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The Effect of Regulation Uncertainty on Water-Right Prices: The Case of the Loa Basin in the Antofagasta Region of Chile

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  • Gonzalo Edwards
  • Oscar Cristi
  • Carlos Díaz

Abstract

This paper analyzes institutional arrangements that impose barriers to voluntary water transfers in the Loa basin, in northern Chile, and their impact on water prices in the market. We focus on restrictions imposed by the Chilean Water Authority (Dirección General de Aguas: DGA). These affect changes in water-diversion location and changes in the nature or type of water use. We hypothesize that these restrictions help explain why mining companies instead of acquiring additional water rights in the market prefer desalination, in spite of the high relative prices. With data for the Antofagasta Region, in Northern Chile, we provide evidence to support this hypothesis.

Suggested Citation

  • Gonzalo Edwards & Oscar Cristi & Carlos Díaz, 2012. "The Effect of Regulation Uncertainty on Water-Right Prices: The Case of the Loa Basin in the Antofagasta Region of Chile," Documentos de Trabajo 421, Instituto de Economia. Pontificia Universidad Católica de Chile..
    • Handle: RePEc:ioe:doctra:421
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    File URL: https://www.economia.uc.cl/docs/doctra/dt-421.pdf
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    References listed on IDEAS

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    1. Jedidiah Brewer & Robert Glennon & Alan Ker & Gary Libecap, 2007. "Water Markets in the West: Prices, Trading, and Contractual Forms," ICER Working Papers 30-2007, ICER - International Centre for Economic Research.
    2. Rosegrant, Mark W. & Binswanger, Hans P., 1994. "Markets in tradable water rights: Potential for efficiency gains in developing country water resource allocation," World Development, Elsevier, vol. 22(11), pages 1613-1625, November.
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    Cited by:

    1. Edwards, Eric C. & Cristi, Oscar & Edwards, Gonzalo & Libecap, Gary D., 2018. "An illiquid market in the desert: estimating the cost of water trade restrictions in northern Chile," Environment and Development Economics, Cambridge University Press, vol. 23(6), pages 615-634, December.

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    More about this item

    Keywords

    Desalination; water markets; water rights; water regulation;
    All these keywords.

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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