OECD Environmental Performance Review of Chile - Highlights

Chile Highlights

2016

What are eprs?

OECD Environmental Performance Reviews (EPRs) provide evidence-based analyses and assessments of countries’ progress towards their environmental policy objectives.

They promote peer learning, enhance government accountability and provide targeted recommendations to help countries improve their environmental performance. They are supported by a broad range of economic and environmental data. Each EPR cycle covers all OECD member countries and selected partner countries.

All reports are available on the EPR website: http://oe.cd/epr.

the second epr of chile This is the second EPR of Chile. It focuses on the period since 2005, when the first Environmental Performance Review was released. Chile joined the OECD in 2010.

This Review was prepared by the OECD in co‑operation with the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). It involved a constructive and mutually beneficial policy dialogue between Chile and the countries participating in the OECD Working Party on Environmental Performance (WPEP).

The EPR provides 54 recommendations, approved by the WPEP on 10 March 2016, to help Chile green its economy and improve its environmental governance and management, with a strong emphasis on climate change and biodiversity policies.

http://oe.cd/epr

“Chile is an economic powerhouse in Latin America.

The question for the next quarter century is whether it will be able to continue to deliver solid economic growth in a way that protects its environmental asset base.”

Simon Upton OECD Environment Director

Chile

Highlights

Overview Natural resources are a pillar of Chile’s open and market-oriented economy. Chile is the world’s largest copper producer and a major exporter of agricultural, forestry and fishery products. Sustained economic growth and investment in environmental infrastructure have helped improve the well-being of the population over the last 15 years.

However, Chile’s natural resource-based economic model has started to show its limits. Strong growth has been accompanied by increasing environmental pressures. In response, Chile has strengthened its environmental institutions and policy framework. Policies must be implemented rigorously over the next decade to fully deliver their positive effects on the environment.

opportunities chile 2015

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Population 17.9 million

New and stronger environmental institutions: a dedicated ministry, inspectorate and assessment agency.

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Long experience in pricing water and fish resources, and recent tax reforms to tackle air pollution and climate change.

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Widespread water supply and sanitation infrastructure networks in urban areas.

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A well-developed public transport system in the capital region.

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A third of Chile’s total energy needs covered by renewables.

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Nearly a fifth of land area under nature protection and plans for establishing the largest marine park in the Americas.

GDP/capita (current purchasing power parity)

USD 22 197 (OECD average is 39 976)

Total area 756 096 km2 Population density 24 inhabitants/km² (OECD average is 35)

Currency Chilean peso USD 1.00 = CLP 654.15

challenges zz

The most material-intensive OECD economy and an overreliance on the use of natural resources.

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Rising greenhouse gas emissions and vulnerability to climate change impacts.

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Persistently high air pollution in large urban and industrial areas.

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Increasing waste generation and continued reliance on landfills for disposal.

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A legacy of hundreds of abandoned mines and contaminated sites.

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High pressures on biodiversity in the regions where mining, agriculture and urban development concentrate.

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Unevenly distributed water resources and overexploited aquifers in some regions.

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Insufficient institutional capacity and co-ordination across levels of government, hampering effective implementation and law enforcement.

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High income inequality and rising socio-environmental tensions in local communities.

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OECD Environmental performance Review of chile

Environmental performance | key developments

Chile extends over nearly 4 300 km along South America’s western coast. Its geography and climate vary greatly, with an extremely dry north, temperate Mediterranean climate and rich vegetation in the central and southern regions, and subpolar forests and icefields in the extreme south. Chilean regions face different environmental challenges as they boast diverse natural resource endowments, population densities and economic structures: most people live in the central regions; mining concentrates in the north, forestry and agriculture in the centre, and fishery in the south.

energy and climate change zz

Figure 1. Renewables increased fast, but Chile’s energy mix relies on fossil fuels

The economy used 54% more energy in 2014 than in

Total primary energy supply. Source: IEA (2015), IEA World Energy Statistics and Balances (database).

2000, with rapid economic growth, increased mining and industrial production and growing transport demand. Nonetheless, per capita energy use is significantly lower than in other OECD countries, reflecting the remaining income gap. zz

Energy production from renewable sources has

Mtoe

GDP 2014 = 178

40 30 GDP 2000 = 100

doubled since 2000, although not quickly enough to satisfy rising energy demand (see figure 1). Renewables

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account for 32% of energy supply, the fifth highest share in the OECD, and 40% of electricity generation.

Hydropower and firewood for residential heating are the main renewable sources; wind and solar are small but growing fast (see page 11). Yet, Chile has increasingly used carbon-intensive fuels such as coal and oil to generate electricity. zz

Greenhouse gas (GHG) emissions (excluding land

10 0 2000 2002 2004 2006 2008 2010 2012 2014 Chile’s energy supply in 2014 Renewables 32%

use, land-use change and forestry) increased by 23% in 2000‑10, and are expected to continue rising, in

(biomass and biofuels 27%, hydro 5%, solar and wind 0.4%)

Natural gas 10%

line with economic growth, energy use and transport demand (see page 12).

Oil 40%

Coal 18%

Figure 2. The vehicle fleet has doubled since 2000, increasing air pollution

2000: 2 million cars

1

4

2014: 4.3 million cars

= 100 000 cars. Passenger cars, vans, minibuses, buses, and goods vehicles. Source: INE (2015), Anuarios parque de vehiculos en circulacion.

Highlights

air quality zz

Chile continues to face high levels of air pollution. Ambient air quality standards are often exceeded, particularly in large urban areas, near mining sites and in southern cities where people use firewood to heat their homes (see figure 3). More than 4 000 people are estimated to die prematurely each

Figure 3. 15% of the population is exposed to severe PM2.5 concentration levels.

Mean exposure to PM2.5, 2013 Source: OECD Environment Statistics (database).

year of cardiopulmonary diseases associated with chronic exposure to fine particulate matter (PM2.5). zz

Emissions from transport, notably of nitrogen oxides (NOx), have kept rising together with distance driven and number of vehicles on the roads, especially diesel-fuelled vehicles (see figure 2). The government adopted several measures to control air pollution, including air emission and quality standards, a NOx-based vehicle tax and a tax on air emissions from large energy and industrial facilities (see page 10). However, air emission standards do not cover all sectors.

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Pollution Prevention and Decontamination Plans are the main instrument for air management. They helped reduce air pollution in Santiago, but lack of inter-institutional co-ordination and local engagement has limited their development and implementation elsewhere, especially in southern Chile.

Coverage of the national monitoring network has expanded in recent years, but information gaps remain (e.g. on PM2.5).

waste management and circular economy zz

Waste generation increased by nearly 30% over the 2000s, in line with improving living standards. Over 95% of collected municipal waste is landfilled. About one-quarter of waste still goes to inadequate landfills or uncontrolled garbage dumps. The government plans to double the number of sanitary landfills by 2020.

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There are limited incentives for waste reduction and reuse. Most households are exempted from municipal waste charges. Some 80% of municipalities do not have a waste management plan and many have insufficient resources to run adequate waste management programmes.

over

95%

of collected municipal waste is

landfilled

zz In June 2016, Chile adopted a long overdue

waste framework law, which aims to

promote waste prevention and recycling.

It introduces a system of extended

producer responsibility for a wide range

of products and packaging materials. If

rigorously implemented, this law would help

Chile comply with the OECD Council Acts on

environmentally sound waste management.

0-10 Îźg/m3 10-15 Îźg/m3 25-35 Îźg/m3

Next steps | air quality, waste and circular economy zz

Develop, implement, evaluate and update Pollution Prevention and Decontamination Plans in all areas that exceed air quality standards.

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Improve air quality monitoring networks and make air pollution information available to the public.

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Continue to invest in urban public transport systems to address increasing travel demand, congestion and emissions of air pollutants and GHGs.

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Swiftly implement the waste framework law and the extended producer responsibility schemes.

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Impose a decontamination fee on hazardous industrial installations and mines and use its revenue to feed a dedicated clean-up fund.

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OECD Environmental performance Review of chile

Environmental performance | key developments water management zz

Chile has the fifth highest renewable freshwater resources per capita in the OECD, but water resources are unevenly distributed across the country. Water demand regularly exceeds supply in the arid north and the central regions, where demand for mining, agriculture and urban water supply is high (see figure 4).

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Water supply and mining companies have invested in efficiency and alternative supply sources (e.g. seawater desalination) to face recurrent water shortages. However, irrigation

Figure 4. Chile’s plentiful water resources are unevenly distributed across the country

efficiency remains low. Inadequate drinking water distribution networks mean that almost one-third of the water abstracted is lost before reaching consumers. zz

In urban areas, tariffs allow water companies to cover operational costs and part of infrastructure investment. Municipal authorities provide water services in rural areas, but they are often unable to invest adequately in infrastructure, which has deteriorated over time.

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In 2014, 96% of urban homes were connected to wastewater treatment services (up from 20% in 2000). However, only two-thirds of urban dwellers are connected to advanced water treatment systems, which is low by OECD standards.

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Sewage and large agricultural run-off result in contamination by nutrients and eutrophication of surface waters. Fish farming and mining are other major sources of water pollution. Chile adopted standards for sewerage discharges. Water quality standards for ecosystem protection are in place for four river basins (out of 14 significant ones) and two lake catchments.

water-use rights “Water is a national property for public use” according to the 1981 Water Code. Water-use rights are allocated upon request, for free and for life. They can be traded so that their price potentially reflects relative scarcity of water. Distortions in allocation rules and practices, however, have led to speculation and hoarding of water rights, and overexploitation of some aquifers.

The 2005 reform has freed up water to be accessed by more potential users. However, historical over-allocation of water-use rights remains, and transparency about trading and prices is limited. There are still overlapping claims on water rights, including by indigenous people. All this reduces the efficiency of the market and exacerbates conflicts among water users.

The 2011 proposed amendments to the Water Code require that new water-use rights be temporary, prioritise human consumption and sanitation, and ensure resilience of water systems.

Percentage of water demand not met by available resources Resources exceed demand Less than 25% 25 - 50% 75-100%

Source: MMA (2015), Segundo Reporte del Estado del Medio Ambiente.

Next steps | water zz

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Further reform the water allocation regime to cap abstractions, give priority to essential water uses and reflect ecological requirements; and assess the risks related to water resource quantity and quality to better inform allocation decisions (risk-based approach).

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Continue expanding the coverage of water quality standards.

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Keep investing in public water infrastructure to reduce distribution losses; ensure safe drinking water supply; and improve wastewater treatment capacity.

Improve transparency of the public register on water rights and effectively sanction illegal water abstractions.

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Improve monitoring of water abstraction, quantity and quality.

Highlights

Environmental governance

Over the last decade, Chile has raised the profile of environmental policy and clarified environmental management responsibilities within the government, as recommended by the 2005 Environmental Performance Review. For Chile to tackle environmental pressures linked to growth and rising income levels, it must thoroughly implement laws and regulations. multi-level governance

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Access to environmental information has improved with the consolidation of the National Environmental

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In 2010, Chile established the Ministry of Environment,

Information System, but many environmental data and

the Environmental Superintendence (inspectorate)

indicators are still unavailable or incomplete, particularly

and the Environmental Assessment Service. The

concerning water, waste, biodiversity and air quality.

Council of Ministers for Sustainability guarantees horizontal co-ordination among a myriad of national

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special rights of indigenous people, which contributes

authorities with environmental responsibilities. Despite

to socio-environmental tensions regarding land

the steady increase in their budget, the new national

acquisition, access to water and the presence of

environmental authorities still lack human and

industrial and mining facilities in local communities.

technical capacity to perform their functions adequately. zz

Many local authorities lack the autonomy and resources to manage their environment and to adapt national policies to local needs effectively. Better inter-institutional co-operation at national level and with local authorities is essential to ensure effective policy implementation and law enforcement.

environmental assessment zz

Environmental impact assessment is the backbone of Chile’s environmental regulation and underpins the granting of environmental permits. The process should enhance public participation in its early stages and better consider ways to minimise potential impacts in

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Chile lacks an effective mechanism for addressing the

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Environmental courts have strengthened access to justice, as showed by the high number of environment-related court actions. Chileans can sue against decisions, permits and standards, and seek remediation. In practice, however, the cost of legal counsel keeps many people and civil society organisations out of the courtrooms.

geo-referenced information The environment ministry has consolidated and improved the National Environmental Information System (SINIA). It consists of databases (cartographic, graphic, documentary, legal, etc.) and procedures for managing

order to avoid environmental and social conflicts.

environmental information. Everyone can access geo-

Strategic environmental assessment has been

impacts on the SINIA website.

referenced information on environmental quality and

increasingly used. It is required for most territorial plans, even though less than half of such plans are actually assessed. Environmental concerns could be better integrated into territorial plans at all levels.

Next steps | governance zz

Improve the environmental impact assessment process to really consider project alternatives and fully guarantee public participation.

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Better apply strategic environmental assessment to territorial development plans.

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Strengthen collection of data on water, air pollution, biodiversity, etc. and make them available to the public and international bodies.

environmental democracy zz

Chile leads the work to conclude a Latin-Americaand Caribbean-wide agreement on access to information, public participation and justice on environmental matters.

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OECD Environmental performance Review of chile

Case studies

cleaner and more competitive In a Clean Production Agreement, enterprises and a competent government authority decide together on specific targets and actions to foster clean production, including the use of best available techniques, that go beyond the minimum legal requirements. Since 1999, 100 four-year-long agreements have engaged about 6 000 enterprises, two-thirds of them from the agricultural sector.

Some complex environmental problems go beyond a single production sector. This is why the industrial zone of Puchuncaví-Quintero concluded a Clean Production Agreement for the whole territory. However, the overall environmental effectiveness of these agreements is difficult to evaluate.

solar excellence The Centre for Solar Energy Technologies was inaugurated in May 2015 to conduct applied research on the use of solar energy for power generation, heat for industrial use and water treatment, to test high radiation solar technologies and to provide quality assurance. This centre is jointly operated by the German Fraunhofer Institute for Solar Energy Systems and the Catholic University of Santiago, with financial support from the Chilean Economic Development Agency. The centre is one of Chile’s 13 International Centres of Excellence, joint research and development (R&D) institutions that connect international players to local partners in order to ease access to international resources and promote a local environment for innovation.

traffic in santiago metropolitan region Over 2000-10, the Transantiago transport system, centralised a vast informal network of public and private bus services into one large public scheme, integrating fares and services with the metro network. The underground network, the most extensive in South America, expanded from 40 km to more than 100 km over 2000-12 (140 km in 2018).

However, Transantiago has not kept pace with increasing travel demand. Roads in the Santiago Metropolitan Region are persistently congested with a fleet of 1.3 million vehicles (expected to reach 2.7 million in 2025) and air pollution from traffic is high.

The Santiago 2025 Master Plan foresees investing USD 22.8 billion in an expanded metro network, new mass transit corridors and suburban commuter trains, and a large expansion of bicycle paths.

wetlands under pressure The black-necked swan and Chilean flamingo are just two species of the rich birdlife feeding and nesting in El Yali National Reserve, a coastal wetland of international importance (under the Ramsar Convention). Invasive eucalyptus forests, nearby cattle farms, crop irrigation and wastewater discharges threaten both the quantity and quality of water in the protected area, which is also vulnerable to drought during the La Niña phenomenon. Overuse of groundwater is threatening the ability of this and other wetlands to recharge their water resources.

Less than 1% of Chile’s 15 000 km2 of wetlands are protected, but a National Wetlands Conservation Programme was launched in 2010.

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Highlights

ATACAMA

COQUIMBO Puchuncaví Quintero Santiago Lo Aguirre reserva NACIONAL EL YALI

cleaning up mining sites The locally owned Lo Aguirre copper mine site was closed in 2008, based on a voluntary closure plan presented in 2000. The closure works were self-financed through the sale of scrap and copper remains. This was one of the few positive cases of mine closure in Chile.

The 2012 Mine Closure Law requires mining companies to present an end-of-life closure plan and to provide financial guarantees. This law does not apply to the more than 650 existing abandoned or inactive mining sites and tailing dams.

Such sites, mostly in the Atacama and Coquimbo regions, contain large amounts of heavy metals and present significant environmental and public health concerns. Very few abandoned mines have been closed properly due to the absence of coherent legal requirements and mechanisms to cover the substantial related costs.

reserva costera valdiviana

the gnawing issue of canadian beavers In 1946, 20 beavers were trapped in Canada and flown to Patagonia to foster a fur trade. There are now tens of thousands of beavers over all of Tierra del Fuego and neighbouring islands. Unlike North American trees, none of the region’s endemic trees grew back once gnawed or flooded. Beavers have damaged half of Tierra del Fuego’s riverside forests. Chile and Argentina created a binational committee to eradicate these beavers and reforest the area at an estimated cost of USD 35 million.

Pilot projects started in 2014. The main difficulty is to gain local support for the eradication of beautiful, popular animals that, in this case, are an invasive species causing major damage.

what do forests do for us?

The Valdivian temperate forests are a biodiversity hotspot, where 70% of species are endemic. However, if current deforestation rates outside protected areas continue, the Valdivian forests will disappear within the next 20 years.

The estimated annual economic value of ecosystem services from the forests is high, including USD 26.3 per ha for maintaining soil fertility, USD 235 per ha

for supplying drinking water

and USD 1.6‑6.3

per ha for recreational services.

TIERRA DEL FUEGO

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OECD Environmental performance Review of chile

Green growth

Natural resources have been a key driver of Chile’s strong growth, with copper mining, agriculture, forestry and aquaculture constituting a major share of national income and exports. It is now time for Chile to reduce its dependence on natural resources. The 2013 Green Growth Strategy is being revamped, with more emphasis on environmental equity, health, gender, cultural diversity and protection of valuable ecosystems.

The National Programme on Sustainable Consumption and Production will be a pillar of the new strategy.

greening taxes zz

The 2014 tax reform seeks to reduce the fiscal gap,

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The new vehicle tax is based on both nitrogen

make the tax system more progressive and reduce

oxides emissions (NOx) and fuel efficiency. It aims to

income inequality. It includes innovative taxes on

discourage the purchase of higher emission vehicles,

vehicles, local air pollutants and carbon dioxide (CO2)

which are mostly diesel fuelled, but it does not apply to

emissions. These taxes will likely increase revenue

commercial vehicles.

from green taxation, which was 1.2% of gross domestic

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product (GDP) in 2014, lower than in many other OECD

The tax on emissions of local air pollutants (PM, NOx and SO2) and CO2 from large industrial and power

countries (see figure 5).

plants will be charged from 2017. Tax rates will be higher in areas where many people live and where air quality standards are exceeded, as well as for more damaging pollutants like PM2.5. However, the tax leaves out major emitters such as copper smelters. At USD 5 per tonne of CO2, the rate for carbon is relatively low.

Figure 5. Revenue from environmental taxes is among the lowest in the OECD Environmental tax revenue as a share of GDP, 2014

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Petrol and diesel are taxed, although at much lower levels than in other OECD countries. The tax on diesel is well below that on petrol, but the carbon content of diesel and the local pollutants it generates are much

Turkey

higher. Energy use for heating, electricity generation

3.8%

and industry is responsible for about 80% of the

3.0%

Israel OECD Europe

2.5%

Australia

1.9%

OECD average

1.6%

Japan

1.5%

country’s CO2 emissions, but is not taxed.

investing in the environment zz

In 2012, 0.5% of total expenditure by 30 central government agencies went to environmental protection, according to Chile’s first comprehensive

New Zealand

1.3%

survey of environmental expenditure. This is equivalent to only 0.1% of GDP. zz

Chile has well-developed infrastructure, notably when

Chile

1.2%

compared to other Latin American countries. Massive

Canada

1.1%

access to key services such as wastewater treatment

public-private investments have given more people and urban public transport. As infrastructure needs

United States

0.7%

Mexico

0.1%

Source: OECD Environment Statistics (database)

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remain large, public investment is on the rise. However, all major investment packages lack systematic environmental considerations and sustainability criteria for their implementation.

Biomass, waste and biofuels

Small hydro

Solar

Wind

Geothermal

USD million 2000

Highlights

Figure 6. Investment in renewables is taking off Value of disclosed asset finance deals for renewable energy projects in Chile, USD million, 2014 prices

Investment in non-conventional renewable energy sources (excluding large hydro) reached a record high of

USD 2.4 billion in 2015.

Greater investment in renewables is expected to bring a GDP increase of

USD 1.6 billion

1500

add

7 700 jobs

1000

and mitigate

9 000 tonnes of PM2.5

500

emissions by 2028.

0

2010

2011

2012

2013

2014

2015

Source: Based on Bloomberg New Energy Finance (database)

developing green markets

renewables and energy efficiency

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Openness to international trade has eased access

Chile, mostly without subsidies. Limited domestic

accounted for more than 60% of water, waste and air

fossil fuel resources, high energy prices and a

pollution technology in 2010; they were central to the

favourable geography for solar and wind power mean

recent expansion of renewable energy technologies

that renewables are cost-competitive with fossil fuel

(see figure 6).

generation. A renewables quota obligation and reforms

Chile’s environmental goods and services sector grew

to improve energy market transparency have further

faster than the overall economy and contributed an

encouraged investment.

estimated 1.7% of GDP in 2010. There are, however,

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Renewable energy sources are expanding rapidly in

to advanced environmental technology. Imports

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Various barriers still keep renewables from

no official statistics on the green industry’s market

matching their potential: grid capacity constraints,

volume or jobs.

a concentrated market structure, permitting delays,

In 2012, 9% of total R&D expenditure targeted the

disputes about local environmental impacts, complex

environment, one of the highest shares in Latin

access to finance, and the failure to fully internalise

America. Few patent applications relate to green

environmental and social costs.

technologies, but their number increased almost twice

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The adoption of an energy efficiency law, as foreseen

as much as that in all other technology domains. In

by the 2014 Energy Agenda, would help Chile complete

2010-12, 13% of patent applications filed by Chilean

its suite of energy efficiency measures, which are now

inventors were environment-related, above the OECD

limited to energy labelling, minimum performance

average (10%). Yet the domestic production capacity for

standards for new buildings, public investment

green technology is limited.

subsidies and voluntary agreements with enterprises.

Next steps | green growth zz

Increase tax rates on petrol and diesel and close the gap between the two.

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Gradually apply the tax on emissions of local air pollutants and CO2 to more emission sources; increase the carbon tax rate.

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Ensure that major investment programmes systematically consider environmental and climaterelated objectives.

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Consolidate eco-innovation promotion initiatives and include them into broader growth and competitiveness programmes.

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Improve eco-labelling and better define environmental criteria for public procurement.

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Regularly update the environmental expenditure analysis, expand it to the private sector and local governments; and develop statistics and indicators on the environmental goods and services sector.

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OECD Environmental performance Review of chile

In-depth | climate change

Chile is vulnerable to the impacts of climate change. Its greenhouse gas emissions are projected to keep increasing in line with economic growth and energy use. Chile is committed to cut its emissions, as part of global efforts to meet the goals of the Paris Agreement. This will entail moving beyond planning and standalone measures to implementing a robust, coherent cross-sectoral set of climate policies.

Figure 7. GHG emissions are increasing with economic growth Mt CO2 eq 100 80

GDP 2010=150 Waste

GDP 2000=100

Agriculture Industry

60 Energy

other than transport

40 20

Transport 0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: OECD Environment Statistics (database)

greenhouse gas emission trends zz

Chile’s greenhouse gas (GHG) emissions (excluding

mitigation goals and strategies zz

by 2020 compared to business-as-usual. It is likely to

land use, land-use change and forestry) grew by 23%

meet this target, provided the Nationally Appropriate

in 2000-10, especially from energy production and transport. While this increase is less than half the GDP growth in the same period (+50%), it remains one

Mitigation Actions (NAMAs) are fully implemented. zz

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generate 20% of electricity from non-conventional

GHG emissions from agriculture steadily rose to 15%

renewable energy sources (i.e. excluding large hydro)

of Chile’s total emissions, a larger share than in most

by 2025. While achieving the energy use target appears

OECD countries. Yet there are no policies or measures

challenging, Chile is on track to meet its renewables

designed to address them.

target (see page 11).

CO2 emissions from transport are high (30% of total

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(emissions per unit of GDP) by 30% relative to 2007

in 2000-13), as most freight and passenger transport

if current economic growth rates continue; and to

relies on roads. The average efficiency of the vehicle

up to 45% with sufficient international finance. The

fleet is improving, but not enough to offset increasing

commitment implies slowing the increase in GHG

car ownership and use.

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emissions, rather than reducing them, and its ambition

The Mitigation Action Plans and Scenarios (MAPS) project provides a transparent mechanism for

In advance of the 2015 Paris Climate Conference, Chile committed to reducing GHG emission intensity

CO2 emissions from fuel use) and increasing (+44%

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The 2014 Energy Agenda plans to reduce energy use by 20% compared to business-as-usual and to

of the largest among OECD member countries. zz

In 2009, Chile pledged to reduce GHG emissions by 20%

is uncertain. zz

The forthcoming climate change action plan 2016-21

understanding the implications of different emission

needs to translate this commitment into coherent

trajectories and available mitigation options. However,

and cost-effective actions. Infrastructure choices,

Chile’s emission inventories are not systematically

notably in the energy and transport sectors, should be

updated and the most recent data are from 2010.

examined carefully to avoid locking-in emissions.

Highlights

Production of grapes and wine, Chile’s most important export agricultural commodity, relies on water supply: 81% of vineyards are irrigated. Water stress would mean a fall in production and affect the country’s competitive position on the international wine market. Chile established a certification system for sustainable wineries in 2012; 46 wineries are now certified and adopt practices to adapt to climate change and reduce their impact on biodiversity (e.g. use of compost instead of synthetic fertilisers, biological corridors for native trees and flowers, cover crops to prevent soil erosion and chickens as a natural form of pest control).

Seven years of drought have reduced wheat cultivation in Chile. Similar extreme climate events are likely to be more frequent and severe, and to affect yields of other cereals as well, which are located primarily in rain-fed areas. zz

Most responsibilities relevant for climate change policy lie outside of the environment ministry’s remit.

While the Council of Ministers for Sustainability is a co-ordination forum, implementation relies heavily upon voluntary engagement by, and sufficient capacity within, other ministries, with varying results.

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Next steps | climate change

International finance has greatly contributed to climate mitigation projects to date, but Chile will likely no longer be eligible for official development

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Clarify responsibilities for climate change policy design and implementation.

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Adopt a funding strategy for the 2016-21 climate change action plan to facilitate private-sector investment in low-carbon and climate-resilient infrastructure.

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Implement domestic policies to achieve Chile’s international commitments for 2030; identify the long-term trajectory for zero net emissions by the second half of the 2050s; analyse the consistency of policy and investment choices with this trajectory.

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Implement the national and sectoral adaptation plans and monitor their effectiveness.

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Put in place a monitoring and evaluation framework for climate change mitigation and adaptation; reinforce capacity to produce timely emission inventories.

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Mainstream climate change mitigation and adaptation objectives in the appraisal systems for plans and projects (e.g. strategic environmental assessment, environmental impact assessment).

assistance from 2017, as it joins the circle of highincome economies. It will have to ensure that adequate budget resources are allocated to climate policy and seek private sector investment and international mechanisms (such as the Green Climate Fund).

adaptation policy zz

Chile is vulnerable to the impacts of climate change, including increased flood risk, reduced availability of water for hydropower, reduced agricultural production and loss of biodiversity. Such impacts need to be systematically considered in budget allocations, project appraisals and strategic environmental assessments.

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Planning for adaptation is more developed than for mitigation. The 2014 National Climate Change Adaptation Plan foresees the adoption of sectoral adaptation plans. Those for biodiversity, forestry and aquaculture have already been completed.

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OECD Environmental performance Review of chile

In-depth | biodiversity Chile is home to a stunning variety of ecosystems and species, many of them unique to the country.

With growing economic activities, extraction and use of natural resources, and infrastructure development, pressures on biodiversity and environmental conflicts are intensifying rapidly.

A large part of Chile’s territory is protected, but biodiversity objectives are only starting to be mainstreamed into land-use planning, agriculture, forestry and mining.

The National System of Public Protected Forest Areas protects

19.5% of land and inland water areas, already exceeding the 2020 Aichi target of 17%. However, important land-based ecoregions are not adequately represented.

Figure 8. Protected area funding increased, but it is still among the lowest in South America

biodiversity state and trends zz

Between 1992 and 2012, 16 of the 127 terrestrial ecosystems in continental Chile lost more than half of their native vegetation due to forest plantations, expansion of agricultural and urban areas, illegal logging and forest fires. Increased use of fertilisers and pesticides poses considerable risks to soil and water.

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More than 60% of species classified in Chile are threatened, but only 3.5% of known species in the country have been classified. Conservation plans are in place for less than 10% of threatened species.

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Alongside Uruguay, Chile is the only country in Latin America to experience a net gain in forest coverage. Forest area certified under the Forest Stewardship Council has increased more than five-fold since 2010.

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The marine ecosystems are in relatively good health, but several fish stocks such as horse mackerel and anchovy are fully exploited or overexploited. While fish captures have more than halved since 2000, fish production from aquaculture has almost tripled. Effluents and pesticides flowing from fish farms are a major source of pollution.

Costa Rica USD 16.5/ha

protected areas zz

Chile has expanded the terrestrial and marine protected areas, which are mostly managed by two institutions: the National Forestry Corporation and the National Fishing and Aquaculture Service. This division of roles

Argentina USD 8.6/ha

hinders a coherent and integrated management of protected areas. zz

(SBAP) foresees an integrated national protected areas system,

Uruguay USD 4.3/ha Mexico USD 3.5/ha

comprising both public and private protected areas (the latter covering about 2% of land area). zz

Ecuador USD 0.8/ha Source: Bovarnick, A. et al. (2010), Financial Sustainability of Protected Areas in Latin America and the Caribbean; de Guevara, L. (2013), Proposed 2015-2030 Financial Strategy for the Chile National Protected Areas System

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More than 80% of protected areas have management plans, but many such plans are only partially implemented, incomplete or outdated.

Colombia USD 1.8/ha Brazil USD 1.8/ha Chile USD 1.3/ha Peru USD 0.8/ha

A 2014 draft legislation for a Biodiversity and Protected Areas Service

Most protected areas lack sufficient financial and human resources, including park rangers. Despite current efforts, Chile will not likely have operational management for all protected areas until 2050. zz

Public financing for protected areas, and biodiversity more generally, has significantly increased. Entrance fees, concessions and merchandise sales provide nearly a quarter of funding for protected areas, one of the highest shares in Latin America. Yet protected areas funding is among the lowest in South America (see figure 8), and dispersed across many different institutions. The SBAP legislation plans to increase it, though not to the necessary level.

Highlights

Once officially established, the Nazca-Desventuradas Marine Park (below) will be the largest marine reserve in the Americas.

It will bring Chile’s marine protected areas to

24%

Central Chile, including the matorral (shrubland) and the Valdivian temperate rainforest, is one of the world’s biodiversity hotspots, with high rates of endemic species and habitat loss.

of its exclusive economic zone.

economic instruments zz

Chile uses some economic instruments to promote sustainable use of biodiversity. A market of water-use rights has long been in place (see page 6), although it does not allow for meeting ecological requirements in half of the river basins in northern Chile. A fishing quota system has helped reduce fish catches.

zz

There are no examples of payments for ecosystem services in Chile and the use of biodiversity offsets is at an early stage (e.g. 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.

zz

The proposed SBAP legislation provides the necessary framework for expanding the use of economic instruments. This would help raise additional resources for biodiversity. It would also help Chile fulfil the 2004 OECD Council Recommendation on the use of economic instruments in biodiversity policy.

perverse subsidies zz

Support to farmers, although modest and declining, is

Next steps | biodiversity zz

Fill knowledge gaps on biodiversity with help from academic and research centres, and conduct a national ecosystem assessment.

zz

Swiftly approve the Biodiversity and Protected Areas Service legislation and ensure adequate financial and human resources to implement it.

zz

Improve participation of non-governmental organisations, local government and indigenous communities.

zz

Invest in protected areas in priority ecoregions and along the shores of continental Chile; accelerate the development and update of management plans, and review their implementation.

zz

Expand the use of economic instruments, including payments for ecosystem services, biodiversity offsets and specific levies (e.g. on water effluents, fertilisers and pesticides).

mostly linked to input use. This indirectly encourages overuse or misuse of water and potentially harmful inputs. Subsidies for on-farm irrigation systems have encouraged the adoption of water-saving techniques, but relatively old and inefficient irrigation methods still prevail. Irrigation subsidies allow drainage of wetlands and canalisation of natural water courses, with potentially negative environmental impacts. zz

Chile has long subsidised forest plantation and, more recently, the preservation of native forests.

Afforestation subsidies can help build carbon sequestration capacity, but have encouraged replacing native forests by exotic tree species, affecting native vegetation and contributing to water scarcity.

zz

Subsidies to small-scale mining can encourage exploitation of natural resources, increase the risk of pollution of water tables and affect biodiversity.

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more information OECD Environmental Performance Reviews: Chile 2015 The report and all data are available on http://oe.cd/epr-chile Environmental Performance Review programme http://oe.cd/epr

contacts Head of division Nathalie Girouard Nathalie.Girouard@oecd.org Report co-ordinator Ivana Capozza Ivana.Capozza@oecd.org Communications Clara Tomasini Clara.Tomasini@oecd.org

image credits Cover: Nikki Bidgood/iStockphoto.com, Matyas Rehak/Fotolian.com.

Icon Kristen Gee/TheNounProject.com. P.2-3: progat/iStock. P.4-5: Icons TheNounProject.com Waleed AlAlami, Edward Boatman, David Chapman, Korawan.m, Pauel Tepikin. P.6: Icon TheNounProject.com/Nick Abrams.

P.8-9: Produccion Limpia; Fotolia/b201735, baisa; Jorge Jorquera/Flickr.com; Jovengandalf/Flickr/com; Horacio Parrague/Panoramio; Mari L. Pena/Flickr. com. P.10-11: Icons Iconathon and Waleed Al Alami/TheNounProject.com.

P.12-13: John Zacherle/Flickr.com; Icons by Lloyd Humphreys, Krisada, Edward Boatman, Korawan.m/TheNounProject.com. P.14-15: Icon EdwardBoatman/ TheNounProject.com; The TerraMar Project; Rafael Medina/Flickr.com.

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

http://oe.cd/epr