TED Case Studies

Chile Air Pollution

CASE NUMBER: 134
CASE MNEMONIC: CHILEAIR
CASE NAME: Chile Air Pollution

I. IDENTIFICATION

1. The Issue

Chile has experienced a period of strong economic growth.
As growth has proceeded at a rapid pace, the health and
productivity costs of environmental degradation have become
apparent. Air pollution in Santiago, the country's capital, is
the most obvious environmental problem of the nation. Santiago
experiences very high levels of air pollution, often exceeding
guidelines suggested by the World Health Organization. Air
pollution in Santiago causes significant health damage, including
premature death and serious respiratory diseases. Air pollution
in Santiago is caused by industrial and vehicle emissions as well
as street dust blown from unpaved roads and eroded hillsides.
Not only is air pollution aggravated by thermos inversions but
also because the city's location is in an enclosed valley with
limited wind and little rain. Therefore, those factors limit the
dispersion of emissions from traffic and industry from Santiago's
Metropole.

2. Description

The economic policy under the military government (1973-
1990) emphasized the development of a free-market economy based
on non interventionist principles and strong export-orientation
(monetarist policy). The government at this time viewed
Environmental protection as detrimental to economic growth.
Also, the population affected by environmental problems was
largely excluded from political decision-making. There was
neither a coherent body of environmental regulations nor a
central environmental authority in Chile. Environmental rules
and regulations were fragmented and without effective
enforcement. There was no national legislation requiring the
assessment of environmental impacts of investment projects, and
new projects were approved and modified monthly. Basic
environmental data was either lacking or collected sector by
sector and not compiled in a manner useful for environmental
management.

The transition to a popular elected democratic government in
1990 represented an important political milestone and has
resulted in an increasingly open debate about the future of the
country. Both the people and the government have become aware
that the environmental cost of past growth is being borne by the
population at large and the country's natural resources base.
Aylwin's government has made protection of the environment and
responsible management of Chile's rich natural resources an
important part of its program. In his speech to a joint session
of Congress on May 21, 1992, President Aylwin outlined the
government's strategy for improved environmental management. He
cited that environmental management would be a central element of
the development strategy for the country. The new government of
President Frei, which took office in March 1994, is expected to
continue this emphasis on sound environmental management.

There is a strong commitment by the government to
environment protection, and the environmental sector has been
undergoing a process of rapid change and maturation. "The
government's strategy is based on the "polluter pays" principle
that combines the use of both economic incentives and direct
regulations to promote efficient and sustainable development,
which explicitly considers environmental factors.

Santiago's air pollution represents the most difficult
challenges faced by the authorities responsible for reducing the
damage caused during the years of environment's negligence. There
are two causes that led Santiago to have such a problem. First,
"the population of Santiago has grown from 1.4 million in 1960 to
an estimated 4.8 million currently, representing 37 percent of
the country's population." Second, industrial pollution
represents another problem that arises primarily from the mining
sector and smelter operations (see COPPER case). Also, thermal
power plants are some significant contributors to CO2 emissions,
which contribute as greenhouse gases to global warming. Air
pollution from thermal power plants is currently not a major
concern at the national level, for example when compared to
pollution from the mining sector. Therefore, increased population
densities and associated levels of economic activity have led to
increased pollution.

Air pollution in Santiago results from fixed and mobile
sources. Moreover, the topographical, climatic, and
meteorological conditions in Santiago make air pollution worse.
Also, Santiago citiesþ location is in an enclosed valley with
limited wind and little rain and thermal inversion throughout
most of the year, which limits the dispersion of emissions from
traffic and industry. By indicators provided by WHO/UNEP in
1992, Santiago's air quality in an international perspective is
among the worst (see Table 134-1).

Studies have shown significant effects of the air pollution
levels found in Santiago on human health, including premature
death, respiratory deceases such as chronic bronchitis,
pneumonia, and asthma, and other health effects including
coughing, snoring and night awakening. "The costs of air
pollution include the costs of cleaning, reduced vegetation and
agricultural productivity, and vision impairment resulting in
lost amenity value and lost revenue from tourism. An additional
cost category is productivity loss incurred due to emergency
measures imposed during periods of intense air pollution." The
emergency measures include the closing of schools, restricting
the operation of polluting industries, and limiting the operation
of vehicles. Table 134-2 shows the days of pre emergency and
emergency measures during the last years, generally occurring
between May and August.

Table 134-1
City Comparison of Air Pollution

CITY Total Suspended Particles Sulphur Dioxide

Calcutta 393 54
Beijing 370 115
Tehran 261 165
Mexico City 100-500 80-200
Bangkok 220 34
Santiago 210 38
Manila 120-250 20-50
Athens 178 34
Bombay 140 23
Sao Paulo 50-85 35-62
Los Angeles 46-115 0-10
New York 61 60
Tokyo 51 20

WHO Recommendations 60-90 40-60

Source: WHO/UNEP (1992), World Bank (1992), other World Bank
reports.

Table 134-2
Emergency Measure Days in Santiago

Year Preemergency Days Emergency Days

1990 11 2
1991 9 2
1992 14 2
1993 8 0

Source: CEDRM

Public sentiments and policies already reflect willingness
to undertake control measures to reduce air pollution in
Santiago. Chilean law has long recognized the right to live in an
unpolluted environment. The "Lay sobre Bases Generales del Medio
ambient" establishes the National Commission for Protection of
the Environment (CONAMA), the polluter pays principle, and
institutional responsibilities in terms of standards and programs
represent this right. In Santiago, the Special Commission for
Pollution Prevention and Reduction in the Metropolitan Region
(CEDRM), established in 1990, works with ministries when specific
courses of actions are recommended. The regulations that
establish emission standards are based on health ministry
legislation. The ministry's metropolitan environment health
service also operates the city's air pollution monitors.

Pollution control measures may be justified in a cost-
benefit analysis based on health benefits alone. Therefore, the
first principle of an environmental strategy is the application
of integrated environmental management based on the comparison of
costs and benefits. The main strategy for achieving integrated
environmental management is to let the prices of all goods
reflect their full social costs, including environmental damages.
The challenge facing the government is to define the limits of
individual property rights where the rights of others to a clean
environment are violated and to expand secure property rights to
those natural resource and environmental goods where they have no
yet been established.

Finally, important steps have been taken with the passing of
the Basic Law and the strengthening of CONAMA. There is a strong
commitment on the government's part to environment protection,
and the environmental sector has been undergoing a process of
rapid change and maturation. The government has taken many
important steps to address the issue and improve the previously
fragmented regulatory and institutional framework for
environmental policy. At this stage however, the institutional
and regulatory framework still requires substantial
strengthening.

3. Related Cases

JAPANAIR case
VENEZ case
SULFUR case
KORPOLL case

Keyword Clusters

(1): Trade Product = MANY
(2): Bio-Geography = TEMPerate
(3): Environmental Problem = Pollution Air [POLA]

4. Draft Author: Marcela Rabi

B. LEGAL Clusters

5. Discourse and Status: AGReement and INPROGress

The government has taken many important steps to address the
issue and to improve the previously fragmented regulatory and
institutional framework for environmental policy. The
government strategy is based on the "polluter pays" principle.
It combines the use of both economic incentives and direct
regulations to promote efficient and sustainable development.
Emphasizing market-based policies, the government, in theory,
favors environmental policies based on market-based instruments.
In practice, however, command-and control regulation is still the
most common approach.

The Chilean constitution in Article 19.8 alludes to the
right to live in an environment free from contamination. Also,
it assigns to the government the responsibility for enforcing
this right and guarding the preservation of nature. Beyond this
constitutional right, there was no coherent legislative framework
governing environmental management. Instead, there was a
proliferation of sectoral ad-hoc regulation affecting the
environment. Generally action was only taken to address
particularly severe localized problems, regulations were
incomplete, overlapping, and in part contradictory. As a result,
there are more than 2,000 specific environmental regulations
contained in about 700 laws and decrees. There is often
uncertainty about the validity of and institutional
responsibilities for regulations, and many regulations are not
effectively enforced.
Formal environmental institutions are relatively new in
Chile. As a result, sector authorities followed their sectoral
interests and have issued regulations that are in many
contradictory cases. The government decided to address
environmental issues not through a large centralized agency or
separate ministry but through a coordinating body. For example,
in 1990, the government created the National Commission for the
Environment (CONAMA, Decree 240/June 5, 1990, replaced by Decree
444/October 9, 1991) as a small environmental agency to
coordinate and implement national environmental policies,
strategies, and action plans. In the same year, the government
created a Special Commission for Decontamination of the
Metropolitan Region (CEDRM) under the Ministry of the Interior to
address the high levels of pollution in Santiago (Decree
349/1990). In 1994, Chile's parliament passed the Basic Law
about the Environment (Law 19.300), which went into effect on
March 1, 1994. The Basic Law establishes a framework for
environmental management in Chile and specifies the details of
the constitutional guarantee to an environment free of
contamination. Similar, the Basic Law establishes Regional
Environmental Commissions (COREMAs). Several initiatives at the
sectoral level have been launched including the establishment of
emission standards for different fixed and mobile sources (see
Table 134-3).
Table 134-3
Environmental Sectoral Regulations
Particulate Emissions from
Fixed Sources Decree 4/1991Regulation of SO2, Arsenic
and Particulate Emissions Decree 185/1991Automotive Vehicle EmissionsDecree 211/1991Source: CONAMA 1994.

It appears that the measures taken over the last three years
are insufficient to lead to a significant improvement in air
quality. However, the decline in air quality has been arrested
despite a continuing increase in population and industrial
activity. Some measures taken are expected to produced air
quality improvements over time.
6. Forum and Scope: CHILE and REGION
Chile is a contracting party or signatory of the major
international environment conventions including the Climate
Change Convention, the Montreal Protocol, the Convention limiting
the movement of hazardous wastes, and the UNEP South-East Pacific
Convention (see MONTREAL case). Chile is involved in the
development of international environmental management standard
(ISO 1400).
USAID is providing assistance, among others, in the area of
biodiversity, and development of environmental quality
indicators. UNDP coordinates technical Assistance under the
Global Environment Facility (GEF).
7. Decision Breadth: 1 (Chile)
8. Legal Standing: LAW
C. GEOGRAPHIC Clusters
9. Geographic Locations
a. Geographic Domain : South America [SAMER]
b. Geographic Site : ANDES
c. Geographic Impact : CHILE
10. Sub-National Factors: YES
11. Type of Habitat: TEMPerate
Air pollution gets worse in the winter months, particularly
May through August. "In this period, particulate concentrations
in Santiago are among the highest in any urban area in the
world.þ What happens is that Santiago metropolitan area stays
inside a gigantic bubble of smog that is due to the thermos
inversions and the limited wind and little rain that limits the
dispersion of emissions from traffic and industry.
D. TRADE Clusters
12. Type of Measure: Regulatory Standard [REGSTD]
13. Direct vs. Indirect Impacts: INDirect
14. Relation of Measure to Environmental Impact
a. Direct Related : YES OILGAS
b. Indirectly Related : YES CHEMical
c. Not Related : NO
d. Process Related : YES Pollution Air [POLA]
15. Trade Product Identification: MANY
16. Economic Data
Due to the necessity to reduce Santiago's air pollution by
enforcing some laws, the economy of the city has been suffering
some adjustment since then. For instance, CEDRM establishes pre-
emergency and emergency measures when air pollution measurements
exceed certain critical levels. The emergency measures include
the closing of schools, restricting the operation of polluting
industries, and limiting the operation of vehicles. Therefore,
when all those activities have to stop, children and students
cannot go to school, industries paralyze their production, and
people have to find another mean of transportation to go to work.
In addition "Santiago banned 2,600 pre-1972 buses, constituting
one-fifth of the bus fleet. Those reforms have helped speed up
transit times, reduce congestion and pollution, increase
occupancy rates, and bring down fares. Also, the new regime has
promoted private investment in two trolley lines in the downtown
area."
17. Impact of Trade Restriction: HIGH
18. Industry Sector: MANY
The mining sector plays a key role in the Chilean economy,
is 55.9 percent of foreign investments, 47.3 percent of exports
and 8.2 percent of GDP. The principal mining activity is the
extraction of copper. With an extraction of 2.0 million tons per
year (1993), Chile is the world's largest copper producer.
Annual extraction is expected to increase to 3.7 million tons by
the year 2000. The mining sector also extracts coal, iron,
gold, silver, molybden, iodine, oil, and saltpeter.
The mining process makes polluting materials that were
previously bound in solid rock accessible to air and water
resulting in the emission of dust at the mining site. The
smelters, which concentrate ore, are an important source of air
pollution with SO2, arsenic, and particulate matter.
19. Exporter and Importer: MANY and MANY
A good way to control air pollution is to introduce
vehicle emission standards. Mexico, for instance, has been
trying to reduce air pollution by adopting vehicle emission
standards. Following Mexico's example, Chile has now started to
import vehicle emission standard from Mexico. In the past Chile
had been importing cars from the Brazilian industry. The reason
for this is that Brazilian cars' production did not offer
vehicles with emission standards.
V. ENVIRONMENTAL Clusters
20. Environmental Problem Type: Pollution Air [POLA]
"The main conventional atmospheric pollutants in Santiago
are total suspended particles (TSP), particle matter smaller than
10 microns (PM-10), carbon monoxide (CO), ground-level ozone
(O3), nitrogen oxides (NOx) and sulphur oxides (SOx)-which
contribute as greenhouse gases to global warming. Air pollution
in Santiago results from a combination of transport (diesel fuel)
and industrial sources. SO2 Originates primarily from industrial
processes. NOx and CO originate primarily from vehicles. TSP
pollution is caused in large part by street dust blown from
unpaved roads, open lands and eroded hillsides surrounding the
city. Diesel buses and industrial sources also contribute
significantly to PM-10 emissions. Conventional urban air
pollutants are considered the most important problem. In
addition, there is atmospheric pollution with toxic substances,
such as lead and hydrocarbons.
21. Name, Type, and Diversity of Species
Name: Many
Type: Many
Diversity: 1,269 higher plants per 10,000 km/sq (Chile)
22. Resource Impact and Effect: HIGH and REGULatory
23. Urgency and Lifetime: MEDium and MEDium
Santiago experiences very high levels of air pollution,
often exceeding guidelines suggested by the World Health
Organization. Air pollution in Santiago causes significant
health damage, including premature death and serious respiratory
diseases. The biggest threat to health comes from fine
particulate matter (PM-10, particles less than 10 microns in
diameter, sufficiently small to penetrate deep into the lungs)
yields health benefits from the reduction of other pollutants.
Beyond pollution control measures currently under implementation,
additional cost-effective options for PM-10 reductions are
available. In the medium term, a focus of air pollution control
strategies on PM-10 is justified.
24. Substitute: Alternative Energy [ALTER]
Chile is developing large hydropower resources, which will
help limit its dependence on imported oil and reduce additional
air pollution. Also, additional uncertainty for the PM-10
compensation system is created by the expectation that a natural
gas pipelines from Argentina to will be available in Santiago
shortly after the last step in the implementation of the emission
compensation system in 1997. The use of gas would be a
substitute for diesel in the industrial sector of Santiago, thus
reducing the air pollution problems.
VI. OTHER Factors
25. Culture: YES
26. Trans-Boundary Issues: YES
Air pollution in Santiago contributes to global
environmental problems, such as global warming and the greenhouse
effect, which are expected to lead to global climate changes.
27. Human Rights: NO
28. Relevant Literature
Arensberg, Walter, M.L. Higgins, R. Asenjo, F Ortiz, and H.
Clark. 1989. "Environment and Natural Resource Strategy
in Chile. Mimeo. Washington, D.C.
Aranda, Carlos F., Sanches , Jose Miguel, J. Angulo, B.
Ostro, G.S. Eskeland. 1994. "Air pollution and health
Effects: A study of Lower Respiratory Illness among
Children in Santiago Chile".
BKH Consulting Engineers and Universidad de Chile. 1992.
"Environmental Management Plan for the Metropolitan
Region of Santiago". Draft Report to the Government of
the Netherlands and Chile.
BKH Consulting Engineers. 1992. "Environmental Management Plan
for
the Metropolitan Region of Santiago". Draft report to
the Comision Especial de Descontaminacion region
Metropolitana, Santiago.
Baumol, William and Wallace Oates. 1988. The Theory of
Environmental Policy, 2d ed. Cambridge: Cambridge
University Press.
Comision Nacional del Medio Ambiente. 1992. "Chile: Informe
Nacional a la Conferencia de las Naciones Unidas sobre
el medio ambiente y desarollo". mimeo.
Eskeland G.S., E. Jimenez and Lili Liu. 1994. "Energy Pricing
and
Air Pollution: Econometrics Evidence from Manufacturing
in Chile and Indonesia", World Bank.
Herendeen, Robert. 1994. "Needed: Examples of Applying
Ecological
Economics". Ecological Economics 9: 99-105
Lutz, Ernest, editor. 1993. Toward Improved Accounting for the
Environment. Washington, D.C.: The World Bank
Ormazabal, Cesar S. 1993. "The Conservation of Biodiversity in
Chile". Revista Chilena de Historia Natural 66: 383-
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O'Ryan, Raul. 1994. "Sustainable Development and the Environment
in
Chile: a Review of the Issues". mimeo.
O'Rayan, Raul Enrique. 1993. "Cost effective policies to improve
air quality in developing countries: case study for
Santiago, Chile". Ph.D. Dissertation, Economics,
University of Carolina at Berkeley.
Ostro, Bart. April 1994. "Estimating Health Effects of Air
Pollution: A Methodology with an Application to
Jakarta". World Bank Working Paper Series.
Ostro, Bart. 1993. "Estimating the Health and Economic Effects of
Air Pollution Control Strategies in Santiago", Chile.
Ostro, Bart. Jose Miguel Sanchez, Carlos Aranda, and Gunnar S.
Eskeland. 1994. " Air Pollution and Mortality: Results
from a Study of Santiago", Chile.
Pearce, David and Jeremy Warford. 1993. World Without End:
Economics, Environment, and Sustainable Development.
New York: Oxford University Press.
Prendez, Margarita, y Jorge L. Ortiz. 1982. "Estimacion de la
fraccion de origen natural en los aerosoles
atmosfericos de Santiago de Chile". Bol.Soc.Chil.Quim.
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Outcomes Associated with Atmospheric Pollution in
Santiago", January.
Shafik, Nemat, and Sushenjit Bandyopadhyay. 1992. "Economic
Growth
and Environmental Quality". Policy Research Working
Paper WPS 904. Washington, D.C.: The World Bank.
Silva, Marcela, Vera Daher, Marta Adonis and Lionel Gil. 1993.
"Dano Cromosomico en el cariotipo humano provocado por
agentes cacinogeneticos del aire de Santiago" Revista
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in Chile". mimeo.
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Control Measures for Santiago", Chile, December.
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Eskeland. 1994. "Simulacion de los efectos de
estrategias de control de emissiones sobre las
concentraciones de contaminantes atmosfericos en
Santigao, mediante un modelo simple de dispercion de
contaminantes".
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"Sustainable Development: Changing Production Patterns,
Social Equity and the Environment". Santiago.
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WHO/UNEP. 1992. Urban Air Pollution in Megacities of the World.
World Health Organization, United Nations Environment
program. Blackwell, Oxford.

References

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