Seeking cost-efficient solutions for Chile's water crisis

Given the hydric stress Chile has been experiencing for years, water solutions are in high demand, and dams and desalination plants have gained the greatest momentum.

However, entities like the Maipo river basin organization (OdCM) are seeking smaller-scale solutions for the management of the country's main basins to better meet the specific needs of each territory.

OdCM is supported by Santiago's metropolitan administration and technology transfer foundation Fundación Chile, and receives contributions from the public and private sectors. It presented a portfolio of 34 projects for almost US$1.6bn with the aim of improving management of Santiago's main water source.

To learn more about the financing options for this portfolio, as well as the possibility of applying this model in other regions, BNamericas speaks with the director of the Escenarios Hídricos 2030 (Water Scenarios 2030) initiative and deputy sustainability manager of Fundación Chile, Ulrike Broschek.

BNamericas: How are the talks on financing OdCM's project portfolio, which involves significant investment, going?

Broschek: We have been exploring different options. In the end, it's necessary to look at public and private articulation.

The public works ministry has amounts for the implementation of water solutions as part of its annual budgets and here we are presenting a portfolio of short-term projects that could be implemented through these financing plans, but all options we have must be considered and we have to generate economic models to see the challenge of how to finance these solutions.

Now, these are highly cost-efficient solutions when compared to dam or desalination works. This portfolio is much cheaper.

There are also private financing options, and that is why this project portfolio also includes the possibility for water users in the territory to invest in the sustainability of their own production processes.

This is a very challenging area where we have to look at both adaptation to climate change and payment for damage and losses caused by drought.

That has costs that I believe we have not yet managed to internalize well.

BNamericas: Are companies interested in financing this type of project?

Broschek: Yes, although to the extent that the projects demonstrate a real benefit for the territory. What did not exist was a project portfolio that could indicate where it was feasible to carry out these works.

We think that as we show these opportunities, new windows of private financing will open. Not only by local companies but also by national or multinational firms.

What we hope is that this broadens a little the view of a much larger financing market, but with a focus on water. Because we have been financing projects in other sectors and the water crisis seriously puts the country's development at risk, since it also has to do with the sustainability of these companies in the territory.

They know that water is a relevant issue, and that desalination is a more expensive solution, so we think they would be open to financing short- and medium-term solutions at a lower cost.

BNamericas: How do you see the possibility of applying the OdCM model to regions with different water realities than that of Santiago's metropolitan region?

Broschek: The metropolitan region hosts one of the critical basins at the national level [the Maipo river]. The water crisis had been occurring for a long time in the northern regions, which have a structural deficit, and it has been moving toward the center, then to the south and even to the Magallanes area, which was unthinkable.

The difference is in the productive activities, the hydrographic and geographical characteristics of each basin. We cannot copy and paste the solutions we have applied in some territories into others with completely different realities.

We need to understand the productive vocation and the territorial base of each basin to propose solutions that make sense for these territories and that are cost efficient.

We are creating mechanisms so that these analyses are done as quickly as possible, so that portfolios of solutions can be generated efficiently and not over-size expensive works that may have a low impact in the territories.

BNamericas: If these plans are applied in other regions, would an organization have to be created for each basin?

Broschek: Probably yes. In general, we are inspired by international structures. We're not reinventing the wheel. This is something that is being done all over the world, and Chile is the only OECD country that does not have this type of basin organization.

This structure has technical bodies that provide input for good decision-making and there is a participation level where different sectors are represented, both holders and non-holders of water rights. And that structure is likely to be repeated throughout the country.

What will change with each organization is its conformation because each basin has productive vocations and variable participants. In the north we may see more mining companies, in the central zone more farmers, other regions may have more indigenous communities, etc.