ICE Case Studies: Chile Dam

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The Bio-Bio River Case, Chile



    1. Abstract

    The Bio-Bio river flows from the Cordillera of the Andes all the way to the Pacific Ocean. Over one million people use the resources of the Bio-Bio for drinking and irrigation water, recreation, and fisheries. ENDESA, the largest private company in Chile, is planning to construct six hydroelectric dams on the Bio-Bio. The first of these, Pangue, is already 70% completed. ENDESA now says it will move ahead with construction of the largest of the dams, called Ralco. Ralco would be a 155 meter-high dam with a 3,400 hectare reservoir, which would displace 700 Pehuenche Indians. The upper Bio-Bio where the Ralco dam is planned, is home to the Pehuenche group of the Mapuche Indians, the last group of Mapuche who continue their traditional lifestyle. The dam would flood over 70 km of the river valley, inundating the richly diverse forest and its wildlife. Environmental and Indigenous rights groups oppose the project not only because of the wide scale destruction it would cause, but also because projections of Chile's future energy requirements indicate that the energy it would produce will not be needed. Critics of Ralco say that construction would violate the new Chilean Environmental and Indigenous Peoples Laws and prior agreements between ENDESA and the World Bank. The Pehuenche of Chile and environmentalists are struggling against a dam project on the Bio-Bio river that will force the Pehuenche off their ancestral land and flood 9,000 acres of farmland and rare temperate rainforest in Southern Chile. On June 6, 1997 the $600 million Ralco dam project was approved by the Chilean government's environmental office. ENDESA, the private public utility company claims that this dam, and 10 more dams its size between now and 2013 are needed to satisfy the energy demands of the Chilean economy.

    This project is seen by the Pehuenche and environmentalists as a violation of the new Environmental and Indigenous laws. According to the Indigenous Law, Pehuenches cannot be forced to relocate from their land. On June 10, 1997 a group of Pehuenches occupied Chile's Indigenous Affairs Bureau and Environmental Protection Board to protest the licensing of the Ralco Dam saying "The Chilean government has once again shown its colonizing mentality by not respecting our people or the law." ENDESA, the powerful utility company that has expanded to Brazil, Argentina, Colombia, and Peru, says that it can challenge the law in court.

    2. Description

    Since ENDESA, Chile's biggest and most powerful electrical company, began planning the construction of six interdependent hydroelectric power plants on the Biobio River in the 1960's, the Ralco power plant has been considered the "key component" of this ambitious hydroelectric project.

    In 1992, ENDESA begin construction on the Pangue Dam, the first major dam built on the Bio-Bio. Pangue is now 70% completed. The arm of the World Bank which funds private sector projects, the International Finance Corporation (IFC), provided a $70 million loan for the dam. The IFC brokered an additional $28 million from the Swedish board for Industrial and Technical Cooperation (BITS), $14 million from the Norwegian Agency for Development Co-operation (NORAD), and $100 million from ten European banks. In response to concerns voiced by these agencies regarding the environmental impacts of a series of dams the IFC asserted that Pangue was the only dam planned for the river despite information that Pangue was designed to work in conjunction with a large reservoir dam upstream, Ralco.

    As part of their loan agreement with ENDESA, the IFC received a 2.5% share of Pangue, S.A., the ENDESA subsidiary which is constructing Pangue and plans to construct Ralco. The IFC has been criticized not only for misleading investors regarding plans to build Ralco, but also for failing to enforce World Bank policies of transparency and regulations in its handling of the Pangue loan.

    Concerned Citizens take Action

    Public outcry has been massive. Different environmental organizations like GABB (Action Group in Defense of the Biobio), Indigenous rights groups, student activists and other outraged citizens have joined forces to stop the construction of Ralco. In a public declaration, GABB called for a complete halt to any other project along the Biobio River, the enforcement of the Environmental and Indigenous Laws, respect for the Pehuenche communities, their land and culture, and the creation of an effective energy policy that would prioritize the social and ecological sustainability of the country.On November 17, 1995, a group of nearly 400 Chilean citizens, including Pehuenche Indians, environmentalists, and other concerned individuals, filed a complaint with the World Bank's Inspection Panel accusing the IFC of violating Bank rules on environmental assessment, environmental policy for dam and reservoir projects, indigenous peoplesn rights, involuntary resettlement, the management of cultural property, wildlands protection and management, and project supervision, as laid forth by the IFC: Environmental Analysis and Review of International Finance Corporation Projects. In addition, the protesters contend that funds allocated to Pangue, S.A. for the Pangue dam are being put toward the Ralco project, in clear violation of the loan agreement.

    Although the claim was rejected by the Inspection Panel on the grounds that the IFC is exempt from the Panel's jurisdiction, President James D. Wolfensohn of the World Bank, (Letter from James Wolfensohn) , responding to concerns from the Bank's Executive directors, promised an impartial, internal review of the Pangue loan. Wolfensohn also insisted that the IFC has no plans to provide financial support for Ralco.

    On June 10, 1997 a group of Pehuenches occupied the Chile's Indigenous Affairs Bureau and Environmental Protection Board to protest the licensing of the Ralco Dam saying "The Chilean government has once again shown its colonizing mentality by not respecting our people or the law."

    The Ralco Dam: An Accident waiting to happen?

    The project, whose cost has been estimated by ENDESA as at least $500 million, would create a dam standing 155 meters high, with a reservoir of 3400 hectares. At full capacity, Ralco would generate 570 MW of electricity. From ENDESA's point of view, Ralco would slow a situation that impairs Pangue's performance and would serve to manage the flow into Pangue during load periods of peak electricity demand. Conversely, the environmental effects of the Ralco hydroelectric plant will be devastating. Estimates indicate that about 3,400 hectares of native forest would be flooded, affecting about 45% of the fauna and 60% of the flora. The creation of an artificial lake would endanger about 8 species of fish, 9 species of reptiles, 10 species of amphibians and 27 species of mammals. Humidity in the area would increase, affecting crop production and altering the region's micro flora and micro fauna. The humidity would also help increase soil erosion. The effects of toxic gas emission and toxic sediments are still to be determined. But given the magnitude of the project, they would undoubtedly be environmentally and economically catastrophic.

    Environmentalist claim that The Ralco dam, upstream from Pangue, would have a devastating impact on the the residents of this area. Because of Ralco's negative impact on the Pehuenche communities and the environment, it would seem that Chile's Indigenous Law and the Environmental Bases Law should be able to stop its construction. The Indigenous Law (No. 19,253) establishes norms for the protection, promotion and development of ethnic communities. It states that Indigenous land cannot be "annexed, mortgaged, levied or repossessed except for Indigenous communities or persons . . ."(Art. 13).

    Bio-Bio, Home Of the Pehuenches

    Chileans take pride in the Bio-Bio as the home of their ancestors, the Pehuenche Indians. More than 600 people, 400 of them Pehuenche from the communities of Ralco Lepoy and Quepuca Ralco, would be displaced by the dam. ENDESA proposes to relocate the Pehuenche to farms in the highlands above the dam. While this area approximates the summer environment of the Pehuenche territory, it does not provide a warm river lowlands area for them to weather the cold winter months. Development of the region would cause a rapid increase in the non-indigenous population of the area, stimulate land speculation, and cause disintegration of the Pehuenche culture.

    During construction of Pangue, the IFC urged ENDESA to create the Fundacion Pehuen (Pehuen Foundation -FP) , ostensibly to mitigate the social and cultural impacts of Pangue dam on the Pehuenche. However, the FP has been implicated in various irregularities, including disregarding the letter of the Chilean Indigenous Peoples Law and the authority of CONADI (Department of Indian Affairs). The FP is controlled almost entirely by ENDESA representatives, and is apparently being used as a tool to create support for the dam projects.

    Under the New Chilean Indigenous Peoples Law, the Pehuenche have autonomy over their lands and the right to refuse any deal offered them by ENDESA. However, the FP has misinformed the Pehuenche, telling them that Ralco is inevitable, and encouraging them to settle for what they can. Pehuenche leaders and support groups are working to organize the Pehuenche communities to resist relocation.

    Environmental Impacts

    ENDESA is currently devisng an environmental impact statement for Ralco in which it will assert that it will address the cumulative impacts of the two dams on the Bio-Bio. The study is being carried out by the Santiago branch of Elektrowatt of Switzerland. Environmentalists say that it is clear that damages would be massive and irreparable. Ralco's powerhouse would be 10 km downstream from the dam itself. The corridor between the dam and the waterfall zone would be entirely dry, while 60 km of the Bio-Bio River valley and various tributaries would be devastated by inundation. The operation of Ralco would cause a monthly fluctuation of the water level of the reservoir of 20 meters. During the low water level periods, some 1400 hectares of denuded reservoir banks would be exposed to erosion and landslides. The dam and its reservoir would destroy over 55 km of the Bio-Bio River valley and the valleys of connecting water ways.

    One major change in the Upper Bio-Bio would be the proposed creation of a stagnant lake in the middle of a fast-flowing mountain river which travels from the Andes to the Pacific. Even before the dam is completed, construction would introduce additional sediments into the river flow. The aquatic life would be severely affected by the disruption of the water flow, and the quality of drinking water for nearly one million people downstream would be impaired.

    Retention of nutrients in the reservoir would affect the food chain in the coastal ecosystems downstream, affecting the productivity of the Gulf of Arauco, a major Chilean fishery. Freed of its sediments, water released below the dam would cause increased erosion. Of the five volcanoes located in the area of the proposed dam, at least three are currently active. There is a risk of generating seismic tremors during dam construction, operation, or failure. Economic activities dependent on the naturally flowing river including eco-tourism based on river rafting would no longer be viable.

    The Flora and Fauna of the Ralco Area
    Home to numerous unique plant and animal species, the Ralco region is remarkable. The limited development in the area to date has already resulted in the loss of the huemul [long-eared Andean deer) and pudo (miniature deer). Among the many species that would be threatened by the Ralco dam are the Andean fox, the puma, the Southern sea otter, the black-necked swan, the endangered Peregrine Falcon, and the national bird of Chile, the Andean Condor. In addition to the Andean cypress and the endangered araucaria pine, whose fruit is harvested by the Pehuenche people, many useful medicinal plants grow in the area. The disappearance of these species could undermine the viability of the native ecosystem in the area around the dam, and the Pehuenche culture that depends on it.

    Any Alternatives ?

    The Chilean Department of Energy (CNE) has recommended that Ralco not be built, saying that Chile will not need the energy. With nine thermal generating stations planned to be powered by natural gas piped from Argentina via one or two new pipelines, and eight smaller hydroelectric projects on tap, Ralco would provide energy far in excess of what Chile will need in the foreseeable future, and only at an unacceptably high social and environmental cost. Dario Jana, an environmentalist who is organizing the international support for the Pehuenche communities, is calling for letters to be presented to the Human Rights Commission of the United Nations during the Fifteenth Assembly of the Indigenous Working Group of the United Nations:
    1. Expressing support for the Pehuenche
    2. Urging the UN to influence the Chilean government to respect the Indigenous and Environmental laws that it has ratified by halting the dam project that will violate indigenous communities and their ancestral land.

    For information on the Pehuenche situation as well as information on other Native American affairs contact the following:

    South and Meso American Indian Rights Center (SAIIC) P.O. Box 28703 Oakland CA, 94604 Phone: (510)834-4263 Fax: (510)834-4264 Email: Office: 1714 Franklin Street, 3rd Floor, Oakland Home Page: or more information about the Bio-Bio case, send an empty email message to:

    The Bio Bío Daily:
    Grupo de Acción por el Biobío,
    Ernesto Pinto Lagarrigue 112,
    Recoleta, Santiago de Chile.
    TEL: +56-2-737-1420
    FAX: +56-2-777-6414

    For more on the Pehuenche people:

    Jose Antolin Curriao Pinchulef
    Mapuche-Pehuenche Center of the Alto Biobio

    Snail-mail: Antonia Lope de Bello 075, Santiago, Chile. Voice 56-
    2-7375251, FAX 56-2-7776414

    4. Location

    Domain: South America
    Site: South America
    Impact: Chile

    5. Actors

    Pehuenches--Native Americans
    Environmental Groups--Action Group in Defense of the Bio-Bio
    The World Bank
    The Government of Chile
    ENDESA (Empresa Nacional de Electricidad S.A.)
    International Financial Corporation (IFC)

    II. Environment Aspects

    6. Type of Environmental Problem


    7. Type of Habitat

    Temperate Jungle

    8. Act and Harm Sites:

    Indigenous people and eco-system

    III. Conflict Aspects

    9. Type of Conflict

    [WARHARM] [

    10. Level of Conflict


    11. Fatality Level of Dispute (military and civilian fatalities)


    III. Environment and Conflict Overlap

    12. Environment-Conflict Link and Dynamics:

    Causal Diagram

    13. Level of Strategic Interest


    14. Outcome of Dispute:


    IV. Related Information and Sources

    15. Related ICE Cases

    16. Relevant Websites and Literature
  • Indians, Environmentalists Vow Rough Water for Chile Dam
  • See the Biobío Campaign
  • Biobío Listserv keeps you informed.
  • The Biobío Fact Sheet is a more detailed look at the Biobío, the planned dam projects and their environmental impacts.
  • The Biobío/Chile/Latin America File Index is a list of files available through the IRN Library.
  • World Rivers Review, August 1997: "Review Panel Blasts World Bank Over Chilean Dam".
  • IRN Press Release of July 30, 1997: "Independent Review Blasts World Bank Over Chilean Dam Project".
  • Letter from James Wolfensohn, World Bank President, to Andrea Durbin, of Friends of the Earth, of June 2, 1997, stating his position of the failure to release the full text of the review of the Pangue hydroelectric project.
  • World Rivers Review, June 1997: "Fighting for the Biobío: An Interview with Juan Pablo Orrego".
  • World Rivers Review, June 1997: "Background on the Biobío Dams".
  • World Rivers Review, April 1997: "Chilean Dam Builders Slip Through the Noose: Endesa Pays Off World Bank to Avoid Loan Conditions".
  • IRN/CIEL Press Release of February 26, 1997: "World Bank Threatens Chilean Dam-Builder with Default".
  • World Rivers Review, June 1996: "News Briefs".
  • World Rivers Review, January 1996: "Second Biobío Dam Hits Choppy Water".
  • World Rivers Review, Fourth Quarter 1994: News Briefs: "Dams Multiply on Biobío". International Rivers Network, in conjunction with Grupo de Acción por el Biobío of Chile (Action Group for the Biobío - GABB), produces and distributes the Biobío Update. GABB is a Chilean environmental and human rights group proposing alternatives to the construction of a series of dams on the Biobío River. Currently online are: Resources elsewhere on the Web: