Neoliberal Transition
Chilean river management has been fundamentally shaped by the country’s political history. Neoliberal ideology was solidified within the Chilean economy during General Augusto Pinochet’s military regime from 1973-1990. The application of these concepts, largely influenced by the U.S. Chicago Boys’ free-market strategies,[1] is displayed by the 1980 Constitution (Tecklin 2011). The subsequent policies and “main political argument[s] for private property…guarantees a zone of freedom from state interference,” while promoting a focus on the commodification of natural resources (Bauer 2012, 2). While the transition from military dictatorship to civilian rule was negotiated in 1990, the inherited economic strength and imbedded “environmental politics reveals a disturbing underside to the Chilean miracle,” otherwise known as the Chilean Model (Carruthers 2001, 1). While both the Chilean economic transformation and resulting policies have been analyzed in great detail in relation to hydropower,[2] a basic understanding of relevant legislation is necessary not only to depict their current implications upon river development, but also to analyze the logic behind social resistance strategies.
Water Code
The Water Code, passed in 1981, is one of the most impactful pieces of legislation that carried over from Pinochet regime. The Code allowed for water rights privatization, virtually selling the majority of Chile’s rivers, while simultaneously separating these rights from connecting land ownership (Carruthers 2008). Water rights are still granted by the national government upon request, at which time the specified water leaves national authority (OECD 2014). While there are technically six different types of water rights that can be permitted, non-consumptive and consumptive are the most prevalent to hydropower dilemmas. While major social issues are generated by the availability and use of consumptive water rights, engaging with potable water needs and perhaps a wider Chilean audience, I will focus on non-consumptive. A non-consumptive right determines that water must eventually reenter a river after use, although no holding time is specified, while consumptive determines that the water will not be returned (Prieto 2012). Non-consumptive rights are permitted as long as the water is physically available. If a specific non-consumptive right becomes competitive, meaning that it is desired by more than one stakeholder, the right is allocated to the highest bidder. Beyond original acquisition, there is no additional or systematic payment required for a non-consumptive right. Once a permit is acquired, it is freely tradable regardless of what the additional uses are, ultimately making rivers a cost-free and thus profitable resource (Preito 2012).
Holders of non-consumptive water rights and the often large network of national and multinational actors they are attached to, are central in understanding Chile’s relationship with hydropower and the five case studies below. Chile’s non-consumptive water rights are almost all held or currently being used by three companies: Endesa, American AES Gener, and Colbún (Matte Group) (Belmar, et al. 2010). The most notable entity is Empresa Nacional de Electricidad S.A., or Endesa, which was privatized during the Pinochet regime, and is currently owned by Endesa España, which operates in twelve different countries (Carruthers 2008). Endesa España is in turn owned by the private Italian conglomerate ENEL (ENEL 2014). The Water Code allowed Endesa to obtain eighty percent of Chile’s non-consumptive water rights through the year 2020 (Carruthers 2008). Therefore, a private Italian company technically owns most of Chilean non-consumptive water rights.
There have been several amendments to the Water Code since its creation. In 2005, the Code was slightly altered to allow for state rejection of water rights requests if they jeopardize the preservation of minimal ecological flows, although this only created an optional veto rather than a regulation, and no mechanisms for monitoring flows were defined (Belmar, et al. 2010). A tax was also added which penalizes water rights that are not being utilized. If the tax is not paid, the rights are reclaimed and resold by the General Directorate of Water Authority (Prieto 2011). This decision has been questioned as it appears to either incentivize further development, or merely generate more revenue for the government. While in 2013 an additional amendment established a transition towards “non-conventional renewable” energies, not including large hydropower, this transition has not been realistically implemented (OECD 2014). The stagnancy is notable in Chile’s submission to the 2015 Paris Climate Conference, which relies upon hydropower production for the renewable energy portion of their portfolio (Chilean Government 2015). Rocio Gonzalez, Executive Director of the Futaleufú Riverkeeper,[3] explains that through the proposal’s vague wording, “if you read carefully…they said 70% of the energy Chile will produce from now until 2030 or 2050 will be renewables, but they are considering hydropower as renewable.” Despite the various environmentally focused amendments, the Code’s original model has not been altered (OCED 2014).
This model is the platform upon which a select group of actors and multinational corporations continue to trade and utilize Chilean rivers with little room for governmental regulation. “This hypothesis is strengthened by the way that other possible uses for non-consumptive water rights that correspond to in-stream uses (e.g. conservation, navigation, recreation, cultural uses) are discriminated against by explicit legal recognition, as objects of property rights” (Prieto 2012, 135). As such uses are legally estranged from the water resource on which they depend, the institutionalized preference for hydropower over civilian priority is evident. While the Water Code has far more intricacies than these basic concepts, it ultimately instilled a preference for hydropower development through the commodification of Chilean rivers, turning them into virtually cost free resource, and promoting a political misevaluation of social connection to river management.
Environmental Law and Hydrological Analysis
In addition to the Water Code, environmental legislation also influences hydropower development dynamics. The legitimacy of Chilean environmental law has been questioned regarding the strength of ecological impact regulations and their underlying motivations. The National Commission of the Environment (CONAMA) was created based on the 1994 Environment Law (Johnston 2004). This commission, consisting of the General Secretary of the Presidency and ten other ministries, establishes regulations as the general governing body of environmental policy (Tecklin 2011). Environmental impact assessments (EIA), determined by the System of Environmental Impact Assessment (SEIA), requires only that projects meet existing environmental laws, and does not ask that alternative options are presented within proposals (Tecklin 2011). Assessment approvals, which have a success rate of 90%, are largely discretionary based on the sitting administration due to the prioritized opinion of the presidential ministry within the commission. Responsibilities of overseeing ministries, such as continued monitoring and enforcement of approved plans, are often left with little coordination.
A crucial step in constructing a hydropower project for example, and gaining EIA approval, is obtaining hydrological data to predict not only MW production, but also potential impacts. While hydrological basin analysis requires a plethora of information and subsequent calculations, accuracy of results is left vulnerable not only to technical limitations and climate variations, but also data manifested through biases. For example, MW predictions internally generated by hydro developers. While the legitimacy of such predictions and impact analyses is often contested by groups in opposition of development, it is fare to argue that studies conducted in response conversly motivated by conservation platforms. Thus, “[r]ecognizing the social influences on scientific findings is clearly important since research agendas are often determined by those with the resources to fund research,” and “what data are collected and how they are collected, analyzed, and interpreted are not independent of the social context of research” (Campbell 2009, 91). Motivations directing environmental assessment outcomes are notably complicated by research financing. Rocio Gonzalez emphasizes this dynamic through her view of an ongoing University of Chile study that is funded by the Ministry of Energy. She explains that the study is supposedly being produced to more fully understand Chilean river basins beyond their MW potential. However, “we don’t believe in this study…we just feel like they are testing…which territories are more or less prepared for certain projects.” Gonzalez goes on to provide examples emphasizing that when areas are asked if organized Mapuche communities are present, this is a tactic gaging how powerful social and legal opposition to a project could become. She justifies this opinion stating that “from our perspective that’s what we see…it’s clear who is paying…they are expecting certain results from [the university’s] study, and obviously there is a tendency of giving them the results that they want to hear.” Gonzalez concludes that this type of highly financed study further disadvantages communities attempting to resist hydro projects, as local organizations often do not have the funds to commission or personally conduct research from their perspective.
Despite contention of hydrological data and impact analyses, EIA approval of hydropower projects is rarely an issue for developers. While river fragmentation induces various ecological implications, both potential and unavoidable impacts are often underwhelming represented. Through multiple legal challenges of EIAs, “the erosion of the CONAMA’s credibility has been notable…thereby fuelling a public perception that regulatory deliberation will not be allowed when it conflicts with projects enjoying high-level political support (Tecklin 2011, 890). Often, projects most blatantly obtaining this political support despite EIA contention, are hydro developments. Gonzalez explains how “ridiculous the laws are [in Chile], and that’s the problem, whatever [hydropower developers] do they are not going against a law, they are not doing anything illegal…so we the community and everywhere else we are vulnerable.” Gonzalez’s opinion is echoed by many Chilean citizens.
Energy Hierarchy and Industry Demand
In addition to political and legal factors, the way energy is mobilized and the sources demanding it help clarify private preference for hydropower. Need for more energy in Chile is a highly promoted concept emanating from its capital, Santiago. While there are accessibility gaps within the country, this promotion connects the dynamics motivating a virtually stagnant Water Code, weak environmental legislation, and motivations guiding hydropower development. While the Water Code turned rivers into commodities, Chile’s electric law and largely privatized energy sector further defined their purpose as power generators, solidifying market value and development prioritization (Prieto 2012).
The hierarchy controlling energy entry into Chile’s grid system illuminates hydropower’s preferential position. Energy produced is connected to one of four grids, Sistema Interconectado Central (SIC) being the predominant line. SIC, depicted in figure 3, supplies approximately 93% of Chilean energy demand from the Los Lagos Region in the south to the Atogagasta Region in the north (Belmar, et al. 2010). The Endesa Interconnected System (SIE) is the majority supplier of SIC. As Mauricio Fierro[4] explains, energy flowing into and through SIC is controlled by the Economic Load Dispatch Center (CDEC), and is first drawn from large hydro generation. If demanded, the following sectors accessed are small hydro, coal and gas, and then alternatives respectively. Importantly, once constructed, hydro production has virtually no operating costs, unlike coal and gas (Prieto 2012). As all energy producers receive the same payment per megawatt hour, keeping the fossil fuel industry in the market allows hydro companies to generate a larger profit margin as they are equally compensated for operating costs. This dynamic has created a political and economic hurdle for non-conventional energy infrastructure in Chile.
Figure 3. These maps display the SIC system in addition to hydropower plant locations, the light grey squares (GENI 2014).
As energy must flow through a main grid before distribution, locally sustained systems are difficult to establish. Many communities in central and southern Patagonia, Futaleufú for example, occasionally lack sufficient energy in the winter months. Fernando Coronado Pinilla[5] emphasizes his perspective that Chilean citizens are often in need of more energy. However, he furthers this idea explaining that there is diversity in energy depending on the region and its resources, emphasizing the illogical nature of drawing all energy to the center, rather than more local distribution. Gonzalez explains that Futaleufú could produce all of its required energy through low-impact systems such as micro hydro, solar, and wind. Communities such as Futaleufú are restrained from this ideal however, largely due to the Chilean physical and political energy infrastructure. There is therefore a monopoly not only over the creation of, but also the transportation of energy in Chile, emphasized by Endesas’ majority contribution to the SIC line.
While energy demand has indeed grown, the mining sector, which already draws more than 30% of Chilean energy, represents the most notable predicted increase of 45% by 2020 (OECD 2014). Fierro explains that the need for more energy is “like a big mythology…created for mining companies.” In 2015, the Chilean government decided to not incorporate a daylight savings time change. This maneuver is claimed by many citizens to be a political ploy corroborating an overall need for more energy. When asked if he believes Chile needs more energy, Cristobal De Bittencourt[6] responds almost identically to most other interviewees: “[T]hat’s what the government is trying to show us, that we are lacking energy, but most of this energy is going to the north to the miners and…to Santiago, and none of the energy stays here, it’s being generated here in all of these beautiful rivers and it’s all going to miners and major companies, they need energy.”
Despite the abundance of solar, wind, and tidal potential in Chile, some of which is being developed upon, the political relationship with the largely conjoined mining and hydropower industry motivations, creates obstacles for harnessing these energies. The Blue Energy example, a Canadian company focused on tidal power generation, displays the power of these private industry motivations. Pinilla explains that Blue Energy proposed a marine turbine project that would have provided 40% of Chile’s total energy needs. However, the project was never nationally publicized and quickly disbanded. From this scenario, it seems fare to infer that by securing fossil fuel production in the market, the previously discussed larger profit margin for hydropower is also fortified. Fierro describes the Chilean government as a puppet of more powerful entities, its decisions representing the interests of the mining sector, private hydropower interests, and influential Chilean elites.
Perceptions of Political Power and Trans-Regional Relations
Many Chilean citizens resonate with the perception that their government is an instrument of the private sector. Proposed corruption in the country is more an accepted reality than a passionate debate, although the level and expanse to which it exists is indeed contested. Beyond this, the centralization of power in Santiago seems to exacerbate lack of citizen political involvement as well as trans-regional tensions, both of which are central to hydropower development, or lack there of. Chile’s basic political structure is defined by the sitting president, their cabinet, and a governor for each of the fifteen regions, which in turn has a council. Some Chileans feel that governors and more local municipalities are also nominated and ultimately implanted by Santiago. Although the degree to which this occurs is not completely transparent, local systems’ lack of deviation from national policy is obvious. While Pinilla corroborates that regions’ governors are selected by Santiago, he emphasizes that although people in small towns reject politics, local governments are indeed chosen by the community. Gonzalez presents an overarching idea that “we have different types of ignorance, but there is a lack of education in Chile in general…you ask anyone and they don’t understand how the country is administered, or organized in a political way.”
Beyond the official system, there are five families in Chile widely regarded as the most powerful. These families have different levels of involvement in industry, particularly mining, the media and legislation. Gonzalez explains that “Chile is governed and controlled by…these big families…you know they have the political power, and also they have big investments in all…of the mining and the power and the electricity companies…obviously they will approve laws that increase their incomes you know, so that is like the corruption we are living here.” For example, Colbún, one of the three largest holders of non-consumptive water rights is owned by the Matte family or Matte Group (Belmar, et al. 2010). Chilean elite influence does appear to be moving in different directions, however, largely through the motivations of younger inheriting generations. In spite these ongoing shifts, the historical and assumed goals of elite power interwoven with Chile’s governmental context has seemingly influenced a lack of citizen involvement in political realms.
Furthering the idea of political passivity, like others, Daniel Rudolph[7] explains that he does not live in a political world and has never voted, but he believes it would be irrelevant if he chose to. This sentiment is felt by many throughout Chile. Pinilla emphasizes that the regions commonly feel autonomous from one another, and would often prefer to make decisions specific to their own resources and dilemmas, rather than the central government dictating management. It appears the notion that centralized decisions do not serve the regions’ specific needs produce a form of citizen passivity in regards to Chile’s political structure. Continuing with the idea of centralization, animosity that is often felt towards Santiago, especially in more southern regions, is palpable. This resentment, although varying, is clearly justified in one regard when Gonzales explains her perspective: “The whole country we feel as if we have been left behind… the important issues for them are the issues in Santiago…people will watch the news and how they dedicate 30 minutes how the traffic has been stopped because they are fixing a pothole, and people [in Futaleufú] have to travel three hours to go to Chaitén…in a section where you can die by falling into the Yelcho lake…but its the media’s fault and it’s the politicians fault that they create this.” Beyond the infrastructural disparity Gonzales presents, she also emphasizes tendencies of the centralized Chilean media. Fierro and others determine that the media is also largely controlled by one family, and “[w]ho owns and controls the media, and for what purposes, has always been a political issue” (Campbell 2009, 75). The result or selected news coverage of this control, adds to the perpetuation of often weak civilian relationships with the political arena.
While political motivations are never completely transparent, the network of influences transpiring between governmental officials, private corporations, and Chilean elites, is central to hydropower’s presence in Chilean rivers. These nuanced factors are also a basis on which to decipher the influences behind and the continued momentum of social resistances to hydro projects.
Social Resistance Strategies
In light of Chile’s privatized water rights, limited and preferential environmental legislation, energy hierarchy and industrial demand, political allegiances, and general lack of citizen engagement in governmental decisions, hydro development resistances clearly need more than one strategy to gain and maintain traction. Various opposition tactics that have been used include, street protests/marches, information promotion through social media, artistic and creative demonstrations, legal court appeals and claims, objections to approved EIAs, externally produced EIAs, involvement of non-governmental organizations (NGOs), political appeals to the economic value of river preservation and tourism potential, arguments for the intrinsic value and rights of ‘nature,’ appeals to project shareholders/financiers both within Chile and internationally, letter writing, and petitions with collected signatures. The degree to which both national and international publicity and availability of information impacts a development’s fate is debatable. However, combinations of these tactics have varying degrees of success, their effectiveness dependent on case specific and trans-regional factors which will become evident throughout the following case studies.
[1] Please reference (Huneeus 2006) and (Silva 1991) for in-depth analyses of the Pinochet regime and its relationship with the Chicago Boys, economically and beyond.
[2] Refer to (Budds 2004) for a superior depiction of Chile’s neoliberal policies and their relationship with water management, specifically the Water Code.
[3] Rocio Gonzalez is the Executive Director of the Futaleufú Riverkeeper.
[4] Mauricio Fierro is a leader of Geo Austral, a member of Comuna de Llanada Grande, and in 2015 participted as a technician on new water policy being developed in Santiago.
[5] Fernando Coronado Pinilla is a counselor of tourism in Futaleufú’s municipality.
[6] Cristobal De Bittencourt is the head guide of Al Sur Expediciones in Puerto Varas Chile, and has a degree in Ecotourism.
[7] Daniel González Rudolph is the co-founder of Bochinche Expediciones, a whitewater company based in Futaleufú.