Thursday, October 18, 2007

Environmental impacts of the Endesa El Porton Dam in the Puelo River Basin


This report investigates the situation currently facing the Puelo River watershed in southern Chile, where the Spanish energy company Endesa has proposed the construction of a dam and 12,000+ acre reservoir. This report provides: background on Chile’s Water Code and the bodies that govern water use; an analysis of Chile’s current energy ‘crisis’; an overview of the Chilean energy matrix and comparative consumption by sector; and detailed treatment of the Puelo River watershed and anticipated impacts (environmental, socio-economic, geopolitical, and geologic) of the proposed dam. The report also briefly discusses proposed hydroelectric projects in other watersheds of Patagonia. It concludes with a corporate history of Endesa, an analysis of the company’s role in domestic and international markets, and a review of its environmental legacy.

On April 17, 2006, the Spanish energy company Endesa announced its intentions to build a dam in southern Chile’s Puelo River watershed and to assert the company’s water rights to the basin (Santiago’s Las Ultimas Noticias newspaper, 4/17/06). The proposed project calls for the construction of a 300-foot dam and the formation of a reservoir of over 5,000 ha (over 12,000 acres) to produce energy for consumption in the north of Chile.


Chile’s Andean-Patagonian watersheds have been threatened by proposed dams for years, but the issue has now come to the forefront due to energy speculation. Historically, rights to waters designated as ‘free’ for agricultural or energy use have been regulated by Chile’s Water Code, which is administered by the General Water Administration (in Spanish, Dirección General de Aguas or DGA) under the Ministry of Public Works. The DGA’s mission is to administer, regulate, and supervise the appropriate use of freshwaters, streams, continental and subsurface waters for multiple purposes that include agriculture, mining, and real estate. Unfortunately, the DGA has also been responsible for the poor use and mismanagement of Chile’s watersheds.

The process of obtaining water rights in Chile is open to nearly all individuals or legal entities who comply with the flexible laws of Chile’s water sector. While the Water Code itself is straightforward, it demonstrates a marked bias in favor of water speculation and privatization. While the law allows for impacted or injured parties to oppose petitions to obtain water rights, opposition is not usually welcomed. Although the current Water Code has attempted to prohibit speculation on requested water rights, the ambiguity of the law and its inclination towards privatization have granted large corporations unrestricted access to the use of continental waters. The Water Code is further limited by the fact that the Spanish energy company Endesa España retains rights to more than 80% of Chile’s rivers and has the resources to pay for permits to continue plans to dam Patagonia’s rivers.


Chile’s supposed energy crisis is a result of 1) the reduction of gas imports from Argentina and 2) the Bolivian government’s statement to share “not one gas molecule with Chile”. Rising consumption and higher energy needs for the country’s steadily growing economy have spurred the government to develop an energy matrix with the goal of bringing Chile to a state of complete energy independence. Daily demand in Chile is 20 million cubic meters of natural gas, or the equivalent of 20% of Argentina’s total daily consumption.

It should be noted that Chile’s energy situation is considered a ‘crisis’ only from the perspective of energy sources. The fundamental problem is the inefficient use of energy and a system that favors energy excess and waste. To be precise, there is currently no crisis; the creation of a ‘crisis’ is solely a mechanism to satisfy the energy demands of transnational mining companies from the north of Chile. This is corroborated by the fact that most of the consumers and plants are located in the north as well as by the high present cost of crude oil derivatives. From 2005-2007, Canadian Transelec – the corporation with the largest network of energy transport lines in Chile – invested in increasing the capacity of its high-tension lines in Chile to support higher energy flow between Puerto Montt and Tal Tal, where the greatest distribution centers and consumption of mining corporations are located. Additionally, the Puerto Montt substation, which acts as a means of access to the circuit (switch) for the interconnecting electrical system (SIC) from the southern part of the country, was equipped with three CER reactors (Compensación Estática de Reactivos) that function with radioactive elements. Local and national authorities have neglected to investigate this reactor system.

For years, gas shortages from Argentina have coincided with attempts by transnational and Chilean corporations to appropriate Patagonia’s rivers and generate lucrative business deals with mining companies from northern Chile.

Distribution of energy consumption in Chile’s energy matrix is outlined by sector in Table 1. This information was published in July 2005 by Chile’s National Statistics Institute, Subdepartment of Statistics Related to Industry, Mining, Improvements, and Energy (Anuario Estadístico Sector Eléctrico 2004):

Table 1 demonstrates that two economic sectors (mining and industry) are alone responsible for consuming over 70% of Chile’s energy matrix. For the most part, these do not reflect state-owned companies but rather transnationals that do not pay taxes or produce jobs from a natural resource that belongs to all Chileans.

Chile’s citizens consume only 17% of energy (through the residential sector), yet – through the damming of Patagonia’s natural resources – are expected to subsidize the energy consumption of Chile’s wealthy mining and industrial interests.

The current structure of free market economics and the matrix utilized is based on providing the incentive for energy consumption, rather than for efficient energy use. Thus, in the context of excessive consumption and a perceived energy crisis, large energy corporations have taken the opportunity to plan the development of hydroelectric plants, under the premise that in a “problem country”, the lack of energy verges on a national emergency. Although the companies promote reservoirs and hydroelectric stations as clean energy, these technologies have never been clean. They are a significant contributor to global warming, generate millions of tons of methane and carbon dioxide, and are statistically proven to pollute more than electro-thermal stations.

The objective of energy companies such as Endesa and Colbun and mining companies like Xstrata (formerly Falcon Bridge) is to gain control of Patagonian waters to establish highly lucrative business.

They are not above manipulating the citizenry and “selling a green image” of their efforts or presenting commercial interests as altruistic while simultaneously seeking political support through influence-peddling. In technical plans, investigations to exempt their projects are also riddled with irregularities, and environmental consultants are hired to demonstrate that dams are beneficial to the environment. Sociologists and psychologists are employed to target communities that may be in resistance to a proposed development. The companies promote the social benefits that will result from corporate plans to exploit the region’s natural resources and do not acknowledge the social costs to be incurred by Patagonia’s inhabitants. They fail to communicate that the prime economic benefit of proposed development is corporate, while the prime cost to be borne is social.

Here is the full article.