ECONOMIC VALUATION OF WATER RESOURCES DEGRADATION

IN UPPER CITARUM WATERSHED-SAGULING RESERVOIR, INDONESIA

Dyah Marganingrum1), Pradono2), Eko Winar Irianto3)
1)

Research Centre for Geotechnology-LIPI

2)
Bandung Institute of Technology (ITB)
3)
Research and Development of Water Resources Agency under Ministry of Public Work

(Focus Area: Water Resources)

Project Summary
Water is becoming a scare good in the world in dealing with clean water availability including in Indonesia. As water
resources provide important benefit to humankind including for commodity benefit like as hydropower as well as
environmental service. Energy is vital to our life. Everyone, especially in the urban area depend on energy availability
while the sustainability of hydropower depend on water availability in river both quality and quantity term. Therefore it
further required for water pricing policy to enact the cost recovery and conservation. This research aim does the
economic valuation analysis in Saguling reservoir as an important hydropower in West Java Island, Indonesia. The
Saguling reservoir bid the upper Citarum River which flowing along several authorities in Bandung basin as
metropolitan area. Hopefully, this research can provide considering to take action for water conservation which
including many stakeholders and authorities proportionally. This research uses the productivity method because of
Citarum River as commodity good to electric productivity.
Key Words: Productivity methods, Saguling reservoir, water cost
BACKGROUND
Citarum River is the longest and largest river in West Java. The area of Citarum watershed is 6.614 Km 2 with a length
of 269 Km. The spring of Citarum River derived from Wayang mountain which flowing through several territorial
regions, namely Bandung regency, Cimahi city, Bandung city, Sumedang regency, Cianjur regency, Purwakarta
regency, Bogor regency and Karawang Regency then the Semenanjung Karawang is Citarum River estuary. Citarum
River provide a great benefit to the community as a source of drinking water, agriculture, fisheries, conservation, to
the most vital of electric providers. Therefore the Citarum River is referred to as one of the national strategic river
[Presidential Decree No. 12 of 2012].
Along the Citarum River there are three very important series reservoirs, namely Jatiluhur reservoir, Cirata reservoir
and Saguling reservoir (Figure 1). The three reservoirs are very important to serve as suppliers to water and power
plants, not just for the people who live in surrounding areas, but also the community of Java, Madura, and Bali. One
of three reservoirs, Saguling reservoir is the largest power plant with a generating capacity of 700 MW, which
operated with 4 turbines. This reservoir is also the first filter the river Citarum water quality, especially coming from
the drainage system of the strategic area of Bandung Basin which often referred as the Bandung Basin (Figure 1).
Therefore, the sustainability of this reservoir is very important.
The previous studies have indicated that the water resources degradation has occurred in Bandung Basin, either in
terms of quantity as well as quality aspects. Various studies have been conducted on the Upper Citarum watershed.
It has shown the hydrological extreme. The extreme occurrence is often associated with the climate change issue.
The extreme conditions threaten surely the sustainability of the water resources infrastructure, including reservoirs.
Climate change and land conversion is predicted as a trigger of the hydrological extreme [Santoso, 2005;
Wangsaatmaja, 2004; Arwin, 2009]. Therefore, the study of the climate change or land use conversion impact to
water resources on a watershed is a crucial topic in adaptation and mitigation of water disaster as well as drought

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and flooding, not only at local or national level but have become the global issues [Novotny and Stefan, 2007;
Narulita et al., 2008; Liu and Cui, 2009; Marganingrum et al., 2010].

Figure 1. Location of Study

A study on the quality aspect shown that Saguling reservoir received the very high nutrient load from Bandung basin
[Hart et al., 2002; Tjokronegoro, 2010; Marganingrum, 2013]. The organic or inorganic wastewater derived from
household activity, industry, agriculture, and fisheries. Wastewater has caused sedimentation level in reservoir
increasing and destructive the other components of power plant. Data by PT. Indonesia Power which cooperation
with PT. Maturo Nuansatama showed that Saguling reservoir has sedimentation seriously enough. The effective
Capacity of Saguling reservoir reached 611,5 million m3 previously. It reduced to 560 million m3 now with the rate
sedimentation an estimated 4.2 million m3 per year [Indonesia Power, 2004].This condition caused the reservoir
lifetime depopulate 11 years of design originally. Besides reduce reservoir lifetime, the water degradation also affect
operating performance reservoir.
Although some evidences have shown the existence of water resource degradation and threaten the sustainability of
Saguling reservoirs, but the real action from government or local authorities has not seen significant. This is related
to the number of stakeholders involved within Citarum watershed. So the problem becomes very complex. Therefore,
it required an approach that can provide the problem solution which it can be done proportionally, where each
stakeholder can take a role balance. One method that can be used for this case is economic valuation approaches.
The economic valuation assist in formulating policies related with further requirement to implement cost recovery
[Moran and Dann, 2008]. Economic valuation method is one approach that can be used to measure the environment
value by using the rupiah or money. This method is expected giving facilitation for the policy makers to make a
decision related with the strategy of a sustainable program. Measures of economic value in the form of the rupiah
also facilitate the contributing sectorial proportionally because the lost economic is a measurable indicators that
accepted easily.
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RESEARCH OBJECTIVES
This research aims to conduct a calculation of economic losses on the energy sector of Saguling reservoir. This one
is very significant research for a decision maker to take a priority program to overcome the water resources
degradation in upper Citarum watershed (Bandung Basin Area) that including the cross-territorial. The results of
valuation also can support in the budget planning management and control of the Citarum river pollution, especially
on the upper Citarum watershed.
METHODOLOGIES
Materials
Data used is taken from PT. Indonesia Power-UBP Saguling which is as the operator of Saguling reservoir. The data
also will take from Research and Developing Centre of Water Resources under Ministry of Public Work to completely
data. The data required in this research are the water quantity and quality as well as the electricity productivity that
generated by PT Indonesia Power. In addition the financial budgeting is also required, particularly related to
environmental maintenance costs.
Methods
The research will use the productivity method within the economic valuation method. This method is one of part the
market price approach. The productivity method is used to describe the net factor income. It is used to estimate the
economic value of ecosystem products or services contributing to the production of commercial goods. This method
was applied in cases where the ecosystem services used together with other inputs to produce goods that can be
sold on the market. In this study, the productivity method will be used to see how far the water quality and quantity of
the river Citarum influence the electricity production by hydropower in Saguling reservoir.
The equations of the productivity method which will be used to be constructed are following:
Productivity (P) = f (water quantity, water quality)
cost
= productivity if the water quatity and quality have changed
Then, the cost analysis will be done with following equations [Tampubolon et al., 2007] :
(1) The environmental cost of electric productivity or power generation (ECEP)
ECEP = LPC + MC
ECEP = the environmental cost of electric productivity (Rp MWh-1)
LPC = the lost production cost (Rp MWh-1)
MC = the maintenance cost (Rp MWh-1)
(2) The lost production cost (LPC)
LPC = (P t+1 P t) x HP
Pt
= productivity of electric in t-time (MWh)
P t+1 = productivity of electric in (t+1) time (MWh)
t
= year
SP
= sale price (Rp MWh-1)
(3) The maintenance cost (turbine and other equipment)
MC = NM x UCM
NM = the number times of maintenance (times per year)
UCM = unit cost of maintenance (Rp per times)
EXPECTED OUTCOMES
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Saguling reservoir is an indicator status of activity happening in the upper Citarum watershed. All forms of activity in
that area gave the impact on water resource degradation. Therefore, the economic valuation in Saguling Reservoirs
is expected to provide outcomes as following:
- To construct a proportionate cooperation in the upper Citarum watershed within the water controlling and
conservation based on the analysis of economic valuation in Saguling Reservoirs.
- To construct the priority programs that are more realistic and effective in handling water resource
degradation in the upper Citarum watershed.
REFERENCES
Arwin (2009): Climate Change, Land Use Conversion, Flooding and Drougt Treathen in Urban Area. Scientific
Speech of Professor ITB. CV Senatama Wikarya-Bandung.
Hart, B.T., Dok, W., and Djuangsih, N. (2002): Nutrient budgent for Saguling Reservoir, West Java, Indonesia. Water
Research, 36, 2152-2160.
Liu, Q., dan Cui, B. (2009): Impact of Climate Change/Vulnerability on the Stream Flow in The Yellow River Basin,
China. Ecolological Modeling xxx (2009), xxx-xxx, Elsevier Publisher-(article in press).
Marganigrum, D. 2013. Integrated Water Resources Management of Saguling Reservoir In Order To Regional Water
Supply Development of National Strategic Area in Bandung Basin
Marganingrum, D., Roosmini, D., Pradono, and Arwin (2010): Potency of Saguling Reservoir as An Alternative Future
Source of Raw Water in The Bandung Metropolitan Area in Terms of Quantity Aspects. Proceeding of
International Symposium on Southeast Asian water Environment, Vol. 8, 209-216.
Moran, Dominic and Dann, Sabrina, The economic value of water use: Implications for implementing the water
framework Directive in Scotland. Journal of Environmental Management 87 (2008) 484496
Narulita, I., Rahmat, A., and Maria, R. (2008): Appication of Geographic Informaton System to Determine The Priority
Conservation Area in Bandung Basin. Journal og Geology and Minning Research, Vol.18 (1), 23-35.
Novotny, E.V., dan Stefan, H.G. (2007): Stream Flow in Minnesota: Indicator of Climate Change. Journal of
Hydrology, 334, 319-333, Elsevier Publisher.
Presidential Decree No. 12 of 2012 about River Zoning.
Santoso, H., Marganingrum, D., Lestiana, H., Yunarto, and Rachmat, A. (2005): IMBaS (Integrated Modeling Based
on Scenarios): Integrated Model Based on Multy Scenarios Which Oriented Policy as well as a Tool within
Citarum Watershed Management. The Cummulative Report of Program Competitive-LIPI.
Tampubolon, R, Sanim, B, Saeni M. Sri, Boer R. 2007. Analysis of Environmetal quality change on Citarum
Watershed in West Java and Its Impact to Productivity cost of Hydropower and Water Supply (Case Study
Saguling Hydropower, Cirata Hydropower, Jatiluhur Hydropower, Purwakarta Water Supply, and DKI Jakarta
Watersupply). Soil and Climate Jurnal No 26, December 2007 ISSN 1410-7244
Tjokronegoro, M.H. (2010): Kontribusi Aktivitas Pemanfaatan Lahan di Kawasan DAS Citarum Hulu Terhadap
Pencemaran Air. Tesis-Program Studi Teknik Lingkungan ITB.
Wangsaatmaja, S. (2004): Land Use Conversion Impact on Surface Water and Environmental Health (Case Study in
Upper Citarum Watershed). The Dissertation is at Environmental Engineering Department, ITB.

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BUDGET ESTIMATION
No.

Expenses

1
2
3
4
5

Travel to collect data and honoraria to data entry

Working group discussion with some stakeholders (2 times)
Publication
Expenses office to reporting
Personnel in the area: water management, economic, and environment
during 10 months
Total

5.000.000
60.000.000
5.000.000
3.000.000
45.000.000

Budget
(USD)
500
6.000
500
300
4.500

118.000.000

11.800

Budget (IDR)

TIMEPLAN
No.
1
2
3
4
5

Description
Collecting data and data entry
Calculation and analysis
Working group discussion
Preparing publication
Final Reporting

Month
1

X X X X
X X X X X X X X
X
X
X X X

10

11

X
X

12

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CV OF APPLICANTS

DYAH MARGANINGRUM
Education
1991-1996

1987-2000

2008-2013

SarjanaTeknik/Bacelor Engineering (ST), Environmental Engineering

Department, Bandung Institute of Technology (ITB)
Master of Technology (MT), Industrial and Management Engineering
Department, Bandung Institute of Technology (ITB)
Doctor of Engineering in Water Resources Management,
Environmental Engineering Department, Bandung Institute of
Technology (ITB)

Positions held
1999 to date Researcher on Research Centre for Geotechnology, Indonesian Institute of Sciences (LIPI)
Research focus
Water Resources Management
Professional activities
1999 2013 Leader and member in the research team on Research Centre for Geotechnology, LIPI
2008 2012 Worked as an internship in many private companies in developing my expertise
Selected recent publications
Dyah Marganingrum. 2007. Supporting the application of technology in environmental management.
TECHNOLOGY INDONESIA Journals, Indonesian Institute of Sciences. Vol. 30, 2, pp: 105-112 ISSN 01261533 Publisher LIPI Press, Jakarta
Dyah Marganingrum, Ida Narulita, S.Yuda Cahyarini, Rizka Maria. 2009.Correlation study between rainfall
distribution and ENSO index in Bandung Basin. Proceedings: Exposure Research Center for Geotechnology
Research - LIPI, Bandung, 3 December 2009 pp: 293-302 ISBN : 978-979-8636-16-5
Dyah Marganingrum, Dwina Roosmini, Pradono, Arwin. 2010. Potency of Saguling reservoir as an alternative future
source of raw water in the Bandung Metropolitan Area in terms of quantity aspects. Proceeding 2010. The 8th
International Symposium on Southeast Asian Water Environment, Volume 8-2010. Asian Water : Department of
Civil Engineering-Prince of Songkla University (PSU), Research Center for Water Environment Technology-The
University of Tokyo (UT), and Southeast Asian Center for Water Environment Technology, Asian Institute of
Technology (AIT) & UT. Phuket Graceland Resort and SPA, Thailand- 24-26 October, 2010.
Dyah Marganingrum, Dwina Roosmini, Pradono, Arwin. 2013. Rainfall variabilities and land convertion impacts to
sensitifity of Citarum river flow. Geography Journal. 2013. Vol. 27, 1.
Dyah Marganingrum, Dwina Roosmini, Pradono, Arwin. 2013. Diferentiation of River Pollutant Source with Pollution
Index Method (Case Study: Upper Citarum Watershed). Geological and Mining Research Journal,. Vol.13, 1, p
39-50

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PRADONO
Education
1982-1987

1992-1994

1997-2004

Bachelor on Economic and Developing, Gadjah Mada UniversityYogyakarta Indonesia (UGM)

Master on Economics of Development, The Australian National
University
Doctor on Urban Engineering, Tokyo University

Positions held
1989 to date Senior Lecture at Program Study of Regional and City Planning-ITB
Research focus
Economic System and Modelling
Professional activities
2013 Preparation of Economics Master Plan for Bandung City 2015-2025
2012 Social and Economic Impact Study of Oil and Gas Development in Kenali Asam, Jambi
2011 Infrastructure Development Specialist, Input-Output Table for Iskandar Malaysia Industrial Region
2010 Transport Economic for National Road Master Plan Project, Indonesian Infrastructure Initiative Project.
Selected recent publications
Prodono. 2009. The Implementation of TDM in Indoensian Cities. Journal of East Asian Society of Transportation
Studies. Vol.8, 2009.
Dyah Marganingrum, Dwina Roosmini, Pradono, Arwin. 2010. Potency of Saguling reservoir as an alternative future
source of raw water in the Bandung Metropolitan Area in terms of quantity aspects. Proceeding 2010. The 8th
International Symposium on Southeast Asian Water Environment, Volume 8-2010. Asian Water : Department of
Civil Engineering-Prince of Songkla University (PSU), Research Center for Water Environment Technology-The
University of Tokyo (UT), and Southeast Asian Center for Water Environment Technology, Asian Institute of
Technology (AIT) & UT. Phuket Graceland Resort and SPA, Thailand- 24-26 October, 2010.
Pradono. 2012. Collaborative Negotiation for Public Provate Partnership In Indonesia. Asian Transaction Science
and Technology Journal. Vol.1, No. 3, 2012
Dyah Marganingrum. Dwina Roosmini, Pradono, Arwin. 2013. Rainfall variabilities and land convertion impacts to
sensitifity of Citarum river flow. Geography Journal. 2013. Vol. 27, 1.
Dyah Marganingrum, Dwina Roosmini, Pradono, Arwin. 2013. Diferentiation of River Pollutant Source with Pollution
Index Method (Case Study: Upper Citarum Watershed). Geological and Mining Research Journal,. Vol.13, 1, p
39-50.

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EKO WINAR IRIANTO

Education
1985-1990

1987-2000

2010-2014

SarjanaTeknik/Bachelor of Engineering (ST), Environmental

Engineering Department, Bandung Institute of Technology (ITB)
Master of Technology (MT), Environmental Engineering Department,
Bandung Institute of Technology (ITB)
Doctor Candidate of Civil Engineering in Water Resources
Engineering, Post Graduate Department, Parahyangan Catolic
University

Positions held
1994 to date Researcher on Water Quality Research Center for Water Resources-Ministry of Public Work
Research focus
Water Environment System and Modelling
Professional activities
1989 now Active in the research team on Water Quality Research Center for Water Resources-Ministry of
Public Work
2010 now Head of Water Environmental Division
Selected recent publications
Irianto, E.W., Yuasa, A., Sudjono, P., dan Machbub, B., 2003. Corellation between water quality multiparameter and
the indicator parameters of dissolved and electric conductivity in upper part of Citarum River. Poster
Proceeding The first International Symposium on South East Asian Water Forum, AIT-Bangkok.
Irianto,E.W., Sudjono, P., Yuasa, A., dan Machbub, B., 2003. The affect of three cascade reservoirs in Citarum river
basin to the water quality of Citarum river. Prosiding Seminar Nasional Sistem Monitoring Pencemaran
Lingkungan Sungai & Teknologi Pengolahannya, Puslit Elektronika & Komunikasi LIPI, ISBN:979-9477-73-5.
Irianto, E.W., Yuasa, A., Sudjono, P., dan Machbub, B., 2004. Seasonal relationship between flow and pollutant
concentration in upper part of Citarum river. Proceeding The First International Symposium on South East
Asian Water Forum, AIT-Bangkok.
Irianto, E.W., Yuasa, A., Sudjono, P., dan Machbub, B., 2005. The influence of dam construction for water quality
improvements of polluted streams in Java-Bali islands. Proceeding: The Third International Symposium on
South East Asian Water Forum, AIT-Bangkok.
Irianto, E.W., Yuasa, A., Sudjono, P., dan Heriansyah, A., 2005. Application of AHP-GIS method to identify potential
polluting areas in the upper Citarum river basin. Prosiding International Symposium on Hydrology. UNESCOLIPI, ISBN:979-3673-70-2.

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ASSOCIATED PARTNERS
The partners listed approve of the submitted research document and declare their support to collaborative research:
ECONOMIC VALUATION OF WATER RESOURCES DEGRADATION
IN UPPER CITARUM WATERSHED-SAGULING RESERVOIR, INDONESIA
Cooperating Indonesian Institutions:
Research Centre for Geotechnology, Indonesian Institute of Sciences (LIPI)

____________________________
Dr. Dyah Marganingrum, ST., MT
Coordinator Research
Bandung Institute of Technology (ITB)

____________________________
Dr.Eng. Pradono, SE.,M.Ec.Dev.
Centre of Water Research and Development, Ministry of Public Works

____________________________
Dr. Ir. Eko Winar Irianto, MT.

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