Quinn, Sarah

English

University of Denver

Water Law Review Volume 11 Issue 1 Article 14 9-1-2007 Carl J. Bauer, Siren Song: Chilean Water Law as a Model for International Reform Sarah Quinn Follow this and additional works at: https://digitalcommons.du.edu/wlr Custom Citation Sarah Quinn, Book Note, Carl J. Bauer, Siren Song: Chilean Water Law as a Model for International Reform, 11 U. Denv. Water L. Rev. 185 (2007). This Book Notes is brought to you for free and open access by the University of Denver Sturm College of Law at Digital Commons @ DU. It has been accepted for inclusion in Water Law Review by an authorized editor of Digital Commons @ DU. For more information, please contact jennifer.cox@du.edu,dig-commons@du.edu. BOOK NOTESHunter and Waterman ascertained that because of the incrediblediversity in the regulatory environment, strict enforcement is unlikelyto occur, but implementing several steps could promote a strict ap-proach. If EPA can obtain more funding, EPA could increase thenumber of enforcement personnel, making strict enforcement morefeasible. Another step would be to fortify the provisions of environ-mental laws at both the state and federal levels. Additionally, EPAcould make the burden of proof against violators more reasonable.Another change would be to ensure a portion of the money from civilpenalties makes it to EPA or to the state environmental agencies. Inaddition, an increase in administrative fines and an increase in permit-ting costs would aid in strict enforcement. Hunter and Watermanfound that to accomplish minimizing the variations of enforcementacross the states we must promote the strict approach, utilize technol-ogical development, change the focus from outputs to outcomes, orchange the focus of the NPDES enforcement to one that tries to inter-nalize the costs of pollution.Lastly, critics have said that environmental regulation has failed be-cause the command and control regulatory approach is inflexible. Theauthors determined that moving toward an economic-incentive basedmethod would offer a variety of different approaches that would aim atinternalizing the external costs of pollution. According to proponents,this system would be more efficient, effective, and easier to implement.Hunter and Waterman conclude that in the framework of a diverseregulatory environment, economic incentives may be a more suitablesystem.Kathleen BradyCarl J. Bauer, Siren Song- Chilean Water Law as a Model forInternational Reform, Resources for the Future, Washington D.C.(2004); 172 pp; $33.95; ISBN 1-891853-79-1, hard cover.Siren Song provides an overview and analysis of the free-market Chi-lean Water Model in the context of international water reform. Bauer,a water researcher with extensive experience in Chile and elsewhere,brings a social science perspective to the largely economic discussionon water rights in developing Chile. The author takes the readerthrough background on the international water policy debate, an his-torical overview of the free-market Chilean system, the issues surround-ing reform of the Water Code, a present-day analysis of its successesand failures, and a look towards the future.This book evaluates the 20-plus year history of the Chilean WaterModel in order to provide the reader with insight into the Chilean ex-perience and to highlight the significance of Chilean water policy inthe international arena. The Chilean Model has treated water rights asheavily privatized, fully marketable commodities, and the internationalIssue IWATER LAW REVIEWeconomic community has largely hailed this free-market approach as asuccess. However, likening the Chilean Model to the alluring but dan-gerous song of a siren, Bauer attempts to show that initial praise of thesystem has failed to recognize some of its severe inadequacies. Inshort, he examines whether the current free-market framework is ca-pable of handling modern water issues, such as inter-basin manage-ment and environmental quality. Furthermore, as applied within theinternational context, the author explores the lessons learned from theChilean Model and argues for a more qualitative and diverse economicapproach.The first chapter, The International Context: The Water Crisis and De-bates about Water Policy, focuses on international trends in water use andwater management perspectives. Multiple competing interests are driv-ing the current global water crisis, including social, economic, and en-vironmental demands. As such, three themes have dominated interna-tional water policy debates: 1) integrated water resource management("IWRM"), 2) economic approaches that rely on market incentives,such as the Chilean Model, and 3) emphasis on poverty and social in-equity. The IWRM approach recognizes the need for comprehensiveand interdisciplinary water management and closely parallels conceptsof sustainable development. The so-called Dublin Principles articulatethis approach and call for recognition of water as an "economic good."The chapter then explores the conflicting perspectives on the "eco-nomic good" principle, from narrow, market-oriented policies thatfocus on costs, to broader approaches that incorporate human rightsand other values. The Chilean Model has been in the internationalspotlight because it represents the extreme of market-oriented policies,and because it received widespread promotion by the World Bank.Nonetheless, Bauer asserts that this early support was premature andlacked empirical data on whether the Chilean Model truly marked vic-tory for neoliberal economists.Chapter two, The Free-Market Model: Chile's 1981 Water Code, providesan historical overview of how the Chilean system developed and theunique attributes that affect its current implementation. The 1981water reforms embraced the laissez faire economic principles of theincumbent military government regime and resulted in vast changes tothe water system. The new Water Code separated water rights fromland ownership and privatized their use, almost eliminating any formof government control, such as permits, taxes, or fees. This new neoli-beral system was a vast pendulum swing away from the agrarian reformsof the 1960s, which resulted in a social redistribution of water where allwater rights were in the public domain. The purpose, in part, of the1981 reforms was to provide economic incentives for private invest-ment in the country's deteriorating infrastructure of dams and canals.However, over the last twenty years since the Water Code's imple-mentation, Chile has struggled to reconcile the free-market model withVolume 11BOOK NOTESits changing social system, as discussed in the next chapter, Reformingthe Reform? Policy Debate Under Chilean Democracy. During the 1980s,there was little debate over the water policy because the governmentremained under military control and the water system was still in itsearly stages of implementation. However, many changes occurred inChile at the beginning of the 1990s, including a transformation to ademocratic government, rapid economic growth, and emerging issueswith putting the system into practice. Hence, the new legislature calledfor reforms to the Chilean Model because of social inequities createdby the large water monopolies, inefficiencies resulting from non-useand hoarding of water, the inability of the private sector to fix thecrumbling infrastructure of Chile's water system, and the failure of theWater Code to address other emerging water issues such as water quali-ty.Over the subsequent decade, two major rounds of proposed reformtook place. The first wave of proposed reform failed largely because itattempted to solve efficiency issues through a use-it-or-lose-it policy fornon-use, which neoliberal members heavily objected to. The secondround reform was more limited and pragmatic, proposing fees for non-use, judicial oversight of water disputes, and consideration of in-streamflow rights to promote water quality and environmental protection;nonetheless, the proposed amendments met strong opposition whichparalyzed the legislature. Finally, in 1997, the legislature passed verylimited amendments to the Water Code, but the debate continues overwhether the rejected tax and fee structures could strengthen the legalsecurity of water rights, provide incentives to use water, or increaseefficiency within the system. Arguably, the free-market system has beenfar from a complete success in Chile, and the country has continuallystruggled to amend its shortcomings.Chapter four, The Results of Chilean Water Markets: Empirical ResearchSince 1990, provides an external examination of whether the ChileanModel has succeeded. In the international arena, Chile's free-marketapproach is so representational of neoliberal policies that the debatehas become ideological instead of pragmatic. Therefore, organizationssuch as the World Bank have lauded the Chilean Model as a successwhile ignoring some of its lackluster performance in practice. TheUnited Nations, however, has been more careful in its assessment, tak-ing notice of the large gaps in the economically driven system, such associal and environmental policy. Nonetheless, the overall trend in theearly 1990s was a lack of any real data on system performance, leadingto exaggerated or misguided claims. Bauer then discusses some of themore recent research on the system, finding that the market was gen-erally inactive for the first decade and that problems have surfacedregarding efficiency, monopoly, reallocation, and the strength of title.Recent analysis suggests that the current system is too inflexible to dealwith more comprehensive problems, such as environmental impactsIssue IWATER LAWREVIEWand water quality, return flows, paper versus actual rights, inter-basinmanagement, multiple use, non-consumptive use, seasonal flows, infra-structure, and social equity. The author then reviews a number of casestudies regarding management for non-consumptive water uses in anumber of different basins. Ultimately, the system is somewhat para-lyzed because the Constitution vests very little authority in the wateragencies or courts to address water disputes, and thus far amendingthe Constitution for water reform has proven difficult.In the final chapter, Conclusions and Lessons about the Chilean Expe-rience, Bauer asserts that there is growing consensus on the need toreform the Chilean Model to address the global water crisis. Based onthe original goals of the 1981 amendments, the Chilean Modelachieved increased legal security for private water rights, freedom ofuse, autonomy, and developing hydropower infrastructure; however, itfailed to increase efficiency or provide for private development of wa-ter infrastructure, and it resulted in power monopolies. Furthermore,the Chilean Model is ill-equipped to handle the more modern waterissues of river basin management, resolution of conflicts, social equity,and environmental protection. Therefore, in answering the essentialquestion of whether the Chilean Model, a narrow and free-market ap-proach to water economics, is compatible with IWRM, the author as-serts that the answer is no. The Chilean Model is part of an ongoingdebate on how we should define water rights, and Bauer proposes thata better alternative would be interdisciplinary, provide for public par-ticipation and representation in the process, and be more flexible todeal with evolving conflicts.Siren Song adds an informed and pragmatic voice to the debate onwhether the Chilean Model provides a successful blueprint for waterreform. The book presents a much needed counterpoint to globallyinfluential organizations, such as the World Bank, that have cham-pioned the free-market approach while ignoring its inadequacies.Bauer avoids some of the classic ideological pitfalls when discussingwater policy and instead relies on a scientific, results-based approach inhis analysis. At a time when the global water crisis is at the forefront ofenvironmental concerns, understanding the strengths and weaknessesof this infamously free-market system is paramount for any practitionerwho desires an in-depth understanding of economic water policy.Moreover, Siren Song reiterates the call for better social and environ-mental policies in water use and management.Sarah QuinnVolume I1I

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