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Abstract
The increasing demand for water and limited degree of cost recovery for irrigation
water delivery are important challenges for policymakers in Indonesia. To meet the
increasing demand for water, it is important to reduce water use in irrigated paddy
cultivation, long the dominant consumptive user, and to divert water away from
agriculture to domestic and industrial sectors. Reducing water use in irrigated agriculture
can be achieved through various means, including rationing, improved user management,
and water markets. The appropriate method depends on the situation specific to each
basin. In the Brantas Basin in East Java, rationing is already practiced, but often leaves
the non-licensed, (non-paying) irrigators with insufficient supplies. Moreover, very low
irrigation service fee recovery rates hamper ongoing water sector reforms, which seek to
strengthen the capacity of local institutions to co-manage water resources. In the Brantas
Basin the average value of water in the production of important irrigated crops
substantially exceeds estimated water supply costs and current ISF. However, increased
water use fees would impose a substantial burden on farm economic welfare, while water
savings would be relatively modest. Therefore, to conserve water and enhance the
financial autonomy of irrigators alternative management systems are proposed, including
‘Integrated Crop and Resource Management’ and a water brokerage mechanism.