Hydroelectric power generation in Chile: an institutional critique of the neutrality of market mechanisms

Abstract

This paper presents an institutional analysis of hydropower development in Chile, focusing on the main legal institutions involved and relevant jurisprudence. Hydropower expansion took place within a neoliberal institutional framework imposed by the military government (1973–1990) that included reforms in both the water and electricity sectors. One of the stated purposes of these reforms was to remove ideology from both water management and electricity generation and ensure the neutrality of the state. The paper argues that the security of property rights for hydropower activities is not value-neutral but sustained only through marginalizing other water rights and interests, such as in-stream uses.

Keywords:

• Chile
• water rights
• water conflicts
• hydropower
• neoliberal reforms

Acknowledgments

We thank Jonathan Barton for his comments on earlier drafts.

Notes

1. For a thorough review of the ideological background of the Chilean economic model, and its influence in the Chilean water and energy reforms, see Bauer (1998a, 1998b) and Prieto (2007).

2. Based on Bórquez (1986) and personal communications (2007) from two anonymous DGA officials.

3. See Orrego v. Empresa Eléctrica Pangue (Corte Suprema, May 8, 1993).

4. According to the report of the DGA to the Court for Defense of Free Competition (see DGA 2006).

5. For more details about the history of this discussion, see Bauer (2004).

6. See details in Prieto (2007).