Fisheries and aquaculture

Chile has a strong aquaculture and fisheries sector. Over the past decade, the export value of aquaculture and fisheries has increased gradually (Figure 2.8). Currently, Chile is the world’s lead exporter of trout, and the second largest producer of salmon.

Figure 2.8. Aquaculture and fisheries exports, 2000-12 (USD millions)

Source: Government of Chile, Under-Secretariat of Fisheries and Aquaculture.

In Chile, there are distinct fisheries policies: i) small-scale artisanal fishery considered to be a part of the rural development package of policies; ii) industrial fishery; and iii) aquaculture, primarily Atlantic salmon production in the most southern regions. Both the commercial and aquaculture components are rural industries, but they are regulated with little apparent sense for their rural nature. By contrast, the artisanal fishery is provided with a protected fishing area and is restricted to small-scale enterprises. This reflects a belief that the artisanal fishery has social and cultural, in addition to its economic, value whereas the commercial fishery only has economic value.

Artisanal fishing is of great importance to the Chilean economy and in particular to rural and coastal areas. It is a heterogeneous sector, composed of three main groups, in which different controls are applied: the group that operates without boats, boats up to 12 meters and boats 12-18 meters. Government support is only provided to registered individuals in the artisanal fishery. The artisanal fishery is also an important element in policy to support indigenous people. Specific areas are assigned for their exclusive use. To participate in the artisanal fishery, boats of up to 18 meters in length must be employed. The artisanal fishery has exclusive rights to the first five nautical miles of coast. In addition, in the first nautical mile, only boats of up to 12 meters in length can be used. Commercial fishing takes place beyond the five-mile limit and it operates under a different set of regulations.

A small number of commercial fishing firms use fleets of relatively modern boats with small crews, while the inshore or artisanal fishery relies on a large number of fishers who are mainly individual entrepreneurs, many without boats. Commercial and artisanal fisheries each account for half the wild caught stock. This reflects a declining share of catch by the commercial fleets and an increasing catch by the artisanal fishers. Government policies and changes in the regulation on the participation of different sectors in the fishery are partly responsible for the increasing catch by artisanal fishers. Both artisanal and industrial sectors have different needs and challenges, although they are managed by the same set of rules, the surveillance and control rules have different levels of requirement. In both cases the value and volume of catch is falling due to stock depletion, suggesting there is room for improving the current management approach.

As in many other countries, the artisanal fisheries remains a difficult problem and current policies have not as yet successfully dealt with overexploitation of coastal fisheries resources or provided stable livelihoods to coastal populations. According to the data registry of artisanal fishermen, there are 13 000 boats and 86 000 artisanal fishers registered. Artisanal fishermen organise themselves in a different level of organisation, at local, regional and national level. The participation of the organised artisanal fishermen in the management of the fishing resources is made through the National Fisheries Council, the zonal fisheries councils and the different management committees. The sector has a long tradition of trade associations, co-operative and union associations involved in horizontal and vertical integration. The existence of these organisations is largely due to the government’s policy to dialogue and implement polices among associations rather than on an individual basis.

Chile, like many other countries, has not found an effective way to manage its fish stocks. Although co-ordination instruments (inter-ministerial committees, councils of ministers, etc.) exist, the large number of associations and actors brings a high degree of fragmentation in the policy implementation at the national level, with an important gap of knowledge and integration of a wide range of actions. National ministries largely operate among national priority guidelines, but there are difficulties in implementing these at lower levels of government at the regional and local level. Given the high degree of variability in conditions both across fisheries and in terms of annual variability, a centralised management structure will always have great challenges. Devolving authority to the local levels can address some of these issues; however, it will face a number of challenges brought by a lack of capacity in many local tiers, the potential for regulatory capture and lack of policy integration.

Aquaculture is a rapidly growing sector in Chile. Currently, the country is a global leader in aquaculture with three distinct production zones in the southernmost regions. The main product is Atlantic salmon but other species are also produced. Aquaculture now creates as many jobs as artisanal fishery and provides better pay and full-time employment in raising and processing fish. In the two regions where salmon production is concentrated, aquaculture is the largest source of regional income.

The history of salmon farming in Chile points to the potential benefits of the importance of an integrated territorial approach to rural development. The far south of Chile is an environmentally sensitive area and a major international tourism destination.

While there is no reason that commercial aquaculture cannot be integrated into environmental management plans along with tourism, it does require policies to be co-ordinated. In the case of Chile, salmon production has been highly concentrated, with farms in close proximity. Not only did this help precipitate a crisis for salmon production due to rapid spread of disease in 2007-08, but it also places a high level of stress on the nearby environment, which could lead to other problems with native species. Aquaculture is internally well integrated, but not very well linked to the larger world outside aquaculture. A holistic approach has the potential to better link aquaculture to other sectors. This will require improvements in innovation, business skills and urban-rural linkages. In the latter, given that the knowledge and know-how are typically present in cities, better linking urban with rural can transfer this to the aquaculture sector.

In sum, aquaculture and fisheries is an important sector for Chile with important international presence. It is also an important sector for many Chilean rural regions in terms of employment effects. The high concentration in salmon activities in some communities and dangers of displacement activities brought by diseases represents a vulnerability to some rural areas. This requires a flexible policy approach that needs to integrate several sectoral programmes. Given the risks of disease spread, salmon farms must follow a well-planed geographic roadmap. This has required displacing existing farms to new locations, which brings challenges of providing infrastructure and labour to the new areas in short time spans. There are also challenges brought by addressing the vulnerability of displaced areas. The artisanal sector, with a large number of associations and organisations, presents difficulties in co-ordination. National guidelines tend to face difficulties in implementation at lower levels. Finally a critical dimension long term development is promoting a sustainable development of the fisheries and aquaculture sector.

Forestry

Chile is a significant exporter of wood products, mainly from the south and central regions of the country. While the majority of the forest cover in Chile is native species, the main commercial species are pine and eucalyptus, which are increasingly managed in intensive plantations (Figure 2.9). The main export products have minimal processing and are lumber, pulp and wood chips. However, there have been steady increases in more highly processed wood products which offer better jobs and higher incomes. These firms are mainly located in smaller towns and cities near the major saw mills. Forest products are now the second largest source of export revenue after mining. Forestry is also a major employer, particularly in the south of the country. Forest cover has been increasing over time, mainly through the conversion of marginal farmland that has no access to irrigation water to forest plantations.

As with other resource-based sectors, the forest industry is segmented into small, subsidized semi-commercial operations and large-scale, globally competitive wood product firms that can meet international competition. Subsidies were first provided to establish plantations in 1974; in 1998, these subsidies were extended to small-scale wood producers. The commercial sector in Chile benefits from: fast growth of trees, low labour costs, aggressive global marketing, a strong transport system with easy access to ports, and the adoption of modern technology.

Figure 2.9. Distribution of forests among Chilean TL2 regions

Note: This map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory covered by this map.

Source: Chilean Ministry for the Environment.

There is a need to co-ordinate a wide number of public institutions involved in forestry promotion, and to improve the inter-connection between forestry and other

related sectors and economic activities. At least five public institutions have a direct relation with forestry promotion and development: the National Forest Service (CONAF), the Foundation for Agrarian Innovation (FIA); the Forestry Research Institute (INFOR); the Ministry of Environment; and - for economic promotion and development programmes - the Economic Development Agency (CORFO). Additionally, forestry development impacts and interacts with other economic sectors of rural areas, as agriculture, livestock or tourism. All these make especially relevant inter-institutional coordination (see Chapter 3) and to integrate the promotion of this sector within a comprehensive rural development policy.

Promoting a sustainable development of the forestry sector is central for long-term economic development. As mentioned, forestry is an important economic sector, and a main source of employment in some rural localities in the south of Chile. However, carrying out the promotion of this sector within a sustainable development approach is crucial for reaching overall economic and social development in the country. Chile’s rapid economic development over the past two decades was accompanied by pressures on natural resources. The booms in mining, forestry and aquaculture have contributed to air, water and soil pollution (OECD, 2011a). At the same time, deforestation and the conversion of native forests to plantations in the past raised concerns about the long-term sustainability of rural local economies in the central and especially southern regions of the country: native forest offers a range of ecosystem services and goods, better water retention and is the source of economic activities that are fundamental to ensure the economic sustainability and diversity of Chilean regions (Box 2.8). The conversion of native forest to plantation is subject to the scrutiny of the correspondent government agency (CONAF).

Box 2.8. Native forests and economic sustainability in Chile

Research by the Austral University of Valdivia reveals the importance of native forest conservation for economic sustainability in the south of Chile. The native forest supports fundamental ecological functions, which provide a range of ecosystem services and goods such as conservation of biological diversity, better water retention, maintenance of soil fertility, supply of water for human consumption, and provision of nature-based tourism opportunities, among others. Native forests play a key role in storing and gradually releasing water, which is the basis for important economic activities in the south of the country, including agriculture, salmon farming, sports fishing and tourism. The presence of native forests in watersheds is particularly crucial for maintaining summer streamflows and the associated dissolved oxygen in fjords and estuaries above the critical values required for salmon production. Mismanagement of the sector in the past degraded native forests, decreasing water availability in forest regions. This had a negative impact on rural communities and put added stress on the problems of poverty and emigration in these areas.

Source: Lara, A. et al. (2003), “Componentes cientificos clave para una politica nacional sobre usos, servicios y conservacion de los bosques nativos Chilenos”, Universidad Austral de Chile, Valdivia.

The approval in 2008 of the national Law for Native Forest Protection and stronger environmental regulations are steps forward towards reaching a fair equilibrium between the development of forestry and the conservation of the country’s rich biological diversity. The examples of OECD countries like Finland or Sweden shows that a strong forestry sector is, and should be, compatible with the protection of the environment and biodiversity of the country.

In sum, the forest sector is a strong employer for a number of southern rural regions. Forestry also has a potential to enhance innovation activities and move up higher in the value-added chain by processed wood products and exploring potential links with other sectors such as renewable energy. There are a number of national institutions managing policies related to forestry. There is a need to balance and reconcile economic with environmental concerns.

Mining

The mining sector is a key driver for the Chilean economy, representing 12% of the national GDP, 59% of total exports (Figure 2.10) and 21.7% of fiscal funding in 2012. The sector is dominated by copper, but there are significant deposits of gold, silver molybdenum and coal. The mining sector has three main elements: state-owned mines, primarily Codelco, which is the single largest mining company in Chile; multinational mining companies; and a group of small- and medium-scale locally owned mines that account for about 8% of production. Mining dominates the three most northern regions of Chile, but it provides relatively few jobs because of its capital-intensive production technology. However, these are well-paid jobs that now in many cases require formal qualifications.

Figure 2.10. The mining sector in Chile, 2012

Source: Central Bank of Chile, 2013.

Mining activities in Chile are geographically located close to the main copper reserves. Indeed, around 25% of world copper reserves are present in the central Chilean region of Atacama, while the processing mostly occurs in northern regions of Antofagasta and Tarapaca. There are also significant mining activities in Coquimbo, Valparaiso, O’Higgins metropolitan region. Given foreseen depletion of the northern reserves, within the next 50 years mining activities are expected to gradually move towards the south. Nevertheless, given the large investments taking place in the current areas of mining (USD 100 000 million) over the next 10-15 years, the expected southern move will likely not take place anytime within the next 20 years.

Mining impacts the rural economy in the following ways:

  • • Employment potential. Mining activity has strong employment secondary effects. It is estimated that for every direct job in the mining sector, three indirect jobs are created. This implies that one-eighth of Chile’s workforce depends directly and indirectly on mining, with important employment effects for rural regions.
  • • Wage potential is the activity that pays better wages with an average salary of USD 1 100. Chilean wages in the mining sector are more than double, leading to higher average wages in mining-intensive rural regions.
  • • Entrepreneurship opportunities in local communities by enabling groups of local entrepreneurs to become providers of goods and services to mining companies.
  • • Public service delivery in rural areas. Mining activities contribute in the social field (education, health) and improve infrastructure in rural areas.

Rural areas should further benefit from mining activities. While the national government manages the taxation of the mining industry to capture royalties from the consumption of a depletable resource, there seems to be little focus on using these revenues to provide alternative economic activities in mining areas in preparation for the time that deposits are exhausted. Indeed, there is little awareness of the need to compensate for the negative social and environmental externalities brought by mining activities in mining-intensive rural localities, or preparation for possible risks brought by resource depletion and the need to reorient the economic base of a town, area or region.

Greater co-ordination could increase the potential to resolve conflicts. Mining is also a major user of water and energy and has the ability to pay more for these inputs than other users. While this may be seen as market forces at work, there is clearly a conflict with current efforts to promote small-scale agriculture. Access to water is vital for mining activities in the north and for agricultural production in the central and southern regions. Both activities, in turn, are important for economic development. Furthermore, there is scope to support energy and the water-saving innovations, which in turn could reduce conflict.

Figure 2.11. Water and energy consumption of the mining industry in Chile, 2012-20

Forecast seawater consumption in mining Forecast electric energy consumption in mining

Source: Chilean Ministry of Mining, 2012.

There is also the potential for linking mining with renewable energy. Mining now accounts for about 90% of energy use in the northern regions. Energy shortages are also leading the mining sector to explore renewable energy sources, particularly solar, as a way to increase the local availability of electricity without major new transmission line investments. Solar energy can also be used for process heat in the refining operations. Storage problems are being addressed through investigations into the possibility of molten salts or pumped storage hydro near the coast.

In sum, mining is not considered a rural economy, but has a strong impact on rural activities. Therefore, there is a need for a cultural change to ensure mining activities are better integrated with rural activities. The mining sector faces electricity and water shortages. This requires co-ordinating the needs of this sector with other policy areas. Mining activities bring negative externalities to a number of rural communities. There is a need for a framework to better internalise and account for these negative externalities. Modern rural policies can help with promoting bottom-up dialogue with local communities, particularly those that face displacements or suffer from negative externalities.

Tourism

Tourism is a rapidly growing industry in Chile. It is estimated that tourism accounts for about 3.2% of GDP and around 3.7% of the total employment (Government of Chile, 2012). This is slightly below the OECD average (4.2% of GDP and 5.4% of employment). However, the tourism sector in Chile has experienced strong growth during the past years. International arrivals increased, on average, by 5.2% annually between 2006 and 2010, to reach 2.8 million visitors in 2010. International tourism receipts, expressed in US dollars, also increased by an average of 7.4% per year between 2004 and 2010 (OECD, 2012b). The objective of Chile is to continue strengthening this sector, increasing its weight in the economy to 6% of the GDP by 2020.

Tourism in Chile is mostly based on nature and landscape. Even though Santiago is the primary entry point to Chile, few tourists come to Chile primarily to see Santiago. Of the top ten tourist attractions in Chile, only one of them, Valparaiso, is located in an urban area. The rest are located in rural areas. The diversity and richness of Chile’s landscapes and nature makes the country an attractive destination for nature-based tourism, eco-tourism and adventure tourism. As an example, Chile has more than 139 active volcanoes, more than 24 000 glaciers, long extensions of native forest (including bio-diversity hotspots as Chilean Winter Rainfall-Valdivian Forests), and the driest dessert in the world (the Atacama Desert).

Tourism represents important development opportunities for rural areas. Tourism in Chile is either based on active (e.g. adventure travel, skiing or climbing sports) or passive activities (e.g. bird watching or visiting highly scenic places). In both cases, there are considerable revenue opportunities for rural places. More and more national and international tourists look for opportunities to stay in rural localities and to have closer contact with the place, the culture and its inhabitants.

Rural tourism has rapidly expanded in many OECD countries including Austria, Italy and Spain. In the case of Chile, given that tourist attractions are mainly located in rural areas, the opportunities are more than evident. Rural tourism therefore offers a great opportunity to diversify the economic activities of rural areas and help support rural economies. Tourism business development in indigenous communities also offers an opportunity for both diversifying income sources and extending the knowledge of culture among national and foreign visitors.

Nevertheless, there are some challenges for rural inhabitants in order to fully take advantage of tourist expansion. Tourist entrepreneurs in rural areas tend to be family based, sometimes lacking entrepreneurial skills or the capacity to advert or promote their businesses. The government of Chile has marked two priorities within its National Tourism Strategy 2012-2020: i) the improvement of the capacities of small rural tourism providers (some small farmers, trying to diversify its activities and incomes); and ii) the quality of rural tourism services (Box 2.9).

For this, training will be offered in such areas as customer service, tourist guide courses, sustainability or cultural heritage. The strategy will promote small entrepreneur associations, aimed at improving the capacities of small-scale providers. This is an excellent initiative that will count on the collaboration of different public institutions, including INDAP and the National Tourism Service (Sernatur). It is supported by other initiatives, including the programme of rural tourism of INDAP, which offers support to small farmers willing to diversify their activities in the tourism sector. This initiative, if broadly backed with institutional support and resources, could have an impact in promoting the diversification of rural incomes and making rural inhabitants part of the growth and success of tourism development in Chile.

There is not enough multi-stakeholder engagement. Although there is a National Tourism Strategy elaborated by the central government, the inputs and views from local stakeholders were not fully taken into consideration in the elaboration of the national strategy. Furthermore, the implementation of the policy is not equivalent in all Chilean regions, given that it depends on the capacity and initiatives of the regional intendentes. For example, in the region of Araucania, the intendente successfully implemented five master plans on tourism in a number of mapuche communities. The region of O’Higgins also has its own strategy for tourism.

Box 2.9. The governance of tourism in Chile and the National Tourism Strategy, 2012-2020

Tourism comes under the Ministry of Economy, Development and Tourism. Within the ministry, an Undersecretary of Tourism is in charge of the national tourism strategies and policies. At the same time, the National Tourism Service (Sernatur) has been established as the public agency in charge of the implementation of these policies. The National Office of Sernatur is located in Santiago, but it has a regional director in all the regions of the country who is in charge of developing the tourism industry regionally, as well as local representatives in some touristic localities or territories such as San Pedro de Atacama, Easter Island, Chiloe or Puerto Natales.

A Ministerial Committee has also been created to ensure the correct level of co-ordination and to improve the efficiency within government. This committee is composed of seven ministries: Economy, Development and Tourism; Culture; Infrastructure; Agriculture; National Assets; Housing and Urban Development; and Environment. In addition, every year, seven industry associations are elected to become part of the Public-Private Tourism Promotion Committee, which also involves seven governmental organisations. This committee is in charge of developing promotional strategies.

As part of the government’s effort to promote tourism development in Chile, a long-term strategy was released in January 2012, the National Strategy of Tourism 2012-2020. This strategy was produced by the Undersecretary of Tourism with inputs from both the private and public sectors. There are five “pillars” in the National Tourism Strategy: promotion, investment and competitive development, sustainability, quality and human capital, and market research. Each of them has a working group with the private sector to develop policies and strategies. The main objectives of this strategy are:

  • • increase the importance of tourism in the national economy, with tourism’s contribution rising from 3.2% of GDP to 6% by 2020
  • • create 40 000 new direct jobs and 160 000 new indirect jobs by 2020, promoting the creation of small and medium-sized enterprises, especially in regions
  • • reach 4 million foreign tourists by 2014 and 5.4 million by 2020, raising the average expenditure per tourist by 50% between 2012 and 2020.

Sources: Government of Chile (2012), Estrategia Nacional de Turismo 2012-2020, Santiago; OECD (2012), OECD Tourism Trends and Policies 2012, OECD Publishing, Paris, http://dx.doi.org/10.1787/tour- 2012-en.

In order to concentrate the impact of public action wherever it deems necessary, a recent national decree regulates the possibility to determine areas of tourist interest (ZOIT) in the territory of one or several municipalities. Any ZOIT can develop a plan of tourism action, creating a management company formed by entrepreneurs in the area, along with local government. Each of these plans must be approved by the Ministry of Economy, Development and Tourism. These entities follow the philosophy known as “destination management organisations” and tune well with the local development approach, pointing to an action commanded from the territories, and starring by communities as the lead actors.

There is a potential to further link tourism to other sectors. Chile is investing in sustainable tourism that combines the tourism industry with the protection of the environment. Tourism to national parks and nature protected areas and eco-tourism are rapidly expanding. This provides another attraction that can parallel existing private sector investments in skiing and adventure tourism. In the period 2000-12, the number of visitors to natural protected areas doubled, from about 1 million in 2000, to more than 2 million in 2012 (CONAF, 2013). The resources to protect these areas - for example, park guards - have increased in the last years. However, recurrent forest fires, including the recent disaster in the National Park of Torres del Paine, raise concerns to further invest resources on the protection of the natural sites and parks. Therefore there is a need to approach tourism in a more sustainable way. Although protected areas are an important source for attracting tourism, the latter needs to respect that the principle goal of designating protected areas is for preserving bio-diversity. A modern rural development policy can help in this domain through its investment driven approach and engagement with multiple stakeholder, particularly involving local actors and its environmental pillar.

The rich biological diversity and the unique natural and cultural environments of Chile form the basis for expanding tourism and recreational services but also raise the challenge of sustainability. Tourists, and particularly international tourists, come to the country looking for its rich, relatively unspoiled and unique environment and nature. This is what makes Chile an attractive destination and what differentiates it from other tourist destinations.

Therefore, it is key for the long-term sustainability of the sector to preserve its nature, forests and landscape from degradation, over-exploitation/urbanisation. As the tourist sector develops, the challenges for preserving its biological diversity and landscapes will also increase. Providing high-quality tourist services appropriate to the carrying capacity of the environment becomes a key. At the same time, modern rural policy can enhance the dialogue and better co-ordinate tourism activities with environmental policies, water, agriculture, forestry and mining.

Finally, there are untapped opportunities for further involving the local population in the development of innovative tourist products, based on local culture and traditions, or local food products (e.g. native forest honey, dietary or health products from seaweed), which can constitute a good complement to the promotion of tourism, and offer a supply of differentiated tourist products. Tourism activities can increase the attractiveness and visibility of remote localities and can be an important industry for employment and raising revenue.

 
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