Comerciando con incertidumbre: Los mercados de agua en la agricultura Chilena

Abstract

This research examines the effect of uncertainty on farmers' water trading decisions in the Limarí River basin. The results show that farmers who face greater risks from water supply shortfalls, such as perennial crop farmers, will not participate in spot water markets but rather in permanent water rights markets. In addition, transactions will be generated not only by differences in the value of the marginal product of water, but also by differences in irrigation efficiency and for risk sharing motives. The main policy implication is that water rights hoarding may be efficient in a water market when it leads to efficient risk sharing among farmers.