Privatized Water Rights and Services in Chile 1981-2011: Flowing Towards the Mainstream

In 1981, a radically new and unique market-oriented Water Code was enacted in Chile, when the country was under military rule, its economy was fragile and its international relations were at a nadir. This thesis analyzes the processes and private sector interests leading to the 1981 Code’s emphasis on water rights as private property. With the return to democracy in 1990, elected governments tried to address defects in water policy inherited from the military regime. However, the core principles of the 1981 Code remained in effect; elected governments continued, and even expanded, the free-market approach by privatizing urban water services. The thesis provides a case study of privatization of water rights and services in Chile and analyzes whether an extended period of authoritarian rule, which profoundly altered the country’s overall economic framework, its societal norms and its institutions can be meaningfully changed through democratic processes to effectively promote public goods such as equitability, sustainability and environmental protection. The thesis contends that the extreme form of free-market water policies, originating in the absence of democratic debate, is no longer tenable. Paradoxically, the economic growth and stability of Chile, and its increased international involvement, have been major factors in highlighting the extent to which Chile’s water policies are out of step with internationally recognized best practice standards. Because the goal of continued economic development is shared across a broad political spectrum in Chile, and because equitability, sustainability and environmental protection are now seen by influential international organizations (e.g., World Bank and OECD) as critical factors for economic growth, the thesis argues that the norms promoted by these international organizations, and the pressures they can exert, have opened a promising path for meaningful evolutionary change in Chilean water policy and practice.