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The Misicuni multipurpose hydraulic project was designed to transfer water from a neighboring watershed to the Cochabamba Valley in the center of Bolivia for domestic, hydropower, and agricultural use. The project involved the construction of a 120 m high large dam and a 19 km transfer tunnel, which negatively affected the rural indigenous host communities that were deprived of productive lands, houses, and livelihoods. This article critically analyzes the process to compensate for harmful effects, demonstrating the existence of divergent knowledge systems, interpretations, and valuing of what was affected and how the impacts had to be compensated. The analysis shows that the compensation was fundamentally a process of negotiation about the meaning and the contested commensuration that was implemented in a context of unequal power relations between state institutions and the indigenous population. This led to unfavorable arrangements for the affected communities. The article details the discussions about impacts, knowledge, and values of key elements of the compensation process and highlights how “compensation” was embedded in the wider struggle over territorial control and natural resource governance. The unreliability of the state institutions worsened the negative impacts for the rural communities because the negotiated outcomes were not always materialized.

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This chapter focuses on how to improve water allocation considering the water user majorities in Andean countries: the needs, capacities, opportunities, and obstacles of the peasant and indigenous communities, and local water management platforms. The water management context and policy debate are first briefly outlined, with a particular focus on watershed management and decentralization. The chapter then discusses the rightsbased orientation of various water policy proposals for improving watershed management, defining four exemplary approaches. A brief overview presents their conceptual underpinning and their practical outcomes for water conflict resolution and integrated water management. The chapter concludes with the presentation of basic elements for analyzing and setting up consensus-oriented water management strategies, and recommendations and process guidelines for user-oriented water policies. F armer-managed water use and production systems form the backbone of local and national economies and food security in most Andean countries, but face increasing problems. 1 Growing demographic pressure contributes to the degeneration of natural resources and local livelihood systems, and the processes of migration, globalization, and urbanization of rural areas, among others, profoundly change the agrarian structure and living conditions. New interest groups enter the territories of local peasant and indigenous communities and often take over a substantive share of existing water resources, thereby neglecting local rules, rights, and agreements. The new water management context leads to increasing inequality, poverty, conflict, and ecological destruction. Consequently, rural communities particularly suffer from the current water crises. Together with other stakeholder groups who lack influence in water policymaking and implementation, they may be characterized as the tail-enders of current water society. Traditionally, water legislation and policies in the Andean countries have paid little attention to locally existing water rights frameworks, their problems, and their solutions. With rapidly growing pressure on water resources and increasing claims and conflicts among multiple use sectors, conventional bureaucratic and free market water allocation approaches seem to have worsened the crisis, instead of contributing to its solution. As in other parts of the world, new policies for the regulation, intervention, and adaptation of water management are being developed as an answer to water crises. These often refer to participation, decentralization, and transferring management to local government. In principle, these could be major steps toward strengthening users' organizations, by granting them greater decisionmaking power and security in their water rights and respecting sufficient autonomy for water management according to their needs and potential. However, in these times of radical state downsizing in the Andean countries, the slogan of participation is often also a facade for the underlying intention to aba...