Abstract

Chile was an early adopter of water rights (WR) markets. WR markets have been documented and are driven by demand from relatively high-valued water uses. WR markets in Chile face many challenges in order for it to deliver its full potential as an efficient water allocation mechanism. The objective of this chapter is to apply the WMRA framework to detect those issues that must be considered in order establish an effective water allocation mechanism based on a WR market. The analysis indicates that although weaknesses exist, Chile has significantly ad-vanced in achieving Trade Step 2 of the WMRA framework.