Market instruments have been often proposed with the aim of improving the efficient allocation of use rights over natural resources. This article analyzes the potential of market mechanisms in the field of water resources and focuses attention on the experience of Chile, one of the few cases in which water markets have been implemented on a wide scale. Evidence from the Chilean case is discussed in order to verify theoretical hypotheses and to outline the potential benefits but also the many drawbacks of these instruments.Key words: Water policy, water markets, tradeable permits.JEL classifications: Q25, Q58.Parole chiave: Risorse idriche, mercati ambientali, permessi trasferibili.
