Ecosystem Services and the Panama Canal

Environmental specialist Duncan Gromko discusses the ecosystem effects of the Panama Canal and its expansion. 

Lake Gatuan, Panama

Lake Gatuan, Panama

When ships cross the Panama Canal, a series of locks raise them a full 26 meters. Thisprocess requires a lot of water from Gatun Lake – more than 55 million gallons for each ship. To accommodate larger cargo ships, the canal is being expanded, and a bigger canal means bigger water requirements.

But just because humans create demands does not mean nature creates supply. Rainfall in Panama varies significantly depending on the season – during the dry season,  withdrawals from the canal make a significant impact on water levels. Each year, there is a one in fifteen chance that water levels will drop so low that canal operations are restricted.

Since the canal generates an annual US$1.8 billion in fees for the government of Panama, there is a very real economic reason to ensure continued water flow for the canal and the expansion of the canal makes that need even more pressing. As I’ve written about before, forests and other ecosystems play an important role in providing a dependable water supply.

The Panama Canal watershed is 55 percent forested, a 40 percent decline since 1974. In order to maintain water supply to the canal, Panamanian policymakers have created protected areas for two-thirds of the forested canal watershed. A 1997 land-use plan aims to increase forest cover in the watershed through reforestation in order to increase water flows to the canal, particularly during the dry season.

However, a recent study by Silvio Simonit and Charles Perrings (sorry, the full article is behind a pay wall) says this reforestation initiative may be slightly misguided. The relationship between ecosystems and local hydrology is much more complicated than it may seem at first glance. “The net impact of vegetation change on water flows depends on its effects on surface runoff, infiltration, and evapotranspiration. Transitions between vegetation types alter all three.”

Forests increase the infiltration of water into the soil, allowing for groundwater recharge. They also increase an ecosystem’s leaf index (the surface area of all green surfaces for a region), which increases evaporation. These two forces counteract each other and local circumstances determine which one dominates.

Canal expansion - you will need a lot of water to fill this tub...

Canal expansion – you will need a lot of water to fill this tub…

The specific results of the study are too complicated for a blog post, but the important takeaway is that reforestation in some places will increase water flow, but in other places will decrease flow. “…Only where there are high precipitation rates, flat terrain, and soil types with high potential infiltration is reforestation likely to enhance dry-season flows.” Only 37 percent of currently forested area increases dry-season water flows; reforestation of the entire area would reduce dry-season flows by 8.4 percent.

In addition to specific recommendations for the canal watershed, this study has broader implications for policymakers. As the term “ecosystem services” becomes a part of people’s vocabulary, it’s important to understand that the relationship between an ecosystem and the benefits it provides to people is not a simple one. Not all forests directly increase water supply. Some coastal reefs will provide greater storm protection than others. Some biological diversity is more valuable to people than other.

Allow me to indulge in a slight tangent: this brings up two important issues with the push to include ecosystem services into decision-making. First, it means that careful study is needed to be sure that investments in ecosystems lead to the desired benefits. Panama can increase dry-season water flow to the Canal through reforestation, but only if it targets the right areas. It’s even more complicated than the article describes; ecosystems are complex systems that are probably impossible to fully model. For instance, although evaporation from increased tree cover decreases water recharge, it also contributes to cloud formation, likely increasing precipitation elsewhere. Second, reducing the value of nature to the benefits it provides people is, well, very anthropocentric. Is improving human welfare the only reason to protect the environment?

Global Crossroads: Panama Canal shipping routes

Global Crossroads: Panama Canal shipping routes

Coming back to Panama, the article points out that there are many other benefits to forest restoration. Although the impact on water supply is ambiguous, reforestation will unequivocally increase carbon sequestration and timber supply. This is where the decision gets really complicated. Does Panama prioritize: a) timber production, which would have a local economic impact, b) water supply, which would also have an economic impact, but on a different population, or c) carbon sequestration which provides global benefits (since it reduces the impact of climate change).

There are other tradeoffs as well: reforestation might increase ecotourism, but will likely require the displacement of agriculture.

All in all, planning based on ecosystem services is complicated. Simonit and Perrings’ study improves our understanding of how the environment impacts people. However, we still have a lot to learn. And the expansion of the Panama Canal is setting off a series of environmental challenges at ports throughout Latin America that need to be addressed.

Panama City has some decisions to make

Panama City has some decisions to make (not least of which: should we finish this sky scrapper?)

Duncan Gromko works on environment issues at the Inter American Development Bank. You can check out his other writing at or follow him on Twitter @dgromko

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2 Responses to Ecosystem Services and the Panama Canal

  1. Pingback: Latin America News Flash | No Se Mancha

  2. Pingback: Pimp My Rainforest | No Se Mancha

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