Abstract

We carry out the first analysis on the use of oral price-ascending auctions to allocate water user rights in Chile. With data for 2005-2018, the effects of the 2005-reform of the Water Code on the use of auctions are analyzed. Post-reform, a minimum proportion of the new rights granted were assigned via auction. In fact, 57% of the auctions called were declared void. On the other hand, in several of the auctions that occurred, few participants attended. Moreover, in the auctions with few participants, awards at the minimum bid prices stood out. Hypotheses and evidence about these facts are analyzed. In case the objective of invigorating the use of auctions to assign new water rights remains valid, we pinpoint challenges to be resolved.