The fight for the survival of Chile's Biobío River is once again at a crucial stage. Chilean citizens and concerned people around the world are joining forces to oppose construction of the Ralco Dam, the second in a series of six hydroelectric dams planned by ENDESA, a Chilean private utility. The dams would irreparably alter the landscape of the upper Biobío, displacing indigenous peoples, destroying forest areas, and inundating diverse ecosystems. Although the fight to keep the Bio Bío free was lost four years ago when ENDESA built the Pangue dam, Chilean citizens have new tools to fight the Ralco dam.
 

World Bank funding for the first Biobío Dam
In 1992, ENDESA begin construction on the Pangue Dam, the first on the Biobío. 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 on the Biobío, 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. This meant that a cumulative environmental impact study was not required.
 

Chileans file complaint with World Bank Inspection Panel
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 and regulations in its handling of the Pangue loan.
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 alleging the IFC violated Bank rules on environmental assessment, environmental policy for dam and reservoir projects, indigenous peoples, involuntary resettlement, management of cultural property, wildlands protection and management, and project supervision, as laid forth in "IFC: Environmental Analysis and Review of International Finance Corporation Projects". In addition, it appears 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 Bank, 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.
 

Ralco: A Disaster in the Making
Ralco, upstream from Pangue, would have far more devastating impacts than the Biobío's initial dam. The project, whose cost has been estimated by ENDESA 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 siltation that impairs Pangue's performance and would serve to manage the flow into Pangue during load periods of peak electricity demand.
 

Environmental Impacts Not Yet Studied
In accordance with the Chilean Environmental Law enacted in 1994, ENDESA has contracted an environmental impact statement for Ralco which it says will address the cumulative impacts of the two dams on the Biobío watershed. The study is being carried out by the Santiago branch of Elektrowatt of Switzerland. Public comments will be accepted only when the report is complete, currently scheduled for April, 1996.
Environmentalists say that it is clear that damages would affect a broad area and be 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 Biobío 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 Biobío River valley and the valleys of various tributaries.
Clearly, one major change in the Upper Biobío would be the 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 Biobío: One of the World's Great Scenic Rivers
On its way from the Andes to the Pacific, the Biobío plummets over numerous breathtaking 100-foot waterfalls, roars through narrow canyons and drifts through forests of protected araucaria pine. Home to numerous unique plant and animal species, the Ralco region is quite fragile. The limited development in the area to date has already resulted in the loss of the huemil (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, 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.
 

The Biobío: Part of Chile's National Heritage
Chileans take pride in the Biobío as the home of their ancestors, the Pehuenche Indians, who have made the Biobío their home for centuries. 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 Fundación 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 Fundación Pehuen 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. An envoy of Chilean government officials recently traveled to the region to listen to the concerns of the Pehuenche and assure them that their rights would be upheld.
 

Alternatives Ignored by ENDESA
ENDESA terms these relocations "inevitable" or "residual" effects of the dam, ignoring their scope and their tragic consequences. At the same time, ENDESA tries to stifle a rational and transparent discussion at the national level about alternatives to the Ralco project. 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.
 

A Test for Chile's Fledgling Democracy
The fight to stop the Ralco dam is a crucial test for Chile's fragile democracy. Two new laws providing citizen rights and public participation guarantees -- the Chilean environmental Law and Chilean Indigenous Peoples Law -- are being tested by citizen groups opposing the project. If the activists cannot effectively use the channels provided in these laws to stop the Ralco project, it will be clear to the Chilean people that these laws do not provide any real power against the enormous and extremely wealthy ENDESA or similar companies. This would almost certainly mean that there will be no legal way to stop the four additional dam projects on the Biobío that are planned by ENDESA whenever the company decides to implement them.