Water Conflicts and Entrenched Governance Problems in Chile's Market Model

The Chilean system of tradable water rights and water markets has been well known and controversial in international water policy circles since the 1990s. Chile's 1981 Water Code is a textbook example of neoliberalism, with strong private property rights and weak government regulation, and the market in water rights has been the dominant theme in debates about Chilean water policy, both nationally and internationally. The Water Code was somewhat reformed in 2005 after over 13 years of political debate. In this paper I review the issues in water policy and politics in Chile during the decade since that reform. What does the ongoing Chilean experience tell us about water privatisation, markets, and commoditisation? Water conflicts have become the essential issue in Chile, rather than water markets. In the past decade conflicts among multiple water users have deepened and widened in many parts of the country, involving river basins and groundwater aquifers. The institutional framework for governing these water conflicts has worked poorly, for a variety of reasons, and the conflicts have become a serious national political problem. I review the evolving political and policy debates in Chile, including the current government's proposal in 2014 for a new and stronger reform of the Water Code. In short, the critical problem of the Chilean water model is the lack of institutional capacity for governance or integrated water resources management, and the problem has worsened as water conflicts have become closely linked to conflicts in the energy and environmental sectors.