In 1995 the government of Chile hosted a study tour consisting of professionals from the World Bank and from developing countries. This report draws together the observations of one participant and the observations of two Chilean professionals prominent in the Chilean water sector.
... See More + The issue of water markets, in general and in Chile in particular, has been the subject of heated debate. At one extreme, have been some who have argued that water markets are a panacea; at the other extreme have been those who have argued that water markets have failed in Chile and will fail elsewhere. The Chilean study tour came to the clear and unanimous judgment that both of these extreme positions were wrong. Among its conclusions are: 1) Countries following the open market model must ensure that water is allocated to highest value users and used efficiently; this requires resources management and movement towards the use of market-friendly instruments. 2) Water markets lead to the better use of water in irrigated agriculture and its release to higher-value urban and industrial users. 3) Water markets function best when rivers are well regulated (hydrologically). 4) Low transaction costs and the consistent and predictable interpretation of water law is essential. 5) The water markets in Chile, though developed during non-democratic political circumstances, are now broadly popular. 6) To deal with market imperfections, water markets need to be supplemented by effective dispute resolution.
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Departmental Working Paper 18297 APR 30, 1998
Briscoe, John; Anguita Salas, Pablo; Pena T., HumbertoDisclosed