The New York Times recently featured an article about Quillagua, Chile, known in some record books as the driest place on earth, in the Atacama desert. Chile, which has very liberal free market water policies where water rights are considered private property rights that can be bought, traded and sold as any other commodity.
The principle espoused was to ensure efficiency in the use and distribution of water. Water will be allocated, by the free market, for its greatest economic use, and in Chile, water intensive extractive industry like the copper mining are a major economic driving force. We've seen in California, and elesewhere in the US where water is undervalued in the market by a prior appropriation system that encourages use over conservation. In drought-stricken California, water intensive crops such as rice, cotton and alfalfa take up a large portion of irrigated land mass. But farmers may feel compelled to use use extra water to maintain their stake in their historical volume use.
What the Chilean example shows however is lack of environmental regulation involved - the water that does flow to Quillagua is heavily polluted from mining operations upstream.
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Free water, where is free water now?
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