The impact of foreign aid on water governance in Indonesia: a case study of fragmented water service reform

This thesis draws on the study case of the Integrated Citarum Water Resources Management and Investment Program (ICWRMIP) in West Java, Indonesia. It is the pilot foreign aid project in Indonesia based on the Citarum River Basin (2007-2023), supporting the values of Integrated Water Resources Management (IWRM). Citarum is the most strategic river in Indonesia. Indonesia reforms its water institutions to accommodate the aid program. However, as it progresses, ICWRMIP faces critical institutional obstacles which leads to its midway termination in 2018. It has left many consequences beyond managerial problems, mainly on the fragmented state of the institutional changes. On that point, this thesis focuses on answering How does foreign aid and the promotion of IWRM influence the institutional changes in water governance in the Citarum River Basin?

This thesis uses Institutional analysis and development (IAD) framework, with update on the political economy context (Clement, 2010). IAD operates in the multi-level governance settings. The contexts are the donor-recipient relations and the decentralisation of government in Indonesia. The analysis begins with the investigation with the development planning among government ministries and donors, then proceeds to the authority delegation to subnational level of government. Following the delegation, the analysis arrives to the real-world analysis in the river basin, mainly in examining the project level realities of human-institutions-river basin connections.

This thesis criticises the implementation of IWRM through foreign aid conditionalities which pose negative externalities on institutional integration. There are fragmentations among the aid projects’ scope, bureaucratic capability, as well as between actors and institutions. The thesis concludes that IWRM values of integrating multi-sectoral aspects of water governance are not parallel with foreign aid objectives which tend to prioritise efficiencies and short term targets. This circumstance is multiplied across levels of government, and thus creating the institutional fragmentation in the Citarum River Basin.