¿Sequía o Saqueo? Scarcity, Power, and Inequality in Chilean Water Markets

“No es sequía, es saqueo” (it’s not drought, it’s plunder) is a common phrase in activist circles arguing that not just drought threatens Chile’s water resources, but rather a market-based model that results in an extremely unequal distribution of water. This phrase starkly contrasts the worldwide acclaim Chile—the only country with fully-privatised water rights—has received for its model’s potential to combat worsening water scarcity. Despite these opposing viewpoints and their implications for water markets globally, empirical understanding of how scarcity and inequality impact Chile’s water markets remains limited, especially on a broader geographic and temporal scale. We draw upon a dataset of nationwide water rights transactions, combining them with Standardised Precipitation Index data to identify water scarcity’s impact on market outcomes. We then employ network analysis to quantify market power and inequalities across time and space. We find that whereas there is no relationship between scarcity and market outcomes, a small group of agents dominates the market through involvement in the vast majority of transactions, ownership of the lion’s share of water volume, and strong tendency to trade with one another. Our results highlight the need for a new water policy model that allocates rights more sustainably and equitably