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Water Rights that are affecting Chilean Agriculture

Water rights can be a complicated issue when you’re looking for an agricultural  property for sale or lease in Chile. The most important issue to understand is that you don’t automatically own the water on or under your property. So you could have a river the size of the Rio Plata running through your farm in Chile, but unless you own water rights from that river or canal, you’re not legally entitled to use any of its water.

Having said that Chile has one of the largest reserves of water in the world so there is lots of it but not necessarily all in the right locations for exploitation. Water rights in Chile are private property, an asset that owners can sell, lease, donate, get a loan leaving water rights as guarantee and can also subject to inheritance.

The General Directorate of Water (DGA or-Director General de Aguas) is the government agency within the Ministry of Public Works which regulates the water rights. This is the entity where you can apply to get water rights. Though, the availability of rights depends on the type of water right you are looking for. In the case of surface waters ( canals etc ), most of the Permanent Consumptive Water Rights have already been allocated to private parties. Other types such as Eventual Consumptive Water Rights are still available as well as Non consumptive Rights.

Underground Consumptive and Non-Consumptive Water Rights are relatively unexploited resource. A person or entity, with the help of an expert, can apply to DGA for water rights. DGA studies the capacity availability of the water source, the diminished water flow can imply less capacity to distribute and then sends a letter to the applier informing of the amount and conditions available. Then the applier has to answer if he accepts these conditions or not. All this is supposing that you can find a source of water that has no owner yet. Nevertheless , DGA may take one or two years to issue the final resolutions which gives ownership. This long wait for the resolution plus the scarce availability of water is why the companies are often willing to pay financial premiums to start a busines immediately. Two years of wait may be more expensive than buying the water right even at high price.

Consumptive and Non-Consumptive Uses

Non-Consumptive waters means that he owner can use it and then the water has to be return to the same source, clean and clear. In other words the water can not be ‘consumed’. Usually used by hydroelectric companies, fish farms or cranberry and similar type producers. Non-Consumptive water rights have suction and restitution points determined by a specific GPS coordinates.

Speculation can be an issue. In early years, several hydroelectric companies bought or requested water rights without using them. According to the Water Code of 1981, the holder of a water right, consumptive or non-consumptive, is not compelled to actually “use” it. But today, after the modifacation of the water code, DGA stimulates the use of the water by private owners holding water rights that are not in used,by taxing them. Consumptive waters means the owner can use it and there is no obligation of restitution of the water. Usually used for domestic purposes, irrigation and animal consumption.

Farmers and Water Supplier Companies are usually the owners of these kinds of waters rights. Land that does not have a water right is known as “rulo”. Since consumptive water is not required to be return to the source, it only has a suction point determined by a GPS

coordinate. A water share is the measurement unit of the water rights and according to the Chilean Water Code, a water share corresponds to 1 l/s. It is said that a hectare can be irrigated with 1 l/s in the south of Chile and 2,0 to 2,5 l/s in the Northern part of Chile.

Resales of water rights represent the most obvious feature within this active market. It also should be emphasized that since 1992 nearly all transfers of water rights have not been included transfers of c water right. Water Rights have their own separated title and receive the same treatment as any real estate property. Whatever the way of accessing a water right, the validation of legal ownership requires its registration in the CBR (Conservador de Bienes RaÌces). One important fact is that a person or company may own the water rights but not the land. These two assets can be sold separately. The paper work to transfer water rights includes title studies and certifications.

If you are in any doubt check before buying with a local Chilean legal advisor. We can help with contacts if you need them.

Notes:

Here is an excellent resource for more information

 

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