Water Use in Chilean Agriculture

Legal Context of the Water Resources Use in Chile

The management of water in Chile and its consequences correspond to a case of administration of a scarce natural resource within a neo-liberal economical and political context, represented by the 1981 Water Code. Such legal body diminished the Government attributions and transferred the ownership of rights for water use, and therefore its usage, exploitation and disposal, to private entities, generating the power to freely negotiate and use the ownership rights for water use.

In the late 70's and beginning of the 80's a series of planning began, oriented to the generation of incentives to invest and modernize the techniques for water application and management. The basic premise was set that the market and the private property of the rights for water use would effectively allow its saving and the sale of the exceeds or its investment on new activities, which, in turn, would add dynamism to the local and national economy.

In 1979, the 2603 Act (Decreto Ley) introduced modifications on the Civil and Water Codes in force at that time that changed the global view regarding the water issues. On the mentioned law, Article 1 had a constitutional level and established that "the rights of particulars on water acknowledged or constituted according to the Law, will grant the owners the property on them". Then Article 2 empowered the President of the Republic to issue regulations for the General Water Law (Guzman y Ravera, 1993). The mentioned decree was the keystone for the elaboration of the 1981 Code (Law Enforced Decree 1122) since it imposed the liberal and privatizator spirit that the Government at that time wanted to imprint on the general economy policy and, particularly, on the water governance in Chile.

The Title I of the 1981 Water Code divided inland water into surface water and groundwater, defining the first one as that "which can naturally be seen by the sight of human beings..." and the second one as that "which is hidden on the ground and has not emerged" (Codigo de Aguas, 1981). On this title, it is important to understand the intention of the Code to conceptually separate surface water from groundwater, with the purpose of creating, later on, different "exploitation rights" for each of them. In general, the owners of rights on groundwater tend to operate individually, while those with rights on surface water become part of user associations. Regarding the latter, two types can be mentioned: Surveillance Board and Channel Associations or Water Communities. Surveillance Boards are in charge of water management of natural flows, i.e. rivers, creeks, and Channel Associations are in charge of water management on artificial aqueduct, i.e. channels (Segura, 2003).

Regarding ownership and water exploitation, Title II clearly established that "water is a national good of public use and privates are granted the right to exploit it". It is important to mention that rights for permanent exercise are granted only at "non over-allocated" sources of supply, and that those of eventual exercise only allow the use of water during the time in which the matrix flow presents "surplus after the permanent exercise rights have been supplied". From this, we infer that permanent rights will not be granted on over-allocated flows, but eventual rights only.

In 2005, after years of questioning the 1981 Water Code, some modifications to this legal body were approved, which focused on subjects such as the justification of the request for exploitation rights (which must be in accordance with the later water use), new attributions for the DGA (Dirección General de Aguas, major water legal authority of the Chilean government) such as, for example, authority to declare, by itself, areas with restriction in the case of groundwater, and user organizations (in particular for groundwater systems). Although the main objective of these modifications was to diminish the degree of speculation associated to the water property, e.g. by imposing a patent for non-use, its practical effects are still uncertain.

Governmental Strategy of Support for Irrigated Agriculture: Chile, an Agricultural Food Producer Power

The "agroindustrial-exporting" development strategy of the Chilean agricultural sector has been one of the bases of the economical growth experienced by the country in the last two decades. In the context of this strategy, irrigation agriculture becomes a key factor: the production of irrigated agriculture represents 60-65% of the Gross Domestic Product (GDP) of the Chilean agricultural sector, contributing with more than 80% of the agricultural products export of the country. Such strategy has laid the foundations of a second phase in this process, oriented to positioning Chile as an agricultural food power, which is expected to be carried out by the second decade of this century. The most indicative fact has been the modernization of the agricultural and forest activity, with outstanding increases in productivity and quality; the exporting development of the main agrifood chains as a response to the opportunities aroused from the commercial agreements signed by the Chilean State; the ability to make compatible the supply to the evolution of the habits and preferences of consumers in the context of globalization, and the public-private integration as a strategy to reach new markets under a common project.

The results to date have been notorious: in the year 2005 the export of fresh and processed food rose above US$ 8.000 million, locating Chile among the 20 countries with best agricultural-related goods exporting capacity. As a result, the food industry is an important source of wealth and job opportunities, generating around 30% of the national GDP and using 20% of the work force, in more than 4.000 companies along the country.

Certainly, the insertion of Chile in the food markets requires growing volumes of products in quantity and quality, which calls for the participation on this process of the largest amount of the national production in the shortest period possible. Thus, a growing pressure and constant dynamism on the forestry and farming national activity is expected. In fact, estimations from the Bureau for Agricultural Studies and Policies (ODEPA), indicate that, in order to sustain the demand for agriculture products from foreign markets, 400 to 460 thousand ha of new irrigation soil over the next 10 years will be required.

Based on the strategic orientations previously exposed, the current Government in Chile has prioritized a series of plans and programs; one of these strategic guidelines is the National Program for Irrigation Promotion (Programa Nacional de Fomento del Riego). Indeed, recently the Agenda for Agricultural Innovation (Agenda para la Innovación Agraria) was published, a document that gathers information and defines needs and actions for innovation for a group of 15 productive chains and key matters for agriculture in Chile (MINAGRI, 2006). One of these topics is water resources, in which guidelines to be dealt with and issues to be focused on to increase the availability and quality of the water resources for agriculture, and to improve the technological level of irrigation and drainage, were defined. This was done with the ultimate purpose of supporting productivity and competence of the Chilean agricultural sector. Particularly, the following guidelines stand out: a) Promoting an integrated vision of water resources at the basin; b) Strengthen the management ability of the users organizations; c) Strengthen the management and institutional operation of the extra-property irrigation infrastructure; d) Generate the coordination to improve the market of water resources for irrigation; e) Control environment pollution caused by irrigation; f) Strengthen the intra-property land management of irrigation.

In summary, irrigation is one of the bases for agricultural development in Chile. At the same time, it has become one of the more efficient instruments for the achievement of the two determining program guidelines on the Agro-food Policy, which are: a) To modernize and make more competitive the national forest and agricultural sector, and b) To promote the opportunities of development of the Medium-size Agriculture and the Rural and Native Family Agriculture.

From this perspective, the central ideas of the program defined by the State of Chile regarding irrigation are:

• Giving structure and order to the irrigation development through the formulation of a National Program of Irrigation and Drainage, based on the National Policy.

• Readjustment, enlargement and focalization of the instruments for the development of irrigation, especially the Law for Irrigation Promotion, to benefit Rural and Native Family Agriculture.

• Restructuring and rehabilitation of the system of promotion and development of rural irrigation from INDAP (National Institute for Agriculture Development), which supports the enforcement of the Law for Irrigation Promotion towards Rural Family Agriculture.

One aspect that outstands from this analysis is related to the 18.450 law or "Law for the Promotion of Private Investment in Irrigation and Drainage Structure". It is important to mention the characteristics of this legal instrument and its influence over the development of the agricultural area under irrigation in Chile to understand the current context of the water use in the Chilean agriculture. The Law for the Promotion of Irrigation and Drainage grants agricultural financial assistance to irrigation and drainage projects with a top cost of UF 12.000, in the case of individual projects, and with a top cost of UF 24.000, in the case of projects presented by farmer organizations (UF stands for Unidad de Fomento1. At the time of writing this chapter, 1UF « US$35). The maximum rebate amount to which a determined project can apply corresponds to 75% of the total cost. Projects that can be rebated include a) building and repairing irrigation and drainage installations, b) execution of intra-property such as wells, technified irrigation systems, and electrification, c) execution of extra-property land buildings, such as water intakes, starting frames, and different art works.

Its original enforcement period was of eight years, but it was modified in 1994 to be in force until December 31st, 1999 and, later on, until January 1st, 2010. However, there is currently an active discussion for an extension of the enforcement. The reason for this responds to the important benefit that its existence has brought, in terms of modernizing and improving the irrigation and drainage infrastructure. For example, for the 2000-2006, the existence of the law allowed for annual average investments over the $M 30.000 (US$ M 60), of which around $M 20.000 (US$ M 40) was rebated by the State. The largest part of these investments, ca. 75%, was concentrated on the area between the regions of Coquimbo and Bio Bio. Only 3% of the investment was destined to drainage works, therefore almost all investments were destined to civil works (51%) and irrigation technification (46%). Finally, it

1 The Unidad de Fomento (UF) is a count unit which adjusts to the inflation rate, used in Chile. It was created by Decree N° 40 from January 20th, 1967. Originally its main use was for mortgage loans. Later on it was widely used for bank or financial loans for private or individuals, investment, contracts and in some case, fees.

is important to point out that the exercise of this law has favored middle-sized entrepreneurs (47%) and small producers (32%) and user organizations (19%).

It is also important to mention, as a complement to the existence of the 18.540 Law, the program for middle-sized and major water reservoirs (dams) motivated by the Chilean State in the last 30 years, represented by the PROMM Program, the Executive Order Law 1123 and the DS 900 of the Department of Public Works Concessions. The PROMM Program finances the building and restoration of middle-sized irrigation structures, that is, those that cost over 24.000 UF but under 600.000 UF. Finally, the 1981 Executive Order Law 1123, modified in 1995, establishes regulations for the execution of irrigation works by the State, while the 1996 DS 900, modified in 2006, corresponds to the Concession Act of Public Works, which includes dams. Both instrument represent the most important financing mechanisms currently available for big irrigation works, that is, those that cost over 600.000 UF (ca. US$ 20M). The main differences between both mechanisms are explained by the fact that in the Executive Order Law 1123 the works are executed and subsidized by the State, and there is a commitment of privates (farmers with water use rights) to reimburse part of the investment, and, therefore, becoming both the reservoir and water rights property of privates. In contrast, for the case of the DS 900, a contract is established between the State and a single private, being the latter a concessionaire. The concessionaire finances the construction, maintenance and operation of the work in exchange for the right to exploit it for a determined period (20 to 25 years) during which the water users (farmers with water rights) must pay a fee to the concessionaire. An "allowance" is set that corresponds to a percentage of the amount the State pays in an agreed period. The remainder of the investment is recovered by the concessionaire with the fare charged to the users. At the end of the concession period the structure becomes property of the State. Under the frame of the first instrument, in the last fifteen years, the Santa Juana (Atacama Region), and Puclaro and Corrales (Coquimbo Region) reservoirs were built, which significantly benefit the development of the agricultural activity in the Central North area of Chile (Torres, 2006). Currently, there is a group of 7 works in project that will be built towards 2013 by means of the 1123 Executive Order Law and the 900 DS, favoring 124.000 and 87.000 has respectively, including new irrigation surface and improved irrigated surface.

Factors that Determine the Use of Water in the Chilean Agriculture

In the following section a brief characterization of the climatic, physiographic and organizational factors existing in Chile is presented and the relation among these factors and the use of water for agriculture in the main areas of agricultural production is established. Thus, this is done for the area comprising the regions between Atacama and Los Lagos (2641° S).

Soils: As opposed to the situation existing northern of latitude 26° S and southern of latitude 33° S, where the territory is organized into clearly defined longitudinal strips N-S, the middle segment between 26°-33° S corresponds to an almost continuous mountainous landscape interrupted by narrow cross river valleys and by some basins on the south (Endlicher and Weischet, 1986). Also, this geomorphologic difference coincides with the absence of quaternary volcanism, due to geodynamic conditions specific for this realm. On this area of transverse, E-W valleys, agriculture soil is set up as alluvial terraces formed by moderately thick sediment (blocks, cobbles, and sand) as result of erosion of the Andean range. The main lithology is intermediate volcanic and plutonic, with a minor participation of sedimentary rocks (Rivano and Sepúlveda, 1991; Paskoff, 1993). The soil presents a moderate degree of development, and it is classified mainly as aridisol and as alfisol (Luzio and Alcayaga, 1992; Oyarzún and Alvarez, 2001).

In the Central South and South areas, the Central or Longitudinal Valley is located, where the major part of Chilean agriculture is carried on, because of a more favorable water availability pattern and soil with better agricultural conditions (34-37° S). The filling deposit includes a larger participation of materials of fluvioglacial and limnic origin, as well as soil horizons formed by ashes and other materials coming from the quaternary volcanism (Borgell, 1983). Also, thick and long laharic fan-shaped deposits were formed, as well as pyroclastic flow (ignimbritic) and ash deposits due to the volcanic activity (Moreno and Varela, 1985). This causes the existence on the soil of horizons of low permeability, and, as a consequence, the presence of perched aquifers with shallow water levels.

The significance of the volcanic material in the origin and development of the Central Valley is evident when considering that nearly 50 to 60% of the arable surface of the country (5.400.000 ha) corresponds to volcanic soil (Arumi and Oyarzún, 2006). The volcanic soil gives rise, in the central-south area, to soils of inceptisol order, and in the south area, to soils of the order andisol order, following to the USDA Soil Taxonomy (Besoain, 1985). They are located, mainly, between the Santiago area (33°30' S) and Temuco (38°30' S), and 60% of them correspond to the type locally known as "Trumao". These soils are characterized, among other aspects, for its moderately fine texture and for the existence of an intense biological activity, and also for an abundant presence of organic carbon, at least in the first meter depth, corresponding to the A and B horizons. Mineralogically, the clays correspond to allophane, imogolite and varied silicate in different proportion (Besoain, 1985). Also, it is possible to find Mollisols in the Central Valley, which proves a higher degree of evolution and a larger accumulation of organic matter (Luzio and Alcayaga, 1992). In fact, the levels of organic matter considerably increase from N to S, with levels of 1,3 to 5% around 34°S, 3 to 8% between 35° to 37°S, reaching values from 10 to 20% between 38° and 42°S (Honorato, 1994).

Weather: Regarding weather, the most important variations in the Chilean territory occur mainly as a result of latitude and, secondary, as a result of altitude; this is essentially reflected in the rainfall pattern existing throughout the country (Figure 3). This is not the same for temperatures, since there is a relative thermal uniformity along the country, because of the moderating influence of the ocean, the action of the Humboldt Current and the movement of air masses (DGA, 1987).

Figure 3: Territorial distribution of rainfall in Chile (own elaboration based on data from DGA, 1987).

Rainfall pattern in Chile is strongly affected by the behavior of the Oriental South Pacific anticyclone and by the superficial temperature of the Pacific Ocean (Santibanez, 1986). The Pacific Anticyclone keeps close to the continent during summer, reducing the entrance of fronts coming from the south. During winter, the anticyclone moves away heading northwest leaving a "passageway" for the passing of front systems towards the centre and north of Chile. In the same way, the summer descent of this anticyclone towards higher latitudes causes the scarce precipitation to be distributed almost exclusively during winter months (Santibanez, 1986). At the same time, the ocean temperatures have influence over the position of the anticyclone, in such way that cold water promotes the stagnation of the center of high pressure in the central area resulting in droughts, specially during summer months. Finally, the effect of the uneven topography of the region favors the formation of several micro-weathers, with different meteorological characteristics.

In the north area the deficit of rain with regard to accumulated potential evapotranspiration during the dry season, stressed by the relief of the inner areas, can reach up to 1.000 to 1.400 mm. Under this scenario, irrigation becomes an essential practice during virtually the whole year, especially for the case of permanent crops. In the case of the Central and Central-South areas, although the water balance presents values closer to precipitation and evapotranspiration, the seasonality of these variables, that reach their peaks in different seasons of the year, makes irrigation essential at least during summer time.

Water Users Organizations: In Chile there is a strong tradition in the distribution and managing of water resources, which goes back to the beginning of the Republic during the first years of the XIX century. It could be said that the main role of user organizations is the distribution of water based on the right and maintenance of the installations for intake and conduction. However, some of these organizations play an important social role bringing together farmers around a channel and throughout the catchment.

These are non-profit institutions since they have no special right for use or benefit from the rights of exploitation belonging to its members, therefore its administrative and accountant structure is designed to manage the services that allow the distribution of the water and the maintenance of the installations. A strength of the organizations of water users is that, given the nature of the resource they are sharing, they keep territorially integrated the whole basin. However, a limiting factor for its development as promoters of the productive fomenting and the appropriate use of water, in addition to the preservation of its quality, is that they cannot apply by themselves for instruments of productive investment fomentation because of their own legal nature.

Supply of irrigation water: Nationally, it is important to consider that from the Metropolitana Region (33°30' S) towards North the rights for surface water exploitation are in an over-allocation condition (Universidad de Chile, 2006), which means that rights have been granted for the use of all the available surface water. Thus, it can be envisioned that there will be a larger demand for the exploitation rights of groundwater in the next years. Estimations made by the DGA indicate that the renewable availability of groundwater in Chile, in the area located north from Santiago, rises up to 65 m3/sec; for the same area the water use rights requested in the year 2000 were 300 m3/ sec (Muñoz, 2000). From the region of O'Higgins (34° S) to the south, the rights requested in the year 2000 were 20 m3/sec (Muñoz, 2000), which implies a smaller pressure over the exploitation of groundwater. In this aspect it is worth to mention that the market of water rights works a lot better in the north area of the country than in the south. Because of the water shortage, initiatives are being developed, such as the desalinization of sea water in the north of Chile and a study of the artificial recharge on water is beginning to be carried out, even though his practice has not been used in Chile (Brown, 2002). Finally, the increase of irrigated surface for permanent crops (fruits) in recent years creates a total dependence on the water supply. Thus, the dependence of agricultural irrigation systems is highly related with regard to the operation of dams. In addition, the incorporation of numerous hectares of orchards of ever green fruit trees has affected particularly the original curves of demand and supply, in which winter water distribution used to be minimal.

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