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Case Study
Improving Panama Canal watershed by policy and land restoration methodologies

Improving Panama Canal watershed by policy and land restoration methodologies

Identifying and improving the Panama Canal watershed using key policy and land restoration methodologies.
Good Practice
  • Watershed management
  • Re-forestation
  • Policy
  • Agriculture, Forestry and Other Land Use
  • Forestry and REDD+
  • Land use management

Panama, Latin America and the Caribbean

Year Published


Case Summary

Due to heavy deforestation within the area around the Panama Canal, a loss of 43% of the forest cover in the watershed was observed between 1974-1991. Since this time period, multiple groups of people; scientists, administrations, politicians and conservationists have been trying to solve the issue of deforestation in the watershed. One of the key methods that were under discussion was – watershed management. Watershed management, via either natural or green infrastructure, was needed to prevent the loss of water in the canal. Loss of water in the canal results due to the heavy traffic caused by the passage of ships that displaces water into the ocean. For each ship that transits the canal, a volume of water that is equivalent to about two-thirds of the daily water consumption of 320,000 Panamanians is displaced. Methods used by the government of Panama, such as (i) enforcing legislature that prohibits deforestation, (ii) initiating land restoration projects, and (iii) monitoring and protecting the watershed (in partnership with the US government), have since restored an estimated 18,000 hectares (~45,000 acres) of forest cover within the watershed.

Actions profiled

The importance of the Panama Canal cannot be overemphasized as its watershed provides drinking water to an estimated 1.3 million Panamanians. Several policy and legislatures were implemented over a long period of time, which resulted in the turn around that we observe today. A policy named “Forest Law 13” was implemented to legally protect second-growth forests older than 5 years, and slash-and-burn agriculture practices were prohibited. Another program that enabled positive results were the “Land Tenure Policies”. This policy prohibited landowners from using deforestation as a method to prove ownership of land, and since then strong strides have been made to grant landowners titles to their land. Furthermore, the Panama Canal Authority has provided training for farmers on land management, finances, forestry, seedling planning and maintenance, which have led up to an increase in knowledge and skill in the local farmers. In this case study, the actions profiled were performed from the 1980's to present. Over this period, invasive plants were identified as a key ecological barrier, which prevents natural regeneration and suppresses native plant growth.


Some laws enacted have incentivized restoration in the Panama Canal watershed, for e.g. the Immigration Law of 1992, provided an incentive for the private sector and foreign investors to invest with a minimum of US$ 60,000. It is estimated that between 1992-2000, the private sector had planted an estimated 31,000 hectares (76,000 acres) of trees. Several tax incentives and Forestry incentives have been implemented, with mixed results and more details can be found in the provided link to the full project description.
  • Government of Panama
  • Panama Canal Authority
  • World Bank
  • Smithsonian Institute
  • The Hongkong and Shanghai Banking Corporation
Cooperation with
  • Watershed management
  • Re-forestation
  • Policy

Results supported byUNDPWorld Resources InstituteTransparency partnership