Environmental reform is under way in Chile

For many countries around the world the price of economic success has been costly environmental abuse. Chile is a prime example of a nation that has experienced such conflict.

Chile has become a model free market economy for Latin America. It has averaged approximately 6 percent annual growth since 1987, and in 1992 recorded the highest GDP growth of all major nations in the Americas. Chile's rapid growth, intensive use of its natural resources, and limited government regulation, have all had a negative impact on its environment. The country has recently awakened to the severe consequences of continued environmental abuse, and now seeks to institute the reforms necessary to reverse this abuse.

Economic growth has led to rapid urbanization and resulted in burdensome pollution problems in and around the capital city of Santiago, where nearly 40 percent of Chile's 13.6 million people live. As a result of the city's high population growth, industrial expansion, and heavy vehicular traffic, Santiago's air quality ranks among the world's worst, along with Mexico City and Sao Paulo. During winter, climatic conditions and the surrounding mountains trap polluted air within the city, and smog emergencies are frequent. The urban population of Santiago experiences a very high rate of respiratory problems, especially among children and the elderly.

Outside Santiago, Chile's mining industry is a primary source of both prosperity and pollution. Thirty-nine percent of every dollar earned in the country comes from the copper industry, and the state-owned mining company, CODELCO, accounts for nearly half of that. Until recent industry clean-up efforts began, copper mining posed tremendous risks to the environment. Liquid emissions and solid materials poisoned the water supply, and aerial emissions contaminated the air at several mining sites.

Legal Protection. Chile's 1980 Constitution created a broad right to "live in an environment free from contamination," and provides that "it is the duty of the state to watch over the protection of this right and the preservation of nature." Chilean courts grant private individuals standing to file lawsuits to seek enforcement of existing environmental regulations. The courts have not interpreted this right as substantive, however. Therefore no particular form of pollution is rendered illegal. The legal process can be daunting, since the mass of laws and decrees is vast and unorganized. Chile's National Environmental Commission (CONOMA) recently collated the country's 911 existing laws on the environment, resulting in an 845-page document, with 2,700 separate items.

Diverse Ministerial Responsibility. In addition to the cumbersome assortment of laws and decrees, a major impediment to enforcement of Chile's environmental regulations is the mix of lines of authority between the country's different ministries. There are more than 70 offices and agencies with some kind of environmental authority, but no one ministry has either full control or responsibility for environmental policy, creating conflict and confusion. Effectiveness is also hampered by insufficient funds and inadequate enforcement apparatus. Fortunately, these issues are now being addressed by Chile's Congress. It is expected to approve a more centralized regulatory procedure as early as November 1993.

Presidential Initiative. In September 1992, President Patricio Aylwin introduced a comprehensive legislative package designed to establish a regulatory framework for Chile's environmental law. The proposed legislation, now before the Chilean Congress, would require the development of specific environmental standards, mandate environmental impact statements for new projects, and clearly define civil liability and penalties.

At present, environmental activity in Chile is being driven by special presidential decrees and the Special Decontamination Commission for the Metropolitan Region (CEDRM) of Santiago. Until the new legislation is operative, measures will be pursued to control and eliminate air contamination, including specific air pollution reduction goals, regulatory enforcement, increased monitoring of air quality, modernization of transportation equipment and conversion to cleaner fuels. Goals and plans will be implemented in the areas of water and land use, as well.

To combat dangerous air pollution levels in Santiago, Chile has imposed a city-wide driving ban of 20 percent of all vehicles, based on rotating pairs of license plates. In September 1992, Chile became the first Latin American country to mandate catalytic converters on all passenger car imports. The government has also implemented licensing requirements that reduce the number and average age of smoke-belching buses operating within the city. The government also keeps two lists of companies that are not meeting required standards for pollution control, referred to as the "red list" and "yellow list." During smog emergencies, those companies on the "red list" must completely shut down.

The government seeks to reconcile its need to encourage profitable growth of its mining industry with its strong new commitment to clean up the environment. The Aylwin government is now committed to spending between 15 and 20 percent of CODELCO's investment budget--approximately $90 million a year--on environmental controls. Advances are being made. For example, CODELCO has developed a new treatment system for its large El Teniente mine, just outside Santiago, to produce nontoxic water from the sludge by-product of the copper extraction process. The water is then used for irrigation and drinking at an experimental agricultural station supported by CODELCO. The company has also launched a $300 million clean-up program at the world's largest copper mine, Chuquicamata, to cut 90 percent of the arsenic and 60 percent of the sulfur dioxide emissions discharged from the plant's smelter chimneys.

International Cooperation. The increasing importance of world trade has heightened Chile's interest in environmental protectionism. In June 1992, Chile signed the United Nations accord endorsed by the leaders of 146 countries at the Earth Summit in Rio de Janeiro. This biodiversity treaty will have the force of law in Chile when it is ratified by Chile's Congress.

Chile's environmental record will most certainly come under scrutiny in the near future as a result of the anticipated free trade discussions with the United States. The United States is pursuing a policy of trade liberalization with Latin American countries, seeking to turn the Western Hemisphere into the world's largest free trade area. Both President Clinton and U.S. Trade Representative Mickey Kantor have said that the United States is committed to pursuing a free trade agreement with Chile; negotiations will begin for a free trade agreement between the United States and Chile following resolution of the North American Free Trade Agreement. Chile will no doubt be required to meet international standards for environmental controls in many areas.

Bilateral Agreement With the United States. Already in place between Chile and the United States is an Environmental Framework Agreement (EFA), signed in Santiago in February 1992. The United States agreed to reduce Chile's $147 million debt to the U.S. Agency for International Development (USAID) by 10 percent, with the sum of the reduction and the interest on the remaining debt to be paid in pesos into an Environmental Fund established by the Chilean government pursuant to the EFA. An Environmental Commission, comprised of Chilean private sector individuals, Chilean government representatives, and a U.S. government representative, determines the distribution of the fund's resources. Funds have been earmarked for such projects as sanitation programs, forestation projects, and the development of parks in poor and urban areas.

Opportunities For U.S. Suppliers. Chile's commitment to environmental reform will create excellent new investment opportunities for U.S. companies. In anticipation of market opportunities, the Overseas Private Investment Corporation (OPIC) has included Chile in its upcoming Southern Cone Environmental Trade Mission scheduled for November 1993 (including Argentina and Brazil) The mission will focus on environmental technology and services, pollution control and abatement, solid and hazardous waste management, and air, water and waste clean-up. Interested firms should contact Andrew Rosen at OPIC at (202) 336-8623. The environmental market of Chile, Argentina and Brazil is estimated at $1.7 billion and is expected to grow nearly 30 percent over the next decade. U.S. companies currently supply 45 percent of environmental imports to the region.

Forecast. The government of Chile is taking significant steps on the road to environmental reform. Regulations put in place by presidential decree and by the CEDRM are already helping. Legislation expected to be passed by Congress in November will create an overall framework for Chile's environmental regulations, facilitating coordination and enforcement. These improvements will help make Chile a leader in yet another area in Latin America's development, and will bring the Chilean government closer to fulfilling its Constitutional duty to watch over its citizens' guaranteed right to live in a clean environment.

COPYRIGHT 1993 U.S. Government Printing Office
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