Panamá: The management of the Panama canal watershed (#5)

To protect the Panama Canal Watershed, which was created when the Panama Canal was constructed, formal limits to its utilisation was set up, including the Panama Canal Treaty and the creation of a Panama Canal Authority.  This case study predominantly illustrates the peculiar problems that arise when a highly artificial watershed is managed by a modern, internationally oriented public corporation with a country that is still copping with the hydraulic culture and a national water policy.


The Panama Canal Watershed (PCW) was developed when the Panama Canal was constructed (1904-1914). The PCW unites the basins of the Chagres and Grande Rivers into a single hydraulic system. The Chagres and Grande Rivers drain into the Atlantic and the Pacific Oceans, respectively. Damming the Chagres River provides water to operate the canal locks. 

By the mid 1930’s, an additional lake had been created in the upper basin of the Chagres River to increase the water storage capacity of the system. In 1999, the formal limits of the PCW were established by law and segments of the Indio, Caño Sucio and Coclé del Norte River Basins were added. All these rivers drain separately into the Atlantic Ocean to the north-west of the PCW.

Under the Panama Canal Treaty (1977) the Republic of Panama was obliged to provide sufficient water for the operation of the Canal and for cities in the area. This led to the creation of several national parks, the promotion of sustainable development activities, and the implementation of base-line studies, all with support from USAID (United States Agency for International Development).

A Panama Canal Authority (PCA) was created by Constitutional reform in 1994 which granted legal obligations and rights to manage the PCW. A land use plan and an Organic Law for the PCA were approved in 1997, though the former has yet to be implemented.

Lessons learned

  • the IWRM concept could be useful for the management of the PWC
  • IWRM has many prerequisites, including an adequate legal framework and effective structures for water management, scientific knowledge and knowledge dissemination
  • traditional centralized approaches to government and to lack of public participation severely hinder the practical implementation of IWRM
  • it is vital to recognize that there may be legitimate conflicts between stakeholders; this recognition encourages collaboration between all parties involved in IWRM
  • IWRM should be seen as a component of a broader sustainable development strategy.

Importance of the case for IWRM

This case study illustrates the peculiar problems which arise when a highly artificial watershed is managed by a modern, internationally-oriented public corporation in an underdeveloped country which lacks a hydraulic culture (Wittfogel, 1956) and a national water policy.

The study demonstrates the relevance of the IWRM concept as a tool for better understanding of the undergoing management process in the PCW, although the PCW is at a very early stage in its development. It also illustrates the importance of an IWRM approach for the future of sustainable development in Panama, including the sustainability of the services provided by the country for world commerce.

Photo credit: Christoffer Undisclosed