More than 100 environmental, social and indigenous organisations protested in the Chilean capital, Santiago, this week to demand that the state regain control of the management of water, which was privatised by the then dictatorship in 1981.

More than 6,000 people took part in the peaceful "great carnival march for the recovery and defence of water" on Monday, according to the organisers, one of whom was former student leader Camila Vallejo, who plans to run for parliament as a Communist party candidate.

The demonstrators delivered a letter to President Sebastián Piñera, complaining that the water shortages affecting local communities were due not only to persistent drought but to structural problems in the policies governing the exploitation of natural resources.

"We have discovered that there is water in Chile, but that the wall that separates it from us is called 'profit' and was built by the [1981] water code, the constitution, international agreements like the binational mining treaty [with Argentina] and, fundamentally, the imposition of a culture where it is seen as normal for the water that falls from the sky to have owners," the letter says.

"This wall is drying up our basins, it is devastating the water cycles that have sustained our valleys for centuries, it is sowing death in our territories and it must be torn down now," it adds.

The mining industry, which uses significant quantities of water, is one of the main pillars of the Chilean economy, with copper exports accounting for one-third of government revenue.

"There is a water crisis at the national level," said indigenous leader Rodrigo Villablanca, president of the Diaguita Sierra Huachacan community in northern Chile and spokesman for the "Hope of Life" ecological and cultural committee.

The movement is fighting for the repeal of the water code, adopted by the 1973-90 dictatorship of Augusto Pinochet, which made water private property by granting the state the right to grant water use rights to companies free of charge and in perpetuity. The code allows water use rights to be bought, sold or leased, without taking into consideration local priorities for water use, the organisations complain.

"Our main demand is the repeal of the water code that is denying us the right to have water to live," said Teresa Nahuelpán, an activist with the Movement for the Defence of the Sea in Mehuín, 800km (about 500 miles) south of Santiago. The code "favours profits and the wealthy", she said.

The organisations are demanding the repeal of the bilateral mining treaty signed by Chile and Argentina in 1997, which they say hands foreign mining corporations all the water and energy they need for their operations along the border between the two countries.

The treaty stipulates that the public institutions of both countries act in a co-ordinated manner with a view to facilitating mining investment and the development of the industry. It says public authorities will permit the use of "all kinds of natural resources, inputs and infrastructure".

Villablanca said: "The binational mining treaty hands more than 4,000km of [Andes] mountains to transnational corporations." The agreement "allows the extraction of natural resources and the use of water to be granted practically free of charge to companies", he added.

"In Latin America, the biggest concentrations of freshwater are in the Andes mountains," home to 80% of Chile's indigenous communities, who "depend on these sources of water for survival", he said.

"These mining and water use concessions [to private interests] are inheritable; they are forcing the highlands communities to retreat. Indigenous people have been moving out and small-scale mining and livestock-raising, on which the communities depended for subsistence, have been hurt," Villablanca added.

"The aim of the march was to have an impact on public opinion, in Chile as well as at an international level," he said. Nahuelpán added: "The march is a wake-up call for people, and a demand for water that allows us to continue living, that gives us life. Logging companies in the south have also caused a great deal of damage [to Mapuche communities]. The territories are drying up; there are many communities that have no water, and that are getting water from tanker trucks."

The Mapuche are Chile's largest indigenous group, numbering about 1 million in a country of about 17 million people. They represent 87% of the native population, and live mainly in the south of the country, where Mapuche communities frequently clash with logging companies over land and water.

The latest setback for the organisations was a supreme court verdict this month that ruled it was not illegal for a mining company to not pay for extracting groundwater on land it had been granted under concession because it was merely "exploring" for minerals in the water, rather than "exploiting" the water.

Environmentalists warn that the ruling could set a legal precedent for mining corporations to use water without any controls, even until a water source has been exhausted.

The ruling was in favour of the Sociedad Legal Minera NX Uno de Peine company, which Chile's water authority had denounced for using groundwater without a permit. But the supreme court ruling said the groundwater pumping operation in question was authorised by the exploration concession and did not require a permit from the water authority, as stated in article 58 of the water code.

"We're talking about water that was in the basins, which enables Chile's valleys to survive," said Villablanca. "In a word, they are leaving all of Chile without water."