Ships await their turn to cross the Panama Canal from the Pacific to the Atlantic Ocean. Credit: Emilio Godoy / IPS

By Emilio Godoy
PANAMA, Aug 9 2024 (IPS)

In 2021, the Panama Canal welcomed a French experimental ship on a world tour, the Energy Observer, the first electric vessel powered by a combination of renewable energies and a hydrogen production system based on seawater.

The vessel exemplifies Panama’s aspiration to become a regional hub for hydrogen, the most abundant gas on the planet, but faces the existential decision of whether to generate it from renewable energy or fossil gas.

This Central American nation of just over four million people is developing, albeit belatedly, the first phase of its roadmap to materialise the National Green Hydrogen and Derivatives Strategy, approved in 2023.

For Juan Lucero, coordinator of the Ministry of the Environment’s National Climate Transparency Platform, green hydrogen would be the best option, given its renewable energy, strategic position and the influence of international policies to reduce greenhouse gas (GHG) emissions in sea transport.

“Panama has natural gas, and companies are interested in taking part in this business, in this case blue hydrogen. If Panama wants to be a hub, then blue is a good option,” he told IPS."For Panama, it has always been a priority to provide services, to be an energy hub. We have tradition, experience, history, as a hub for supplying bunker ships. The idea is to achieve that transition”: Juan Lucero.

He stressed that “for Panama, it has always been a priority to provide services, to be an energy hub. We have tradition, experience, history, as a hub for supplying bunker (a petroleum distillate) ships. The idea is to achieve that transition.”

The production of hydrogen, which the fossil fuel industry has been using for decades, has now been transformed into a coloured palette, depending on its origin.

Thus, “grey” comes from gas and depends on adapting pipelines to transport it.

By comparison, “blue” has the same origin, but the carbon dioxide (CO2) emanating from it is captured by plants. Production is based on steam methane reforming, which involves mixing the first gas with the second and heating it to obtain a synthesis gas. However, this releases CO2, the main GHG responsible for global warming.

Meanwhile, “green” hydrogen is obtained through electrolysis, separating it from the oxygen in water by means of an electric current.

The latter type joins the range of clean sources to drive energy transition away from fossil fuels and thus develop a low-carbon economy. Today, however, hydrogen is still largely derived from fossil fuels.

In its different colours, Panama joins Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Paraguay, Peru and Uruguay in having national hydrogen policies.

Penonomé wind farm, located in the central Panamanian province of Coclé. Credit: Emilio Godoy / IPS

Ambition

In 2022, the Panamanian government created the High Level Green Hydrogen and Green Hydrogen Technical committees to drive the roadmap in that direction.

But it has not made progress in the creation of free zones for trade and storage of green hydrogen and derivatives; updating regulations; and encouraging port activities to use electric vehicles, install decentralised solar systems, introduce energy efficiency and generate heat through solar thermal energy.

The green hydrogen strategy approved in 2023 includes eight targets and 30 lines of action, foreseeing the annual production of 500,000 tonnes of this energy and derivatives, to cover 5% of the shipping fuel supply by 2030.

In 20 years, the estimate rises to the supply of 40% of shipping fuels.

But this potential would require 67 gigawatts (Gw) of installed renewable capacity, which is a substantial deployment in a country whose economy is highly dependent on the activity of the inter-oceanic canal between the Pacific and the Atlantic, inaugurated in 1914 and expanded a century later, in a project that doubled its capacity and came into operation in 2016.

In 2023, the Panamanian energy mix relied on hydropower, gas, wind, bunker, solar and diesel, with an installed capacity of 3.47 Gw at the start of 2024. Panama currently has at least 31 photovoltaic plants and three wind farms.

Electricity generation accounted for some 24 million tonnes of CO2 emissions in 2021, with the largest contributors being energy (70%) and agriculture (20%).

But in 2023, the country declared itself carbon neutral, i.e. its forests capture the pollution released into the atmosphere, having a negative balance in GHG emissions.

The national strategy includes the construction of a 160 megawatt (MW) solar plant and an 18 MW wind power farm in the centre-south of the country, as well as a second 290 MW photovoltaic plant in the northern province of Colón.

In this province, a green ammonia production plant is planned to supply the future demand for shipping fuel, with an annual production of 65,000 tonnes and an investment of US$ 500 million.

The global shipping sector considers hydrogen, ammonia and its derivative, methanol, to be viable. The latter, which is also used to make fertilisers, explosives and other commodities, can be obtained from green hydrogen.

A demand of up to 280,000 tonnes of green ammonia per year is projected by 2040, which would require the installation of 4.2 Gw of electrolysis.

Leonardo Beltrán, a non-resident researcher at the non-governmental Institute of the Americas, told IPS about the process of building strategies, institutional vision, and short, medium and long-term goals.

“They have taken giant steps in a relatively short period of time. They already have the infrastructure, the canal. If that demand is met, it could be a game changer. If you can connect the canal to other ports, to the United States or Europe, they could very well have that (green) corridor that would anchor a relevant demand. That would boost on-site and also regional generation,” he said from Mexico City.

With support from the Inter-American Development Bank (IDB) and the United Nations Environment Programme (UNEP), Panama is developing pre-feasibility projects on the production of green hydrogen, its conversion to ammonia and the installation of an ammonia dispatch station as a clean shipping fuel, and on the production of green aviation paraffin.

The roadmap found to be more feasible the production of hydrogen in Panama, the import of green ammonia and the processing of green shipping fuel.

Panama aspires to become a regional hub for green hydrogen, obtained from water and renewable energy sources, including gas and ammonia production plants. Infographic: National Energy Board

Also, the country is considering manufacturing green paraffin for aviation, given that it hosts an air transport hub in the region, although testing is in its infancy and involves a much longer process than in the case of shipping.

Harmonisation

The hydrogen strategy is a function of Panama’s logistical, energy and climate change needs.

Panama currently has 10 tax-free fossil fuel areas, with storage capacity of more than 30 million barrels (159 litre) equivalent and one liquefied fossil gas area, which are tax exempt and could be the model for future hydrogen generation areas.

In 2021, the country shipped 42.79 million tonnes of fuel to more than 44,000 vessels, a figure that will grow by 2030. By comparison, hydrogen passing through the canal would total 81.84 million tonnes in 2030 and 190.96 million in 2050.

In its voluntary climate contributions under the Paris Agreement, Panama pledged to reduce total emissions from the energy sector by at least 11.5% in 2030, from its 2019 level, and by 24% in 2050.

In parallel, as of 2021, the Panama Canal, through which 6% of world trade passes, is implementing its own Sustainable Development and Decarbonisation Strategy.

The autonomous Panama Canal Authority’s plan includes the introduction of electric vehicles, tugboats and boats using alternative fuels; the replacement of fossil electricity with photovoltaics and the use of hydropower, to become carbon neutral by 2030, with an investment of some US$8.5 billion over the next five years.

The canal reduces some 16 million tonnes of CO2 each year.

Tolls and shipping services are its biggest sources of revenue, and thus the importance of developing shipping fuels based on clean hydrogen.

In the first nine months of 2023, 210.73 million long tons (1,016 kilograms) went through the interoceanic infrastructure, down from 218.44 million in the same period in 2022.

Of the total cargoes, one third are fossil fuels. Container, chemical, gas and bulk carriers are the main transports.

Lucero said the country is looking for investments in renewable energy, particularly green hydrogen.

“This market has to be developed in an orderly way. Demand has to be driven; otherwise, the investment will not be profitable. There are uncertainties, but the line that has been taken is that hydrogen is the future and we want to break away from being followers to become leaders, to seize the moment to develop and be prepared when the boom arrives,” he stressed.

For expert Beltrán, if the government that took office on 1 July follows this route, it would send a strong signal to the sector and thus pull the shipping sector toward energy transition.

“Replacing imports with local product is more convenient, and the way would be with the available, renewable resource. That would impact local development and contribute to the energy transition agenda,” he said.

A ship passes through the Pedro Miguel lock on its way to the Miraflores system to cross the Panama Canal. The infrastructure faces water shortages due to drought in the country, which limits the pace of maritime cargo transport through the bioceanic route that moves six percent of the world's maritime trade. CREDIT: Emilio Godoy / IPS

By Emilio Godoy
PANAMA CITY, Feb 8 2024 (IPS)

At the bar that Sandra manages in Panama City’s central financial district, the variety offered on the menu has shrunk due to delays in ship traffic through the Panama Canal, one of the world’s major shipping routes.

“We are out of stock of some of our foreign beers, because the shipment didn’t arrive. I hope it will get here one of these days,” the Panamanian bar-keeper told IPS, as she pointed to a half-empty refrigerator in the bar nestled between skyscrapers. "Above and beyond the ship traffic, the canal should provide raw water for the populations of (the provinces) of Panama and Colon. The difference is that now there is more traffic and the problem is that in the dry season the salt level rises and damages the raw water for potabilization." -- Óscar Vallarino

The delays have been repeated since drought took hold in this Central American nation throughout 2023, exacerbated by the effects of the climate crisis and the cyclical El Niño Southern Oscillation (ENSO) weather phenomenon that warms the waters of the Pacific Ocean.

This mixture of phenomena has repercussions on the forested areas surrounding the canal and the Alhajuela, Gatun and Miraflores artificial reservoirs that supply it and provide water for more than half of the country’s total population of 4.7 million people.

Due to the lack of rain, the level of Gatun Lake, the main source of water for the canal inaugurated in 1914, dropped from its normal height of 26 meters above sea level to less than 24 in recent weeks.

Six percent of the world’s maritime trade, especially container trade, goes through the canal connecting the Atlantic and Pacific oceans.

In addition, the interoceanic waterway has lost volume through evaporation due to warming water temperatures, according to a 2022 study by the Netherlands Water Partnership (NWP), a network of 180 public and private organizations.

Oscar Vallarino, a former official of the state-owned autonomous Panama Canal Authority (ACP), founded in 1978 to manage the company, said the situation stems from including the canal in its current watershed and expanding it since 2016, which doubled its capacity and the volume of ships, in addition to leading to the prohibition of the construction of more dams.

“Above and beyond the ship traffic, the canal must provide raw water for the populations of (the provinces) of Panama and Colon. The difference is that now there is more traffic and the problem is that in the dry season the salt level rises and damages the raw water for potabilization,” he told IPS.

The cruise ship Queen Victoria, owned by the British company Cunard, prepares to lower the first eight meters in the Miraflores locks of the Panama Canal, heading for the Atlantic Ocean. CREDIT: Emilio Godoy / IPS

From the Bridge of the Americas, which connects Panama City with the western part of its metropolitan area, the ships lined up to enter the canal look like figures in a board game moving slowly over a blue board. The waiting time varies, mostly en route to a U.S. port.

But the slowdown stems from the crucial element of the infrastructure: water, whose scarcity means fewer commercial vessels can cross from one ocean to the other. The reservoirs that feed the canal have a capacity of 1,857 hectoliters and currently hold only 900.

At the same time, the demand for different activities is increasing, leading to greater competition for consumption and conflicts that will intensify throughout this century.

Law 93 of 1999, modified by Law 44 of 2006, establishes the limits of the canal’s watershed, which covers 343,521 hectares and is one of 52 in the country.

The rainy season in this tropical country runs from May to November, but the last quarter of last year recorded lower rainfall, and the drought will worsen in the first half of 2024.

The population of the provinces of Panama and Colon also depends on water from the canal. But the problem is aggravated by waste, the leakage of at least 40 percent of the water due to broken pipes and the lack of efficient infrastructure.

This is despite the fact that this nation ranks fifth in the world in annual rainfall, has six times the world average of fresh water per person, in addition to 500 rivers, in an area of only 75,517 square kilometers.

But on the other hand, it has the highest individual consumption in Latin America, with 507 liters per inhabitant. Panama has an availability of about 115,000 cubic meters per inhabitant/year, according to the Inter-American Development Bank (IDB).

The consequences of the climate crisis and ENSO cloud the outlook for the water supply, since they mean that both excess and scarcity of water will create trouble for this Central American country. El Niño has reappeared in its strong phase, as meteorologists define the worst of its three modalities.

The ACP estimates that the basin captures almost 4.4 billion cubic meters (m3) annually, of which the canal consumes 70 percent for navigation and 15 percent for drinking water.

A view of Panama City, where population growth is driving up water demand. Drinking water for the city and the neighboring province of Colon comes from the Panama Canal and faces chronic management problems and infrastructure failures, now compounded by drought. CREDIT: Emilio Godoy / IPS

Victim of nature

In response to the crisis, the ACP adjusted the maximum draft, the daily traffic capacity and the reuse of diverted water.

As a result, it reduced the number of vessels crossing the 82-kilometer route to 24 per day from an average of between 38 and 40, which could drop to 18 this February, when traffic is expected to decline by one-third from its usual level.

In addition, it charges 10,000 dollars for water rights and auctions quotas for diverting water. Each passage requires 250 million liters of water per vessel, which is then returned to the system.

The canal already suffered an acute water crisis in 2016, but it has been aggravated now by a strong ENSO.

William Hugues, a member of the non-governmental National Front for the Defense of Social and Economic Rights, said the crisis was foreseeable and exposed the underlying aim of prioritizing the canal over the water supply to the local population.

“We issued a warning in 2006, when the expansion was being discussed, that larger locks would cause more salt water to enter Gatun. This demand would threaten the supply of drinking water. We have to accept that the canal has physical limits and we cannot respond to the dynamics of the international economy,” the economist, whose group includes social organizations, trade unions and other groups, told IPS.

Hugues, author of a book on the expansion of the canal traffic, pointed out that there is always a line of ships waiting to cross during the dry season and that the measures applied are the same as before the expansion.

Due to cargo demand, the expansion, undertaken in 2007 and completed in 2016, added two locks to accommodate the larger, heavier Neopanamax cargo ships, which need more water to transport up to 120,000 tons, especially gas cargo. But the expansion has had repercussions on the demand for water.

The use of the canal brings more than four billion dollars into the Panamanian coffers annually, approximately six percent of GDP. The drop in traffic could mean a financial loss of more than 200 million dollars a year and, therefore, will have an impact on the already stressed finances of this Central American nation.

Although it had promised to do so, the ACP did not respond to an IPS query about forecasts for canal activity in 2024.

The crisis has forced ships to take longer and more expensive routes, such as around Cape Horn, to the south of Chile, or to move cargo overland from coast to coast in Panama, before reloading it onto ships.

Drought has caused lines of ships waiting to cross the Panama Canal, where traffic could shrink even more in the face of the increasing scarcity of rain. Infrastructure managers are already limiting daily ship crossings to one-third of the usual number. CREDIT: ACP

Palliative measures

To face the recurring crises, the ACP is studying the construction of a dam and reservoir on the Indio River, west of Gatun, and the use of the Bayano dam, which would entail different costs.

The dam costs 800 million dollars and involves the flooding and displacement of some 1,900 people in an area of 400,000 hectares, while the use of the Ascanio Villalaz hydroelectric dam, owned by the Panamanian state and the private U.S. company AES Global Power, costs three times as much.

But the effects of the climate crisis may worsen, as several recent analyses suggest.

Between 1971 and 2020, Panama experienced significant drops in precipitation, although rainfall trends varied between regions.

Thus, the eastern and central Pacific provinces were significantly drier, especially during the summertime, while the western and central Caribbean provinces were wetter, particularly during the fall, according to the Panama climate risk study published by the World Bank earlier this year.

By 2050, precipitation patterns are expected to increase, when the Pacific territories should experience a jump in rainfall, mostly in summer and autumn, and the Caribbean/Atlantic should see no net change.

The study warns that the frequency of intense floods and droughts related to ENSO will become more common and are especially critical to monitor in the canal basin and the Dry Arc, an area in the west of the country characterized by scarce rainfall.

Meanwhile, the study by the Dutch organizations warns that the measures adopted are short-term and will only limit the canal’s customers in the long term, which will affect the national economy and global pollution.

In addition, several swaths of the country, including the capital and Gatun, are expected to be flooded by 2050.

Panama has an Action Plan 2022-2026 for the integrated management of water resources, composed of 35 actions, but its implementation is proceeding slowly.

The plan seeks to contribute to water security through the prioritization of concrete actions based on national priorities, climate change scenarios, the needs of the different sectors and the institutional and financial capacity for their implementation.

The ACP itself recognizes the need for long-term investments to meet the challenges.

The country has 56 water treatment plants, seven of which are located in the canal. The expansion of several facilities and the construction of two would add some 851 million liters to the flow.

According to Vallarino, a new reservoir and the use of the Bayano dam would eventually be needed.

“We have to ask ourselves if it is feasible. Studies projecting the future should be done, to assess the options. The population is a priority. If it is well managed, we may have some setbacks, but there will be enough water for the public,” he said.

Meanwhile, Hugues said that the canal’s mercantile development rate is unsustainable.

“With the expansion of the canal, shipowners will continue to expand ships, they’ll keep growing and growing. That means we would have to make the basin the whole canal. If they follow the thesis that the canal must continue to be expanded, there will never be enough water to meet demand,” he argued.

Under the circumstances, the canal must adapt, because if it does not, drinkable water will choke in the pipes and businesses such as Sandra’s will continue to have half-empty refrigerators.

Two ships go through the Miraflores locks on the Pacific side of the Panama Canal, which raise or lower vessels 16.5 metres and take 40 minutes to pass through. Credit: Iralís Fragiel/IPS

By Iralís Fragiel
PANAMA CITY, Mar 4 2016 (IPS)

When the new locks of the expanded Panama Canal begin operations, they will do so amidst numerous challenges, because of the storm clouds hanging over the global economy, especially China. But local authorities and experts are not worried about the possible impact on the expanded canal.

The slowdown in the Chinese economy, the second largest client of the Panama Canal, transporting 48.42 million tons in 2015, is one of the factors causing concern regarding this motor of the Panamanian economy, which last grew six percent, the highest rate in Latin America.

But the start of operations of the expanded canal, due in May or June, does not worry Luis Ferreira, spokesman for the Panama Canal Authority (ACP), an autonomous government agency.“When there were economic problems in the past, we would lose basically two to three percent of the cargo; the same thing might happen this time, but we don’t expect a substantial decrease, unless there is an all-out recession in China.” – Luis Ferreira

“When there were economic problems in the past, we would lose basically two to three percent of the cargo; the same thing might happen this time, but we don’t expect a substantial decrease, unless there is an all-out recession in China,” he said in an interview with IPS.

In 2015, China’s GDP grew 6.9 percent, compared to 7.3 percent in 2014, confirming the slowdown after years of double-digit growth.

The expansion of the 80-km canal, which turned 100 years old in 2014 and which handles approximately five percent of global trade, involved an investment of 5.25 billion dollars. Work began on Sep. 3, 2007.

With this megaproject, carried out by Grupo Unidos por el Canal (GUPC), the consortium led by Spanish construction firm Sacyr, Panama hopes to increase daily ship traffic from 35- 40 to 48-51.

The canal will also be able to accommodate larger vessels. Currently, it can only handle ships with a cargo capacity of up to 5,000 tons, but once the expansion is complete New Panamax vessels with a capacity of up to 13,000 tons will be able to go through the canal.

For Panama’s productive sectors, the expansion of the canal holds out the promise of economic growth.

The ACP’s team of experts in foreign trade told IPS that the weakening of the global economy in 2015 did not affect the canal, and that no impact is expected this year either.

“The volumes of raw materials heading for China for industrial use, such as coal and iron ore, are not significant (for the canal), since there are closer sources in Australia and Brazil, which do not use the waterway,” the ACP experts stated in their collective response to IPS.

Meanwhile, the volumes of grains, especially soy, grew at a strong pace in the last few years, due to the rising demand for food in China.

The experts also said the expansion “will open up new opportunities for trade flows of non-traditional products, such as liquefied natural gas, and will offer economies of scale that will make the Panama Canal route more attractive for segments such as container vessels and dry bulk cargo ships.”

The new locks in Cocolí, on the Pacific Ocean, have 16 rolling gates. Each chamber is 427 metres long by 55 metres wide and 18.3 metres deep. The expanded Panama Canal will be able to handle New Panamax vessels with a capacity of up to 13,000 tons, up from the current 5,000 ton limit. Credit: Iralís Fragiel/IPS

Cargo tonnage by origin and destination has remained steady over the last three years, according to the ACP. The United States remains the largest client of the canal, with a total cargo of 160.78 million tons in 2015.

The cargo traded between the two leading clients reflects this stability. From China to the United States, 10.37 million tons were shipped through the canal in 2013, 10.96 million in 2014 and 10.91 million in 2015. And from the United States to China, 24.95 million tons were shipped in 2013, 30.77 million in 2014 and 30.20 million in 2015.

Given the economic outlook in China and changes in the energy sources used, the ACP is also getting ready for traffic of liquefied natural gas carriers.

“An incursion into new areas of business that reinforce the transportation and logistics industries is being evaluated, such as the case of the Corozal port and the creation of a logistics park that would complement the operations of the expanded canal,” the ACP experts said.

Canal revenue totaled 2.6 billion dollars in 2015, up from 2.5 billion in 2014, and equivalent to 5.61 percent of the country’s GDP.

Jordi Prat at the Interamerican Development Bank (IDB) told IPS that Panama has “a positive economic outlook but not without risks.” And in the case of the canal, the United States, which it depends on most, “is growing at a relatively strong pace,” although the vulnerability could increase if the situation in China continues to go downhill.

Prat, the IDB’s principal regional economist for Central America, said the challenge faced by this country is keeping the growth rate between six and eight percent a year, and preventing a decline in maritime trade flows, fuelled by other sources of growth.

Prat pointed out that between 2000 and 2014, the sectors that grew the most in Panama were construction (37 percent), transportation and logistics (22 percent), finance (15 percent) and public services (12 percent).

Besides the economic variables, inclusion is key to development in this Central American nation of four million people, he said.

Panama managed to reduce the poverty level from 38.3 to 25.8 percent, between 2006 and 2014, said Prat. However, inequality is reflected by the fact that 86.9 percent of the population in autonomously governed indigenous “comarcas” or counties is poor.

The IDB economist said Panama should move towards “inclusive growth, by fomenting human capital, education, and access to health and basic services, in order to boost productivity, which has not increased significantly in recent times.”

Analyst Rodrigo Noriega concurs with Prat that Panama has to seriously focus on education, training and scientific research, to bolster development.

“That is where we are limping, in education, and in corruption – these are issues that in the long term definitely hurt the Panamanian economy,” said Noriega.

He said the economy may see growth slow down in 2016 and 2017, due to external factors and the impact of the drought caused by the El El Niño-Southern Oscillation (ENSO), a cyclical climate phenomenon that affects weather patterns around the world.

“These external factors could be reducing Panama’s GDP by 2.0 to 2.5 percent a year. What I’m saying is GDP could be growing between 7.5 and 8.0 percent, instead of the current 5.0 to 5.5 percent,” he said.

But he stressed that a project such as the expansion of the canal is not something that is undertaken with a short-term view, but to address the needs of the country over the next 30 to 50 years.

“There will be two slow years, but that is actually a good thing for us because right now we have a water shortage problem. It’s best if the ship traffic isn’t so heavy, because we need to recover in terms of water supply and take baby steps to learn to handle the larger vessels,” said Noriega.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

The town of Taboga viewed from the sea. Credit: Creative Commons

By Emilio Godoy
TABOGA, Panama, Oct 16 2014 (IPS)

Fermín Gómez, a 53-year-old Panamanian fisherman, pushes off in his boat, the “Tres Hermanas,” every morning at 06:00 hours to fish in the waters off Taboga island. Five hours later he returns to shore.

Skilfully he removes the heads and scales of his catch of sea bass, snapper, marlin and sawfish. He delivers the cleaned fish to restaurants and hotels, where he is paid four dollars a kilo, a good price for the local area.

“I use baited hooks, because trammel nets drag in everything. That’s why the fishing isn’t so good any more: the nets catch even the young fry,” said this father of three daughters, who spent years working on tuna-fishing vessels.

Gómez lives 200 metres from Taboga island’s only beach, in a town of 1,629 people where the brightly painted houses are roofed with galvanised iron sheets. Located 11.3 nautical miles (21 kilometres) from Panama City, the mainstay of the island is tourism, especially on weekends when dozens of visitors board the ferry that plies between the island and the capital twice a day.

Gómez, who comes from a long line of fishermen, tends to go out fishing at midnight, the best time to catch sea bass. On a good day he might take some 30 kilograms.

“The fishing here is good, but we are dependent on what people on the other islands leave for us,” said Gómez, tanned by the sun and salt water.

The island of Taboga, just 12 square kilometres in area, lies in the Gulf of Panama and is the gateway to the Las Perlas archipelago, one of the most important nodes of coral islands in this Central American country of 3.8 million people.

From the air, they appear as mounds emerging from the turquoise backdrop of the sea, surrounded by what look like dozens of steel sharks, the ships waiting their turn to pass through the Panama Canal.

The isthmus of Panama possesses 290 square kilometres of coral reefs, mostly located on the Atlantic Caribbean coast, which harbour some 70 species. Coral reefs in the Pacific ocean host some 25 different species.

What the fisherfolk do not know is that their future livelihood depends on the health of the coral reefs, which is threatened by rising sea temperatures, maritime traffic, pollution and illegal fishing.

 Seabed corals on underwater mountains in Coiba National Park in Panama. Credit: Smithsonian Tropical Research Institute

In Coiba National Park, in western Panama, and in the Las Perlas islands, “the diversity of the coral and associated species has been sustained in recent years. We have not detected any bleaching, but a troublesome alga has appeared,” academic José Casas, of the state International Maritime University of Panama (UMIP), told IPS.

“It’s threatening the reef,” said the expert, who is taking part in a project for the study and monitoring of reef communities and key fisheries species in Coiba National Park and the marine-coastal Special Management Zone comprising the Las Perlas Archipelago. The study’s final report is due to be published in November.

Algal growth blocks sunlight and smothers the coral, which cannot survive. Experts have also detected the appearance of algae in Colombia and Mexico.

The project is being carried out by UMIP together with Fundación Natura, Conservation International, the Autonomous University of Baja California, in Mexico, and the Aquatic Resources Authority of Panama (ARAP).

Researchers are monitoring the coral in Coiba and Las Perlas in Panama. They took measurements in March and August, and they will repeat their survey in November.

There are differences between the two study zones. Coiba is little disturbed by human activity; it is a designated natural heritage area and a protection plan is in place, although according to the experts it is not enforced. Moreover, Coiba Park is administered by the National Environmental Authority (ANAM).

A protection programme for Las Perlas, to be managed by ARAP, is currently in the pipeline.

Reefs are essential for the development and feeding of large predators like sharks, whales, pelagic fish such as anchovy and herring, and sea turtles, the experts said.

In Panama’s coral reefs, ARAP has identified species of algae, mangroves, sponges, crustaceans, molluscs, conches, starfish, sea cucumber, sea urchin, as well as groupers, snappers, angelfish and butterflyfish.

Fishing generates some 15,000 jobs in Panama and annual production is 131,000 tonnes, according to the National Institute of Statistics and Census.

An Environmental Agenda for Panama 2014-2019 (Agenda Ambiental Panamá 2014-2019), published by the National Association for the Conservation of Nature (ANCON),

Fundación MarViva, Fundación Natura and the Panama Audubon Society, proposes the passage of a law for wetlands protection, emphasising mangroves, mudflats, marshes, swamps, peat bogs, rivers, coral reefs and others.

On the Caribbean coast, coral reefs around the nine islands of the Bocas del Toro archipelago, 324 nautical miles (600 kilometres) west of Panama City, are experiencing bleaching caused by high water temperatures.

This was a finding of a study titled “Forecasting decadal changes in sea surface temperatures and coral bleaching within a Caribbean coral reef,” published in May by the U.S. journal Coral Reefs.
Angang Li and Matthew Reidenbach, of the U.S. University of Virginia, predict that by 2084 nearly all the coral reefs they studied will be vulnerable to bleaching-induced mortality.

They simulated water flow patterns and water surface heating scenarios for the present day and projections for 2020, 2050 and 2080. They concluded that reefs bathed by cooler waters will have the greatest chances of future survival.

Bocas del Toro adjoins the Isla Bastimentos National Park, one of 104 protected areas in Panama covering a total of 36,000 square kilometres, equivalent to 39 percent of the national territory.

“Local communities need education in resource management, sustainable use, fisheries zoning and fisherfolk organisation,” Casas said.

The next phase of the corals project, financed with 48,000 dollars this year and requiring about 70,000 dollars for 2015, will involve quantifying the value of ecosystem services provided by coral reefs.

Gómez has no plans to change his trade, but he can see that his grandchildren will no longer follow the same occupation. “Fishing is going to be more complicated in future. They will have to think of other ways of earning a living,” he told IPS, gazing nostalgically out to sea.

Edited byEstrella Gutiérrez/Translated by Valerie Dee

Thanks to the expansion, the Panama Canal will be able to accommodate ships that carry up to 14,000 containers, instead of the current 5,000. Credit: Fabíola Ortiz/IPS

By Fabíola Ortiz
PANAMA CITY, Oct 3 2014 (IPS)

With the expansion of the canal, Panama hopes to see its share of global maritime trade rise threefold. And many Panamanians hope the mega-engineering project will reduce social inequalities in a country where development is moving ahead at two different speeds.

The expansion is happening one hundred years after the inauguration of the canal that links the Pacific and Atlantic oceans. At the heart of the project is a third set of locks, larger than the current two, which will accommodate ships with a maximum length of 400 metres, a maximum width of 52 metres and a draught of 15 metres.

Currently the 12,000 ships going through the canal every year have a maximum length of 294 metres, a maximum width of 32 metres and a draught of 12 metres, which means the canal handles only about five percent of global seaborne trade.

The construction work, which began in 2007 and is to be completed in December 2015, is 80 percent done, Ilya de Marotta, the engineer in charge of the expansion works in the Panama Canal Authority (ACP), the government agency responsible for the management of the canal, told IPS.

The aim of the expansion is to boost the canal’s share of global shipping traffic to 15 percent, Olmedo García, director of the University of Panama’s Canal Institute, explained in an interview with IPS.

The 5.2-billion-dollar project will mean the 79-km canal will be able to handle larger vessels capable of carrying nearly three times as many containers.

“The canal now contributes 1.1 billion dollars a year to the national budget. Gross revenues are 2.3 billion dollars, but operating the canal absorbs 1.2 billion,” the academic explained.

“As soon as we finish the expansion, we have to think of building a fourth set of locks, which would cost 12 billion dollars,” said García, because the canal “is and will be the country’s main economic and commercial activity.”

De Marotta said “the expansion was indispensable because the canal was reaching the maximum capacity of boats that could go through. The demand for bigger ships is a global tendency, for bulk carriers and liquefied natural gas carriers – a client we don’t have because they are bigger vessels.”

“This is a good business that we’ll be able to attract now,” she said. “The idea is to avoid falling behind in global trade; with the new locks a container ship could carry 12,000 to 14,000 containers,” the engineer said.

According to projections, the country’s canal revenue will have climbed to 2.5 billion dollars by 2019 and to six billion by 2025, García said.

“The big advantage is that we not only have the Panama Canal, but also the logistics centre; together they represent 40 percent of our GDP. We have the best logistics connectivity in Latin America, with ports on each ocean, railways and the free trade zone,” he said.

“We can create multimodal trade with the merchandise distribution ports,” he added.

The neglect of the historic centre of Colón near the Caribbean Sea entrance to the Panama Canal and next to the city’s Free Trade Zone reflects the contrast between the pace of economic growth and social development in this Central American country. Credit: Fabíola Ortiz/IPS

Social development at another level

But Panama’s priorities must change in order for the promising economic prospects engendered by the expansion of the canal to translate into benefits for the poorest segments of the population.

Despite annual GDP growth of around seven percent, because of the high levels of inequality, 27.6 percent of the population is poor according to figures from Sept. 28, although García and other academic sources told IPS the poverty rate is actually nine percentage points higher.

In rural areas of this country of 3.8 million people poverty stands at 49.4 percent, compared to 12 percent in urban areas. Worst off are the country’s small indigenous minority, who suffer from a poverty rate of 70 to 90 percent.

And according to official figures from August, 38.6 percent of the economically active population is engaged in the informal sector of the economy.

Thousands of families lack piped water and services such as health care and transportation.

Alfredo Herazo, 29, lives in the capital but takes a bus every day to the city of Colón, where he works in a soldering workshop that he and his father set up. “I don’t like this life but I don’t have any other options,” he told IPS at the end of a long day of work, as he got ready for the 79-km commute back to Panama City.

Colón, the second largest city in Panama, is a port near the Caribbean Sea entrance to the canal and is surrounded by the area that was the Panama Canal Zone when it was under U.S. control.

The canal was fully handed over to Panama on Jan. 1, 2000, as stipulated by the “Torrijos- Carter” treaties signed by the two countries in 1977.

The 450-hectare Colón Free Trade Zone is the world’s second largest free trade area after Hong Kong, with 2,500 companies that import and re-export with a total annual business volume of 30 billion dollars – although business dipped in 2013 because of disputes with Colombia and Venezuela, its biggest clients.

The Colón Free Trade Zone receives 250,000 visitors a year from all over the world.

“Like any Panamanian, I would like to work on the canal or in the duty free zone, because of the salaries paid there. The canal is our pride and joy. If I get the chance, I would be a solderer there,” Herazo said.

The young man said “the problem with the canal, from the point of view of the ordinary citizen, is that we don’t see the profits, which aren’t distributed among the population.”

The neglect of the rundown historic buildings in Colón contrasts sharply with the modern free trade zone, illustrating the gap between the vibrant growth of the canal and the country’s financial and trade centres and the desperation of those included from the boom.

Cesar Santos, 32, has been living in Colón for seven years, making a living selling fruit and vegetables in the Municipal Market in the city centre. He sets up his stand early every morning across from the Municipal Park.

“With this I only have enough to live as a poor man. Life in Colón isn’t good,” he told IPS.

He lists the problems in the city, stressing the lack of sanitation and decent drainage systems. “When it rains, everything floods, the streets are impassable, the city is paralysed. After a downpour, everything is flooded,” he said.

Besides the lack of urban infrastructure, what bothers him the most is the living conditions of most of the people living in the city.

“People here are really poor,” he said. “People live in condemned houses. Besides all the assaults and thefts, this is a city that has been forgotten by the governments; good thing we have the free trade zone, otherwise there would be even worse poverty,” Santos said, while three customers nodded their heads in agreement.

García, in Panama City, said “The financial centres have to transfer part of their wealth. There is a serious social fracture. The canal can’t just be a channel for trade, communication and world peace. Panamanians need the social debts to be repaid, and part of the wealth should be transferred to the people.”

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes