Institutional and Organizational Arrangements for Water Markets in Chile

Abstracts

Chile is one of the few countries that has encouraged the use of markets in water resource management. Market allocation in Chile is possible, in part, because a system of transferable water-use rights was reestablished in 1981. These rights are independent of land use and land ownership, thus trading of water rights is fairly unrestricted. The codification of these water-use rights coincided with a series of reforms in the Chilean economy, including privatized land rights and liberalized trade. Although Chile’s water rights system is unique, it faces water resource management challenges that are very similar to those in other countries. Increased population and income in Chile’s urban areas have created increased urban demand for water. In addition, industrial and residential pollution are overburdening the assimilative capacity of many of Chile’s rivers.