Abstract
Water has unique features, which distinguish it from other natural resources. These characteristics usually result in legal systems in which water belongs to the public domain, but rights granted to economic agents to use it are protected under constitutional guarantee of private property. The allocation and retention of water rights are always contingent upon putting them to a socially recognized beneficial use. For an increasingly scarce resource, new demands can only be satisfied by transferring water rights from existing uses. To deal with the problem of reallocation, countries have to decide whether to use administrative mechanisms or water markets. For the sustainable and efficient functioning of water markets, it is necessary to have an institutional and legal system that is compatible with water marketing as well as with the nature of the water resource itself. A water market without regulations to protect the resource base, third parties and the environment, and to prevent monopolization, will result in uncontrolled private appropriation of a scarce resource and problems in related markets rather than in efficient resource allocation. Source: Solanes, Miguel and Jouravlev, Andrei, “Water rights and water markets: lessons from technical advisory assistance in Latin America”, paper prepared for the 19th Congress of the International Commission on Irrigation and Drainage (ICID), Santiago, Chile, Economic Commission for Latin America and the Caribbean (ECLAC), September 2005, unpublished. Published in 2006 by John Wiley & Sons, Ltd by permission of the Economic Commission for Latin America and the Caribbean.