As Chile Starts To Think Green...A Town Takes Up The Cause

The planners at Celulosa Arauco y Constitucion, Chile's largest forestry company, didn't exactly have the black-necked swan in mind when they chose a site along the Cruces River outside Valdivia for their pulp plant. The site was acquired years ago because of its proximity to the river, the railway, and the 90,000 hectares of forests planted by the company, known as Celarauco, over the past 10 years.

But not all Valdivians rolled out the red carpet when Celarauco announced last year that it would build a $1 billion plant that would employ 3,500 during construction and 350 after that. Some worry about the environmental effects of making pulp. Their biggest concern is effluents pouring into the river's ecosystem, which includes marshes that house Chile's only bird sanctuary. The river is also the heart of Valdivia's tourist industry. Alexander Guerrero, a tourist guide, fears that if the rivers are polluted, Valdivia will lose its charm for tourists. "People don't know what effects the plant will have," he says.

For the first time, such concerns are carrying weight. Celarauco in February achieved the dubious honor of being the first company in Chile to have its voluntary environmental impact study rejected because of missing information. The technical committee of the regional environmental authority, Corema, tossed back the study on the grounds that it didn't offer enough data on water treatment and dump sites. Corema later accepted an amended study and indicated that the project will be approved once the company shows it can comply with additional requirements.

For its part, Celarauco says it's taking all precautions to ensure the river is protected. That's both company policy and good business sense, says project director Victor Renner: "In today's world, no one will buy paper made in a way that contaminates the environment." Celarauco is a subsidiary of COPEC, a forestry and oil conglomerate run by Chile's Angelini family, and New Zealand's Carter Holt Harvey Ltd., controlled in turn by International Paper.

WORST CASE. The Celarauco case is one of several squabbles that may signal a new era. Chile has become famous as the free-market success story of Latin America; now it could become a trendsetter in the realm of the environment. The Celarauco case "is significant because a company the size of COPEC isn't used to submitting to [Corema] in environmental matters. It must seem crazy, unheard of," says Pio Infante, a member of the technical team that rejected the study.

Another sign of the times was the Central Bank's attempt late last year to figure the depletion of natural resources into its gross domestic product accounts. Its first such report predicted that in a worst-case scenario, native forests will disappear in 20 years. The bank was bashed by business and government alike for being alarmist. Bank President Roberto Zahler Mayanz vows that the studies will continue but says they will be presented in a way to avoid causing a ruckus: "It is the Central Bank's responsibility to provide the numbers, but not set policy or lead the debate."

San Alfonso is a tiny town on the slopes of the Andes. It has 600 inhabitants and, on a sunny day, up to 20,000 tourists. The population is divided between small farmers and upper-middle-class Santiagoans who commute. But they've been united by the possibility that a pipeline transporting natural gas from Argentina into Santiago might pass through the town.


Corema O.K.'d the pipeline project at the end of January but stipulated that Gas Andes, a six-company consortium led by Nova Corp. of Canada, take more steps to protect the environment, especially in a national monument area near San Alfonso. If those steps prove too costly, Corema said the pipe could run through the town instead.

The townspeople's petition against that ruling, arguing that a pipeline through San Alfonso would be too dangerous, was heard in early April, and a ruling is expected by June. Gas Andes, in turn, has appealed the restrictions Corema included with the approval. This is the first time private citizens have contested a Corema ruling, and if they succeed, other groups are sure to pick up the banner.