Despite being directly responsible for only 0.045% of global greenhouse gas emissions, Panama plays a major role in international environmental policy. It has made several efforts on mitigation of the effects of climate change and to promote effective environmental policies. Indeed, the country is home to remarkable ecological biodiversity and is home to some of the most intact tropical forests in Central America, which allows it to be considered as carbon negative. Yet this natural wealth exists alongside a set of structural vulnerabilities that are deepening under the combined pressure of climate change, economic growth and institutional fragility.
Panama’s economy is heavily dependent on services, as they account for 80% of the country’s GDP, with the Panama Canal alone representing 7.7% of the country’s GDP. Other services the country provides and relies on are tourism, banking and financial services, all of which are particularly vulnerable and sensitive to environmental disruption. Indeed, according to the ministry’s presentation on the ecological transition and green jobs, 38% of Panama’s GDP is vulnerable to climate change. The country ranks 14th globally among nations most exposed to natural hazards according to the IMF, and its key economic engines spanning from agriculture to shipping without overlooking tourism and construction, are directly dependent on stable water resources, functional ecosystems and predictable rainfall patterns. Therefore, this dependence makes environmental governance not a secondary concern but rather a core condition of economic stability.
It is in this context that Juan Carlos Navarro operates as Minister of Environment. He inherited a ministry whose mandate has historically been under-resourced relative to the scale of the challenges it faces and tries to overcome, as its budget only represents 0.49% of the national budget ($69.4 million).
Mining Threats
Since the 1980s, mining has grown to become a booming pillar of Panama’s economy, with the government encouraging private companies to explore and exploit mining sites in the country, especially with gold prices rising in the 1980s. Nonetheless, it came with major environmental challenges as it produces long-term damage to land and water, damages that persist well beyond the active lifetime of any mine. At the Remance gold mine in Veraguas, a decommissioned site since 1999, waste tailings left from gold exploitation that have been exposed for over twenty years still contain dangerous substances that include cyanide, arsenic, antimony, copper and mercury. Such toxic elements have contaminated nearby soils and increased pollution levels in rivers such as the Chitreca and Santa María effectively degrading drinking water quality and threatening the viability of agricultural practices in the regions depending on these rivers.
Panama’s mining governance framework compounds these risks, as the principal mining legislation, the Mineral Resources Code has not been substantially updated since the 1960s and predates modern environmental standards entirely. Furthermore, it does not contain any clear obligations on mine closure, and Panama lacks detailed national regulations on water protection and waste management in the context of mining operations. In practice, the sector is regulated primarily through the Environmental Impact Assessment (EIA) system established by Law 41 of 1998 and the General Environmental Law, which require project-specific studies to be reviewed and approved by the Ministry of Environment. While the EIA system is designed to evaluate potential impact on forests, water and biodiversity, as well as to set environmental management conditions, enforcement in practice has been consistently weak, with said conditions not always followed in reality.
Mining was projected to contribute around 6% of national GDP, making it the second largest economic sector after the Canal. Cobre Panama, a large copper mine involved in a corruption scandal, alone accounted for roughly 5% of GDP and 2% of employment before its shutdown. In November 2023, Panama’s Supreme Court struck down Law 406, declaring the mine’s contract unconstitutional for violating the rights to life, health, and a clean environment, and for bypassing transparency and bidding requirements. The mine’s own environmental study had projected damage to 5.900 hectares, of which approximately 5.500 were tropical rainforest, encompassing three critical watersheds: Petaquilla, Caimito, and San Juan. The combination of economic weight and ecological damage makes mining an important long-term challenge for the country. In this context, Navarro has inherited two unresolved cases. At Remance, his ministry must manage contamination from a site that was never properly decommissioned. At Cobre Panama, he maintained the suspensions of operations while navigating pressure coming from two opposite sides: communities and civil society organisations, whose 2023 protests were the largest in the country’s history, demanding permanent closure, and business groups warning that the shutdown threatens exports and economic growth. He has called for stricter regulatory compliance, both in legislation and enforcement, but the tensions persist.
Water Scarcity and Pollution
Water scarcity refers to the insufficient availability of freshwater to meet the demands of human populations, agriculture, ecosystems and infrastructure. Panama’s case is paradoxical as the country holds five times more freshwater per capita than the world average, yet deforestation and intensifying El Niño events are causing the depletion of water resources across many regions. The most consequential case is Gatún Lake, which simultaneously supplies the freshwater needed to operate the Panama Canal’s lock system and the drinking water for Panama City and Colón. When levels fall, the Canal Authority must impose draft restrictions, limiting ship depth and daily crossing numbers, reducing cargo volumes, and directly impacting revenue. In agriculture, the sector is also particularly exposed as Panama’s central Pacific corridor, also known as the Arco Seco, is already facing chronic seasonal deficits in water. The 2023-2024 drought, the worst in over 70 years with rainfall 43% below historical averages, devastated pastures and livestock across the region, forcing farmers to reduce cattle herds and triggering emergency actions from the Ministry of Agricultural Development.
On agriculture, 80% of Panama’s rice production relies on the dry method, which depends greatly on rainfall patterns that are becoming increasingly unpredictable, forcing farmers to plant at rising costs, reducing yields and undermining food security, especially among rural and indigenous communities. The consequences for ordinary Panamanians are also tangible, as despite the country holding substantially more freshwater resources than the world average, only 26% of urban households receive water without daily interruptions. Moreover, around 10% of the population have no access to piped drinking water at all, with indigenous communities being the worst affected at around 60%. Neighbourhood protests over supply cuts have become routine across the capital, and the cities of San Miguelito and Panama Oeste, prompting Panama’s Ombudsman to receive delegations from over ten communities in Panama Este in 2025 and formally demand urgent government responses. In June 2025, the government itself declared a state of water emergency in the country’s central region after contamination of two major rivers cut supplies to more than 100.000 people.
Water scarcity effectively sits at the intersection of every major pressure Navarro faces as a minister. From an economic approach, the Canal is Panama’s most strategic national asset and any policy that fails to protect the efficiency of its operations undermines the country’s fiscal stability as well as global shipping routes. This makes water governance politically necessary and unavoidable, not a mere environmental agenda. Navarro’s personal formation as a geographer and conservationist positions him to understand that the canal’s water supply is inseparable from the health of surrounding forests and ecosystems. His active role in implementing PAGIRH 2022-2026 and his engagement with the Adaptation Fund’s water-harvesting projects in Chiriquí Viejo and Santa Maria rivers reflect that he is a leader who understands the stake of protecting water while simultaneously thinking about economic self-defence.
Deforestation and Biodiversity Loss
Deforestation, defined as the intentional clearing of forested land, is a main environmental challenge faced in Panama. Over the years, the country’s forest cover has steadily declined due to factors such as population growth, livestock farming, subsistence agriculture, and firewood consumption, even though the percentage of forests and woodlands present in the country is 68%.
Panama’s forests are greatly threatened by mining, where its expansion results in massive deforestation, river pollution, as well as ecosystem destruction. Agriculture expansion including cattle ranching, large-scale agricultural plantations, and infrastructure development are also causes for deforestation. Moreover, fires are also drivers of tree cover loss, where from 2001 to 2025, Panama lost 40 kha of tree cover to fires alone. Additionally, climate change is exacerbating this issue by increasing the frequency and severity of fires.
Deforestation is a socioeconomic issue, since 60% of Panama’s forest cover lies over indigenous territories, threatening their livelihoods. This is relevant since the indigenous population accounts for 11% of Panama’s population and it is often marginalised economically, politically, socially and culturally. In fact, in 2025, Panama lost 15 kha of natural forest, which is equivalent to 9.0 Mt of carbon dioxide emissions.
As an environmentalist focused on the conservation and protection of biodiversity, Navarro has emphasised that “now is the time for action” and that therefore bold steps must be taken to protect national forests and parks. This is why, for instance, he has enacted a province-wide logging moratorium in the Darién National Park to put a stop to illegal logging and rainforest clearing; hiring, equipping, and training 150 new national park rangers with necessary equipment; implementing new technologies such as satellite monitoring, marine radars, cellular cameras to improve conservation, protection and monitoring efforts; and support the livelihoods of indigenous communities. This also implies the protection of Panama’s local biodiversity given that the Darién Biosphere Reserve is considered among the most species-rich ecosystems in Central America, including an astonishing amount of endemic species, and one of the most diverse rainforests in the world.
IE x RAIA Summer Research Programme:
This article is an excerpt from a report on Juan Carlos Navarro produced as part of a RAIA research programme on climate leaders. For a full picture of Navarro’s climate leadership, including the sources, read the full report. This project was fully financed by IE University’s School of Politics, Economics and Global Affairs and School of Science and Technology.
Authors: Giulia-Elena Curt, Lucia María Sven Piederiet & Yassine Abada
Editor: Clarisa Gorrín
Project Lead: Dario Hasenstab
