Social contracts: Improving water utility performance in Eastern Indonesia

Social contracts: Improving water utility performance in Eastern Indonesia

In 2013 IWC, with the University of Queensland and in partnership with Indonesia’s BAPPENAS and PERPAMSI, received a grant under the Australia Indonesia Infrastructure Research Award (AIIRA) to review the potential of piloted social contracts to stimulate trust for improved water governance and service delivery in Indonesia.
Social contracts: Improving water utility performance in Eastern Indonesia

Social contract theory sets out “how governments and responsibility evolve over time as emerging risks pose challenges to the established consensus concerning the role of the state”. In the current decentralised water governance context in Indonesia, improvements to the relationships between the local water utilities, local government and customers are considered critical for sustainable water service delivery, and for reversing the previous trend of underinvestment and decreasing coverage levels.

Anecdotal evidence suggested that social contracts can provide framework to re-create favourable external conditions that enable the building of trust among these key actors, while addressing performance-related concerns of water utilities. This research aimed to answer two core research questions:

  • Can social contracts contribute to improved water governance? and
  • What evidence is available to support the value of this contribution?

To answer these questions, IWC undertook three in-depth comparative case studies – two water utilities that implemented pilot social contracts under the 2010 Indonesian Infrastructure Initiative (IndII) water governance program, and one high performing water utility without a formal social contract.

Research activities included a range of participatory qualitative research activities. Based on a review of existing literature, a conceptual model was developed and set out expected governance and norms that could be associated with different levels of utility performance. This model evolved to take account of findings about the complexity of governance, trust and associated water service delivery levels.

The ability of social contracts to stimulate trust and improve the external environment of water utilities was considered through the following sequential steps;

  1.  the levels of participation and engagement,
  2.  types of Social Capital between water supply actors, and
  3.  subsequent changes in governance that enable cost recovery.

Indonesia - social contractsKey findings

While it is important to acknowledge the limited scope of the study, the findings from the IWC review did reveal some evidence that social contracts do contribute to improvements in governance and performance in urban water supply services. While these findings indicate a strong logic and motivation for the Indonesian Government to support scaling-up social contracts, there is room for improvement and evolution of the social contract concept and associated implementation process.

The way forward

There are high expectations that water unities can greatly improve service delivery in the coming years, but this will not happen unless trust and reciprocity amongst external stakeholders can be created. Understanding of roles and responsibilities and structure connections are also important in supporting water utilities, local governments and customers to work productively together. Evidence from the pilot sites suggests that social contracts can contribute to this process, and with refinements can help further break down misconceptions and allow greater understanding of the range of challenges faced by different stakeholders.

Photos courtesy Declan Hearne

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