A group of Canadian teachers could decide the future of Chile's water supply
In 1981, Pinochet’s water code redefined water as a tradable good. Since then, corporations have been able to bid for water usage rights from the state and resell them through a market-based allocation system, with little public oversight. Only a handful of countries have attempted such a drastic retrenchment of state control over water resources.
The market system has led to conflicts over water resources and to the loss of water rights of indigenous communities, such as the Atacameño people who lost access to large amounts of water that sustained their livelihoods and cultural activities along the Loa River.
In addition, Chile has the most privatised water and sanitation services in the world; 95.8% of the population is served by private utilities. Globally, however, more than 90% of water and sanitation services are publicly-funded and managed thanks to fierce opposition to for-profit water, which typically results in higher tariffs and reduced accountability.
Communities around the world have stopped the privatisation of water and sanitation services; the Transnational Institute, a Dutch NGO, has documented the cases of 235 communities taking water back into public hands between 2000 and 2015.
Growing opposition to privatisation in Chile follows this trend but has an unexpected twist. The Ontario Teachers’ Pension Plan (OTPP) is currently the largest investor in Chile’s water and sanitation, holding majority shares in three large Chilean water utilities – Essbio, Esval and Aguas del Valle – and with 41% of the sector under its control.
Chile has near universal water coverage; 99% of the population uses an improved source of drinking water. This near-universality is often claimed as one of the benefits of privatisation but was in fact achieved through public financing, before the sector was privatised.
While other public assets were sold off during the Pinochet era, the state continued to invest heavily in water and sanitation – it was the last sector to be privatised. Private corporations inherited well-functioning systems in 1999, by which point Pinochet-era policies had created an environment highly-favourable to foreign investors, including a guaranteed 7% profit rate.
Amid extreme weather patterns linked to climate change, investments in infrastructure upgrades and maintenance by OTPP-funded utilities fall short of Chilean guidelines. Chile’s government records show that Aguas del Valle invested just 49% of the recommended minimum in 2014, while Essbio and Esval invested 75% and 64%. And all while water tariffs are higher in Chile than anywhere else in Latin America.
Meanwhile, corporate utilities have maintained the right to determine which areas to service, leading to a number of “non-utility zones” outside profitable urban centres. These are often run by community volunteers on a not-for-profit basis through associations known as Agua Potable Rural (APR).
In the water-scarce province of Petorca, water extraction permits granted by the state exceed available resources. In the town of Cabildo, smallholder farmers claim that a water permit granted to Esval is having drastic impacts on their own water supplies, but their legal efforts to have Esval’s access rescinded have been unsuccessful. Meanwhile, under-resourced APRs operating in the area’s non-utility zones often run out of water during periods of drought.
Ricardo Sanguesa Botella, president of the local irrigators’ association, and Modatima, the regional smallholder farmers’ network, also claim that when water sources run dry in the drought season, Esval purchases water from illegal wells – those operating without permits – in order to provide water through emergency trucks. When approached for comment, Esval said: “Chile, and specifically the Petorca area, have been affected by a severe drought over the last eight years. Facing this scenario has meant a great effort for our company and thanks to arduous work we achieve a continuous water supply without alterations for our clients. During this period we had to reinforce our production with the contribution of external sources. We count on external suppliers who, as a basic requirement, have groundwater rights in the area that guarantee their operation, so we ensure that the water source is in order and complies with current legislation.”
Esval did not reply to questions regarding the measures taken to ensure compliance of third party sources with Chilean regulations.
However, obtaining water through illegal wells is a growing problem in Chile as the penalties imposed are too negligible to be an effective deterrent. In addition, the Chilean state does not track the origins of water trucked by private companies during periods of crisis.
The myth of the successful Chilean model has survived because the consequences of privatisation have been less dire than in poorer countries. But as the benefits of decades of strong public investment wane, and the reality of climate change sets in, private utilities are being exposed.
Water justice groups in Chile – such as Modatima, Fundación Terram and ChileSustentable – are demanding an end to privatisation, but it will not be easy to wrest power from the hands of corporations in the era of free trade agreements. Chile has signed 26 trade agreements covering 62 countries, including Canada, since the late 1990s. These agreements lock in the rights of corporations who have the power to sue Chile if the government attempts to tighten regulation.
Chilean environmental groups, labour unions and community organisations recently partnered with the Council of Canadians to highlight the OTTP’s role in Chile’s water crisis. But the interplay between water markets, private services, climate change and the human right to water is complex. Rather than pushing for an immediate divestment, water justice groups would like Ontario teachers to simply join the discussion around a just and sustainable transition from private to public control of water in Chile.
The first step they can take is to sign a petition asking the OTPP to engage in a dialogue with the Chilean groups exploring strategies and a realistic timeline to bring water and sanitation back into public hands.
The water crisis in Chile is complex, but it provides a unique opportunity for Canadian teachers to support the growing anti-privatisation movement, and help to free Chileans from the shackles of the Pinochet era.