Design of a water option contracts for climate change adaptation in Santiago, Chile

What is it about?

In Santiago (Chile), the total adaptation cost of extreme events can be reduced by an options contract considers leasing water from agriculture to urban uses during droughts, and a water savings options contract to reduce urban water consumption during short-term turbidity events. We find that water options contracts are flexible instruments that improve the distribution of hydrological risks.

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Why is it important?

Climate change-induced extreme events pose an important challenge for urban water managers since predictions indicate that they will increase in frequency and intensity. Thus, designing cost effective adaptation strategies is a publi policy priority.

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