Water Pricing in Chile: Decentralization and Market Reforms

Abstract

The water sector in Chile underwent major changes as a result of decentralization and market reforms. This chapter focuses on recent pricing experiences in the urban residential and rural sectors. Over the last 30 years, the Chilean government has successfully incorporated private participation in the water and sanitation sector and implemented a regulatory framework that has contributed to cost recovery and affordability of the reform. The service offered has greatly improved in quality and coverage reaching, in 2013, 99.9 % of urban population. National coverage of sewage treatment has significantly increased from 17 % in 1999 to 99.8 % in 2013. However, the privatization and decentralization of water utilities is facing new challenges, such as increasing extreme climatic events and a more informed and organized consumer base. In addition, there are concerns with respect to sustainability of groundwater extraction and deterioration of water-dependent ecosystems due to over allocation of water rights. This chapter also presents an overview of Chile’s national Rural Potable Water (APR) program, which has reached almost 100 % coverage in semiconcentrated rural areas. Unlike urban service providers, the rural water-supply and sanitation sector has not been subject to regulation like urban services.