Reform of the Chilean water code in 2022: shift from a neoliberal model to a more public interest model

Abstract

Chile's 1,981 Water Code (CA81) established a market-oriented allocation model based on private, perpetual, and tradable water rights, sharply limiting the state's regulatory role. Over time, water scarcity, socio-environmental conflicts, and sustained academic and policy critiques revealed governance gaps regarding human needs, ecosystem protection, hoarding and non-use, state authority, and climate adaptation. This article examines Law No. 21,435 (CA22), enacted in 2022, asking whether it fundamentally transforms Chilean water law or incrementally adjusts CA81. It combines a systematic review of 63 studies on CA81 with a detailed legal and policy analysis of CA22, structured around eight critique clusters that encompass regime design, state capacity, distributional outcomes, environmental safeguards, conflict and judicialization, hoarding, and maladaptation. The findings show that CA22 recognizes access to drinking water and sanitation as an essential, inalienable human right, strengthens ecosystem protection, converts new water rights into temporary and conditional concessions, and expands the powers of the Dirección General de Aguas to intervene in allocation and scarcity management. Yet persistent institutional fragmentation, information deficits, uneven water markets, and over-allocation under climate stress mean that the reform yields a hybrid governance regime that reorients the neoliberal model.