Water Code Reform

After 11 years of Congressional discussion, Law No. 21,425, which reforms the Water Code was enacted into law in Chile on April 6, 2022.

The Reform reaffirms that water rights are real rights. However, water rights granted post Reform will be limited in time, as the concessions will be granted for 30 years and will be automatically renewed, unless the General Water Bureau (“DGA”) sets out that the relevant water right is not being used effectively upon its expiration date or that a renewal could affect the sustainability of the water source. Furthermore, the Reform added the concept of “public interest” as a requirement for the granting of new water rights.

Additionally, the Reform sets out that all water rights (even those preexistent to the Reform) are now subject to termination triggered by effective lack of use, with regards to the unused water flow, if their extraction and/or restitution works that allow their effective exercise are not built within 5 years (consumptive water rights) or 10 years (non-consumptive water rights) from their first inclusion in the DGA yearly list of water rights subject to payment of non-use taxes published from January 2023 onwards.

Sets out a priority or preference for uses of water related to human consumption, basic sanitation, and subsistence, prioritizing them for the granting of water rights and exercise restrictions. Water rights may change their use, with a prior reporting duty, but such change of use is limited with regards to water rights used for human consumption or public health.

Creates non-extractive water rights for environmental conservation or sustainable, recreational or sport tourism purposes, which would not be subject to the non-use taxes frameworks. Existing water rights may be reconverted to such category.

Broadens the prohibition for the granting of water rights in glaciers and areas under official biodiversity protection and extends the geographical area of such limitation for wetlands and marshes (vegas, bofedales, pajolanes) in the north of Chile.

Sets out that water rights granted before the Reform, that are not registered at the Water Property Registry (“WPA”) kept by the relevant Real Estate Registrar (“CBR”) may expire if they are not registered within 18 months from the publication of the Reform in the Official Gazette, with certain exceptions.

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