Abstract

The present case study retrospectively analyses the controversial construction of two hydroelectric dams built by the private sector on indigenous territory in Chile during the 1990s. Even when the initial evaluation by the International Finance Corporation found limited negative impacts and the final project included an innovative benefit sharing plan for the indigenous communities, the construction of two dams and the involuntary resettlement negatively affected the cultural survival, social welfare and political autonomy of the Pehuenche indigenous communities, which remain vulnerable more than 30 years later. Based in the collaborative governance approach, our retrospective political analysis analyses the dynamics of the relations between the private sector and indigenous communities project and traces the likely outcomes of a more culturally sensitive participatory project design process. International standards were insufficient due to presence of politically powerful actors that supported dam construction on indigenous lands. In this context, the International Finance Corporation should have actively supervised the process to reduce power asymmetries and ensure that the costs of development are not paid by the most vulnerable groups. To reduce community divisions and strengthen the governance capacity of the Pehuenche communities, impartial facilitation of a deliberative process is proposed.