A queue of cargo ships stretches across the Caribbean Sea, waiting to traverse the Panama Canal towards the Pacific. It is a cloudy June day and the region and the region has spent over a year in drought, the third worst since the canal opened in 1914, forcing the authorities to restrict the number and size of vessels crossing the continent, creating today’s waterborne traffic jam.
The vessel limits are a response to a drop in water levels at Lake Gatun, a water reserve essential for the canal’s operation.
Since the drought, the impact of extreme weather on the country’s fast-growing economy has been under scrutiny, leading Panama’s authorities to adopt strategies to combat the risk of events triggered by the climate crisis: undertaking works to ensure the canal’s continued operation and, simultaneously, investing in sustainable development and adaptation.
As environment minister in José Raúl Mulino’s new government, Juan Carlos Navarro is at the forefront of this.
His environmental commitment is hard to dispute: he is the co-founder of a solar energy company, NSolar; led the national association for nature conservation and has been vocal on the subject of global responsibility for the climate crisis.
“We are a carbon-negative country, yet we pay the price for climate change. It’s ironic, and indeed tragic, unfair and immoral that countries like Panama and small island states suffer from climate change despite not being responsible for it,” says Navarro.
He took office at a time of intense pressure, facing environmental emergency and the risk of economic crisis, and after months of political turbulence sparked by protests demanding the closure of a contentious mining project and for the country to end corruption and embrace a future with the environment at its heart.
One of his challenges is to seek the delicate balance between conservation and economic growth – Panama’s estimated GDP growth in 2023 hit 6.5%, driven by construction, tourism, financial services, trade and transportation.
“We have set the country on a path to attract private sector investment and to promote private sector growth with sustainability. That is our path, with the canal being the perfect example,” says Navarro.
Since taking power, the Mulino government has announced the expansion of the canal’s watershed to reduce water usage by 12% for each boat crossing.
To address the risk of droughts, the Panama Canal Authority also proposed constructing a dam on the Indio River, a $1.6bn (£1.23bn) project designed to act as a regulator during drought or heavy rains, but contested by Indigenous groups and environmentalists.
The canal remains a priority as, 110 years after its inauguration, the infrastructure that revolutionised logistics and global trade in the 20th century continues to be the backbone of Panama’s economy, generating about $4bn (£3bn) in revenues a year, with direct payments of about $2.5bn (£1.93bn) to the government.
“When it rains a bit, like last year, we lose $1bn (£770m) in revenues. Now, we are expanding the watershed to make sure we always have enough water for the canal,” says Navarro. “We must take all measures that allow us to become more resilient.”
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Panama’s concerns are justified. Since 1997, three significant droughts have threatened the canal’s operations, says Steven Paton of the Smithsonian Tropical Research Institute, who monitors tropical climate and oceans. He confirms growing worries about the sustainability of water levels in the Panama Canal given changing climate patterns.
The canal recorded historically low water levels last year, says Paton, which could be repeated due to increasingly frequent El Niño events. After the drought, 2024 recorded nearly average precipitation and weather conditions, allowing Lake Gatun to replenish after dramatic fluctuations over the past two decades. But Paton says that severe climate events will continue threatening the canal, as in 2010, when the La Purisima storm nearly overflowed the canal’s dams.
Climate change models indicate periods of more pronounced precipitation and longer dry spells – consistent with patterns in the canal’s watershed, which has experienced decade-long average rainfall changes of up to 20%. “The most important thing [governments] could do is protect the forest cover in the canal area and the watershed, and that’s what they are doing,” says Paton. “The forest acts like a huge sponge.”
The problem is that these measures come with a human impact. For example, constructing the dam for the new reservoir will require relocating hundreds of families living near the canal.
Isaías Ramos, a biologist and environmental management from the Centre for Integrated Asset Management (CIAM), says the canal’s water management challenges are mainly social. The canal continues to attract debate about the distribution and use of water resources, he says, with international concerns centred on potential impacts on global maritime routes, rather than people.
“Panama has a lot of water,” says Ramos. “The question is rather how it is being used. In adapting to the climate effects of El Niño, we have to make sure that water remains widely available to communities beyond the canal.”
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Navarro says he is acting not only to protect the country’s economic interests but also to safeguard the right to land and water, particularly for small farmers, in a country where agriculture, accounts for “between 2% and 3% of GDP, but between 30% and 40% of jobs”.
“The objective is sustainable agriculture,” he says. “Modernising agriculture, increasing yields, making better use of land and water resources, and bringing in top-of-the-line technology for food production is a priority.”
Besides the canal, another urgent issue is environmental degradation in the Darién Gap, a large watershed with tropical rainforests and mountains connecting the American continents. The region is suffering the adverse effects of a humanitarian crisis caused by mass immigration. The influx of more than 500,000 migrants last year has led to an alarming degradation of the Darién national park and its previously untouched rainforest.
“This is a problem we must address together – the US, Panama and all the countries in the region, including Venezuela, from where 70% of the migrants come, and Colombia,” he urges.
The protection of Indigenous communities is also urgent, not just in Darién but also on the island of Gardi Sugdub, from where the Guna people had to be evacuated due to rising sea levels.
Navarro says his Indigenous ancestry means he is particularly sensitive to the cause. “We must protect our remaining forests and national parks and work side by side [with Indigenous peoples] as we develop ecotourism, sustainable agriculture and initiatives that bring resources and open up opportunities for education, growth and self-governance.”
The minister acknowledges, however, that Panama “is not immune” to the oil rush in Latin America and the Caribbean. “People are already exploring for gas, shale, and oil,” he says.
But Navarro argues that oil is not a priority, as the time to accelerate the energy transition. “I think the future is clean energy,” he says. “And we’re on our way.”
Serena Vamvas, founder and director of the NGO MiMar, says that despite Navarro’s consistent position on the environment he is part of Panama’s political establishment – a “system” of “older minds stuck in the era of extractivism”. “It doesn’t matter if you’re motivated,” she says. “If the system is against you, it can slow down any change.”
