From Risk to Revenue: Using Land Value Capture to Finance Flood Infrastructure in the Ciliwung Basin, Indonesia
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2025-07-21
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en
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Indonesia faces growing challenges in financing critical climate adaptation infrastructure, such as flood protection, due to limited public budgets. Large projects span multiple jurisdictions, raising questions about funding responsibilities. Land Value Capture (LVC) offers a potential solution by enabling governments to recover part of the land value increase. Presidential Regulation 79/2024 has introduced a national legal framework for LVC, but its practical implementation remains uncertain.
This thesis asks: How have past practices and institutional conditions shaped the prospects for implementing LVC as a legitimate financing mechanism for flood protection infrastructure in Indonesia? Focusing on the Ciliwung Basin, it examines how past financing practices influence current expectations, how the new regulation is perceived by local actors, and which rationales for LVC are considered fair. The study applies a qualitative design, combining document analysis and expert interviews.
Findings show that earlier negotiated practices fostered incentive-based thinking that continues to shape notions of fairness and feasibility. While development gain skimming is broadly supported when contributions are transparent and linked to public benefits, cost equivalency models rely heavily on institutional trust. Despite the new regulation, weak capacity and low public trust persist. A hybrid approach, combining tax-based and cost-recovering strategies, appears most promising.
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Faculteit der Managementwetenschappen