Chile Convention Approves Water Overhaul for Mines and Farms

Chile moved a step closer to replacing one of the world’s most privatized water-allotment systems after writers of a new constitution approved a plan to dissolve property rights.

By James Attwood

In a vote late Monday, a proposed system in which the state grants temporary and revocable permits for the use of water and wind reached the two thirds majority required to be included in the draft document. Chileans will vote on a plebiscite in September whether to accept or reject the new magna carta.

By protecting the rights of agricultural, energy and mining companies, the current water system helped Chile become a major exporter of goods from copper to avocado and wine. But more than a decade of drought and lax oversight has left some communities dry, elevating water to a key social justice issue. Earlier this month, authorities announced an unprecedented plan in case it needs to ration water for Santiago.

Aerial view showing a dry plantation in Petorca, Chile. In Chile, a country with massive copper and lithium mines and urban centers dependent on glacial melt, water is edging into the center of national debate. Bloomberg Green/ Tamara Merino.

In January, congress passed a bill to cap unlimited water allocations at 30 years and empower regulators to suspend rights that aren’t being used, or if supplies are at risk.

But the proposal passed last night requires commercial users to seek temporary permits in a model that prioritizes human consumption and the sustainability of reserves, establishing water as a natural asset that can’t be owned and is “democratically” overseen and protected by the state.

“These authorizations, whether individual or collective, do not generate property rights,” one article states.

The agricultural industry, which accounts for most water consumption in Chile, attributes the crisis to drought, a lack of investment and clumsy bureaucracy. The solution is a coordinated strategy involving more dams, desalination plants, recycling and modern irrigation, farming groups say.

Large mines are already investing heavily in the use of seawater and recycling, with the proposed new system of fresh water permits likely to hit smaller operations harder.

In phrasing that may have implications for the lithium industry, the approved article refers to water “in all its states.” In Chile, the second-largest producer, lithium is extracted from brine in massive salt flats that dot the country’s northern desert.

“There is a model unfolding in the Convention, based on strong state control of natural resources, which would radically change the development model followed by Chile in recent decades,” said Juan Carlos Guajardo, who heads consulting firm Plusmining.

Source: Bloomberg