In Chile, the excesses of the "water markets"
As in many other countries, water in Chile is a public good. But, as in Australia and certain US states, its management is entrusted to the owners of "water rights," and public authorities limit their interference to the bare minimum.
Elisabeth Lictevout, University of Concepción; Hervé Jourde, University of Montpellier and Véronique Leonardi, University of Montpellier
The legal and institutional framework remains regulated by the 1981 Water Code, one of the neoliberal reforms implemented by General Pinochet's military regime, which was in power between 1973 and 1990. This legislation is based on free market principles, where the role of the state is reduced to a minimum. The action of the public authorities – through the General Water Directorate (DGA) – is thus limited to granting "water rights": these are always associated with a maximum volume of water pumped per year (m3/year) and a maximum instantaneous flow rate (l/s orm3/s). Once acquired, they can be sold or transferred without informing the DGA. The DGA also assesses the level of resources and may decide to close, temporarily or permanently, overexploited watersheds and aquifers.
"Water rights" are managed like real estate and protected by the Constitution: acquired in perpetuity by buyers, they are transferable and free to use. This is because the Water Code does not define any priority uses in terms of allocation: drinking or washing does not take precedence over income-generating economic activities, as it is the market, not the state, that is supposed to regulate the efficient—in economic terms—allocation of water.
Some authors praise the economic success of this approach: water rights provide legal certainty, which has encouraged private investment. From a social and environmental perspective, however, it appears unfair.
An unfair and inefficient system
Water rights are granted to anyone who applies for them, whether they are individuals or legal entities. It is first come, first served, which favors large companies that have the resources to put together the application.
Conversely, small users are often excluded from this access. Sometimes, it is simply because they have not applied for it: this is the case for indigenous populations. For them, this resource is ancestrally associated with the land, whereas Chilean legislation separates its ownership from that of water. The administrative process is also complicated and costly. It is also common for small users to sell their water rights to large companies, particularly in watersheds and aquifers that are closed to new water rights—under restriction declarations.
When an aquifer is subject to restrictions, users are theoretically required to form an aquifer management committee. However, as the committee's board of directors is formed on a pro rata basis according to water rights, those who own the most water rights have more votes. In the case of Pampa del Tamarugal, in the north of the country, farmers were thus excluded from the board of directors, which was dominated by the large mining company and the drinking water company.
Poorly assessed water resources
The system therefore appears to be particularly harmful to the population, especially in the arid areas of northern Chile, where mining consumes a significant amount of water in certain basins.
Its operation is based on knowledge and assessment of the variability of water resources, which are estimated by the DGA via a hydrometric and piezometric network—a set of stations that continuously measure various variables such as precipitation, river flow, and groundwater levels. However, this network has major shortcomings, both in terms of geographical coverage—it does not take into account all water reserves—and in terms of the representativeness and quality of the data.
However, studies funded by the DGA to estimate the availability of the resource are all based on this data and sometimes draw contradictory conclusions. When this is the case, stakeholders use the study that suits them best. This includes the government, which does not hesitate to support large-scale mining projects... under the guise of stimulating economic growth.
Furthermore, the allocation of water rights in flow units (volume per unit of time), a lack of knowledge about transactions between water rights owners, and the limited capacity to monitor extraction mean that it is impossible to determine the true demand for water or how it is actually used.
The case of Pampa del Tamarugal
The Water Code provides the DGA with a number of crisis "management" tools, in particular the declaration of scarcity (for surface water) or restriction/prohibition (in the case of groundwater), which correspond to a definitive or temporary halt to the granting of new water rights. However, as the assessments are open to criticism, these decisions are often based on inaccurate information.
In the far north of Chile, a study of the Pampa del Tamarugal case showed that the aquifer restriction declared in 2009 was unjustified. Recent work has revealed a decline in groundwater levels that is not widespread and is very moderate in relation to the thickness of the aquifer.
The calculations presented by the DGA to justify the restriction declaration also contain numerous biases: among other things, the failure to take recharge into account in the availability estimate, errors and uncertainties in the groundwater balance terms, particularly extractions. The decision was therefore made on the basis of highly uncertain data.
Conflicts and the water rights market
As a result, the number of water conflicts has continued to rise in recent years. Granting rights to those who request them without accurate knowledge of water resources has led to the overexploitation of certain aquifers, as well as the declaration of restrictions on more than a hundred of them.
These are concentrated in the arid and semi-arid north of Chile. Mining activity (copper in the Andes, nitrate and lithium in the Atacama Desert), which requires large amounts of water to process the ore, puts constant pressure on rights holders, particularly farmers.
A market has sprung up around these titles, which are sold at exorbitant prices—one liter per second costs between US$80,000 and US$100,000. In the case of the La Ligua Valley, Copiapo, and Pampa del Tamarugal, highly questionable calculations were used to justify declaring the aquifer restricted for the benefit of large economic players, who use it to eliminate their competitors.
Although official estimates of available flow showed that no new additional rights could be issued, they did not call into question existing rights and allowed new applications to be validated.
The need for a participatory process
Analysis of the actions implemented by the various stakeholders (mines, drinking water supply companies, farmers, indigenous peoples) revealed that each pursued its own strategy, notably by using the issue of water management and the information available (or unavailable) for its own purposes.
However, the generation of scientific information after the fact has not been able to break this status quo. As a result, many small users remain excluded from access to water and its management.
The establishment of a participatory aquifer management process—now demanded by farmers and indigenous peoples—based on validated scientific information would make it possible to address the issue of how much water to extract from the aquifer.
In this way, it would be possible to define a "desirable" extraction volume, based on different development scenarios. To achieve this goal, it will be necessary to restore trust between the state and large companies on the one hand, and between the state and indigenous peoples on the other, but also to change Chilean legislation.
Elisabeth Lictevout, Researcher, University of Concepción; Hervé Jourde, Researcher, University of Montpellier and Véronique Leonardi, Researcher, University of Montpellier
This article is republished from The Conversation under a Creative Commons license. Readthe original article.