PrintSend to friend

Chile’s government is poised to create an environment ministry and other institutions to resolve environmental issues more efficiently and give them greater weight in national debate. But will they resolve the problems they are designed to fix?

Fifteen years since Chile’s framework environmental law came into force, the country is on the verge of a major reform that will change the way environmental regulations are developed and enforced. Last November, Congress approved legislation that will create the country’s first environment ministry, a new national regulator and a new system for evaluating projects. 

The country’s existing environmental regulation dates from 1994 when Congress created the National Commission for the Environment (CONAMA), which coordinates environmental policy and standards amongst a number of ministries and other public services.

“This form of organizing the state in environmental issues has achieved important results since 1994,” Environment Minister, Ana Lya Uriarte, told bUSiness CHILE.

The online environmental impact evaluation system, run by CONAMA, has ensured that the thousands of new mines, salmon farms, housing developments, lumber mills and other projects built in Chile over the last 12 years have complied with the country’s environmental regulations.

But a series of controversial cases have highlighted weaknesses in the current system.

In 2005, authorities partially shut down a new pulp mill near the southern city of Valdivia after it allegedly exceeded pollution limits, a fact some linked to the disappearance of wildfowl from a nearby nature reserve.

Then, in early 2009, the Supreme Court halted construction of a new coal-fired generation project on central Chile’s coast, ruling that its environmental license had been granted on land set aside for conservation.

Meanwhile, efforts to clean up the air in Chilean cities, most notably Santiago, have failed with pollution levels rising rather than falling in recent years.

Chileans are also becoming more concerned about environmental issues such as climate change, water shortages, and waste management, putting pressure on the government to act.

Green Legislation

Chile’s politicians have responded. In her 2005 presidential campaign, then-candidate Michelle Bachelet signed an agreement with leading environmentalists to create a ministry and an environmental regulator if elected.

“Given the environmental challenges facing Chile and the world… we need to give the environment a higher political status,” said Uriarte, whom Bachelet named Environment Minister in 2007 with the specific aim of pushing through new legislation.

But some in the business community say environmental reform is unnecessary.

According to Javier Hurtado, who is director of research at the Chilean Construction Chamber (CChC) and represented the private sector in negotiations with the government, talk of weakness in the system has been exaggerated.

Only a tiny fraction of the thousands of projects submitted to CONAMA over the last 13 years have run into serious environment difficulties, he said.

“If ten projects out of 17,000 have had problems I would say that was a success,” he suggests, adding that the private sector sees little need or room to improve on current legislation.

The problem is that many of the mechanisms established under the 1994 legislation have not been implemented.

Just a handful of emission standards have been announced including a new limit on emissions of breathable particulate matter from thermoelectric plants due out this year. In addition, a proposed emissions trading scheme that was pioneering in its time has been shelved when such mechanisms have become commonplace in the rest of the world.

Minister Uriarte admits to problems implementing the law, but counters it has been a question of resources rather than will.

Around 70 percent of CONAMA’s staff is dedicated to managing the evaluation system, leaving the remaining 30% to divide their time between administrative duties, regulation, and developing new policies, Uriarte said.

Separating the evaluation system from policy development should allow officials at the new ministry to concentrate fully on developing the norms and standards Chile needs to ensure its sustainable development, she said.

Moreover, creating a ministry will ensure issues like climate change, air quality and nature conservation are discussed at the highest level of government.

With an environment minister in the cabinet, the debate between economic development and the environment will result in more balanced policymaking, argues Sara Larraín, executive director of the NGO Chile Sustentable.

She points to the delays in publishing emissions limits for thermoelectric plants, which mean that the wave of new coal-fired power stations in development will have several years to adhere to the standards. With an environment minister equal in rank to the energy minister, this would not have happened, said Larraín.

Enforcement

Creating new policies is one thing and enforcing them is another, which is why recent debate has focused on the powers of the new regulator, the Superintendencia del Medio Ambiente.

Regulatory responsibilities are currently dispersed between a range of government services including regional health services, in the case of air pollution, and the water utility regulator, responsible for monitoring water quality in rivers and lakes.

Given these sometimes overlapping jurisdictions, such tasks are often neglected or shelved due to more pressing priorities such as monitoring flu outbreaks or ensuring drinking water supplies.

The lack of adequate enforcement also means companies that adhere to environmental regulations face unfair competition from rivals that break the rules. 

However, these tasks will now be centralized in the new regulator with powers to search plants, investigate alleged violations of emissions norms, and impose fines where necessary.

According to Hurtado, more visits from inspectors do not worry executives, but the proposal that the new agency will also have sentencing powers is cause for significant concern, especially when punishment could include fines up to US$9 million and, in repeat cases, business closure.

Giving inspectors the power to fine first and ask questions later could see plants being shut down at considerable cost to companies on unclear environmental reasoning, argues Hurtado.

Almost five years on from the Valdivia case, courts have still not found sufficient scientific evidence to mount a case against the company.

“If someone had these superpowers at the time, they could have fined or closed the plant, even though a full investigation has not proven any link,” Hurtado said.

It’s true that regulatory entities in other sectors, such as banking, already have powers to punish guilty companies, but the environmental regulator would have broader powers covering all sectors of the economy, said Hurtado.

In a last minute compromise with opposition senators, the government sent a bill to Congress in November that would create special environmental courts through which companies will be able to challenge sentences imposed by the regulator.

Although not part of the government’s original proposal, Minister Uriarte insists the new courts will be “extraordinarily beneficial for Chile,” since they will give companies a fair trial. Judges specialized in economics and science will be picked to rule in these cases which would otherwise be handled by judges trained in criminal or family law.

Project Evaluation

The final leg of the triumvirate of institutions created by the legislation is a new independent service to manage the environmental evaluation of new projects, until now handled by government appointees in the area where the project is located. 

Environmental impact studies have been obligatory for major investment projects in Chile since 1997, and Hurtado sees little change in the new evaluation service.

But Jaime Duran, of the University of Chile’s Environment Center (CENMA), argues that increased autonomy will stop politically-convenient projects being forced through despite dubious environmental credentials.

Moreover, projects will have to be presented in their entirety, ending the current situation where, for example, studies for major hydroelectric projects are submitted without considering the transmission lines necessary to transport the energy to consumers.

In addition, public participation in environmental studies will be extended to more projects and developers will have to explain how their project fits in with the government’s land development plan or else they will not be approved, said Uriarte.

These stricter rules should provide greater certainty to investors, avoiding the recent situations in which projects with environmental permits in place have been left in limbo after the courts or legislators have picked holes in the approval process.

“These situations will not be repeated,” Uriarte said.

A Bird in the Hand

Prolonged debate and pressure to ensure the creation of the new institutions during the Bachelet government, did not allow time for all issues to be covered, but “better a bird in the hand than two in the bush,” said Larraín.

A particularly thorny issue is the management of protected areas by national forestry corporation (CONAF), which is also a promoter of the forestry industry. The government will have to split these functions which cannot co-exist in a single institution, Uriarte said.

The government must also decide which areas to protect and how. Seventeen percent of Chile’s territory is already protected in parks and reserves, a far greater percentage than in the U.S. or most European nations, but experts warn many ecosystems are underrepresented or not protected at all.

Nevertheless, Chile’s new government will have more pressing priorities like turning the new legislation into functioning institutions.

If the new institutions are implemented in the spirit of the law, Chile will be able to develop policies, enforce regulations, punish polluters and evaluate new projects more efficiently and transparently.

Many challenges remain and caring for the environment has benefits beyond short-term political considerations, but the new legislation is a step towards a greener future.

Tom Azzopardi is a freelance journalist based in Santiago