How Much Does Water Management Cost? The Case of the Water Market in the Ñuble River of South-Central Chile
1
Water Resources Department, CRHIAM Center, ANID/FONDAP-15130015, Campus Chillan, College of Agricultural Engineering, University of Concepción, Av. Vicente Méndez 595, 3812120 Chillán, Chile
2
Department of Industrial Engineering, University of Concepción, Edmundo Larenas 215, 4070409 Concepción, Chile
*
Author to whom correspondence should be addressed.
Academic Editor: Francesco De Paola
Water 2021, 13(3), 258; https://doi.org/10.3390/w13030258
Received: 11 November 2020 / Revised: 12 January 2021 / Accepted: 12 January 2021 / Published: 21 January 2021
(This article belongs to the Special Issue Analysis, Evaluation and Optimization of Infrastructures Serving Water Systems)
Economic and population growth has increased the demand for freshwater worldwide, generating pressure on the environment and creating conflicts among users. Water markets have emerged as a solution for managing this resource, and Chile has been a pioneer in implementing this approach. However, most Chilean water markets are inefficient due to incomplete information, the poor flexibility of the water distribution system, and high transaction costs. This study analyzes the Ñuble River water market and estimates the economic and social costs of its inefficiencies through a methodology based on the marginal profitability of water, which simulates the operation of a perfect market for the Ñuble River irrigation system. Net benefit losses from market inefficiencies were estimated at 7.6 million dollars annually, which is equivalent to a 25% increase in the net returns of the current river water distribution strategy. Losses of economic benefits are even greater as the availability of water flow decreases. This is important considering that in the last decade the water flows of the Ñuble River have decreased by more than 30% compared to their historical average.
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Keywords:
transaction costs; imperfect market; water administration; water market; proportional water distribution
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited
MDPI and ACS Style
Buzolic, B.; Arumí, J.L.; Jimenez, J. How Much Does Water Management Cost? The Case of the Water Market in the Ñuble River of South-Central Chile. Water 2021, 13, 258. https://doi.org/10.3390/w13030258
AMA Style
Buzolic B, Arumí JL, Jimenez J. How Much Does Water Management Cost? The Case of the Water Market in the Ñuble River of South-Central Chile. Water. 2021; 13(3):258. https://doi.org/10.3390/w13030258
Chicago/Turabian StyleBuzolic, Bratian, José L. Arumí, and Jorge Jimenez. 2021. "How Much Does Water Management Cost? The Case of the Water Market in the Ñuble River of South-Central Chile" Water 13, no. 3: 258. https://doi.org/10.3390/w13030258
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