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Dissertation by Made Ika from FEB UNDIP: The Needs of Internalization of Externality in Maintaining Subak Existence

SEMARANG – Made Ika Prastyadewi, Doctoral Program of Economics Studies student of Faculty of Economics and Business Diponegoro University (UNDIP), who works as a lecturer at Mahasaraswati University Denpasar, Bali successfully defended her dissertation in front of internal, external, promoter and co-promoter examiners. The title of her dissertation is “Internalization of Externality to Maintain Subak Landscape Existence in Bali (Studies on the Landscape of Subak Jatiluwih in Tabanan Regency). The Board of Examiners chaired by Prof. Dr. Suharnomo, S.E., M.Si with members of Dr. Tjokorda Gde Raka Sukawati, S.E., MM (External Examiner), Prof. Drs. Waridin MS and Dr. Nugroho SBM, M.Si (examiners), Prof. Dra. Indah Susilowati, M.Sc, Ph.D (Promoter), and Dr. Agr. Deden Dinar Iskandar, S.E., MA (Co-Promoter), decided that Made Ika passed and was entitled to hold a doctorate.

The dissertation using mix method which specifically examines the use of Subak landscape as a tourist attraction and Subak landscape as common pool resource based on its collective nature and management. Subak is a community organization that specifically regulates the irrigation system for rice fields used in rice cultivation in Bali.

Suharnomo as the Head of Examination Team, praised the dissertation made by Made Ika. “It is very good. The theme raised community problems and provided strategic solutions in the midst of industrialization that continues to displace agricultural land and the continuity of local culture,” he said, after the trial which took place on Thursday (8/4/2021) from 1:00 – 3:00 PM.

The examiner also decided her as PhD candidate to be graduated cum laude with a final Grade Point Average of 3.92, with the length of study of 3 years 7 months 7 days. As for the theoretical basis used, according to (Ostrom, 2006), there are two characteristics that make Subak landscape as common pool resource. First, everyone can use it so it becomes difficult to prohibit other parties from using it. The second reason is the difficulty in sharing resources or profits in the average use of goods.

This condition is later stated in theory of what is known as a stowaway (free rider). Subak landscape that lies within the agricultural area of Bali can be enjoyed freely by anyone. Even hotels and restaurants around the area make it as an attraction to increase the number of tourist visits. However, neither the hotel nor the restaurant have so far made any contributions to the land owners or Subak organizations. There are no clear rules regarding the obligation to pay levy or rent to farmers whose rice fields are used as a tourist attraction. This condition makes hotel and restaurant managers as free riders in utilizing Subak landscape in Bali.

Subak which has been designated as a World Cultural Heritage by UNESCO is a group of indigenous peoples with socio-religious characteristics, where the group is an association of farmers who manage irrigation water in paddy fields. Subak is one of Bali’s cultural heritages in the form of an irrigation system with the authority to regulate the distribution of water management based on a mindset of harmony and togetherness according to formal rules and Hindu religious values.

The growth of development of tourism sector has led to an increase in and conversion. It has resulted shrinkage of productive agricultural land and caused threat of Subak as an agricultural institution based on local wisdom in it.

Made Ika said, in the context of Subak, there is a positive externality, namely the actions of a person that provided benefits to others, but these benefits are not allocated in the market. If the activities of some people bring benefits for others and the person receiving these benefits does not pay or give a price for these benefits, the true value of those activities is not reflected in market activities.

One of the solutions to solve the problem of externality is internalization. Internalization of externality is to include incentives for change by involving people in the production process. The model for sustainability of Subak landscape offered is internalization of externality through determining the value of protection Subak landscap. The determination is done by looking at conditions of landscape availability (supply side) and the number of tourist visits (demand side) as well as involving stakeholders in their respective roles.

The internalization value that is available to tourists is Rp. 20,000 which will be added to the Entrance Ticket Price for tourism objects. This conception is considered to be able to provide justice that can contribute to the preservation of Subak landscape.

Of the several recommended action recommendations, the following two things are important to be followed up, they are preparation of awig-awig (rules made by Pakraman village court) and government regulations regarding the prohibition of land conversion and sanctions. That way the existence of Subak landscape can be protected. By providing incentives for farmers, it is hoped that farmers will gain interest in maintaining and preserving their agricultural land. (PR team)

Translated by: Titis (Public Relations)

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