Author(s): Eric Figueroa, Neil Mcintyre, Jim Smart
Linked Author(s): Eric Figueroa
Keywords: Water value, trade-market, water economics, water management
Abstract: The Aconcagua River Basin (ARB) is one of the most important rivers of the central zone in Chile, providing water for agriculture activities, mining sector, and human consumption. During the last five years, social and economic development have been undermined in ARB, mainly due to a decreasing water supply (drought and climate change), increasing water consumption (population growth and new water requirements from mining and agriculture sectors), low-efficiency irrigation systems, and limitations of the water market for managing water and fostering competition fairly. Likewise, the lack of knowledge about the value of water (social, environmental and economic values) is an obstacle for understanding and communicating on the impact of these issues and how they may be managed by new approaches for allocating water. In this context, the Ecosystem Service Approach was conducted to improve the current understanding of water values in Chile, to assess the possibility to apply an economic methodology and to estimate the total economic value (TEV) of water in ARB. Likewise, the market price methodology was used as a necessary starting point for the TEV approach and for understanding the water market in Chile. The main results show that the average price of water in ARB during 2005-2014, which is about 125 UF/LS (approximately 160, 000 US dollars per Gigalitres in a year), principally in agriculture and mining sectors. Additionally, the most important drivers that control the water price are the location, the type of water users (quantity, power, interests, and willingness to pay) and the type of water rights (permanents or conditional)
Year: 2017