Abstract
The “law of the pendulum” (ley del péndulo) is a Chilean phrase that describes dramatic changes from one extreme to another. During the twentieth century such swings have been common in Chilean political and economic thought and practice, and the realm of water rights is no exception. With its 1981 Water Code, Chile’s military government swung the pendulum away from the “statist” policies of the preceding decades, which had culminated in the 1967 Agrarian Reform Law that greatly expanded state authority over water use.1 The 1981 Code aimed to reverse that trend by strengthening private property, increasing private autonomy in water use, and favoring free markets in water rights to an unprecedented degree. It created several market mechanisms, based on separating water rights from land ownership, and attempted to foster a market mentality among water users. As a corollary it sharply reduced the state’s role in water management and regulation. The new Code follows the institutional structure of the 1980 Constitution, and like the Constitution it was written and approved while neoliberal ideology in Chile was at its most ascendant, before being somewhat discredited by economic crisis (see Chapter Two).
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Notes to Chapter Three
For a prominent water lawyer’s use of the phrase to describe the 1981 Code, see Manriquez (1992), p.68. Manriquez was then the head of the national water rights agency, the Directión General de Aguas. The Code was dictated as Decree with Force of Law 1,122, published in the Diario Oficial (the official legal newspaper) on 29 October 1981. In Chile a D.F.L. is issued by the executive but has the force of legislation. For overviews of the 1981 Code, see Bauer (1993A); Figueroa (1992); Gándara (1989); Institute Iibertad y Desarrollo (1993A); Lobo (1982); Manríquez (1992); Muñfioz (1986); Navarrete (1989). Accounts in English include Bauer (1995B) and (1997); Rfos and Quiroz (1995); Rosegrant and Gazmuri (1994). More technical references include Agurto (1986); Dirección General de Aguas (1982); Manríquez (1981); Universidad de Chile (1982). Several Chilean law school theses have also analyzed the Water Code: Borquez (1986); Machuca (1985); Muñoz (1992); Soriano (1986).
This chapter would have been impossible to write without repeated interviews and conversations during 1991-1993 with the following Chilean lawyers, economists, and engineers: Rafael Del Valle, Luis Simón Figueroa, Jorge Galvez, Luis Gurovich, Gerardo Jofré, Eugenio Lobo, Gustavo Manríquez, Enrique Márquez, Gabriel Muñoz, Fernando Peralta, Juan Antonio Poblete, Fernando Valdés, and Alejandro Vergara. I am grateful for their time and cooperation.
See Chapter Two, Notes 7 and 9; Barros (1996).
Constitution, Art. 19, No. 24, final paragraph.
Civil Code, Art. 582. See República de Chile (1990); Alessandri et al (1990).
See EUenberg (1980); Soriano (1986); Vergara (1990), (1991 A).
See Escudero (1990); Figueroa (1992); Institute) Iibertad y Desarrollo (1993A). There is a very similar debate over the legal coherence of mining “property” in Chile. Although the 1980 Constitution reaffirms the inalienable public ownership of minerals, in what was a victory within the regime for nationalists and military conservatives over the neoliberals, subsequent legislation undercut this by guaranteeing private property rights to mining “concessions.” Concessions are government permits that allow private exploitation of public minerals. Owning a concession entails no obligation to use it, but if it is not used the owner must pay an annual fee to maintain it. The legislation was written by a leading neoliberal, José Piñera. See Cavallo et al (1989); Pifñera (1986). For a critical view see Vergara (1992A).
Water Code, Art. 163.
In other words, there is no requirement of “beneficial use,” as it is called in the Western United States (Sax et al 1991). Chile is apparently the only country in the world whose water legislation includes no obligation to use water rights (Solanes 1996). For more on speculation, see Chapter Four.
See Barrueto and Marquez (1986); Cerda (1987); Matus (1986); Peralta (1989A). Some three-fourths of Chile’s total irrigated acreage is watered by private canals built before 1920, and the rest by state projects built since then.
On the colonial period see Stewart (1967), (1970), and Vergara (1992B), both of whom emphasize the confusing nature of the public-private distinction. Meyer (1984) describes a similar pattern in Spanish colonial Mexico.
For the Civil Code itself, see República de Chile (1990). See also Alessandri et al (1990), a well-known Chilean text and commentary, and Zweigert and Kötz (1992), p.l 18. Bello’s Code has been widely praised for its clarity and logic, and has had great influence in codification efforts elsewhere in Latin America. On comparative law and the civil law tradition in general, see Chapter Two, Note 35.
See Book II of the Civil Code, entitled “Of Different Goods and their Ownership, Possession, Use, and Enjoyment.” Derechos reales are defined as those rights “which we have over a thing without regard to any other person in particular” (Art. 577), whereas derechos personates “are those which can be claimed of certain people who have contracted obligations, either by their own actions or as required by law” (Art. 578).
Civil Code, Art. 585. Cf. the famous principle of the Institutes of Justinian (Book II, Title I): “By natural law the air, the flowing water, the sea, and therefore the shores of the sea are common to all.” Lee (1956), p.l 13. For national property see Note 17.
“Immaterial things” include rights themselves (Art. 576). There is a doctrinal dispute in Chile over whether the very concept of “public property” is coherent. Critics argue that property and ownership are fundamentally concepts of private law, which necessarily involves exclusive and alienable control. The state’s powers over national property, in this view, stem not from “ownership” but rather from its superior regulatory authority to promote the common good. See Alessandri et al (1990); Vergara (1992A).
On water rights in the Civil Code as well as in later nineteenth and early twentieth century legislation, see Soriano (1986); Stewart (1967), (1970); Vergara (1990), (1991 A), (1991B).
Civil Code, Arts. 589 and 595. The other form of national property is called state or government property (bienes fiscales), and belongs to the state rather than to the people as a whole (Art. 589).
See Alessandri et al (1990), and the citations in Note 16.
The Civil Code had created a nationwide system of local offices of title registration for real property. These Real Estate Title Offices (Conservadores de Bienes Raíces) became the administrative basis of private property nationwide. They did not then register water rights. See also Note 16.
The Code was passed as Law No. 9,909, published in the Dialio Oficial on 28 May 1951. See Borquez (1986) and the citations in Note 16.
According to the water law scholar Ciro Vergara (1960), the “right of advantageous use” was a new concept in Chilean law. Because of its intermediate position between administrative concession and private property, he argued that it should be considered a new, third category of national property, rather than simply a subset of “national property of public use.” Cf. Note 17.
In descending order of preference, the uses were for drinking and domestic purposes, irrigation, generation of electricity, and other industrial purposes (Art. 30).
A great deal has been written about the Chilean Agrarian Reform. Good overviews are Garrido et al (1990); Jarvis (1985), (1988). See also Comité Interamericano de Desarrollo Agrícola (1966).
The Agrarian Reform Law was No. 16,640. The Water Code was published separately in 1969 as Decree with Force of Law No. 162, but it took effect in 1967.I will refer to it as the 1967 Code in order to reinforce its links with the Agrarian Reform. Useful sources on the 1967 Code include Ellenberg (1980); Faundes (1969); Institute de Capacitación e Investigatión en Reforma Agraria (1968); Jensen (1970); Machuca (1985); Medina (1970); Parks (1976); Thome (1979); Vergara (1990).
Some compensation was offered at least nominally, as explained in the following note. The constitutional amendment about water rights was a last-minute addition to the broader 1967 Amendment of the property rights clause (Art. 10, No. 10 of the 1925 Constitution). The 1967 Amendment was necessary to facilitate the Agrarian Reform as well as urban redevelopment. It expanded the scope of the “social function” of property and thereby restricted private rights, with the pragmatic objective of allowing land expropriation through longterm deferred compensation (government bonds). See Chapter Two, and Evans (1967), (1986); Garrido et al (1990); Machuca (1985).
Besides their technical purpose, the “standards” were also a device to minimize the compensation paid to existing rights-holders. The Agrarian Reform Law required compensation only if those rights-holders were not granted new concessions equivalent to the local standards of use. Because the standards were more demanding than previous methods of use, the burden was on the existing rights-holders to adjust to smaller quantities of water by improving their efficiency of use.
Jensen (1970) describes an example of this process and its difficulties in the Choapa Valley in northcentral Chile.
See Note 23.
See El Campesino, the Society’s journal.
Parks (1976) has a good discussion of the technical and administrative difficulties of implementing the standards and redistributing water rights. He concludes that abandoning that approach for a policy emphasizing improved irrigation technology and management at the farm level would be much more effective at increasing economic returns to water use. See also CEPAL (1960).
Interviews cited in Note 2.
On the Constitutional Commission see Chapter Two, text at Note 9. The Commission’s sessions on water rights were Nos. 182-184, held in January–March 1976, Actas Oficiales de la Comisión Constituyente, republished in Revista de Derecho de Minas y Aguas Vol.1 (1990), pp.227-259. See also Machuca (1985).
See Decree Law 2,603 of 1979 and the 1980 Constitution, Art. 19, No. 24, last paragraph.
Constitutional Acts Nos. 2, 3, and 4 were dictated in September 1976 as a step toward consolidating and systematizing the evolving legal order of the regime. In January 1976 Constitutional Act No. 1 established the Council of State. On the Junta, see text at Note 3.
See Act No. 280,3 September 1976, Actas de Sesiones de la Honorable Junta de Gobiemo (unpublished).
Decree Law 2,603 was published in the Diario Oficial on 23 April 1979. Although it repealed and replaced fundamental elements of the 1967 Code, it left the bulk of that Code intact until an entirely new one could be promulgated. Useful references are Dougnac (1989); Ellenberg (1980); Escudero (1990); Machuca (1985); Venezian and Gurovich (1980); Vergara (1990).
See citations in Note 10. The proportions and totals of irrigated land remain similar today.
Quoted above at Note 33.
This argument had also been made in the early 1970s in “the brick,” the document which formed the basis of the military government’s first economic policies. See Centro de Estudios Públicos (1992), and also Chapter Two, text at Note 20.
For the economic arguments in favor of the Decree Law, see Biichi (1993); Figueroa (1993); Instiruto Iibertad y Desarrollo (1993A); Venezian and Gurovich (1980). According to Ellenberg (1980), the taxation scheme was adopted after rejecting a proposal to charge fees for water use (see the following section).
Compare the Proyecto de Decreto Ley with the final version, in Decretos Leyes Dictadas por la Honorable Junta de Gobierno: Transcription y Antecedentes, Tomo 167, Folio 1-356, in the Biblioteca del Congreso National. The initial proposal was prepared by staff of the Minister of Agriculture, Alfonso Marquez de la Plata (Machuca 1985).
See Act No. 364,7 February 1979, Actas de Sesiones de la Honorable Junta de Gobierno (unpublished). The Minister of Planning was the influential neoliberal economist Miguel Kast; the Minister of Agriculture was Alfonso Márquez de la Plata (see previous note). General Pinochet declared himself especially concerned about the insecurity of water rights: “This Decree Law is costing me a lot of sleep. This business has been a permanent, life-long bomb in the countryside: people kill each other. Now, my great worry…is that this may serve so that the people who have water can blackmail the poor ones who lack it…until the latter get bored and have to sell their land.”
See Note 41. At one point the idea was floated of annual auctions of all water rights, but it was rejected because of the legal and economic uncertainty it would cause, the rigidity of the irrigation infrastructure already in place, and the repeated emphasis it would give to the fact of public ownership.
See the interviews with the Minister of Agriculture, Márquez de la Plata, and the President of the Confederation of Chilean Irrigators, Rule Bismarck, in El Mercurio, 24 April 1979, pp.Al, A12. See also the editorial, “Ley sobre derechos de aguas: Un fomento a inversión,” pp.2-3, and a second interview with Bismarck, “Luz verde para invertir en obra de riego,” pp.14-15, in El Campesino, May 1979, the magazine of the National Agriculture Society. A year-and-a-half later the President of the NAS said that he knew only the broadest outlines of the Water Code in preparation and wished he knew more; see “Medidas para agilizar el desarrollo agrícola,” El Campesino, November 1980, p.22. There was another attempt to roll back Decree Law 2,603’s pro-market bias in August 1979, in a draft Water Code prepared for the Minister of Agriculture. The draft aimed to improve efficiency and claimed to follow the Decree Law’s principles of private property and market logic, but in fact it widened the scope of state intervention even more than had the 1951 Water Code. As in the 1951 Code, requests for new water rights had to specify the intended use, and irrigation was preferred over hydroelectricity. Rights were granted provisionally until the waters were actually put to use; unused rights were cancelled and then auctioned, with the proceeds going to the former owner. Uses could not be changed without state administrative approval. The authority of private canal users’ organizations was increased, but the state was given power to redistribute water rights as part of the rationalization of canal systems, and to dictate the management rules for multipleuse reservoirs, including giving hydroelectricity priority over irrigation. The Minister rejected the draft and set up a new committee to prepare what eventually became the 1981 Code. See Anteproyecto del Código de Aguas, by lawyer José Luis Perez Zañartu, 30 August 1979 (unpublished).
See the historical summary in Chapter One.
The Water Code is D.F.L. 1,122 (see Note 1); the irrigation law is D.F.L. 1,123.
In 1985 the government passed Law No. 18,450 to subsidize small and medium scale private irrigation projects, as discussed in Chapter Four.
See Ellenberg (1980); Hgueroa (1989); Institute de Ingenieros (1993). Parks (1976) concluded that neither water pricing by volume nor by market forces was feasible in Chile, because the canal infrastructure was illsuited and the institutional costs were too high.
Lobo (1982). Soon after the Code’s passage the agency held several auctions in the upper Mapocho River basin near Santiago, not to gain revenue but to try to generate information about potential prices in a still nonexistent market.
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Bauer, C.J. (1998). Water Rights and the Law of the Pendulum: Legal and Political History of the 1981 Water Code. In: Against the Current: Privatization, Water Markets, and the State in Chile. Natural Resource Management and Policy, vol 14. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-6403-4_3
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