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The Extractive Industries and Society xxx (xxxx) xxx

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The Extractive Industries and Society


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Original article

The (not-so-free) Chilean water model. The case of the Antofagasta Region,
Atacama Desert, Chile
Manuel Prieto a, *, Matías Calderón-Seguel a, María Christina Fragkou b, Rodrigo Fuster c
a
Departamento de Ciencias Históricas y Geográficas, Universidad de Tarapacá, 18 de septiembre 2222, Arica 1010069, Arica, Chile
b
Departamento de Geografía, Universidad de Chile, Portugal 84, Santiago 8331051, Santiago, Chile
c
Departamento de Ciencias Ambientales y Recursos Naturales Renovables, Laboratorio de Análisis Territorial, Facultad de Ciencias Agronómicas, Universidad de Chile,
Santa Rosa 11315, La Pintana 8820808, Santiago, Chile

A R T I C L E I N F O A B S T R A C T

Keywords: Both supporters and critics of the Chilean water model have described it as a textbook example of deregulation
Chile and the free-market model for water management. In this article, we challenge this characterization and argue
Extractivism that the model has relied on long-term and highly centralized State decisions that have installed and reproduced
Water markets
historical power asymmetries. Based on archival research and historical records of water rights assignments and
Water privatization
Neoliberalism
water-related legal instruments, we develop a comprehensive historical analysis of how water rights have been
distributed over the last 100 years in one of the country’s most paradigmatic cases: the Antofagasta Region.
Starting seven decades before the military regime imposed the 1981 Water Code, our analysis reveals that water
in this geographical area has historically been distributed through distinct State-driven strategies rather than
market instruments, favoring mining companies. We conclude that the Chilean water model, rather than being a
market-driven approach to water management, actually relies on strong regulations, and that the Water Code
merely crystallizes centralized historical decisions regarding water distribution that support an extractivist
development model.

1. Introduction Among these, the new 1981 Water Code is an iconic example of
free-market model for water management (Bauer, 1998; Budds, 2004).
Chile was the birthplace of the articulation of a comprehensive This status derives from its strong protection of private water rights that
neoliberal project during the late 1970s and early 1980s (Harvey, 2007). can be traded freely in the market.
In response to President Allende’s socialist program (1970-1973), The Code established tradable private property rights separated from
Pinochet’s dictatorship (1973-1989) deployed violent and repressive land rights and expressed in volume per unit of time (e.g., liters per
methods to erase any hints of socialism in society and impose an over­ second, cubic meters per year). This regime was accompanied by min­
arching neoliberal economic reform. During the late 1970s, the military imal state intervention, with the national water agency (Dirección
regime, advised by radical neoliberal economists the “Chicago Boys” General de Aguas – hereafter DGA) lacking the power for management,
(Valdés, 1995), developed a broad economic reform that implemented planning, and conflict resolution. Private property in terms of water
the core principles of neoliberalism: privatization of common goods and rights was also strengthened by the constitution (Bauer, 1998). Ac­
economic activities, limited economic regulation, strengthening of pri­ cording to neoliberal theory, this design would allocate water apoliti­
vate property, openness to international markets, free functioning of cally toward the highest economic value uses while maximizing social
markets, and incentives for foreign investments. All of these elements welfare (Briscoe, 1996). The rationale for this new system was that
were codified at the constitutional level in the 1980 Constitution, which private decisions and their coordination through private trading would
is still in force (Bauer, 1998). The reform included the transformation ensure efficient water allocation, conflict resolution, and distribution.
and privatization of several sectors (e.g., education, health, social se­ Supporters of the Chilean model have promoted it as a successful
curity) and resources (e.g., energy, minerals, fishery, and forestry). case study for international water reforms (Briscoe, 1996; Hearne and

* Corresponding author.
E-mail addresses: mprieto@academicos.uta.cl (M. Prieto), mcalderons@academicos.uta.cl (M. Calderón-Seguel), mariac.fragkou@uchilefau.cl (M.C. Fragkou),
rfuster@uchile.cl (R. Fuster).

https://doi.org/10.1016/j.exis.2022.101081
Received 19 October 2021; Received in revised form 12 April 2022; Accepted 13 April 2022
2214-790X/© 2022 Elsevier Ltd. All rights reserved.

Please cite this article as: Manuel Prieto, The Extractive Industries and Society, https://doi.org/10.1016/j.exis.2022.101081
M. Prieto et al. The Extractive Industries and Society xxx (xxxx) xxx

Easter, 1995; Rios and Quiroz, 1995; Thobani, 1995). Libertarian the idea of the Chilean model as a paradigmatic case of a market-driven
scholars have presented it as an example showing that the idea of approach to water management, highlighting its reliance on strong
free-market environmentalism is no longer an oxymoron (Anderson and regulations. This allows us to see the Water Code as another chapter in a
Leal, 2001), while other scholars have stressed the socio-environmental broader historical approach to water management that has favored
problems of the model (Babidge et al., 2019; Budds, 2004; Yáñez and extractive interests.
Molina, 2011), and social movements have demanded changes to the
Water Code based on discourses of water injustice (Bolados et al., 2018). 2. Methods
These different perceptions all have one thing in common. All of them
agree that the Chilean water model’s radical laissez-faire approach We employed a mixed research design that combined historical
means that it can be considered a textbook example of deregulation and analysis of archives and secondary sources with descriptive statistical
the free-market model of water management. analysis. The historical analysis has allowed us to address the articula­
Contrary to the general assumption that the Chilean case is an un­ tion between the state, mining, and water in the region. We used various
regulated water market, as part of a broader research agenda we have secondary sources, mainly government technical studies and scientific
problematized this assumption by emphasizing that the model relies on studies. We examined this information along various thematic di­
highly centralized state decisions that, in turn, have reproduced his­ mensions in order to account for the historical dynamics in the alloca­
torical power asymmetries ([author(s)]). First, we have described how tion of water by the state and the role of the mining industry.
the model is not value-neutral, but rather is sustained through the We conducted archival research at the DGA. We reviewed the public
marginalization of particular water uses (such as in-stream uses) and the records related to the water rights officially recognized and looked for
design of specific types of water rights that privilege certain uses over lacunas and inconsistencies in the data. We filled the gaps based on
others (such as hydropower over agriculture; [author(s)]). Second, we technical reports (CADE-IDEPE, 2004; Figueiredo Ferraz Consultoría e
have explored how multiple socio-ecological contradictions within the Ingeniería de Proyecto Ltda, 1996) and field validation. We organized
model have been solved through extra-market decisions that ensured the 1022 cases of water rights allocation (equivalent to 28,349 liters per
process of capital accumulation. One example is the development of second) granted between 1905 and 2018 into a database with the
water desalination that alleviates some of the problems attributed to following variables: (a) flow granted, (b) year in which the rights were
Chile’s water market model but creates new ones ([author(s)]). Third, granted, (c) type of rights (surface water or groundwater rights), (d) type
we have examined the case of the lithium industry, where companies of use (sanitary, industrial, mining, irrigation, and other uses), and (e)
pump large volumes of brine from aquifers. However, they do not location.
require water rights for such extraction because the brine is not To characterize the evolution, distribution, and quantity of the water
considered “water” under Chilean regulations [author(s)]). Fourth, by rights granted, we examined the data throughout the time series 1905 –
studying water rights transactions in the Atacama Desert, we have 2018 represented as line graphs. The study period comprises the years
shown how, despite the high degree of competition for water use, the for which there was data availability in the existing official records. The
market has not been as active as expected for reallocating water; instead, results allow us to develop a diachronic analytical perspective on how
water allocation has been highly dependent on hierarchical decisions the state has been distributing water resources during the study period.
([author(s)]).
Continuing with this research agenda, in this article we aim to 3. The Antofagasta Region
deepen the criticism of the idea thatthe Chilean water model isa case of
deregulated water management. To this end, we pursue an empirical Our research focuses on the Antofagasta Region, which is located in
analysis of the relationship between mining, water rights, and the the Atacama Desert (Northern Chile). This region is known as the
Chilean State in the Atacama Desert. More specifically, we develop a “mining heart of Chile”. It contributes to 51% of the country’s mining
historical description and analysis of how water rights have been cen­ GDP (Banco Central de Chile, 2022), and it represents 30% of total na­
trally distributed without using market instruments in a paradigmatic tional exports, 55% of total copper exports (Gobierno de Chile, 2019),
case: the Antofagasta Region, located at the heart of the driest desert in and 100% of lithium production, which corresponds to 26% of world
the world and where Chile’s richest mineral deposits are found. We production (Servicio Nacional de Geología y Minería, 2020).
develop a comprehensive analysis of the historical and spatial distri­ Multiple factors explain the hyper-dry conditions of the area. The
bution of water rights in the region for more than 100 years, with a Andes mountain range separates this area from the tropical continental
starting point seven decades before the implementation of the 1981 climate by obstructing the moist air coming from the Amazon Basin
Water Code. (Garreaud, 2009). Annual rainfall is mostly concentrated in the austral
Our results challenge two types of previous analyses: those that summer season, and it responds to an upper-level anticyclone located at
present the Chilean model as an apolitical and efficient system of water the southeast of the central Andes (Sarricolea and Romero, 2015). The
allocation, and those that have criticized the free-market model as the topographic gradient defines an altitudinal rise in precipitation in the
primary source of water injustice. Indeed, we stress that the state has west-east direction, and below 2500 masl precipitation is virtually ab­
played a central role in water rights allocation by adopting hierarchical sent all year.
decisions that are far from flexible, market-oriented, and developed Despite the summer rainfall, waters that feed ground and surface
within an unregulated institutional context. This finding leads us to basins are scarce due to the high evaporation rate. Permanent water­
suggest that the present Water Code is yet another chapter in the series courses are restricted to the upper part of the Andes because the
of regulatory regimes that have managed water in the region since the Domeyko mountain range contains them. This morphology determines
establishment of intensive mining activities, favoring extractive in­ the existence of endorheic basins with a high rate of evaporation, pro­
dustries and consolidating historical power asymmetries. ducing salt flats. Other surface water runoff consists of smaller streams,
In what follows, we first explain the research methods. Second, we creeks, lakes, hot springs, and small lakes located in the highland zone.
describe the focal region. Third, we develop a historical analysis from Additional resources are primarily groundwater, which is located
1857 to present, in which distinct institutional models have shaped the mainly in the salt flats, uplands, and in the intermediate depression
water-mining nexus in the region. Fourth, we present the historical sector.
distribution of water rights in the Antofagasta Region during the study This research focused on the region´s two main basins: the Loa River
period. Fifth, we emphasize the centralized state role, and how it has Basin (hereinafter, LRB) and the Atacama Salt Flat Basin (hereinafter,
fossilized historical water allocation, reproduced historical power ASFB) (Figure 1), which together are responsible for 67% of the water
asymmetries, and created new asymmetries. Finally, we problematize rights in the region and most of the extractive activities.

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Fig. 1. Study area.

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The Loa River is the primary water source and the only one that flows LRB in the interests of industries and mining projects. These regulations
into the sea after running 440 kilometers from its source in in the Andes established five uses for which concessions could be granted, and
Mountain range. Its main tributaries are the Salado River, the San Pedro established priorities and a minimum water flow reserve for the first
River, and San Salvador River. Water resources from this basin are three priorities. In order, priorities were:1) Drinking water, industrial
mainly exploited for the intense copper extraction. With the exception of plants, and requirements for locomotives and steam boilers (with a
a few small private mines, the state-owned company, Codelco, exploits reserve of 500 L/s); 2) Nitrate refining (with a reserve of 400 L/s); 3)
these mines: Chuquicamata, Radomiro Tomic, Ministro Hales, and El Industries and mining (with a reserve of 300 L/s); 4) Irrigation (with no
Abra (co-owned with Freeport McMoRan). Urban growth has increased reserve); and 5) Driving force for hydroelectric and other purposes (with
the water demand in the basin. During the 20th century, both state and flow reserve) (Lira, 1921; Rudolph, 1927).
private investors built infrastructure to divert water from the upper These laws allowed the construction of pipelines that brought water
section of the basin and toward the main cities (Calama, Antofagasta, from the Atacameño village of Toconce to the mines and into the cities of
and Tocopilla). Calama and Antofagasta (Rudolph, 1927). The mining companies,
To the south is the ASFB, located between the Andes Mountain range especially the then American Chile Exploration Company (Chilex,
and the Domeyko range. It is located 55 km south of San Pedro de currently Codelco), directly obtained the state water rights to a signifi­
Atacama and is surrounded by mountains. Here the only permanent cant amount of water from the Loa River and its tributaries (Hojalar,
river runoffs are the San Pedro River and the Vilama River. Many other Toconce, San Pedro) and are currently owned by Codelco. Under this
small creeks flow into the salt flat from the Andes mountains. water regime, sulfur mining companies and the British company Anto­
In the area, two private companies, Albemarle and SQM, conduct fagasta (Chile) & Bolivia Railway company (FCAB in its Spanish
large-scale brine exploitation (mainly lithium and potassium). This ac­ acronym) also obtained rights to significant amounts of water from the
tivity demands a high amount of groundwater, which is pumped from Siloli River and the San Pedro River.
below the flat to evaporating ponds. There are also two private copper After the collapse of the nitrate industry, the copper industry became
mines that rely on aquifers in the ASFB: Escondida (the highest- the main industrial sector to benefit from these laws. Copper production
producing copper mine in the world) and Zaldivar.́ changed its status from small- to large-scale in the early 20th century,
Since pre-Hispanic times, Atacameño (or likan-antai) indigenous when the Guggenheim family merged the small mines to create the
people, and to a lesser extent Quechua and Aymara, have developed Chuquicamata mine in 1912, founding the Chilex company, which was
agro-pastoral activities in the oases, ravines, and wetlands located later bought by the Anaconda Copper Mining Company in 1923 (Millán,
around the above-mentioned basins (Castro and Martinez, 1996). 2006). This situation was followed by a rising global demand for copper
Following the industrialization of the area, these activities underwent that has been maintained to date in the aftermath of the construction
major transformations due to environmental changes and the proleta­ boom following the new deal, the massification of electric power, and
rization process (Gundermann, 2003). the development of new mining technologies (Millán, 2006).
All these water uses coexist in the region. These users’ conflicting
interests have been a historical source of conflict, mainly associated with 4.2. The first Water Code
control over water resources and mining impacts (Babidge et al., 2019;
Carrasco, 2015; Prieto, 2015; Yáñez and Molina, 2011). The country’s first Water Code came into force in 1951 as part of a
broader agenda that promoted economic growth. Water rights were tied
4. The Antofagasta Region’s hydro(mining)politics to land ownership, blocking a water market, while the law also deter­
mined preferential uses. This Code enabled more state intervention in
Mining exploitation and the sanitary sector have shaped the region’s water infrastructure development in order to ensure economic devel­
hydropolitics since the second half of the nineteenth century, when the opment through the promotion of high-water-demand projects.
Chilean economy became dependent on the extraction of nitrates Although these rights were considered private once they were granted,
(Mendez et al., 2020). Ever since, copper and lithium have been the they were subject to several state regulations (e.g., revocation of rights
main mineral resources attracting investors to the region (Bus­ when the water was used in a non-declared way).
tos-Gallardo and Prieto, 2019; Gundermann and Göbel, 2018; Jerez When this Code entered into effect, Chilex obtained significant water
et al., 2021; Mendez et al., 2020). The spatial concentration of this in­ rights to the Hojalar, San Pedro, and Salado rivers. Indeed, the rights
dustry and its high-water demand has generated excessive pressure on obtained to the Rió San Pedro (537.5 L/s) are currently the main water
the aquifers (Comisión Chilea del Cobre, 2020; Prieto et al. 2019, Yañez sources for Codelco-owned mines. When Chilex began to pump the
and Molina 2011). These activities have essentially defined how local water from this source, they completely dried up the related section of
water rights are distributed amongst users, assisted by state policies the river and the lagoon where the river originates, radically affecting
(Yañez and Molina 2011). In what follows, we narrate the close rela­ indigenous herders (Prieto et al., 2019). Chilex also obtained water
tionship between mining and water control, stressing how distinct rights to the ASFB. During this period, many rights were also granted to
institutional frameworks related to both water and mining have his­ sulfur mining companies (Rudolph, 1952).
torically promoted a regional development model based on extractivism The urban growth that followed mining development increased
that has ignored other water uses and actors (i.e., agriculture, indige­ water demand, leading the state to bring water from the highlands to the
nous communities), revealing the state’s importance and challenging cities. In 1958, the then Directorate of Sanitary Works (Dirección de
the results of the mainstream literature. Obras Sanitarias), located within the Ministry of Public Works—the same
entity that still manages water in Chile today—built an intake in the
4.1. Establishment of the mining industry: 1857 – mid-20th century upper reaches of the Toconce River and the Hojalar River. This situation
radically diminished the available water for the community of Toconce,
The 1857 Civil Code of Chile established that waters were a national which had already seen its water diminished due to the pipelines built at
good, although the government granted licenses to private parties under the beginning of the century: a fact that led to the progressive aban­
restricted terms. Despite the national character of this legislation, in the donment of the village.
early twentieth century the nitrate mining sector pushed for better During the same period, the state began a process of intervention in
conditions for its interests, including water access. In response, the state the mining sector in 1953. This resulted in the nationalization of the
passed special legislation to regulate the distribution of water (Rudolph, entire copper industry and its transfer to the state-owned company
1927), establishing legal priorities among different uses. During the Codelco during the presidency of Allende. The reinforcement of a state-
1920s, the government passed laws that distributed the waters of the centered water regime also accompanied this process.

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4.3. Centralization, infrastructure, and regulation under radical reforms: did not need to justify their use of the water or make effective use of the
The 1967 Water Code water (i.e., beneficial use doctrine). These new water rights are free of
charge for life, and their owners are free to use them for any purpose. In
State control of water achieved its peak in 1967, when a new Water addition, to ensure water accessibility for mining projects, both the
Code was approved as part of an Agrarian Reform promoted by the Water Code and the Mining Code of 1983 freely granted so-called
government of Eduardo Frei Montalva. This law strengthened state “miners’ waters.” These are exclusive water rights automatically gran­
control, reinforced the public character of water, and expropriated all ted to the holder of mining rights over the aquifers within their mining
private rights. Under this model, water rights became concessions. As concession to the extent necessary for mineral exploitation.
such, they were regulated under public law, the state could cancel them, Finally, the Code established that the president can directly confer
they could not be separated from the land, and they could not be traded water rights under “exceptional circumstances and general interest”. In
on the market. Finally, under this model, state water management was the few cases in which this specific clause has been invoked, in 1985
based on technical criteria associated with the goals of a centralized Pinochet directly conferred superficial water rights to the public water
economy. During President Allende’s socialist government, the state’s supply company Sendos. These water rights correspond to a total of 850
role in the economy was strengthened: egalitarian policies were rein­ L/s from two uptakes in the Loa River, Lequena (550 L/s) and Quin­
forced, government participation in the industry became more active, chamale (300 L/s), and are now under the management of the Aguas
and the private sector and large private property holdings were weak­ Antofagasta company, which has the concession of sanitary services.
ened (Bauer, 1998). This company is considered private under Chilean legislation. However,
In the Antofagasta Region, this translated into the development of paradoxically, it is currently controlled by the EPM Group (Empresas
state-driven water infrastructure. It was also reflected in an ambitious Públicas de Medellín), a public Colombian company.
agricultural land reform whose implementation required an expansion All of the above special provisions have determined that significant
of state authority over water use and distribution, and the parallel volumes of water rights have been granted to mining companies, hy­
weakening of private rights through the state regulatory power (Yáñez drological exploration companies, and water supply companies that
and Molina, 2011). obtained their rights directly from the state authority.
The state increasingly developed agricultural improvement plans for Between 1982 and 1983, the DGA began to standardize water rights
Calama and nearby communities. The most important infrastructure in the region under the new Code. They developed a unique program in
improvement was the Conchi Dam, constructed across the Loa River Calama, Quillagua, Chiu-Chiu, and Lasana that was oriented toward the
between 1969 and 1975 and intended to increase the irrigation capacity agricultural sector. The objective of this action was to privatize water
of the Quillagua, Calama, Chiu-Chiu, and Lasana communities (Mon­ rights in order to facilitate free transactions among the agriculture,
salve, 1969). mining, and sanitary sectors. In the process, the DGA ignored traditional
In the early 1970s, the Salvador Allende radicalized the reformist water management practices (e.g., irrigation of wetland, vernacular
regulations begun by Frei’s government and continued to claim more units of measurement of water flows, ways of organizing land ownership
power for the state to centralize water management, allocate water concerning irrigation), which led to the privatization of less water than
rights, and build water infrastructure. This situation produced tensions had previously been the case. This generated a surplus, which was
in the rural communities, especially those downstream of the Conchi centrally transferred by the state to the extractive industries (see details
Dam and for the peasants of Calama, who experienced a decrease in in Prieto 2015, 2017).
water availability. As a result, people feared any new development plans Another relevant milestone in the region’s water distribution is the
and the possibility that the state would reallocate their waters toward Indigenous Law of 1993. This law established three main principles
industries (Yáñez and Molina, 2011). regarding indigenous waters: First, it recognized indigenous commu­
nities as collective legal entities, thus their collective rights to water
4.4. Entering the neoliberal era: The infamous 1981 Water Code and the were acknowledged. Second, it established that Atacameños’ and Ay­
consolidation of past mining water rights maras’ water should be specifically protected. It mandated that the DGA
and the The National Corporation for Indigenous Development (Corpo­
After the coup d’état in 1973, the military junta maintained Codel­ ración Nacional de Desarrollo Indígena –CONADI) should sign an agree­
co’s status of state company, though it implemented several institutional ment for the protection, constitution, and reestablishment of the
changes that favored private mining: the 1981 Mining Code and the ancestral water rights of the indigenous communities (Dirección General
Foreign Investment Act of 1974. As a result, private companies (e.g. de Aguas and Corporación Nacional de Desarrollo Indígena, 1997).
Antofagasta Minerals, Freeport-MacMoran, Escondida, Barrick) still Through this agreement, the state assigned significant water rights to
operate today alongside Codelco in the region (Servicio Nacional de communities—though it ignored cultural uses, water for herding, and
Geología y Minería, 2020). groundwater, among other things (Cuadra, 2000; [author(s)]). Finally,
Significantly, the 1981 Water Code’s regime reinforced water control the indigenous law established a special subsidy to indigenous people
by the extractive industries. Indeed, all rights to large amounts of water for the acquisition of water rights in the market ([author(s)]).
that had been acquired under previous legal systems by the extractive It is important to acknowledge that since the early 1980s, there has
industries were recognized by the new regime as private rights. Like any been increasing water extraction in the ASFB by the brine mining in­
new rights, they become governed by private civil law and freely trad­ dustry. Two companies hold the main concession rights to exploit brine.
able on the market. This situation is crucial for our case study because, This industrial process demands the pumping and evaporation of a large
as described above, several special 1920 laws regulated water use and amount of water containing a high-concentration salt solution from
established priorities for human consumption and the mining sector beneath the salt flat to produce the final products (potassium, lithium
over irrigation (Rudolph, 1927). Besides, the code established an initial carbonate, lithium hydroxide). However, legally this water is considered
distribution system of water rights using the “first come, first served” brine rather than water regulated by the Water Code (Bustos-Gallardo
rule, based on the prior appropriation doctrine. In the focal region, this et al., 2021). Consequently, these companies are not required to obtain
system has directly favored extractive industries. According to this rule, water rights. In practical terms, this means that the state has given two
the DGA must award water rights free of charge to the first petitioner if companies in the area permits to extract 2442 L/s of water without any
water is physically available. Initially, applicants for new water rights concurrent water rights (Babidge et al., 2019). This situation has

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generated an overexploitation of the aquifers, which has led to envi­ Our historical review suggests that the distinct Water Codes have been
ronmental degradation (Gutiérrez et al. 2022) and conflicts with relevant in defining ownership but not in defining the owners them­
indigenous communities (Lorca et al. 2022). selves. On the contrary, it is political interests, private agreements, and
arbitrary state-centric decisions that have historically shaped water
ownership. All of these strategies have created a waterscape in which
4.5. Drying up the desert: Expanding a technocratic neoliberal water water is accumulated by extractive industries and indigenous peoples
model in democratic Chile, 1990 - today are dispossessed of their waters (Yáñez and Molina, 2011; Prieto et al.
2019). At the same time, sanitary companies have played an enormous
The above-mentioned arrangements have resulted in an unprece­ role in water distribution over and above ownership. Human con­
dented accumulation of water rights by the mining sector, favoring its sumption and agriculture are less relevant uses in this setting. In what
expansion (Servicio Nacional de Geología y Minería, 2020). By the follows, we see how the above political, economic, and legal background
1990s, the water needs of the rapidly growing mining sector, facilitated has shaped and is reflected in the distribution of water granted in the
by the attraction of foreign capital and the subsequent population Antofagasta Region throughout the 20th century.
growth and urban expansion, brought the region into conditions of
water stress. It is from this point onwards that the regional water utilities 5. Distribution of water granted in the Antofagasta Region,
company began to gain power in determining how water was distributed 1905-2018
in the region, introducing new ways of accumulating and distributing
water at the margins of the market. The process of privatizing water rights meant that by 2018 there
Water utility companies in Chile cannot make their water rights were 28,244 L/s allocated in the region. Of this total, 41% was assigned
available in the market, but they can enter into contracts for water in the LRB (11,590 L/s) and 26% (7,322 L/s) in the ASFB. Together,
provision with private parties as long as they can guarantee water pro­ these basins contain 67% (18,912 L/s) of the total regional water
vision for their urban concession areas. Under this scheme, ESSAN granted in 579 water rights. The current status is a result of the accu­
(Empresa Sanitaria de Antofagasta SA), a state-led company created mulation of water rights granted by the state under the institutional
during the first period of democratic government after the end of the models described above. Considering the relevance of these two basins,
dictatorship, entered into contracts with mining companies for the we focus on them in the following analyses.
provision of untreated water for industrial use. To secure water provi­ The evolution of water rights granted in both basins between 1905
sion and sustain these contracts, ESSAN also directed the construction of and 2018 (Figure 3) reflects the historical events previously reviewed.
the La Chimba desalination plant, whose water production for the sup­ The first increase in water granted occurs around 1915. This coincides
ply of the region’s main urban consumer, Antofagasta, would “liberate” with the start of operations of the Chilex company and reflects a series of
the company’s water rights for the direct sale of freshwater to the mining water rights allocations between 1914 and 1921 to Chilex, the saltpeter
sector. industry, and the FCAB, owned by the Luksic Group, in addition to a
In 2003, three months after the desalination plant opened, Aguas series of regulatory provisions regarding the allocation of water for these
Antofagasta took control of ESSAN through a thirty-year concession large capitals.
contract. Aguas Antofagasta was part of Antofagasta plc, a major na­ The second, notorious increase in water granted in both basins
tional conglomeration of mining and transport companies that owns two occurred in 1927. This abrupt change is associated with 1920s regional
of the nine large-scale mines in the region. Since then, desalinated water regulations in the LRB, which permitted the extraction of water through
production increased from 150 L/s in 2003 to 850 L/s in 2017, and has the development of infrastructure works, favoring mining. The main
gradually been replacing freshwater in the city of Antofagasta. This has allocations during this episode, as well as in the subsequent period until
allowed Aguas Antofagasta not only to maintain the existing water the 1950s, were in the LRB for Chilex, explosives companies, and nitrate
provision contracts but also to add three new ones, including the two companies (Figure 4A). In the ASFB, Chilex and the FCAB stand out
mines affiliated with its conglomerate. By 2016, the total volume of (Figure 4B).
water sold to the mines, was slightly more than 17 million m3 annually, The enactment of the 1951 Water Code enabled a third significant
while the La Chimba desalination plant produced 19 million m3 in the increase in the water granted to industrial and sulfur mining companies
same year. in the mid-1950s, while the sanitary sector began to emerge in terms of
The actions taken by ESSAN had important implications for the water property. Water in both basins was assigned principally to Chilex
company in undertaking its work following privatization. The new (with over 500 L/s, still Codelco’s property), SQM, and other mining
concessionary company would not only have access to the water rights companies (saltpeter and others). Alongside the augmentation of mining
of ESSAN; in fact, the contract also included water provision agreements operations, the construction of infrastructure to satisfy increasing urban
with the mining sector, plus the complete control of the La Chimba water needs caused an increase in sanitary water needs in the LRB
desalination plant. (Figure 4A).
Although representatives of the current owners of Aguas Antofagasta This water allocation pattern, characterized by specific peaks fol­
since April 2015, the EPM group (see above), claim that the desalination lowed by periods of low dynamism, changed abruptly in the mid-1970s.
plant was constructed in order to satisfy Antofagasta’s expanding pop­ Between 1976 and 1989, over 4300 L/s were assigned in the LRB, 3809
ulation, a 2003 report from the Inter-American Development Bank of which corresponded to mining companies (e.g., Codelco, Antofagasta
clearly states, after recognizing that water availability is critical in the Minerals, and SQM), while 363 L/s were assigned to the FCAB and other
region and that mining activities require more water, that the water companies for industrial uses. Eighty-six percent of the assigned water
produced by the plant will gradually replace the freshwater supply. (3,720 L/s) corresponds to only six water rights allocations, revealing
What is more, “the substituted water will be negotiated with the mining the concentration of water property (Figure 4A).
companies that require it for their new expansion projects” (Inter-­ For the first time, the 1981 Water Code started to recognize
American Development Bank, 2003). Hence the political-institutional customary water as private rights. After the enforcement of the 1993
system favors the flow and accumulation of water toward certain eco­ Indigenous Law, the state began a narrow implementation of this
nomic sectors ([author(s)]). recognition among indigenous communities. Several other private ac­
This section demonstrates the various ways in which water has been tors also gained rights under this Code.
distributed over the last century in the Antofagasta Region (Figure 2).

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Fig. 2. Hydro(mining) politics in the Antofagasta Region.

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Fig. 3. Cumulative water rights granted (L/s) in the LRB and ASFB, 1905-2018

Fig. 4A. Cumulative water rights granted (L/s) in the LRB, according to water use (1905-2018)

Water rights for sanitary uses in the LRB (2063 L/s) are mainly the present, water rights for mining use (1896 L/s) were assigned to
owned by the state, although the sanitary company Aguas Antofagasta is SQM and large private copper mining companies (e.g. Minera Escondida
currently under private management. Along the same lines, irrigation and Spence, operated by BHP Billiton, and Zaldivar owned by Antofa­
water rights are primarily owned by the state through the Directorate of gasta Minerals). The industrial uses (349 L/s) are owned by two smaller
Irrigation (1350 L/s out of 1626 L/s). Non-state irrigation water is up to mining companies and one unidentified company. Conversely, water
278 L/s, and is associated with natural persons and a Atacameño´s rights for irrigation present a very different picture from the LRB. In the
farmers’ organization (65 L/s). The water rights of indigenous organi­ ASFB, irrigation water (1927 L/s) is under the control of various
zations total 610 L/s. Despite only 130 L/s are formally allocated for indigenous organizations and accounts for 1600 L/s of the total water
irrigation, through ethnographic work, we observed that the main use of used for irrigation. The main water rights for irrigation belong to the
these rights is irrigation. indigenous communities of San Pedro de Atacama (870 L/s), followed
In the case of the ASFB (Figure 4B), during the period from 1985 to by a state reserve of the Directorate of Irrigation (270 L/s). The

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Fig. 4B. Cumulative water rights granted (L/s) in the ASFB, according to water use (1905-2018)

indigenous organizations of the ASFB have a total of 47 water rights, exception is a 1914 allocation to the FCAB in the LRB, currently used by
totaling 2066 L/s, and declare uses for irrigation (the primary use), the mining companies owned by the Luksic group (see above).
sanitary use, and other uses. In the LRB, there was a sharp increase in groundwater allocations
Between 1990 and 2018, the granting of water rights was less dy­ between 1990 and 1995, corresponding to 20 water rights allocations
namic than in the previous period. A surge in water rights granted in the held by mining companies for a total of 1852 L/s. From 1995 to 2018,
LRB in 1990 was followed by a similar surge in the ASFB a few years the allocation of groundwater rights followed a slower pace. During this
later (mid 1990s). The first sharp increase was between 1983 and 1988, period, 36 allocations were given for mining and industrial uses. This
followed by the period between 1996 and 2001, with a final peak be­ represented a total of 1405 L/s.
tween 2013 and 2017. On the other hand, in the ASFB, groundwater began to be allocated
When analyzing the allocation of water rights according to water between 1985 and 1994, during which period 33 allocations equivalent
source in both basins (Figure 5), it is notable that until the mid-1980s, to 753 L/s were assigned for industrial and mining uses. The most abrupt
virtually all water rights related to surface water sources. The only increase occurred between 1996 and 2000, when only 35 groundwater

Fig. 5. Cumulative water rights (L/s) in the LRB and ASFB, according to the nature of the water (1905-2018)

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allocations—mainly for mining uses—totaled 1460 L/s. Finally, be­ (Babidge et al., 2019). On the other hand, recent developments
tween 2001 and 2018 there were 66 groundwater rights allocations for a demonstrate the importance of desalinated seawater in offering an
total of 1673 L/s. Here, in addition to mining uses, there are sanitary and alternative water source that compensates for market failures and se­
irrigation uses, several of which are linked to hotels. cures water for mining, even if it is designated for human consumption
In light of these results, we now turn to discuss the state’s historical (Fragkou and Budds, 2019). Second, the “miners’ waters” regulation
role in water allocation, facilitating water accumulation by extractivist offers a new, free, and perpetual water source to mining companies, as it
activities. grants exclusive water use to the holder of mining rights over the
aquifers within their mining concession.
6. Discussion State strategies for water allocation have evolved alongside the
development of the mining sector in the region, with visible results to
Our historical survey of national and regional water management date: many of the water rights assigned throughout the 20th century to
strategies, summarized in Table 1, questions the perception of the mining companies and other capital-intensive extractive industries are
Chilean water model as unregulated. On the contrary, it shows how the now property of the state-owned Codelco company. A similar pattern
current model cannot be understood without considering broader his­ applies to the regional sanitary company, another relevant actor in the
torical, political, and economic processes, which have been underpinned region that has been beneficiary of centralized assignments of water
by a strong state role in water distribution ever since the establishment rights, including 850 L/s that were directly conferred by the dictatorship
of mining activities in the Antofagasta Region at the beginning of the by an exceptional order. The regional sanitary company is now a private
20th century. As shown in Table 1, the most common strategy up until concession, meaning that its accumulated water rights are under private
the 1980s was the centralized allocation of water rights, the principal management but essentially of public ownership. This means that the
beneficiaries of which were mining companies. water rights of the two most important actors in the region, Codelco and
To achieve this centralized allocation, many laws, regulations, and Aguas Antofagasta, are essentially under state ownership. The fact that
decrees implemented on different institutional scales have favored Aguas Antofagasta is actually a foreign public company is yet another
extractive activities. These measures, which include the specification of paradox in the Chilean pro-private model.
regional minimum water flows for mining, industrial, and human con­ Another consequence of these strategies has been the accumulation
sumption (unlike anywhere else in the country), reflect the strategic of water rights by the mining sector and their legitimization through the
importance of mining in the region. Mining development in strategic 1981 Water Code, which legitimized and fossilized the water distribu­
mining hotspots was also assisted by the construction of the hydraulic tion taken throughout the 20th century in an unprecedented manner, i.e.
infrastructure necessary to mobilize water across the vast Atacama through the assignment of private, free-of-cost, perpetual, and trans­
Desert and make water assignments feasible; the state promoted and ferable water rights.
financed this infrastructure for a large part of the 20th century. Through this historical lens, we can see how both state- and market-
State plans to secure, assign, and mobilize freshwater for mining driven water management models have gradually secured water for
activities continued after the neoliberal Water Code came into force in mining, clarifying the government’s role in water property politics as
the 1980s. Following water shortages, these plans were gradually one of an active, hierarchical, and centralized regulator. Beyond the
complemented by the securing of complementary, non-traditional water Water Code itself, government water politics have directly influenced
sources. First, the state secured water for mining through two types of the ownership and allocation of water. This in turn has affected regional
water that are not included in the Water Code: brine and seawater. Due development, with the objective of guaranteeing water for mining
to the lack of regulations regarding brine, mining companies were resulting in the construction of an distinctive region in terms of both
granted the right to extract 2442 L/s without needing any water rights economic development and environmental injustice.

Table 1
State strategies to control water property and promote extractivism in the Antofagasta Region, and resulting winners and losers.
Historical term State water strategies Main Winners and Losers

Establishment of the mining industry: Specification of minimum guaranteed flows for certain uses, W: nitrate mining companies; FCAB and Chilex
1857 – mid-20th century including industries and mining
Direct assignment of water rights to mining companies L: Agropastoral Indigenous communities of the upper-middle
section of the Loa River Basin
The first Water Code (1951) Granting of private rights that are subject to several state W: FCAB; Chilex; Directorate of Sanitary Works and sulfur mining
regulations companies
L:Agropastoral Indigenous communities of the upper-middle
section of the Loa River Basin
Centralization, infrastructure, and Expropriation of private water rights W: Codelco; Directorate of Sanitary Works
regulation under radical state reforms: L: Agropastoral Indigenous communities of the upper-middle
the 1967 Water Code section Loa River Basin, and indigenous communities and peasants
from the middle-lower section of the Loa River.
Entering the neoliberal era: the 1981 water Water rights acquired under previous legal systems by mining W: Codelco, brine mining companies, private water supply
code and the consolidation of past corporations and urban water-supply companies are recognized company
mining water rights by the new regime as private and perpetual rights L: Agropastoral Indigenous communities of the upper-middle
Granting the right to mining companies to exclusively exploit the section Loa River Basin, indigenous communities and peasants
aquifers within their mining concession even without water from the middle-lower section of the Loa River, and Agropastoral
rights, under the concept of miners’ waters Indigenous communities from the Atacama Salt Flat Basin
Direct assignment of water rights to the sanitary company by the
dictator’s exceptional order
Drying up the desert: expanding a Institutional arrangements that secure new water sources for W: Codelco, private copper mining companies, brine mining
technocrat neoliberal water model in mining activities (seawater, underground brine) companies, private water supply company
democratic Chile: 1990 - today L: Agropastoral Indigenous communities of the upper-middle
section Loa River Basin, indigenous communities and peasants
from the middle-lower section of the Loa River, Agropastoral
Indigenous communities from the Atacama Salt Flat Basin, and
urban water consumers

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7. Conclusion Supplementary materials

Chilean post-1980s neoliberal reforms have been framed as a case of Supplementary material associated with this article can be found, in
deregulation, in which the idea of the withdrawal of state has become the online version, at doi:10.1016/j.exis.2022.101081.
commonplace among both followers and adversaries. Within the context
of the Chilean neoliberal reforms, this viewpoint has privileged dis­ References
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