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Article
Water Privatization and Inequality: Gini Coefficient
for Water Resources in Chile
Juan Correa-Parra 1, * , JoséFrancisco Vergara-Perucich 1and Carlos Aguirre-Nuñez 2
1
Centro Producci
ó
n del Espacio, Universidad de Las Am
é
ricas, Providencia 7500975, Chile; jvergara@udla.cl
2Escuela de Construcción, Universidad de Las Américas, Providencia 7500975, Chile; caguirre@udla.cl
*Correspondence: juan.correa.correa@edu.udla.cl; Tel.: +56-97-373-9644
Received: 24 September 2020; Accepted: 24 November 2020; Published: 1 December 2020
Abstract:
This document makes a comprehensive analysis of the inequality of the water market in
Chile, measured by the Gini coefficient method. The situation of water rights in Chile is of particular
interest because it is a wholly privatized system, where rights are traded in the market and therefore
water is presented as a commodity. This privatization of water in Chile occurred as part of the
process of neo-liberalization since the 1981 Water Code. The results of this study indicate that both
concentration and inequality in the distribution of water rights are very high, which undermines a just
social development process and facilitates the economic exploitation of the environment. It proposes
a profound revision of the application of a mercantile logic to a scarce essential resource for life such
as water and explores the importance of its role as a national good for public use.
Keywords: water; Gini coefficient; concentration; privatization; Chile
1. Introduction
The World Health Organization and UNICEF indicated that Chile is the Latin-American country
with the highest access to safely managed drinking water services [
1
]. However, water rights are
privatized and diverse conflicts are related to this legal framework regarding a natural resource.
For instance, an increasing number of slums in the country have limited access to safe water [
2
].
The privatization scheme has triggered conflicts between water rights owners and local communities,
such as the Mapuche-Huilliche case in the south of the territory [
3
] and with the Atacama communities
in the north [
4
,
5
]. Furthermore, the privatized water market has fostered the creation of economic
groups related to the provision of this resource to households; nevertheless, the quality of the products
is not better than the safe water produced by independent firms and scarce regulation concerning
these entrepreneurial activities undermines access to better water for consumers [
6
]. The water market
in Chile has exploited the resource at such a level that, nowadays, a social movement on a national
scale has organized to contest the privatization of water and to pursue its nationalization as a public
good [
7
]. There is a contradiction between the global data indicating high access to safely managed
drinking water services and the conflicts occurring in the territories related to the water market in
Chile. In order to illuminate the potential origins of these conflicts, we investigated water inequalities
at global and local levels using a statistical approach. The trigger for the privatization of water started
in 1975, with the political-economic project of the dictatorship, in relation to implementing a radical
free-market economic model privatizing public services usually allocated at the state level. This process
is known as neo-liberalization.
As part of the Chilean process of neo-liberalization, in 1981 the Water Code was created, and this
scarce natural resource began to be commercialized, generating negotiable property rights in what
is known as the water market. Chile is the only country in the world with fully privatized water.
Another particularity in Chile is that the owner of the land has no right over the water that may be
Water 2020,12, 3369; doi:10.3390/w12123369 www.mdpi.com/journal/water
Water 2020,12, 3369 2 of 13
present on that piece of land. Such conditions make the Chilean water market a unique study case,
now critical due to the climatic crisis. In general, the creation of a water market can be based on
the privatization of rights, institutionally controlled business cycles, pricing according to availability,
or determining its free disposal as a fundamental human right for subsistence [
8
]. In the face of
the climate emergency, water scarcity is a challenge and the management of the resource must be
adapted to the current planetary crisis [9,10]. It is for this reason that it is relevant to critically review
those cases in which water resource management instruments have not been adapted to the climate
crisis. This occurs in the Chilean case, which takes on greater relevance in the face of resistance from
democratic authorities to recognizing the importance of adapting regulation in the water domain
to current times. On 7 January 2020, the Senate of the Republic decided to reject the designation of
water as a national good for public use [
11
], despite the fact that Chile faces a severe drought [
12
]
and that the international literature raises the urgency of rethinking models of governance over
natural resources [
13
]. This article presents relevant evidence regarding the urgency of resuming
this discussion by exposing how the Chilean case can illustrate the complexity of creating a market
through the privatization of water rights for consumption purposes which leads to a high concentration
of ownership of a natural resource, generating speculative scenarios with the commercialization of
property and significant inequality in water access. The water market creates a compounded scenario
that Mehta et al. [
14
] define as a scarcity policy, where unequal access to water is naturalized, a decision
justified by exclusionary property regimes [
15
], serving as a strategy to divert attention from other
problems such as the causes of inequality or poverty [
16
]. Therefore, studying the water market in
Chile provides a view on different aspects of inequality, and not only in access to water.
When a water market was proposed, it is crucial to understand that this is one of the particularities
of Chilean reality, wherein in 1981 water rights were privatized and the values and mechanisms
necessary in order to exchange water for money established a market that sets its prices by the law
of supply and demand. For Boelens [
17
], in the study of water rights it is critical to identify the
affordability of the resource for users, determining how the owner of the water rights exercises his
power by controlling a scarce resource elemental for the development of life. Boelens proposes that
power relations will define the distribution of water resources, but the discussion also concerns the
restructuring of power relations across society. In the specialized international literature, there is
consensus that the water market should not operate like that for any other type of tradable good and
requires democratic and institutionalized regulations. In some cases, the development of a water
market can improve the efficiency in the distribution of water resources [
18
], but in the case of weak
regulatory institutions, it can generate speculative frameworks that end up reducing the population’s
access to water [
18
–
20
]. The conflictive relationship between water owners and communities has been
presented in literature from qualitative approaches, [
21
,
22
] so this article contributes by offering a
nation-wide perspective on how uneven the water market is from a quantitative approach.
Hence, this article seeks to contribute to the discussion of the effects of generating a water market
in a situation of water scarcity, that is to say, a scarcity policy; from the review of its distribution and
sustainability, it takes the case of water rights in Chile. Specifically, it studies the inequality of water
distribution in Chile as measured by the Gini index. To frame the problem, the article presents a
general framework for the origin and scope of water management in Chile, from the first regulations
to the creation of a market through privatization in 1981. The data for the study and the methods used
are then discussed. The source of information analyzed is based on secondary data obtained from
the General Water Directorate of the Ministry of Public Works. These data are georeferenced and the
inequality of the allocation of this resource for consumption is studied, i.e., for waters that are extracted
without reincorporation into supply channels. The method used is a geo-localized Gini index to review
the distribution of the resource spatially. The results argue that privatization optimizes the distribution
of the water resource. The proposal is to open discussion based on the specialized international
literature in order to rethink how to manage water resources in Chile from the institutional and public
policy point of view, considering the important drought that the country faces and in view of the
Water 2020,12, 3369 3 of 13
climate emergency. Although Chile presents good indicators of human access to drinking water in
urban areas, this study considers total water rights, as the treatment and management of drinking
water for human consumption does not reach more than 12%. In this sense, the concentration of rights
and their use in extractive areas presents a clear risk for these positive indicators in the future.
Historical Review of the Formation of the Water Market in Chile
In 1819, Bernardo O’Higgins, the architect of Chile’s independence, drafted a supreme
decree to determine how water should be used, based on a metric configuration of the irrigators,
clearly establishing how water should be marketed and assigning responsibility for the correct use of
the resource by the controllers of water intake. Already by 1857, water resources had been nominated as
national public goods. In view of the emergence of drought episodes, in 1872 several regulations sought
to generate mechanisms to manage water in the event of alterations in annual rainfall, focusing on rural
agricultural productivity. These were the first approaches to regulating water use in Chile, without a
market as such but rather with a system of concessions for use for specific productive purposes.
It was in 1927 that a proper water code was drawn up, within the framework of the civil code,
with 476 articles covering a large number of the provisions relating to water resource management and
enshrining it as a national good for public use, where the State would govern the modes of allocating
the use of the resource for activities other than human consumption. This project saw a set of revisions
in 1928 and 1930, until the final configuration of the 1936 water code, where concessions for the use of
the resource were designated as part of the State’s role. The water code took a more definitive and
consensual form at the level of parliament in 1951, the year in which the role of the State was specified,
establishing that it was the President of the Republic who would approve applications for water use
rights [
23
]. Then, under the government of Eduardo Frei Montalva and in the midst of the search
to improve the functioning of agriculture, in 1967 a new water code was created that emphasized
the public domain. Under this code, exploitation would be defined according to a rationalized rate
by the central planning agencies, thus limiting the volume of maximum use flows [
24
]. In this first
review, it can be seen that Chile historically privileged the understanding that water was a national
good for public use whose fair distribution should be supervised by government authority (i.e., by the
President of the Republic himself), with a rationality typical of a protagonist State’s role in the national
economy using a centralized planning approach. With neoliberalism, the paradigm changed completely.
The State reduced its participation in the regulation of productive activities, and in matters of public
interest markets were created, such as in social security, education, health and water, among others.
The neo-liberalization of public goods in the case of water will took form in the 1981 Water Code.
With the framework provided by the Constitution of the Republic promulgated in 1980, a private
property regime would be the focus of this new mechanism for regulating water resources. Thus,
the management of this resource would be oriented towards the possibilities of its commercialization
and acquisition, without State regulation. The State, on the other hand, would play a role in assigning
use rights, but without the effective capacity to control such uses, much less the markets for water
use transactions between private parties. In this way, water in Chile becomes a commodity [
24
].
For Humberto Peña [
25
], the main characteristics of the Chilean water code can be identified as the
following aspects:
•Transfer of water management from the State as a public good to the market as a commodity.
•The enshrining of original water rights to generate ownership.
•
The work of inspection and conflict resolution among private parties is organized, giving this role
top government.
•
Strategic planning for water resource management is generated with a focus on its productive
role, without sufficient emphasis on the sustainability of its use.
With these transformations, the territory as a whole entered a process of privatization for
commercial purposes. For Carl Bauer, the separation of water rights from land rights would be another
Water 2020,12, 3369 4 of 13
problematic factor since water tributaries crossing a land will not have a direct commercial relationship
with the landowner. This will account for the overlap of property rights on the same land. The use
of water will not have much territorial weight, but will be valuable as an economic resource, so its
primary role for the development of life is subjugated to its commercial efficiency. Making water a
commodity via the 1981 Water Code also marks the emergence of a water market that in those years
followed the recommendations of the Inter-American Development Bank and the World Bank [
21
].
The main objective argued by the promoters of these reforms was the need to manage water scarcity.
These water policies proposed that access and coverage would be achieved in a better way if the
until then public management of the water resource passed to private hands, in search of increasing
efficiency and improving management, favoring competitiveness in the sector, eliminating barriers for
international companies, reducing regulations, and assuring a 10.3% profitability [
16
–
18
]. This was the
fundamental argument of neoliberalism [26].
To be precise, the perspective of increasing efficiency and improving management of the resource
is defined by Panayotakis [
27
] as “the order of the day”, where governments and elites use the idea of
scarcity to legitimize the capitalist system and its logic, just like the privatization or financialization
of public goods, reserving an exclusive access to these assets to producers only. This privatization
generates severe effects on environmental equilibrium and also on social groups in rural and urban
areas. Mehta [
28
] considers these effects as a those of a new type of policy regime, where the practice
of resource control ends up by making vulnerable the most deprived communities.
For Bauer [
25
], the freedom to buy and sell water rights has led to the revaluation of water resources
in certain areas. Still, the adverse effects are related to the normative rigidity of the constitutional and
legal framework of the Water Codes. This makes it difficult for regulations to be adapted to the diverse
uses of water and the nature of water flows, which eventually leads to the aforementioned potential
conflicts over water between companies and communities, or the reduction of efficient management of
the resource due to inadequate exploitation, despite scarce conditions. Using this short-term logic,
water privatization with a focus on productive activities does not consider the common good but
instead aspires to economic return on such activities, thus neglecting the ecological role of water
resources, since productive processes have other objectives related to income and commercial efficiency.
In 2005, a change to the Water Code was introduced. Although the water market was not
disestablished, a monetary tax was generated on the non-exploitation of water resources by those who
held the corresponding water rights, seeking to avoid speculation. According to Peña and Jaeger [
29
],
the objective of preventing speculation and monopolistic frameworks was to generate a better balance
between the productive role of water and social needs, in addition to adding sustainability criteria
to water resource management. However, it was Peña himself, the author of the reform, who later
recognized that it was made in an adverse political climate, in which the Constitution facilitates the
hindering of progressive reforms, favorable to the conservative political forces that in Chile tend
to prioritize the market over the social function of water [
24
]. In other words, the reforms were
limited, without managing to resolve the conflicts related to the sustainability of the water market,
preserving the negative characteristics that tend to concentrate resources and access unequally.
Inequality in the distribution of water is a complex scenario. The Water Code establishes a
situation in which the owner of the land has no rights over the water flowing on that land. As the
community leader Rodrigo Mundaca indicates, in Chile there are no planning regulations associated
with the productive capacities of agricultural soil. Therefore, with the person holding water rights on
the one hand and agricultural production on the other, communities’ access to water may be affected
by the consumption industry [
1
]. Studying the water market in Chile is a means to observe how a
non-comprehensive planning apparatus may undermine community access to natural resources.
2. Materials and Methods
The data set used for this study comes from the national water rights databases of registered
with the General Water Directorate of the Ministry of Public Works of the Government of Chile,
Water 2020,12, 3369 5 of 13
where original rights and new applications for water rights are identified according to Article 122 of
the Water Code. The database corresponds to the National Consolidated Rights, dated 20 January 2020.
In particular, we have applied the study to consumptive water rights, that is, those assigned so that
water is consumed without returning to its original course. Even so, in the presentation of the results,
global water rights are presented, against these consumptive rights [30].
However, it should be reported that the original database presented some consistency problems,
so a thorough review of the information had to be carried out. In this process of cleaning up the
database, inconsistent information had to be removed. In short, from the national consolidated data,
out of a total of 131,124 cases, only 97.62% were used (128,015 permits), given that the rest presented
problems of various kinds, including typing errors, records without data on the volume of water
transferred and units of measurement that cannot be converted into volumes of water, as is the case
with the so-called shares or irrigators, which are measures proportional to the flow of a given course,
information that is not entirely suitable for the calculation of the Gini Coefficient. The corrected table is
attached as a complementary database annex to this publication and has also been sent to the Ministry
of Public Works for further correction.
Based on the above, it was decided to work with the 97.62% of the data already processed,
on which different spatial concentration analyses were carried out, starting with the spatialization
of the water resource capture points (Figure 1). From the data set, several analyses were executed,
specifically, (i) distribution according to rights to the resource, (ii) nature of origin, (iii) volume of
water extracted and finally (iv) an analysis of how concentrated the water resource is, based on its Gini
coefficient, at a national, zonal and regional scale.
Water 2020, 12, x FOR PEER REVIEW 5 of 13
2. Materials and Methods
The data set used for this study comes from the national water rights databases of registered
with the General Water Directorate of the Ministry of Public Works of the Government of Chile,
where original rights and new applications for water rights are identified according to Article 122 of
the Water Code. The database corresponds to the National Consolidated Rights, dated January 20
2020. In particular, we have applied the study to consumptive water rights, that is, those assigned so
that water is consumed without returning to its original course. Even so, in the presentation of the
results, global water rights are presented, against these consumptive rights [30].
However, it should be reported that the original database presented some consistency problems,
so a thorough review of the information had to be carried out. In this process of cleaning up the
database, inconsistent information had to be removed. In short, from the national consolidated data,
out of a total of 131,124 cases, only 97.62% were used (128,015 permits), given that the rest presented
problems of various kinds, including typing errors, records without data on the volume of water
transferred and units of measurement that cannot be converted into volumes of water, as is the case
with the so-called shares or irrigators, which are measures proportional to the flow of a given course,
information that is not entirely suitable for the calculation of the Gini Coefficient. The corrected table
is attached as a complementary database annex to this publication and has also been sent to the
Ministry of Public Works for further correction.
Based on the above, it was decided to work with the 97.62% of the data already processed, on
which different spatial concentration analyses were carried out, starting with the spatialization of the
water resource capture points (Figure 1). From the data set, several analyses were executed,
specifically, (i) distribution according to rights to the resource, (ii) nature of origin, (iii) volume of
water extracted and finally (iv) an analysis of how concentrated the water resource is, based on its
Gini coefficient, at a national, zonal and regional scale.
Figure 1. Location of water capture points registered as rights at the General Water Directorate of the
Ministry of Public Works. Source: drawn up by the authors based on data from the Dirección General
de Aguas (DGA).
To analyze this data, a study of unequal access to water rights was carried out using the Gini
coefficient. The Gini coefficient is a method for measuring levels of inequality in the distribution of a
Figure 1. Location of water capture points registered as rights at the General Water Directorate of the
Ministry of Public Works. Source: drawn up by the authors based on data from the Direcci
ó
n General
de Aguas (DGA).
To analyze this data, a study of unequal access to water rights was carried out using the Gini
coefficient. The Gini coefficient is a method for measuring levels of inequality in the distribution of a
specific factor in a given population. It is usually used to measure income inequality, as suggested
by its creator, Conrado Gini. The result of the calculation ranges from 0 (total equality) to 1
Water 2020,12, 3369 6 of 13
(complete inequality). Its interpretation is simple, which is crucial in a study that seeks to review the
problem of water rights in Chile so that its discussion is taken up by different disciplines, from human
rights approaches to marketing. In particular, we have classified rights to consumptive water according
to the volume of water assigned for each user registered with the General Water Directorate, in order
to achieve clarity on the levels of inequality in the allocation of water resources.
Then, based on the distribution patterns of water rights, we will be able to review which actors
consume the most greatest amount of liters per second and how these results are interpreted in the
light of the water crisis the country is experiencing.
To obtain the Gini coefficient, the following calculation was made:
Gini =1−
n−1
X
k=1
(Xk+1−Xk)(Yk+1−Yk)(1)
where X corresponds to the cumulative proportion of the variable stakeholders owning water rights
included in this study, while Y corresponds to the cumulative proportion of water volume measured in
L/s.
3. Results
For a general description of the sample, out of a total of 131,124 permits granted and registered in
the original database, 128,015 (97.62% of the total) are identified. In this database, 54.1% of the licenses
were for groundwater and 45.9% for surface water. Of the total number of permits, those corresponding
to consumptive water are studied, whose flow estimate is 4,293,280 L/s. As indicated in Figure 2,
most of the non-consumptive licenses are located near the mountain range in the central-southern zone
of the country (regions of Valpara
í
so, Metropolitana, O’Higgins, Maule, Ñuble, Biobio, Araucan
í
a,
Los R
í
os and Los Lagos), while consumptive licenses are distributed throughout the national territory.
Water 2020, 12, x FOR PEER REVIEW 6 of 13
specific factor in a given population. It is usually used to measure income inequality, as suggested by
its creator, Conrado Gini. The result of the calculation ranges from 0 (total equality) to 1 (complete
inequality). Its interpretation is simple, which is crucial in a study that seeks to review the problem
of water rights in Chile so that its discussion is taken up by different disciplines, from human rights
approaches to marketing. In particular, we have classified rights to consumptive water according to
the volume of water assigned for each user registered with the General Water Directorate, in order
to achieve clarity on the levels of inequality in the allocation of water resources.
Then, based on the distribution patterns of water rights, we will be able to review which actors
consume the most greatest amount of liters per second and how these results are interpreted in the
light of the water crisis the country is experiencing.
To obtain the Gini coefficient, the following calculation was made:
𝐺𝑖𝑛𝑖 = 1 − (𝑋 −𝑋
)(𝑌 −𝑌
)
(1)
where X corresponds to the cumulative proportion of the variable stakeholders owning water rights
included in this study, while Y corresponds to the cumulative proportion of water volume measured
in L/s.
3. Results
For a general description of the sample, out of a total of 131,124 permits granted and registered
in the original database, 128,015 (97.62% of the total) are identified. In this database, 54.1% of the
licenses were for groundwater and 45.9% for surface water. Of the total number of permits, those
corresponding to consumptive water are studied, whose flow estimate is 4,293,280 L/s. As indicated
in Figure 2, most of the non-consumptive licenses are located near the mountain range in the central-
southern zone of the country (regions of Valparaíso, Metropolitana, O’Higgins, Maule, Ñuble, Biobio,
Araucanía, Los Ríos and Los Lagos), while consumptive licenses are distributed throughout the
national territory.
Figure 2. National map with the permits according to consumptive or non-consumptive rights.
Source: Compiled by the authors based on information from the DGA.
Figure 2.
National map with the permits according to consumptive or non-consumptive rights. Source:
Compiled by the authors based on information from the DGA.
Figure 2show the distribution of the consumptive and non-consumptive rights throughout the
Chilean territory. In addition to the concentration of extraction spots in the central zone of the country
Water 2020,12, 3369 7 of 13
(where about 75% of the population is concentrated), more than the 90% of the non-consumptive
rights are localized in this area, particularly in the mountainous area (over 1000 MSL). In these areas,
the water rights are linked principally to hydroelectric companies which generate electricity to supply
urban areas and for economic activities nearby.
When quantifying the value of the water market for surface consumption rights, it is estimated
that it corresponds to a market of USD 45,868,679. One of the problems found in the study is that
the General Water Directorate holds 57.4% of permits, without information on the owners or the
destination relating to these water rights. For this reason, we present the concentration of water rights,
incorporating those protagonists for whom we do not have data (Table 1) and a table of consumptive
rights considering only those for which uses for the water are identified (Table 2).
Table 1.
Consumptive water rights by use, including “No data” cases. Source: Author ’s elaboration
based on DGA data.
Consumptive Water Rights
Water Use L/s. %
Recount Add Up Of the Total
No data 73,591 2,465,931 57.4%
Drink/Domestic Use/Sanitation 13,008 352,034 8.2%
Hydroelectric Energy 40 5746 0.1%
Other Uses 1983 95,927 2.2%
For Observation and Analysis 3 2 0.0%
Fish Farming 332 21,858 0.5%
Irrigation 24,524 1,296,526 30.2%
Silvo-Agropecuario 127 1223 0.0%
Industrial Use 380 26,915 0.6%
Medical Use 4 67 0.0%
Mining use 479 27,050 0.6%
Total 114,471 4,293,280
Table 2.
Consumptive water rights by use, excluding “No data” cases. Source: Author ’s elaboration
based on DGA data.
Consumptive Water Rights
Water Use L/s. %
Recount Add Up Of the Total
Drink/Domestic Use/Sanitation 13,008 352,034 19.3%
Hydroelectric Energy 40 5746 0.3%
Other Uses 1983 95,927 5.2%
For Observation and Analysis 3 2 0.0%
Fish Farming 332 21,858 1.2%
Irrigation 24,524 1,296,526 71.0%
Silvo-Agropecuario 127 1223 0.1%
Industrial use 380 26,915 1.5%
Medical Use 4 67 0.0%
Mining use 479 27,050 1.5%
Total 40,880 1,827,348
One of the main observations is that irrigation as a consumptive activity and at the same time a
productive activity, registers 71% of the volume of water transferred, with clear identification of use.
The use of water for irrigation in Chile is equivalent to the annual consumption of 243 million homes,
similar to the number of households in India or 10 times that of the United Kingdom (Figure 3).
Water 2020,12, 3369 8 of 13
Water 2020, 12, x FOR PEER REVIEW 8 of 13
Figure 3. Water rights according to the main destination of water use. Source: Author’s elaboration
according to DGA data.
Figure 3 presents a clear pattern of the distribution of activities using water for production, such
as mining activity, which in relation to water rights tenure is predominant in both location and
volume, despite the scarcity of water resources in the Atacama Desert, where most mining activities
are situated (northern area of the territory). On the other hand, in the central valley of Chile both
irrigation and hydroelectric activities capture most of the water rights. This relationship is related to
the greater extent of cities, industrial activities, and agriculture. Products with high demand for water
are produced in this valley, especially fruit and wines.
This result makes it necessary to review whether this water consumption makes a similar
contribution to the treasury through production taxes, when only 2.75% of annual sales are
concentrated, representing only 6.27% of companies in Chile and contributing through income tax
from agricultural activities only 0.46% of the fiscal budget (0.11% of GDP). It is also essential to review
the volume of privatized water distributed in the regions, where Maule (14.69%), O’Higgins (14.04%)
and the Metropolitan Region (13.52%) are where a significant part of the total national consumption
flow is concentrated (Table 3). This initial descriptive review allows us to recognize the general profile
of consumptive water rights in Chile (Figure 4) and the importance of studying levels of inequality
and concentration.
Table 3. Spatial distribution of permits in the territory by political-administrative region. Source:
Compiled by the authors based on DGA data.
Region Recount Add Up Of the Total
Arica y Parinacota 2281 20,996 0.49%
Tarapacá 1708 37,273 0.87%
Antofagasta 1022 25,840 0.60%
Atacama 1592 41,040 0.96%
Coquimbo 11,891 149,198 3.48%
Valparaíso 13,958 410,540 9.56%
Metropolitana 9575 580,271 13.52%
O’Higgins 8744 602,980 14.04%
Maule 9022 630,651 14.69%
Figure 3.
Water rights according to the main destination of water use. Source: Author’s elaboration
according to DGA data.
Figure 3presents a clear pattern of the distribution of activities using water for production, such as
mining activity, which in relation to water rights tenure is predominant in both location and volume,
despite the scarcity of water resources in the Atacama Desert, where most mining activities are situated
(northern area of the territory). On the other hand, in the central valley of Chile both irrigation and
hydroelectric activities capture most of the water rights. This relationship is related to the greater extent
of cities, industrial activities, and agriculture. Products with high demand for water are produced in
this valley, especially fruit and wines.
This result makes it necessary to review whether this water consumption makes a similar
contribution to the treasury through production taxes, when only 2.75% of annual sales are concentrated,
representing only 6.27% of companies in Chile and contributing through income tax from agricultural
activities only 0.46% of the fiscal budget (0.11% of GDP). It is also essential to review the volume
of privatized water distributed in the regions, where Maule (14.69%), O’Higgins (14.04%) and the
Metropolitan Region (13.52%) are where a significant part of the total national consumption flow
is concentrated (Table 3). This initial descriptive review allows us to recognize the general profile
of consumptive water rights in Chile (Figure 4) and the importance of studying levels of inequality
and concentration.
Table 3.
Spatial distribution of permits in the territory by political-administrative region. Source:
Compiled by the authors based on DGA data.
Region Recount Add Up Of the Total
Arica y Parinacota 2281 20,996 0.49%
Tarapacá1708 37,273 0.87%
Antofagasta 1022 25,840 0.60%
Atacama 1592 41,040 0.96%
Coquimbo 11,891 149,198 3.48%
Valparaíso 13,958 410,540 9.56%
Water 2020,12, 3369 9 of 13
Table 3. Cont.
Region Recount Add Up Of the Total
Metropolitana 9575 580,271 13.52%
O’Higgins 8744 602,980 14.04%
Maule 9022 630,651 14.69%
Ñuble 7639 161,216 3.76%
Biobío 6909 333,580 7.77%
Araucanía 14,915 465,402 10.84%
De Los Ríos 8166 161,737 3.77%
De Los Lagos 10., 287,634 6.70%
Aysén 4704 230,327 5.36%
Magallanes 1413 154,596 3.60%
Total country 114,471 4,293,280
Water 2020, 12, x FOR PEER REVIEW 9 of 13
Ñuble 7639 161,216 3.76%
Biobío 6909 333,580 7.77%
Araucanía 14,915 465,402 10.84%
De Los Ríos 8166 161,737 3.77%
De Los Lagos 10., 287,634 6.70%
Aysén 4704 230,327 5.36%
Magallanes 1413 154,596 3.60%
Total country 114,471 4,293,280
Figure 4. Water rights according to total liters/second per commune. Source: Own elaboration from
DGA data. Figure 4 shows the distribution and volumes of water rights per commune, which
illustrates the territorial inequalities throughout the country. This map underline the high levels of
water consumed in the northern areas of the national territory and the high levels of inequality
between neighboring communes in the central valley of Chile, where industrial activity, hydroelectric
generation, agro-industrial crops and extended cities act as stresses on natural resources. This
situation adds up to a critical scenario for the most vulnerable communities, especially small
agricultural and livestock producers whose access to water is uneven in relation to the big companies
owning water rights [12,13].
The Gini coefficient for all permits at the national level is 0.9999585 and, in the specific case of
surface consumption rights, this reaches a value of 0.9537 (Table 4). At first glance, the level of
inequality is abysmal, and concentration is very high. In this study, 1% of registered actors own
79.02% of the total volume of water available in the system, which in turn makes up only 4.3% of the
existing water property rights. In other words, we see very high inequality and very high
concentration of water resources.
Figure 4.
Water rights according to total liters/second per commune. Source: Own elaboration from
DGA data. Figure 4shows the distribution and volumes of water rights per commune, which illustrates
the territorial inequalities throughout the country. This map underline the high levels of water
consumed in the northern areas of the national territory and the high levels of inequality between
neighboring communes in the central valley of Chile, where industrial activity, hydroelectric generation,
agro-industrial crops and extended cities act as stresses on natural resources. This situation adds up
to a critical scenario for the most vulnerable communities, especially small agricultural and livestock
producers whose access to water is uneven in relation to the big companies owning water rights [
12
,
13
].
The Gini coefficient for all permits at the national level is 0.9999585 and, in the specific case
of surface consumption rights, this reaches a value of 0.9537 (Table 4). At first glance, the level of
inequality is abysmal, and concentration is very high. In this study, 1% of registered actors own 79.02%
of the total volume of water available in the system, which in turn makes up only 4.3% of the existing
water property rights. In other words, we see very high inequality and very high concentration of
water resources.
Water 2020,12, 3369 10 of 13
Table 4.
Study of the Gini Coefficient at the national level for the total and specific superficial consumer
rights. Source: Prepared by the authors.
Gini Coefficient for All Rights
Total Rights 128,015
Total Owners 63,864
Flow rate (L/s) 4,865,684,475
Gini Coefficient 0.999585
Gini Coefficient for Surface Consumer Rights
Total Rights 55,853
Total Owners 29,001
Flow rate (L/s) 3,369,691
Gini Coefficient 0.9537
The distribution of water rights in all regions of Chile shows very high inequality (Table 5),
fluctuating between 0.8309 (Atacama Region) and 0.9721 (O’Higgins and Ñuble Regions). The most
unequal areas correspond to the central sector of the country, where there are greater population and
agricultural developments, reflected in regions such as O’Higgins, Maule and Metropolitan, which,
although they have fewer water rights, delivered 4726 rights, equivalent to 10.6% of the national
total; each right has in proportion more liters/second than the rest of the nation, equal to 42.9% of the
national total. In other words, the highest consumption of liters/second occurs in the central valley, in
areas with a high preponderance of agricultural activities that demand irrigation, such as vineyards,
avocados, berries and fruits in general.
Table 5. Summary of Gini Coefficient results by national regions. Source: Prepared by the authors.
Surface Water Consumption Rights
Region No Rights Sum of L/sNational
Percentage Rights
National
Percentage L/sGini Index
Arica y Parinacota 336 16,944 0.8% 0.5% 0.8993
Tarapacá285 30,596 0.6% 0.9% 0.9499
Antofagasta 446 11,554 1.0% 0.3% 0.8980
Atacama 212 11,672 0.5% 0.3% 0.8309
Coquimbo 695 58,671 1.6% 1.7% 0.9329
Valparaiso 2213 173,222 4.9% 5.1% 0.9569
Metropolitan 1562 385,058 3.5% 11.4% 0.9716
O’Higgins 1213 515,841 2.7% 15.3% 0.9721
Maule 1951 545,045 4.4% 16.2% 0.9598
Ñuble 2312 127,003 5.2% 3.8% 0.9721
Bio Bio 3888 315,563 8.7% 9.4% 0.9535
Araucanía 10,121 441,378 22.6% 13.1% 0.9152
De Los Rios 6482 135,056 14.5% 4.0% 0.8671
De Los Lagos 7693 218,361 17.2% 6.5% 0.9115
Aysen 4346 229,828 9.7% 6.8% 0.9704
Magallanes 974 153,899 2.2% 4.6% 0.8993
Total country 44,729 3,369,692 100.0% 100.0% 0.954
4. Discussion
When speculation occurs, decisions are made about specific actions without enough evidence
about what is believed to generate optimal results for everyone in the future. A speculative process
results from the search for rewards with a strong element of chance. Indeed, speculation has no
scientific basis since it is driven by belief rather than evidence. Using this definition as a starting point,
we can state that in Chile there is a process of water speculation, given that its consumption would
indicate that more water is consumed than is naturally regenerated. A water ownership scheme has
Water 2020,12, 3369 11 of 13
modeled a scenario of scarcity. As Mehta et al. indicate [
14
], this capitalist fueled scarcity produces a
situation in which natural resources have become the focus of global discussion, allowing governments
to legitimize the privatized management of resource rights. In the case of Chile, this benefit becomes
monetary capital which can be accumulated in rights and used for speculative enterprises which
lead to drastic inequality of access to water for people. Restrictions of direct access to user groups
benefits a minority with economic and productive interests, principally linked to the social and
economic inequalities rooted in Chilean society [
31
]. Therefore, in our interpretation, water markets
reduce accessibility to natural resources because the price of water rights hinders universal access
in low-income communities, an everyday reality in rural areas. Given the way in which the water
market in Chile is conducted, the use of water rights as financial assets which increase price over
time is problematic for social development, and the social benefits of this mode of managing natural
resources are difficult to find. Hence, speculation in water rights is one of the results of having a water
market for distributing water.
To illustrate this problem with an analogy, it is as if water is being consumed that the glaciers will
not run out, while in reality the water supplies of the planet are reaching an abundance threshold,
producing scarcity. The mere fact that runoffis much lower than productive consumption generates a
deep concern, where sustainability of water resources are compromised in the future. Do we know if
the runoffof glaciers is enough for domiciliary consumption and more sustainable forms of production?
Some authors [
31
,
32
] assert that the naturalization of the scarcity of natural resources, as an acceptable
phenomenon not created by society, justifies exclusionary property practices, as with the public right
to access nature.
Without regulatory mechanisms appropriate to the Chilean reality [
33
–
35
], the water market
and its speculative characteristics are dangerous for subsistence in Chile. This complexity, that
especially affects rural communities [
36
], needs to be remedied through public policy and the structural
transformation of property management in Chile.
On the one hand, the World Bank proposes that water markets should be formalized and more
transparent, which leads to significant price dispersion, unclear operating costs and considerable
information asymmetries among market participants. The latter could lead to the development
of inequitable economic activities concerning exchange processes. Recently, the Organization for
Economic Cooperation and Development (OECD) has proposed that Chile increase its tax collection by
increasing (or creating) taxes on the exploitation of natural resources (such as water) to finance new
social and infrastructure projects needed to advance development.
The water market is more important in areas where the resource is scarcer [
37
–
39
]. However, this
is contradicted by much of the literature that presents a critical view of water resource distribution.
To understand the idea of the water market, then, we can conclude that water privatization is far from
being a socially just way of distributing resources in a society that, in addition, presents high levels of
inequality and segregation [40–42].
The climate emergency represents another critical point in the discussion. This crisis will increase
the intensity and frequency of extreme events which will cause mass migration waves and food and
water insecurity, increasing the occurrence of violent climate conflicts [
27
,
32
]. Chile is no exception,
considering the social and political conflicts in the Latin-American region, where people from different
countries migrate to Chile in search of better opportunities, working in primary economic activities like
mining, forestry or agriculture, three activities entirely linked to water rights and community conflicts.
Finally, this work represents the first approximation of an inequality metric and spatial perspective
on the concentration of water rights in the continental territory of Chile. With a nation-wide perspective,
the article links not only with localization but also indicates the type of rights assigned, the number of
liters granted and the ways of using of the resource, all strongly related to the productivity of mining,
forestry and agriculture, which are the primary resources of the Chilean economy. We have shared the
data freely to contribute to further analysis and studies related to water rights.
Water 2020,12, 3369 12 of 13
Author Contributions:
Conceptualization, J.F.V.-P.; methodology, J.C.-P.; validation, J.C.-P., C.A.-N. and J.F.V.-P.;
formal analysis, J.C.-P., C.A.-N. and J.F.V.-P.; investigation, J.C.-P.; resources, J.C.-P.; data curation, J.C.-P. and
J.F.V.-P.; writing—original draft preparation, J.F.V.-P.; writing—review and editing, J.C.-P., C.A.-N. and J.F.V.-P.;
visualization, J.C.-P.; funding acquisition, J.F.V.-P. All authors have read and agreed to the published version of
the manuscript.
Funding:
This research was funded by ANID, grant number FONDECYT 11180569 and Universidad de
Las Américas.
Conflicts of Interest: The authors declare no conflict of interest.
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