Abstract

This investigation presents a new approach to estimate the costs resulting from the introduction of environmental flows in the arid Huasco River basin, located in the Atacama Region of Chile, one of the most sophisticated private water markets worldwide. The aim is to provide information to the water users, who hold the right to decide on water use, and thereby support the inclusion of environmental flows into decision-making. Costs are estimated by calculating the loss of agricultural productivity resulting from a trade-off between users and environmental flow requirements in times of water scarcity. Based on environmental flow requirements calculated by International Union for Conservation of Nature (IUCN), and hydrological supply-and-demand modelling using the Water Evaluation and Planning (WEAP) model, economic parameters of water productivity are calculated for the main economic sectors and then included in hydrological analysis. The study presents concrete costs that might be imposed on the water users during times of water scarcity, and confirms that there are significant variations in water productivity between different sectors.