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Sovereign Man Notes from the Field Date: May 12, 2011 Reporting From: Santiago, Chile

In Business on May 12, 2011 at 7:01 pm

Sovereign Man

Notes from the Field
Date: May 12, 2011
Reporting From: Santiago, Chile

[Editor’s Note: Dr. John Cobin, a long-time resident of Chile, is filling in for Simon today who is out looking at property. Photos are available on the site.]

I was driving through the Chilean countryside recently and it dawned on me that in most of Chile, even the relatively “dull and drab” parts are downright beautiful.

I have been to 60 countries, including extended visits to Guatemala, Jordan, Iran, Italy, and New Zealand, and have lived in both the USA and Chile for many years. I have literally been almost everywhere in the latter two countries, seeing all the best spots, and I believe Chile to be far more beautiful.

Why Chile is so often neglected by tourists and expatriates compared to other countries is a mystery to me. Chile is a wonderful, modern, civilized place. It is great to live here, and the free market reforms continue to spur strong economic growth.

Chile is a country of sprawling, magnanimous, diverse and ubiquitous beauty, and there is no place quite like it. It’s ironic that one of the ‘dullest’ places in Chile looks like California’s Central Valley. Imagine being in a country where the ‘ugliest’ part looks like central California!

So where is this paradise? The southern Central Valley is found from Los Andes, about 100 miles north of Santiago, down to Los Angeles, about 350 miles south of Santiago. It is basically a mirror image of California’s Central Valley from Bakersfield up to Red Bluff.

In this “Central Valley” of Chile, everything is grown. There are plenty of cows, chickens, pigs, horses and other livestock (mainly sheep and goats), too. Dairy is big business. Wine is an even bigger business. Oranges, pears, apples, avocados, cherries, plums, peaches, nectarines, grapes, watermelons, etc.

The climate is quite nice too, so long as long, dry, often hot, summers are not a problem for you. You’ll hardly ever see a snowflake in winter unless you go up into the higher elevations nearby.

A person who likes central California’s scenery and weather ought to consider enjoying some choice property near Chile’s heartland of agricultural production. Great places to live and farm can be found within 2-3 hours of Santiago’s supplies, services, and great medical care.

But the most important aspect of the Chilean heartland is that it can be had for reasonable prices. Bear in mind, this is a developed, first world country… but you’re not paying first world prices.

To give you an example, I recently saw a 7-acre property with a modest home, about 2 hours south of Santiago, for $76,000. Larger farms (100+ acres) can be purchased for a few thousand dollars per acre.

In Chile, the thing to always remember is that water rights are separate to land rights; in other words, you purchase a property, and often have to separately purchase water rights.

To give you an example, Simon is out right now looking at a large property on one of Chile’s magnificent rivers. The property doesn’t automatically come with rights to use the water that’s in the river, though.

Chile has a market-based system to allocate water rights for a collective body of water– the owners of all the properties which border the river get together and bid for rights to a certain volume of water, essentially a certain number of gallons per minute that they can take from the river.

If one farmer expects to use more water, he or she must bid more. If the river has a limited capacity and demand for the water rights exceeds the river’s supply, then the price goes up… that’s how the market works. In this way, you can be use that the water will be put to its most economic use.

Furthermore, these water rights are held in a separate title and can be bought, sold, and transferred just like title to property. Typically, water rights and land rights are sold together in a package… but not always.

This system is quickly becoming THE standard that many other countries are adopting to allocate their water rights– one of the many ways that Chile is becoming a model to the world.

Dr. Cobin’s book, Life in Chile: A Former American’s Guide for Newcomers , is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost ever topic imaginable for immigrants. This knowledge is applied in his valet consulting service, where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc.

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