Chile - Managing environmental problems : economic analysis of selected issues

Chile's main environmental issues are: (a) urban pollution of air and water; (b) industrial pollution by localized industries, in particular mining; and (c) the intensive use of natural resources, including native forests and fisheries. This report provides an overview of environmental problems in Chile and outlines elements of an environmental strategy. The detailed chapters on air and water contamination in Santiago, and native forest management in a case study area go well beyond the description of problems and proved an in-depth analysis of three serious problems as examples for the application of economic analysis to environmental issues. This report recommends integrated environmental management based on the comparison of costs and benefits. A delay of improved environmental management would create high costs in the future, and could potentially limit access to foreign markets. The government should focus its resources on priority areas, set realistic objectives, and enforce the regulations enacted to achieve these objectives. Priority should be given to instruments, such as presumptive charges or performance bonds, that shift the administrative burden to the polluter.