Date of Original Version
Abstract or Table of Contents
In 1981, the military government of Chile passed a new water code, based largely on the principles of neoliberal economics that had guided the policies of the government and the 1980 constitution. The idea behind the new water code was that if the government enabled a free market for water rights, water resources would eventually be allocated to their most valued use. This hypothesized efficiency, however, has failed to come to fruition in many parts of Chile, as evidenced by many empirical analyses conducted in different river basins. I argue that this failure was caused in large part by the transaction costs inherent in an unconstrained market, and also by the natural variance in geography and rainfall throughout Chile.