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March 20, 2009

When the Market Controls Access to Water

The devastation that occurs when water is treated as a free-market commodity, and not as a public resource, can be vividly seen in the Chilean town of Quillagua. As described by the New York Times, “Quillgagua is among many small towns [in Chile] that are being swallowed up in the country’s intensifying water wars.”

In the Quillagua region in the north of the country, mining companies have bought up scarce water rights, leaving farmers and individuals to fend for themselves. Where farmers once grew corn and alfafa, nothing grows because the river is dry and, when it does run, is polluted. Over the past two decades, so many villagers have migrated elsewhere that only one in five remain.

In the southern part of Chile, the free-market approach to water allocation has had similar effects. For example, a single electricity company from Spain has bought up 80 percent of the water rights: absentee investors have privileged access to the water over local residents.