Making Water Infrastructure Investable: The Financialisation of Water Infrastructure in Jakarta Indonesia

Abstract

This thesis explores the financialisation of water infrastructure, or the process through which increasing debt relations determine the governance and operation of water supply infrastructures, in Jakarta. Jakarta faces chronic water supply shortages and unreliable service, forcing households and industries to extract groundwater excessively, leading to severe land subsidence over the decades. This crisis becomes the rationale for the state to roll out massive water supply projects for Jakarta under Public-Private Partnership (PPP) arrangements. This research draws on grounded fieldwork, event observations, and more than 80 interviews with elite and community groups to understand the processes, frictions, and contradictions embedded in the financialisation of water infrastructure.

First, this thesis shows the extensive role of the state in de-risking private-sector investment and luring private actors to develop and operate water infrastructure, while reorganising water infrastructures: unbundling and rebundling the different parts of the infrastructure chain, to make water infrastructure an investable proposition. Second, as the state backstops private returns, it transfers the risks to the public, leading to the displacement of urban-rural communities, persistent disconnection from water access for the urban poor, and higher water tariffs for water users. Third, I demonstrate how financialisation is undermined by the ‘spillovers’ or uncontrolled water flows – groundwater, bottled water, tanker water – sustained by different state agencies, which challenge the financial viability of PPP projects. This thesis’s findings therefore suggest that financialisation is inherently unstable and uneven, imposing fiscal burdens on the state and socio-ecological risks for the public, while investors privatise the profits.