondary canals is decreasing. lot of sedimentation.

Destruction of the banks of secondary canals.

Government officials tend not to visit irrigationscheme regularly to monitor water allocation.

>> Schedule of flushing sedimentation is not clear. Farmers are not well informed about- Schedule of flushing sedimentation is not clear, ~~~~~~flushing schedule.________________

O The water is not allocated fairly among the secondarycanals.

Government Farmer's destruction of some diversion gates.Farmers tink Dt~¶act Resoures, Offic tends ~Pnrioty on water allocation etc. between Priority on water allocation should

give too much! priority for hIdustry than farmers. am ead inOus not clry defined b ned wer el Ircgtio nby he istictOffice. aOominitte,.

Government officials say that they need to worklonger to keep control proper use of gates.Some farmers do not follow the rules such ascropping pattern in dry season. (Porong canal)(* 1. Some farmers say water masters take money for There are a lot of people who take / give Improvement of water management

irregular operation of gates.) the money for the water allocation. by farmers.Improvement of public awareness offarmers.

1. Canals need to be dried up twice a year,

* 2. Maintenance of the secondary canals is not done but the announedmdenly / 2. Governmentproperly. maintenance of the canals are not properly

done.

(Note) * 1: Some officials did not agree about the problem. *2: This was discussed but not written on a card. The facilitator added this card after the workshop.

3/3

Annex 10 a) 3) Participants of PCM Workshop at Tempel Village on 6 March 2004

Farmers (1 participants)

Name Location

Sipon Middle stream

Sudin Middle stream

Samuji Middle stream0

Dasir. K Middle stream

H. Sholikin Middle stream

Suwardi. SP Middle stream

ABD. Karim Middle stream

Kasdan Down stream

Abdul Hamid Up stream

H. Kastur Up stream

M. Kusen Up stream

Annex 10 a) 4) Participants of PCM Workshop at Dinas East Jawa on 9 March 2004

No. Name Institution Position

I Edy Tambeng Province Development Planning of East Java Staff

(BAPPEDA Propinsi Jawa Timur)

2 Sjahrul Environment Impact Management of East Java Field Head

(Bappedal Propinsi Jawa Timur)

3 A. Yasid Financial Management of East Java Province Section Head of Recruitment

4 Endro Agriculture Management of East Java Province Section Head

5 Rudy K. Provincial of Mineral Resources and Energy of East Staff

6 Imelda S. Provincial of Water Resources for O&M of East Section Head

7 Joav H. Provincial of Water Resources for Using of East Section Head

8 S. Priamboda Provincial of Water Resources for Partnership of Staff

9 Siswadi Provincial of Water Resources Management of East Section Head of

10 Zuhan Basin Management for Surabava Regional Section Head O&M

11 Parminto Water Municipality Corporation for Surabava Staff

12 Ismail LSM Spektra Surabava / NGO Leader

13 Susanto Airlangga University Lecturer

14 Sugeng Wiiava Kusuma University Lecturer

15 Moehtar Water Municipality at Sidoario Supplying Head

16 Soeiitno District of Water Resources for Sidoario Provincial Head

17 Karsono District of Mineral Resources and Enerav of Environment Staff

18 Hadi Prastowo District of Agriculture of Sidoarjo Section Head of Land Use

_ _________ _ _Plannin

19 Thowet Water Users Association Federation Leader

20 Tarmudii Water Users Association Federation21 Ngadino Water Users Association Federation Leader

22 Rachmat Petro Kimia Corporation Gresik Engineering Staff

23 Iwan S. Cement Corporation Gresik Staff

24 lsngadi District of Water Resources of Jombang Section Head of Water

_ ____________ ____________________________________________ R eso u rces

25 Sudarmo Farmer from Mrican Canal Leader

26 A. Ridwan Farmer from Mrican Canal Leader

27 Musikin A.W Farmer from Mrican Canal Leader

28 Suprijadi District of Water Resources of Mojokerto Sub Provincial Head of

Water Resources

29 Sadi Farmer Representation Leader

30 lYoshi Aiinomoto Corporation Manager Department

31 Widodo Ciwi Kimia Corporation Staff

32 Agus Surwano Basin Manaaement for Kediri Regional Basin Leader

33 Ani Pudvastuti Basin Manaaement for Malana Regional Technical Staff

34 Purwantoro Electric Power Corporation (PLN) Malang Division of Maintenance and

Operation

35 Fahmi Hidavat Jasa Tirta II Corporation Staff

36 Muslim Brawiiaya University Lecturer

37 Suparman Ngadireio Sugar Corporation Engineer of a ship

38 Ridwan Provincial of Water Resources Staff

39 Theresia S. Irriaation Proiect Vice Proiect Leader

40 Tarmain Consultants DHV Surabaya Team Leader

AIO a) -6

Annex 10 a) 5) Sub-Basin Level Sellection of Core Problem at Majalaya on 16 March 2004

Farmers' Problems Industry and PDAM's Problems Government's Problems [ All the Water Users' Problems

Too many kinds of taxes and fees onFarmers' income is low water at many levels of goves ment and Regulations on water allocation are not Conflict on water among farmers,____________________________w UaFe tm n eeso o e m n n clear industry and PDAM

Farmers cannot get enough water in dry It is difficult to get recommendations Law enforcement is low Water shortage in dry seasonseason from WUAF

Flooding in rainy season Industry and PDAM tend to take more Water users don't follow the ruleswater than licensed

Polluted water come into rice field Priority on water allocation is not clear

) Water use of farmers is not efficient

Many damages in irrigation structure

Small shops occupy the banks of thecanal illegally

Remark: taxes and fees are (1) tax collected by Province (70% goes back to District), (2) fee collected by PJT (Rp.23/m3), (3) fee collected by WUAF (Rp. 150,000 to250,000 / month /industry)

Annex 10 a) 6) Sub-Basin Level Self-Evaluation at Majalaya on 16 March 2004

Specific Problems [ Efforts to Solve the Results So Far [ Lessons Learned J Way ForwardT Problems I1. Govemment should allocate enough money for regular

(1) Maintenance of the Several secondary canals Water flows fluently in Maintenance of all the canals maintenance. / 2. Government should build small dumping sites and

canals is not good. Whave already maintaine y several secondary canals. should be done regularly. collecting stations. / 3. WUAF will campaign not to dump and

WUAI monitor.

1. Removal of sedimentation must be done by heavy machinery. / 2.

(2) Sedimentation in the Removal of sedimentation Water flows fluently in Removal of sedimentation Removal of sedimentation on the banks should be done as soon as

(2) Sedimentatoninth has been done at several Water sefuntly in al of sedmnation possible. / 3. Canal lining need to be done by Government. / 4.canals. secondary canals several secondary canals. should be done regularly. Canal banks should be normalized. / 5. Govemment should allocate

money for removal of sedimentation.

Rotation: 6am to 4pm for 1. In dry season (June - August). downstreamers of gate 12 (125ha)

(3) Conflict among farmers ats 1 to 8 (1 5ha) and 4pm Gate 12 does not get enough Water distribution does not hould be irrigated using pumps and fuel should be paid by farmers

at secondary level. o 6am for gates 9 to 12 water in dry season. go well. ate treatmen flt and discharged water should go back to

(~~~~~~~~~~350ha) wtrtetnn aiiisaddshre ae hudg aktO350h) lirrigation canal.

When there was a conflictwith the guards of rich

(4) Conflict among farmers farmers who didn't let others . None None

at tertiary level. to take water, WUAF invitedthe guards to a meeting andgot a consensus.

Village leader had a meeting If farmers plant at the same 1. Govemment should keep standardized rice price because farmers

(5) Farmers do not follow with farmers to decide Farmers plant at the same time, that reduces the harvest at the same time. / 2. Goverment should give subsidies for

the cropping pattemn. planting time and kind of time with same kind of crops. number of pests. fertilizers and pesticides.

crops.

(6) Industry and PDAM havedifficulties in getting a letter Not yet None None 1. License should be one and only by WUAF, if water is taken from

of water allocation irrigation canal.

agreement from WUAF. l

(7) Too many kinds oftr. Not yet None None 1. Fee should be one and only by WUAF, if water is taken from

related fees for industry. NtytonNneirrigation canal.

Annex 10 a) 7) Province Level Definition of Core Problem at Dinas West Java on 18 March 2004

WUAF [ Govemment Industry and PDAM

No clear rule on water use right. Many damages in canals because money for operation and Industry cannot take enough water in dry season.maintenance is small.

Farmers of Ciherang are fighting with PLN and PDAM over Demand of s a Quality of water in rivers, canals and lakes is deterioratingwater allocation. suppy of water are unbaanced. due to industry discharge.

Farmers of Wangisagara are fighting with industry and No control on ground water exploitation. Industry has to pay too many kinds of taxes and fees.PDAM over water allocation.

Coordination among water users related institutions is It is difficult for PDAM to find new water sources. (ManyNo communications between water masters and farmers. weak. regulations)

Industry feels they have priority over farmers' water, Human resources, organization and regulations do notbecause they pay tax and fee. support law enforcement fully.

Farmers do not know how much water industry takes, Conflict between govemment and forestry companies.because irrigation canals go through industry area.

Quality of the water does not satisfy the requirement ofPDAM.

Contract-base government officials by honorarium cannotget full status for long time.

Annex 10 a) 8) Provincial Level Self-Evaluation at Dinas West Java on 18 March 2004

EfotstSle 1h _ __Way ForwardSpecific Probles Efforts to Sve the Results So Far Lessons Learned Wae Usersd

I Problems Water Feserabon Industry and PDAM Govemment

m1) Law enforcement is IRegulation on water use 1. Some people still don't Law enforcement is not 1. Empowerment of 1. Establishment of forum 1. Improvement of law

weak. has already composed and follow the rules. still optimal. farmers cooperating with among water users in enforcement in each

implemented. 2. Government officials village leaders. Cisangkuy river, government office.

2.Monitoring and control who upholds the law do not 2. Strengthening of punishment

has already implemented. take a resolute step. and reward.3. People's involvement inmaking government regulation.

(2) Limitation of water in 1.Farmers adjusted 1.Famers follow the new New cropping pattem is not 1. Adjustment of cropping 1. Operation of water 1. Preparation of water pond.

dry season cropping pattem according cropping pattem. still appropriate. pattem according to treatment facilities. 2. Normalization of traditional

o the water availability. 2. Industry still takes much water availability. 2. Flow the suitable waste lakes.

2.Reforestation has been water ignoring the license. 2. Planting crops at the water to irrigation canal.

0 implemented (not only in same time.

e government land but 3. Application of efficient

_.. also in the community land water use in agricultural

o of farmer's group). system.

(3) No water regulation isavailable on rivers Not yet None None None None None

(4) Farmers in downstream Rotation system has been Most of farmers can get Efficiency of water use can 1. Improvement of 1. Construction of Water 1. Preparation of water

don't get enough water by modified (daytime for enough water. be increased by appropriate rotation system in every reservoir. / allocation manual.

rotation system in dry upstream, evening for water management dry season. 2. Proper water use

season downstream) according to the license.

(5) Water is polluted in the District regulation on water Several industries have 1.Quality level of discharge 1. Campaign for not 1. Construction of 1. Construction of collective

river pollution has formed and become to treat their water is still bad (B3- dumping garbage into storage for hazardous hazardous waste treatment

already implemented. waste water properly. worst). canal cooperating with waste. center.

2. Some people are still 2.Treatment of hazardous village leader.dumping garbage into canal. waste should be done in

the national treatmentcenter.

(6) Too many kinds of 1. Establishment of one-stop

water related fees and govemment service system.

taxes for industry. Not yet None None None None 2. Simplify the tax & fee system.

Annex 10 a) 9) Definition of Core Problem at WUAF Wanir on 20 March 2004

1. Quantity (supply) 2. Rotation System 1 3. Quantity (demand) 1 4. Pollution 5. Communication and 6. Operation and_ _ _ ___ _ _ _ _ _ _ _ coordination j Maintenance (financial)

Communication betweenWater in canal is limited in Not enough water downstream Industry uses bodyguards to Industry discharges polluted WUAF and other water users WUAF does not get any funddry season. even with rotation. get enough water. water into the canal. (PDAM, industry etc.) is not from water taxes or fees.

good.

PDAM continuously takes The water use license shouldWater resources are limited large amount of water in dry require recommendation fromin the catchment area. season. WUAF.

Govemment gives water uselicense to industry too easily.

Annex 10 a) 10) Self-Evaluation of WUAF Wanir on 20 March 2004

Specific Problems Efforts to Solve the Problems j Results So Far Lessons Learned

(1) Conflict on water distribution among 1. WUAF consulted government office for 1. Memorandum of understanding between 1. Coordination of all stakeholders should

WUAF, PDAM, and industry. having discussion with PDAM. / 2. WUAF and PDAM is not still available. / 2. be done well. / 2. Government should give

Government facilitated discussion with PDAM still do not follow the rotation the license according to the water

PDAM. / 3. WUAF asked PDAM not to system. / 3. PDAM still operate their availability. / 3. Farmers should get

take water in dry season, and follow the company in dry season. / 4. Water fee for permission by government when they

rotation system. WUAF has not been paid by industry change their activities (farming to small-

legally. / 5. Person who came from PDAM scale industry). / 4. Government officers

was not decision maker. who give the license should be moreresponsible.

- (2) Rehabilitation and maintenance done 1. WUAF had meeting with village leaders. 1. WUAF collect water fee from farmers 1. WUA/WUAF must be proactive to do

Pa by government office does not meet / 2. WUAF submitted farmer's needs to to establish village fund for maintenance their own rehabilitation/maintenance

farmer's needs. (primary, secondary canal) government office (district). / 3. Water of irrigation canal. / 2. PIAJB (project program to the government/ 2. Members

- users had a formal meeting (among under central government) agreed several of WUA/WUAF should pay water fee for 0

regional planning agency, water resource WUAF proposals (farmers' needs). / 3. & M. / 3. Planning should be done

office, and all the WUAF). There is agreement between WUAF and coordinating with WUAF, village leader,

government to do rehabilitation and and district office.

maintenance based on farmers' priority).

(3)Water distribution among the members Water distribution schedule was Farmers (except for downstreamer) follow Water distribution schedule should be

of WUAF (14 units) is not suitable. discussed at members' meeting and the water distribution schedule under discussed by WUAF.

decided as 6:00-18:00 for upstream and monitoring by WUA/WUAF.

18:00-6:00 for downstream.

(4) Government gatekeepers are not WUAF had a meeting about arrangement Water distribution are going well. WUAF should organizemanagement

functioning. of their own gatekeepers, and reported to system (not voluntary).

the government (Governmentgatekeepers were replaced by WUAFgatekeepers.)

Annex 1O a) 11) Way Forward of WUAF Wanir on 20 March 2004

Way ForwardSpecific Problems l

Water User's Association Federation Industry and PDAM Government(1) Illegal logging 1I.Strengthening of public awareness. / 2. 1. Establishment of fund for land 1. Establishment of fund for land

Application of punishment / 3. conservation. conservation. /2. Control and lawStrengthening of law enforcement enforcement. / 3. Appointment of propercoordinating with related govemment office. person for campaign of reforestation. 4.I____________________________________ Proper command on illegal logging.

(2) Farmers tend not to be disciplined. 1. Adjustment of cropping pattem 1. Strengthening govemment role inaccording to water availability. / 2. Planting discipline enforcement. / 2. Coordinationcrops at the same time. / 3. Application of None with farmers' leaders on law enforcement.lfficient water use in agricultural svstem.

(3) PDAM and industry take much water. Regular control of water gate for PDAM. 1. Taking water according to the license / 1. Monitoring of every intake for PDAM.2. Establishment of compensation fund forcanal maintenance and land conservation.

(4) Illegal taking water in upstream of Wanir Strengthening of coordination with village 1. Development of technical dam for villageweir. leaders, sub-district leaders, and tertiary None irrigation/simple irrigation systemblock leaders.

(5) Bodyguard hired by industry 1. Stop hiring bodyguard. 1. Campaign for industry that watermanagement should be managed by

None WUA/WUAF.

(6) Canals are polluted. Campaign for not dumping garbage into 1. Installation of water treatment facilities. 1. Campaign for industry that they shouldcanal coordinating with village leader. have water treatment facilities.

(7) Water users tend to be selfish. Campaign for following the water 1. Consideration of water availability anddistribution regulation. other water user's situation. None

(8) Canal maintenance is poor. Regular maintenance of canal according to 1. Payment of water fee for 0 & M. 1. Financial support for 0 & M cost.armer's capacity (finance as well as

manpower).

I

I

i

i

Annex 1 O-b) Problem Analysis

IiIIIII

Annex lO.b) 1) Problem Analysis at Tempel Village in East Java(6 March 2004)

| ~~> avalailty a lot of losses~~~~~~~~~~~~~~~~~~~at the weir of water at|a ~~~~~~~~~~~~~~~~~~is very limite secondary canal

Tertiary _No rain in _Level ofcanals dry season _ maintenance atare not in the _ secondary canalworking-well rn-trearj is low

Tertiary Level of |No drying upcanals maintenance of forare tertiary canals canaltoo long is low maintenance

Construction of PDAMtertiary canals does notdid not follow

wantthe design no flows

Annex l O.b) 2) Problem Analysis of Group A at Dinas East Java7 ~~~~~~~~~(9 March 2004)

*F- rii

Annex I O.b) 3) Problem Analysis of Group B at Dinas East Java(9 March 2004)

5. Implementation n

. .mpirmen>L X 0 ~~~~3. Farmers 4* fIndustryof water allocation d o edt s

does not | ~~~~~~~follow the !|more wtrta follow the plan cropping pattem al

----. -- i l- .Local govemment i Skills of govemment Farmers do not | Farmers | Industry and PDAM Industry and PDAM _

is weak at officers (ex. water get the j cannot want to I do notmonitoring masters) j ] information of the I plant rice maximize understand

and control is low cropping pattemr on time the product j the e

Irrigation Farmers tend Sanction for Sanction forCommittee to grow rice j using more water using more water

Li) 4 does not as much as than allocated than allocated '| perform wel possible is too light is too light

Local govemment_j does not pay Sanction for

proper attention I not following the Ito monitoring etc. I crapDing patte-

. ___ | ~~~~~~~~~~~~~~~~~~is too light |

Farmers do nothave enough

information oncropping pattern

Farmnershaveother

jobs to do

Young peopledo not

stayin the village

The area_ is I

beingurbanized j

Annex 1O.b) 4) Problem Analysis of Group C at Dinas East Java(9 March 2004)

~~~ 1 ~~~~~3. Excessiv use oF dlnsle j z~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ pesticides / fertilizersinmutmae

Farming is Illegal logging /not properly legal and illegal mining

practiced i by the people

Farmers Farming Farmers Low law | People don'tdon't follow technique do not have I enforcement | comply with the

the instruction L is not good good tools on logging lows

Not enough There are no E 1 There areinstruction supporting little job

material I regulations in the area

Local government | Local governmenthave limited do not haveresources enough resources

Annex 1O.b) 5) District-level Problem Analysis at Majalaya, West Java(16 March 2004)

Conflict on wateramong farmers,

industry andPDAM

the can ortage of l p ter usene t dorum for bwater do not communication

in follow and coordinationdry season the rules is not optimal

moWater availability Many damages othFarmers' famr PDAM and s L Iigion For iO ~~ ~ ~~of in water use industry tend to on water enforcement committee at irrigation atthe river irrigation is not take more water is not is district level is province devel

dn ~~~goes down _ structure efficieryt _than licensed clear low not working well does not exist

Catchment Maintenance Farmers PDAM and Regulation on Governmentarea level of do not industry irrigation officials tend tois n the canals plant need at district level be soft todecreasing is low at the same time | much water | is not available | illegal activities|

l | ~~~~~~Too much | |Some farmers | | Control by ||| Illegal | sedimentati'on | do not l the government|

L logging in in the think about | is not l|| mountain | | canals | other farmers | | enough lIl area I

l | ~~~~Farmers l|| Farmers | |do not have |Lg plant l enough lfood crops manpower |

l l l | ~~Small shops|||Government | occupy the |L reforestation banks of the |program is not |canals illegaly||working well|

Annex 1O.b) 6) Problem Analysis at Dinas West Java(18 March 2004)

Conflict among water users on1. Quantity, 2. Quality, 3. Corntrol

and regulation, 4. water feeand license, and 5. Land use

1. Water ll 2. Flow ll 3. Illegal | |4. Gate keeper ||5. Water quality || 6. Too many availability in capacity water intake / water master of rivers kinds ofthe rivers and of the rivers by industry does not follow and canals water fees

lakes is low is low and PDAM the rules is bad for industy

A lot of Industry needs Planning at There isWater Reclamation sedimentation constant amount province and Polluted waste People no clear

resources of in the of water all district level water from dump garbages regulation onare lakes rivers year around is not good industry goes into into water use

decreasing rivers and canals canals

lIl j | . | Water demand | | No water andForest to farm Implementation co No s by the regulations Pesticides andi Forest to farm | Implementation | i conservation | n industry is available on Not many fertilizers fromtransformation of master plan of the increasing rivers water paddy field go intoin catchment is not catchment area treatment drainage canals

area working well Water is Implementation facilitieslimited of rules does not Polluted

I I l 1 in work well in Industry does domestic wasteImplementation Low dry season irrigation schemes not operate water goes intoof master plan law water treatment rivers and canals

is not enforcement facilities properlyworking well on land use i

Domesticwaste water

| Low l l is not| law i | treated well

enforcementon land use

Annex I1O.b) 7) Problem Analysis at WUAF Wanir, West Java(20 March 2004)

Conflict among water users on I------------1. Quantity (supply) 2. Rotation System, 3. Quantity (demanc I

4. Pollution, 5. Commnunication and Coordination, and 6. 0 & M (financial)j----------- ----

------ ---- --I

--- - - ---- ----- -----1. Water 2. No nuh3. PDAM 1 4. Industry uses jf 5. Industry 6. Canal 7. Water 8. Irrigationin canal wate dontemcontinuously takes bodygurads jj does not follow water allocation among canalsis limited in enwihlarge amout of to get the water is the wter users aredry season roainwater in dry season enough water allocation rule polluted is not disciplined damaged-------------- ------- ~ ~ ~ ~ ~---- -…------ - …------ - -------- --

Water resources It takes five PDAMsiltks1 I Industry cannot industry needs Industry L All water usersj Operation and> ~ ~~are limited hours to reach wfree get enough ~ water constantly discharges ~ think their needs ~ maintenancein the downstream though thwaef f water without even in poliluted water have priority are not doneo) catchment area (canal: 8 km long) is alreadylmtd bodyguards dry season into the canal over others properlyr---------- ----

I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~----- ----------f --- Farmers have Industr----------- ~I dus IPeople --- I----------------------- -.4 ~~~~~~Illegal made many I PDAM intake is too throw Government does Operation andlogging illegal j L locates profit I garbages not give any maintenancein the intakes upstream of oriented itthe canal information on [ fund iscatcmen are Larg water-- --- ----- _Wanirda water allocation limited

There are users are C~ustomers of There is no forum1 r --- -so many in upstream and PDAM j among water users WUAF doeswater users middlestream a re rapidly at irrigation not get any fundfor Wanir dami -increasing

scheme levelJ from water taxes- -------------- -- - ----------- ~ o r feesCanals Fish ponds PDAM

....... -11 .. -are j in middlestream is too Natural factorsdamaged uses profit

such asJ ~~~~a lot of water oriented hilsli~deand

Downstream -- -------- farmers als

Illegalgrow rice three ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~land use oft.imes a yercanal

banksII ---rticltur by small shops

Horticulture ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~CanalsII needs high areproduction cost

daaedbwith high risk cattle

Illegal diggingof sandat the

primary canal

i

i

Annex 11 Quantification of Customary Rights and WaterQuality in Brantas Basin

il

Annex 1 1-a) Location and Layout of the PehngaronIrrigation Scheme

--

K.Brangkal

Pehngaron Irrigation Scheme A

TK.4.ki . 6M.l.Ka KL.[iklA =978ha 89Ha 76 Ha H

Flow measurement point TKAT_ I|Te.7 K 11 Ha B.G M,l BA .11

_ | TK.4.ka | KINTELAN

29 Ha 68

- ~~~~~~~PG.2.ki PG.3.ki PGA4.k TK.3.Ka..2

> 27Ha 13Ha 4Ha 13 Ha- < < L m B. TK.3 TP.5.Te

TK.3.Ka..l188 Ha

34 Ha

B. TIK1 I I 1 |TTP-2-ki |K|aTP-3.ki |

PR.l.a.kl PR.la. S. T K I 2 B.6H P.I52 Ha _ H

TK.L.kaS. 7 . L j TP.2.ki TP.3..ki

PADANGAN ~~TIRIM KIDUL 6 aIHa 10OHa

B. TP.I - TAMPU G/ B.PR.la -- B.PR.I B.PR.2 PENHGARON B. TP.2 B. TP.3 B. TP.4

R.I.~ ~ ~ ~~~~~.P. / PR.l . ka ~~~~~~~~~~~~~~~~~~~~~~TP.l.ka ||TP.4.ki|

llOHa X |~~~~~~~~~~~~~lH 23 Ha|

iIi

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Annex 1 1 -b) Flow Data of Pehngaron IrrigationScheme

Annex 11 b)

Table 1.Dischange of Weir

Month Period _______ 2003Overflow _ Intbke Total

I II Average PR. Ki Pehngaron Total Overflow +Main Canal Intake

(l/s) (/s) I/s) (1/s) (l/s) (l/s) (l/s)I 190 1.152 671 4 544 548 1.219

Jan II 127 431 279 4 544 548 827III 1.330 4.291 2.811 4 595 599 3.410I _ 6.831 8.224 7.528 4 603 607 8.135

Feb II 3.693 9.566 6.630 4 594 598 7.228III 8.579 8.578 8.579 4 595 599 9.178I 8.641 1.306 4.974 4 598 602 5.576

Mar II 6.325 8.525 7.425 4 595 599 8.024III 2.888 2.336 2.612 0 471 471 3.083I 575 412 494 0 361 361 855

Apr II 216 216 216 0 443 443 659III 0 0 0 4 467 471 471I 0 0 0 4 467 471 471

May II 0 0 0 4 473 477 477III 0 0 0 4 479 483 483I __0 0 0 4 483 487 487

Jun II 0 0 0 4 389 393 393______ III 0 0 0 4 378 382 382

I 0 0 0 4 366 370 370Jul II 0 0 0 0 309 309 309

III 0 0 0 0 307 307 307Aug I 0 0 0 1 331 332 332

II 0 0 0 1 331 332 332III 0 0 0 1 330 331 331I 0 0 0 1 316 317 317

Sep II 0 0 0 1 320 321 321III 0 0 0 1 320 321 321I 0 0 0 1 320 321 321Oct II 0 0 0 1 288 289 289

IIII 0 0 0 1 256 257 257I 0 0 0 1 246 247 247

Nov II 0 0 0 0 236 236 236III 0 0 0 0 311 311 311I 0 0 0 0 385 385 385

Des II 0 0 0 2 557 559 559III 0 0 0 3 460 463 463

Al l b) -1

I

Annex 1 1 -c) LPR-fPR Method

Annex 11 c)

(1)Operation of Pehngaron District Irrigation

Water allocation of Pehngaron District Irrigation Scheme is operated by LPR+-PR Method.LPR-FPR method is a operation method of water allocation in Jawa Timur Province exceptMadiun District Irrigation. The Operation of water allocation in Madiun is carried out byFaktor K method.

(2)LPR (Luas Polowijo Relative)

LPR (Luas Polowijo Relatip) means conversion area of plant to area of polowijo based onwater requirement.

LPR, = k x Acropn

S LPRt(iLPRS = i-

fjm

, LPRS,jLPR = fl=1

lp

Where LPRt Luas Polowijo Relatip tertiary (Ha.pol)LPR, Luas Polowijo Relatip secondary (Ha.pol)LPRp Luas Polowijo Relatip primary/main (Ha.pol)k conversion factor

influence by type of crop and phase of growth

Paddy Rainy SeasonNursery/Seedling 10Cultivation 6Growth 4Dry SeasonNursery/Seedling 20Cultivation 6Growth 4

Paddy not permitted all season 1Sugarcane Young 1.5

Old 0Polowijo, Fiber, Tobbaco 1

Acrop = Area crop (Ha)lIj = efficiency sub secondary canal

Al1 c) -1

Note: 11padangan Q T. PG. 1Ki + + * QT. PG. 4 KaQPadangan

qtirimkdul QT.TK.1Kj + -- + QT.TK.4Ka

QTirimkidul

=lTampunganl = QT.TP.lKa + -- + QT.TP.SKi

QTampungan

lkintenan = QT.KL.1Kj + -- + QT.KL.lKa

QK int enan

qp = efficiency primary/main canal

= Qpadangani + Qtirimkidul + Qtampungan + Qkintenan + QT.PR.1Ka + QT.PR.2Ka + QT.GM.lKa

Qint ake dam

Based on 2003's crop data in Pehngaron District Irrigation, area for each secondary canal and

calculated LPR is shown as follows:

180 - 900

160 - -0

14070

120 600

,, 100 - l'ioo ss7g- i l _ / -4 -500 ,

80 4 00

60 . .i- .i j | / _ 300

40 .* * * * * 200

20 - .', } 100

20 30\ P.3 b N, AP, N . uo JYl Au,Q Sep Opt N.p DI.

Month

Paddy-MH Paddy-MK I Paddy-MK IC SSgarnane -Young _ Sugarne -Old Polootjo 1 Polowijo Ir Polowijo 111 -- LPR (Ha.Pol)

Area and LPR in Padangan Secondary Canal

250 - - - - - 1.400

100~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.0

6000

100~~~~~~~~~~~~~~~~~~~~~~~~~600 i.

200

50~~~~~~~P N.,','lt

- - w w 0

3.P, F .b. ... . .... .. Np , Nup' JAn 3- NAU SPp N.Y Sep DY,

Month

=Paddy-MH _ Paddy-MK = Paddy-MK II oSgarrane -Young _ Sugao ane -Old -Polowjo 1 Poloowijo 11 Polowijo 111 -0-LPR (Ha.Pol)

Area and LPR in Tirim Kidul Secondary Canal

All c) -2

250 1.000

900

200 - 800

700

150- - 600

100 [ 400

300

S0 2-0

; t * - 200

00

Month

r Paddy-MH _ Paddy-MK I r Paddy-MK n r Sugarcane -Young _ Sugarcane -Old Polo-u1o I Polowijo 11 Polowljo III 0 LPR (HadPol)

Area and LPR in Tampungan Secondary Canal200

700

180 600

160

140 J50

120 -0

;100 -40

t r _- _._ _ _ _3 * 1 300

60 200*~~5n;

40 -1 ii ____ __ ______ 100

0 0

FeD MY 00, M. Fen 34 og Sep urn NOD DeSMonth

Paddy-MH _Paddy-MKI = Paddy-MK 11 Sugarcane -Young _Sugarcane -Old rPolow3jo I _Polowijo 11r Polowijo III -O-LPR (Ha.Pol)

Area and LPR in Kintelan Secondary Canal1200

4,500

LW0 40000

3.500

800 32000

< C _ r ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~2.000 r

400 -U U U U U U j - 1.500

200 _~>X_wwzr- __ 0

lJn Frf ?S 0p M0 . h 9 Sp Dt =

Monthr3Paddy-MHO Paddy-Mt I1 = Paddy-K1 =MI v ;i_Sugarcane -Old r Poluoulo I _Polowijo 11I PulDojlo 111 -0LPR (HdaPol)

Area and LPR in Pehngaron Primary Canal

All c) -3

Soo ~ ~ ~

(3)FPR

FPR (Faktor Polowijo Relatip) means a discharge water taken from intake weir for one hectare

of polowijo.

The formula FPR:

FPR = Qint ake dam

LPRPwhere FPR = Faktor Polowijo Relatip (1/s/Ha.pol)

LPRp = LPR primary canal

FPR influence by characteristic soil and available water.

Based on type of soil, FPR optimum are shown as follows;

FPR Heavy Soil 0.27 VIs/Ha.pol

Medium Soil 0.32 V/s/Ha.pol

Light Soil 0.42 VIs/Ha.pol

In Pehngaron district irrigation, medium soil dominates, so FPR of Pehngaron District

Irrigation is 0.32 l/s/Ha.

Value of FPR is used as reference to applied water allocation system in Pehngaron

FPR 0.32 x 0.7=0224 Irrigation by continuous flow

All area given all time

FPR 0.15 - 0.224 Irrigation by intermitted flow (Rotational irrigation)

WUA /WUF plans to schedule water allocation

FPR <0.10 WUA /WUF requests Dinas to get water supply fromBacem Weir

Based On 2003's data, average FPR Pehngaron district irrigation are shown as follows:

FPR Rainy Season 0.234 V/s/Ha.pol

Dry Season I 0.332 V/s/Ha.pol

Dry Season II 0.256 V/s/Ha.pol

In case of FPR is lower than FPR optimum, rainfall is added for water shortage in rainy

season, but in dry season II, limited available water from dam.

(4)Discharge

Based on FPR calculation in primary : FPR = Qint ake damLPRP

Allocation discharge calculated:

Tertiary : Q = LPR x FPR

Secondary Canal : = LPRS x FPR

Based on 2003's data, discharge in Pehngaron District Irrigation is shown as follows:

All c) -4

300 - --- ---- - ---- -1.000

_ LPR 900

-Q Operated250 -e-- QCalculation --

-=Q Optimum 800

2001 --- -- :700

600

150 - 1 500(

l l

400 |-3Qprte .00

400100~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0

300 0 _ 300

450 1 1U400

400 Q1 Oprae 1 11 2L00- i

MonthPaai a Secondary Canal

450 ---- -- -- -~~~~~~~~~~~~~~~~~~~~~~~1.4000

300~~~~P

200 6-4-

Oertd .00

350 -- - - - 2--- -- -- - ----i- --u-- - --- -- - - - -

14000

.50 -

2'~ I

0 0

Month

Tirim Kidul Secondary Canal

AllI c) -5

400 .. ___1.200

_ LPR350 - . +QOperated --- -

-- Q Calculation 1.000

3 - Q Optimum300' _ _.__

800

250 -r

E 200 600 Z

400

100.__20

200

0 0

Month

Tampungan Secondary Canal

2 50 l _ _ _ _._ 80 0

LPR: Q Operated 700

200 Q Calculation- Q Optimum

600

500150

2' 400 Z

300

200

50

100

0 0

Month

Kintenan Secondary Canal

(5)Year Total Water requirement (MCM/year/ha)

Based on 2003's data, year total water requirement in Pehngaron District Irrigation is shown as

follows:

Q optimum 16.78 MCM/year

Q operated= 13.09MCM/year

There is about 3.6 MCM difference between Q optimum and Q operated.

All c) -6

I

Annex 11 -d) Water Quality Monitoring at Brantasand Subaraya Rivers

Location of River Water Quality Monitoring G

Station in Brantas River

RJO~~~~~~~O

~~~~~~-- VA -; 1.

i f NGML X P ,; ~~~~~~~~~~~~~~~~~~~~~~044 03X J3

MUERA ID

Data source: PJT1

YEARLY AVERAGE BOD CONCENTRATIONAlong Brantas River, Surabaya River and Mas River

27

24 ) Brantas River T Surabaya T RrvtMas24 Rivraby River

21

"18

0150

A 1 2

3 ~~~ 2 l

t~~~~ .a A: ,2 ' S } 6~~~~~~~~~( z Z Q. . V. In ( |

o 0 0 0 0 0 08 0 0 0 0 0 0 0o0 00 00

° 2nw N° ° OoN oo… °° N N N°< N N N N N ° °~ °~ D) C'

I Kt. Malang I Kab.Malang I Kab. Blitar I Kab. T.Agung I Kt. Kediri I Kab.Nganjul4Kab.Jbg. IKab/Kt.M.kertolGresik IKt.Surabaya

Monitoring Distance (kin)

C StandarMaks. Th.1991 Th.1992 Th. 2000 Th.2001 Th.2002

Date source: PMT1

YEARLY AVERAGE COD CONCENTRATIONAlong Brantas River, Surabaya River and Mas River

60

Brantas River MasSurabaya River

50 River

40

0 300

A

ii 20

10

co a s 0 j 1

O 010

c 0 Q-

O 0 010 10 m~~ -, z -, -~ 10 QCI 0 T0 0 0 00 0 0 0 0 0 A 0 0 0A 0 00l~ 10

03 7 cl) 771 C7 1- ) 0 C 0 F- 0 19 0 0) C 100 ~ C 10 (0 0Th C 0 F-W1C 10 00- -' -t ir co 01 P 1 (00 01 01 01 0

\C.r 0 0 0 1 0 0 0

- CII 9) t (0) 0D - CDII C') OJ (0 N ( 0 0 L CD II CO ') C ( N N C\1 0 CO C\)l co

I Kt. Malang I Kab.Malang I Kab. Blitar I Kab. T.Agung I Kt. Kediri I Kab.NganjuRKab.Jbg.lKab/Kt.M.kertolGresik iKt.Surabaya

Monitoring Distance (km)-'-Standar Maks. A*Th. 1991 --a--Th. 1992 + Th. 2000 e Th. 2001 -'Th. 2002

Data source: PJT1

YEARLY AVERAGE OF DO CONCENTRATIONAlong Brantas River, Surabaya River and Mas River

9

Brantas River Surabaya Mas

River River

7

6

> =,5 _t__

- 0)

aA 3

2 cn-cn = ._ - c ° C _c c '

o o oC o o2 oo oo o o o o o o' oE o' o o o c 10 o nG) oo O ~ * Z -,^^ -, 0 ^ *(/3CDE * .o 0 uoome 0000 0 0 0 0 0 Qj00

0 ' 0CC0 0 0 0 0 0 COO,0 0 C C0

O O Oc O O cOo O O O O 0 O O O O 0 0 0 0 0 OCO 0 0 O0 0 00 w 0 0 ~ 000 0 0 00 0 0 0

0A0 0 0C 0 0 0 0 0 0 0D 0 0 0DC 0 0 0 0 0 C C 0 0 0) 0 0 0 0) 0 0 0 0C0 0

- Q N q 1') U) (0 N- CD ) 0 N: C') ~ if CD C 0 0 N C ') " 24) c0 N- CO 0) a N C'N Ch o IS} <Ct S CO 0 0 N N0 t iD U\ \ C\1 N N N N N N N C C C CON

I Kt. Malang I Kab.Malang I Kab. Blitar I Kab. T.Agung I Kt. Kediri I Kab.Nganju9Kab.Jbg. IKab/Kt.M.kertolGresik IKt.Surabaya

Monitoring Distance (km)-l-Standar Min. Th. 1991 - Th. 1992 +Th. 2000 oTh. 2001 -- Th. 2002

Data source: PIT

Annex 12 Quantification of Customary Rights and WaterQuality in Citarum Basin

Annex 12-a) Observation Points on Water Quality inCitarum Basin

iI

North Tarum Canal

I

OBSERVATION POINT ON

WATER QUALITY IIN CITARUM RIVER BASIN

(Data source: PJT 2) 2!22

WALAHAR WEIR

West Tarum Canal C WEast Tarum Canal>~~~~~~~~~~~~~~~~~ CURUG WEIR_ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~20-

KETERANGAN :A1. Wangisagara BEKASI CIKARANG CIBEET2. Majalaya

is3. Citarik Sapan 174. Ciganitri JATILUHUR CINANGKA CIKEMBANG5. Sapan CIKUNDUL 166. Cisangkuy

CISOMANG7. Margahayu CIBALAGUNG8. Cibeureum Burujul CIRATA9. Nanjung

1410. Cimahi Nanjung CISOKAN u4 11. Batujajar CIRANJANG 13 CIMETA12. Inlet Saguling SAGULING13. Outlet Saguling 1214. Inlet Cirata *15. Outlet Cirata

CIMAHI 16. Inlet Jatiluhur 9 CIBEUREUM17. Intake PDAM CIWIDEY 18. Outlet Jatiluhur C CISANGKUY19. Cikao Bandung

20. Bendung Curug CIKAPUNDUNg CIGANITRI21. Bendung Walahar 4-22. Tanjungpura CIRASEACITARIK23. Tunggakjati

24. Rengasdengklok 225. Muara Gembong U

I I I I I I I I I I I | | | | . . .~~~~~~~~~~~~~

BOD CONTENT IN CITARUM RIVER(1992 - 2002)

180

160 f992 - 2002 161.4 mg/litre 1. WangNE gara

160 - 0~~~~~~~~~~~~~~~ ~2. MajalayaNOTE: 3. Citarik Sapan

4. Clganitri140 -Threshold: 6 mg/litre 5. Sapan

6. Cisangkuy7. Margahayu

j 120 | \ 8. Cibeureum Burujul9. Nanjung

> _ l lo10. Cimahi Nanjunglm 94.5 mg/li945 11. Batujajar

_ _ 100 9.m gltr 12. Inlet Saguling

13. Outlet SagulingCD 14. Inlet Cirata

E 80 - 15. Outlet Cirata0 16. Inlet Jatliuhur

C.) | / \ 17. Intake PDAM

D 60 | | \ \ 18. Outlet Jatiluhuro 60 - 19. Clikao Bandung

/ | \ \ 20. Bendung Curug21. Bendung Walahar

40 - 22. Tanjungpura

/ A J X \ ~~~~~~~~23. Tunggakiati/ / \ ~~~~~~ | t ~~24. Rengasdengklokk

20 - 25. Muara Gembonq6/ mg/litre

... v t,........ ............................ ... .................

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Data source: PJT 2 Sampling Points in Citarum River

AVERAGE BOD CONTENT IN WEST TARUM CANAL

AVERAGE BOD CONTENTWEST TARUM CANAL

YEAR OF 2000, 2001 & 200214.0

12.0

10.0

0.0

>~~~

P, ~ I-8.0z

z0

6.00

0

4.0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~(

2.0

0.0

BTb. 1 BTb.10 Sungai BTb.23 Sungai BTb.35 Sungai BTb.45 BTb.49 Inlet Pulo BTb.51 Btb.53 InletCibeet Cikarang Bekasi Gadung Pejom-pongan

Data source: PJT 2 OBSERVATION POINT Th.2000 Th.2001 Th.2002

AVERAGE COD CONTENT IN WEST TARUM CANAL

AVERAGE COD CONTENTWEST TARUM CANAL

YEAR OF 2000, 2001 & 200225.0

20.0

0)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1

5.0z CG

z0 O

010.0 Mc

0

5.0

0.0Bin. 1 BTh. 1 0 Sungai BTh.23 Sungai BTM3 Sungai BTh.45 BTh.49 Inlet PUbo BTh.51 l3tb.53 Inlet

Cbeet akarang Bekasi Gadung Pejorn-pongan

Data source: PJT 2 OBSERVATION POINT Th.2000 -Th.2001 - Th.2002

Annex 13 Economic Analysis

-~ ~ - -l -

Annex 13-a) Water Use in Brantas and CitarumBasins

I

Annex 13 a)STATUS OF WATER USE IN THE BRANTAS

AND CITARUM RIVER BASINS

1. Introduction

In this annex, main findings of the field surveys carried out in the Brantas basin (mainlydelta area) and Citarum basin (upper region: Bandung District) are summarized. We describethe findings of each basin by topic and summarize the difference and common issues betweenthe two basins. Topics for findings are 1) Water demand Projection in the Two Basins, 2)Water Shortage and Sufferings, 3) Conflicts, and 4) Current Practice of Securing Water.

2. Outline of the Field survey

We carried out interviews of officials of provincial and district offices, PJTs and PDAM,farmers and industry personnel, as well as collecting statistical data and existing studydocuments. PCM workshops also gave us a lot of insight about the stakehosders in the field.Details of the interviewees are included in Annex --.

3. Water Demand Projection in the Two Basins

To glimpse the long-term structural trend of the water demand in the two basins, wereferred to a study by International Food Policy Research Institute (IFPRI) / Asian DevelopmentBank (ADB)(2003)1 for the Brantas basin and PJT-II company profile in 2002 for the Citarumbasin. These projections are shown Tables in 7.2 and 7.3 and Figures 7.1 and 7.2 below2.

The projections in both basins show similar tendencies that are increase of total demand(1.07 and 1.32 times in Brantas and Citarum respectively), decline of irrigation demand (0.74and 0.95 in Brantas and Citarum respectively), and gradual increase of demands from othersindustry and municipality. These structural trends indicate unless there is no further

1 "Irrigation Investment, Fiscal Policy and Water Resources Investment in Indonesia and Vietnam" (IFPRI/ADB,2003).2 In the Brantas basin, there are another two studies conducted water demand projection, that are "The Study onComprehensive Management Plan for The Water Resources of The Brantas River Basin in The Repubhc of Indonesia(JICA, 1998) and "Surabaya River Pollution Control Action Plan Study (SRPCAPS, 1999). Those studies werecarried out before the impacts of the 1997-98 Asian Currency Crisis were filly manifest in the Brantas basin, butbasic trends resulted in the three studies are common.

A-13 a)- 1

development of water resources, the reallocation of water from irrigation sector to others would

inevitably gain force.

Table 1. Brantas Basin Water Demand Projection Based on IFPRI/ADB Study 2003

Year 2003 2020 Growth

Irrigation 2,575.0 82.8% 1,902.3 57.1% 0.74

Domestic 220.0 7.1% 955.1 28.6% 4.34

Industry 106.5 3.4% 270.6 8.1% 2.54

Flow Maintenance 207.4 6.7% 207.4 6.2% 1.00

Total 3,108.9 100.0% 3,335.4 100.0% 1.07

(Unit: million m3/year)

Figure 1. Brantas Basin Water Demand Projection (IFPRI/ADB 2003)

4,000.0 ~ mIation ' * Domestic.-| ' Ind~sty -K -Flow Maintenance

3,500.0 -tota

, 3,000.0

_ 2,500.0 ' - --_ _ _ _ 1Z0 2,000.0_

E 1,500.0

Q 1,000.0 -__i

500.00.0 S .' . ____ _ - -

2003 2020Year

A-13 a)-2

Table 2. Citarum Basin Water demand Projection Based on PJT-2, 2003

Year 1990 2020 Growth

Irrigation 177.30 85.4% 168.00 61.5% 0.95

Industry 7.91 3.8% 25.00 9.2% 3.16

Drinking Water 9.77 4.7% 45.00 16.5% 4.61

Fishery 1.00 0.5% 20.00 7.3% 20.00

Flushing 2.00 1.0% 15.00 5.5% 7.50

Peak Hour Load 9.51 4.6% 0.00 0.0% -

Total 207.49 100.0% 273.00 100.0% 1.32

(Unit: m3/s)

Figure 2. Citarum Basin Water Demand Projection (PJT-I1, 2002)

300.00 - Irrigation .W - Industry. 'DrinkingWater -X-Fishery

- Flushing Peak Hour Load|

250.00 Total

i 200.00E -- - - _ - - - - - - -

X 150.00

IE8 100.00a

50.00

0.00.1990 2025

Year

4. Water Shortage and Sufferings

4.1 Shortage in downstream reaches of irrigation systems

It has been confirmed that water shortage is more severe downstream in the both basinsas has been said everywhere and there is a situation in the Brantas that while upstream farmersgrow paddy, options of downstream farmers are narrowed and forced to grow other secondary

A-13 a)-3

5. Conflicts

According to the officials at East Java Provincial Water Resource Management Office,

conflicts between farmers are more visible, especially when farmers upstream grow paddy three

times per year. It is also heard that illegal water abstraction (breaking rotation rule) by farmers

is in place. In de facto situation, water shortage is not equally shared among farmers as

downstream farmers are suffering more.

The officials in East Java further told that conflicts over water usually take place within

district territory. Farmers downstream would not go beyond the district boundary up along the

secondary canal for claiming unfairness on water abstraction. Also the point indicated by the

government officials and farmers interviewed are the fact that there is no adequate place to

make complaints against unfair water abstraction over district boundary.

As for inter-sectoral conflicts, from farmers' point of view in the both Brantas and

Citarum basins, it seems for them to make complaints against industry is more difficult unless

they are firmly united as federation. In the Citarum basin a committee member of Wanir water

users. association federation told that water pollution by industry is current issue to protest, but it

was difficult for them to carry out the protest activity due to high expenses of logistics for it.

The interest of farmers, however, does not always clash with industries. There was an

incident in Mojokerto district in the Brantas basin that when a plan to build a factory in the area

came up, farmers adjacent to the site were rather supporting the plan because it would give them

job opportunity. Some of the farmers interviewed in the Citarum basin also said that they could

not really oppose industry, since their family are working in the factories and giving subsistent

support to their living.

6. Current Practice of Securing Water

To secure water to maintain the products of each water user, there are several ways to

secure water taken by water users. What was found through the field survey and described here

from economic point of view is 1) to find alternative water resources other than surface water,

such as groundwater and drain water, and 2) Improvement of efficiency, and 3) negotiation

between water users for water reallocation. Interviews to stakeholders in the both two basins

revealed that there are informal negotiations among water users, and inter-sectoral and intra-

sectoral water reallocation during water shortage period in dry season.

A-13 a)-6

5.1 Alternatives to Surface Water

There are alternative water resources to surface water such as groundwater and re-usewater. Groundwater is commonly used by industry in the Brantas basin, but not all the factoriesare equipped with well constrained by cost. As for the upper Citarum basin, the aquifer ofgroundwater is as deep as more than 100 meters and therefore, it is not physically andeconomically feasible for most of the industries and PDAM to drill the deep well. It is alsoreported that in the upper Citarum basin, water quality of the groundwater is not satisfactoryswelling the groundwater development cost.

According to the officials at Provincial Water Resource Management Office in EastJava, the use of groundwater for irrigation is not significant in the Brantas basin. Instead, thereis a case that some farmers re-use drainage water by pumping. The officials of West JavaProvincial Water Resources Management Office also told that during water shortage period, theoffice rents out pump sets to farmers especially located downstream to re-use drain water,though the effect of the pumping re-use water is not so significant.

5.2 Improvement of Efficiency

Improvement of irrigation efficiency is mostly expected from tertiary level of irrigationsystems. Irrigation facilities are owned and maintained by the government up to secondarycanal. The facility improvement up to secondary level has been advanced, while most oftertiary canals have left unlined. According to the empirical investigation by West JavaProvincial Water Resources Management Office, it is estimated that the expected efficiencyimprovement from primary, secondary and tertiary levels are 10%, 10% and 25% respectively.To increase, however, efficiency from primary and secondary levels need to costly and elaboratetechnology like installing pipeline system, but for the tertiary level, canal concrete lining or wetmasonry work can increase the efficiency ratio to such extent.

Industries are aware of saving water and installment of recycling system mainly forcooling use is a countermeasure for saving water, which is even obligated by the government.But there is constraint for small-scale factories to install such expensive recycling system.

As for PDAM Kota Bandung, current loss of water as a whole system is 54% and theytarget to reduce the loss up to 30% toward year 2010 (see Table 7.4). They also applyprogressive water tariff system to give saving incentive to customers (see Table 7.5). Theyclassify the water consumers according to income level and type of uses as social use,household, shops and industry. The issues that the water tariff is decided by the central

A-13 a)-7

government and hence the PDAM cannot decide their water tariff to cover O&M cost and also

scrap up investment cost.

Table 4. Progressive Tariff Structure of PDAM Kota Bandung (2001)

Use Tariff Structure (Rp/m3)

m 3 Social Household Commercial Industry

IA IB IIA1 IIA2 IIA3 IIA4 IIIB IIIA IIIB IVA IVB

0 -10 560 560 560 700 875 1,050 700 1,050 1,400 1,750 2,100

11-20 560 560 875 1,225 1,400 1,750 1,225 1,750 2,100 2,450 2,800

21 -30 560 875 1,225 1,750 2,100 2,625 1,750 2,625 2,975 3,325 3,675

Above 30 560 1,225 1,750 2,450 2,975 3,500 2,450 3,500 3,850 14,375 25

Note: IA - IVB classifies users according to use and income level

Source: PDAM Kota Bandung

5.3 Negotiation for Water Reallocation

In the Brantas basin, WUAF Sumber Lancar Jaya in Mojokerto district is practicing

rearrangement of rotation in a situation of water shortage. When there is water shortage,

farmers concerned discuss rotation appointment to be changed. In normal situation rotation is

three days interval among the tertiary canals, but when there is water shortage, it changes to

daily interval. There are 12 WUAs under the federation and they will decide the change of

rotation in the Federation meeting. Change of rotation is fully decided by the WUAF and the

government is just reported about the change.

There is also a case of water reallocation between irrigation systems in the Brantas

basin. Pehngaron irrigation system in Mojokerto district is receiving lOOVsec during dry season

from Bacem Irrigation System located upstream reaches of Pehngaron to mitigate water

shortage. This arrangement is coordinated by the district office and there is no compensation

given to Bacem Irrigation System.

In the Brantas basin, negotiations between the provincial / district office and factories

(paper factory, sugar factory), or between farmers and factories have been taking place

informally to solve an emergency water shortage, which occurs in spots in a short period during

dry season. Industry is not always successful in getting water by the negotiations as the sugar

factory and paper factory had to slow down the operation last year. According to the cases

collected by the interviews, there was no clear statement on compensation as the result of the

negotiation, but it could have been the case that some kind of compensation was compelled to

settle the negotiation.

As for the cases in the upper Citarum basin, The above article (Bruns and Meinzen-

Dick, 2000) about Ciwalengke (Wangisagara) irrigation system describes how industry acquires

A-13 a)-8

water to meet their demand, which are apart from legal permits, industry are informal ways ofgetting water from farmers. In the upper Citarum basin survey we tried to confirm the existenceof such practice, that are:

* Buying and renting farmland to get water

* Cooperation with farmers in maintaining irrigation canal

* Rotation of water between farmers and industry (morning for industry and evening forfarmers)

In the Citarum basin, the sub-team interviewed two personnel of textile factories locatedin Wangisagara irrigation system in Bandung district, one of whom is the chairman of industryassociation in Bandung capital. They said when there is water shortage in dry season, theycorporate with farmers. They agree with farmers to arrange rotational use of canal water. Theyagree with the rule that farmers take water at evening and factories take water from morning toevening. This arrangement was mutual agreement between farmers and the factories and thedistrict officer is just to approve it. It is, however, heard from farmer side that industry does notfollow the rotation rule and take water even during evening when farmers have their turn to usewater.

Also industry could get water from farmers as exchange of giving services to farmers.Industry pay 0 &M cost of secondary canal and also they maintain or rehabilitate canal at theirexpenses. They said cash contribution to farmers for giving up their water is little but mainlypaid by services. This mutual cooperation is also confirmed from farmer side.

The water giving up to industry from farmers is not excess water since this arrangementis practiced during dry season. Surrender of some extent of water might have caused reductionof harvest to the farmers, but the chairman of the industry association said that the farmers havenever appeared with complaints.

The chairman of the industry association explained that family members of the farmersare working in the factories, so that the maintaining of operation of the factory is also theirconcern. Textile industry has long history in the area, as textile industry was established inWangisagara area in 1940's. In 2003, there are 27 textile factories taking water from Citarumriver or Ciwalngke river /canal 5.

Farmers have been seeks job opportunity of factory work, but for recent four years, thegrowth of textile industry is stagnant or even getting worse, some of the factories are even

5 West java Provincial Water Resource Management Office, List of License Holders, Dec. 2003

A-13 a)-9

bankrupt, so that working days of factory labor has been cut to three to four days per week.

Declining of prospects for off-farm job opportunity would again shift farmers' interest to

fanning and that will make industry difficult to get current agreement with fanner group to

secure water and they might violate the allocation of water to their permit and irrigation.

As for the case that industry was buying or renting land just for getting water, this

practice was not reported from the interviews. Provided paddy crop needs one liter/s/ha, if

industry buys or rents 1Oha, they could get 101/s of water, which is close to average permits of

the textile factories in Wangisagara irrigation system. However, the chief of water resource

division at Bandung District told that to selling or buying farmland to shift the land use will be

very difficult, since such transaction with the change of land use requires permission appraised

by a team organized by the board of land, agriculture office, public works (Kimpraswil), and

head office of Bandung district.

A-13 a)-10

Annex 1 3- -- b) We V a u a

Annex 13-b) Water Valuation

I

Annex 13 b)WATER VALUATION AND SENSITIVITY ANALYSIS

1 Value of Water

1.1 Introduction

In Brantas and Citarum basins, with the limited potential of further development ofwater resources and increasing demand especially from industry and municipality sectors, waterreallocation with compensation among water users has come up as an issue to consider forefficient water use and economic growth of the nation. The Study team evidenced informalwater reallocation between water users on the ground in the two basins. If there were anauthorized reallocation of water and consequent exchange of compensation, how would thecompensation rate be determined? In this Annex, we try to guess the value of water fromobservable data, which would be the basis of compensation rate for formalized waterreallocation.

The analysis of determining compensation rate requires attention to three distinct albeitrelated concepts: the cost, price and value of water, respectively. The cost of water refers tosome measure of realized expenditures for storing, controlling and managing water resources asrequired to make such resources reliably available for various uses, expressed on a per-unitbasis. Such expenditures are incurred, for example, in the construction of dams, weirs andintakes; river improvement works and irrigation networks, and in maintaining and operatingsuch works.

The price of water is also a financial concept, the actual tariff charged to various usersof water on a comparable per-unit basis. The value of water is an economic concept, typicallythe average (or marginal) value product of a unit of water in its most profitable use or value ofirrigated land on which the value of water is capitalized. The price and cost of water,respectively, can in principle be observed directly and/or derived from financial data, includingproject documents. The value of water, by contrast, must be estimated or imputed, since it isseldom (if ever) the case that farmers bid for water under competitive market conditionsinvolving other economic sectors. Here with available data, following concepts are discussed.

(1) Cost and Price of Water as Wholesale

(2) Efficiency Improvement Cost

(3) Benefit per unit of water

A13 b)- 1

1.2 Cost and Price of Water:

PJTs are responsible for managing basin water and delivery of bulk water to users. PJT

as wholesaler, charges bulk water fee from the users, which is defined as wholesale price of

water. Water charge of bulk water to municipality and industry needs to be approved by

Provincial Governor based on recommendation of a inter agency committee and the charges are

revised every two years. Hydro-power water charge from PJT-I to National Power Corporation

(PLN) is approved by the Ministry of Finance.

Even without considering capital investment, ideal tariffs based on properly

implemented O&M cost (operational cost recovery level) are already over the current water

charges according to the estimations by both PJT-I and PJT-II. PJT-l quotes the situation in

2001 on its study report' saying that a few of O&M activities had to be canceled due to short of

water tariff collection. Tables 1 and 2 show the actual tariff and ideal tariff level estimated in

PJTs. PJT4II data shows both operational cost recovery (O&M cost recovery) and full cost

recovery, which includes capital cost. It shows that full cost recovery level in PJT4I reaches Rp

200/m3 as for the water cost of PAM Jaya, the cooperation delivering municipal water to Jakarta.

Since PJTs do not levy water tariff from irrigation sector (also flood control and

maintenance flow), policy of cross-subsidy is considered, that is, other municipal and industrial

users pay tariffs in excess of fair share levels in order to eliminate the need to charge farmers.

The tariff study carried out for PJT-I in 2002 examines the cases of ideal tariff to each sector

without cross-subsidy and with additional load to power, municipality and industry as it is

shown in Table 1. The cases with additional load, cross-subsidy, to the above three sectors are

examined with adding charge borne from 25% to 100% of costs which are supposed to be borne

by other sectors like irrigation.

1 "Comprehensive Proposal for Water Resources Financial Management (Usulan Komprehensif Pembiayaan

Pengelolaan Sumberdaya Air Di Wilayah Sungai (WS) Kali Brantas)", Jan 2002, Tariff Evaluation Team, Ministry of

Resettlement and Infrastructure

A13 b)- 2

Table 1 Actual Water Tariff and Cost Recovery Study (Brantas)

(Brantas Basin: Study in 2002: Operational Cost Recovery Level)Actual Tariff Operational Cost Recovery Level (WI and W/O Cross-subsidy)

Sector Unit 2002 W/O Subsidy W/ Subsidy 25% WI Subsidy 500/o W/ Subsidy 1000/oPower Rp/kwh 18.5 33.07 35.40 37.73 42.39Irrigation Rp/ha/yr - 85.66Municipal Rp/m3 45 84.98 90.97 96.95 108.92Industrial Rp/m 3 80 179.57 183.45 195.52 219.66Flood Rp/ha/yr 28.28 1 1Maintenance Rp/m3 14.94 1 1Source: Comprehensive Proposal for Water Resources Financial Management, Jan 2002,

Tariff Evaluation Team, Ministry of Resettlement and Infrastructure

Table 2. Actual Water Tariff and Cost Recovery Study (Citarum)

(Citarum Basin: Data from PJT-I1: Operational Cost Recovery and Full Cost Recovery Levels)2003

Sector Unit Actual IdealPower Rp/kwh 115 166 (200)Irrigation Rp/ha/yr - -PAM Jaya Rp/m3 80 165 (195)Municipal Rp/m3 40 65 (115)Industrial Rp/m3 50 65 (115)Source: PJT-I1Note: Ideal = Tariff necessary for Operational Cost Recovery Level, ( ) = Full Cost Recovery Level

1.3 Water saved by irrigation efficiency improvement

There is a key issue that if farmers gave up paddy cultivation to obtain compensation, itwould contradict national food security policy. Regarding this, the compensation rate whichwould be set for public transaction of water reallocation should not be high enough for farmersgetting motivated to sell water, but the investment in efficiency improvement to create surpluswater to return to basin operator should be awarded.

Most prospective field of improving efficiency is tertiary level of irrigation systems.Though, it is very difficult to measure how much of water can be saved by improving waterdelivery facilities, by the empirical investigation of the West Java provincial water resourcesmanagement office, it is considered that delivery efficiency of 25% can be improved byconcrete lining of the tertiary canals. The average value of water by efficiency improvement iscalculated as annual investment and O&M costs divided by annually saved volume of water.

Annual investment cost is calculated applying cost recovery factor given with durationof the investment and discount rate. Assuming the O&M cost is annually equal, annual investcost and consequent average value of water saved by the tertiary improvement is calculated bythe following formulae:

A13 b)- 3

S =P x i (1i) +M(,+d/ -1

Y- S/QY: Ave. Value of Water Released by Tertiary Improvement (Rp/m 3/yr)

S: Annual Cost for Tertiary Improvement (Rp/ha/yr)Q: Annual Saved Water (m3/ha/yr)P: Investment Cost at Present Value (Rp/ha)M: Annual Maintenance Cost (Rp/ha/yr)i: Discount Rate (%)n: Operation Duration (Year)

Applying the numerical values below, the average value of water saved by efficiency

improvement is estimated at around 86 Rp/m3 , which is a little higher than the bulk water

charge for industry by PJT.

* Investment cost: US$ 260/ha or Rp484,809/ha (US$=Rp8,300) estimated based on

standard concrete lining work.

* Annual O&M: assumed 1% of Investment Cost: Rp5,530/ha/yr

* Discount Rate: 17% (Average investment loan interest of 5 years at State Banks:

Source: Economic Indicators 2002 Oct. BPS)

* Duration of investment: 10 years (Standard)

* Volume of water saved by tertiary improvement: 5,609m3/yr (Average of the Brantas

and Citarum basins: data from East and West Java provincial water resources management

offices)

1.4 Average Value of Water in Economic Use

1.4.1 Irrigation

The mean gross and net values of water, respectively, in irrigated agriculture are

estimated from data on crop-profit analysis and water requirement. For crop-profit analysis, we

applied the IFPRIVCASER 2000 sample survey of 480 farm households within four major

Brantas irrigation systems (Sumaryanto, et al., 2002)2. This data are compared to production

2 Sumaryanto, Masdjidin Siregar and Wahida M, 'Socio Economic Analysis of Farm Households in Irrigated Area of

Brantas River Basin', "Irrigation Investment, Fiscal Policy and Water Resource Allocation in Indonesia and Vietnam,

Country Report Indonesia, Chapter 7 (P557 - 661), ADB (RETA 5866)

A13 b)- 4

cost survey data collected in the Provincial Agriculture Office in East Java. As the table belowshows the results of both survey are fairly consistent. Also crop production cost survey datacollected in West Java provincial Agriculture Office was used for the analysis.

The mean value of water is calculated for irrigated paddy by dividing net returns in Rp.per hectare by estimates of field-level water requirement in cubic meters per hectare. Estimatedwater values in both Brantas and Citarum basins are summarized in Tables 7.9 and 7.10 below.Two measures of water value or crop water requirement are estimated as gross value, whichincludes effective precipitation, and net value, which applies to supplemental irrigation only.The data for crop water requirement were collected from provincial water resource managementoffices and FAO database was used for obtaining effective precipitation in Surabaya andBandung.

Gross water requirements for paddy cultivation at field level are 11,000 - 12,000 m3/haIt is estimated that irrigation water has an average value of Rp. 200 - 500 per m3 for paddyapproximately. These are observed to be a full order of magnitude higher than the estimatedfull cost recovery prices charged to respective sectors by PJTs. One clear implication of thisdisparity is that volumetric tariffs set at or near cost-recovery levels are unlikely to alter levelsof consumption dramatically, as values greatly exceed costs.

Table 3. Estimation of Average Value of water of Unit Product (Paddy, Brantas)Brantas Basin (East Java)

Gross Production Net Income Gross Gross Net Water Net ValueSource Season Income Cost Water ValueI_____ _____ ooo 000 Rp/ha 000 Rp/ha m3/ha Rp/m3 m3/ha Rp/m31 2000 Dry 1 7,700 4,608 3,092 11,059 280 7,806 3961 2000 Dry 2 7,360 4,873 2,487 11,059 225 8,563 2902 2003 Dry 1 1 6,463 3,930 2,532 11,059 229 8,563 296Average(dry) 7,174 4,471 2,7041 11,059 244 8,311 325Source: 1 IFPRI/CASER Farm Sample Survey (2000) (No. of Sample = 480)2 Dinas Pertanian Jawa Timur (East Java Provincial Agriculture Office) 2003Water Requirement: Estimated by the data from East Java Provincial Water Resources Office and Effective Rainfall in FAO database2000 Prices are adjusted to 2003 by Commodity Price Index of Rice to Income and Index of Prices Paid by FarmersEastJava (Source: Economic Indicator, Oct. 2003, BPS)

Table 4. Estimation of Average Value of water of Unit Product (Paddy, Citarum)

Citarum Basin (West Java)Gross Production Net Income Gross Gross Net Water Net ValueCondition Season Income Cost Water Value

000 Rp/ha 000 Rp/ha 000 Rp/ha m3/ha Rp/m3 m3/ha Rp/m32003 Dryl 7,763 3,478 4,285 11,858 361 8,168 525Upland 2003 4,600 2,250 2,350 11,858 198 8,168 288Average(dry) 6,1811 2,864 3,317 11,858 280 8,168 406Source: West Java Provincial Agriculture OfficeWater Requiremrent: Estimated by the data from West Java Provincial Water Resources Office and Effective Rainfall in FAO database

A13 b)- 5

1.4.2 Industry

Industrial water use would probably not expand significantly even if the price of bulk

water to industries were reduced, since current demand levels reflect technical characteristics

and capacities of water-using plant technologies, the efficiencies of which have recently been

improved. This assumption was vindicated to some extent via field interviews conducted in the

Brantas basin. Two of three plant managers interviewed (food industry and paper) confirmed

that current levels of water use were not price elastic, but rather reflect internal technical factors,

although the sugar processing facility does not follow this pattern.

The mean value of water for industry differs by type of products, capacity of processing

facilities, quality of water etc. Here we estimate an example of mean value of water for sugar

production obtained from the field interview in the Brantas basin. Sugar industry has been

historically dominant and still major water users in the Brantas basin. The case is of a sugar

factory located in the Brantas delta. Following are the estimation basis:

Water demand: 449,280m3 /month (permit: 2001/s (518,400m3/month))

Production: 16,300t/year (average)

Water demand per production: 165.4m3/t (0. 165m3/kg)

Ave. cost of water: Rp 35million/month or Rp 68/i 3 (based on PJT-I water charge)

Price of sugar: Rp 3,100/kg at factory gate

Income sharing with contract farmers: 35% to factory (Rp 1,085/kg)

From the basis above, Figure 1. Range of Indicators implying Water Value

cost of water per unit product is Ta (Munipaliy PJT-)600( afl(ucpn J4

estimated at Rp 1 1/kg, which 1 2 Tarditf (Industry PJT-11)3 Tariffl (Municipality PJT41)

counts 0.35% to the gross 500 - 4 Ideal Operational Cost Recovery Level (Industry, PJT91)5 Ideal Operational Cost Recovery Level (Municipality. PJT91)

revenue of one kg product at 6 Tantt Ondustry PJTvu yI Ideal Operational Cost RecoveryLe l IuncatyPT)

factory gate price, or 1 % of 400 B Water Released by Tertiary Improverent9 Seal t2p..-onl Cue Receuny Le"i vr5r Onu-edM&Y lMrustpy, PT4

income share of the factory. 1 0 Full Cost Recovery Level(IndustryPJT-5)E 300 1 1 Full Cost Recovery Level (Municipality PJT-ll)

Therate indi e tt12 Ideal Operational Cost Recovery Level (Industry, PJT-9)

The rate indicates that the cost 13 Ide Oper-inal Cot Rcovery Level al, Cs-sbdy (bdtrny PJT-)

14 Average Value of Water of Paddy Production (Ave. of Two Basins)

of water is very low to the 200 15 Average Value ot Water ol SugaroPmeosing (Sample)

industry. However, it should be

taken account that degrading 100 _

water quality would force I S

factory to install intake water 1 2 3 4 5 6 7 B 9 10 11 12 13 14 15

A13 b)- 6

treatment infrastructure as well as effluent treatment leading to increase of cost of water.

Average gross value of product per unit water is calculated by Rp3,100/0.165m 3, and itarrives at Rp 18,788/m 3. Profitability of sugar fluctuates every year due to risks of internationalmarket, foreign exchange rate, weather, etc. Here provide net profit ratio of sugar product is onaverage 3%, the average net value of product per unit of water counts at Rp 564/m3, which ishigher than irrigated agriculture.

1.4.3 Range of Water Value

As roughly estimated above, the value of water varies by use and viewpoints, but itshowed the ranges from Rp 20/m 3 to Rp 560/m3 in different use and process of water used (SeeFigure 1). Difficulty is to measure marginal value of water3. If there were ample of water likeduring wet season, marginal value of water or user's willingness to pay could be zero and higherbound of the value of water would be restrained with the profitability of irrigated agricultureand industries. The value of water differs by occasion and therefore, estimating compensationrate in case of reallocation occurs would have to clarify the condition on which the reallocationtakes place. Conditions are occasional water availability, use of water, production cost of water,profitability of water by location, natural, social condition etc.

2. Sensitivity of Water Transfer to Economic Factors in Irrigated Agriculture

2.1 Introduction

An analysis of the sensitivity of trade levels to agricultural economic factors includingcosts of production, productivity and producer prices; changes in land use, opportunities forearning income off-farm, and transactions costs invariably associated with transfers.

The cost, value and price of water in irrigated agriculture, respectively, and incompeting uses are described. The analysis is based on survey and secondary data onproduction, productivity (yield), costs of production and producer prices. Emphasis is placed ontrends in net profitability of important irrigated crops, which are critical variables in projectingthe extent of water trade. A sensitivity analysis of water trade levels is performed with respect

3 The marginal value of water is considerably more difficult to assess. In theory, the marginal values, equivalent tothe derivatives of the total value product with respect to a unit change in water supply, could be obtained as shadowprices dependent on the crop-water production function, which would, however, obscure the roles of numerous "realworld" factors influencing the marginal value of water in actual irrigated cropping. These include location, soilcharacteristics, crop stage, stochastic behavior of rainfall (Perry, C. J. "Charging for Irrigation Water: The Issues andOptions with a Case Study from Iran", IMWI 2001). In this study, the marginal value of water was, therefore, notconsidered.

A13 b)- 7

to commodity price levels, costs of production and tariffs (willingness to pay) in competing

sectors.

2.2 Sensitivity analysis

A sensitivity analysis was performed which examines the likely extent of economically-

induced water transfers under a range of assumptions concerning microeconomic and

macroeconomic factors. These factors include the producer price of paddy, the cost structure of

paddy production, the opportunity costs of family and hired labor, the price at which water

could be sold between or across sectors, and a range of administrative, legal and information-

related costs collectively referred to as transactions costs.

Paddy producer prices reflect a range of factors, including the price of rice traded in

international markets (currently set primarily by low-cost regional exporters Thailand and

Vietnam); Indonesian government polices including the aggressiveness by which BULOG4

defends floor prices and the extent of border control mechanisms, and local supply effects. The

costs of production are dominated by land rents and the cost of hired labor, and by the costs of

purchased inputs, Nitrogen fertilizer being the most significant.

The opportunity cost of labor is influenced by the proximity of the farm community to

urban labor markets and the unemployment rate in those markets. Water sale prices are set

and/or constrained primarily by official water tariff rates (in the Brantas, established by Perum

Jasa Tirta 1) and by the relative scarcity of water, in turn a function of season, climate and the

basic framework of demand. Transactions costs are, in the context of this analysis, essentially

unknowns, although they are clearly positive and potentially significant, depending critically on

the statutory requirements and limitations on water transfers and the presence and effectiveness

of information coordinating mechanisms or institutions.

The basic model described here assumes the following: (i) Water transfers are permitted

by law, either as private transactions or, more reasonably, as government-brokered trades; (ii)

potential trades do not conflict with the statutory structure of use rights, permits and/or priority

of rights; (iii) transfers are motivated and justified by economic opportunity; and (iv) trades are

restricted to the Dry Season (May-October, approximately) since water is unlikely to be

sufficiently scarce during the wet season to motivate transfers. In this simplified exercise,

4 Bureau of Logistics, which is the state-operated rice buffer stock program. Historically, BULOG would set a floor

price for paddy, and would be prepared to purchase rice if the market price fell below this floor. Similarly, BULOG

would release rice to the wholesale market if wholesale prices got too high. In recent years, BULOG has not been

functioning in exactly this way.

A13 b)- 8

--__________ - ' - I

farmers (or farm communities) are assumed to face two basic choices: they can cultivate paddyfor profit, or they can forego cultivation and sell (or more properly lease) their water use right-based allotment to other parties and sell their labor in regional labor markets. By taking thelatter course, they avoid the ordinary costs associated with paddy production. It is not assumedthat they are able to derive income from the lease of their lands, since irrigation water would notaccompany the land under the scenario described. The expected return from each optiondetermines the farm community's choice.

The data supporting the analysis was collected in 2000 as a component of theIFPRI/PJT/CASER Brantas study described in Rodgers, et al. (2003)5. Recall data for the 1999-2000 cropping season was collected from 480 farmers in the Brantas Basin, 40 each from 12tertiary blocks stratified within the four major Brantas irrigation systems Lodoyo-Tulungagung(upper Basin), Mrican Kanan and Mrican Kiri (middle Basin) and Brantas Delta (lower Basin).

The 480 farm families collectively cultivated 610 plots during the Dry Season of 2000.Basic accounting of revenues and costs for these 610 plots is summarized in Attachment of thischapter for a farmgate price of Rp 900 per Kg of GKS paddy. It is observed that at this price,the approximate sample mean for the survey period, net returns per hectare of Dry Season paddyare around Rp. 2,580,000. This estimate ignores the costs associated with land rental, sincesample farmers are primarily (but not exclusively) owner-cultivators, and treats the(opportunity) cost of contributed family labor as a return to management rather than as a cost ofproduction. The variation within this sample of 610 plots with respect to yields, costs ofproduction and family labor intensity provides the basis for the sensitivity analysis. Thevariation in net returns to paddy cultivation per hectare is depicted in Figure 2.

Figure 2. Sample Distribution of Net Returns to Paddy Cultivation, Brantas 2000

18.00

16.00 _ _ _ _ _ _-

14.00 _ _ _ _ _ _ __ _

110.00 -_ _ _ . _ . . _

8.00 -

6* .00 -- - - -- - -

4.00 - -- --

Rp/Ha Not

5 Charles Rodgers, Claudia Ringler and Mark Rosegrant, "Irrigation Investment, Fiscal Policy and Water ResourcesAllocation in Indonesia and Vietnam. Final Report prepared for ADB and IFPRI", Oct. 2003

A13 b)- 9

In the sensitivity analysis, we examine variation in three factors that influence the

relative profitability of paddy cultivation, and hence the extent of water trade: (1) the producer

price of paddy, (2) the opportunity cost of family labor and (3) the potential sale price of water.

As transactions costs are ignored in the analysis, the extent of water trade is most likely biased

upward. The sample suggests a distribution of net profits per hectare as influenced by all

factors affecting costs and returns, including yield and the use of purchased and family inputs

(Figure 7.4). A farmer (or plot owner) is assumed to prefer water sales to cultivation if the

revenue (s)he earns from the combined sale of family labor and water exceeds the net profit

from cultivation. The extent of family labor in man-day equivalents is known from the farm

sample survey. Family labor is assigned a relative value expressed as a fraction of the effective

or shadow value of that labor applied on-farm. The hired labor wage was used as the shadow

value of family labor. In the sensitivity analysis, off-farm opportunities were varied between

50% and 120% of the value of family labor on-farm (100%).

The amount of water each plot could sell was calculated using the relative polowijo

factor (LPR) method used by East Java Provincial Water Resources Management Office. The

LPR method will not be described in detail here, beyond noting that water demand is calculated

through a correspondence between an actual cropping pattern and the equivalent hectarage of a

polowijo, or secondary (irrigated, dry-footed) crop such as maize, soybeans or groundnuts. In

this analysis, the irrigation demand for dry-season paddy is calculated at roughly 15,000 m3/ha

in the dry season. Calculations appear in Attachment of this chapter. The range of prices at

which this water might be sold is suggested by the actual pattern of water tariffs prevailing in

the Brantas Basin. These tariffs are currently Rp 40/m3 for municipal (PDAM) and roughly Rp

80/m3 for industrial customers, respectively. Feasible water sales prices were assumed to take

on a range from Rp 10/m3 to Rp 100/m3.

Producer prices (GKS) averaged roughly Rp 900 per Kg at the time of study (2000).

Observed prices reflect, among other factors, the distorting influences of a range of Indonesian

government policies, some deliberately targeting producer prices and some influencing them

inadvertently. Among the former are BULOG price support levels, border controls and the

current import tax of Rp 435 per kg. The likely level of producer prices in the absence of

distorting factors is extremely difficult to determine, but it is likely that equilibrium producer

prices are below Rp 900 per Kg, possibly in the range Rp 750 to Rp 850 per Kg. In the

sensitivity analysis, we examine a range of prices from Rp. 750 to Rp 1,200 per Kg, which

approximates the range of producer prices reported by our sample respondents.

The results of the sensitivity analysis are summarized in Figure 3 (off-farm income

opportunities and water prices, (paddy prices assumed Rp 900 per m3)) and Figure 4 (paddy

A13 b)- 10

producer prices and water prices, (off-farm wage opportunities at 100% of on-farm wage)). It isobserved that when opportunities for off-farm income are restricted, so that farm families canonly expect to earn, on average, 50% of their implicit farm wage through off-farm wage labor,only a minority finds it profitable to become wage laborer/water sellers. Even when water canbe sold at Rp 100 per in 3, only 30% of plot owners are better off selling water and labor.However, if off-farm earning potential is equal to implicit on-farm family wages, roughly 23%of farmers are better off as water sellers at water prices of Rp 40 per m3 (the current Municipaltariff) and 45% are better off at Rp 100 per m3 , assuming paddy producer prices of Rp 900 perKg.

The extent of trading is even more sensitive to variation in paddy producer prices. Atlow producer prices (Rp 750 per Kg), over 25% of farmers are better off as water sellers, even atwater sale prices as low as Rp 10 per m3. If water can be sold for Rp 100 per in3 , over 2/3 offarmers find it more profitable to sell water and labor than to farm paddy. However, at highproducer prices (Rp 1,200 per Kg), only 16% of farmers would choose to sell water, even at Rp100 per m3, and at more realistic prices of Rp 40 - Rp 75 per m3, less than 10% find it moreprofitable to sell than to cultivate. It should be noted that over 3 % of our sample farmers willalways find it more profitable to sell water and labor, since they are losing money, at least at Rp900 per Kg paddy.

Figure 3. Extent of Trade with Respect to Water Price and Off-Farm Income Opportunity

o 20.00 -

5. 0 20 %

100 90- 80 7605400.6 08°

40.0% ~ ~ ~ ~ ~ ~ ~ ~ ~ -0. O-ar ae

WaterPricep 3 30 0 .5

Al3 b)- 11

5.I I I %

Figure 4. Extent of Trade with Respect to Water Price and Paddy Producer Price

70,0%

6a 0.0% --Au 50.0%

0.0%

0.0%'-

N O _~ O-

Water Price RpM^3 ap, Lo sO 0 OKP Prod. Price RplKg

The sensitivity analysis demonstrated here revealed what kind of economic factors and

how strong they are influencing farmers deciding whether to release water to others or use it for

growing paddy. It should be remarked that the strength of economic incentive demonstrated in

the analysis does not mean that water transfer would immediately take place if value or price of

water is assigned, since farmers would not make decision only with economic incentives but

consider cultural value and morals. The analysis just indicates the economic circumstances of

irrigated agriculture under the on-going urbanization and industrialization.

A13 b)- 12

r l l l l l l l l l l l l | | | | | | | g | g | S | | g | -

Annex 14 Institution and Legal Analysis

i

I

Annex 14 a)

REPORT OF THE INSTITUTION AND LEGAL TEAM (ILT) ON

BRANTAS AND CITARUM RIVER BASIN FIELD TRIPS

The ILT spent three and half days in the Brantas River Basin and five days in the Citarum RiverBasin. In East Java, the team met with:

1. PJTBrantas (PJTI)

2. Provincial Dinas Pekerjaan Umum-Pengairan

3. Balai PSDA WS Buntung Paketingan

4. District Dinas Pekerjaan Umum-Pengairan, Kabupaten Sidoarjo

5. PDAM 'Delta Tirta' Sidoarjo

The team also observed a PCM workshop at Tempel Village, Krian Subdistrict, Sidoarjo.

In West Java, the team met with:

1. Jasa Tira I (PJT1I)

2. Provincial Dinas Pengairan

3. Balai PSDA WS Citarum

4. Provincial Badan Pengendalian Lingkungan Hidup Daerah (BPLHD)

5. PDAM Kota Bandung

6. District Dinas Pengairan, Kabupaten Bandung

7. District Dinas Lingkungan Hidup, Kabupaten Bandung

8. Chairman of Industry Association of Bandung

9. Chairman of a WUAF from Wangi Segara irrigation system

In Bandung, the team also visited two offices concerned with groundwater, namely:

1. National Departemen Energi dan Sumber Daya Mineral and

2. District Department Sumber Daya Mineral, Kabupaten Bandung.

There were a number of investigations that were not possible due to shortage of time. It was notpossible to collect records of meetings of the PTPA or PPTPA or to meet with members of thecommittees. The team did not visit offices responsible for decentralisation. In East Java, theteam did not visit the environmental management agencies or agencies responsible forgroundwater.

A14 a) -1

The following account will outline the findings from discussions in each province under the

following headings:

A. East Java

B. West Java

C. Groundwater

D. Summary of findings

A. EAST JAVA

1. Perum Jasa Tirta I - Brantas River Basin

The ILT met with expert staff Pk. Eddy and Pk. Barsono. The team was later joined by Pk. Tjoek

Walujo Subijanto (Director of Operations) and Pk. Raymond Valiant (Bureau of Quality

Management).

Key issues:

o PJTI are only able to meet 50 percent of the optimal operational and maintenance

expenses and rely on deferred maintenance. They do not receive a government subsidy for

O&M. Dams are owned by central government.

o Each customer signs a contract with PJTI for access to raw water. There are different

contracts for the different kind of users eg: hydroelectric power, PDAMs and industry.

The contract is conditional on the user having a licence with the Provincial Dinas.

o There are overlapping roles between PJTI and Balai in water resources management,

which creates uncertainty. PJTI have been given a strong role in water resources

management but has only implemented this role in a limited way related to water quality.

There is no external audit PJTI's water resources management. River flows are

determined by the PTPA.

o PJTI mixes a service provider function with a regulatory function. The team was

informed that contracts for service provision include wastewater discharge conditions,

which are monitored by PJTI (although none of the copy contracts provided contained

such terms).

o It is possible that in the future PJTI will also manage groundwater on receipt of a transfer

of authority from the Ministry for Mining. It was not clarified exactly what it will

involve.

o Longer-term security of supply is seen as an issue by PJTI. According to PJTI, the

Brantas River is in a crisis situation as by year 2020 it will need two new dams to

maintain water supply. They are focusing on demand management and the promotion of

efficiency. PJTI can only generally provide 80 percent' of the farmers' need for irrigation

The estimation of water availability is 80% of effective rainfall within the basin.

A14 a) -2

water (according to targets set by the Department of Agriculture) and in times of watershortages (such as in 1997) they can only meet 50 percent of the need.

o The understanding of PJTI is that the new Water Resources Act prohibits transfersbetween users without the involvement of government. They have considered the optionof allowing farmers have a quantified right to water so that in the event of a watershortage they are entitled to compensation as long as it is used to manage the irrigationsystem. This solution would avoid criticism that water user right transfers will exposefarmers to commercial exploitation by economically powerful interests.

2. Provincial Department of Public Works - Irrigation (Dinas Pekerjaan Umum -PengairanPropinsi)

2.1 Data and Research Section

The ILT visited the Data and Research Section (Seksi Pendataan dan Penelitian) of the Sub-Directorate on Water Resources Use (Sub-Dinas Penatagunaan Sumberdaya Air) and met withthe head of the section, Tbu Endang Wasiati and officials from her section.

Tasks and functions:

The Sub-Directorate on Water Resources Use is concerned with coordinating the formulation ofguidelines for water resources use. They also carry out surveys, research and studies. They draftguidelines and technical standards and report on the outcome of water resources use. The Dataand Research Section is concerned with the collection of data and material and research for thedrafting of guidelines on water resources use.

Key issues:

o Their office was not consulted in the national water law reform program in a systematicway. They consider that there was a lack of transparency in dealings between the nationaland provincial government in developing water resources management program.

o The Provincial Dinas relies on the Provincial Water Management Committee (PanitiaTata Pengaturan Air Propinsi) (PTPA) for coordination between the various sectorsrelating to water resources management. The PTPA is only required to meet twice a year.It may meet up to ten times a year; however, this level of frequency will be event-driven.

o They do not consider longer-term environmental sustainability of the river system overall.

O They have not considered procedures that may be involved in application of transferablewater entitlement markets (TWE). The Provincial Dinas is dependant on managingthrough a supply-side approach, which has not considered transfer issues in terms ofwater use right but merely in terms of physical movement of water. They have notconsidered the implications of transfer of water from one side of the basin to another(resumption of a water right and relocation of that right).

o They are of the view that there are not many disputes over water use. Conflicts areusually resolved by providing additional water.

A14 a) -3

2.2 Provincial Department of Public Works - Irrigation (Dinas Pekerjaan Umum -

Pengairan Propinsi) - Licensing Section

The ILT visited the Licensing Section (Seksi Perijinan) within the Exploitation Sub-Directorate

(Sub Dinas Manfaat) and met with Pk. Uki Basuki, Head of the Licensing Section.

Tasks and functions:

The Licensing Section is responsible for licensing all surface water users including the alteration

of water resources infrastructure, use of land for water supply, land use change from irrigation to

non-irrigation and technical recommendations for wastewater disposal.

Key issues:

o Licensing is kept up to date and well organised. This is possibly attributable to the fact

that a licence brings in revenue for the Province.

o Industry is not required to reduce intake in times of water shortage in the same way as

irrigation farmers. There is provision within licences for reduction of intake by industry

during water shortages but it is not clearly expressed.

o Bulk water supply and irrigation allocation, delivery and regulation are separate. Industry

gets a licence from the Provincial Dinas but they also obtain a guarantee of supply from

PJTI. Where industry withdraws water from an irrigation system or canal there is

potential for confusion between who is the provider (Provincal Dinas (through the Balai)

or PJTI) and who is the user (Provincial Dinas or industry).

o All licences are basically the same and adopt standard conditions. There is tailoring

licence conditions the needs of particular users.

o A user-pays system has not been introduced. Transaction costs (cost of processing the

licence, technical assessment and monitoring) amount to a subsidy to the user.

o There is no provision for notification or public participation in licensing decisions. As a

result, farmers are not informed of an impending licence decision in an area that may

affect their water use.

3. Water Resources Management Bureau - Buntung Paketingan River (Balai Pengelolaan

Sumberdaya Air Wilayah Sungai (PSDA) Buntung Paketingan

The Balai PSDA for the Buntung Paketingan River is one of nine bureaus in East Java, and three

bureaus in the Brantas river basin, established within the Provincial Dinas in accordance with

sub-basin boundaries. Its area of operations covers six district governments. The current role of

the Balai is to carry out operational tasks in the field of water resources management. It has the

primary role in water resources management including implementing community services,

conservation and preservation of water resources, maintenance of water resources and water

supply structures, control of floods and handling droughts and control of water pollution. The

Balai operates the O&M for irrigation systems that straddle districts.

The ILT met with the following staff from the Balai:

A14 a) -4

Head of the Balai: Pk. Joko Adi Roso, Head of the Operation Section: Pk. Johan, HydrologySection: Pk. Rustamadji and Water Allocation Section: Pk. Sujoko.

Key issues:

o The Balai is very aware of its capability limitations. They have deficiencies in humanresources, technology and funding, which hinder their capacity to fulfil their tasks andfunctions and are currently seeking increased resources. The ILT was provided with adocument dated December 2003 arguing for additional resources.2

o There are major changes afoot in the structure of Provincial Dinas, which is likely toaffect the Balai. At present there is a process of national restructuring to reduce thenumber of Provincial Dinas through Peraturan Pemerintah tentang Pedoman OrganisasiPerangkat Daerah. This may mean that the role of the Balai is streamlined. The team wasprovided with an academic paper in response to proposed changes.

o Arrangements for monitoring water use by the Balai in secondary canals are not in placeand there is no self-reporting obligation. Responsibility for monitoring is shared betweenthe PJTI, Balai, Department of Revenue and District Government; however, in realityonly the PJTI monitors water withdrawals. There is an overlay of responsibility betweenPJTI and the Environment Agency (BAPEDALDA). No single authority hasresponsibility for monitoring levels of water use.

o Responsibility for long term environmental protection such as the overall environmentalcondition of the river basin or biodiversity along and within the river has not beenallocated.

o The Balai from different sub-basins do not meet between themselves.

4. District Irrigation Department, Kabupaten Sidoarjo (Dinas Pengairan KabupatenSidoarjo)

The ILT team met with Pk. Soejitno, Head of the Exploitation and Rehabilitation Sub-Agency.

The Sidoarjo District is in a low-lying area close to the outskirts of Surabaya. Many peoplecommute from Sidoarjo to Surabaya. It contains primary, secondary and tertiary irrigationchannels. Some of the secondary channels straddle district boundaries and are therefore underthe authority of the Province whilst others are contained within the boundary of the SidoarjoDistrict and are therefore under the authority of the District.

Sidoarjo district has one big irrigation system, New Lengkong Irrigation system. The district isresponsible for O&M of at least one secondary canal within the district. Another secondary canal(the Pelayaran Canal) is also used to supply PDAM Surabaya and, for this reason, is managed bythe Province, with operational responsibility held by Balai. The role sharing between Balai andthe District Dinas is arranged as follows:

2Memori Balai Pengelolaan Sumberdaya Air Wilayah Sungai Buntung Peketingan, Surabaya, Desember 2003

A14 a) -5

o The primary canal, from the headwork to the secondary diversion point and the

service canal is the responsibility of the Balai.

o The other secondary canal is the responsibility of District Dinas.

Key issues:

o Institutional boundary arrangements have created problems in identifying accountabilities.

Routine O&M for the Pelayaran Canal is considered the responsibility of the Balai.

However, the Balai is short of funds and does not recover the cost from the PDAM. Even

though PJTI has a supply agreement with the PDAMs, PJTI is not responsible for O&M

in the secondary canals.3

o The District Dinas does not play a role in regulation. Where a canal begins and ends

within the district, the province still carries out licensing. Up to year 2000, the District

Dinas played a stronger role in licensing as they submitted technical specifications to the

province. Since year 2000, it has only participated in a joint meeting at Provincial level to

check and approve licence documentation.

o The District Dinas does not have a defined role in water quality control; requirements to

notify the provincial BAPEDALDA of a pollution incident are non formal

o There are formal and informal arrangements for WUAs. The 5 WUAF for secondary

canals systems only cover 20 percent of users. Where farmers take direct from primary

canals there are ad hoc WUA.

o Urbanisation is impacting of use of water for irrigation. The amount of land under

irrigation in the district is rapidly reducing (estimates 1994: 36,000 ha., 2004: 20,000 ha.,

2010: 15,000 ha.) with agricultural land being used for housing. Farmers surrender

irrigation water without a reassignment policy. There is no conception that the farmers

have lost anything as water is seen as a 'free' good.

5. Regional Public Company for Water Supply (Perusahaan Daerah Air Minum) - PDAM

'Delta Tirta' Sidoarjo

The ILT met with staff from the Water Production Division who process raw water (surface and

groundwater) to consumable water: Pk. Mochtar, Pk. Agus and Pk. Sudrajat Jatmiko. Ninety-

four per cent of the PDAM customers are domestic users and six percent are from industry and

other users. All customers pay a fixed fee, which varies between customer groups. They operate

on a full-cost recovery basis with no government subsidies.

Key Issue:

3 There was some uncertainty whether PJTI is involved in the O&M of the secondary canal through a project called

'Project Brantas'. For instance, when the PDAM Surabaya want to increase their abstraction, PJTI may be involved

in the improvement of the Palayaran secondary canal to guarantee water for PDAM.

A14 a) -6

o Whilst the PDAM has a licence with the Provincial Dinas they do not have a fornalarrangement with PJTI. The PDAM has attempted to secure a supply contract with PJTIbut without success. This interferes with their financial security and ability to plan.

B. WEST JAVA

1. Perum Jasa Tirta II (PJTII) - Citarum River Basin

The team met with the Director Sri Hermowo and a number of staff members. A powerpointpresentation was made with much useful information.

Key Issues:

* Responsibility for managing irrigation infrastructure is divided between PJTII in the areasdownstream of the Citarum Reservoir and the Balai in the areas upstream.

* PJTII has US$166 million rehabilitation costs outstanding. Their books only mentionincome generating assets but they carry out operation and maintenance for all assets. Theother assets are in the control of Central Government. As a result the enterprise looksmore profitable than it is.

* Their income only covers 30-40% of what would be ideally covered on O&M (as bestpractice). This is dominated by irrigation. In this sense, they feel they are goingbackwards.

* We were told by the PJTH that they look after ST To 3rd order rivers whilst the Balailooks after the 4th order rivers. However, when this was mentioned to the Balai, they didnot recognise this categorisation.

* PJTII has a role in broad natural resources management and in education. There is anoverlap with the Balai on natural resources management and in water allocation. PJTIIfeel they are better able to carry out these roles.

* Water diversion from the basin to Jakarta places them in a powerless position.

* There appears to be a very different organisational culture in the PJTI/Il when comparedto government offices as seen in the financial mindset and the level of energy of staffmembers.

2. Provincial Department of Water Resources (Dinas Pengelolaan Sumber Daya AirPropinsi)

2.1 Meeting with Head of the Dinas, Pk. Maksun.

Pk. Maksun expressed concern about a number of problems in the Bandung river basin such asthe depletion of groundwater and surface water shortages caused by changes upstream includingdeforestation. Other problems are water pollution from industrial and domestic waste. He saidthat in the 'water for life' category there was enough water in Bandung basin to meet the needstill 2020; however, the main problem was the leaking canal that transports water to Jakarta.

A14 a) -7

He advised that a Provincial Perda had been passed to implement Government Regulation No. 77

of 2001 on Irrigation (Peraturan Pemerintah No. 77 Tahun 2001 tentang Irigasi) but that it had

not been signed pending resolution of issues at the national level. He expressed general support

for a scheme to register farmers' entitlements quantitatively as it would make farmers more

accountable in following the cropping pattern.

2.2 Meeting with Licensing Section

The ILT met with Pk. Sasuta (Head of Licensing Section), Pk. Soekarman (Licensing staff

member) and Pk. Samsudin (Water Acquisition Pricing). It was explained that there are three

sub-sections, namely Tax, Oversight and Institutional Cooperation.

* In 2003, they received 15 new licence applications and did 20-30 renewals. Licences are

renewed every 2 years. In a renewal, authorised water extraction is usually raised or

lowered in accordance with actual use. The renewal process is part of the monitoring

process, which is a partial explanation for the frequency of renewal. Licence applications

are occasionally refused.

* Only industry, PDAMs and enterprises in the oil sector are licensed. They have tried to

licence the PLN but have not succeeded to date although PLN does pay a small amount of

tax.

* There are 600 irrigation schemes in Citarum. If they were licensed, there would be 600

more licenses. How well this could be managed would depend on the budget.

* If the licence application is for more than 100 litres/sec an environmental impact

assessment is required.

* There is no requirement that farmers participate in licensing decisions. However, this

year, the Head of the Dinas gave an oral instruction that any new licence is not to be

given without the approval of the WUA. This procedure has been put in place. One new

licence received written approval from the WUA. Effectiveness will depend on the level

of organization of the farmers.

* In relation to coordination mechanisms, the only institutions are the PTPA and PPTPA.

However, theses bodies are not focused on groundwater use. The PTPA meets twice a

year. The PPTPA for Citarum meets more often, up to four times during the dry season.

About 50-60 people attend including WUA. This may include Dinas from 2-5 Districts.

Each Dinas raises its problems.

* Sanctions consist of three warnings by the Head of the Dinas followed by a transfer of the

case to civil investigators (Penyidik Pegawai Negeri Sipil (PPNS), who are located in the

Dinas.

3. Water Resources Management Bureau (Balai Pengelolaan Sumberdaya Air) (Balai

PSDA), Citarum River Basin

In the meeting with the Provincial Dinas, the following information was provided about the

Balai:

A14 a) -8

It was explained that there are 5 Balai in West Java established according to catchment areas.Whilst the Citarum Basin and the Balai have the same boundary, there are a number of self-contained sub-basins under the authority of the Balai. The boundaries were set out as riverdistricts (wilayah sungai) in Peraturan Menteri Pekerjaan Umum No. 39/PRT/1989 tentangPembagian Wilayah Sungai but do not always follow the boundaries of a single watershed.

The role of the Balai is essentially that of water resource manager: one of their functions is waterallocation and they are also involved in water quality and data management. They also have anOperations Section.

The team then met with officers from the Balai:

* The Balai plays a role in asset management concerning dams, weirs and river structureswhere irrigation straddles districts. Where an irrigation system is contained within adistrict, the district manages the assets. As a result, there are three sets of people doingdifferent kinds of asset management within the jurisdiction of the Balai: PJTII, Balai andDistrict Dinas.

* Water quality monitoring of irrigation water is not carried out by the Balai, the system isdependant on self-reporting. The Balai and BPLHD both carry out water qualitymonitoring of river water.

* In deciding on water allocation, they ensure the allocation does not exceed the historicallimit. They do not consider limits that may be desirable for the environment(environmental flows). They will not support a licence application if water balance isalready at a minimum or there is potential conflict with other users.

* Licenses within irrigations systems (Surat Izin Pengairan Jaringan Irigasi)(SIPJI) need arecommendation of support from the District government and this is considered a way ofavoiding future conflict. In addition, the Balai is able to discern whether or not there islikely to be potential conflict by going to the field. If there is opposition to a licenceapplication, the farmers will approach them informally.

* The Balai monitors water use on a monthly basis. They also make technical assessmentson the availability of water, which are used in the licensing process. However, they arenot able to predict water conditions for the next ten years. Studies have shown a 5-10%reduction of water in the dry season but they are not able to say where it has gone. Theyare not aware of findings from studies on whether or not deforestation is causing thedecline in water availability.

A few days later the team returned to the Balai and spoke with Azhari Dwikora, Section Head ofLicensing and other staff members:

* Eleven irrigation schemes cross over district boundaries and the Balai manages theseschemes. The Balai have a list of licences granted to industry within each scheme.However, if a scheme is located within a district, the district government will license.

* Whilst they have enough staff for licensing, they do not have enough for monitoring.They only have three staff for monitoring. Within irrigation schemes that straddle districts,only the Balai do monitoring, not PJTII or district government. If non-compliance is

A14 a) -9

discovered a warning will be issued. Frequently, there is no sanction, only a change in

the licence. They do not know how many entities remain unlicensed.

* The Balai employ the water master/gate keeper to measure the water flow. At present

there are seven and they need to employ four more gatekeepers this year.

* They do not have much connection with the WUA apart from employment for routine

maintenance.

4. Regional Environmental Control Board (Badan Pengendalian Lingkungan Hidup

Daerah) (BPLHD)

The team met with Lex Laksamana, Director BPLHD.

* There are a number of institutions that monitor water quality, namely Badan Pengelitian

dan Pengembangan Teknologi (BPPT), PJT, PLN, Balai and BPLHD. There is a

centralised database that has been published since 2002.

* Wastewater discharge licences are not usually issued for industry operating in irrigation

systems that return water to the irrigation flow.

* Environmental agencies do not have any input into water use licences. If they are to have

responsibility for environmental consequences of flows they should have an input.

* They do some biological monitoring using micro invertebrates as a river health indicator.

They do not monitor fish populations; however, it is fair to say that fish are basically non-

existent in the moderately and heavily polluted areas.

* Water extraction levels do not greatly influence pollution levels. Pollution levels vary

with the season. In the dry season, as the quantity of water in the river reduces, the

sources of pollution become overwhelming in impact. Additional extractions to not make

a great deal of difference to this situation.

* BPLHD should be in the process that considers water allocation, as the change in flow is

important for the environment. Changes in flow variability matter for geomorphology and

microbiology. Setting water allocation at the minimum historical level is not

environmentally sound. BPLHD should not only be involved in issues related to waste

water treatment plants.

* Groundwater levels are continuing to go down. BPLHD does not monitor groundwater

quality. A main reason is the excessive exploitation by industry. Whilst a ban has been

instituted, enforcement is not by BPLHD but by the District office of the Ministry of

Minerals and Energy.

5. PDAM Kota Bandung

The team met with Ibu Syani Widia Fauzani, Director of Clean Water and Pk. Agus Setiyawan,

Research and Development.

* The PDAM extracts water in the following sources:

A14 a) -10

159 litres/sec from springs

171 litres/sec from groundwater wells

2,139 litres/sec from surface water (almost all from Cisangkuy)

This makes a total extraction of 2469 litres/sec. However, their total need is 3027litres/sec, so the deficit in 2002 was 558 litres/sec.

* In year 2020, there will be a 4,839 litres/sec shortfall based on 80% population coverageand a population growth from 2.5 million in 2002 to 3.7 million in 2020. The shortfall ispartly due to an increase in population and an increase in coverage.

* At present, in the deep wells there is no water. Housing areas already suffer from watershortages. The PDAM's big problem is lack of water and they wonder how they willcope in the future. New dams are needed but where is the finance to come from? In fact,no new dams are planned for the future apart from some small hydro-electricity dams.Any new dams will have to be multi-purpose dams for the supply of electricity and otheruses. PDAM has suggested to central government that a tunnel be built from anotherbasin to transport water to the Citarum River.

* The PDAM pays taxes and fees:

Surface water - Rp 10 per cubic metre to the Provincial Government.

Spring and groundwater - Rp 20 per cubic metre for each well to the DistrictGovernment.

* They have recently refused to make any payment to PJTII on the grounds that PDAMextracts water from an area that is not managed by PJTII but is higher up in Cisangkuy.

* The tariff for water supply is set by the government and fixed according to differentcategories of use, namely, social use, household use, hospital use and industrial use.Ninety percent of users of PDAM water are households. The remaining users consist ofhotels and others; however, usually they have backup supply sources from groundwater.

* The PDAM experiences a 50 percent loss of efficiency due to illegal connections.

* The suggestion that the supply of irrigation water be reduced has been discussed in thepast. Farmers would have to be compensated. If a farmer gives up a right to water byselling their right to a PDAM, who is going to pay the farmer? The farmers would wantto obtain an amount to cover the volume of rice not sold. The cost would have to bepassed on to the consumers. In any event, this is unlikely to be possible as theGovernment controls the tariff. Another solution is to raise the efficiency of water usethrough progressive tariffs.

5. District Dinas Pengairan, Kabupaten Bandung

The team met with Pk. Bunbun Sabur from the Operations and Maintenance Section.

A14 a) -11

* Operations covers management, allocation, distribution and gate management where an

irrigation system is located within a district. Therefore, his section operates weirs on

rivers and secondary canals. The Dinas has 300 staff consisting of office and field

workers. They do not operate irrigation in the tertiary systems, which is done by the

farmers.

* Water allocation is done in accordance with the cropping pattern. The farmers' planting

schedule goes to the Sub-District Irrigation Committee and then the District Irrigation

Committee. The data comes from the Department of Agriculture Sub-District Office.

* Water scarcity is managed through a rotation system. One alternative is to rotate on a

daily basis (3 days/4 days) the other is to alternate on a 24-hour basis (day/night). The

rotation arrangement is decided between the farmers and the sub-district Dinas office

(Sub-Dinas Pengairan) and is formalised by a letter of agreement. It can also include the

PDAM close to Wangi Segara and the PDAM close to Wanira, which is usually on a

day/night rotation. Industry will also be included in the agreement. If industry needs a

continuous supply of water they have to find some other means of obtaining water such as

through water storage.

* Water shortages can be attributed to sediment levels, which lower the water level. There

is a heavy silt load in the system with a 5-10 cm growth each year. Another problem is

that upland farmers use more water than they need. They take water from the secondary

canals, which are not always locked. Also, there are leaks in the lining of the secondary

canals, which are only made of clay.

* Industry does not take enough water to make a difference to water availability. Usually

industry takes directly from the river rather than from irrigation schemes. They comply

with rotation arrangements and also use groundwater. However, there is a problem as

groundwater levels are going down. The Dinas recommends industry to build deepwater

storage wells for artificial recharge.

* The Operations and Maintenance Section is usually consulted after a licence application

is received but there is no formal arrangement and this can cause difficulties.

* Maintenance of irrigation (except tertiary systems) is all under the authority of the

District; the PJTII do not carry out any maintenance. In inter-district irrigation systems,

such as between Kota Bandung and Kabupaten Bandung, maintenance is actually done by

the Kabupaten Bandung and even the gatekeeper is employed by this District as the most

of the irrigated area is found in Kabupaten Bandung. In relation to the weir, the Balai

says they are responsible but in fact they employ someone from the District. When the

District carries out maintenance they will use office staff if it is light, routine work.

Otherwise, they will use contractors.

* The farmers maintain the tertiary systems and are quite independent from the Dinas.

They may join in the maintenance of secondary systems but only if there is an emergency

or something serious happens. Eleven of the 25 irrigation systems have WUAF. Farmers

are not competent to do routine maintenance for more than the tertiary systems.

* In reality, since July 2003, no money has been available for maintenance. Routine

maintenance costs about Rp 200,000 - 300,000 per hectare. Money is budgeted for but

A14 a) -12

no money has been provided to his office. He does not want to protest, as he is about totake his pension in any event.

6. District Department of the Environment (Dinas Lingkungan Hidup) (DLH), KabupatenBandung

The team met with Tbu Yunita, Head of the Sub-Dinas Lingkungan Hidup.

* Thirteen sectors impact on water quality but the most important one is industry. Heavymetals are also discharged by hospitals and abattoirs. The jurisdiction of DLH does notcover the Citarum River, which crosses district boundaries. Basically, only small riverscome under the responsibility of the districts.

* The DLH is the result of a merger between Environmental Management Board (BadanPengelolaan Lingkungan Hidup), the Department of Minerals and Energy and theDepartment of Forestry. This arrangement is based on the watershed. Different districtshave different institutional arrangements for environmental management.

* After receiving a wastewater discharge licence application, DLH coordinates with theBalai. A team is formed consisting of the Dinas Pengairan, Dinas Perindustrian, DinasPekerjaan Umum and the Sub-District. The team visits the site of the licence application.However, when Dinas Pengairan receives a licence application for use of surface wateror when the Dinas Pertambangan receives a licence for groundwater extraction, there isno coordination with the DLH.

* DLH coordinates with the Balai in water quality monitoring and also with the ProvincialEnvironmental Control Board (Badan Pengendalian Lingkungan Hidup Daerah)(BPLHD). They do water quality sampling by contracting with accredited laboratories inWest Java. There are eleven for the whole Province. There are serious environmentalproblems for water quality caused by pesticide and fertiliser use.

* To be effective they need more staff especially environmental engineers. They have tocontrol 200 large industries and thousands of small industries. Arrangements forcoordination are adequate; the main problem is money and human resources. However,there is still a problem with allocating responsibility for pollution problems, for example,the BPLHD tends to blame the City of Bandung for the high pollution levels in theCitarum River, when in fact the pollution comes from upstream.

* They started issuing wastewater licences in 2002 and have now licensed 126 out of 200industries. Prior to regional autonomy, the Province only issued 44 licences. A fee ispayable for the licence but it is not based on pollution load.

7. Pk. Suganda - Chairman of the Bandung Textile Industry Association

His factory does weaving, washing, dying and printing of polyester fabrics. The productioncapacity is 4.5 million meters of fabric (per year). They use 33,000 cubic meters of water eachmonth. They have a licence for 12 litre/sec but only use 9 litre/sec flow. The water is pumped infrom the irrigation canal.

A14 a) -13

* In choosing a site for a textile factory, the most important factors are availability of

groundwater and surface water. In terms of price, there is not much difference between

irrigated and non-irrigated land.

* When the reliability of water supply goes down, a rotation schedule is organised between

the users of the irrigation system. Industry also buys water from farmers groups such as

in the Wangi Segara irrigation scheme. The types of factory include textiles, printing

fabric and cattle farms. This has happened for many years as a private arrangement.

Money is rarely exchanged, if ever. Usually industry assists the scheme by repairing

canals or something similar. Many farmers work in the factories so they want the

factories to succeed.

* Groundwater is now hard to obtain and factories are experiencing problems with water

supply. Many factories are building their own water storage systems.

* Each month someone comes to inspect water abstraction and return rates.

* There seem to be a lot of different institutions involved, which he finds confusing for

example both the PJTH and the Provincial Department of Revenue record the abstraction

rate. He pays three different fees:

PJTII (since October 2003) - Rp5O per cubic metre

The Province- Rp 100 per cubic meter

District DLH - Rp25 per cubic meter

It is likely in the future that the factory will have to pay an amount to the WUA; this is still being

negotiated. The only service they receive is from PJTII, who at least provide the dams.

8. Pk. Ahmad - Chairman of Wangi Segara WUAF

* There are 16 WUA in his federation. 14 of the 34 industries in his area assist with O&M

of the irrigation system. This has increased from 4 industries last year. They are not part

of the WUA. The last licence was given by the Dinas to industry in 2000 and the WUAF

was not informed.

* Whilst there are five new industries in his area, none take water directly from the

irrigation system.

* District government manages water sharing between schemes.

* In times of water shortage, a rotation system is introduced within each scheme. In

addition, they try to stop leaks in the channels or get funds from the Dinas to improve the

condition of the canals or install pumps.

* If one farmer decides not to plant in a time of shortage, he does not expect anything in

return for the water he has not used. In such a situation, it is generally thought that those

who decide to plant do so at their own risk.

A14 a) -14

C. GROUNDWATER

1. National Department of Minerals and Energy - Groundwater Conservation Sub-division (Departemen Energi dan Sumber Daya Mineral, Sub-Bagian Konservasi Air Tanah)

The team met with Pk. Syaiful Ruchijat, Head of Groundwater Conservation and Pk. HDanaryanto, Hydrogeologist.

Tasks and functions:

Policy advice on groundwater conservation. This includes the drafting of guidelines for theimplementation of groundwater management under the New Law.

Key findings:

* No national policy on groundwater has been produced to date. This is the sort of topicthat will be covered by the National Water Resources Council, when it is operative.

* Information systems are built at three levels. From the District level, information can beobtained from the licensing system. The province is aware of the volume of groundwateruse from the taxation system, which taxes groundwater use.

* Indonesia has been divided up into 263 groundwater basins, 80 of which are found inJava. It is not yet decided how these groundwater basins will be allocated between thethree levels of government. However, in any event, the Districts have responsibility forlicensing groundwater use.

* Institutional weakness at the District level is a concern. Problems with securingimplementation of the guidelines could develop if the Districts are unable to implementthem. Other issues could arise if the Districts fail to implement technicalrecommendations issued Central or Provincial government. There is very little that canbe done to ensure that technical recommendations are followed.

* The level of resources at the district level to manage groundwater varies. Not all Districtshave a Department of Mining and Energy, especially if there is no mining activity in theDistrict. In such a situation, if the only resource to be managed is groundwater, it will bemerged with a different institution.

* In relation to clarifying the limit of water use that can be obtained without using a licence,this is 100 cubic meters/month for one well and one household. In Jakarta the limit is 50cubic meters/month - DKI Jakarta has introduced the stricter standard. Non-domesticuse will also need a licence.

* There is a crisis in groundwater supply in the Citarum river basin area. Whilst they havefigures on the estimated use of groundwater by industry, they do not have completefigures on the total of non-licensed use but rely on estimates. Extraction rates areexceeding recharge rates. Groundwater use is continuing to increase because thepopulation is growing. The only way to reduce domestic use of groundwater is toincrease the supply of piped water; however, there are constraints in achieving this. Asstated by the officers: "we are worried, we are in crisis".

A14 a) -15

* A ban on new licences has been introduced in areas identified by the Department as being

in a critical state. Districts are carrying out 'sweeping' operations to identify new illegal

use by industry. In fact, since the economic crisis, the level of groundwater use by

industry has gone down due to economic factors.

* A major cause of the crisis is due to the fact that a large amount of surface water is used

by Jakarta. The only thing that can be done is to build dams higher up, so that the local

population can use surface water from these dams. This could be done as conjunctive use,

where a user has both a surface and groundwater licence. However, consumers will

complain if the tariff for water use goes up.

2. Sub-Department of Mining and Energy within the District Department of the

Environment, Soreang District (Sub-Dinas Pertambangan dan Energi; Dinas Lingkungan

Hidup, Kabupaten Soreang)

The team met with Pk. Drajat, staff member in the Groundwater Licensing Section.

Tasks and functions:

In relation to monitoring, the water metre for licensed users is checked monthly.

Key findings:

* In attempting to reduce the level of abstractions of groundwater, the office relies on

voluntary reductions after advising users that they are in a critical zone.

* If there is an illegal bore (one without a SIPPA), two warning letters are issued and then,

if there is no response, the bore is locked up. New water extraction found in prohibited

areas will be closed.

* They do not have any data on the volume used by households.

D. SUMMARY OF FINDINGS

Institutional issues - surface water

1. Institutional coordination is a major challenge

Institutional coordination poses major challenges in Indonesia given the context of regional

autonomy, the arrangements of authority proposed in the New Law and the nature of integrated

water resources management.

Whist regional autonomy requires coordination between central, provincial and district levels of

government, there is a lack of formal channels for vertical coordination. Where a river basin

straddles provinces or districts, as established under the New Law, there is also a need for

horizontal coordination between those provinces or districts. In addition, integrated water

resources management requires coordination of the management of groundwater and surface

water as well as water quality and quantity, the responsibilities for which are spread between

institutions and levels of government.

A14 a) -16

At present, the primary coordinative bodies are the PTPA (provincial level) and PPTPA (basinlevel). These bodies respond to immediate issues rather than carry out basin-wide waterresources planning and management. Groundwater is not regarded as key focus for the PPTPA.

The only formal procedural coordination mechanism concerns the consideration of a licenceapplication.

2. Overlapping and split functions obscure lines of authority and responsibility

The complicated configuration of overlapping and split functions makes it difficult to see theoverall picture of who is doing what. An attempt has been made in Tables 1 and 2 to map thearrangement of basic functions in accordance with the classification as either a function inservice provision or regulation.

A14 a) -17

Table 1: Service Provision - rivers and irrigation systems

Large rivers Small rivers Rivers Rivers Irrigation Irrigation

(East Java) (East Java) downstream upstream across within

Citarum Citarum districts districts

(West Java) (West Java)

Rivers - PJTI Balai PJTII Balai

operation

Irrigation Balai District

systems - Dinas

operation

Irrigation Balai District

systems - Dinas

assetmanagement

Table 2: Regulation - rivers and irrigation systems

Large rivers Small rivers Rivers Rivers Irrigation Irrigation

(East Java) (East Java) downstream upstream across within

Citarum Citarum districts districts

(West Java) (West Java)

Management PJTI, Balai Balai PJTII, Balai Balai Balai DistrictDinas

Licensing Provincial Provincial Provincial Provincial Provincial Provincial

water use Dinas Dinas Dinas Dinas Dinas Dinas

Licensing District District District District ? ?

wastewater Environment Environment Environment Environment

discharges Agency Agency Agency Agency

Monitoring PJTI, Balai Balai PJTII, Balai Balai Balai District

quantity Dinas

Monitoring PJTI, Balai, Balai, PJTII, Balai Balai, ? ?

quality Provincial District District District

Environment Environment Environment Environment

Agency, Agency Agency/ Agency

District ProvincialEnvironment EnvironmentAgency Agency

Law Provincial ? District Provincial ? District Provincial District

enforcement Dinas Dinas Dinas Dinas Dinas Dinas

A14 a) -18

It can be seen that the same institutions play both a service provision and regulatory role in thelocality under their jurisdiction. In service provision, there is also a splitting of functionsbetween the PJTI/II and provincial and district levels of government. Furthermore, in regulation,there are both split and overlapping functions in management and monitoring.

There are also gaps in functions, particularly in relation to environmental management. Forexample:

* Who is ultimately responsible for considering long-term environmental sustainability?

* Who issues discharge licences for industry operating in irrigation systems?

* Who monitors water quality in irrigation channels?

3. Financial and human resources are limited

Budget constraints and limited human resources allocations within Provincial and Districtgovernment create uncertainty about capacity to implement expanded responsibilities. Budgetconstraints were found within all the institutions visited. In particular, the Balai havedeficiencies in human resources, technology and funding, which hinder their capacity to fulfiltasks and functions.

4. The level of mobilization offarmer organizations is still quite low

Only a small percentage of farmers are organised into WUA. In Sidoarjo District, East Java,there are formal and informal arrangements for WUA. There were 5 WUAF for secondarycanals systems from the 11 secondary diversion systems, which only cover 20 percent of farmers.Where farmers take water direct from primary canals there are many 'ad hoc' WUA of uncertainlegal status.

WUR Framework

S. Revenue considerations appear to drive water use licensing policies and priorities

The issuing or renewal of a licence is a source of revenue for provincial government. Licencesare not regarded as administrative/management tools for the governance of water use - to supporta management system, to protect the rights of the licence holder or to provide information toassist water resources management.

6. There is inadequate consideration of environmental aspects in licensing water use

Licences are allocated so as not to exceed the 'historical limit'; however, this limit may notcoincide with the limit that is desirable for environmental reasons. The Provincial EnvironmentAgency in West Java expressed the view that they would like to provide input into decisions thataffect water flow. The minimum flow of a river (like the Citarum River) should be maintained sothat it is higher than the lowest historical flow so as to protect the long-term sustainability of theuse of water resources.

A14 a) -19

7. There is noformalprovisionforpublicparticipation in water use licensing

There is no procedural requirement to ensure that new licence applications are notified to the

surrounding community and that the community can participate in the licensing process. Only

environmental impact assessment (for new enterprises) has a procedure for public participation.

Groundwater

8. There is a needfor a national policy on groundwater use

To date no national policy on groundwater use has been prepared. Responsibility for the

definition and creation of WUR to groundwater is unclear. There is a possibility of failure in the

effective collection of hydrological data within groundwater basins due to the lack of effective

information management systems.

9. Institutionalfragmentation needs to be overcome

Coordinative mechanisms are needed to integrate institutional responsibility for surface water

and groundwater use including the management of water groundwater quantity and quality.

10. Regulatory capacity is uncertain

Under regional autonomy, the district level is responsible for regulating groundwater use. The

level of institutional capacity to fulfil this responsibility is unknown; there is likely to be a wide

variation across Indonesia. This situation is exacerbated by a lack of regulatory authority at

higher levels of government.

A14 a) -20

~~-- -' 'I ' ' g '

Annex 14-b) Institutions for Water ResourcesManagement

I

Ii

Annex 14 b)

INSTITUTIONS FOR WATER RESOURCES MANAGEMENT

This annexure will set out the institutional arrangements currently in place for the management ofwater resources in Indonesia. It will consider the following:

1. Provision for water resources management based on the river basin.

2. The role of central government under regional autonomy, national coordination and thePerum Jasa Tirta.

3. The role of provincial government under regional autonomy, the provincial Dinas, the futureProvincial Water Councils, the Balai PSDA, stakeholder organisations and irrigationcommittees.

4. District level: the district Dinas and irrigation committees

5. Farmers' Water Users Associations under existing national law the regional response in EastJava.

1. WATER RESOURCES MANAGEMENT BASED ON THE RIVER BASIN

1.1 National and provincial river districts/territories before the New Law

The concept of management based on the watershed was introduced in Indonesia in 1989, when thenational government established 90 river territories across the country: Peraturan Menteri PekerjaanUmum No. 39/PRT/1989 tentang Pembagian Wilayah Sungai (PerMen 39/89). The river territoryhas been defined as a hydrological unit, which results from one or more watersheds (daerah aliransungai) (PerMen 39/89 art 1(1)). Watershed (daerah aliran sungai (DAS)) has been defined as onehydrological unit that is formed naturally wherever water penetrates or flows through a river and itstributaries (PerMen 39/89 art 1(2)).

Management authority for river territories has been established since 1990: Peraturan MenteriPekerjaan Umum Nomor: 48/PRT/1990 tentang Pengelolaan Atas Air Dan Atau Sumber Air PadaWilayah Sungai. Seventy-three river territories have been under provincial government since 1990.In 15 river territories, management was allocated to the Department of Public Works. In two riverterritories, the Brantas River (East Java) and the Citarum river (West Java), management authoritywas allocated to state corporate bodies: Perum Jasa Tirta Brantas and PT Otorita Jatiluhur.

Peraturan Pemerintah No. 35 Tahun 1991 tentang Sungai establishes the respective governmentauthority for managing rivers based on the river district. It also allows for the authority andresponsibility for fostering (pembinaan) rivers of central government to be transferred from centralgovernment to a state-owned government enterprise (BUMN)(Badan Usaha Milik Negara) and toregional government (PP35/91 art 10).

The Minister (with the possibility of delegation to a BUMN or a region government) has hadresponsibility for planning within the river district, which has been stated to include the making ofan inventory of the development of the river, it potential and characteristics, observation andevaluation regarding floods and water quality, determining plans to foster the river, drafting

A14 b) -1

guidelines and coordination (art 11(1)-{3)). Development of rivers has been primarily carried out by

central govermnent or BUMN (art 12(1)). PP35/91 uses the terms exploitation and

protection/maintenance (eksploitation dan pemeliharaan). These activities, where they include

welfare and safety, can be carried out by either the government or BUMN (PP35/91 art 13(2)).

Where they include planning, implementation, observation and evaluation, they can be carried out by

legal entities, social organisations or individuals (PP35/91 art 13(3)).

1.2 River territory boundaries under the New Law

Act No. 7 of 2004 on Water Resources (the New Law) establishes four arrangements (Articles 14-

17):

- where there is a river territory, a section of a river territory or a river basin, the whole of which is

found within a district;

- where a river territory exists in more than one district government area;

- where a river territory exists in more than one province or straddles national boundaries; and

- strategic river territories.

Previously, only the national and provincial government had responsibility for river districts. This

has changed under the New Law, which introduces responsibility at the district level. There is still a

certain amount of fluidity as to how the responsibility for implementing water resources

management will be allocated between the different layers of government. These arrangements are

awaiting determination through the passing of a Presidential Decree.

2. NATIONAL INSTITUTIONS

2.1 The role of central government under regional autonomy

Before regional autonomy, central government had the functions of setting policy, planning,

providing a program, regulating, fostering operational tasks and control (art 8(2)): Peraturan

Menteri Pekerjaan Umum No. 65/PRT/1993 tentang Penyuluhan Pengairan (PerMen 65/93). Under

Undang-undang No.11 tahun 1974 tentang Pengairan) the Minister for Public Works had

responsibility to coordinate the planning, oversight, protection and the use of water and water

resources (not including groundwater) (arts 5(1)&(2)). The Minister's responsibility for

coordination was elaborated in the Peraturan Pemerintah (PP) No. 22 Tahun 1982 tentang Tata

Pengaturan Air (art 8). The regulation lists coordination tasks such as the setting of planning

priorities, the administration of the water use, the regulation of the disposal of liquid waste and the

development of irrigation (art 9). This involved the collection of data regarding the quality and

quantity of water, the maintenance of an inventory, the preparation of policy on the development of

water resources, and the arrangement of the means and conditions for the disposal of liquid waste

(art 10).

Since regional autonomy, if Government Regulation No. 25 of 2000 on The Authority of the

Government and the Authority of the Provinces as Autonomous Regions (PP25/2000) is considered,

it would seem that central government's role has been curtailed to the stipulation of guidelines and

standards (art 2(3)(15)-(16)). Indeed, the only reference to central government responsibility for

irrigation in PP25/2000 concerns the stipulation of a standard irrigation. However, as against these

A14b) -2

provisions, it also seems that central government may have wide authority in relation to the 'efficientuse of natural resources' (art 2(2)).

Under the New Law, central government has authority for water resources management in riverterritories that span provinces or states and strategic river territories. This role is set out under article14 and includes policy making, planning, implementation of water resources management andlicensing. Furthernore, in relation to the operation and maintenance of irrigation, centralgovernment has authority and responsibility for primary and secondary irrigation in all areas undertheir authority (art 64(6)(a)).

2.2 A National Coordination Agency

The following Ministries share responsibility for different aspects of water management at thenational level:

(i) The State Minister of the Environment

(ii) The Minister for Mines and Energy (groundwater)

(iii) The Minister for Industry and Trade

(iv) The Minister for Agriculture

(v) The Minister for Forestry and Plantations

(vi) The Minister for Health

(vii) The National Planning and Development Agency

(viii) The Minister for Home Affairs.

A National Coordination Team (Tim Koordinasi Sumberdaya Air) was to be established underKeputusan Presiden No. 123 Tahun 2001 tentang Tim Koordinasi Pengelolaan Sumberdaya Air.The team was to be set up in the form of a non-structural, coordination body for determiningnational policy with direct responsibility responsible to the President (art 1) and was to assist thePresident in deternining general policy on water resources (art 2). A primary function of the Teamwas to formulate national policy on water resources management (art 3). The functions of the teamwere stated to be the coordination of the development of policy, internal and external consultationwith all parties both government and non-government, provision of opinions to the President,monitoring and evaluation and reporting to the President (art 4).

The National Coordination Team was never brought into existence as an operational entity.Furthermore, the idea behind its formation did not address certain issues. First, the respective rolesfor Team and the Minister for Settlement and Regional Infrastructure needed to be settled, as thereare areas of potential overlap. Second, there was no detailed statement on the areas of policy forwhich the Team was to be responsible. Since then, the New Law proposes the establishment of aNational Water Council 14(h). Little detail has been made available at this stage regarding theconstitution, role and functions of the National Water Council.

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2.3 National Government-Owned Enterprises - Perum Jasa Tirta

The two particularly important river basins in Indonesia, the Brantas and Citarum rivers are managed

by state corporate bodies: Perum Jasa Tirta Brantas and PT Otorita Jatiluhur. The Perum as a kind

of National Government-Owned Enterprise (BUMN) delivers services for general benefit as well as

to obtain a profit (Peraturan Pemerintah No. 3 Tahun 1983 Tentang Tata Cara Pembinaan Dan

Pengawasan Perusahaan Jawatan (Perjan), Perusahaan Umum (Perum) Dan Perusahaan

Perseroan (Persero) (PP3/83 art 2(1)(b)).

The objectives of a Perum includes the following (PP3/83 art 2(2)):

- to contribute to econonmic development- to generate income- to protect public benefits- to pioneer activities that are not able to be carried out by the private sector or cooperatives

- to participate in the implementation of government policy in the field of econornic development.

Perum are to be fostered by the Minister (Director-General) of their sector (PP3/83 art 4).

Management of the Perum is the responsibility of the Executive Director (PP3/83 art 9). Work

reports have to be forwarded to the Minister and are assessed by the Minister of Finance (PP3/83

art 12). The oversight of the Perum is to be carried out by a Supervisory Board (Dewan

Pengawas) (PP3/82 art 24) who carries out the directives of the Minister and has wide-ranging

authority (PP3/83 arts 25-29). Members of the Board are appointed by the Minister from

technical departments, the Department of Finance and other government offices associated with

the Perum.

East Java - PJTI

Government Regulations were passed regarding the Perum in the field of water resources, the

Perum Jasa Tirta. Peraturan Pemerintah No. 5 Tahun 1990 tentang Perusahaan Umum

(Perum) Jasa Tirta (PP5/90) stated that the Perum Jasa Tirta (PJT) is to be established to carry

out the exploitation and protection of water resources infrastructure and well as commercially use

water and water resources in accordance with existing legislation (PP5/90 art 3(1)-(2)). In

addition, Peraturan Menteri Pekerjaan Umum No.56/PRT/I991 tentang Kebijaksanaan Umum

Pengelolaan Perusahaan Umum (PERUM) Jasa Tirta states that the main tasks of PJT are to

operate and maintain water infrastructure, commercially use water and water resources, manage

the river basin including protection, expansion and use of water and water resources and

rehabilitation of water infrastructure (art 6).

It can be seen that Perum Jasa Tirta has both an operational and a management role. It also

carries out the beneficial use of water resources and management of the watershed where specific

tasks are given by Central Government including protection, expansion and use of the river and

or water resources including the giving of information, recommendation and guidance ((PP5/90)

art 5(2)). These tasks include rehabilitation (PP5/90 art 6(1)).

PJT had its name changed to PJTI pursuant to Peraturan Pemerintah No. 93 Tahun 1999 tentang

Perusahaan Umum (PERUM) Jasa Tirta I (art 2(2)). This Government Regulation listed the

A14 b) -4

- - -^ > S S -I

activities of PJTI in the supply of water for drinking water companies, electricity companies,human settlements, fish farming, plantations, industry, irrigation, hydroelectricity and other uses(art 8a.). It also sets out the arrangements for the direction of PJTI including the GoverningCouncil (Dewan Pengawas). The management role of PJTI is mentioned in this GovernmentRegulation but in a more limited manner as relating to certain tasks given to it by centralgovernment in the management of the river basin that include protection, expansion and use ofthe river and/or resources including giving information, recommendations, information andguidance (art 6(2)).

In September 2000, the work area of the PJTI was altered to cover the Bengawan Solo River inCentral Java. PJTI now has a work area that straddles Provinces: Keputusan Presiden No. 129Tahun 2000 tentang Penambahan Wilaya Kerja Perusahaan Umum (PERUM) Jasa Tirta I diWilaya Sungai Bengawan Solo.

3. PROVINCIAL LEVEL ORGANISATIONS

3.1 The role of provincial government under regional autonomy

Before regional autonomy, management tasks referred to Provincial Government included thefollowing (Peraturan Menteri Pekerjaan Umum Nomor: 48/PRT/1I990 tentang Pengelolaan Atas AirDan Atau Sumber Air Pada Wilayah Sungai) (PerMen 48/90 art 2):

a. management and expansion of the benefits of water and water resources

b. licensing based on planning, technical planning and arrangement of water

c. licensing water allocation, use and supply

d. licensing the commercial use of water

e. determining and regulating law-making and legal relations

f. coordinating the system for arranging water

Under regional autonomy law, the role of the province in the public works sector (irrigation) extendsto support to the districts in the development of infrastructure and facilities (PP25/2000 art3(5)(14)(b)). In addition, the provincial office (dinas propinsi) has the task of implementing theauthority of central government delegated to the governor as the representative of the centralgovernment through the framework of deconcentration. I

This arrangement needs to be reconciled with the New Law under which provincial government hasauthority for water resources management, including managing irrigation systems. This role is setout under article 15 and includes policy making, planning, implementation of water resourcesmanagement and licensing in river basins that straddle district boundaries. Furthermore, in relationto the operation and maintenance of irrigation, provincial government has authority andresponsibility for primary and secondary irrigation in all areas under their authority (art 64(6)(a)).

Ministerial Circular from the Minister of Home Affairs 061/729/53 dated 21.3.2000 Part 3(a) Ad.3 (b)&(c)

A14 b) -5

3.2 Coordination at the Provincial Level

Coordination is to be carried out by the Provincial Administration Office (Sekretariat Daerah

Propinsi). Public works, communications and the environment along with settlement and regional

development have been grouped together into a coordination bureau.2 In relation to water resources

management the following sectors share responsibility:

* Public Works

* Agriculture and Forestry

* Health and Social Welfare

* Industry and Commerce

* Energy and Mineral Resources (ground water)

* Fisheries and Maritime Affairs

* Regional Environmental Impact Management Agency (Badan Pengendalian Dampak

Lingkungan Daerah)(BAPEDALDA)

* Regional Development Planning Agency (Badan Perencanaan Pembangunan

Daerah)(BAPPEDA)

In view of the enormity of this coordination task, the New Law has provided for the formation of

a Provincial Water Resources Council at the Provincial or river territory level (art 15(h)). As

with the National Water Council, the constitution, role and functions of these councils have yet

to be determined.

3.3 The Provincial Dinas

East Java: The Provincial Department of Public Works - Water (Dinas Pekerjaan Umum -

Pengairan)

The irrigation institutions were set out in Peraturan Pemerintah No. 23 Tahun 1982 tentang

Irigasi (PP23/82). The arrangement and regulation of irrigation has ben the responsibility of

Provincial Government (PP23/82 art 2(1)). Licensing procedure has been regulated by regional

regulation (PP23/82 art 5(3)).

After regional autonomy, which devolved many administrative functions to district government,

the Provincial Government in East Java passed a Provincial Regulation (Perda) to clarify the role

of the Department of Public Works-Water (Dinas Pekerjaan Umum Pengairan). According to

Peraturan Propinsi Jawa Timur No. 23 Tahun 2000 tentang Dinas Pekerjaan Umum Pengairan

Propinsi Jawa, the functions of the Provincial Dinas are: (art 4)

2 ibid Part 3(a) Ad.l(e)(4)

A14 b) -6

a. Planning technical development policy and the management of water resources that crossdistrict boundaries

b. Provision of support and assistance for joint ventures with district government and thedevelopment of infrastructure for water and dams

c. Provision of support for the management of surface water resources, operation andmaintenance of irrigation networks and drainage across district boundaries and theirstructures

d. Licensing the commercial use of surface water in watersheds that cross districtboundaries

e. Licensing the establishment, alteration or demolition of structures within, above orcrossing over water resources or irrigation channels straddling district boundaries

f. Development and improvement of irrigation networks that cross districts as well as theirstructures

g. Composing plans for the supply of irrigation water.

The licensing function of the Provincial Dinas was elaborated in Keputusan Gubernur KepalaDaerah Tingkat 1 Jawa Timur 76 Tahun 2002 tentang Pelimpahan Kewenangan Pemberian danPenandatanganan Izin di Bidang Pekerjaan Umum Pengairan (KepGub 76/2002), which givesauthority to the Head of the Provincial Dinas for licensing the taking of water, the commercialuse of water, the use of ground water, alterations to water channels and infrastructure that crossover districts in addition to licensing the alteration of structures that exist above and below waterresources (KepGub 76/2002 art 1). The Head of the Provincial Dinas is obliged to determinelicensing mechanisms, administration, oversight and control of licensing and protection of waterresources through licensing and to report to the Governor (KepGub 76/2002 art 2(2)).

West Java: Provincial Office for Water Resources Management (Dinas PengelolaanSumber Daya Air Propinsi)

The list of various Provincial Offices is set out under Perda No. 5 Tahun. 2002 TentangPerubahan Atas Peraturan Daerah Propinsi Jawa Barat No. 15 Tahun. 2000 Tentang DinasDaerah Propinsi Jawa Barat (Perda 5/2002) including the Provincial Office for Water ResourcesManagement (Dinas Pengelolaan Sumber Daya Air Propinsi ).

Detail regarding the functions of the Dinas for Water Resources are set out in KeputusanGubernur No.49 Tahun 2001 tentang Tugas Pokok, Fungsi dan Rincian Tugas Unit DinasPengelolaan Sumber Daya Air Propinsi Jawa Barat. They include (art 2):

- formulation of operational policy,- fostering operations that include the program, conservation, technical aspects, operations and maintenance andexploitation,- preparing facilities and a system for investment,- licensing,- facilitating the management of water resources,- oversight, control and evaluation of water resources

A14 b) -7

One product of the Dinas is the Master Plan for the Management of Water Resources in West

Java: Peraturan Daerah Propinsi Jawa Barat No. 3 Tahun 2001 tentang Pola Induk

Pengelolaan Sumber Daya Air di Jawa Barat.

3.4 Balai PSDA

Technical units known as Balai Pengelolaan Sumberdaya Air (Balai PSDA) were established

nationally as a technical agency of the Provincial Dinas in 1996 pursuant to Keputusan Menteri

Dalam Negeri Nomor 179 Tahun 1996 Tentang Pedoman Organisasi Dan Tata Kerja Balai

Pengelolaan Sumberdaya Air) (arts 2 & 3).

The Balai PSDA has wide ranging responsibility for the management of irrigation, preparation of

water quality standards, rivers, lakes, reservoirs, control of floods and droughts, swamps, control

of pollution and the protection of beaches, estuaries and deltas. Their functions include the

implementation of operational services for the community in irrigation, conservation and

preservation of water resources as well as technical services (art 4). The delegation of functions

to Balai PSDA also includes some regulatory functions including (arts 8 &10):

- monitoring water quality and quantity;- carrying out water allocation to fulfil various interests;- maling technical recommendations regarding licensing and water resources;- carrying out monitoring and making the inventory on the condition and function of irrigation infrastructure;

- control of floods and droughts;- pollution control;- treatment, protection, repair and development of infrastructure;- control over the exploitation of water resources; and- provision of information.

East Java: Balai PSDA

In East Java, the Balai has a key role in data collection as set out in Keputusan Gubernor No. 56

Tahun 2001 tentang Petunjuk Pelaksanaan Peraturan Daerah Propinsi Jawa Timur No. 16

Tahun 2001 tentang Pajak Pengambilan dan Pemanfaatan Air Bawah Tanah dan Air

Permukaan_(KepGub 56/2001). Data is to be collected each month (KepGub 56/2001 art 5(1))

by the Technical Implementation Unit (Unit Pelaksanaan Teknis Dinas) 'together with' the Balai,

PJTI and District Offices in accordance with their authority (KepGub 56/2001 art 5(3)). The

Balai is to report to the Head of the Provincial Dinas every three months (KepGub 56/2001 art

5(4)). The results of the collection of data on use of water for plantations, farming and

hydroelectricity are to be reported to by the Balai to the Head of the Provincial Dinas each year.

West Java - Balai PSDA

In West Java, there are six river districts. the arrangement of the five Balai PSDA are set out

under the technical offices of the Dinas Pengelolaan Sumber Daya (Perda 5/2002). The

structure is set out as consisting of (art 3A)

- The head of the Balai- Sub-division on Method of Operations- Operations and Data Processing- Restoration and Improvements- Control and Security- Installations- Functional officers

A14 b) -8

The technical offices of the Dinas Pengelolaan Sumber Daya include the five Balai PSDA forthe main river territories. The tasks and functions of these offices are set out under KeputusanGubernur No. 61 Tahun 2002 tentang Tugas Pokok, Fungsi dan Rincian Tugas Pada UnitPelaksana Teknis Dinas di Lingkungan Dinas Pengelolaan Sumberdaya Air (KepGub 61/2002).There seems to be a name change as the Balai within the Dinas are referred to as BalaiPendayagunaan Sumber Daya Air (BPSDA) - pendayagunaan referring to the efficient use ofwater resources rather than the management of water resources. The structure is the same as thatmentioned in Perda 5/2002.

It can be seen that the role of the Balai PSDA in West Java is very wide and encompassesmanagement and regulatory functions (KepGub 61/2002 art 5-8). The overall tasks of theBPSDA are to provide operational services, management of data, restoration and improvement ofwater resources infrastructure, control and water resources security. In addition, they are taskedwith technical services that includes general management, finances and employment (KepGub61/2002 art 2(4)a&b.)

3.5 Stakeholder Participation Institutions

The stakeholder participation institutions at the Provincial level are the Provincial WaterManagement Committees (Panitia Tata Pengaturan Air Propinsi)(PTPA) and the River BasinWater Management Committees (Panitia Pelaksana Tata Pengaturan Air Propinsi) (PPTPA).Currently the composition and functions of the PTPA and PPTPA are set out in PeraturanMenteri Pekerjaan Umum Nomor: 67/PRT/1993 tentang Panitia Tata Pengaturan Air PropinsiDaerah Tingkat I (PerMenPU 67/93). The Governor forms the PTPA and they are responsible tothe Governor (PerMenPU 67/93 arts 2 & 3) as a consultative forum (art 3(2) to assist theGovernor in coordination tasks. In particular, their functions are: (PerMenPU 67/93 art 4)

* determining priorities for planning the use of water and water resources

* deterrnining the order of priorities for water use in plans for the protection, development and use of water

* arranging water use

* arranging waste disposal

* arranging the development and expansion of irrigation and

* other matters that may arise.

The Governor can form a PTPA for the Province and a PPTPA in river territories within theProvince to assist the PTPA (PerMenPU 67/93 art 6(3)). No further detail is given in relation tothe PPTPA.

The members of the PTPA are all government officials (PerMenPU 67/93 art 6) with minimalprovision for public involvement. It is merely stated that the PTPA is able to invite water usersor other interested parties and individuals to attend PTPA sittings, to assist with the provision ofdata and information as required (PerMenPU 67/93 art 8). The financial support for the PTPAcomes from central government (PerMenPU 67/93 art 9(a)) and funds received from the levy(iuran) imposed on water users (PerMenPU 67/93 art 9(b)).

A14 b) -9

3.5.1 Provincial Water Management Committees (Panitia Tata Pengaturan Air Propinsi)

(PTPA)

A PTPA has been established in East Java pursuant to Keputusan Gubernur Kepala Daerah

Tingkat 1 Jawa Timur No. 59 Tahun 1994 tentang Pembentukan Panitia Tata Pengaturan Air,

Propinsi Daerah Tingkat 1 Jawa Timur (KepGub 59/94). There are 21 members of the

committee including two experts on water resources. This decree states the tasks of the PTPA as

(KepGub 59/94 art 5):3

(a) Collection, processing and preparation of material obtained from technical management units:

1. data on the quantity of surface water and groundwater

2. data on the quality of surface water and groundwater

3. data on water conservation

4. data on water use needs on the past, present and future from relevant sectors based on time, space, total

and good quality

5. data on the exploitation of water resources for the past, present and future.

(b) Considering and resolving issues:

1. on the supply and use of water resources including the allocation of water in the wet and dry season to

support the needs of each sector based on agreed criteria that refer to legislation

2. determination of locations and the method of disposal of wastewater including finance and management

3. determination of flood flows to minimise damage

4. coordination of problems related to sand/gravel mining

(c) Oversight:

1. collation and assessment of report from relevant offices

2. preparing suggestions for action to be taken regarding oversight reports.

(d) Reporting to the Governor and Minister for Public Works through the Director General of Water.

3.5.2 River Basin Water Management Committees (Panitia Pelaksana Tata Pengaturan Air

Propinsi) (PPTPA)

East Java

In East Java, the Governor has formed seven PPTPAs (KepGub 59/94 art 8), which coordinate

receipt of data, decision making and reporting on the implementation of tasks to the PTPA

3 Identical provisions are made for West Java: Keputusan Gubernur Kepala Daerah Tingkat I Jawa Barat No. 18 Tahun

1994 tentang Pembentukan Panitia Tata Pengaturan Air Propinsi

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Keputusan Gubernur Kepala Daerah No. 131 Tahun 1997 tentang Pembentukan PanitiaPelaksana Tata Pengaturan Air Propinsi Daerah Tingkat I Jawa Timur (art 8(3)) (KepGub59/94). The seven watersheds (art 2) each contain a number of district govermments (art 10). Therole of the PPTPA is elaborated as follows (art 5):

(a) Collect data as needed by PTPA and related offices

(b) Set priorities for water use, the need for water and plan the allocation of water

(c) Compose the plan for water supply, allocation of water, water quality standards, pollution loads in theframework of water quality control

(d) Compose the plan for determining the borders of rivers

(e) Resolution of problems regarding sand and gravel mining for water resources and groundwater extraction

(f) Implementing other integrated programs related to water resources including conservation of groundwaterand surface water

(g) Lifting the awareness and participation of the community in the protection, expansion, use and control ofwater and water resources

(h) Resolving problems that arise as a consequence of implementing the above tasks.

To complete the above tasks the PPTPA is to meet three times per year (art 7). It consists of aHead of the Committee, a Secretary and the Members of the Committee (art 6(1)). The samelimited provisions for public participation apply, with the PPTPA being 'able to invite'representatives of affected parties to meetings (art 8). Without further elaboration, relations withthe PTPA are stated to be 'consultative' and relations with the Irrigation Committee for theDistrict (Panitia Irigasi Kabupaten/Kota) are 'coordinative' (art 9(1)).

West Java

In West Java, a PPTPA have been formed for the Wilayah Sungai Citarum: SK Gubernur No.614.05/SK.834-Huk/97*4 The tasks of this PPTPA are slightly different to the tasks of the PPTPA inEast Java.

1. Coordination of the collection and processing of data as needed by PTPA including:

a. water quality and quantity (surface and groundwater)

b. data on land and water resources conservation

c. data on needs for water

d. data on the exploitation of water both that which is used and not yet used

e. data on areas affected by floods and droughts

2. Coordinating the management of water:

4 Also for Wilayah Sungai Ciujung-Ciliman: SK Gubernur No. 614.05/SK.2123-PerekW94 and at least six other riverterritories.

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a. Composition of the annual water allocation plan and setting use priorities

b. Determining the priorities for allocating water in the wet and dry season

c. Determining water quality standards including volume of waste that is able to be disposed of to the

river

d. Composing land use plans in areas of the river management as well as plans for water resources

developments

e. Composing operational plans to manage floods

f. Composing plans for floods beyond river borders

g. Handling of natural disasters

h. Resolution of land use problems

i. Resolution of problems with gravel mining

3. Provision of consideration and suggestions on the management of surface and groundwater

4. Lifting the level of awareness and participation of the conununity in the development, exploitation, protection

and control of water resources.

5. Monitoring and oversight in the regulation of water in the Citarum River

6. Support for other integrated programs connected with water resources including land and water conservation

7. Reporting to the Governor

8. Other tasks as directed by PTPA.

3.6 PJTI Licensing Working Group

In East Java, a LicensingWorking Group was established in 2002 to give input to the Governor

concerning licensing applications: Keputusan Gubernur Kepala Daerah Tingkat 1 Jawa Timur No.

188/266/KPTS/013/2002 tentang Kelompok Kerja Pertimbangan Perizinan Pergambilan dan

Pemanfaatan Air Permukaan di Wilaya Kerja Perusahaan Umum (PERUM) Jasa Tirta 1 . It is also

to collect data, impose sanctions, evaluate reports and coordinate between the Provincial and District

level. Its membership includes representatives from the Law Bureau, Economics Bureau, the

Environment Agency, and the Departments of Public Works, Finance, Agriculture, Industry, Health,

Tourism as well as PJTI.

3.7 Irrigation Committees

The arrangements for irrigation institutions have been set out in Peraturan Pemerintah No. 23

Tahun 1982 Tentang Irigasi (PP23/82). Provincial Government arranges and regulates irrigation

(PP23/82 art 2(1)). However, a legal entity, social organization, village, subak or individual can

develop irrigation for commercial use on obtaining a licence from the Governor (PP23/82 art

6(2)) and also direct water through existing irrigation channels (PP23/82 art 9).

The institutional arrangements for irrigation provide for the establishment of Provincial Irrigation

Committees (Panitia Irigasi Propinsi) (PP23/82 art 37). These committees are to be a consultative

forum to assist the Governor in the supply, division and provision of irrigation water for crops and

A14 b) -12

~~~-- - -

other needs (PP23/82 art 37(2)). The Provincial committee is made up of the Governor and agovernment official from the water sector and high-evel officials from technical offices related toirrigation (PP23/82 art 37(3)&(4)). Further provision is to be made by the Governor (PP23/82 art40).

4. DISTRICT LEVEL ORGANISATIONS

4.1 District Dinas and the New Water Law

Regional autonomy and the New Water Law has added another layer of possible variation to thearrangement of levels of governmental responsibility. Under regional autonomy law, districtgovernment and the district level Dinas Pengairan has the task of implementing newresponsibilities at the regional level. Under the New Water Law, major changes will occur wherea river basin is considered to fall within the boundaries of district government as in such cases,the powers of the Provincial Dinas will be devolved to the district. The number of such riverbasins is yet to be determined by the Ministry for Settlements and Infrastructure. According toinformation received by the ILT team, it is likely to be less than 10 river basins.

East Java: Kabupaten Sidoarjo, Department of Public Works - Water (DinasKabupaten/Kota Pekerjaan Umum - Pengairan.

In East Java, the Provincial level of government transferred its authority to District Governmentsin 1994: Peraturan Daerah Propinsi Jawa Timur No. 17 Tahun 1994 tentang PenyerahanSebagian Urusan Pemerintah Propinsi Daerah Tingkat I Jawa Timur Dalam Bidang PekerjaanUmum Pengairan kepada Daerah Tingkat II

As set out in Peraturan Daerah Kabupaten Daerah Tingkat II Sidoarjo No. 53 tahun 1996tentang Irigasi di Kabupaten Daerah Tingkat II Sidoarjo, this District Government has hadauthority for managing irrigation systems within its geographical area since 1996 under a transferof authority from the Province. This authority has included planning, implementation,determination of irrigation priorities including licensing of irrigation systems within the districtnot including tertiary systems or systems built by legal entities (art 3).

West Java: Kabupaten Bandung, Department of Public Works - Water (Dinas PekerjaanUmum Penganian)

Similarly to East Java, the Provincial level of government in West Java transferred its authorityto District Governments in 1996: Peraturan Daerah Tingkat I Propinsi Jawa Barat No. 10Tahun 1996 tentang Penyerahan Sebagian Urusan Pemerintahan di Bidang Pengairan kepadaPemerintah Daerah Tingkat II di Jawa Barat. As a result, the Bandung District issued aregulation on licensing to provide for a licence to use irrigation systems (Ijin PenggunaanJaringan Irigasi): Surat Keputusan Kepala Dinas Pekerjaan Umum Pengairan KabupatenBandung No: 611/609/BM/Sk-Air Kab.IAP/2002.

4.2 Irrigation committees

The institutional arrangements for irrigation have provided for the establishment of DistrictIrrigation Committees (Panitia Irigasi Propinsi) by the Governor (PP23/82 art 37). Thesecommittees were to be a consultative forum to assist the Governor in the supply, division andprovision of irrigation water for crops and other needs (PP23/82 art 37(2)).

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East Java: Kabupaten Sidoarjo

In response to national laws on the WUA, in 2003 the Kabupaten of Sidoarjo passed a Decree on

Irrigation Committee: Keputusan Bupati Sidoarjo No. 188/514/404.1.1.3/2003. This decree sets

out the tasks of the committee including coordinating the provision of water in accordance with

annual plan prepared by the WUA, determining the cropping plan and water allocation. The

members of the committee include the Dinas Agriculture, Industry, Small and Medium-Sized

Cooperatives and Fisheries, the Community Empowerment Board, the Police, a representative of

an NGO and the WUA.

5. FARMERS' WATER USERS ASSOCIATIONS (WUA)

5.1 National Law on WUA

The idea of the farmers' water users association (WUA) for farmers in tertiary irrigation, village

irrigation or subaks has been around at least since 1982. PP23/82 transferred authority for

managing tertiary irrigation systems, village irrigation or subaks to farmer users of water, the

village or subak (art 2(2)). It also stated that regional government was to determine the form and

expansion of farmers' water users associations (WUA) for the handing over of functions and

responsibilities (art 20). Subsequently, a Presidential Instruction was issued, Instruksi President

No. 2 Tahun 1984 tentang Pembinaan Perkumpulan Petani Pemakai Air, delineating the work

area of the WUA, the form of organization, tasks and authority as well as rights and obligations.

National provision was again made for the establishment of WUAs through Peraturan Menteri

Pekerjaan Umum No. 42/PRT1989 tentang Tata Laksana Penyerahan Jaringan Irigasi Kecil

Perikut Wewenang Pengurusannya Kepada Perkumpulan Petani Pemakai Air (P3A) (PerMenPU

42/1989). The WUA is stated to be an umbrella institution of farmers or groups of farmers that

manage irrigation water within a small irrigation network (art l(g)), which is less than 500

hectares (art 1(1)). They have authority for managing such irrigation networks (art 2) after

meeting certain criteria and following a set procedure (art 2-5).

This was followed by a decree of the Minister for Home Affairs: Peraturan Menteri Dalam

Negeri No. 12 Tahun 1992 tentang Pembentukan dan Pembinaan Perkumpulan Petani Pemakai

Air. This decree states that guidelines are to be issued by the Provinces and the WUA must fulfil

certain conditions. The formation of WUA is to be determined by a decision of the head of the

district. The management of the WUA is registers the organization with the County Court

(Pengadilan Negeri) based on Ordinance dated 25 September 1939 regarding Indonesian

Associations to obtain a legal status (art 5). This decree also sets out the functions and authority,

rights and obligations of WUA. It also sets out the work areas, work relations and financing of

WUAs. It was followed by Instruksi Menteri Dalam Negeri No. 42 of 1995 tentang Petunjuk

Pelaksanaan Peraturan Menteri Dalam Negeri No. 12 Tahun 1992 tentang Pembentukan Dan

Pembinaan Perkumpulan Petani Pemakai Air (P3A) which provides a draft District Regulation

to be passed by District Government and an example of the memorandum of association of the

WUA (Anggaran Dasar).

Instruksi Presiden No. 3 Tahun 1999 tentang Pembaharuan Kebijaksanaan Pengelolaan Irigasi

was passed to give a wider role to farmers in the management of irrigation systems. It was

envisaged that there would be a transfer in stages of management in accordance with the

principle "One irrigation system, one manager" (Part 2(3)). It was thought that a levy (iuran) for

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-I

irrigation services would provide a source of income for financing operation and maintenance,rehabilitation and the development of infrastructure (Part 2 (4)).

5.2 Further reform on WUA: Regulation No. 77 of 2001 on Irrigation

Since that time, central government passed Regulation No. 77 of 2001 on Irrigation (PeraturanPemerintah No. 77 Tahun 2001 tentang Irigasi) which detailed the concept of IrrigationManagement Transfer (IMT). IMT transfer concerns the transfer of rights, authority andresponsibility from regional government to Water User Associations to arrange the managementof irrigation and the financing of irrigation management in their work area. The work area isbased on the principle 'one irrigation system, one manager' (art 5(2)) and could conceivablyinclude primary, secondary or tertiary irrigation areas. It was envisaged that the arrangementwould be as follows:

* Farmers would form legal entities and that the transfer would be carried out through awritten agreement without any transfer of the ownership of the irrigation assets (art 9(3)).Where irrigation systems are multi-use, the agreement would be between the farmers, thegovernment and other users of the irrigation system (art 10). If after an audit, it isapparent that the transfer of management has not succeeded, management could be re-transferred to the government.

* A right to use irrigation water would be given to WUAs, legal bodies, social bodies,individuals and users of irrigation water for their various needs (art 14(1)). This would begiven in the form of a licence to take water (izin pengambilan air) (art 15(1)).

* A yearly plan for the supply of irrigation water would be devised based on thesuggestions of farmer's groups and users of irrigation water in accordance with theirrights to use irrigation water (art 18(1)). The Governor or Mayor would determine theplan in accordance with their authority (art 18(2)).

* During times of shortages the rights to use irrigation water would enable compensation tobe provided for water shortages (art 18(4)).

* The division of water of each water irrigation area would be determined each year byfarmers users groups (art 19(1)). In multi-function areas it would be finalised throughmediation through a coordination forum (art 19(2)). Excess water from one irrigationsystem could be used for planting needs outside the system or other needs after obtaininga licence (art 20).

* The division and provision of water is to be set out in a program of water use (art 21(1))and if it is thought that the deficit in water will not meet the need, then the fanner waterusers group is able to determine the priorities for water use without affecting the needs ofdomestic users (art 21(2)-(3)).

* In relation to operation and maintenance, the WUA have both authority and responsibilityfor the irrigation systems in their work area (art 31(1)). In multi-use areas they are tocoordinate through a coordination forum (art 31(2)). Regional government is to give helpand assistance whilst considering the independence of the association (art 32).

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After PP77/2001, two guidelines were passed on the transfer of authority to WUA. The first,

Keputusan Menteri Permukiman dan Prasarana Wilayah No 529/KPTS/M/2001 tentang

Pedoman Penyerahan Kewenangan Pengelolaan Irigasi kepada Perkumpulan Pertani Pemakai

Air details how the transfer of authority for irrigation management is to be transferred to WUA

from Provincial or District government. It sets out the scope of the transfer as well as the

authority, rights, obligations and responsibility of WUAs. It also details the conditions to be met

for transfer and when cancellation can occur, the respective roles of government and WUA in

management and financial arrangements. Keputusan Menteri Dalam Negeri No. 50 tahun 2001

tentang Pedoman Pemberdayaan Perkumpulan Petani Pemakai Air is a complementary decree,

which covers such topics as the method of forming a WUA, authority, rights and obligations,

empowerment, working areas, work relations and sources of funds.

A lot of work has gone into establishing the respective roles and functions of the WUA and

District government in managing irrigation, as set out in Keputusan Menteri Dalam Negeri No.

22 Tahun 2003 tentang Pedoman Pengaturan Wewenang, Tugas dan Tanggung Jawab Lembaga

Pengelolaan Irigasi Propinsi dan Kabupaten/Kota. In the annexures, which cover irrigation

systems found within one district, between districts and between provinces, a clear idea is

provided of who is to carry out what functions

(a) at the district level between the WUA, the irrigation office, the agriculture office, and the

irrigation commission

(b) at the provincial level between the WUA, the irrigation office, the agriculture office and

the irrigation coordinating body.

Considerable detail has been provided in Keputusan Menteri Keuangan No. 298/KMK.02/2003

tentang Pedoman Penyediaan Dana Pengelolaan Irigasi Kabupaten/Kota on the financing of the

management of irrigation within District government.

5.3 Response at the regional level: East Java

In response to Peraturan Pemerintah No. 77 Tahun 2001 tentang Irigasi, which detailed the

concept of Irrigation Management Transfer (IMT), East Java Province passed an implementing

Regional Regulation, Peraturan Daerah Propinsi Jawa Timur No. 6 Tahun 2003 tentang Irigasi.

As the national regulation is under review, no action was taken by East Java to proceed with

reorganisation of authority set out in the regional regulation.

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Annex 14-c) Legal and Institutional Context -The Capability of the Present Systemto Support WUR

iI

Annex 14 c)

LEGAL AND INSTITUTIONAL CONTEXT -

The capability of the present system to support WUR

The capability of the present licensing system to support WUR will be assessed by looking at thecomponents of a WUR system, which can be said to consist of the following steps:

(a) definition and creation of WUR

(b) assignment and modification of WUR

(c) delivery of WUR

(d) protection of WUR and

(e) securing compliance with WUR

Reference has been made to the Water Resources Act No. 7 of 2004 (Undang-undang No 7 Tahun2004 tentang Sumberdaya Air) ('the New Law') and well as the present system established underAct No. 11 of 1974 regarding Water (Undang-undang No. 11 Tahun 1974 tentang Pengairan) ('theOld Law').

Definition and creation of rights

Before rights can be defined or created, there is a need for policy making on river basin managementand WURs as a management tool. As a first step, an inventory of the features of a river basin needsto be compiled. This is likely to involve the collection of hydrological data within a river basin anddeveloping an information management system. The next stage involves planning river basinmanagement including estimation of the sustainability limit of water use in the basin and definingdifferent types of rights and their purposes. This is followed by setting priorities for water use.

In completing these tasks coordination between sectors is required. Once rights have been defined,they need to be created, which can be achieved through allocation of bulk basin shares withreference to priorities for water use. In a two-tier system, it also requires an allocation of waterwithin the second tier.

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Table 1: Definition and Creation of Rights

Activity Findings

The DGWRD within Kimpraswil carries out national policy formulation on water resources

management and the PWRS is responsible for technical policy. This policy making could

conceivably include policy on WUR.

There seems to be a lack if understanding of WUR concepts in both the government and

community in general. For example, the use of licences for utilities and non-consumptive uses

are not appropriate. At present there is litte conception of a two-tier System. Level two

Policy formulation entities will need to be formulated.

on river basinmanagement and WUR as a Licences are not regarded as administrative/management tools for the governance of water use

tool - to support a management system, to protect the rights of the licence holder or to provide

information to assist water resources management. There appears to be a poor awareness of

WUR concepts among government personnel at management and operational levels.

There appears to be poor coordination between government institutions in lawmaking. A

detailed policy document was not prepared prior to drafting the New Law. In drafting the New

Law there was little formal consultation with the PWRS or DWRS. This raises questions

about the coordination of policy making including the ability of farmers to influence policy.

Making of inventory Balai PSDA has responsibility for making an inventory. However, limited resources available

of the features of to the Balai raise questions about the adequacy of the inventory.

the river basin

Balai PSDA has overal responsibility for information management. Again, limited resources

Collection of hydrological available to the Balai raise questions about their capacity to meet this requirement.

data within a riverbasin and developing In East Java, the Balai PSDA and PJTI and the Provincial Finance Office collect the data on

an informnation management the volume of water extractions. The results of the collection of data are to be reported by the

system Balai PSDA to the PWRS. In the time available, the ILT was not able to make a full

assessment of how well this system works in practice.

This function is carried out by the PWRS and coordinated by the PTPA and PPTPA. There is

a question about the capacity of the system to identify the overall quantity of water available

for allocation to various uses within a specified water source as an upper limit as contained in

the basin plan. Whilst there may be planning of river basin management and setting of

priorities, river health issues seem to be inadequately considered. There needs to be a

Planning river basin detailed evaluation of a river basin's behaviour and the risks posed by water allocations.

managementShares between the various competitive uses should be worked out after the sustainability

limit has been determined. Current processes do not provide data on the risks of potential

over commitments of water supply. There are no sustainability limit or supply security figures

available for the Brantas or Citarum river basins. Future planning is based on average

statistics. There is no assessment of risks of security loss from increasing extractions.

This function is also carried out by the PWRS and coordinated by the PTPA and PPTPA. To

Creation - setting allocate water for irrigated farming, water is provided for areas of land under wet rice

priorities for water cultivation. Water for other uses is allocated by PJTI and PJTII on a volumetric basis.

use and annual allocationof water in accordance with Under the New Law, the water allocation policy for each selected basin will be contained

priorities within the water resources management plan. In particular, this plan will determine the

allocations for various classes of use and in stream needs.

Coordination with The coordinative bodies are the PTPA and PPTPA. Whilst these bodies may operateCoordinaton with effectively for routine and emergency events, they do not appear to be equipped to carry out

longer-term planning.

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Assignment and modification of rights

Assignment involves the provision of legal evidence that a person or a group has a water right.The existence of a licence is the clearest evidence of the existence of right. Another form couldbe a certificate of an entitlement as has been recommended in this study.

A question arises regarding the nature of the assignment, that is, whether it goes as far asproviding a right to receive particular services from the Government. Furthermore, does theright involve a set and agreed priority to ensure that water is received on time, in the rightamount and quality, and that the supply infrastructure (rivers, groundwater basins and watersupply structures) are safe?

Licenses generally need to be provided for the variety of uses of water. In addition, it may beconsidered desirable to make an allowance for the flow necessary to protect the environment, ineffect, providing a right to the environment for a certain minimum flow considered necessaryfor environmental protection. There also needs to be scope for modification of rights to allowfor adaption to changes in circumstances.

Table 2: Assignment and Modification of Rights

Activity Findings

Grant and modification ofoperating licence for raw Neither PJTI or PJTTI, who provide raw water, function under an operating licence; howeverwater supply they are under the oversight of Kimpraswil and Kementrian BUMN

Approval for theestablishment of PWRS approves the establishment of infrastructure for primary water supply within irrigationinfrastructure for primary on the basis of technical recommendations from PJTIVPJTII, Balai PSDA and DWRS.irrigation

Approval for theestablishment of PWRS licenses the establishment of infrastructure for secondary water supply within irrigationinfrastructure for secondary on the basis of technical recommendations from PJTIVPJTII, Balai PSDA and DWRS.irrigation

A right to use water without a license has existed for basic daily human needs and the needs ofanimals. This right has covered drinking water, water for cooking, washing, worship andhousehold needs.

There appears to be an understanding both under the Old Law and the New Law thatthe first priority is water for drinking. In the time available, the ILT was not able to discernThe right to water for basic the mechanism for securing this priority. For example, there are no provisions on prioritisingneeds - drinking water drinking water supply in licence conditions imposed by PWRS in licensing PDAMs inEast Java. A question remains as to how drinking water is to be prioritised by PDAMs whoalso supply industry and other uses?

Much will depend on Government Regulations passed under the New Law. A question to beaddressed is how to establish the respective priorities of the supply of drinking water and theprovision of irrigation water for farming communities.

Irrigation water has also been able to be used without a licence such as water for daily needs,extinguishing fires, non-commercial transport, fishing, washing and drinking water for animals.The right to irrigation water In effect, the interpretation of this provision has been that irrigation water used for famnily-by farming communities based farming has not required a licence, as it is water for daily needs. The proviso has beenthat activities can only be carried out in a way that does not obstruct water flow, change watercharacteristics and or damage the irrigation network or land.

A14 c) -3

The right to farming communities to use irrigation water without a licence is reiterated under

the New Law.

Modification of farmers' Farmers' rights are modified from time to time as required by circumstances, for example, in

roights o ffres times of scarcity. Within irrigation systems, the water rotation is a modification of in-scheme

rights rights. In addition, there is negotiation between users to apportion water in times of scarcity.

Licensing is carried out by PWRS on receipt of technical recommendations from PJTIVPJTII,

Balai PSDA and DWRS. Licence conditions are standardised and follow the minimum

conditions set out in provincial regulations. The issuing or renewal of a licence is a source of

revenue for provincial government and revenue considerations appear to drive water use

licensing policies and priorities. Records of licensing activities (by type, rate of new licences

Licensing urban water by type and location, renewals etc) are not always accurate, which indicates limited

supplyen urby: water institutional capacitysupply by:

- PDAMs Criteria to assess adequacy:

- uGuarantee the availability of water: Tenure of authorisations for all types of WUR is- 1ndustry short (2 to 3 years). There is a lack of formal longer-term secure rights, especially for

industries and water supply companies. The supply contract with PJTIH provides a level

- State Electricity Corp. of guarantee of supply but is limited by the width of the provisions on unavoidable

circumstances, which at least in East Java includes droughts.

- new irrigation systems,

* Protect the environment: Limited- commercial farming and

* Provide equity in access to water: Limited - as licensing is as not part of an overall system

- others of WUR

* Provide a basis for compensation for non-available water or re-location of water: The

New Law has a provision for compensation, which will have to be developed procedurally.

The short licence periods of 2-3 years allow for adjustment in licence conditions. However,

the common practice appears to be simply to renew the licence under the same conditions.Modification of licenses

The New Law caters for government to step in and adjust rights. It is reasonably specific on the

circumstances and means for modification including suspension or cancellation of the rights.

There is no provision for licensing flows necessary for environmental protection. Licences are

Licensing environmental allocated so as not to exceed the 'historical limit' even though this limit may not coincide with

flows the limit that is desirable for environmental reasons. As a result, whilst river health issues may

be recognized and articulated in Basin Plans they are not within the concept of WUR.

Environmental Impact Assessment is required for applications to use more than 100 litres/sec

& listed activities predetermined as likely to have a large effect on the environment. The

Environmental Impact Provincial Environment Agency will carry out an EIA if possible impact crosses district

Assessment boundaries and the District Environment Agency will carry out an ELA if possible impact is

contained within district boundaries. There are public participation provisions in

environmental impact assessment. The ILT was not able to assess the effectiveness of the EIA

procedure in relation to water use.

PWRS is responsible for coordination of licence decision-making. The current licensing system

has a clear procedure as well as a system for coordination between the PJT, Balai and District

Level. Discussions with the DWRS indicated there might be a lack of full input from the

Coordination with relevant District level, at least in some regions.

sectors in license decisionIn East Java, a Licensing Working Group has been provided for in the PJTI work area. The

ILT was not able to determine how effectively it coordinates the relevant sectors, for example,

the Environment Agencies, the PWRS and DWRS.

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Delivery of rights

Delivery of rights is concerned with the delivery of the service protected by the right, forexample, water supply allocated for a particular use. This requires maintenance of rivers aswell as construction and maintenance of canals and infrastructure. It also involves the actualsupply of water.

Table 3: Delivery of Rights

Activity Findings

Maintenance of rivers DGWRD is authorised to provide finance for maintenance of the Brantas and CitarumRiver basins; however, finance is not always readily available. PJTI and PJTII rely ondeferred maintenance. PWRS as the resource manager provides support and assistance butwith a limited budget. User's fees do not have a cost recovery function for maintenance.

Construction and In Citarum River Basin, downstream from the Citarum Reservoir, PJTII has responsibilitymaintenance of primary and for construction and maintenance of primary and secondary canals and infrastructure;secondary canals and however, it is experiencing severe financial constraints.infrastructure

In the area upstream of the Citarum Reservoir and in Brantas, PWRS has a limited budgetfor the construction of irrigation systems that staddle district boundaries. DWRS also has alimited budget for irrigation systems within district boundaries. User's fees do not have acost recovery function for either capital investment or maintenance.

Construction and DWRS has been responsible for initial construction and major refurbishment. There hasmaintenance of tertiary only been a limited degree of devolution of authority to WUAs. Therefore, the degree tocanals infrastructure which WUA are able to carry out construction and maintenance has been lirmited.

Construction and PDAM, or privatised PDAMs have responsibility. Again these organizations are undermaintenance of severe financial constraints.infrastructure for urban andindustrial water supply

Delivery of annual water East Javaallocation, supply raw water PJTI delivers water up to the headwork and supplies raw water for distribution to users.for distribution to users and Balai PSDA operates the water flow from the headwork to secondary canal.supply of raw water forirrigation and other uses West Java

PJTII downstream of Citarum Reservoir delivers water up to the head work, supplies rawwater for distribution to users and also irrigation and other uses.

This situation leads to inconsistency in the role of the PJT across provinces. The role ofPJT in irrigation systems needs to be clarified. If rights are to be transferred to farmers,PJTI1 will have to give up its role as the supply of raw water for irrigation.

Supply of treated water for PDAM has responsibility for supplying and treating water to ensure it reaches a standardurban, industrial and other suitable for 'potable' water. In West Java, the PDAM's main problem is lack of water.consumersOther PDAMs suffer from high rates of water loss due to illegal connections and leakage.

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Protection of WUR

Protection of WUR ensures that a right holder is able to use water in accordance with their

right in such a way that is free from any detrimental impact on the right from other users. It

involves imposing obligations on licence holders not to impair the rights of others to use water

or to endanger the environment. Third parties whose rights may be adversely impacted by the

introduction of new rights or changes to existing licence conditions also need to be protected.

Protection also requires conditions in licences that impose obligations on the government to

provide a service on a set and agreed system of priorities, so that water is received on time and

in the agreed amount and quality. Implicit in these obligations is the understanding that supply

infrastructure (rivers and water supply structures) will be safe, which requires safe construction

and adequate remedial work on multi-purpose dams.

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Table 4: Protection of Rights

Activity Findings

Safe construction and refurbishment DGWRD is responsible for dam construction and remedial work. The ILT wasof existing major works (not not able to investigate this topic. However, comments made by DGWRDmaintenance) adequate remedial indicated that central government regards such expenses as a heavy financialwork on multi-purpose water storage burden.dams

Adequate maintenance PJTI and PJTII are only able to carry out deferred maintenance.multi-purpose water storage dams

Inclusion of conditions in licences Licences reviewed by the ILT did not include conditions imposing obligations onon the right to get services from the government.Government on a set and agreedpriority, on time, in the right amount In East Java there is an obligation to reduce the intake if water availability isand quality. reduced as a result of river or canal maintenance or rotation of provision within a

canal. If this causes disturbance then the licence holders can change theextraction site at their own cost.

Inclusion of license obligations to:

* not endanger the environment In some instances there are conditions on not endangering the environment. Thereare no standard conditions not to impair the ability of others to use water or to

* not disturb water use by others help maintain infrastructure and facilities.

* help maintain infrastructure andfacilities

Notification of licence application There is no formal procedure for public participation in licensing. New licenceand facilitation of public applications do not have to be notified to the surrounding community and theparticipation community has not right to participate in the licensing process. The only formalrequirement for public participation comes from the procedure for environmentalimpact assessment of new enterprises.

Oversight of licensing procedure There is no organization tasked with oversight of licensing procedure to ensurecorrect procedure is followed and the best results are obtained.

Third party appeal against a licence There are no provisions to enable a third party to appeal against a licence decision.grant or conditions

Dispute resolution - PJTIIM & users The provisions on dispute resolution between PJTI/II and users are set out insupply contracts. The provisions are not standard. Although all contracts requireefforts to mediate disputes at least in some cases in East Java an ongoing disputecan be taken to court whilst in West Java it goes to arbitration. There is no detailregarding how the mediation is to be arranged.

Dispute resolution - between users PWRS and DWRS have offices responsible for dispute resolution andare able to arrange mediation of disputes between users. In the time available,the ILT was not able to ascertain how effective the PWRS or DWRS is in this role.

The New Law provides for mediation as a first stage in resolving disputes to befollowed by either resort to the court system or through arbitration.

Dispute resolution - PDAM and A provision on dispute resolution is not contained in any customer contract.customers

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Ensuring compliance - monitoring, surveillance and sanctions

Ensuring adherence to legal obligations or obligations in licence conditions is important to

guarantee the functioning of the overall system. It requires surveillance and monitoring of

compliance with legal obligations and the application of appropriate sanctions in the event of

non-compliance.

Table 5: Compliance with Rights

Activity Findings

Supervision of delivery schedules The delivery schedules are contained in a Letters of Decision issued by PJTI/h.

According to the supply contracts, failure to deliver (except from forced

circumstances) makes the PJT liable to a fine. In the time available, the ILT was

not able to discern the means for ensuring compliance with the schedules or how

the fine is to be imposed.

Oversight of compliance with Oversight of licences for bulk water supply is shared between a number of

license conditions, metering etc institutions (Provincial Dinas, Balai, relevant District Dinas) and this is likely to

lead to problems in coordination.

Balai PSDA is responsible for irrigation channels that straddle districts. They

have insufficient financial and human resources to adequately oversee

compliance with licence conditions.

District Dinas are responsible for irrigation channels within districts. They are

also lacking in financial and human resources to adequately oversee compliance

with licence conditions but do not have to cope with the same travel demands as

the Balai.

PJTI/IH, Balai PSDA, as well as Provincial and District Environment Agencies

monitor water quality in rivers. This needs effective coordination. The ILT was

not able to discem the extent to which coordination is adequate.

There is a gap in allocation of responsibility for monitoring water

quality in irrigation channels.

Administrative enforcement Licences contain provisions for the imposition of penalties in such

circumstances as a failure to install an effectively working meter. The

conditions do not state who will impose the sanction. Regional regulations also

provide for administrative sanctions such as closing a meter or revoking a water

use licence. In practice, there appears to be very little administrative

enforcement. If a licence holder uses water in excess of the licence, it is likely

that the licence will be amended to provide for an increase in extraction rates.

Criminal enforcement Whilst there is provision for criminal enforcement in licensing water use, it has

rarely been resorted to, if ever. Criminal enforcement for water pollution

offences is still rare in Indonesia. However, the ILT was informed of three

recent prosecutions launched by the Environmental Agency in the Bandung

District.

Civil enforcement Civil enforcement by the government of environmental proceedings is not

provided for in legislation in Indonesia. However, the New Law includes a

provision that allows the Government to act on behalf of the public interest,

which may be an allusion to some form of civil proceedings.

Other civil proceedings The New Law provides for the possibility of and class actions legal standing for

environmental organisations in limited circumstances. Similar provisions exist

in environmental legislation. The effectiveness of these provisions, which rely

on functional court system, is still being tested.

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Annex 14-d) Outline of Licensing Surface WaterUse

II

iI

Annex 14 d)

OUTLINE OF LICENSING SURFACE WATER USEIntroduction

This annexure will outline the licensing system that was established for surface water useunder Act No.11 of 1974 regarding Water ('the Old Law') and provisions in the new ActNo.7 of 2004 on Water Resources ('the New Law'). It will start by looking at the nature ofwater use rights and what kinds of rights have existed in Indonesia under the Old Law andnow exist under the New Law. It will also look at customary rights and the water allocationmechanism. It will go on to review water use rights provided under licences, licenceprocedures and licence obligations. It will also look at licensing law in East Java and WestJava, supply contracts and provisions for enforcement and resolution of disputes.

The Constitutional basis for the protection of Indonesia's natural environment is article 33(3),which states:

Land and water and the natural resources therein are controlled by the state and utilised for the greatestwelfare of the people.

Article 33(3) is an example of a power-conferring provision that confers considerablelegislative and administrative power to the state to use and control land, water and the naturalresources of Indonesia. It provides the necessary foundation for a scheme to control andmanage water resources through a system of water use rights. To date in Indonesia, there is anincomplete system, which consists of minimalist-style licences for certain water uses,essentially related to commercial use of water.

WHAT IS A WATER USE RIGHT AND WHAT KINDS OF WATER USE RIGHTEXIST?

Nature of a water use right (WUR)

A water use right (WUR) grants to person or group the right to use water in such a mannerthat is recognised and protected by the formal legal system. A complete system of WURswill document all water uses in a river basin as a form of resource accounting in the allocationof water across a river basin. A Water Users Right (WUR) has been defined as 'an organisedmeans of managing a planned sharing of water for the benefit of a community'.' It wassuggested at the First National Workshop on WUR Study, Stage 2 on 26 March 2004 that aWUR provides:

- a guarantee of a certain availability of water

- protection for the environment

- a system to establish equity in access to water

l Sanyu Consultants Inc/ LP3ES Indonesia: Water Rights Study Stage 1 Final Report World Bank July 2003 atp.7.

A14 d) -1

- a basis for compensation for non-available water or re-ocation of water.

A licence can provide clear legal evidence that a person or group has been assigned a water

use right. A licence brings a WUR into existence when it authorizes the use of water from a

specified water source and imposes conditions on its access, extraction and use. This is done

by specifying in a licence the authorized "exploitation entitlements" and "discharge rights"

and the conditions applying to accessing, extracting and using water from a specified water

source and/or to discharge to a water source, consistent with its sustainability limit. Outside

the licence system, mechanisms that need to be looked at to assess the extent of water use

rights in Indonesia are the system of prioritising water use and the annual allocation of water

through cropping patterns as a form of right for farmers.

Recognition of rights under the Old Law

Under the Agriculture Act No. 5 of 1960 (Undang-undang No. S Tahun 1960 Tentang

Peraturan Dasar Pokok-pokok Agraria) there is a reference to a right to use water as being

separate from a right to land but this concept is not developed further (art 4(3)). Under the

previous national water resources statute, Undang-undang No. 11 Tahun 1974 tentang

Pengairan (UU 11/74), it was stated that water resources are controlled by the state (UU 11/74

art 3 (1)). The Government had a 'right' to control water resources and as such it had

'authority' to arrange the validation and/or provision of licences based on planning and the

technical planning of the regulation of water (UUI 1/74 art 3(2)(b)). There was no mention of

rights to use water by individuals or the community.

The right to use water was introduced in Peraturan Pemerintah No. 22 Tahun 1982 tentang

Tata Pengaturan Air (PP22/82). A right to use water without a license has been available for

basic daily human needs and the needs of animals (PP22/82 art 16(1)). As elaborated in the

elucidation, this right covers drinking water, water for cooking, washing, worship and

household needs. It is stated that the use of water by individuals or community groups is to

accord with local adat tradition and conditions associated with health and the environment

(PP22/82 art 17). The relationship between traditional (adat) rights to water use, the authority

of government to control and manage water and the rights obtained under a licence needs to

be set out. For example, does government authority co-exist with traditional rights?

Furthermore, is a traditional right subject to the rights of licensed users, can a licence for use

impair traditional rights or does it have to recognise pre-existing traditional rights. This

appears to be an area of uncertainty.

Pursuant to Peraturan Pemerintah No. 23 Tahun 1982 tentang Irigasi (PP23/82), irrigation

water has been used without a licence for daily needs, extinguishing fires, non-commercial

transport, fishing, washing and drinking water for animals (PP23/82 art 22 (1)). The

interpretation of this provision has been that irrigation water used for family-based farming

has not required a licence, as it is water for daily needs. These activities have been permitted

to the extent that they do not obstruct water flow and do not change water characteristics or

damage the irrigation network or land (PP23/82 art 22 (2)).

Recognition of rights under the New Law

The New Law commences with an undertaking by the state to 'guarantee the right of every

person to obtain water for their basic minimal daily needs to fulfil a healthy, clean and

productive life' (art 5). In the Old Law there was no explicit reference to the right to use

water for water for production although it existed in practice.

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The New Law (art 7) establishes two broad rights under the heading of water use rights (hakguna air)

(a) a right to obtain and make use of water and

(b) a right to commercially use water for various needs.

Some aspects of these rights require a licence. However, the right to use irrigation waterwithout a licence is stated under the New Law, which states that 'A right to make use of wateris obtained without a licence, to fulfil basic daily needs for individuals and for farmingcommunities within irrigation sistems' (art 8 (1)).

Priority uses under the Old Law

PP 22/82 established the use of drinking water as the highest priority in the management ofwater resources (PP22/82 art 13(1)). Apart from this use, other uses for water are to accordwith the needs of the local community and situation (PP22/82 art 13(2)). Water use prioritiesare to be set out in a water resources development plan (PP22/82 art 13(3)). The situation isanticipated that there may be more than one community group using water from adevelopment or water pipes and, if so, the division is to be arranged by the group based onguidelines issued by the Governor (PP22/82 art 15).

In East Java, a Governor's Decree sets out the priority of water use by relating it to licensing(Keputusan Gubernur tanggal 11 Juli 1988 No 316 tentang Petunjuk Pelaksanaan PeraturanDaerah No. 15 Tahun 1987 tentang Perizinan Penggunaan Air di Jawa Timur) as follows(art 3):

Drinking water, agriculture, plantation, fisheries, industry, hydroelectricity, flushing and swimmingpools.

In West Java, it is stated that the first priority is drinking water and the order of priorities is tobe determined in the plan for water resources development (Perda No. 12 Tahun 1989tentang Tata Pengaturan Air (art 9).

Priority uses under the New Law

As mentioned above, the New Law commences with an undertaking by the state to 'guaranteethe right of every person to obtain water for their basic minimal daily needs to fulfil a healthy,clean and productive life' (art 5). This right is supported by a provision that states (art29(3)):

the supply of water to meet basic daily needs and irrigation for farming communities within irrigationis the first priority of water supply above all other needs.

This provision seems to create two priorities. It can be seen that the two priorities also appearin the provisions that identify when a licence will not be needed (art 8(1)), use of waterresources (art 32(3)) and non-liability for a service fee (art 80(1)). In the elucidation of article8(1) it states that what is meant by 'basic daily needs' does not include water that is takenfrom a distribution pipe, which seems to exclude water supplied by PDAMs. Therefore, theintention seems to be that PDAM water is not considered a basic daily need but only water

A14 d) -3

that is taken directly from a water resource such as would occur in a traditional farming

community.

In practice, drinking water is provided (with varying levels of water quality) through a

number of means including direct taking from rivers, from irrigation channels, from

groundwater, purchase of drinking water from water vendors and piped water from PDAMs.

Exactly how this priority is to be guaranteed in relation to each source will need to be made

the subject of further regulations.

Apart from these two priority uses, the order of other priorities is to be determined in each

river district by central or regional government (art 29(4)). This is to be set out in the water

resources management plan in each river district (art 29(6)).

There is no reason why further regulations should not define the range of priorities and how

their respective purposes are to be achieved such as

* drinking water

* other basic human needs such as cooking, washing, worship and caring for animals

* irrigation water for farmers as part of their basic daily needs

* irrigation water for farmers beyond basic daily needs

* water for industry and other sectors

However, if this is something that is left for policy making at the regional level, arrangements

could vary between regions. The WUR framework will need to have a generic structure to

address government policies and the law but with sufficient scope to allow variation in content to

cover the diversity that exists at the regional level.

Customary rights

Provisions to protect customary rights are usually qualified by references to the national

interest or other overriding priorities. The protection of traditional rights to use water is not

directly covered by article 33(3) in the Constitution: utilization 'for the greatest welfare of the

people' does not expressly protect traditional rights of a local community to use water. Under

amendment No. 2 to the Constitution, it is provided that the state recognises and respects

customary law and traditional rights to the extent that they are still alive and accord with the

development of the community and national unity (art 18B(2)).

Under UU11/74 state authority was to be exercised whilst recognising rights of traditional

communities as long as they did not conflict with the national interest (art 3(3)). PP22/82

provides that water use arrangements for the needs of farmers are to respect traditions of local

communities to the extent that there is no conflict with the general interest and existing

legislation (art 20). Under the New Law, the same proviso applies (art 6(2)&(3)).

A stronger provision is found in Act No. 39 of 1999 on Basic Human Rights (Undang-

Undang No. 39 Tahun 1999 Tentang Hak Asasi Manusia) which provides that in the

framework of the protection of basic human rights, differences and needs of communities

A14 d) -4

_________-_ I

guided by traditional law must be given attention and protected by the law, community andgovernment (art 6(1)).

WUR and the water allocation mechanism

The ILT has access to the Governor's Decree on the cropping pattern which sets out the waterallocation for irrigation-based farming communities: Keputusan Gubernur Jawa BaratNomor: 521/Kep/1088-Benprod/2003 tentang Penetapan Rencana Tanam Padi RendengMT.2003/2004 dan Gadu MT. 2004 Serta Tanam Palawija MT.2004 Di Daerah IrigasiJatiluhur. The allocation for irrigation only addresses the surface area of land under wet ricecultivation and is not expressed volume as litres/second. At the District level, each sub-district's allocation of water is set out according to the number of hectares under cultivationand the type of irrigation system: Keputusan Bupati Bandung Panitia Irigasi KabupatenBandung Nomor: 520/Kep602A.DPU/2002 tanggal 29 Oktober 2002. In what appears to be aconflict with the stated priority of water use, pursuant to the Decree of the Governor, waterallocation for PAM DKI, PDAM and industry from Jatiluhur that is arranged by PJTII is to beadjusted with the planting season during periods of drought. Exactly how the priority forwater is allocated during droughts was not investigated by the ILT.There is no undertaking by the Provincial Government that farmers will receive the amount ofwater mentioned. Further detail concerning seeds and cropping systems, the program fordelivery of water and ways of handling water shortages are arranged by the Mayor. There isno standard complaint procedure if water is not provided as stated in the Decree; however the.2ILT was told that informal avenues exist. It can be seen that if this form of water allocationis compared to a system of WUR, there is a minimal guarantee of a certain availability ofwater, there is no provision for protection for the environment, nor is there a basis forcompensation for non-available water or re-location of water.

WATER USE RIGHTS PROVIDED BY A LICENCE

Licensed water use under the Old Law

General approach before regional autonomy

Under UUl 1/74, the Government could regulate, validate and provide licences for theallocation, water use and the supply of water and or water resources (UU 11/74 art 3(2)(c)).The Government could also regulate, validate and provide licences for the commercial use ofwater or water resource (UU1 1/74 art 3(2)(c)). Licensing is elaborated in PeraturanPemerintah No. 22 Tahun 1982 tentang Tata Pengaturan Air (PP22/82). If a river district orpart of a river district is within a provincial government then the Provincial Government hasauthority (PP22/82 art 5(1)) and is responsible to the Minister (art 5(2)). In other situations,where the borders of a river district cross over a Province, the Central Government hasauthority (PP22/82 art 5(3)). As this regulation predates regional autonomy, the arrangementof government authority for water follows the borders of river districts (wilayah sungai) butdoes not mention the role of district government.

2 By participants in the First National Workshop on WUR Study, Stage 2 on 26 March 2004

A14 d) -5

Provision has been made for licensing water use for all needs that are not basic daily needs

(PP22/82 art 19(1)). The activities that need a licence are listed as including urban

development, farming, energy, industry, mining, water transport, floating materials, recreation,

health and other needs (PP22/82 art 19(2)). It appears that different arrangements have

applied depending upon whether the use is for farming, energy, industry or the oil and gas

sector. It is stated that in assessing all licence applications, attention must be given to the

value of use of the need along with the consequences for water balance concerning both water

quality and quantity and fulfillment of requirements for waste disposal in existing legislation

(PP22/82 art 24(3)).

Pursuant to Peraturan Menteri Pekerjaan Umum No. 49/PRT/1990 tentang Tata Cara

Persyaratan Izin Penggunaan Air dan atau Sumber Air (PerMen PU 49/1990) licenses have

been required for the following activities: ((PerMen PU 49/1990 art 4)

a. drinking water supply

b. urban development and housing

c. supply of irrigation water for farming

d. animal husbandry

e. plantations

f. fish farming

g. industry

h. mining

i. energy

j. floating activities

k. soaking

1. water transport

m. recreation

n. wastewater disposal

o. development, alteration or demolition of all structures above or below water.

Industry, mining, and oil and gas

To date, the regulation of water use by different sectors has been carried out by the Minister

for that particular sector such as industry, mining, and the oil and gas sector (PP22/82 art 22).

This arrangement has meant that each sector issues licenses independently. The request for a

licence has been made to an authorized party within Central or Provincial Government

together with information and data as regulated by the Minister (PP22/82 art 23(1)). The

application must contain a plan for the disposal of wastewater and other liquid and solid

waste (PP22/82 art 23(3)).

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Electricity

A licence to use water for power generation has been provided by the Minister (PP22/82 art23(2)). Licensing procedure is to be arranged by the Minister (PP22/82 art 23(4)). Whenwater is to be used for energy production it must not exceed the installation capacity (dayaterpasang tertentu) and is to be based on the plan for the water resources development. Inthis regard, the relevant Minister (the Minister for Minerals and Energy) has been authorisedto impose technical conditions (PP22/82 art 21).

Irrigation water

The arrangements for licensing water use in irrigation have been set out in PP23/82 underwhich irrigation water used for daily needs, to manage fires, non-commercial water transport,fishing and farm animals (PP23/82 art 22) does not require a licence. The interpretation ofthis provision has been that water used for irrigation by farming communities is considered tobe water for daily needs. All other uses of irrigation water have required a licence from theGovernor (PP23/82 art 23).

Irrigation water and systems established by a legal entity, social organisation or individual forcommercial use is transferred to such bodies (PP23/82 art 2(3)), which apply for a licencefrom the Governor (PP23/82 art 5(2)). The licensing procedure is to be regulated by regionalregulation (PP23/82 art 5(3)). The supply of irrigation water is to be implemented by theProvince; however, a legal entity, social organization, village, subak or individual is able todevelop irrigation for commercial use on obtaining a licence from the Governor (PP23/82 art6(2)) and to also direct water through existing irrigation channels (PP23/82 art 9).

Primary responsibility has been held by Provincial government for organizing the allocationof water use in irrigation, which has included making allowances for water shortages in thedry season (PP23/82 art 12-16).

hrrigation water can only be taken from tertiary level channels (saluran tersier) or level fourchannels (saluran kwarter) from places determined by authorized people (art 17). This is tobe organized by the farmers themselves in accordance with technical directives and policyissued by Provincial Government (PP23/82 art 18(1)). Irrigation water in tertiary channels foragricultural industry (tanaman industri) is to be prioritized for crops in the nearby irrigationsection (petak irigasi). If irrigation water is not sufficient to meet the needs of theagricultural industry and other crops then the use of water can be arranged in rotation basedon a Decree of the Governor (PP23/82 art 19). Local farmers can carry out these activities byusing village irrigation or subak (PP23/82 art 21).

Licensed water use under the New Law

Under the New Law, the right to make use of water (hak guna pakai air) will need a licence if(art 8(2)):

a. the method of use is such as to change the natural condition of the water resource.

A14 d) -7

b. it points to a need of a group who need water in large quantities; or

c. it is to be used by a farming community outside an existing irrigation sistem

This test for the need for a licence requires an assessment of whether 'the natural condition of

water resources' is to be 'changed' by the water use or whether water is to be used in 'large'

quantities.

The most detailed reference to licensing concerns the right to use water commercially (hak

guna usaha air) under a licence (art 9(1)). Only water resources enterprises (an individual,

company or joint venture) whose extent of activity does not cover a whole river district can be

licensed. Enterprises which use water commercially are required to obtain a business licence

to carry out their activities (art 45 (3)). Such licenses cover the use of water at a specific site,

the exploitation of reservoirs and the exploitation of water power/energy at a specific site (art

45(4) (a)-(c)). The water licence will include the allocation of water allowed for water use (art

46(3)).

However, there are additional provisions for licensing. In the provisions which outline the

respective authority of central, provincial and district government, it is stated that each level

of governmeilt has authority for 'the regulation, determination and provision of licences for

the supply, allocation, use and commercial use of water resources' .... within their area of

authority (arts 14 (f), 15(f) and 16(f)). This provision seems to support the provision of

licenses and hence water use rights for

* Water supply

* Water use

* Commercial use of water.

Other references to licensing concern licensing weather modification (art 38(2)) and

exploitation of sea water (art 39(2)) There is also a reference to licensing the construction of

water resources infrastructure by individuals or enterprises (art 63 (3)). All licences that have

been granted under previous law are still operative (art 98).

LICENCE PROCEDURES

The procedural law on licensing water is set out in a ministerial decree: Peraturan Menteri

Pekerjaan Umum No. 49/PRT/1990 tentang Tata Cara Persyaratan Izin Penggunaan Air dan

atau Sumber Air (PerMen PU 49/1990). The grant of a licence is to be based on the plan for

the protection and development of water use for each water resource in river territory

(wilayah sungai) (PerMen PU 49/1990 art 2(2)) and if a river territory has not been provided

for, it is to be based on agreement between relevant departments (PerMen PU 49/1990 art

2(3)). The Director-General provides guidelines regarding minimum technical conditions that

must be contained in licences (PerMen PU 49/1990 art 2(4)).

The level of government with authority for licensing was divided between the Governor and

the Minister depending on the demarcation of the river district (art 5). If it is a river district

managed by the central government, the Director-General of the Department of Public Works

had authority to make technical recommendations. If it is a river district managed by a legal

A14 d) -8

body then technical recommendations are to be given by that body (PerMen PU 49/1990 art10 (2)). The authority of the Governor to issue licenses is to be the topic of a Perda (PerMenPU 49/1990 art 7).

LICENCE OBLIGATIONS

Statutory prohibitions

Statutory prohibitions imposed on the licence holder have been follows:

- not to assign the licence to a third party without the agreement of the licensor (PerMen PU49/1990 art 18(1)).

- not to sell the licence to another party except in accordance with the conditions in thelicence (PerMen PU 49/1990 art 18(2)).

Under the New Law, these provisions seem to have been made more strict as there is astrongly worded provision that water use rights (hak guna air) are not able to be leased ortransferred in part or in full (art 7(2)). It is stated in the Elucidation that leases or transfersshould not take place for whatever reason. It is also stated that if the right holder does not usea water use right, the government is able to revoke the right. Renting out (disewakan) wouldseem to refer to a temporary transfer of access to water use, which at the end of the periodreturns to the original holder of the right. Transfer (dipindahtangankan) could be seen torefer to a more permanent arrangement where there is a transfer of an existing right betweenan existing water user or a new water user with the right staying with the receiver not thegiver of the right. This provision is backed by a strong sanction which states that any personwho intentionally leases or transfers part or whole of a water use right will be liable to amaximum of 3 years jail and a maximum fine of Rp 500 million (art 94(3)a).

Levies (Iuran)

According to Peraturan Pemerintah No. 6 Tahun 1981 tentang luran PembiayaanEksploitasi dan Pemeliharaan Prasarana Pengairan (PP6/81) a levy (iuran) is payable tocover the exploitation and maintenance of water infrastructure by those who benefit from thesupply of water through water infrastructure (PP6/81 arts 2&3).

The obligation to pay a levy only applies to licensees who intend to use water for commercialpurposes (PerMen PU49/1990 art 14)). This levy does not apply to farmers who pay theRegional Development Levy (luran Pembangunan Daerah (IPEDA) (PP6/81art 3(2)). Thelevy is to be used to finance the exploitation and maintenance of water infrastructure and theprotection of water resources (PerMen PU 49/1990 art 14(2)). The size of a levy for powersupply (not micro-hydroelectricity) is set by the Minister (PerMen PU 49/1990 art 15(1)). Inrelation to other uses of water, the size of the levy is also set by the Minister but with inputfrom the Provinces (PerMen PU 49/1990 art 15(2)). Levies payable by the oil and gas sectorfor the use of groundwater are arranged under separate legal instruments. 3

Keputusan Bersama Direktur Jenderal Moneter, Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah,Direktur Jenderal Minyak dan Gas Bumi, Dan Direktur Jenderal Pengairan KEP-4802/m/1991 No. 974-718

A14 d) -9

Before regional autonomy, the level of the levy was to be set by central government after

taking into account exploitation and maintenance, amortisation, interest, depreciation and

development (PP6/81art 5(1)). Exactly how this arrangement was to work in practice was not

elaborated upon in Keputusan Presiden No. 58 Tahun 1990 tentang Penetapan Perusahaan

Umum (PERUM) Jasa Tirta Sebagai Perusahaan yang Dapat Menarik dan Menerima luran

Pembiayaan Eksploitasi dan Pemeliharaan Prasarana Pengairan. In any event, since

regional autonomy this authority has been devolved to the regional level.

Taxes

According to Undang-undang No. 34 Tahun 2000 tentang Perubahan Atas Undang-undang

No. 18 Tahun 1997 tentang Pajak Daerah dan Retribusi Daerah (UU34/2000), the province

can impose taxes for the extraction and use of surface water (art 2(1)(d)). At least 70 per cent

of the proceeds from this tax are to be transferred by the Province to the local government (art

2A). However, it is not clear whether the revenue raised from a particular locality is to be

returned to that locality or can be diverted to another locality. It is stated that the division

between localities is to be determined by a Provincial Regional Regulation with attention to

equity and potential between localities (UU34/2000 art 2A (3)). The rate of tax is set in

UU34/2000 and is to be set in the same manner across Indonesia and is to be arranged by a

Government Regulation (UU34/2000 art 3(2)).

It is notable that whilst local government is able to impose taxes, they are not able to raise

levies or impose taxes that can be imposed by provincial or central government (UU34/2000

art 2(4)(a)&(d)). This seems to deny local government the opportunity to raise a levy or tax,

which is an important consideration where the local government is responsible for managing

a river basin or sub-basin under the New Law.

The tax is payable on the taking, using, and taking for use of surface water: Peraturan

Pemerintah No. 65 Tahun 2001 tentang Pajak Daerah (PP65/2001) (art 33(1)). Government,

and government-owned enterprises established for water exploitation or protection do not

have to pay tax (PP65/2001 art 33(2)(a)&(b)). Other exceptions are farming communities

(pertanian rakyat) (PP65/2001 art 33(2)(c)) and households (rumah tangga) (PP65/2001 art

33(2)(d)). The exception allowed to 'farming communities' allows for uncertainty, as this

concept is not defined.

The basis for the calculation of the tax rate is the value of the gain (perolehan) of water

(PP65/2001 art 35(1)). This is calculated taking into account (PP65/2001 art 35(2)):

a. type of water resource;

b. location of the water resource;

c. objective of the taking or use of the water;

107K/101/DD JM/91-137/KPTS/A1991 tentang Tata Cara Pembayaran Retribusi Air atau Sumber Air Untuk

Kegiatan Usaha Otonomi Daerah, Minyak dan Gas Bunii dan Pengusahaan Sumber Daya Panas Bumi [see blue

booklet]

Keputusan Bersama Direktur Jenderal Menteri Pekerjaan Umum dan Menteri Pertambangan dan Energi No.

04/KPTS/1991 tentang Penggunaan Air dan atau Sumber Air Untuk Kegiatan Usaha Pertambangan Termasuk

Pertambangan Minyak dan Gas Bumi dan Pengusahaan Sumber Daya Panas Burni [see blue booklet]

A14 d) -10

d. volume of water that is taken or used or taken for use;

e. water quality;

f. the size of the location from with water is taken or used;

g. the season in which the water is taken or used or taken for use;

h. the extent of environmental damage that is caused by the taking or use or taking for use.

Where water is used by a Government-owned enterprise (BUMN) or Regional Government-owned enterprise (BUMD) that provides services to the public or the mining and gas sector,the value is determined by the Minister of Home Affairs with consideration of the Ministerfor Finance (PP65/2001 art 35(3)).

In relation to the receipt of water used by BUMN and BUMD that provide public servicesand the oil and natural gas sectors, a decree of the Minister for Home Affairs has beenpassed: Keputusan Menteri Dalam Negeri No. 12 Tahun 2002 tentang Nilai Perolehan AirYang Digunakan Badan Usaha Milik Negara, Badan Usaha Milik Daerah yang MemberikanPelayanan Publik, Pertambangan Minyak Bumi dan Gas Alam. The basis for the paymentof the tax is the value of water, which is set out in the KepMen (art 3).

Regional Fees (Retribusi Daerah)

The imposition of a fee relates to use of public facilities. A regional fee can be imposed inrelation to licensing (retribusi perizinan tertentu) where licensing is needed to protect thepublic interest, when there is a financial burden on the region related to the issuing of thelicence licence and a cost in responding to negative impact in granting the licence: Undang-undang No. 34 Tahun 2000 tentang Perubahan Atas Undang-undang No. 18 Tahun 1997tentang Pajak Daerah dan Retribusi Daerah (UU34/2000) (art 18(3)c.).

It would appear national law does not authorise the passing of a regional regulation imposinga fee for the taking or use of water. Peraturan Pemerintah No.66 Tahun 2001 tentangRetribusi Daerah (PP66/2001) contains the definition of a licence fee (retribusi perizinan)which includes licences for the regulation of the use of natural resources (art 1(5) & 4(1)).This would seem at first glance to apply to the licensing of water use; however, such a licenceis not included in the list of types of licence fees (art 4(2)). Separate provision is made for thepayment of a fee (retribusi) for the use of water by the oil and gas sector. 4

4Keputusan Bersama Direktur Jenderal Moneter, Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah,Direktur Jenderal Minyak dan Gas Bumi, Dan Direktur Jenderal Pengairan KEP-4802/M/1991 No. 974-718107K/101/DD JM/91-137/KPTS/A1991 tentang Tata Cara Pembayaran Retribusi Air atau Sumber Air UntukKegiatan Usaha Otonomi Daerah, Minyak dan Gas Bumi dan Pengusahaan Sumber Daya Panas Bumi.

A14 d) -11

LICENSING WATER USE IN EAST JAVA

Background

The basis for licensing water use in East Java is Peraturan Propinsi Jawa Timur No.15

Tahun 1987 tentang Perizinan Penggunaan Air di Jawa Timur . This regulation sets out the

overall framework for all licensing in the Province including basic licence conditions, the

payment of fees and levies, oversight and sanctions.

According to national law, in the PJTI work area, all enterprises, individuals and legal entities

that use water are obliged to possess a Water Use Licence (Surat jin Penggunaan Air atau

Sumber Air) (SIPA) issued by the Governor: Peraturan Menteri Pekerjaan Umum

No.614/PRT/1991 tentang Pelimpahan Wewenang Pelaksanaan Pemberian Ijin Penggunaan

Air dan atau Sumber Air di Wilaya Kerja Perusahaan Umum (PERUM) Jasa Tirta kepada

Gubernur Kepala Daerah Tingkat 1 Jawa Timur (PerMen 614/91 Point 3(1)). The SIPA is to

cover water used for the following:

a. supply of water for drinking water

b. urban development and housing

c. supply of irrigation water for farming

d. animal husbandry

e. plantations

f. fish farming

g. industry

h. mining

i. floating activities

j. soaking activities

k. water transport

1. recreation

m. wastewater disposal

n. development, alteration or demolition of all structures above or below water.

It can be seen that this list repeats the list contained in PerMen PU 49/1990 (art 4) with the

deletion of reference to energy.

Licence procedure in East Java

According to national law passed in 1991, the Governor issues the licence based on a

recommendation from PJT (PerMen 614/91 Point 4). The SIPA contains technical conditions

as set out in the technical recommendations received from PJT (PerMen6l4/91 Point 7).

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These recommendations must be provided to the Governor and Head of the KanWil PU toenable monitoring and oversight and also reporting to the Ministry (PerMen614/91 Point 8).To facilitate licensing, a Licensing Group (Kelompok Pertimbangan Perizinan) is establishedconsisting of PJT, KanWil Public Works, Dinas Public Works (water) and other relevantoffices Keputusan Gubernur Kepala Daerah Tingkat 1 Jawa Timur No. 649 Tahun 1991tentang Pelaksanaan Perizinan Penggunaan Air dan atau Sumber Air di Wilayah KerjaPerusahaan Umum (Perum) Jasa Tirta (KepGub 649/91) (art 7). This has been the subject ofa further Governorial Decree: Keputusan Gubernur No. 53 Tahun 1992 tentang PembentukanPelompok Pertimbangan Perijinan Penggunaan Air di Wilayah Kerja Perusahaan Umum(Perum) Jasa Tirta.

In 1991, the licence application procedure established two systems based on whether waterwas taken from rivers under the management of PJTI or from the irrigation system. Thearrangements for licensing were elaborated in Keputusan Gubernur Kepala Daerah Tingkat IJawa Timur No. 668 Tahun 1991 tentang Tatacara Perijinan dan Pemungutan luranPembiayaan Eksploitasi dan Pemeliharaan Prasarana Pengairan Di Wilayah KerjaPerusahaan Umum (Perum Jasa Tirta) (KepGub688/91).

Since regional autonomy, a further Decree of the Governor was passed to cover thearrangernents for licensing within the work area of PJT: Keputusan Gubernur KepalaDaerah Tingkat 1 Jawa Timur No. 74 Tahun 2002 tentang Perizinan Pengambilan danPemanfataan Air Permukaan pada Sumber-sumber Air serta Pemungutan luran PembiayaanEksploitasi dan Pemeliharaan Prasarana Pengairan di Wilayah Kerja Perusahaan Umum(PERUM) Jasa Tita I (KepGub 74/2002). The work area is very broad and covers all surfacewater including natural water resources, the built environment and all levels of irrigation(KepGub 74/2002 art 1(2)). In return, PJT guarantees the supply of water (KepGub 74/2002art 1(4)).

According to the more recent governor's decree, the licence application is made to the Headof the Provincial Department of Public Works - Water through the local Balai PSDA(KepGub 74/2002 art 2(1)). A licence can only be provided after a supportingrecommendation is received from PJTI the relevant Mayor and the Group for theConsideration of Water Licences (Kelompok Pertimbangan Perizinan Pengambilan danPermanfaatan Air Permukaan) (KepGub 74/2002 art 3(1)). The working group was set uppursuant to a Keputusan Gubernur Kepala Daerah Tingkat I Jawa Timur No.188/266/KPTS/013/2002 tentang Kelompok Kerja Pertimbangan Perizinan Pergambilan danPemanfaatan Air Permukaan di Wilaya Kerja Perusahaan Umum (PERUM) Jasa Tirta 1.

A directive has also been issued by the East Java Department of Public Works on thelicensing of water use, which provides for a slightly different licensing procedure for waterresources outside the PJTI work area: Keputusan Kepala Dinas Pekerjaan Umum PengairanPropinsi Jawa Timur No. I Tahun 2003 tentang Petunjuk Teknis Pelaksanaan PerizinanPengambilan, Pemanfaatan, Pengambilan dan Pemanfaatan Air Permukaan di PropinsiJawa Timur (KepKa Dinas 1/2003). According to KepKa Dinas 1/2003, the procedure is asfollows:

1. Applicant files application with the Balai PSDA.2. Balai PSDA checks the completeness of the application and the accuracy of the data.

A14 d) -13

3. A copy of the application is sent by the Balai to the Head of Provincial Dinas together with a technical

recommendation.4. Head of Provincial Dinas sends the application to the Mayor in his capacity as the Head of the

Irrigation Committee.5. Mayor sends his considerations to Head of Provincial Dinas.6. Head of Provincial Dinas organizes a coordination meeting with relevant sub-Dinas.

7. Head of Provincial Dinas processes the licence and sends the original licence to the Balai with a copy to

the Mayor.

8. Balai sends the original licence to the applicant.

Licence conditions

Standard conditionsThe minimum conditions of the licence for water use within the PJTI work area include

obligations to pay a levy, tax, installation of a meter and to not allow third parties to use the

water commercially (KepGub 74/2002 art 3(3)). Further detail is provided in the KepKa

Dinas 1/2003, which sets out the licence conditions as including the following (art 3(2):

(a) obligation to pay tax(b) obligation to pay fees(c) obligation to install a meter(d) prohibition against another party using the water or infrastructure except for the social interest

(e) obligation to follow PJTI directives(f) obligation to report any damage to the meter to Provincial Dinas or PJTI

(g) obligation to return water without substances that will damage the environment or breach discharge

standards(h) obligation to build an entrance to the facilities.

There is an obligation to reduce the intake if water availability is reduced as a result of river

or canal maintenance or rotation of provision within a canal (art 3(2)(k)). If this causes

disturbance then the licence holder can change the location of extraction at their own cost (art

3(2)(1)). There is also an obligation to enter into an agreement with PJTI if water is taken

from the PJTI work area (art 3(2)(n)).

The licences reviewed essentially repeated the conditions mentioned in KepKa Dinas 1/2003.

There is no express grant of authority to the licensing officer to impose other conditions based

on site-specific conditions, which limits the authority of licensing officers.

TaxesIn East Java, a tax on the use of surface water (and ground water) has been imposed for the

taking and use of water, except water used for household purposes or by farmers: Peraturan

Propinsi Jawa Timur No. 16 Tahun 2001 tentang Pajak Pengambilan dan Pemanfaatan Air

Bawah Tanah dan Air Permukaan (Perda 16/2001) (arts 1(6) & 2). Those exempted from

paying the tax are (art 4):

1. Central and regional government2. BUMN and BUMD established for the exploitation of water resources, the protection of waters and the

commercial use of water resources3. Farming communities4. Household use, religious use and other social organisations.

A14 d) -14

Those subjected to the tax are private individuals and legal entities that take or commerciallyuse or take and commercially use surface water (Perda 16/2001 art 5).

The assessment of the tax is stated to be based on the value of the acquisition of water, whichis calculated according to the same list of factors contained national law, with no furtherdetail provided (Perda 16/2001 art 6(2)). Other arrangements have been made for water usedby BUMN, BUMD (such as electricity), the oil and gas sector. These are covered by theMinister for Home Affairs and the Minister for Finance (Perda 16/2001 art 6(5)&9(2)). Theoffice authorised to raise the tax is stated to be the Finance Office (Perda 16/2001 art 10(2)).

A directive on the implementation of the tax has been issued in the form of KeputusanGubernor No. 56 Tahun 2001 tentang Petunjuk Pelaksanaan Peraturan Daerah PropinsiJawa Timur No. 16 Tahun 2001 tentang Pajak Pengambilan dan Pemanfaatan Air BawahTanah dan Air Permukaan (KepGub 56/2001). It is stated that the imposition of the tax iscombined with an obligation to obtain a licence (KepGub 56/2001 art 2(2)). There is also anobligation to install a meter to measure the withdrawal of water (KepGub 56/2001 art 4)).Data collected on water use is to be used by Department of Public Works (Water) todetermine the allowable volume of water to be used within a maximum of seven months(KepGub 56/2001 art 6(2)). The volume of the commercial use of water for plantations,farming and hydroelectricity is to be determined by the Department of Public Works (Water)annually (KepGub 56/2001 art 6(3)). There is no mention of the basis for this decision.

The format to register for the payment of the tax is called the Letter of Notification ofRegional Tax (Surat Pemberitahuan Pajak Daerah (SPTPD)). The Head of the FinanceOffice sets the tax rate (KepGub 56/2001 art 10(1)). The calculation of the tariff for surfacewater is not completely explained in this instrument and is to be regulated further by theGovernor (KepGub 56/2001 art 11). However, based on the annexure it appears to be relatedto the volume of extraction, the price of water and the tariff of the tax.

A Governor's decree has been issued on value of water: Keputusan Gubernur No. 57 Tahun2001 tentang Penetapan Nilai Perolehan Air untuk Menghitung Pajak Air Bawah Tanah danAir Permukaan Tahun 2002 (KepGub 57/2001). This instrument gives different tax rates forvarious categories of users, namely:

1. industry

2. drinking water supply

3. plantations

4. commercial fish farming/horticulture/crops not including the farming conmmunity (pertanian rakyat)

5. recreation

6. washing and cooling machinery

7. swimnning pools, fish ponds/laundries and animal husbandry

8. electricity PT. PLN

9. electricity that is not PT.PLN

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10. Pertamina and their sub-contractors

11. Small-scale industry and cooperatives

Levies (Iuran)Prior to regional autonomy, any levies charged by PJTI were based on the principle of

covering costs and were set by the issuing of a Ministerial Decree on the suggestion of the

Director and consideration by the Minister for Finance (PP5/90 art 23). Further investigation

is needed to work out the situation since regional autonomy.

A Ministerial Decree was passed in 1991 that established that levy could be imposed on a

legal entity, social organisation or individual but could not be imposed on farmers who use

water for farming and who are already liable to a Land and Development Tax (Pajak Bumi

dan Bangungan (PBB): Keputusan Menteri Pekerjaan Umum Nomor 534/KPTS/1991 tentang

Tarif Dasar Iuran Pembiayaan Eksploitasi dan Pemeliharaan Prasarana Pengairan Perum

Jasa Tirta (KepMen 534/91) (art 2).

KepMen 534/91 set the rate of the levy (Rpl6 per cubic meter) (KepMen 534/91 art 3). A

distinction is made between the tariff of the levy (iuran) and a fee to use a public facility

(retribusi) that can be set by the Governor (KepMen 534/91 art 3(2)). It also acknowledges

that it does not cover a tariff for the use of water for electricity, which is to be set by the

Minister (KepMen 534/91 art 4)).

Keputusan Gubernur Kepala Daerah Tingkat I Jawa Timur No. 649 Tahun 1991 tentang

Pelaksanaan Perizinan Penggunaan Air dan atau Sumber Air di Wilayah Kerja Perusahaan

Umum (Perum) Jasa Tirta (KepGub 649/91) mentions the payment of a levy in the issuing of

the licence (KepGub 649/91 art 3(2)). A distinction is made between the levy (iuran) and fee

(retribusi) for water use (KepGub 649/9lart 4(2)). However, the levy and fee are to be

imposed at the same time in the licensing process (KepGub 649/91 art 5(1)). The raising of

the levy is for water users who take water from the irrigation system. This would seem to

conflict with article 2 of KepMen 534/91 mentioned above. This aspect needs clarification.

The levy is implemented by the Finance Office (Dinas Pendapatan Daerah Propinsi Daerah

Tingkat 1) (KepGub 649/91 art 5(2)). How this is to be achieved is deferred to the passing of

a lower level direction (petunjuk) that is to be passed by the Head of the Finance Office, the

Head of the Public Works Department (Water) and PJT (KepGub 649/91 art 6).

The size of the levy is to be based on a decree issued by the Minister of Settlement and

Regional Infrastructure after obtaining input from the Governor (KepGub 74/2002 art 8). The

amount of the levy is to be set by the Provincial Finance Office (KepGub 74/2002 art 12)) but

the actual collection of the levy is to be carried out by PJT (KepGub 74/2002 art 13(1)) as a

joint effort (kerjasama) with the Provincial Department of Public Works - Water and the

Provincial Finance Office (KepGub 74/2002 art 13(2)).

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LICENCSING WATER USE IN WEST JAVA

Background

In West Java, according to regional regulation, all enterprises, individuals and legal entitiesthat use water are obliged to possess a Water Use Licence (Surat Ijin Pengambilan danPemanfaatan Air) (SIPPA) that is issued by the Governor through the head of the WaterResources Management Bureau (Dinas Pengelolaan Sumber Daya Air): Peraturan DaerahPropinsi Jawa Barat No. 10 Tahun 2001 Tentang Pengambilan dan Pemanfaatan AirPermukaan (Perda 10/2001 art 3(1)). It covers the same range of activities as in East Java(elucidation Art 3(1)) with the inclusion of energy.

The exemptions from obtaining a SIPPA are as follows (Perda 10/2001 art 5):

Religious worship, fire extinguishing, subsistence farming, research activities that do not give rise todamage to water resources and its environment, water supply structures and land underneath them,household needs of less than 100 cubic meters/month.

This list of exemptions could be interpreted as being narrower than East Java as theobligation to obtain a licence seems to apply to all farmers who are not subsistence farmers.However, in practice there is no difference and farming communities in irrigation systems arenot required to obtain a licence for use of irrigation water.

Licensing procedure

Licence procedure is set out in Keputusan Gubernur No. 3 Tahun 2002 tentang PetunjukPelaksanaan Peraturan Daerah No. 10 Tahun 2001 tentang Pengambilan dan PemanfaatanAir Pemukaan (KepGub 3/2002). The application is made to the Governor through theProvincial Dinas with a copy to the local technical unit (Unit Pelaksana Teknis - theProvincial Balai Pengelolaan Sumber Daya Air (Balai PSDA) and the local Mayor (KepGub3/2002 art 4(1)). If the extraction location is within the PJTII work area then a copy isprovided to PJTII (KepGub 3/2002 art 4(2)).

The application must attach a number of documents. It must attach technicalrecommendations from the Balai PSDA and/or PJTII. (KepGub 3/2002 art 4(2)(d)). Thisprovision seems to allow for different site locations: if the site is within the PJTII work area,then the recommendation must come from PJTII but if it is outside the PJTII work area thenthe recommendation must come from the Balia PSDA. The licence application must alsocontain a copy of the location licence, business licence (KepGub 3/2002art 4(2)(e)) andinformation regarding the wastewater disposal licence (KepGub 3/2002 art 4(2)(f)).

It is stated that the local government (the office with responsibility for irrigation) must give atechnical recommendation on the application (KepGub 3/2002 art 5(l)&(2)). Therecommendation must be given within 20 days of receiving the application (KepGub 3/2002art 5(3)). A similar time limit applies to PJTII and the Balai PSDA (KepGub 3/2002 art 5(4)).In giving the recommendation, local government is to work together with PJTII and the BalaiPSDA (KepGub 3/2002 art 5(5)).

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Licence conditions

Some of the licences reviewed by the ILT were very short and contained very little in terms of

obligations and prohibitions. However, this seems to have changed recently as licences

issued in 2004 were more comprehensive.

ProhibitionsThere is a prohibition against the sale of water by licence holders except under a licence from

the Dinas (Perda 10/2001 art 14). Licence holders who are able to sell water are housing

developments without access to piped water through PDAM, industrial estates or industry that

is not able to access water (Perda 10/2001 art 15).5

There are a number of prohibitions that are imposed on licence holders including against the

sale of water except under a licence (KepGub 3/2002 art 9(a) & art 13). The same provisions

apply on the sale of water as are stated in Perda 10/2001 except that the Governor is able to

licence sale to other parties (art 14(d)). Any licence holder who is able to sell water must

work together with the local PDAM (art 15(1)).

ObligationsThere are a number of statutory obligations set out in Perda 10/2001 including:

- to renew the licence every two years (art 8(2))- to comply with the conditions regarding the taking of water (art 11 (a))- to measure the volume of water taken per second (art 11 (b))- to pay tax (Perda 10/2001 art 11 (c))

- to report on water extraction each month to the Dinas (art 11 (e)).

In addition, unlike in East Java, there is an obligation to provide a portion of water to the

surrounding community if needed through an agreement between the licence holder and the

community (art 11(d)). This obligation may provide the basis for agreements that were

discovered by the ILT team between industry and farmers within irrigation systems.

TaxA tax on the use of surface water (and ground water) has been imposed for the taking and use

of water: Perda No. 6 Tahun 2001 Tentang Pajak Pengambilan Dan Pemanfaatan Air

Permukaan (Perda 6/200 1). Those exempted from paying the tax are (Perda 6/2001 art 3(2)):

a. central and regional governmentb. farming communitiesc. householdsd. religious use, fire extinguishing, research, investigations that do not give rise to environmental damage

or structures related to water delivery and related land.

Those liable for the tax are private individuals and legal entities that take or commercially use

or take and commercially use surface water (Perda 6/2001 art 4). The assessment of the tax is

based on similar factors as in East Java but there is no reference to the objective of water use,

5 This provision is difficult to translate and may refer to those to whom water is able to be sold.

A14 d) -18

rather there is a reference to the water function (Perda 6/2001 art 5(2)). The calculation of therate of the tax is to be done by the technical bureau (dinas teknis) (Perda 6/2001 art 5(3)).

The Governor has authority to raise the tax but this authority is to be implemented by theDinas (Perda 6/2001 art 9). A directive on the implementation of the tax been issued in theform of Keputusan Gubernor Jawa Barat No. 11 Tahun 2002 tentang Petunjuk PelaksanaanPeraturan Daerah No. 6 Tahun 2001 Tentang Pajak Pengambilan dan Pemanfaatan AirBawah Tanah dan Permukaan. Every licence holder is required to pay tax on water use. Theformat to register for the payment of the tax called the Letter of Notification of Regional Tax(Surat Pemberitahuan Pajak Daerah (SPTPD)). The basis for the calculation of the tax is notset out in the instrument; rather it would seem to be an aspect within the authority of theDinas. However, Keputusan Gubernor No. 29 Tahun 2002 tentang Tata Cara PerhitunganHarga Dasar Air Sebagai Dasar Penetapan Nilai Perolehan Air Bawah Tanah dan AirPermukaan (KepGub 29/2002) has been passed to set out the basis for determining the valueof receipt of surface and groundwater. This decree sets out a number of categories of waterusers, namely (KepGub 29/2002 art 2):

- Social- Non commercial- Commercial and services- Industry and production- Farmning- Water businesses (not PDAM)- Electricity.

The amount is calculated based on natural components, the price of raw water and the groupof water users (KepGub 29/2002 art 11(1)). Each of these components is set out in furtherdetail in the Governor's Decree together with indexes (KepGub 29/2002 art 11- 15).

Licensing use of irrigation water by the DistrictAs a result and the 1996 transfer of authority from Provincial to District Government ofaspects of water resources management and additional licence is provided in West Java (atleast in some districts) for the use of irrigation water.

The Bandung District issued a regulation on licensing to provide for a licence to use irrigationsystems (Ijin Penggunaan Jaringan Irigasi) to supplement the licence issued at the provinciallevel. In the licensing decision set out in Surat Keputusan Kepala Dinas Pekerjaan UmumPengairan Kabupaten Bandung No: 611/609/BMISk-Air Kab./AP/2000 a number ofconditions are imposed including:

- prohibition against water diversion- prohibition against blocking or disturbing the water flow- obligation to comply with in operation and maintenance activities- obligation to obtain a SIPA.

In East Java, it was the impression of the ILT that the District Level did not issue anyadditional licence for use of irrigation water. However, it is possible that it does occur incertain districts.

A14 d) -19

SUPPLY CONTRACTS

Delivery schedules are set by PJTII through a letter of decision issued by the Director (for

example: Surat Keputusan Direksi Perum Jasa Tirta II Nomor: 1/609/KpTS/2003 tentang

Recana Pokok Penyediaan dan Penggunaan Air Untuk Tanam Padi Rendeng MT.2003/2004,

Tanam Padi Gadu MT. 2004 dan Tanam Palawija MT. 2004 Serta Kebutuhan Air Untuk Air

Minum, Industri, Perkebunan dan Pengelontoran Kota Tahun 2003/2004). Supply contracts

are generally entered into between PJTI/PJTII and those who have obtained water use

licences.6 The contracts in each province have a different structure and slightly different

contractual details.

The contracts specify that the amount of water to be extracted complies with the licence and

that PJTI/II will supply water in accordance with the licence. However, there is no guarantee

by PJTI/II as to the quality of the water supplied. For example, in the contract between PJTI

and PDAM Surabaya, the quality of water is stated to be the responsibility of PJTI, the Dinas

at Provincial and District level and the community. If pollution is such that the PDAM is not

able to process the raw water supplied by PJTI, the PDAM is not able to claim compensation.

The obligations of PJTIIII are to provide the volume of water as stated in the licence, to

defend water elevation levels as stated in the annexure to the contract and to routinely

monitor and report to the Governor on water quality. The rights of the PDAM are to take

water as stated in the licence, to receive a volume of water and water elevation that is

appropriate for the water use as set out in the licence. In East Java, the PDAM is entitled to

receive the water quality monitoring reports every month from PJTI. In addition a

levy/subscription is paid for the water supply to PJTIMPJTI.

Forced circumstances are not considered a breach of the contract. In East Java this is stated to

include lateness or failure to supply water in a drought; however, there are obligations to

inform in such circumstances following standard operational procedure. If a loss of

production is sustained due to a fall in water elevation (not from forced circumstances) then a

fine is payable by PJTI based on loss of production. In both East Java and West Java,

disputes are to be resolved firstly through mediation. In West Java, if the dispute is not able

to be resolved through mediation it goes to arbitration. In East Java, court proceedings can be

filed if mediation fails.

PROVISIONS FOR ENFORCEMENT AND RESOLUTOIN OF DISPUTES

Administrative sanctions

The New Law does not establish a system of administrative sanctions, which appears to be an

aspect that has been left to the regions to develop. Regional regulations provide for

administrative sanctions such as closing a meter or revoking a water use licence. Licences

6 This does not always occur, as emerged from discussions with the PDAM "Delta Tirta" Sidoarjo in East Java.

A14 d) -20

provide for the imposition of penalties in such circumstances as a failure to install aneffectively working meter. The conditions do not state who will impose the sanction. Inpractice, there appears to be very little administrative enforcement. If a licence holder useswater in excess of the licence, it is likely that the licence will be amended to provide for anincrease in extraction rates.

Criminal sanctions

It was the impression of the ILT that criminal sanctions have been rarely, if ever, used inwater resources law. Under UUl 1/74 anyone who intentionally failed to comply with waterresources planning or technical planning, commercially used water without a licence, or witha licence failed to carry out environmental protection measures could be liable to two yearsimprisonment or up to five million rupiah fine (art 15(1)). There was a lesser penalty fornegligence. Criminal penalties were further elaborated in PP22/82 and PP23/82 to includesuch offences as use of water without a licence and failure to join in water security efforts (art43).

The New Law also sets out criminal sanction for intentionally carrying out certain activities,which include the following:

- An activity which causes damage to water resources and infrastructure, disturbs thepreservation of water and or causes water pollution (arts 24 & 94(l)(a))

- An activity that is able to give rise to damaging effect of water (art 94(l)(b) & 52)

- Use of water that causes loss to another person or party and damages the function of thewater resource (art 94(2)(a)). This provision seems to be directed to farmers as it is crossreferenced to a prohibition against using a water resource for daily minimum needs, socialneeds or community farming in such a way as to damage the water resource and itsenvironment or general infrastructure (art 32(2)).

- An activity that damages water resources infrastructure (art 94(2)(b) & 64(7)).

- Rental or transfer of a water use right (art 94(3) & 7(2)).

- Commercial use of a water resource without a licence (art 94(3) & 45(3)).

There are corresponding provisions that establish criminal liability for negligently carryingout these activities activities (art 95).

Notably there is no criminal sanction for interfering with the basic right established in article5 to obtain water for basic minimal daily needs although this could be interpreted as fallingwithin damage to water resources. Should a prosecution be brought by an enforcementagency, it is difficult to predict at this stage how these provisions would be interpreted by acourt.

Civil sanctions

There is no provision for enforcement through the use of civil sanctions. Civil sanctions, atleast in other legal systems, provide a wider range of remedies such as an injunction anddamages. They also carry a lower burden of proof, that is, proof on the balance of

A14 d) -21

probabilities - significantly less onerous than establishing the criminal burden of proof, which

requires proof beyond all reasonable doubt.

Dispute resolution

Initial stage of dispute

The New Law states that all disputes in the first stage should be attempted to be resolved

through negotiation and mediation (art 88(1)). The elucidation states that such disputes

include disputes over the management of water resources, the right to make use of water or

the right to commercially use water. It is said that this provision covers disputes between

water users, between commercial users of water or between users and commercial users of

water, between districts or between regions upstream and downstream. If the dispute is not

able to be resolved, it may be processed through the court system or outside the court system

(art 88(2)).

Alternative Dispute Resolution

Resolution outside the court system or alternative dispute resolution (ADR) can be carried out

through arbitration or mediation (art 88(3)). Indonesian legislation on alternative dispute

resolution therefore needs to be referred to in this regard. There is likely to be a need to

develop ADR procedures with specific reference to water resources. In particular, if an

arbitration system is to become a reality such as a Water Tribunal it will need supporting

legislation.

Dispute resolution through the courts

If such disputes cannot be resolved informally then the dispute may be processed through the

court system or outside the court system (art 88(2)). There is no further explanation regarding

how such disputes could be processed through the court system. There is a provision that

permits class actions (gugatan perwakilan) by communities that are adversely affected by

water resources problems (art 90). This provision could open up the way for affected farming

communities to protect the basic right established to obtain water for basic minimal daily

needs (art 5). It could also be used to protect a water use right, should one be provided in the

future. However, to provide certainty, the implications of a water use right (in terms of

reciprocal obligations on government and other parties) would need to be detailed in practical

terms in legislation to give the provision on class actions real meaning.

There is also a provision that gives legal standing to environmental organizations to bring

proceedings to protect the environment (art 92(1)). Legal standing is limited to organizationsthat meet set requirements (art 92(3)). The elucidation says that this is a class action, which is

a legal confusion of terminology and demonstrates a fundamental misunderstanding of the

difference between a class action and legal standing. Clearly, the resolution of disputes

through the court system is an area of law that needs to be further developed.

A14 d) -22

Annex 14-e) Review of National Legislation onGroundwater

I

Annex 14 e)

REVIEW OF NATIONAL LEGISLATION ON GROUNDWATER

1. Separation of administration of groundwater and surface water

The definition of water and water resources has included groundwater (art 1(3)&(4));however, authority granted to the Minister for Public Works under Undang-undang No. 11Tahun 1974 tentang Pengairan for managing surface water has not extended to groundwateror hot springs (UU1 1/74 art 5(2)).

According to Peraturan Pemerintah No. 22 Tahun 1982 tentang Tata Pengaturan Air, theMinister for Mining and Energy has been the relevant Minister in relation to groundwater andhot springs (PP22/82 art 6(1)). There has been no separate statute on groundwater, neitherhave any government regulations been passed to date on groundwater use.

The New Law does not go into detail of groundwater management and relies on the passingof government regulations. The management of groundwater is to be based on thegroundwater basin (art 12(2)). It is stated that the system for planning the management ofwater resources is based on the river basin with the principle of the intergratedness of surfaceand groundwater. However, how this is to occur is not set out (art 11 (2)).

Government regulations are to be passed on a number of aspects of water resourcesmanagement, which could conceivably also concern groundwater. It remains to be seenwhether all these aspects will be taken up in groundwater regulations issued by the Ministryof Mines and Energy:

(a) the right to use water (art 10)

(b) management of groundwater based on the groundwater basin (art 12(3))

(c) criteria for determining groundwater basins (art 13(5))

(d) preservation (pengawetan) (art 22(3)

(e) management of water quality (art 23(4))

(f) conservation of water resources (art 25(3))

(g) expansion of groundwater (art 37(3))

(h) drinking water (art 40(7))

(i) control of the destructive power of water regarding groundwater basins (art 58(2))

(j) planning water resources management (art 59-60)

(k) oversight of water resources management (art 76)

There is little reference to the interconnectedness between the use of surface water andgroundwater apart from mention of groundwater in relation to effective use (pendayagunaan)

A14 e) -1

of water resources. It is stated that effective use of water resources is to be based on the

relationship between rain water, surface water and groundwater with priority of effective use

(mengutamakan pendayagunaan air permukaan) being given to surface water (art 26(5)).

There is also a statement to the effect that the expansion of groundwater from a groundwater

basin is to be done 'integratedly' with water resources in a river district (art 37(2)).

There is no specific reference to groundwater in the provisions on developing a model/system

for managing water resources (art 11), water allocation (art 28), water supply (art 29-30),

water use (art 32), inventory making (art 61), information management systems (art 65-69),

finance (art 77-80), the role of the community (art 82-84). The application of the New Law to

businesses selling mineral water is not immediately apparent.

The draft government regulation that the ILT obtained from the Ministry of Mines and

Energy.... [need to complete]

2. Inconsistent definition of groundwater

There appears to be inconsistency in the definition of groundwater. It is sometimes defined

so as to include springs that arise naturally to the surface of the earth (Keputusan Menteri

Energi dan Sumber Daya Mineral No. 1451 K/10/MEM/2000 tentang Pedoman Teknis

Penyelenggaraan Tugas Pemerintahan di Bidang Pengelolaan Air Bawah Tanah (KepMen

No 1451/2000) (art 1 (12)). This would appear to conflict with the definition of rivers which

has always included springs as the starting point. Also, the New Law defines groundwater as

water that is below the earth's surface (art 1(4)). This would appear to exclude springs.

3. Regional autonomy

Under regional autonomy law, pursuant to Peraturan Pemerintah No. 25 Tahun 2000 tentang

Kewenangan Pemerintah dan Kewenangan Propinsi Sebagai Daerah Otonom

(PP25/2000), the Minister of Mining and Energy has authority for determining standards for

general research and standards for managing groundwater (art 2(3)3.d) and arranging the

groundwater survey at a scale of 1:250,000 (2(3)3.g). Provincial government only has

authority to prepare support for the development and exploitation of groundwater (art

3(5)3.a.). This allocation of authority is not clear as to an intended meaning. The balance of

responsibility for managing groundwater falls to District Govermnent.

Under regulations passed since regional autonomy, the role of the Province is essentially to

coordinate and facilitate the management of groundwater (KepMen No 1451/2000 art 3(2)).

How other roles are divided and coordinated between each level of government has not been

clearly stated in national law. For example, in relation to inventory making, this is stated to

be carried out be central, provincial and district government (KepMen No 1451/2000 art 4(4)).

It is to be provided to the Director General ((KepMen No 1451/2000 art 18(1)&(5)).

4. Act No. 7 of 2004 on Water Resources Management Act (the New Law)

The arrangement of authority introduced under regional autonomy is adjusted under the New

Law to take account of the borders of the groundwater basins. The groundwater basin areas

are to be determined by a Presidential Decree (art 13(1)). Groundwater basins can be located

within a district or straddle district, provincial or state boundaries (13(4)). The criteria for

determining groundwater basins are to be set out in a government regulation (13(5)).

A14 e) -2

In the same way as river basins, if the borders of a groundwater basin straddle provinces, thecentral government has authority, if the borders of a groundwater basin straddle districts, theprovincial government has authority and district government has authority for groundwaterbasins found in the district. How this is to be achieved will be the subject of a governmentregulation (art 12(3)). It would seem that the arrangement is to be as follows:

- If the groundwater bore is in a groundwater basin that is contained within a district, thenthe District government provides the licence (art 16(f))

- If the groundwater bore is in a groundwater basin that straddles districts, then the Districtgovernment provides the licence but technical recommendations are given by theProvince (art 15(g))

- If the groundwater bore is in a groundwater basin that straddles provinces, then theDistrict government provides the licence but technical recommendations are given byCentral government (art 14(g)).

In this regard, the level of government responsible for licensing differs between surface andgroundwater. In surface water, the level of government responsible for licensing will bedetermined by the configuration of the river basin.

5. Conservation of groundwater resources

The main focus of activity in managing groundwater use is conservation of groundwater,according to the Ministry of Mining and Energy. Conservation is to be based on identifyingand evaluating groundwater basins, recharge areas and discharge areas, planning the use ofgroundwater and information concerning the change in condition of groundwater (KepMenNo 1451/2000 art 7(3)). Whilst it is stated that the District determines the location ofmonitoring wells (KepMen No 1451/2000 art 8(3), the responsibility for conservation isshared between each level of government (KepMen No 1451/2000 art 9(1)).

6. Priorities in groundwater use

The groundwater use priorities set out prior to passing the New Law only concern surfacewater, not groundwater. Priorities have been set out in a Ministerial Decree as follows(KepMen No 1451/2000 art 10(2)):

a. drinking water

b. domestic use

c. animal husbandry and simple farming

d. industry

e. irrigation

f. mining

g. urban affairs

h. other interests.

A14 e) -3

It can be seen that this arrangement of priorities is different to the priorities for surface water

use in that industry has a higher priority than irrigation. Furthermore, this arrangement of

priorities can be changed by a Governor or Mayor in accordance with the general public

interest and site-specific conditions (KepMen No 1451/2000 art 10(3)). There is potential for

conflict with the priorities established for the use of surface water. There are also issues

regarding how these priorities are to be implemented when there is insufficient water to meet

all needs as compared to when there is sufficient water.

7. Licensing groundwater extraction

Licensing groundwater extraction was previously carried out by the Governor with attention

to technical directions from the Minister of Mining and Energy (PP22/82 art 6(2)). Since

regional autonomy licensing is the responsibility of the District Government. This has been

done in accordance with guidelines issued by central government.

Licenses are for activities such as exploration, installing bores, taking groundwater and taking

water from springs and are to be provided by the Districts (KepMen No 1451/2000

artl 1(2)&(3)). The licence procedure is set out in annexures to the Ministerial Decree.

Taking groundwater for drinking water and domestic use 'up to certain limits' does not

require a licence (KepMen No 1451/2000 art 14(1)). Those limits are to be determined by

District government. This provision means that limits may vary between districts.

8. Taxes

According to UU34/2000, the province can impose taxes for the extraction and use of

groundwater (UU34/2000 art 2(1)d.) At least 70 per cent of the proceeds from this tax are to

be transferred by the province to the district government (UU34/2000 art 2A) with attention

to equity and potential between localities (UU34/2000 art 2A (3)).

It is notable that whilst local government is able to impose taxes, they are not able to raise

levies or impose taxes that are imposed by provincial or central government (UU34/2000 art

2(4)a.&d.) This denies local government the opportunity to raise a levy or tax, which is

inappropriate where the local government is responsible for managing a groundwater basin

under the new Water Resources Act.

The tax is payable on the taking, using and taking for use of groundwater Peraturan

Pemerintah No. 65 Tahun 2001 tentang Pajak Daerah (PP65/2001) (art 33(1)). Government,

and government-owned enterprises established for water exploitation or protection do not

have to pay tax (PP65/2001 art 33(2a. &b.)) Other exceptions are farming communities

(pertanian rakyat) (PP65/2001 art 33(2c.)) and households (rumah tangga) (PP65/2001 art

33(2d.)) The exception allowed to farming communities is of uncertain application, as this

concept is not defined.

The basis for the calculation of the tax rate is the value of the gain (perolehan) of water

(PP65/2001 art 35(1)). This is calculated taking into account the following factors:

(PP65/2001 art 35(2)).

a. the type of water resource

b. the location

A14 e) -4

c. the objective of taking or using the water

d. volume

e. water quality

f. the width of the site

g. the season in which the water is taken or used

h. the level of environmental damage caused.

9. Oversight and control

Oversight and control of aspects such s exploration, drilling, extraction, pollution andenvironmental damage is the responsibility of District government and the community(KepMen No 1451/2000 art 15 (2)). There is no further explanation regarding how this willbe achieved.

B. SOME REGIONAL LAWS ON GROUNDWATER USEEast Java - tax

Provincial regulations passed in East Java mirror the national guidelines: Peraturan PropinsiJawa Timur No. 16 Tahun 2001 tentang Pajak Pengambilan dan Pemanfaatan Air BawahTanah dan Air Permukaan.

Those exempted from paying the tax are (Perda 16/2001 art 4):

1. Central and regional govermment2. BUMN and BUMD established for the exploitation of water resources, the protection of waters and the

commercial use of water resources3. Farming communities4. Household use, religious use and other social organisations.

Those subjected to the tax are private individuals and legal entities that take or commerciallyuse or take and commercially use ground water (Perda 16/2001 art 5). The office authorisedto raise the tax is stated to be the Finance Office (Perda 16/2001 art 10(2)).

A directive on the implementation of the tax has been issued in the form of KeputusanGubernor No. 56 Tahun 2001 tentang Petunjuk Pelaksanaan Peraturan Daerah PropinsiJawa Timur No. 16 Tahun 2001 tentang Pajak Pengambilan dan Pemanfaatan Air BawahTanah dan Air Permukaan. The imposition of the tax is combined with an obligation toobtain a licence (art 2(2)). There is also an obligation to install a meter to measure thewithdrawal of water (art 4)).

The arrangements for the collection of data are rather briefly stated. The collection of data onthe extraction and commercial use of groundwater is to be carried out by the TechnicalImplementation Unit (Unit Pelaksanaan Teknis Dinas) (UPTD)) and offices of the DistrictGovernment in accordance with their respective authority (art 5(2)). This data is to be used todetermine the volume of water extraction by the Finance Office (Dinas Pendapatan) (art6(1)).

A14 e) -5

The format to register for the payment of the tax is called the Letter of Notification of

Regional Tax (Surat Pemberitahuan Pajak Daerah (SPTPD)). The Head of the Finance

Office sets the tax rate (art 10(1)). The calculation of the tariff for surface water is not

completely explained and is to be regulated further by the Governor (art 11). However, based

on the annexure it appears to be related to the volume of extraction, the price of water and the

tariff of the tax.

A Governor's decree has been issued on the value of water for the purpose of calculating the

tax: Keputusan Gubernur No. 57 Tahun 2001 tentang Penetapan Nilai Perolehan Air untuk

Menghitung Pajak Air Bawah Tanah dan Air Permukaan Tahun 2002. This instrument gives

different rates for commerical use, non commercial use and the water industry (industri

dengan bahan baku air). There is also a differential based on whether the water comes from

a spring (mata air) or not (bukan mata air).

West Java - tax

In West Java, a directive on the implementation of the tax raised on the use of groundwater

been issued in the form of Keputusan Gubernor Jawa Barat No. 11 Tahun 2002 tentang

Petunjuk Pelaksanaan Peraturan Daerah No. 6 Tahun 2001 Tentang Pajak Pengambilan dan

Pemanfaatan Air Bawah Tanah dan Permukaan. The format to register for the payment of

the tax called the Letter of Notification of Regional Tax (Surat Pemberitahuan Pajak Daerah

(SPTPD)). The basis for the calculation of the tax is not set out in the instrument; rather it

would seem to be an aspect within the authority of the Dinas Teknis. However, Keputusan

Gubernor No. 29 Tahun 2002 tentang Tata Cara Perhitungan Harga Dasar Air Sebagai

Dasar Penetapan Nilai Perolehan Air Bawah Tanah dan Air Permukaan has been passed to

set out the basis for determining the value of receipt of groundwater. This decree sets out a

number of categories of water users, namely (KepGub 29/2002 art 2):

- Social- Non commercial- Commercial and services- Industry and production- Farniing- Water businesses (not PDAM)- Electricity.

The price of groundwater (dasar air) is calculated based on natural components, components

for compensation for restoration and components of the price of basic water (air baku)

(KepGub 29/2002 art 4(1)). Each of these components is set out in further detail in the

Governor's Decree together with indexes (KepGub 29/2002 art 5-11).

C. SUMMARY OF ROLES AND FUNCTIONS RELATED TO WATER USE RIGHTS

- GROUNDWATER

The following is an attempt to summarise the division of roles and functions related to

groundwater water use rights in East Java and West Java. (See a similar summary in SW1)

If a comparison is made with surface water, it can be seen from the table that the management of

groundwater does not concern the same range of issues as surface water. Particularly in relation

to the assignment and modification of rights there is no need to be concerned with a licence for

raw water supply, licensing the establishment of infrastructure for primary or secondary water

supply within irrigation. In relation to the delivery of rights there is no need to be concerned

A14 e) -6

with the construction, operation or maintenance of infrastructure, apart from urban or industrialwater supply that originates from groundwater. In relation to protection of rights, construction,remedial work and maintenance of multipurpose storage dams is not an issue. In addition,dispute resolution is likely to be limited to situations where there is conflict between users ofgroundwater due to water shortages or where groundwater supplies have been polluted from landcontamination or water pollution. Concerning compliance with rights, there is no need forsupervision of delivery schedules although there is still a need to supervise metering.

Table 1: Definition and Creation of Rights

National Provincial District OtherActivities Government Government Government - basin level org.- users

Policy formulationon groundwater DESDSM unclearbasin management

unclearPlanning uncleargroundwater basinmanagement, settingpriorities for use

Coordination with unclear unclearrelevant sectors

Collection ofhydrologicaldata within agroundwater DESDSM Dinas Dinasbasin, developingan informationmanagement system

Making of inventoryof the features of DESDSM Dinas Dinasthe groundwaterbasin

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Table 2: Assignment and Modification of Rights

OtherNational Provincial District - basin level

Activity Government Government Government - non government

Licensing groundwaterwater useby PDAMs,industry and others _ Dinas

EnvironmentalImpact Assessment District

(for predetermined Provincial BAPEDALDA - if Public participation

activities likely to BAPEDALDA - if impact contained provisions in

have a large effect impact crosses within district environmental

on the environment) district boundaries boundaries impact assessment

Coordination withrelevant sectors inlicense decision District Dinas

Oversight of licensingprocedure

Table 3: Delivery of Rights

Activity OtherNational Provincial District - basin level or

Government Government Government - non government

Construction of PWRS PDAM

infrastructure for -issues licenceurban and industrialwater supply

Maintenance of PDAM

infrastructure forurban and industrialwater supply

Supply of treated Dinas PDAM

water for urban, - issues licence

industrial and otherconsumers

Coordination with unclear unclear

relevant sectors

A14 e) -8

Table 4: Protection of Rights

Activity National Provincial District OtherGovernment Government Government - basin level

- non government

Notification oflicence applicationand facilitation ofpublic participation

Oversight oflicensing procedure

Coordination of unclearlicence decision

Appeal againstlicence grant orconditions

Dispute resolution unclear- between users

Table 5: Compliance with Rights

Activity National Provincial District OtherGovernment Government Government -basin level or

- non government

Supervision of Dinasmetering

Oversight ofcompliance withlicense conditions Dinasby monitoringand metering

Administrative Dinasenforcement

BAPEDALDA- water quality

Criminal BAPEDALDAenforcement -water quality

Civil enforcement

A14 e) -9

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