# Chapter 4. Applying IPF to Chile’s Infrastructure Project Proposals

This section documents the results of the IPF-based project prioritization for water catchment and road transport projects and compares these results with actual project selection outcomes. The greatest value of the Chile pilot is the opportunity to compare IPF results to project selection informed by CBA to test the analytical demands of IPF inputs, the robustness of outputs, and degree of alignment of IPF results with the outcomes of other approaches. The comparative results show that prioritization outcomes are affected not only by the methodologies in use, but also by the practices and policies of project selection – i.e., how the results of analyses are applied in decision-making.

In this chapter, we first present the IPF mechanics and comparative results of IPF- and MCE-based prioritization for water catchments and follow with IPF construction and comparative results of IPF- and SCBA-based prioritization for road transport projects.

## Water Catchment Projects in Chile

<mark>Water resource management is an important policy priority in Chile with direct impacts on rural and agricultural development and environmental sustainability. Despite an abundance of water resources (overall availability of around 50,000 m</mark><sup>3</sup> <mark>per capita per year), Chile faces water stress due to geographic distribution patterns. Most of Chile’s population lives in arid and semi-arid areas where water availability is low (less than 1,000 m</mark><sup>3</sup> <mark>per capita year) and demand exceeds surface water supply. An increasing need to offset unmet demand by groundwater extraction has led to a significant increase in annual freshwater withdrawals, which has become a key sustainability concern.</mark><sup>12</sup> <mark>Moreover, Chile is projected to move from a level of medium water stress to extremely</mark> high stress in 2040 due to the impacts of climate change.<sup>13</sup> <mark>The erosion and desertification of soils also present a recognized sustainability challenge related to development of the Chilean forestry and agriculture sectors. Deforestation, overgrazing, inadequate crop management, and irrigation practices have resulted in soil degradation affecting nearly half of the territory and 75 percent of productive soils. This increased water stress and soil degradation disproportionally affects the poorest populations, who rely on small-scale agriculture as a critical income source; depend on natural resources for food, fuel, and building materials; and</mark> are typically located in arid rural regions most affected by climate variability and drought.

<mark>As such, there is increased pressure to better manage water resources to ensure water security, meet growing agricultural and industrial demand on water resources, support adequate provision to the poorest communities, and deal with increased water stress associated with the effects of climate change.</mark>

### Water Catchment Project Sample

Projects are typically prioritized within regions (as opposed to the national level) to ensure the disbursement of funding across regions. Since projects are allocated funds region by region, the IPF was also applied at the regional level in four areas: Biobio, Maule, O’Higgins, and Valparaiso.

> 12 Chile’s annual freshwater withdrawals as percentage of internal resources went from 2.3 percent in 1992 to 4.0 percent in 2014.

> 13 Maddocks, Young, & Reig (2015).

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