Conflict over water is a significant phenomenon in many parts of the world where globally linked neoliberal economic activities encroach on the lands of indigenous peoples. This case study from Chile examines how water scarcity affecting indigenous agricultural communities in the Chilean Altiplano has been exacerbated by legally sanctioned mining-related practices. Notably, the legal framing of the 1981 Water Code promotes private ownership of water rights and enhanced mining activity usually at the expense of the ancestral territorial rights of indigenous communities. In the case of the Atacameño community of Chiu Chiu, a serious decrease in subsistence and agriculture production has been suffered as a consequence of reduced flow in the Loa River, resulting from the water intensive needs and extraction practices of the nearby Chuquicamata mine owned by Codelco, the National Copper Corporation of Chile. Via an analysis of the political ecology of competing rationalities this paper explores how an economic rationality based on utilitarian and reductionist thinking manifested by Codelco has taken precedence locally over a socionatural rationality grounded in holistic thinking and sustainability concerns as articulated by the Chiu Chiu community.