PAYMENT OF ENVIRONMENTAL SERVICE AS AN INSTRUMENT TOWARDS A SUSTAINABLE

WATER MANAGEMENT IN PROVINCE OF BALI

I Made Sudarma

The Center Of Environmental ResearchUdayana University

Background

• Ayung River is the longest river in Bali (68.5 km), with upstream watershed in Bangli, Badung, Buleleng, Tabanan Regencies and flowing through Gianyar, Badung and Denpasar City

• Watershed ecosystem is holding important role to preserv the sustainability of water and life.

• Damage of ecosystems not only will reduce the quality of socio-economic life in site , but also have an impact on people's lives outside.

• Sustainibility of water existence in a river it is depend on the forest and watersheds condition, especially in the upstream region.

AYUNG WATERSHED

• Ayung river water used for many sectors, namely : domestic consumption (household), irrigation (agriculture), raw water taps (clean water), rafting (tourism), and socio-culture -spiritual.

• Ayung watershed is currently facing the problems (complex and interrelated).

• The problem occurs due to various factors, primarily due to population pressure, pressure of development, and socio-economic pressures in the around area of the forest and watershed.

Activities and Landscape of Ayung River

PROBLEMS OF AYUNG WATERSHED

Water Polluted▪ Content of BOD, COD, Nitrite, Detergent, Fosfat, E. colli and Colli

total : up than environmental standar (BLH, 2014, 2015)

Land Conversion

• Coversion of vegetation cover in upstream area and conversion of land utilization

▪ In 2010-2014, there was reduction of rice field average 288 ha/year.

Conflict Utilization Land and Water▪ Exploitation of ground water

and surface water

▪ Conflict utilization of water

and land between agriculture

and tourism sector

Cultivation Conversion(perennial crop to annuals crop)

Land Use Conversion

• Base on the study showed that the height of water flow of the Ayung

River continue to be decreased, where in 1975 the height of water was

177.67 mm, but in 2008 it became 44.13 mm.

• Reduction of water potential and average water flow of the Ayung

River will directly affect the utilization of water of the Ayung River,

especially “competition” between agriculture (irrigation) and water

supply company (PDAM).

• Land slide at the upstream area increased the turbidity of raw water

and exceeded the normal threshold. The turbidity level reached 36,000

NTU (Nepolitric Turbidity Unit) much higher than 500 NTU, the raw

water turbidity maximum level for clean water processing. Due to the

landslide, there are three days water supply of PDAM Denpasar to the

customers stoped.

• The impact of the water crisis is felt more in Denpasar and Badung regency which has a high population density and as a center of tourism developing in Bali.

• Development of tourism facilities such as hotels, restaurants, golf, recreational facilities and others are fastly growing in both areas.

• Even in these two regions are expected water shortages will occur in 2015. In 2015, Denpasar Water Company (PDAM) defeciency of clean water amounted to 391.94 l /second, caused the company only provide 1.260.46 l/second of 1,652 l/ second needed.

• To protect the ecosystem in upstream area is done by around people, but the water thats produced from theecosystems are consumed by communities in downstream area.

• To give the responsibility only to the upstream communities to preserve ecosystems without compentation by the “user” (downstream communities) is not fair and it is a form of “injustice” .

• To make the fair ; the people who “provide” water haveto receive compensation from user for “caring” ecosystem through conservation, reforestation and others.

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• The Payments for Environmental Services (PES) is a form of

environmental economic instruments that expected to be

incentive-disincentive-based instruments which is reliable in

sustainable environmental protection.

• The incentive system is more focused on the party, especially

in the upstream community to use natural resources by

paying more attention on conservation principles,

• The PES is an effort to give a "fair" environmental services as

well as prevent the tragedy of ownership (Ostrom, 1990).

• The basic concept is the people who play a role in

maintaining and "providing" environmental services of

natural ecosystems should be compensated by those who

receive the "benefits" or "user" ecosystem services.

• Data Analysis :

Willingness to pay (WTP) concept is applied to determine

the willingness of people in downstream to pay for

services the upstream people as a “keeper” water supply,

while the concept of willingness to accept (WTA) is to

determine the amount of compensation expected by the

people in the upstream in maintain the hydrological

functions.

Beside WTP approach, analysis be aquiped by the

marginal value product (MVP) analysis as a comparation.

• Based on analysis, the willingness to pay (WTP) of farmer for

irrigation, is IDR 127.500/ha/season, with the range of IDR

100,000-IDR 225,000.

(Noted : water prices be paid by farmers currently is IDR

100.000/ha).

The low of willingness to pay of water by farmers caused they

think water is a common property and they have spend a lot

of money for buying others inputs is like seed, fertilizer,

pesticide, labour, etc.

Based on profit maximization approach (MVP) the price of water for irrigation is IDR 314,000/ha/ season. This price is higher than the price that farmer pay currently, namely IDR 100,000 and also higher than the price of water based on WTP, i.e IDR 127,500.

For the upstream people side, willingness to accept (WTA) from rafting company is IDR 8.250/boat/operation. Currently there is no contribution of rafting activities to upstream people. Its also like water supply company (PDAM), there is no compensation from company to people who “provide” and “keep” water supply in upstream area.

Reccomendation :

• Bali government commitment is needed to manage

sustainable water through the PES mechanism by involving

various stakeholder who are “consume” water from the

Ayung River

• It is necessary to establish a non-structural institution that

regulates and manages sustainable water utilization. The

new body that will accommodate multi-parties interests,

especially upstream communities as “water providers” and

downstream communities that consume water.

• CSR fund allocation by companies such as PDAM, tourism

industry, must be aimed at the preservation of sustainable

water resources.

Thank you