Water Financing and Disaster Risk Reduction in Indonesia

6. Tentative action plan resulting from the National Dialogue on Water

Abstract

Based on the main findings of the National Dialogue on Water, this Chapter presents a tentative action plan for the implementation of the Dialogue’s recommendations. The tentative action plan can support the preparations towards the new National Medium-Term Development Plan and the National Long-Term Development Plan of Indonesia. It also suggests actions that support the implementation of ongoing policy reforms, notably the tariff reforms and the forthcoming Presidential Decree on Land Value Capture.

The previous chapters present the main findings of the National Dialogue on Water and the policy recommendations that emerged from the Dialogue. Indonesia is in the middle of preparing the National Medium-Term Development Plan and the National Long-Term Development Plan. Water sector reforms have been ongoing, and new elements of that reform are expected to be introduced in the short-term, including a nation-wide uniform water tariff and the forthcoming Presidential Decree on Land Value Capture. In light of these developments, the table below provides a tentative action plan that presents the main policy actions resulting from the Dialogue. The action plan brings the threads together by highlighting the main elements of potential reforms in Indonesia’s water sector (ranging from short to long-term action), and the partners and champions that ideally are part of this reform.

Table 6.1. Tentative action plan resulting from the National Dialogue on Water in Indonesia

Main finding	Recommended action	Objectives of the action	Champions / partners	Timeline
Making the water sector attractive to private finance: operational efficiency and tariffs
Water utilities are underperforming and are faced with insufficient revenue streams. This poses a barrier to attracting investments in Indonesia’s water sector.	Establish a national economic regulator that oversees tariff-setting and the performance of service providers. Jakarta Water Supply Service Regulatory Body can serve as an example.	Reliable water services for consumers Stable revenue stream for utilities Attract investments Operational efficiency of water utilities	PUPR Jakarta Water Supply Service Regulatory Body	Medium term
The introduction of a nationwide, uniform water tariff could lead to the weakening of revenue streams and operational efficiency of water utilities, but could also be an opportunity if designed well.	Couple the new tariff design to the introduction of an economic regulator Engage in a national consultation with relevant stakeholders to align different interpretations of the tariff reform Consider a uniform tariff for bulk water and pluriform tariffs for retail based on performance and cost recovery.	Ensure that the new tariff design improves financial stability, operational efficiency of water utilities, equity and affordability of water.	Home Affairs PUPR	Short term
Tariffs for water supply (bulk and retail) are not systematically collected, putting additional stress on the financial situation of PDAMs.	Implement a strategy for revenue generation, such as outsourcing collection, reducing free substitutes (groundwater), and increasing trust in tap water. Establish national targets revenue collection in the next Medium-Term Development Plan.	Reliable water services for consumers Stable revenue stream for utilities Attract investments	PUPR BAPPENAS PDAMs	Short to medium term
Policy instruments that regulate demand and pollution are in place, but do not have the desired impact.	Target central government support to local governments in building administrative and financial capacity to enforce environmental policies and collect environmental taxes/charges. Establish national targets for enforcement and charge/tax collection in the next Medium-Term Development Plan, including targets for local environmental tax administration. Explore additional instruments for water demand management, such as water allocation regimes that regulate demand.	Promote sustainable water use that reflect operational costs, environmental costs and opportunity costs of water Incentivise clean effluent discharge in water bodies / reduce pollution	Ministry of Environment and Forestry Provinces and districts PUPR BAPPENAS	Medium term
Introducing Land Value Capture as new financing instrument for water
LVC is underutilised given the revenue potential in the Indonesian context	Implement LVC instruments including developer obligations, charges for development rights, land readjustment, and infrastructure levies as a revenue source for water infrastructure	Increase revenues to fund water infrastructure Promote balanced and sustainable development through land use planning Redistribute property wealth accumulated through public actions	BAPPENAS PUPR Ministry of Agrarian Affairs and Spatial Planning Local governments	Medium to long term
Local governments lack the sufficient capacity to implement LVC and proper spatial planning	Target central government support to local governments in building administrative and financial capacity to develop the enabling frameworks for LVC adoption Simplify the rigid spatial planning system to be flexible and conducive to rapid changes in land needs Expand local government autonomy through continued legislative reforms	Improve local government capacity to implement LVC Enhance local government autonomy Enable better land-use regulation and spatial planning in general	Ministry of Agrarian Affairs and Spatial Planning Other national government ministries Local governments	Short to medium term
Land registries are incomplete and inaccurate, precluding effective LVC implementation	Provide central government financial and administrative support to develop and maintain accurate land registries Maintain an adequate workforce of certified appraisers at the municipal level	Reduce the prominence of the informal land and property market Provide the enabling framework for LVC adoption	BAPPENAS Ministry of Agrarian Affairs and Spatial Planning Local governments	Short term
Land acquisition processes are lengthy and tedious, impeding LVC implementation	Clarify land acquisition legislation to lay out guidelines for landowner compensation procedures Allow for the fixing of land prices at specific points in time predating government interventions	Facilitate streamlined land acquisition to speed up infrastructure development and LVC processes Effectively capture windfall gains in land values that are due to public intervention	Ministry of Agrarian Affairs and Spatial Planning BAPPENAS Local governments	Medium to long term
Non-structural measures that reduce flood disaster risk
Pre-planning and post-development for all land uses	Establish a specific plan for development before proceeding with development Vulnerability assessment according to changes in land use such as urban reorganisation, new town construction, redevelopment, etc., should be made mandatory.	Establish disaster resistant land use planning	PUPR Home Affairs	Short & medium term
Evaluate the risk of disasters and prepare policy alternatives for each risk level	Create a matrix on the likelihood and consequences of disaster occurrence for the disaster hazard zone Establish countermeasures according to the degree of risk of disaster (Relocation of residents of existing areas to safer areas, Establishment of structural and non-structural measures etc.)	Minimise human casualties and property damage to lay the foundation for sustainable development	PUPR Home Affairs Local governments	Short & medium term
CCTV based Automatic Discharge Measurement	Expand the use of CCTV technologies to flood surveillance for small mountainous streams and urban streams.	Enable continuous real time measurement of flood stage and discharge Develop a stage-discharge relationship	PUPR Provinces and districts BAPPENAS	Medium term
Spatial flood forecasting based on flood hazard maps	Improve the flood forecasting system by presenting the flood forecast for an entire area based on flood hazard maps	Provide information on potential flooding areas to regional governments and relevant authorities which can support in effective disaster prevention such as evacuation, flood insurance, land use regulation, and so forth.	PUPR Provinces and districts BAPPENAS	Medium term
Strategic plan for utilising ICT technology to substantially realise the "last mile or must have" in early warning services	ICT-based Disaster Information System Considering Community Participation Development of "Last Mile" Improvement Plan Using ICT Technology Pursuing the simultaneity of sending and receiving message in early warning service delivery	Facilitate of modern communication technology Two-way communication system for “must have” Strengthen “last mile” in End-to-End Flood Forecasting and Early Warning Systems	PUPR BAPPENAS Other agencies related to disaster risk management	Short term
Development of technical solutions for the building and utilisation of integrated water and disaster management information systems considering various localities and varieties of disasters	System integration by sector primarily (ex, weather, hydrologic and flood forecasting, water and sanitation, map and GIS, etc.) Platform or Clouding System for Participation and Utilisation of Local or Basin Units Improving accessibility to Database and Application System and integrating systems	Build small-scale integrated systems by sector Integrate data base server and flood farecasting system into platform as a service Delivery of computing service for 325 high risk areas	PUPR BAPPENAS Other agencies related to disaster risk management	Medium term