Latin America has more fresh water per capita than any other region on Earth. And yet, it is squandering it. The world's most water-rich region faces a growing paradox: relative abundance alongside real scarcity, made worse by decades of undervaluing the resource.
The region holds four times more water per inhabitant than the global average. Yet 164 million people, one in four, lack guaranteed access to safely managed drinking water, and another 336 million have no adequate sanitation, according to the regional report from the WHO/UNICEF Joint Monitoring Programme. The Andean glaciers, which supply water to 167 million people and generate 85% of the region's hydroelectric power, have lost between 30% and 50% of their surface area since the 1980s, according to Chapter 12 of the IPCC's Sixth Assessment Report.
This is the water paradox documented in the report Valoración del agua: reflexiones y recomendaciones para América Latina y el Caribe [Water Valuation: Reflections and Recommendations for Latin America and the Caribbean], published by the Economic Commission for Latin America and the Caribbean (ECLAC) in 2026 under the coordination of Silvia Saravia Matus. Its diagnosis is as much political as it is technical: the problem is not purely physical or climatic. At its core, it is a problem of valuation. For decades, the region has treated water as though it were infinite, free, and replaceable. And that decision, or rather, that failure to decide, carries an increasingly visible cost.
For decades, the region has treated water as though it were infinite, free, and replaceable. And that decision, or rather, that failure to decide, carries an increasingly visible cost
Undervaluation as implicit policy
When economists talk about undervaluing a resource, they don't simply mean that its price is too low or non-existent. They mean something deeper: a systematic failure to account for all its dimensions. Water is not merely a productive input. It is also a human right recognized by the UN since 2010 through UN General Assembly Resolution 64/292; an essential component of ecosystems; a cultural and symbolic element for indigenous and rural communities; and the backbone of food security, public health, and social stability across every territory.
Treating water as just another input has had concrete consequences. Aquifer overexploitation has reached such extremes that a 2023 study published in Geophysical Research Letters found that massive groundwater extraction between 1993 and 2010, roughly 2,150 gigatons globally, shifted the distribution of land masses and measurably displaced Earth's rotational axis. In Latin America, everyday consequences include accelerating land subsidence in Mexico City and saltwater intrusion into coastal aquifers in the Dominican Republic.
Agriculture accounts for 76% of the region's water use, a share similar to the global average, but with one critical difference from higher-income countries: here, economic growth has not been decoupled from water consumption. In Chile, El Salvador, Jamaica, and Paraguay, water extraction is growing even faster than GDP. In these contexts, water remains a resource to be exploited, not managed.
Three forms of scarcity that feed each other
The ECLAC report introduces an analytical distinction that helps explain why the problem is so hard to solve: there is not just one kind of water scarcity, but at least three distinct forms that often coexist and reinforce one another.
There is not just one kind of water scarcity, but at least three distinct forms that often coexist and reinforce one another
The first is physical scarcity, the most intuitive kind: less available water due to drought, climate variability, or the structural overexploitation of river basins and aquifers. Many major cities and strategically important productive zones across the region already operate with availability below 500 cubic metres per person per year during the dry months, levels which are comparable to those in North Africa or the Middle East.
The second is scarcity due to pollution: there is water, but it cannot be used because it has been degraded by untreated industrial, agricultural, or urban discharges. Only 46% of the region's wastewater is safely treated, according to UN SDG monitoring data. The cost of that pollution falls paradoxically on the poorest, who must pay for filters or bottled water to compensate for others' regulatory negligence.
The third, and perhaps the hardest to solve, is institutional scarcity. Silvia Saravia Matus, the report's coordinator and head of water resources at ECLAC's Natural Resources Division, made this point clearly at the Fifth Regional Water Dialogues, held at ECLAC's headquarters in Santiago de Chile in October 2025, which brought together government representatives, regulators, academia, and civil society from across the region: "The gap preventing us from achieving water security is not only financial, but institutional and one of implementation. In Latin America and the Caribbean, water and sanitation plans tend to identify priorities, but rarely translate them into viable investment portfolios." Along these lines, water authorities frequently lack ministerial standing, management is fragmented across multiple institutions with no effective coordination, and the result is deteriorating infrastructure, with distribution network losses averaging 40% across the region.
Water authorities frequently lack ministerial standing, management is fragmented across multiple institutions with no effective coordination
The unresolved debate: price or right?
At the heart of the report lies a tension that global water policy has spent decades failing to resolve cleanly. In 1992, the Dublin Conference established that water has an economic value in all its competing uses and should be recognised as an economic good. That statement had enormous consequences: it opened the door to the privatization of services, the creation of water-rights markets, and the application of market logic to the management of a resource that many communities consider sacred, communal, or simply inalienable.
In some cases, the introduction of pricing improved efficiency. In many others, it produced exclusion, concentration, and conflict
The results were, in the report's own words, mixed. In some cases, the introduction of pricing improved efficiency. In many others, it produced exclusion, concentration, and conflict. The Cochabamba water wars of 2000, the protests in Buenos Aires against privatized services, and the campaigns to return water management to public hands in Paris and Berlin all reflect the same social rejection of allowing the market to decide who drinks and who doesn't.
In 2010, the UN General Assembly sought to resolve the matter with Resolution 64/292, which recognised access to safe drinking water and sanitation as an essential human right. Several Latin American countries enshrined it in their constitutions: Bolivia in 2009, Uruguay in 2004. But formal recognition has been slow to translate into coherent policy.
The ECLAC report's position on this tension is nuanced but clear: valuing water is not the same as commodifying it. In Saravia Matus's words, what is needed is "a comprehensive, equality-focused valuation that recognizes the social, environmental, and economic value of water and prioritizes those who need it most," combined with economic instruments that send the right signals, tariffs, fees, incentives, and standards, to reflect scarcity and fund source protection. Pricing can be a useful tool, but it cannot substitute for democratic debate, nor can it ignore the cultural and ecological values that have no monetary expression.
Three countries, three models, none sufficient on its own
To illustrate how that debate plays out in practice, the report examines in detail the cases of Chile, Costa Rica, and Mexico. The three represent radically different approaches and offer valuable lessons precisely through their contrasts. Their national officials also took part in the Dialogues, where they provided firsthand perspectives on the achievements and limitations of each model.
Chile is the most radical experiment in applying market logic to water. Since the 1981 Water Code, water use rights have been private property: transferable, perpetual, and separate from land ownership. The state charges nothing for water use: it is the rights holders themselves who set prices through market transactions. In the arid north, one litre per second can cost more than $100,000. In the rainy south, less than $500.
The problem is that the market has also produced extraordinary concentration. According to a 2020 study by Correa, Aguirre, and Vergara, published by the Centro de Producción del Espacio at the Universidad de Las Américas de Chile and cited in the ECLAC report, 1% of rights holders control approximately 80% of the country's total concession volume. Rodrigo Sanhueza, Water Director General at the Ministry of Public Works, acknowledged that legacy at the same gathering: since 2022, water basins are required to develop strategic resource plans, human supply is prioritized, and the country is moving toward temporary water rights, subject to review in light of actual hydrological conditions, thus moving beyond the original model of perpetual concessions. The focus, he explained, is on reducing litigation and equipping the regulator with tools to make decisions with predictability.
The conclusion of the report and of the national managers themselves is consistent: no model is sufficient on its own
Costa Rica represents the most coherent model for linking charges to sustainability. Since 2006, it has applied a volumetric use fee differentiated by type of use and source, with two explicit components: the value of use and the value of the environmental service of water protection. Revenue is reinvested back into the sector. José Miguel Zeledón, Water Director at Costa Rica's Ministry of the Environment, described how the system grew from collecting roughly $200,000 annually to between $20 and $25 million annually over two decades, owing to gradual rulemaking and legal stability despite ongoing litigation. His central lesson was that more than the model itself, "what matters are clear, sustainable rules that outlast changes in government". Between 2019 and 2023, fee-funded funds financed 298 environmental services contracts that protected more than 18,000 hectares, according to data from Costa Rica's Water Directorate.
Mexico combines a system of differentiated charges by water availability zone, four zones with distinct rates for surface and groundwater, regulated under the Federal Law on Rights, with earmarked revenue streams: environmental services, hydraulic infrastructure, irrigation modernisation, and sanitation. However, it maintains a full exemption for the agricultural sector within its concession volume, making it the only one of the three countries that does not charge for agricultural water use, thus undermining the efficiency signal precisely in the sector that consumes the most water.
The conclusion of the report and of the national managers themselves is consistent: no model is sufficient on its own. Market prices require robust regulatory frameworks to prevent concentration and exclusion. Regulated prices need transparent institutions with real enforcement capacity. And payments for environmental services depend on stable funding and social trust. Mauro Gutiérrez, president of the Association of Water and Sanitation Regulatory Bodies of the Americas, added a pointed warning: prices lose their effectiveness when users have no idea how much water they actually consume or what they pay for it. Without real metering and clear communication, economic signals fail to influence everyday behaviour.
Without real metering and clear communication, economic signals fail to influence everyday behaviour
The missing institutional framework
Beyond the debate over pricing, the report argues that the region's central problem is one of governance. To structure its diagnosis, ECLAC proposes a framework of institutional capacities it calls TOPP: with technical, operational, policy, and proactive dimensions. The first encompasses robust water monitoring systems and up-to-date registries of water rights. The operational category covers everything from the effective application of tariffs and fees to enforcement and sanctions mechanisms, which are today systematically weak. The policy dimension involves water authorities with real standing and cross-sector coordination. And the proactive or forward-looking dimension means anticipating future scenarios rather than managing crises reactively.
Ethel Cabrera, president of El Salvador's Water Authority, offered perhaps the most illustrative example of how to build that institutional capacity from scratch. El Salvador created a Water Finance Directorate to verify volumes and collect fees, designed the system through a participatory process incorporating poverty coefficients, type of use, and physical conditions, and directed a portion of the revenue to rural operators, schools, and health units to build social acceptance. The result was unexpected: although the law allowed a full year for regularization, "people started paying immediately". Social legitimacy cannot be decreed: it is built through transparency and visible benefits.
The cost of lacking these capacities is concrete. Universalizing safe water and sanitation access across the region would require investing 1.38% of regional GDP annually for ten years, according to ECLAC's own estimates. Flood control would require an additional 0.28% through 2030. Current public spending is clearly insufficient to meet these needs, and much of the little that is allocated never actually gets spent.
What has no price is not without value
There is one dimension of the report that is worth keeping in sight amid all the economic and institutional analysis. The document insists that valuing water cannot be reduced to what people are willing to pay for it. In many communities, water carries a symbolic, spiritual, and cultural value that resists monetary translation but is no less legitimate for that. Marisa Mar Pecero, representative of Mujeres en Agua ALC, put it plainly: the invaluable "does not always need to be quantified, but it does need to be recognized". She proposed starting from a water ethics that acknowledges the existence of others, with their values and needs, and that grounds participation in solid legal principles. The human right to water, she stressed, comes first.
From the academic sphere, Christopher Dalbom of the Tulane Institute on Water Resources Law and Policy drew attention to a new frontier of water undervaluation that current regulatory frameworks have yet to address: the expansion of data centres and artificial intelligence is significantly increasing water and energy consumption, frequently with tax exemptions and public infrastructure expansions that shift costs onto society as a whole while the benefits remain in private hands. The existing regulatory framework, he noted, rests on a fiction: protection arrives too late, through litigation, rather than through preventive safeguards.
The report's concluding argument is that none of the approaches examined, conventional economic, ecological, or institutional, is enough on its own. Latin America's water crisis is too complex for universal solutions. What is universal, ECLAC concludes, is the need to abandon the systematic undervaluation of a resource that sustains all forms of life. If valuation, economic instruments, and institutional capacities are brought together, Saravia Matus argued, "water valuation will cease to be a technical exercise and become a state policy that effectively safeguards the human right to water, reduces risks, and attracts sustainable investment to the region". Water is worth more than what we pay for it. And the cost of continuing to ignore that grows every year.
