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Economic Value of Water in The Aconcagua River Basin, A Comparison Between Agriculture and Mining Sectors

IWRA World Water Congress 2017 - Cancun Mexico
3. Water security in a changing world
Author(s): Eric Figueroa
Neil McIntyre
Jim Smart

Eric Figueroa
Angloamerican
eric.figueroa@angloamerican.com
Neil McIntyre
The University of Queensland
n.mcintyre@uq.edu.au
Jim Smart
Griffith University
j.smart@griffith.edu.au


Keyword(s): water value; trade-market; economics
Article:

Abstract

The Aconcagua River Basin (ARB) is one of the most important rivers of the central zone in Chile, providing water for agriculture activities, mining sector and human consumption. During the last five years, social and economic development have been undermined in ARB, mainly due to a decreasing water supply (drought and climate change), increasing water consumption (population growth and new water requirements from mining and agriculture sectors), low-efficiency irrigation systems, and limitations of the water market for managing water and fostering competition fairly. Likewise, the lack of knowledge about the value of water (social, environmental and economic values) is an obstacle for understanding and communicating the impact of these issues and how they may be managed by new approaches for allocating water. In this context, the Ecosystem Service Approach was conducted to improve the current understanding of water values in Chile, to assess the possibility to apply economic methodology and to estimate the total economic value (TEV) of water in ARB. Likewise, the market price methodology was used as a necessary starting point for the TEV approach and for understanding the water market in Chile. The main results show that the average price of water in ARB, between 2005-2014, it was about 125 UF/LS (principally agriculture and mining sectors). Additionally, the most important drivers that control the water price were the location, the type of water users (quantity, power, interests, and willingness to pay) and the kind of water rights (permanents or conditional).

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