Assessment and recommendations

The Assessment and recommendations present the main findings of the Environmental Performance Review of Chile and identify 54 recommendations to help Chile make further progress towards its environmental policy objectives and international commitments. The OECD Working Party on Environmental Performance reviewed and approved the Assessment and recommendations at its meeting on 10 March 2016.

  

1. Environmental performance: Trends and recent developments1

Chile is a small, open economy with abundant mineral resources. It has experienced a long period of strong economic growth, which has helped reduce poverty and improve the well-being of its population, even though inequality remains large. As the world’s largest copper producer and exporter, Chile benefited from the commodities boom of the 2000s and well weathered the 2009 global economic crisis. However, gross domestic product (GDP) growth and investment have weakened as raw material prices and external demand began declining in the early 2010s (OECD, 2015a).

Natural resources are a pillar of the economy, with copper mining, agriculture, forestry and fish production constituting a large share of national income and exports. Chile is among the most resource-intensive economies in the OECD, reflecting extensive mining activities and wood and biomass use. Economic growth, extraction and use of natural resources, and rising consumption have increased environmental pressures, notably air pollution, water shortage, loss of native forests and biodiversity, and soil and water contamination (MMA, 2012). Climate change is expected to exacerbate some of these pressures.

Energy mix and intensity

Energy used by the economy (total primary energy supply or TPES) grew by 54% between 2000 and 2014, with rapid economic growth, increased mining and industrial production, and growing transport demand. Nevertheless, the energy intensity of the Chilean economy (TPES per unit of GDP) has decreased to slightly below the OECD average. Per capita energy use is significantly lower than in other OECD member countries, reflecting the remaining income gap.

Chile’s energy mix relies predominantly on imported fossil fuels. Supply shortages of natural gas in the mid-2000s led to a sharp increase in the use of coal and diesel for electricity generation (Figure 1), resulting in increased emissions of local air pollutants and greenhouse gases (GHGs) (Section 4). Energy production from renewable sources has doubled since 2000, but has not kept pace with the growth in energy demand. In 2014, renewable energy sources, mainly firewood used for residential heating, accounted for 32% of energy supply, among the highest shares in the OECD. More than 40% of power generation comes from renewables, mostly hydropower, but the carbon intensity of electricity generation is higher than the OECD average.

Figure 1. Selected environmental indicators
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 http://dx.doi.org/10.1787/888933388219

Air emissions and air quality

Since 2005, emissions of most air pollutants have increased, reflecting the increase in thermoelectric power generation, growing freight and passenger transport (notably diesel vehicles), and continuously strong reliance on firewood for residential heating. A notable exception, sulphur oxide (SOX) emissions from copper smelting decreased markedly, but remain high. Air emission standards are now in place for two major industrial sectors (thermoelectric power plants and copper smelters) and some pollutants (Section 2). Vehicle emission standards were strengthened.

Despite progress, especially in Santiago, Chile continues to face high levels of air pollution. Ambient air quality standards are now in place for all major pollutants, including fine particulate matter (PM2.5), but they are often exceeded, particularly in areas with high concentration of population and mining industry. On average each year, 15% of the Chilean population is exposed to severe PM2.5 concentration levels (above 35 micrograms/cubic metre), well above the OECD average (Figure 1). Pollution Prevention and Decontamination Plans (PPDAs) are the main instrument for air management, but lack of inter-institutional co-ordination and insufficient engagement of local stakeholders have hampered their effective implementation. The development of PPDAs is lagging behind, especially in southern Chile; existing plans are subject to review every five years, but many have not been updated for much longer. There is also a need to improve air quality monitoring networks, as many stations cannot measure concentrations of PM2.5 and nitrogen and sulphur oxides.

Waste management and circular economy

Waste generation increased by nearly 30% over the 2000s, although data are not fully reliable. Per capita municipal solid waste generation is low compared to OECD levels, but is higher than in regional peers such as Mexico and Brazil. Landfills absorbed 96% of total collected municipal solid waste in 2010/11, while 4% was recovered or recycled. Inadequate landfills or uncontrolled garbage dumps received about one-quarter of total landfilled waste in 2015, compared to nearly 40% in 2009 (Figure 1). Two out of three municipalities lacked access to sanitary landfills in 2010. To extend access, the government plans to double the number of sanitary landfills by 2020. However, a stronger focus on waste prevention and recycling may reduce the need for additional capacity.

Chile does not have a recycling industry, which is linked to limited incentives for waste reduction and reuse. Municipalities can charge their inhabitants for waste services, but about 80% of households are exempt from such a charge. Municipalities have little incentive to reduce landfilled waste, as their costs for disposal in privately operated landfills decrease with the volume of disposed waste. Some 80% of municipalities do not have a waste management plan and many have insufficient resources to run adequate waste management programmes.

A proposed waste framework law, submitted to parliament in 2013, would expand the policy focus from sound waste disposal to waste reduction and reuse. It would introduce a system of extended producer responsibility for a wide range of environmentally harmful products, as well as paper and packaging. Full implementation of the law would help significantly reduce the volume of landfilled municipal solid waste, the related financial burden on local governments, and environmental and health risks associated with the landfilling of hazardous products. The Ministry of Environment (MMA) is also developing a policy for waste prevention and recovery, a regulation on the transboundary movement of waste and a revised regulation on hazardous waste management. The swift adoption and implementation of these legal instruments are key steps towards compliance with all OECD Council Acts on environmentally sound waste management.

Water resource management

The main sources of surface water pollution are urban and industrial wastewater, fish farming and processing, and the agriculture and agro-food industry (Figure 1), with substantial regional variations. Limited tertiary wastewater treatment (Figure 1) and large agricultural runoff have resulted in nutrients contamination and eutrophication of coastal lakes, wetlands and estuaries; mining effluents have increased the concentration levels of heavy metals and other toxic pollutants in surface waters (Section 5). Chile has adopted standards for sewerage discharges, as well as water quality standards for ecosystem protection for four river basins and two lake catchments (which provide water to major cities). Such standards are still being developed for some river basins in northern Chile, which are the worst affected by mining activities, and standards for industrial effluents are being updated. As of early 2016, a water quality and ecological information platform was under development to regroup and publish all available data on water quality. The lack of comprehensive and consistent data is a serious obstacle to managing water resources.

Chile’s plentiful water resources are unevenly distributed across the country. Water demand regularly exceeds supply in the arid north, where most of the water-intensive mining activities take place, and increasingly in the central parts of the country, where agricultural production and the population concentrate. Water tables in several aquifers decreased dramatically and their monitoring is limited. The structural water supply deficit is projected to worsen with economic growth, increased water use and climate change. While water efficiency has increased in the mining sector, irrigation efficiency has remained low (Section 5). A third of the water abstracted for public water supply is lost during distribution, due to inadequate infrastructure.

Since adoption of the 1981 Water Code, the allocation and use of water resources are based on a system of tradable water-use rights. However, insufficient regulation and transparency of the water market have led to over-allocation and extreme concentration of water rights, overexploitation of some aquifers, drinking water shortages in some rural areas and conflicts among water users. The 2005 reform of the Water Code strengthened regulation on groundwater management and set minimum flow requirements for new water rights to preserve the resilience of water bodies, but many market and information failures remain unsolved.

A new set of amendments being discussed in parliament seeks to ensure that new user rights are temporary (they are now for life), do not undermine the resilience of freshwater systems and give priority to drinking water supply and sanitation. It proposes more stringent provisions for non-use of rights and for restricting the exercise of user rights in the public interest (e.g. in case of drought). These are steps in the right direction. Future reforms will also need to address the issue of currently over-allocated water-use rights, improve market transparency and ensure that water rights and their transactions are registered. Efforts should focus on developing the knowledge base on risks for water resource availability and quality and their potential economic, environmental and social consequences. This would help determine the effective availability of water for allocation and better inform decisions about priority uses. Chile’s multi-stakeholder water roundtables can help identify risks and policy priorities.

Recommendations on air, waste and water management

Air quality management

  • Develop Pollution Prevention and Decontamination Plans (PPDAs) for all areas that do not comply with air quality standards, and evaluate and update those that already exist; closely engage local authorities in the design, implementation and evaluation of specific policy measures within each PPDA.

  • Continue to improve the air quality monitoring network and ensure that air pollution information is made available to the public.

Waste management and circular economy

  • Adopt the draft waste framework law at the earliest opportunity and implement extended producer responsibility schemes for key types of environmentally harmful products.

  • Update and implement regulation on hazardous waste management and transboundary movement of waste to comply with international best practice.

  • Encourage waste prevention, recycling and recovery of products not covered under the planned extended producer responsibility schemes (e.g. organic waste), including by: i) making greater use of charges and taxes on generated waste; ii) considering fiscal incentives for recycled products; iii) reviewing the incentives and funding mechanisms for waste management in small municipalities; and iv) raising awareness among citizens.

Water management

  • Introduce a risk-based approach to water resource management by developing the knowledge base on water risks to inform decision making; consider enhancing the role of water roundtables to resolve water conflicts.

  • Design and implement further reforms of the water allocation regime to ensure an effective and enforceable cap on abstractions that reflects environmental and ecological requirements and sustainable use; establish “essential” water uses (such as public water supply, sanitation and ecosystem services) as a high priority use; speed up the regularisation and registration of water-use rights to make the public register on water rights fully operational and transparent; consider auctioning the allocation of new rights (for systems that are not already over-allocated); strengthen enforcement and sanctions for illegal abstractions.

  • Develop a strategy to address over-allocation in basins and aquifers where water-use rights exceed the sustainable capacity of the water body.

  • Continue expanding coverage of water quality standards and accelerate implementation of the planned water quality and ecological information platform, with a view to systematically collecting and publishing water quality data; improve monitoring of soil contamination, as well as of water abstraction to protect ecosystems, notably wetlands.

2. Environmental governance and management

Institutional framework

Chile has strengthened its institutional framework for environmental management at the national level. Distinct agencies are now responsible for environmental impact assessment and compliance assurance. Despite the steady increase of their budgets, however, the national environmental authorities, especially the Environmental Superintendence (inspectorate), still lack human and technical capacity to adequately perform their functions.

The Council of Ministers for Sustainability provides an important mechanism for horizontal co-ordination among a myriad of national authorities with environmental responsibilities. In Chile’s centralised system of environmental governance, sub-national units of those authorities also need to collaborate effectively. At the municipal level, the rapidly developing System of Environmental Certification of Municipalities is an important capacity building tool. Local authorities, however, lack the autonomy and resources to play a more substantial role in local environmental management and to adapt national policies to local needs.

Regulatory framework

The MMA has been increasingly using regulatory impact analysis, including the assessment of benefits (using health impact parameters) and costs of draft environmental regulations. The methodology for this ex ante evaluation has put growing emphasis on quantitative analysis of regulatory impact. In 2014, the MMA introduced regular ex post evaluation of environmental regulations, as well as of environmentally relevant government programmes, but this practice is still evolving.

Chile has reinforced the regulatory framework for air and water pollution control, adopting a range of environmental quality and emission/effluent standards. However, the system of air emission and wastewater discharge standards remains patchy. It covers some, but not all, regulated pollutants and only selected activity sectors. These standards do not prescribe specific abatement methods, but their values are set based on reference end-of-pipe pollution control technologies and not integrated process solutions.

The System of Environmental Impact Assessment (SEIA) remains the backbone of Chile’s environmental regulation. Projects subject to full environmental impact assessment (EIA), as opposed to the simpler environmental impact declaration, correspond to over 40% of the value of new investments, reflecting the effectiveness of the screening procedure. EIA is closely linked to permitting: a Resolution of Environmental Qualification (RCA) constitutes a one-window environmental permit that prescribes environmental impact mitigation measures. However, the existing provisions for public participation in the EIA process do not ensure adequate consideration of project alternatives or minimisation of potential environmental impacts, which may potentially lead to environmental and social conflicts.

While the coverage of territorial planning has increased considerably over the last decade, it generally lacks coherence and mostly reflects sectoral priorities. Municipalities have the power to make planning decisions on their territory, but inter-communal and metropolitan plans overseen by the central government prevail over communal plans. Strategic environmental assessment (SEA) has been increasingly used. Most territorial plans are required to undergo an SEA, although less than half of them do. Integration of environmental concerns into territorial plans at all levels and public participation in their development need to be enhanced.

Compliance assurance

The institutional framework for compliance assurance remains highly fragmented. The Environmental Superintendence (SMA) has a wide range of administrative enforcement tools at its disposal, but severely lacks the capacity to act. It has to rely on sectoral competent authorities for compliance monitoring of specific RCA conditions, which undermines their enforceability. Unlike most OECD member countries, Chile does not have criminal sanctions for environmental offences.

The problem of past land and water contamination, caused particularly by abandoned mining sites, has been widely recognised. The Mine Closure Law requires companies to develop detailed mine closure plans and provides for the establishment of financial guarantees, a post-closure fund and monetary penalties for infringement. But there is no specific regulation on the remediation of the hundreds abandoned mines, tailing dams and contaminated areas, no specific agency charged with their identification and clean-up, and no mechanism to cover the substantial related costs. The absence of strict liability (irrespective of legal fault) for future environmental damage and of decontamination standards is likely to further aggravate this problem. There is also a need of better knowledge and transparency on the location of mining activities and environmental liabilities, and the state and safety of the latter. There is very limited information available about environmental impacts generated by the medium- and small-scale mining industries.

At the same time, Chile has made remarkable progress in promoting environmentally friendly business practices through a variety of non-regulatory instruments. These include Clean Production Agreements (APLs), corporate social responsibility initiatives in exporting sectors, publication of sector-specific green practice guides and introduction of initial elements of sustainable public procurement. The broad engagement of the business community could further promote these initiatives.

Environmental democracy

The MMA has been engaging the public in the design of policy instruments (e.g. environmental quality and emission standards), environmental assessment, development of Pollution Prevention and Decontamination Plans and wildlife conservation initiatives. The Environmental Protection Fund supports projects implemented by non-governmental organisations (NGOs) and other non-profit institutions. At the same time, Chile lacks an effective mechanism for addressing special rights of indigenous communities, which contributes to socio-environmental tensions in many local communities.

Since 2005, Chile has greatly enhanced access to environmental information through a range of legal guarantees, the improvement of the National Environmental Information System, the publication of regular environmental reports, and the enhancement and consolidation of the Pollutant Release and Transfer Register. It also leads the work to conclude a wide-ranging regional agreement on access to information, public participation and justice on environmental matters in Latin America and the Caribbean. However, serious problems persist with respect to information availability, coverage and completeness. In particular, there is little information on water abstraction and use, as well as on biodiversity protection and negative impacts on ecosystems. Air and water quality monitoring stations often collect data on only a few parameters. As a result, Chile has difficulties in providing environmental statistics under international conventions and to international organisations.

Establishment of environmental courts has strengthened access to justice, as has the right to sue against decisions of environmental institutions, including standards, EIA decisions and SMA enforcement actions, and to seek measures for environmental remediation. In principle, the extensive environment-related litigation demonstrates that access to justice in Chile is functioning. In practice, however, the cost of legal counsel often puts this access out of reach of NGOs and private citizens.

Chile’s education system increasingly incorporates environmental considerations, as witnessed by the successful implementation of the National System of Environmental Certification of Educational Establishments, as well as several socio-environmental awareness-raising initiatives. However, environmental curricula quickly become outdated. There is a need for much bigger outreach to various non-government actors to raise their capacity to contribute meaningfully to environmental policy making.

Recommendations on environmental governance and management

Regulatory framework

  • Develop and implement a coherent policy for regulating pollution releases into air and water from stationary sources, including technique-based emission/effluent limit values for large, high-risk industrial installations and sector-specific emission and effluent standards for facilities with lower environmental impact.

  • Improve the EIA process to ensure it includes meaningful consideration of project alternatives, guarantees public participation in its early stages and takes better account of potential environmental impacts, particularly on ecosystems.

  • Enhance the practical application of SEA to territorial development plans and ensure the implementation of relevant mitigation measures; better integrate housing and infrastructure planning with public investment in water and waste management services, and nature protection; empower municipalities to take more control over local territorial planning by reinforcing the role of Regulatory Communal Plans.

Compliance assurance

  • Harmonise environmental compliance and enforcement policies across various national competent authorities and ensure the involvement of SMA inspectors in assuring compliance with sector-specific environmental permits; increase the enforcement capacity of the SMA; consider introducing criminal penalties for egregious environmental offences.

  • Introduce a strict liability regime for future damage to water bodies, land, species and ecosystems; develop and implement environmental remediation standards and plans, particularly for soil contamination with heavy metals; empower the SMA to enforce liability provisions through administrative actions.

  • Maintain and frequently update risk assessment inventories of abandoned contaminated sites; establish a financial instrument to impose decontamination fees on hazardous industrial installations and mines, and earmark the revenue to constitute a fund to be used for clean-up of past land and water pollution.

  • Upscale efforts to monitor and control the resource use (e.g. energy, water) and environmental impacts generated by medium- and small-scale mining industries, and support the adoption of new processes and technology to increase their efficiency and safety.

Environmental democracy

  • Strengthen the information base to support environmental decision making by expanding data collection and management with respect to water allocation, abstraction and quality, air pollution, biodiversity protection, etc., and make this information available to the public, as well as to international bodies.

3. Towards green growth

Chile has made significant progress towards green growth since 2005. In line with the 2009 OECD Declaration on Green Growth, it launched a major Green Growth Strategy in 2013. The government plans to revamp the strategy, with a view to placing more emphasis on environmental equity, health, gender, cultural diversity and protection of valuable ecosystems. The new strategy aims to be an umbrella for all major sectoral strategies and plans related to green growth, many of which are already underway. The MMA is also developing the National Programme on Sustainable Consumption and Production, which will constitute a major pillar of the new Green Growth Strategy.

Greening taxes and subsidies

In 2014, Chile approved a major tax reform, seeking to reduce the fiscal gap, make the tax system more progressive and reduce income inequality. In line with a recommendation from the 2005 OECD/ECLAC Environmental Performance Review, the reform includes new environmentally related taxes. Among them, a new tax on light motor vehicles addresses both the emissions of nitrogen oxides (NOx) and the fuel economy of the vehicle, thereby discouraging the purchase of higher emission vehicles, which are mostly diesel fuelled. However, the tax does not apply to commercial vehicles. The emission-related components of the tax increase with the vehicle’s price, thereby making the tax progressive. However, the vehicle price does not affect the environmental damage done by a unit of emissions; untying the emission-related component of the tax from the vehicle price would help better address both environmental and equity considerations.

A tax on emissions of local air pollutants and carbon dioxide (CO2) from large stationary sources will be charged from 2017. The Chilean tax is innovative: for emissions of local air pollutants, the tax rates are based on the social costs of the different pollutants and on the size of the affected population (residents of the municipalities where the emissions take place). However, the rate of the CO2 tax, at USD 5 per tonne of CO2, is relatively low. The tax covers boilers and turbines and, therefore, primarily affects thermal electricity generation (responsible for 27% of CO2 emissions) and leaves out other major emission sources such as copper smelters and other industrial plants. There are also interactions with the system for setting electricity prices that effectively shield some power generators, small businesses and households from the costs of the tax. The government should accelerate the ongoing assessment of these interactions, which influence the effectiveness of the tax in encouraging electricity savings and investment in cleaner generation.

These new taxes are particularly welcome, as the use of environmentally related taxes in Chile has been relatively limited so far. In 2014, revenues from environmentally related taxes amounted to 1.2% of GDP, among the lowest of all OECD member countries. Many energy tax rates do not adequately reflect the cost of environmental damage. Energy use outside of the transport sector (for heating and electricity generation, for example) is untaxed, despite being responsible for about 80% of the country’s CO2 emissions. The forthcoming CO2 tax will help address this issue. Tax rates on petrol and diesel are very low compared to those applied in most OECD member countries. Diesel is taxed at a much lower rate than petrol, which is not consistent with the carbon content of these fuels and the local pollutants generated by their use. In addition, diesel used in truck transport receives a tax credit. As a result, the effective carbon price implicit in energy taxation is among the lowest in the OECD (OECD, 2015b).

Support for fossil fuels has been scaled back over recent years, but a fuel price smoothing mechanism is still in place. This mechanism reduces the excise rates on petrol and diesel when international fuel prices are above a certain threshold, and raises them when international prices are lower, with a cap on fiscal expenditure. This system should be examined carefully to ensure that it does not function as an implicit fossil fuel subsidy. The strong decrease in international oil prices since mid-2014 is an opportunity to phase out all remaining fuel price stabilisation measures.

Fiscal revenues from non-renewable natural resources are substantial in Chile, amounting to 2.1% of GDP in 2013, although much less than in other Latin American countries. A tax on mining extraction and exploration rights, levied per hectare of land, has long been in place. It accounts, however, for a negligible share of environmentally related tax revenue. In 2006, Chile introduced a specific tax on mining profits, aiming to increase the financial contribution of the mining sector to social expenditure, as recommended by the 2005 OECD/ECLAC Environmental Performance Review. The average annual revenues from this tax are about 0.45% of GDP; overall taxation of mineral resources appears relatively low in Chile compared to other resource-rich members of the OECD (OECD, 2015a).

Expenditure for environmental protection

Central government budget allocations to environmental protection increased by 174% (in real terms) between 2000 and 2014, more than the total budget. Allocations to water supply increased even more (280%), mainly to secure drinking water supply in rural areas.

In 2015, in a welcome move, Chile published its first comprehensive study on public expenditure on environmental protection, covering 30 central government agencies. The study estimated public expenditure at 0.1% of GDP or 0.5% of total public expenditure by central government agencies in 2012. Biodiversity and landscape protection attract more than one-quarter of this expenditure; a relatively small share targets water and sanitation (the sector was privatised in the late 1990s) and air and climate, despite the considerable air pollution challenges and rapidly increasing GHG emissions.

Chile should build on this environmental expenditure accounting exercise, conducting it periodically and eventually expanding it to the sub-national level. This would facilitate analysis of spending effectiveness and efficiency and help ensure that budget allocations meet environmental policy priorities. The implementation of the Pollution Release and Transfer Register provides a starting point for data collection and analysis for private expenditure and investment.

Investment in environmental and low-carbon infrastructure

Chile has well-developed infrastructure, notably when compared to other Latin American countries. Since the early 1990s, it has attracted extensive private investment through concession-based public-private partnerships. Infrastructure needs remain large, however. Several major investment packages were launched in recent years, including the 2014 National Infrastructure Plan, which also includes investment in environment-related infrastructure such as public transport. However, investment plans lack systematic consideration of environmental and climate components or sustainability criteria and indicators in implementation.

Mobility and transport

The road network has been expanded and upgraded, notably in the core regions around Santiago. Road pricing applies to most motorways and for the urban highways around Santiago, on which road tolls vary with traffic congestion levels. Investment in the rail system has been limited, however, and most freight and passenger transport relies on roads. Different initiatives and investments have improved, upgraded or expanded the range of public transport in Chilean cities, mostly in the Santiago Metropolitan Region. Yet the expansion of the metropolitan transport system has not kept pace with the rapid rate of urbanisation and the steep increase in the vehicle fleet (+40% over the 2000s). This results in oversaturated metro and persistent traffic congestion, with severe air pollution impacts and increasing GHG emissions (Section 4). The stronger emphasis on public transport and sustainable mobility by the USD 23 billion Santiago 2025 Master Plan is much welcome.

Renewable energy

Investment in non-conventional renewable energy sources (i.e. excluding large hydro) has increased sharply in recent years, reaching a record high of about USD 2.4 billion in 2015 (BNEF, 2016), and is expected to grow further. Investment has concentrated on wind and solar energy since 2010, reflecting the market competitiveness of these renewables technologies in Chile and a supporting regulatory framework (Section 4). The government and its agencies have provided soft loans and other financial incentives that have helped kick-start the financing of renewables projects. Nonetheless, investors continue to face difficulties in accessing finance on the domestic market (Nasirov et al., 2015); many renewables projects are financed by international development institutions.

Water and sanitation

Large investment by water companies brought the share of urban households connected to wastewater treatment services to more than 96% in 2014 (from roughly 20% in 2000). However, only two-thirds of urban dwellers were connected to advanced (secondary and tertiary) treatment in 2011, which was low by OECD standards (Figure 1). Water and mining companies have responded to drought and water shortages with significant investment in alternative supply sources (e.g. seawater desalination). Investment is projected to decline markedly after 2020, and to focus largely on public water supply. This reflects the priority given to securing continuity of water supply services, rather than building new treatment capacity. Reducing the large losses in drinking water distribution networks should also be a priority.

Water tariffs for urban water services rose considerably in the early 2000s to finance the expansion of sewage treatment infrastructure; drinking water consumption per household has decreased by 18% since then. Water prices allow water companies to recover almost twice their operating costs, which is more than in most other countries in the region. The tariffs consider the value of water, determined by the market price of water-use rights, and thus reflect water scarcity and encourage water conservation in resource-scarce areas.

In rural areas and remote communities, water supply is mostly operated by municipal authorities and investment financed by the state. In these areas, water tariffs are not subject to regulation and their levels are often too low to recover maintenance and investment costs. As a result, infrastructure has deteriorated over time (Donoso, 2015). Accentuated by consecutive years of drought, this meant that several rural water supply installations in northern and central Chile have not been able to supply drinking water to the population, forcing the state to rely on high-cost emergency solutions (e.g. cistern trucks and desalination of brackish rivers). Investment is also needed to expand rural wastewater treatment, which currently is limited.

Eco-innovation

Chile’s innovation system has matured considerably since the formulation of the first specific innovation policies in 2005. Expenditure in research and development (R&D) increased with the establishment of the Innovation Fund for Competitiveness, which is partly financed by revenue from the specific tax on mining. Yet it remains the lowest in the OECD (at 0.4% of GDP in 2014) and focuses largely on the publicly-funded university sector. Investment and innovation performance of businesses have improved, but remain well below average OECD levels, particularly among small and medium-sized enterprises (SMEs). The 2014 Growth, Innovation and Productivity Agenda aims to address longstanding weaknesses in this area, including poor industry-science co-operation, insufficient skills and fragmented policy.

Chile does not have a formal eco-innovation strategy. Policies that promote eco‐innovation have to date focused on renewables, notably through the establishment of a promotion centre and international centres of excellence for renewable energy technologies. R&D expenditure targeting the environment has increased faster than total spending on R&D since 2000; it reached 9% of total expenditure in 2012, one of the highest shares in Latin America. Patenting activity in environment-related technologies, albeit small, increased almost twice as much as general patenting activity. This was driven by a strong increase in patent applications in renewable energy technologies, common to many OECD member countries, and in water pollution abatement technologies. Overall, the dynamics of eco-innovation in Chile are incipient, but encouraging.

Green markets and employment

Strengthened environmental policy instruments and external market demand for environmentally sustainable products have encouraged the development of an environmental goods and services (EGS) market in Chile. There are no official statistics on the market volume, however. USAID and APEC (2011) estimated that the Chilean “environment industry” grew faster than the rest of the economy prior to the financial crisis and accounted for 1.7% of GDP in 2010. The actual market volume of Chile’s EGS sector is likely larger, as the study did not consider important market segments such as renewable energy, energy efficiency and green products and services (e.g. sustainable agriculture and tourism).

Openness to international trade and a favourable investment environment have eased access to high-level environmental technology. More than 60% of water, waste and air pollution technology was provided by imports in 2010, hinting to a weak domestic production capacity of high-value innovation and technology. The renewable energy technology market is also expanding rapidly, with rising imports, especially in the solar and wind segments. Investing in renewables bears economic, social and environmental benefits: greater renewables penetration may increase GDP by USD 1.6 billion between 2013 and 2028, create 7 700 additional jobs and mitigate 9 000 tonnes of PM2.5 emissions (NRDC, 2014).

Chile developed several initiatives that stimulate the consumption and production of environment-friendly goods and services, yet these have been relatively piecemeal. Regulations allow for the consideration of environmental criteria in public procurement, but these have not been defined yet. Eco-labelling regulations are missing; the variety of international and independent eco-labels in the Chilean market tends to confuse consumers. Inconsistent environmental regulation and enforcement remain barriers to the domestic EGS sector. The lack of information about the sector and of a common definition of “environmental goods and services” has hampered the development of coherent, cross-sectoral policy responses. The development and implementation of the National Programme on Sustainable Consumption and Production will likely strengthen policy coherence in this domain.

Chile is a regional hub for multinational environmental consulting and engineering firms. At the same time, many businesses, especially SMEs, lack knowledge and skills to comply with environmental regulation and claim a lack of training in this area. Environmental skills needs are not well studied and there is no co-ordination among relevant ministries (e.g. environment, industrial development, education). This has hampered the development of training offers (Government of Chile, 2013) and contributes to a mismatch between education/training and labour-market demands in this domain.

International trade and development co-operation

Chile has concluded numerous regional trade agreements, most of which include some type of environmental provisions. Agreements concluded with Canada, the European Union and the United States included strong environmental requirements, which Chile accepted in exchange for market access. They provided momentum for Chile to overhaul and codify its environmental legislation, resulted in various co-operation projects and helped strengthen institutional capacity in the country. In recent years, Chile has proactively supported the integration of environmental provisions into new agreements concluded with emerging and developing countries. Assessments of the environmental impacts of trade agreements (such as of those conducted with Canada, the European Union and the United States) can help assess the effectiveness of environmental provisions and identify pressures arising from expanding productive sectors, particularly those that cannot be identified through project-focused environmental impact assessments.

As an upper-middle income country in 1993-2012, Chile received lower amounts of official development assistance (ODA) than other Latin American countries. However, ODA has been an important source for the implementation of environment-related programmes, including in the fields of climate and biodiversity (Sections 4and 5). One‐third of total ODA disbursements to Chile over 2005-14 targeted environment-related sectors. These resources may decline, however, as Chile will likely no longer be eligible for receiving ODA as of 2017. Chile’s activity as a development co-operation provider is expanding. While there are no official statistics, it is estimated that 10% of Chile’s co‐operation projects in Latin America target the environment, one of the highest shares among donors in the region (SEGIB, 2014). No mechanisms are yet in place to ensure mainstreaming of environmental criteria throughout international activities and systematic monitoring and evaluation of results.

Recommendations on green growth

Greening taxes and subsidies

  • Increase the tax rates on petrol and diesel; gradually reduce the petrol-diesel tax gap and phase out the tax refund for the diesel used by heavy goods vehicles.

  • Assess the fuel price stabilisation mechanism to ensure it does not function as an implicit fossil fuel subsidy.

  • Consider revising the new tax on emissions of local air pollutants and CO2 from large stationary sources: i) increase the tax rate on CO2 on the basis of pre-defined steps, to better reflect the social cost of emissions; ii) include additional emission sources, such as copper smelters and other industrial plants; iii) assess the interactions between the electricity price-setting mechanisms and the CO2 tax, and consider the adjustments needed to safeguard the full effectiveness of the tax; and iv) expand the geographical basis of the air pollution component of the tax to relevant airsheds.

  • Explore the introduction of a cap and trade system for relevant pollutants and emitters that are not covered by the new tax on emissions of local air pollutants and CO2.

  • Broaden the coverage of the vehicle tax to commercial vehicles; delink the environmental and price elements of the vehicle tax; consider increasing the rates of the energy efficiency and NOx components of the tax.

Environment-related expenditure and investment

  • Conduct systematic surveys of public environmental protection expenditure, building on the experience gained with the 2015 survey; extend the survey to sub-national institutions and private expenditure; develop a system for systematically evaluating effectiveness of environmental expenditure.

  • Ensure that major investment programmes systematically consider environmental and climate objectives, include sustainability criteria to guide implementation and indicators to monitor environmental impacts.

  • Continue to encourage investment in public water supply infrastructure with a view to securing drinking water supply, reducing water distribution losses and enhancing resilience against water shortages; maintain investment to improve wastewater treatment capacity, especially in rural areas.

  • Continue to invest in urban public transport systems to counteract the continuous shift from public to private passenger transport and reduce congestion and emissions of GHGs and air pollutants.

Eco-innovation, green markets and employment

  • Consolidate initiatives for promoting eco-innovation into a coherent strategy or framework and set long-term objectives for eco-innovation; strengthen co-ordination of industrial development, innovation and environmental policies across the government with a view to integrate eco-innovation into broader growth and competitiveness strategies and programmes.

  • Develop statistics and indicators for the environmental goods and services sector, including employment, with a view to informing the evaluation of environmental policies, and policy making more generally.

  • Improve the national labelling system for environmentally sustainable products; accelerate the definition of environmental criteria for public procurement.

  • Develop programmes on jobs and skills that include profiles, training plans and activities for green jobs; improve co-ordination between relevant ministries and agencies (i.e. education, industrial development, environment) and consider linking the concept of green jobs to the National Training and Employment Service.

Development and trade

  • Continue to promote environmental considerations in trade policies; assess effectiveness of environmental provisions in regional trade agreements.

  • Ensure that environmental and sustainability criteria are mainstreamed throughout international development co-operation activities and that results are monitored and evaluated.

4. Climate change

Greenhouse gas emissions and impacts of climate change

Climate change is an increasingly important environmental issue for Chile. The most recent data, from 2010, shows that Chile’s GHG emissions (excluding land use, land-use change and forestry, or LULUCF) grew by 23% in 2000-10, driven by Chile’s rapid economic growth (Figure 2). Emissions from most sectors – especially energy production and transport – increased during this period. The CO2 emission intensity of the economy has declined over time, but there is still a positive correlation between growth in emissions, energy supply and GDP (Figure 1). GHG emissions per capita were the lowest of all OECD member countries, reflecting the remaining difference in income levels. However, as GDP per capita catches up with the OECD average, Chile’s emissions per capita are projected to rise.

Figure 2. Greenhouse gas emissions increased with economic growth
picture

 http://dx.doi.org/10.1787/888933388222

Chile is vulnerable to the impacts of climate change, due to its geography and socio-economic characteristics (in particular, high levels of inequality). The May 2015 flooding and mudslide in northern Chile provided a vivid illustration of the types of impacts that could be felt: it led to 31 casualties and more than 16 000 people left homeless. The risk of flooding is projected to increase with climate change, as will incidents of extreme heat. In addition to changes in extremes, Chile will be affected by a longer-term trend of declining water availability, negatively affecting hydropower generation and agricultural production.

Policy framework for climate change mitigation and adaptation

Chile is putting in place many of the elements required for an effective policy response to climate change. The 2005 Environmental Performance Review (OECD/ECLAC, 2005) recommended that Chile develop a strategy for addressing climate change, with a focus on energy efficiency and GHG mitigation. In line with this recommendation, Chile developed a climate change strategy in 2006 and the 2008-12 Climate Action Plan. Energy efficiency has been an increasingly prominent component of the government’s energy strategy, alongside measures to encourage forestry and renewable energy.

In 2009, Chile pledged to reduce GHG emissions by 20% by 2020 compared to business-as-usual, with some ambiguity about what this would consist of in absolute terms. It is likely to meet this target, provided that the emissions reductions in the Nationally Appropriate Mitigation Actions (NAMAs) are realised. In advance of the Paris climate change conference in December 2015, Chile submitted its Intended Nationally Determined Contribution (INDC) to complement its 2009 commitment. The level of ambition will depend upon certain criteria being met. Chile commits to reducing GHG emissions (excluding LULUCF) per unit of GDP by 30% relative to 2007 if economic growth is maintained at current rates; it has a separate target for forestry. This will be strengthened to 35-45% if there is sufficient international financial support. The INDC is more transparent than the 2009 pledge, but the use of conditions on growth and financing leaves some uncertainty about the strength of the commitment. Overall, the INDC would slow the increase in GHG emissions, rather than reducing them in absolute terms. By 2030, Chile is projected to have a GDP per capita similar to that of Spain and France now, but higher per capita emissions.

The overarching challenge is moving to an emission trajectory that is consistent with limiting global temperature rise below 2°C, as indicated in the 2015 Paris Agreement. This will require Chile to develop measures to peak emissions as soon as possible and achieve more stringent emissions reductions thereafter. Chile will also need to avoid locking in emissions that will make future reductions more challenging to achieve. This is not yet happening in the energy sector, where planned generation capacity still contains a considerable share of unabated coal-based power generation. More generally, infrastructure choices should be examined carefully to ensure their consistency with the transition to a low-carbon economy.

Adaptation policy has taken shape with the release of the National Climate Change Adaptation Plan in 2014. This contains institutional reforms to improve horizontal and vertical co-ordination, as well as developing the evidence base for adaptation. Chile is developing sectoral adaptation plans to implement the national plan; those for biodiversity, forestry and aquaculture have already been completed. Chile would benefit from undertaking a national assessment of the risks (and opportunities) from climate change, as well as the interdependencies across sectors. This should be complemented with strengthened efforts to mainstream climate change into budget allocation, project appraisals and strategic environmental assessments.

Overall, adaptation planning is further developed than is the case for mitigation. The 2008-12 Climate Action Plan primarily aimed to lay the groundwork for policy action, rather than to implement measures to reduce emissions or enhance resilience. The national and sectoral adaptation plans are building on this to identify more concrete approaches. Meanwhile, mitigation policy has been piecemeal, reflecting constrained resources and uneven engagement across sectors. The forthcoming climate change action plan 2016-21 will need to build on experiences gained from the adaptation plans to translate Chile’s international commitments into concerted domestic action.

Policy development, monitoring and evaluation

There is strong commitment to enhance public, business and civil society access to climate information and their inclusive participation in key climate policy decisions. The INDC process was transparent and responsive to significant public engagement. The Mitigation Action Plans and Scenarios (MAPS) project provides a transparent mechanism for understanding the implications of different emissions trajectories. It is also helping clarify the implications of available mitigation options. Stakeholder engagement used to develop national and sectoral adaptation plans is helping raise awareness about climate issues.

Chile has developed a robust and comprehensive system for assessing emissions trends over time, but there remain challenges with the frequency of updates; the most recent data available are for 2010. The methodology for the 2011 GHG emission inventory strengthens the treatment of emissions from land use. Reinforcement of capacity for developing inventories would assist with the transition to biennial reporting to the United Nations Framework Convention on Climate Change, and support monitoring progress towards mitigation goals more generally.

In contrast to mitigation, there is no single metric that can assess progress in relation to climate change adaptation. Moreover, the effectiveness of adaptation measures may only become clear over long time horizons, or if an extreme weather event occurs. To address this, and other methodological challenges, Chile could adopt a pragmatic combination of four tools for assessing progress: climate change risk and vulnerability assessments; indicators; evaluations and national audits; and climate change expenditure reviews.

The Chilean approach to monitoring and evaluation for adaptation has yet to be implemented, but some constituent elements are in place. The final evaluation of the 2008-12 Climate Action Plan focused on the extent to which actions had been implemented rather than on their effectiveness in achieving their intended goals. The National Climate Change Adaptation Plan requires national monitoring reports to be submitted annually to the Council of Ministers for Sustainability. The INDC states that a full evaluation of progress on adaptation will not be completed until 2026. This timescale is considerably longer than adopted by other OECD member countries, and risks missing opportunities to inform the evolution of adaptation in a timely manner.

Governance and financing challenges

Achieving the voluntary commitment and the INDC will require concerted efforts across all emitting sectors. This will entail moving beyond planning, analysis and standalone measures to implementing policies that deliver a robust, coherent set of climate policies across emitting sectors.

Two major challenges will need to be addressed to strengthen implementation of mitigation actions. The first is the need to further strengthen institutional arrangements for embedding climate change policy in government operations. Progress is being made, with an increasing number of ministries now having climate change focal points. The Office of Climate Change in the environment ministry, overseen by the Council of Ministers for Sustainability, provides co-ordination. However, most responsibilities relevant to implementing climate policy lie outside of the environment ministry’s remit. Implementation relies heavily upon voluntary engagement by, and sufficient capacity within, other ministries, resulting in delays in the delivery of information and variable implementation of climate change actions.

The second major challenge is to ensure adequate and sustainable financing for the implementation of climate change policies. The absence of sufficient and consistent funding was a barrier to action by ministries to implement the 2008-12 Climate Action Plan (University of Chile et al., 2015). A funding strategy is due in 2018, which is intended to strengthen co‐ordination and improve understanding of trends in public spending on climate action. International climate finance has been a major contributor to the development of climate measures to date, but Chile will likely no longer be eligible for ODA from 2017. Meeting climate goals will require efforts to broaden and strengthen the funding base: encourage private sector investment, take advantage of new international mechanisms such as the Green Climate Fund and ensure the benefits of climate policy are reflected in domestic budgeting decisions.

Mainstreaming climate change in energy, transport and agriculture

Mitigation policy to date has largely focused on enhancing energy efficiency through voluntary measures (such as Clean Production Agreements), providing subsidies and public investment programmes (e.g. street lighting, heating systems). There has been limited use of regulatory measures, with exceptions including energy labelling and minimum performance standards for new buildings. Achieving the target of reducing energy use by 20% by 2025 appears challenging. The 2014 Energy Agenda proposes the development of an energy efficiency law. Among other things, this law would require large energy users to develop energy management systems and energy conservation plans, and encourage distributors to work with customers to reduce their electricity consumption. Chile would benefit from swiftly approving this law.

Chile is experiencing rapid growth of renewable generation, mostly without subsidies. This provides a strong basis for the transition to a low-carbon economy. The proportion of solar and wind energy is growing rapidly. Chile is on track to meet its 2025 target of generating 20% of electricity from non-conventional renewable energy sources ahead of schedule. With limited domestic fossil fuel resources, Chile faces some of the highest energy prices in Latin America. This, combined with a geography that is well-suited to solar and wind power, makes renewables price-competitive with fossil fuel generation. A renewables quota obligation (implemented in 2010 and rising over time) and policy reforms to improve market transparency have further encouraged investment. Nevertheless, use of non-conventional renewables is still far from matching its potential, as various barriers persist, including grid capacity constraints; a concentrated market structure; permitting delays; disputes about local environmental impacts; access to finance; and the failure to fully internalise the environmental and social costs of alternative forms of generation. The announced carbon tax will help correct the very low effective carbon price implicit in energy taxation (Section 3) and further stimulate investment in renewables and energy efficiency.

Transport, particularly road, represents a key challenge for the achievement of Chile’s GHG emission reduction targets. CO2 emissions from transport are large (30% of total CO2 emissions from fuel use) and increasing (+44% in 2000-13). Economic growth and rising incomes are the main driver of this increase. The average efficiency of the vehicle fleet is improving, but not enough to offset the effects of increasing demand for travel and the shift from public to private transport (car ownership doubled in 2000-14). GHG emissions from the transport sector are projected to grow by up to 95% by 2030, with economic growth, increasing wealth and low-density urban expansion (MAPS Chile, 2014). However, the integration of transport into climate policy remains at an early stage. Similarly, climate policy has received limited attention in transport planning. While the 2013 National Transport Policy does not explicitly cover climate change, it aims to expand and upgrade public transport systems and improve the infrastructure for cycling.

GHG emissions from agriculture have been steadily rising and represent 15% of Chile’s total emissions. Yet there are no policies or measures designed to address agriculture’s contribution to GHG emissions. At the same time, climate change impacts on agricultural production are expected to be significant. The 2013 sectoral adaptation plan for agriculture focuses on improving water use, which would be beneficial even in the absence of climate change. Forestry is a major carbon sink in Chile and it has long been encouraged with subsidies to afforestation activities. The effectiveness of these measures in supporting climate policy has not been formally evaluated, however.

Recommendations on climate change

Governance and financing

  • Strengthen and formalise the institutional basis for climate change policy to provide clear responsibilities for implementation, in line with Chile’s national circumstances and international commitments.

  • Identify likely resource requirements, and financing sources, to implement the forthcoming climate change action plan 2016-21, including resources needed for core functions (e.g. co-ordination and monitoring progress); adopt a funding strategy at the earliest opportunity; develop a strategic approach to facilitate private sector investment in climate change, including energy production.

Policy development, monitoring and evaluation

  • Establish and implement the suite of domestic climate policies to achieve Chile’s Intended Nationally Determined Contribution (INDC) for 2030; implement the NAMAs or adopt alternative measures to ensure that the 2020 target is achieved.

  • Identify the long-term trajectory consistent with zero net emissions by the second half of the 2050s; communicate long-term commitment to climate policy, whether through legislative or other means.

  • Continue improving the evidence base and capacity for mainstreaming climate change adaptation into public sector decision making; make the results of climate projections more accessible to end users (through a web portal, for example) to encourage adaptation by the private sector and other stakeholders.

  • Implement a monitoring and evaluation framework for climate change adaptation and mitigation policies, including clear accountability mechanisms; reinforce capacity to produce timely emissions inventories; consider using intermediate milestones for longer-term emissions goals; undertake a national climate risk and vulnerability assessment, evaluate the climate resilience of large projects and develop indicators to monitor progress towards adaptation objectives.

Mainstreaming

  • Analyse the consistency of current policy choices with decarbonisation in the longer term, particularly in the transport and energy sectors, and ensure that the necessary adjustments are made; design climate policy measures to ensure a coherent, aligned and integrated policy mix across key sectors responsible for emissions (e.g. energy and transport) and removals (e.g. land sector).

  • Mainstream climate change adaptation in public sector appraisal systems, such as strategic environmental assessment, the National System of Public Investment and project appraisals; integrate climate resilience in the development of relevant regulations, norms and standards, such as those for infrastructure and building design.

5. Biodiversity conservation and sustainable use

Chile’s biodiversity: State, trends and pressures

Chile’s unique geography results in a variety of climates, ecosystems and vegetation, and in a large number of endemic species (that are found nowhere else in the world). Many of its ecoregions are considered significant to global biodiversity. Central Chile, including the matorral (shrubland) and Valdivian temperate rainforest ecoregions, is among the world’s biodiversity hotspots, due to the concentration of endemic species and the high rate of habitat loss (CEPF, 2015).

Pressures on biodiversity from land-use change (e.g. conversion of forest lands and agricultural expansion), fishery, mining, urban and infrastructure development remain intense. Forest fires, climate stress and exotic invasive species exacerbate these pressures. Sixteen of the 127 terrestrial ecosystems in continental Chile lost more than half of their native vegetation between 1992 and 2012, mostly in central and south-central Chile. Pressures on inland water ecosystems are significant and increasing, especially in the northern regions (Section 1). More than 60% of species classified in Chile are threatened, although only about 3.5% of known species in the country have been classified. Conservation plans are in place for less than 10% of threatened species. According to the 2015 Ocean Health Index, the marine ecosystems across Chile’s exclusive economic zones are in relatively good health, but several coastal and inland fish stocks are fully exploited or overexploited.

Improving the knowledge base for biodiversity policy

Chile has improved knowledge on the status of, and pressures on, biodiversity. It has systematically assessed terrestrial ecosystems, identified priority sites for conservation and developed national registries for wetlands and protected areas. However, significant knowledge gaps remain, especially about the conservation status of species, soil contamination and marine and freshwater ecosystems, as well as about the value of biodiversity and ecosystems and the costs associated to their loss. Further work is needed to develop an accurate biodiversity baseline to assess trends, identify priorities for action, inform decision making and build public consensus around biodiversity conservation and sustainable use. The environment ministry should accelerate development of a national ecosystem assessment, which is planned for 2016 or 2017.

Governance and policy framework

Chile has made significant progress in developing strategies, plans and policies to promote biodiversity conservation and sustainable use. Chile’s National Biodiversity Strategy, first published in 2003, has led to progress in several areas, including building knowledge and expanding protected areas. However, it has been only partially implemented (MMA, 2014). The revised strategy for 2015-30, which was intended for release in 2015, aims to align biodiversity policy with the Aichi targets and to correct many implementation challenges of the previous strategy. It is also expected to indicate financial needs for implementation and mechanisms to monitor progress. The 15 regional biodiversity strategies are also being updated, taking into consideration territorial and local community needs.

Biodiversity governance is highly fragmented. While the MMA oversees biodiversity policy, two separate institutions manage protected areas: the National Forestry Corporation (CONAF) is responsible for most terrestrial protected areas; and the National Fishing and Aquaculture Service (SERNAPESCA) is in charge of marine protected areas. Water governance is also complex and fragmented. Different institutions are in charge of water allocation, water quality and pollution, regulation of water utilities, irrigation and water ecosystems. In spite of some high-profile policy initiatives, such as the 2008 National Strategy for Integrated Watershed Management, Chile has made little progress in introducing integrated water resource management: it has neither river basin institutions nor a system of river basin water quality planning. This division of roles creates significant governance and co-ordination challenges, and makes it difficult to develop coherent, integrated biodiversity policy that addresses trade-offs with water management, urban and infrastructure development and sectoral policies.

The 2005 OECD/ECLAC Environmental Performance Review recommended that Chile review institutional and legislative arrangements for the management of biodiversity. In following up on this recommendation, in June 2014, the government submitted to parliament a draft legislation establishing the Biodiversity and Protected Areas Service (SBAP). The bill foresees the creation of an integrated national protected areas system, which would comprise official marine and terrestrial protected areas and private protected areas. It also enables greater use of economic instruments and financial incentives to promote biodiversity conservation and sustainable use. At the time of writing, however, the legislation was pending in parliament. Its approval is an opportunity for strengthening the governance, co-ordination and effectiveness of Chile’s biodiversity policy; better involving the private sector; and improving mainstreaming of biodiversity in decision making. The centralised governance model for biodiversity would also benefit from better engaging NGOs, local governments and indigenous communities earlier in the policy-making process, as well as in implementation. This would help re-build trust and enlist a broader set of resources.

In 2014, the government proposed legislation to protect and preserve glaciers and regulate activities that can take place within their surroundings, which would need to undergo environmental impact assessment. There has been criticism that the proposed law does not adequately protect glaciers, which are an essential source of water. Others have expressed concern that it will limit mining activity in the Andes Mountains.

Policy instruments

Chile has implemented a wide set of policy instruments to promote biodiversity conservation and sustainable use. The policy heavily relies on regulatory instruments, including protected areas and water quality standards for ecosystem protection (Section 1). EIA and SEA procedures are the main instruments to mainstream biodiversity considerations in major sector-specific projects and plans (Section 2). However, consideration of biodiversity impacts within the EIA process has been ad hoc, leading to uneven treatment of projects and protection of sites.

Chile uses some economic instruments to promote biodiversity conservation and sustainable use. A market of water-use rights has long been in place (Section 1), although the current allocation of user rights does not allow for meeting ecological requirements in half of the river basins in northern Chile. A quota system governs the fishing industry. Entrance fees to protected areas have been widely used: together with concessions and sales they provide nearly a quarter of the total available funding for protected areas. This is among the highest shares in Latin America (Bovarnick et al., 2010).

Nonetheless, there is scope to expand use of economic instruments. There are no examples of payments for ecosystem services (PES) in Chile and the use of biodiversity offsets is at an early stage, with some examples in the mining sector. Water effluents, pesticides and fertilisers are not taxed or charged. The taxation of mining operations pays little attention to their environmental impact (Section 3). The proposed legislation creating the SBAP provides the framework for expanding the use of economic instruments. This would help Chile fulfil the 2004 OECD Council Recommendation on the use of economic instruments in promoting the conservation and sustainable use of biodiversity.

Protected areas

With 19.5% of its land protected within the National System of Public Protected Forest Areas, Chile has already exceeded the Aichi target of protecting at least 17% of its terrestrial and inland water areas by 2020. However, important land-based ecoregions are not adequately represented in the protected area system (Figure 3), such as the Chilean matorral; public protected areas in the central and northern parts of the country are also mostly small and fragmented (ELI, 2003). In October 2015, the MMA announced plans for the Nazca-Desventuradas Marine Park. Once officially established, this will be the largest marine reserve in the Americas and bring Chile’s marine protected areas to 24% of its exclusive economic zone (from the current 4.3%), well beyond the Aichi target of protecting at least 10% of such areas by 2020. However, the largest marine protected areas are far from shore and large population centres, where the urgency for protection is greatest.

Figure 3. Coverage of protected areas varies widely across ecoregions
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 http://dx.doi.org/10.1787/888933388231

Chile faces considerable challenges in managing its protected areas. More than 80% of protected areas have management plans, but many plans are only partially implemented, incomplete or need to be updated. Most protected areas lack sufficient financial and human resources, including park rangers. This also affects the ability to involve the local communities effectively and to ensure co-ordination with the local governments and their territorial plans (Fuentes et al., 2015). The government expects that 60% of protected areas will have revised their management plans and developed systematic monitoring programmes by 2030. It is likely, therefore, that Chile will not have operational management and administration for all protected areas until 2050.

Private conservation initiatives cover about 2% of Chilean territory, which is remarkable considering that no financial incentives are in place. Many of these initiatives, however, have limited budgets and lack management plans. The proposed SBAP legislation will allow for bringing private areas into the overall protected area system. This could help fill the gaps in ecosystem representativeness and build connectivity across pre-existing protected areas. Designing an incentive system to encourage private conservation initiatives would help enhance private and NGO involvement in the expansion and management of protected areas in priority ecoregions (e.g. the matorral), where a significant proportion of land is privately owned.

Financing biodiversity policy and protected areas

Since 2006, Chile has significantly increased financing for biodiversity from public resources and from entry charges and concessions at protected areas. However, financial resources remain inadequate to attain biodiversity objectives or bring Chile in line with biodiversity funding provided in other South American countries (Bovarnick et al., 2010). A dispersal of resources across many different institutions has also reduced expenditure effectiveness. The proposed SBAP legislation includes an increase in funding, though not to the levels independent studies have concluded are needed (Figueroa, 2012). Chile will need to explore new and innovative ways to raise revenue and leverage private sector investment, such as PES and biodiversity offsets.

Mainstreaming biodiversity considerations in other policy areas

With growing economic activity, extraction and use of natural resources, and development and expansion of infrastructure, pressures on biodiversity and environmental conflict are increasing. This makes mainstreaming all the more important. However, while biodiversity objectives are now being incorporated into several other policy areas, tangible results from these efforts – beyond a few local examples – are not yet apparent.

Organic agricultural land has expanded, but still amounts to a negligible share of total agricultural land. Increased use of fertilisers and pesticides poses considerable risks to soil and water. While support to farmers has declined and is modest compared to other OECD member countries, it is mostly linked to input use (OECD, 2015c). This indirectly encourages agricultural production and increases risk of overuse or misuse of water and potentially harmful inputs. These subsidies include support to investment in on-farm irrigation systems. Irrigation subsidies have encouraged the adoption of water-saving techniques, but their impacts on groundwater recharge and ecosystems have not been assessed (Donoso, 2015). For example, they allow drainage of wetlands and canalisation of natural water courses in areas of ecological value. Despite these subsidies, Chile still has among the highest irrigation water application rates in the OECD (OECD, 2013). Existing irrigation capacity should be used more efficiently before constructing new irrigation reservoirs, as foreseen in the National Irrigation Plan.

Chile’s forest products sector has increasingly certified its production processes to conform to market demand and trade agreements. The forest area certified under the Forest Stewardship Council has increased more than five-fold since 2010 (FAO, 2015). Chile has long subsidised forest plantation and, more recently, the preservation of native forests. While afforestation subsidies can contribute to increasing carbon sequestration capacity, they may have encouraged replacing native forests by plantations with exotic species. The tree plantation subsidy programme ended in 2012, but is expected to be renewed. In designing the new programme, Chile should rebalance the incentives, traditionally in favour of forest plantation, and carefully assess costs, benefits and trade-offs between carbon sequestration and biodiversity objectives.

In 2001, Chile introduced a fishery quota system, which helped reduce fishing effort. On the contrary, fish production from aquaculture almost tripled over 2000-12. The effluent, pesticides and medicines flowing from the fish farms are a major source of pollution of, and pressure on, inland waters, estuaries and marine ecosystems. Financial and human resources are inadequate to systematically monitor these impacts and enforcement is weak (MMA, 2014). The fisheries legislation is being amended to limit emissions of solid and liquid waste from aquaculture.

Excessive extraction of groundwater, soil and water contamination and hazardous waste represent the mining sector’s greatest risks to biodiversity in Chile. Mining development is expected to continue to be a source of environmental conflict, as a result of disputes over land and water. The mining industry has greatly improved water use efficiency and increasingly used seawater. Seawater use is projected to expand massively to meet rising water demand. In addition to increasing energy needs, an expansion of desalination may alter salt concentrations and chemical compositions at discharge sites, with unknown impacts on ecosystems and biodiversity. The 2012 Mine Closure Law strengthened regulation on mining waste and environmental liabilities, but there is a need to improve knowledge and transparency about the location and state of abandoned mining sites, as well as about environmental impacts of small-scale mining operations (Section 2). Subsidies to small-scale mining can encourage exploitation of natural resources, increase the risk of pollution of water table and affect biodiversity.

Recommendations on biodiversity conservation and sustainable use

Knowledge base and evaluation

  • Accelerate efforts to build the knowledge base on the status and trends of biodiversity, including classification of species and assessment of the status of terrestrial, inland water and marine ecosystems; further engage academic and research centres in filling knowledge gaps and support policy development.

  • Conduct a national ecosystem assessment at the earliest opportunity to improve knowledge of the values of biodiversity and ecosystem services and of the costs associated with their loss; ensure the values of ecosystem services are integrated into national accounts, as well as policy design and evaluation.

Governance and policy framework

  • Approve the proposed legislation creating the Biodiversity and Protected Areas Service and accelerate its implementation; ensure the proposed service has adequate financial and human resources to fulfil its mandate.

  • Reinitiate institutional and policy reforms to implement integrated watershed management that would bring together water quantity and quality planning and regulation.

  • Ratify and implement the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (ABS).

  • Improve participation of NGOs, local governments and indigenous communities at all stages of biodiversity policy development and implementation to build trust and enlist a broader set of resources for executing action plans.

Protected areas

  • Focus investment in protected areas on increasing the representativeness of priority ecoregions and the protection of the coasts and marine areas of continental Chile, and on conserving the habitats and nesting grounds of priority species.

  • Accelerate the development and update of the management plans for all protected areas, and systematically review their implementation; ensure that the plans set clear priorities, targets and progress indicators.

  • Develop and implement a strategy to encourage private conservation initiatives through carefully designed incentives (e.g. incentives for donations of land in priority areas to the protected area system; contracts with landowners); bring private conservation initiatives into the national system of protected areas; and support financing management plans and protection activities.

Economic instruments

  • Further expand the use of economic instruments to encourage biodiversity conservation and sustainable use, raise additional revenue and leverage private sector investment; in particular, consider introducing water effluent charges, taxes on fertilisers and pesticides, and payments for ecosystem services programmes; expand the use of biodiversity offsets.

Mainstreaming

  • Systematically integrate biodiversity conservation objectives into land-use planning, marine planning and sectoral policies; further mainstream biodiversity considerations into project and plans appraisal mechanisms, such as EIA and SEA.

  • Expand efforts to increase water use efficiency in all economic sectors, particularly in agriculture and mining; systematically monitor freshwater abstraction and the use of desalinated seawater to prevent negative impacts on water ecosystems.

  • Systematically assess the impacts of subsidies for irrigation and small-scale mining on groundwater recharge, biodiversity and ecosystems, with a view to reforming these subsidies; decouple agricultural support from input use and the expansion of agricultural land, to ensure the protection of sensitive ecosystems.

  • Review the incentives for afforestation and native forest protection, and carefully assess costs, benefits and trade-offs between carbon sequestration and biodiversity objectives.

References

BNEF (2016), Bloomberg New Energy Finance (database) (accessed March 2016).

Bovarnick, A. et al. (2010), Financial Sustainability of Protected Areas in Latin America and the Caribbean: Investment Policy Guidance, United Nations Development Programme (UNDP), New York and The Nature Conservancy, Ballston.

CEPF (2015), “The biodiversity hotspots. South America”, Critical Ecosystem Partnership Fund, Arlington, www.cepf.net/resources/hotspots/South-America/Pages/default.aspx (accessed 4 February 2016).

Donoso, G. (2015), “Water pricing in Chile: Decentralisation and market reforms”, in Dinar, A., V. Pochat and J. Albiac-Murillo (eds.), Water Pricing Experiences and Innovations, Springer International, Geneva.

ELI (2003), Legal Tools and Incentives for Private Lands Conservation in Latin America: Building Tools for Success, Environmental Law Institute, Washington, DC.

FAO (2015), Global Forest Resources Assessment 2015, Food and Agriculture Organization, Rome, www.fao.org/forest-resources-assessment/en/.

Figueroa, E. (2012), Operative Design of a Financing Strategy for the Medium and Long Term of the Chile National Protected Areas System, Santiago.

Fuentes, E., R. Domínguez and N. Gómez (2015), Consultoría de Aplicación y Análisis de Resultados del Management Effectiveness Tracking Tool (METT) a las Principales Áreas Protegidas en Chile 2015, [Consultation on the Application and Analysis of the Management Effectiveness Tracking Tool (METT) to Chile’s Main Protected Areas 2015], Santiago.

Government of Chile (2013), National Green Growth Strategy, Ministry of Environment and Ministry of Finance, Santiago.

MAPS Chile (2014), Opciones de Mitigacion para Enfrentar el Cambio Climatico [Mitigation Options for Addressing Climate Change], Government of Chile, Santiago.

MMA (2014), Quinto Informe Nacional de Biodiversidad de Chile. Elaborado en el marco del Convenio sobre la Diversidad Biológica [Fifth National Biodiversity Report of Chile to the Convention on Biological Diversity], Ministry of Environment, Santiago.

MMA (2012), Official Environment Status Report 2011, Ministry of Environment, Santiago.

Nasirov, S., C. Silva and C.A. Agostini (2015), “Investors’ perspectives on barriers to the deployment of renewable energy sources in Chile”, Energies, Vol. 8/5, pp. 3 794-3 814, http://dx.doi.org/10.3390/en8053794.

NRDC (2014), From Good to Great: The Next Step in Chilean Energy Efficiency, Natural Resources Defense Council, New York.

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OECD (2015b), Taxing Energy Use 2015: OECD and Selected Partner Economies, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264232334-en.

OECD (2015c), Agricultural Policy Monitoring and Evaluation 2015, OECD Publishing, Paris, http://dx.doi.org/10.1787/agr_pol-2015-en.

OECD (2013), OECD Compendium of Agri-environmental Indicators, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264186217-en.

OECD/ECLAC (2005), OECD Environmental Performance Reviews: Chile 2005, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264009684-en.

SEGIB (2014), Report on South-South Co-operation in IberoAmerica 2013-14, Ibero-American General Secretariat, Madrid.

University of Chile, Poch Ambiental and Adapt-Chile (2015), Evaluación Término del Plan Nacional de Acción de Cambio Climático 2008-2012 [Final Evaluation of the National Climate Change Action Plan, 2008-2012], University of Chile, Santiago.

USAID and APEC (2011), Chile Environmental Industry 2011: Case Study, United States Agency for International Development and Asia-Pacific Economic Cooperation.

Annex A. Actions taken to implement selected recommendations from the 2005 OECD/ECLAC Environmental Performance Review of Chile

Recommendations

Actions taken

Environmental performance: Trends and recent developments

Make further progress with the implementation of air quality programmes, including those concerning the mining sector and those focusing on PM2.5, PM10 and ozone; monitor progress and the programmes’ impact on health through appropriate indicators.

Chile adopted Air Pollution Prevention and Decontamination Plans for ten cities or areas across the country and work on further plans is in progress, focusing mostly on fine particulate matter (PM2.5).

Develop air monitoring in all major cities and an integrated air data management system.

The Ministry of Environment (MMA) developed a National Air Quality Information System (SINCA) that integrates information from public and private networks. The Pollution Release and Transfer Register (PRTR) captures air emission data from roughly 7 000 stationary sources.

Develop nationwide emission standards (e.g. for a range of industrial sources and for toxic air pollutants).

Chile adopted a primary air quality standard (designed to protect human health) for PM2.5 and national emission standards for furnaces, copper smelters and thermal power plants, which are so far the only sectors covered by such standards. Emission standards for mobile sources were strengthened.

Increase the effective treatment of industrial effluents, and strengthen water inspection and enforcement capacities.

Emission standards for industrial discharges in public sewerage were amended to include new parameters and set more stringent maximum limits. Cross-sectoral effluent standards for industrial discharges into marine and continental surface waters and groundwater are being updated.

Improve the information and knowledge base for water management (e.g. monitoring of ambient water quality, registry of water rights, data on expenditure and financing).

Efforts to monitor eutrophication in coastal areas and freshwater ecosystems increased following the issuance of water quality standards. The 2005 reform of the Water Code allowed for keeping better record of water rights transactions.

Strengthen chemical and hazardous waste management according to international agreements, notably the Stockholm, Rotterdam and Basel Conventions; complete and implement national plans for persistent organic pollutants and hazardous waste; strengthen enforcement activities, develop pollutant release and transfer registers and improve the regulatory framework to better manage chemicals throughout their life cycle.

The PRTR, created in 2002, compiles data on pollutant releases into air, water and soil, as well as waste generation and disposal. It also includes data on compliance with environmental regulations. A 2013 regulation created a one-window system for reporting relevant data, which now covers over 20 000 facilities reporting on 132 pollutants. The National Policy on Chemical Safety was reformulated in 2012 and updated for the period 2015-19. A regulation on the transboundary movements of waste, which would implement the Basel Convention, is expected to be enacted in 2016.

Environmental governance and management

Develop and strengthen the environmental institutions at national and regional levels.

The 2010 Environmental Quality Law (20.417/2010) replaced the National Environmental Commission (CONAMA) with three institutions that have distinct policy making, environmental assessment and compliance assurance responsibilities.

Formalise institutional integration mechanisms relating to sustainable development.

The Council of Ministers for Sustainability was established in 2010 and is chaired by the MMA. It advises the president on sectoral policies, including draft laws and regulations that concern the environment.

Further develop and strengthen regulatory frameworks (e.g. standards) to improve environmental health and to achieve Chile’s international commitments; review ways to strengthen compliance and enforcement capacity, including through institutional reforms, for instance the establishment of an environmental inspectorate.

In 2010, Chile established the Environmental Superintendence (SMA) to manage compliance monitoring and enforcement. The compliance assurance system includes direct enforcement by the SMA, as well as through sub-programmes implemented by other public authorities. Chile adopted a large number of standards, including environmental quality standards and sector-specific emission or effluent standards, particularly in the area of air pollution control.

Further reduce the environmental impact of the mining sector (e.g. air pollution by SO2 and arsenic, water pollution, abandoned sites and tailing dams).

Chile introduced a national emission standard for SO2, PM and arsenic emissions from copper smelters. A new law regulates the closure of mining works (2012 Mining Closure Law). First surveys on the location and state of mining environmental liabilities have been conducted.

Further develop and strengthen land use plans: municipal and intermunicipal plans, regional urban development plans and coastline and watershed management plans; survey wetlands and assure their protection through regulations and incentives.

Speed up progress towards establishing an effective land-use planning system capable of taking biodiversity values into account.

There are currently 4 regional plans, 19 inter-communal plans and 270 communal plans, while the remaining municipalities are formulating or approving their plans.

Develop economic analyses of environment-related policies, expanding both economic information on the environment (e.g. on environmental expenditure, environment-related taxes, health risk assessment, water and energy prices) and cost-benefit analysis of projects and legislation relating to the environment.

General and Social Analysis (AGIES) of draft environmental regulations, which corresponds to regulatory impact analysis in other OECD member countries, includes cost-benefit analysis. Since 2000, 47 regulations related to environmental quality, emission standards and pollution abatement plans have been analysed, with a growing emphasis on quantitative analysis. AGIES covers both compliance costs of the regulated community and administrative costs of regulatory authorities. Where benefits are difficult to quantify, AGIES evaluates the cost effectiveness of draft environmental regulations.

Undertake strategic environmental assessments concerning i) Chile’s energy policy framework and ii) long-term transport plans for the Santiago Metropolitan Region, for other urban areas and at national level.

According to the 2010 Environmental Quality Law, all territorial development plans are subject to strategic environmental assessment (SEA), but there is no established list of sectoral policies and plans that must undergo SEA. 29 of 155 territorial plans elaborated in 2013 have undergone SEA.

Consolidate efforts to produce environmental data, state of the environment reports and environmental indicators to strengthen decision making and public information, taking into account international methodologies.

The 2009 Transparency Law (20.285/2009) and the 2010 Environmental Quality Law provide guarantees of access to environmental data and administrative documents. The MMA has consolidated and improved the National Environmental Information System (SINIA), which consists of databases and procedures for managing environmental information. SINIA makes environmental indicators and statistics available to the public through its website. The MMA created in 2012 an Inter-Ministerial Committee on Environmental Information. The MMA has also been upgrading the PRTR, created in 2002.

Continue to develop public participation in processes such as project-based environmental impact assessments and strategic environmental assessments of public policies, plans and programmes.

In accordance with the 2011 Law on Associations and Citizen Participation in Public Management (20.500/2011) and several respective presidential guidelines, many environmental regulations now specify procedures for public participation. Public participation is mandatory for a full environmental impact assessment process; and may be requested by citizens for Environmental Impact Declarations. The formation of Councils for Environmental and Social Recovery is envisaged for “environmentally vulnerable territories” (that are faced with severe environmental degradation).

Strengthen environmental education and awareness through a long-term strategy of environmental learning and a national environmental education plan, including: i) further integration of environmental material in primary and secondary school curricula and ii) development of environmental knowledge through professional associations and environmental management systems within enterprise.

The 2009 General Law on Education (20.370/2009) stipulated that the education system should encourage respect for the environment and promote sustainability. The National Education Policy for Sustainable Development (2009) has led to the creation of several initiatives to address environmental education and awareness in the country, including a National System of Environmental Certification of Educational Establishments (SNCAE).

Towards green growth

Review the scope for introducing new economic instruments (e.g. product charges on hazardous waste, air emission charges, water pollution charges) and improve trading mechanisms.

Further apply the polluter pays and user pays principles through appropriate charges (e.g. on waste management, for access to protected areas, for natural resources), with due regard to social constraints.

Chile introduced a tax on vehicle purchases based on NOx emission and fuel efficiency; a tax on emissions of CO2 and local air pollutants from some stationary sources (in force in 2017); and a tax on fish extraction rights. The transferable fish quota system, introduced in 2001, was revised.

Municipalities can apply charges for waste services, but about 80% of households are exempt from such charges. Water tariffs for urban water services (supply and treatment) are in place throughout the country; they reflect scarcity of the water resource (the price of water-use rights) and allow water companies to recover almost twice their operating costs. Many protected areas charge entry fees, which generated about USD 10 million in revenue in 2012.

Review ways and means of integrating environmental concerns in fiscal instruments and policies.

A Green Growth Strategy was launched in 2013. The 2014 tax reform introduced the tax on purchases of motor vehicles (based on NOX emission and fuel efficiency) and a tax on emissions of CO2 and local air pollutants from some stationary sources.

Increase the financial contribution of the mining sector to support long-term investment in human and social capital and to apply the polluter pays principle according to the General Environmental Framework Law; consider a mechanism for proper capture of resource rents associated with mineral exploitation.

Chile introduced a specific tax on mining in 2006, which amounts to a progressive percentage of the operating income of mining companies. Part of the tax is allocated for specific purposes. About 30% of the tax has fed the Innovation Fund for Competitiveness.

Continue to invest in sewerage, wastewater treatment and other sanitation infrastructure in urban and rural areas.

Investment in, and coverage of, sewerage and wastewater treatment increased (urban population connected to wastewater treatment plant was 96% in 2014). In recent years, investment has focused on securing water supply due to drought and water shortage. The 2015 National Policy for Water Resources plans to build desalination plants to increase public water supply in two northern regions. The Rural Drinking Water Programme finances water and sanitation services in rural areas.

Implement air, traffic and transport management plans in the Metropolitan Region; develop and implement improved plans to reduce emissions from transport in all cities.

Transantiago reformed and integrated public transport in the Metropolitan Region. The Santiago 2025 Master Plan aims to increase sustainable mobility, including through an expanded metro network, new mass transit corridors, suburban commuter trains and a large expansion of bicycle paths. The 2014 National Transport Policy also promotes public transport in Santiago and other major cities (Valparaíso and Concepción).

Continue to promote mutually supportive trade and environment policies through effective implementation and strengthening of the environmental regulatory framework and promotion of corporate social responsibility.

The Ministry of Economy, Development and Tourism created a Social Responsibility for Sustainable Development Council in 2013. Some large mining companies have established rigorous voluntary environmental and community standards.

Ensure that co-operative activities associated with trade agreements are targeted to mitigate any adverse environmental impacts from large-scale natural resource exportation.

Most trade agreements concluded since 2005 include environmental provisions. Several environmental co-operation activities have been carried out with major trade partners; some previously concluded agreements (e.g. with Canada, the European Union and the United States) have been subjected to environmental impact assessments.

Climate change

Develop energy efficiency measures for all aspects of energy consumption.

The Energy Efficiency Action Plan 2012-20 established a target of reducing energy use by 12% by 2020, compared to business-as-usual, and contains measures for the building sector, mining and other industries; passenger and freight transport; and home appliances. The contained measures were further strengthened in the 2014 Energy Agenda. The Chilean Agency for Energy Efficiency was created in 2006.

Review the future energy supply mix (including contingency plans), taking into account environmental concerns (such as emissions of air pollutants and greenhouse gases).

The 2014 Energy Agenda and the Energy Policy to 2050 presage an increasingly active role by the government in balancing environmental, social and economic elements of the energy supply mix. The Energy Agenda recommits to the goal of generating 20% of energy from non-conventional renewable energy sources (i.e. excluding large hydro) by 2025.

Based on analysis of the social cost and benefits of energy efficiency and non-conventional renewables, consider providing a positive financial incentive to encourage faster uptake.

Since 2008, Chile has provided long-term, low-cost funding to commercial banks for on-lending to non-conventional renewable energy projects. Subsidies are also available for pre-feasibility and pre-investment studies for renewable energy projects and for the installation of solar thermal systems in public, commercial, household and industrial buildings.

Develop a balanced, scheduled strategy concerning climate change issues; strengthen energy efficiency and greenhouse gas mitigation policies, including through a cleaner energy mix, and promote the use of clean development mechanisms in the context of the UNFCCC and the Kyoto Protocol.

The National Climate Change Action Plan 2008-12 laid the groundwork for a co-ordinated response to climate change. This was subsequently elaborated by the development of national and sectoral adaptation strategies. A climate action plan for 2016-21 is under preparation. Mitigation policies have been strengthened and measures taken to increase the share of renewables in the energy mix.

Chile has made extensive use of the Clean Development Mechanism.

Biodiversity conservation and sustainable use

Complete, firmly implement and devote adequate resources to the national and regional biodiversity strategies and action plans.

The 2003 National Biodiversity Strategy included 315 actions, half of which had been completed and 23% were either partially completed or in process by 2014.The strategy is being updated; it will cover the 2015-30 period and incorporate the Aichi targets.

Budget allocation to biodiversity protection grew by 174% between 2000 and 2014 in real terms.

Review institutional and legislative arrangements for the management of nature and biodiversity.

A draft legislation, presented in June 2014, proposes the creation of a Biodiversity and Protected Areas Service (SBAP) as the last pillar of the new environmental institutional system. The MMA aims to have the new Service created by 2018.

Develop a strategic vision of the complementary roles of state and private protected areas in order to achieve a coherent network of core protected areas, buffer zones and ecological corridors.

The proposed legislation establishing the SBAP will establish a National Protected Areas System (SNAP), which would integrate the management of marine and terrestrial protected areas. The SNAP will also incorporate private areas into the system and establish incentives for private parties to collaborate on preservation and sustainable use of areas important for biodiversity conservation.

Step up financial efforts to meet the target of protecting 10% of all significant ecosystems in Chile (including coastal and marine areas) and boost nature-related enforcement activities.

In 2012, the total financial resources available for official protected areas were about USD 41 million, of which three-quarters came from central government ministries and agencies. Entry charges, concessions and sales at protected areas generated revenue of USD 10 million. The proposed legislation establishing the SBAP includes a request for an increase in financial resources to approximately USD 47 million.

Mount a co-ordinated effort by state agencies and academia to build the scientific knowledge base (including cataloguing of living species) required for nature management.

The MMA has co-operated with universities and civil society organisations to assess ecosystems using internationally acknowledged threat categories. About 1 000 species have been classified by conservation status (3.5% of all species known in Chile). The MMA considers launching a national ecosystem assessment.

Identify and use further mechanisms, including economic instruments, for creating win-win opportunities in tourism and nature policies.

Economic instruments used to promote biodiversity conservation include access fees to protected areas and tradable fishing quotas. The proposed legislation creating the SBAP provides scope for establishing payments for ecosystem services, biodiversity offsets, and compensation and certification. It also provides for the use of revenue from ecotourism concessions in protected areas to be used to administer the SNAP and for a National Biodiversity Fund. Chile is also a part of the REDD+ mechanism (Reducing Emissions from Deforestation and Forest Degradation).

Adopt and implement measures to assure sustainable management of native forest, including rewards for environmental services, cross-compliance mechanisms, partnerships and co-operation among stakeholders on overall management.

The 2008 Native Forest Recovery and Forestry Promotion Law created a financial incentive for the protection and preservation of native forests.

Develop an integrated watershed approach to improve water and forest resource management and to provide environment-related services more efficiently.

A National Strategy for Integrated Watershed Management (IWM) was issued in 2008 and three IWM pilot schemes were initiated in 2009, but there has been no follow-up since. The National Irrigation and Drainage Policy is being updated to create irrigation management plans for each watershed.

Give greater weight in water management to protection of aquatic ecosystems; improve the integration of nature concerns in water management by setting up a robust regime for minimum ecological flows and biological water quality standards.

The 2005 reform of the Water Code introduced a minimum ecological flow (of 10% to 20% of the average annual river flow), which was updated in 2014 (replacing the 10% floor with a more flexible 50% of monthly river flows while the 20% cap was maintained). Since 2010, six secondary environmental quality standards have been adopted to protect aquatic life; five others are being developed. Once all are approved, they will cover nine river basins and two lake catchments spread across the country.

Reduce the effects of agriculture (e.g. those related to irrigation, nutrients, pesticides and salinisation) on water quality and quantity.

Chile has heavily invested in irrigation infrastructure and subsidised on-farm investment in irrigation and drainage, with a view to promote the adoption of water conservation techniques.

Country submission.

Note

← 1. See Sections 4and 5 for climate change and biodiversity.