Shifting the water paradigm from social good to economic good and the state’s role in fulfilling the right to water

Shifting the water paradigm from social good to economic good

In the conventional paradigm, water, apart from being a basic human need, is also a social good that is not owned by anyone but in the form of global commons, which is managed collectively, not to be sold or traded for profit. This traditional view has changed and been abandoned because water is not just a ‘social good’ but has become an economic commodity. This conventional paradigm contradicts the modern water management paradigm based on the intrinsic economic value of water, based on the assumption of limited and scarcity of water and the need for investment or the provision of clean water, as the fulfillment of the rights of every citizen.¹²

No water, no civilization is a phrase that may be appropriate to describe the importance of water in life. Without water, life will be extinct, and thus civilization will also be destroyed. Therefore, everyone feels they have a right to this one resource. It was this sentiment that contributed to the complexity of water resource management in the first place. Certain groups which perceive water as a commodity are increasingly viewing this situation as a water resources business opportunity. There is a clear shift in the perspective of certain groups on the value of water, where water is no longer considered a social good but an economic good. No doubt, water is then considered as a new commodity whose management is approached with economic principles. This is the beginning of the commodification, commercialization, and privatization of water resources being taken for granted.¹³

The availability of clean and widely accessible water is vital for all living things on earth. Hence, water is a social good. According to Peter H. Gleick, the definition of social good is:

For Gleick, water as a social good has benefits for many people, and social goods open up a better life.

Water as a public good is the marginal cost of producing a social good is zero, according to economic literature. In addition, social goods have the nature in use and the need for city parks. Another trait is lacking excludability so that none of the members of society do need it. The market price of these goods and services can be equal to (or close to) zero. Therefore, goods as social goods needed by the state’s people must strive for it. It does not mean that water has no value, but that is inappropriate to use market forces to describe the sacrifices that consumers of clean water have to pay.¹⁵

The shift in water as an economic good found its momentum in January 1992 when the International Conference on Water and Environment took place in Dublin, Ireland. The conference produced four principles - which became known as the Dublin Principles -, one of which was

The Dublin Principal argument at a glance shows there is a concern for the protection of increasingly limited water resources. Water is an economic good that departs from wasteful use efforts are needed to use it efficiently and fairly and encourage conservation and protection of water resources.

However, if we look further, there are global powers that play a role. The World Bank has a huge role in the water resources sector. And not the only role, but also power. This role and power are obtained through the policies and conditions that accompany the loans, which unfortunately greatly encourages the privatization of water in developing countries such as Indonesia.

This new perspective on watermarks is the start of a paradigm shift about who owns water, how to understand its function, and how to use it. Especially after many international organizations gave their support for a new perspective on water, as Budds and McGranahan (2003) said,

Even the World Bank is actively encouraging the governments of developing countries to minimize their role in public services and shift them to the private sector. The sequence of World Bank policies concerning the water resources sector demonstrates this effort to broaden the task of the private sector.¹⁸

For privatization groups, they argue that if a product is available for free, the market function that should allocate resources efficiently will not be achieved, it means there is no guarantee that the water availability is proportional to the level of consumption carried out. People tend to overuse water. The way that the government can control this is by limiting its use through regulations, tax, or by imposing it as a private good, namely goods that are excludable and rival.¹⁹

The changes in the perspective of water as an economic good then brought about a tremendous transformation in approach through the economic law of supply and demand. The consequence is that price becomes the key to control demand, which in turn makes the reallocation of water use to uses with a higher water value.

Indonesia has imposing water as an economic good since the early 1980s, the government’s efforts to encourage and develop community participation in water resource management, especially in the sub-irrigation sector and clean water supply. Subsequently, in the 1990s, efforts to attract interest and cooperate with the private sector in the irrigation sector appeared to expand. The attempt to withdraw the private sector from managing water resources is inseparable from the policies of the new order government at that time were controlled by foreign capital forces.²⁰

The intense privatization of water resources has become complicated, pitting the public sector against a group of capital owners. It is the same as confronting resources that control human life versus the subject of ownership for trading. It seems justified when Law (UU) number 7 of 2004 on water resources has been promulgated. The enactment of this law on February 19, 2004, was followed by the issuance of several regional regulations (Perda) related to water privatization. The privatization of water in Indonesia highly contributes to the clean water crisis because Law no. 7 of 2004 provides opportunities for the privatization of the drinking water sector and the control of water sources (groundwater, surface water, and some river bodies) business entities and individuals. As a result, the water rights of every individual are threatened with the agenda of privatization and commercialization of water in Indonesia.²¹

The cancellation of the Water Resources Law was carried out because it did not guarantee restrictions on water management by the private sector, hence, it violated Article 33 of the 1945 Constitution concerning Indonesian natural resources that must be controlled by the state for the benefit of Indonesian citizens. So that there is no legal vacuum, the Irrigation Law is enacted again. On September 17, 2019, the House of Representatives had ratified the Draft Water Resources Law (RUU SDA) into Law No. 17/2019 concerning Natural Resources.²²

It is awaited that the making of the new Water Resources Law will not repeat the old law so it can create water management that can maximize the people’s right to water and protect the state against that right. Then in the new Water Resources Law, it can be seen how far it can eliminate the opportunity for clean water to be privatized. Therefore, the core issue is whether water should be treated as a public good, the fulfillment of which must be carried out by the state, or water as an economic good which is understood as a commodity whose fulfillment would be better if carried out by the private sector. In this case, the government’s role in supporting and implementing the new Water Resources Law is necessary, so the fulfillment of water needs during the dry season is met without incurring huge costs.²³

The paradigm shift framework for water policy can be described in Figure 1 by referring to Thomas Kuhn’s Paradigm Theory.

Figure 1. Shifting the water resources management paradigm.

Following the lines of Thomas Kuhn’s Paradigm Shift Theory, first, water was initially positioned as a Res Commune as a shared property that was passed down from generation to generation. This phase can be categorized as the Pre-Paradigmatic Stage or Pre-Science, namely the phase where science does not yet have a foundation of methods, theories, and concepts; in other words, it does not yet have a paradigm. In this context, the juridical regulation of water has not yet emerged and still places water as common property. The state has no role and is still purely managed by the community simply or traditionally.

The second phase in Kuhn’s terminology is called Normal Science; the theory began to emerge, which then dominated other disciplines. This is the result of a paradigm that has been agreed upon by the scientific community. In the context of the Indonesian legal system, Legal Positivism is thought to place positive law as the main thing. Regarding water regulation in Indonesia, for the first time, regulations related to water management were the birth of the Algemeen Water Regulation (AWR) 1936. The origin of the AWR 1936 departed from the interests of the Dutch colonial government through the politics of cultuur stelsel (forced cultivation). The AWR 1936 does not provide a solid basis for efforts to develop the use/utilization of water and or water sources to improve people’s living standards. Still, in the normal phase of science after 29 years of independence, Law No. 11 of 1974 concerning Irrigation was born. The contents of the 1974 Irrigation Law, which amounts to 17 articles, are based on the principle and basis of regulations, namely viewing water as a social function aimed at the greatest prosperity of the people. The regulatory substances include, among others, state control over water, the concept of the right to water, and management of water resources.

The third phase is termed the critical phase, a contradictory situation. In terms of water resources management, there is a paradigm of water as an economic good which is contradictory to water as a social good. The enactment of Law No. 7 of 2004 concerning Water Resources was inseparable from the situation where global power through world financial institutions was very influential. The impact of the 1998 economic crisis increased Indonesia’s dependence on international financial institutions. The Dublin Principle emerged in 1992 when water emerged as an economic good. The World Bank has a huge role in the water resources sector. And not the only role, but also power. This role and power are obtained through the policies and conditions that accompany the loans, which unfortunately greatly encourages the privatization of water in developing countries such as Indonesia. Law No. 7 of 2004 concerning Water Resources has the character of water as an economic good was finally revoked by the Constitutional Court through Decision No. 85/PUU-XI/2013.

The last phase is the need for new ideas to emerge to get out of the crisis. The establishment of Law no. 17 of 2019 reaffirms the relationship between the state, the people, and water, emphasizing the necessity of state intervention in water regulation. Consideration of the state’s obligation to respect, protect and fulfill the human right of access to water. However, Law no. 17 of 2019 has a weak point epistemologically, which remains characterized by purely positivistic strengths. Water in its initial position has a religious value as something sacred for human life. For that, we need the concept of incorporating spiritual values into water resource management and safeguarding water resource management by local or traditional communities.

It is necessary to build a legal framework between God, the State, and Society. The relationship between God, the State, and Society was inspired by Werner Menski’s idea, known as the Triangular Concept of Legal Pluralism Theory.²⁴ For Werner, the legal product is a triangular synergy between Religion, State, and Society. In terms of water resources management, see Figure 2.

Figure 2. Triangular of the water resources management.²⁵

Placing water as God’s property, the state and society only must manage it. It can be said that water is again placed as a sacred item for human life. The state should fulfill the right to water which places water as a social good and must also have religious values. Religious values provide awareness of the state’s responsibility in fulfilling the water rights.²⁶

The role of the private sector in water resources management should be limited. This restriction avoids exploitation which threatens water resources. This restriction also provides opportunities for the private sector to participate without leaving religious values, the absence of greed, or in the other hand, water has economic and religious value, and the last is the protection of water resources in indigenous or local communities so that potential water sources are maintained and utilized for the sustainability of the ecosystem. Indigenous peoples have a long history of local wisdom, and the state must protect and maintain their existence from attacks by capital owners who are only profit oriented.

The role of the state and fulfillment of the water rights

The state is an organization held by a nation and inhabits a particular area based on the law for the common good. A country certainly has the ideals of shared prosperity based on justice and humanity value. A democratic state fights for the realization of the public interest or res republica. Indonesia, as a country in the form of a republic, must establish itself to be oriented to the public interest.

The water right is a human right that does not come from the state; it is the specific ecological context of human existence that gives rise to the water rights. As a result, the inclusion of the state in water management as a form of control rights contained in Article 33 paragraph (3) of the Republic of Indonesia’s 1945 Constitution is a form of protection of these human rights, which cannot be eliminated by anyone, because the water right is a natural right. As a result, water as a human need is a right that the State must fulfill in order to recognize the right to life itself.²⁷

The water right is a dimension of rights that stems from the “right to an adequate standard of living” and the “right to health.” In the Universal Declaration of Human Rights (DUHAM, this right is affirmed in Article 25 of the DUHAM as follows:

Furthermore, the explanation of the water right contained in General Comment No. 15 on the Right to Water, the word “included” in Article 11 paragraph (1) of the Covenant on Economic, Social and Cultural Rights, the list of rights in an adequate standard of living is not a limited list.

General Comment No. 15 also explains that the water right is an inseparable right concerning the right to achieve the highest standards of health (and the right to adequate housing and food) and being a bridge for other rights.

The water right is inclusive. The inclusive nature makes this right to be owned individually and jointly by everyone. One person’s claim to this right does not make another person lose his claim to this right. The universality of this right is demonstrated by the recognition made by the world community. Many rights do not necessitate any special treatment to be held. Every human being can automatically have this right.³⁰

The implication of acknowledging the water right is to give the State the task to organize such a mechanism so that public access to water can be made available. This mechanism must be regulated so that it does not provide an opportunity for the State to transfer its responsibilities to other parties. Consequently, it does not mean that everyone has to get water for free without any limits on the amount of use, which will create the possibility for those who are vital to get more water resources, but rather the recognition of the water right provides an opportunity for the State to make arrangements for restrictions on water resources. Certain restrictions on certain people or groups of people to ensure that the right to water for each person must be fulfilled.³¹

Normatively, the formulation of the recognition of the water right is also contained in Law no. 17 of 2019 concerning Water Resources in Article 6, which means that in the regulation phase, the government has an instrument for recognizing water rights. Then what about the fulfillment aspect or implementation aspect?

At the implementation stage, it is still far from expectations, as can be seen from budget politics in the clean water sector. Adequate development budget to encourage access to safe drinking water in 2030, so far, the government’s allocations for the last five years for the clean water sector have been around Rp. 3.5-6.5 trillion with an average per year of Rp. 4.5 trillion. If this amount can be maintained every year until 2030 there will be around Rp. 45 trillion. It is still very far from the development needs until 2024, which is Rp. 147 trillion, even funding needs in 2030 amounting to Rp. 238 trillion.³²

Until 2018, access to safe drinking water in Indonesia has reached 87.75%. However, only 6.8% of the population has enjoyed secure access. There is still a gap of 80.95% of the population in 2018 whose access still needs to be improved from decent access to safe access. Overall, as many as 93.2% of the population have not had secured access. If this figure translated into funding needs, the estimated amount up to 2030 could be Rp. 238 trillion if the inflation rate is considered. It is expected that 30% of funding needed can be allocated by the regional government.³³

The challenge of meeting the amount of funding is not easy. If the APBN is still unable to provide the necessary funds for the sector development budget, it is almost impossible for local governments to allocate APBD (as expected by the central government). Field data collected by the Water and Environmental Health Working Group indicate that the average APBD size for the water and sanitation sector is only around 2% per year. Fulfilling the need for the development budget for the drinking water sector is still an extensive homework for sector managers.³⁴

Homework for the government to fulfill the right to water for its citizens does not mean leaving it to the private sector or shifting responsibility by doing privatization. In principle, the state assigns the task to the state to implement such a mechanism so that public access to water can be provided.

There is a tug of war between the strengthening of the state’s role in the management of water resources on the one hand and the other hand the power of capital owners who place water as an economic good, so an alternative needed to emphasize community participation in the management of water resources {XE “Sumber Daya Air”}.

In the context of justice, strengthening the aspect of justice that places cultural factors as an important factor is also formulated in this goal, namely the protection and empowerment of communities, including indigenous people to conserve water and water resources. Indigenous peoples are people with knowledge, habits, and culture passed down from generation to generation by utilizing water sources in their territory to meet their daily needs. They manage these resources together and live in harmony with the nature around them.

In conditions of limited water, arrangements are needed so that all community members have access to water in a mutually agreed manner and place. In Law Number 17 of 2019 concerning Water Resources, Article 9 paragraph (2) provides space for local wisdom in the management of Water Resources, which states that Control of Water Resources is carried out by the Central Government and, or Regional Governments while still recognizing the Ulayat Rights of local Indigenous Peoples and rights similar to that, as long as they do not conflict with national interests and the provisions of laws and regulations. The need for community participation in maintaining water resources is also emphasized in Law Number 37 of 2014 concerning Soil and Water Conservation. In Article 46 paragraph (1), it is stated that the Community has the same opportunity to participate in the implementation of Soil and Water Conservation carried out by the Government and, or Regional Government per their authority, and paragraph (2) states that the implementation of community participation is carried out with due observance of the local wisdom.

Local wisdom can be used as social capital that deserves attention in managing water resources in an area. Local wisdom has two critical roles: fulfilling the right to water for life and maintaining the relationship between humans and water resources and the surrounding environment.

Underlying data

The legal rules and regulations data are publicly available and accessible at: