Effectiviness Evaluation of Payment of Environmental System Between Cirebon Government and Kuningan Government

Abstract

Ecosystem conservation of watershed on the upstream area is a critical requirement in a continuous water management. This effort has to be supported not only by people that live at the upstream area as the „owner‟ of the catchment area but also by people at the downstream area as the „user‟. Therefore a comprehensive water management endeavor between the „owner‟ and the „user‟ is needed, through a payment of environmental services mechanism. This mechanism has been applied in West Java Province, specifically in Ciremai Mountain area – between Kuningan as the owner of the Paniis watershed and Cirebon as the user. Within the course of payment of environmental services, Kuningan and Cirebon keep identifying an accurate formula to manage the watershed area. Such circumstances place government in a consideration, whether the payment of environmental services program is effective in conserving Paniis watershed as the source of water of people in the city of Cirebon. It is critical to evaluate the effectiveness of payment of environmental services program in Paniis watershed, Ciremai Mountain to address the above question. Four main analyses have been employed to address that main question: (1) Cost and benefit analysis, (3) Willingness to pay analysis, and (4) Multinomial logit analysis. Results of the cost and benefit analysis of the payment of environmental services from 2003 - 2011 indicate that direct costs and direct benefits for Cirebon PDAM had been declining. These results conclude that the payment of environmental services of Cirebon PDAM is not effective to increase the production capacity of the institution. Results of willingness to pay analysis indicate that water users (costumers) have willingness to pay the environmental services of Rp.72/m 3. Based on the payment retrieval analysis: 49% of the respondents choose the payment through the monthly billing method, which is paid through the PDAM account.