Abstract

Globally irrigation subsidies are utilized to boost modernization and increase irrigation efficiency. This paper examines the effects of the irrigation subsidy programme in Chile by reviewing 32 years of allocations and exploring the drivers and consequences of the subsidy programme with a clear market approach based on competition and a state risk-free strategy. Our analysis reveals that, despite the flexibility in targeting, the results indicate an uneven allocation to smallholders' detriment, a state inability to identify farmers' needs, market concentration and a bias towards agricultural expansion. As long as the programme remains unaltered, it will threaten agriculture and water resources' sustainability.