The 1981 water code: The impacts of private tradable water rights on peasant and indigenous communities in Northern Chile

Budds, Jessica (2009). The 1981 water code: The impacts of private tradable water rights on peasant and indigenous communities in Northern Chile. In: Alexander, William L. ed. Lost in the long transition: Struggles for social justice in neoliberal Chile. Lanham: Lexington Books.



One of the most radical neoliberal reforms devised and implemented in Chile under the military regime led by General Pinochet (1973–1990) was the major revision of the water law, the 'Water Code', in 1981. Designed according to free-market principles, the result was a law which introduced a system of private water rights that could be traded in free markets with almost no government regulation. The Water Code has also been important in international water policy, having been recommended by some development agencies as a successful model that should be replicated in other countries. This promotion has been heavily based on claims of economic efficiency, but also the potential to generate social benefits and effective water resources management. Social benefits are one of the most contested issues in relation to Chilean water markets, but the debate is clouded by the absence of empirical evidence of how they affect poorer water users.
The aim of this chapter is to analyze the nature of the 1981 Water Code and explore its social outcomes through two empirical case studies. This research will form the basis for a discussion of the social implications of introducing private tradable water rights systems. The chapter starts by outlining the creation of Chile's 1981 Water Code within the historical-political context of the military regime, and its principal 'neoliberal' characteristics. The following section examines debates, both in Chile and internationally, surrounding the advantages of tradable private water rights and their potential to produce social benefits, and considers existing field studies from Chile. The next section explores the social implications of the conversion of water rights into tradable private property in two regions of northern Chile, focusing on the outcomes for peasant farmers and indigenous communities. The final two sections then draw some conclusions on social equity issues in relation to water markets, and reflect on the extent to which these issues are likely to be addressed by the modifications to the Water Code in 2005.

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