Bringing Water Markets Down to Earth: Water Rights Trading in Practice, 1980–1995

The 1981 Water Code set up the legal framework for free trading of water rights and left the rest to private initiative. This chapter looks at the results of the water market during its first fifteen years. Chilean water markets have enjoyed good press recently, shining in the reflected glow of the country’s dynamic economic growth. Influential voices within Chile and in the World Bank have praised the Water Code as a model of successful neoliberal reform, showing the benefits of privatization and free markets. Neighboring governments-e.g. in Peru, Bolivia, and Ecuador-have been encouraged by such voices, and in their admiration for Chile’s economy, they have considered copying its water law as well. Unfortunately, these claims for the Water Code’s success are exaggerated and incomplete. They rest on political or ideological beliefs rather than empirical support. A closer look at the evidence shows the Code’s impact to have been uneven, geographically diverse, and quite complicated.