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Effects of the implementation of a progressive tariffs policy on water management in DKI Jakarta, Indonesia

Abstract The status of the availability of water resources in DKI (Indonesia’s Special Region of) Jakarta has reached a critical phase. Determination of progressive tariffs by the DKI Jakarta Provincial Government in 2007 aimed to encourage water users to use water resources rationally and in a sustainable way. However, since the launch of the policy, there has been no evaluation to determine the effectiveness of these progressive tariffs. This research analysed empirical data to examine the effect of policy interventions on water use behaviour in DKI Jakarta. An analysis was carried out by calculating water usage before progressive tariffs were applied and comparing them to water use after the tariffs were applied. Another analysis calculated the number of customers before and after the implementation of progressive tariffs and compared the changes. The increase in water prices plotted are stated in nominal value by assuming the average level of inflation in Jakarta (especially the price of water) was nearly under 2 percent and the price of water was not controlled by the market mechanism The results of this study indicate that before progressive tariffs were applied, water consumption had declined despite an increase in the number of customers, however, water consumption increased after the implementation. This shows that progressive tariffs are effective instruments to distribute clean water access through cross-subsidies, however, it has no effect on consumption levels.