Payment where it is due

In March I took a ten-day trip to Panama. While I was there, I was struck by a number of interesting connections. The Panama canal is crucial to the economy of Panama, and is absolutely vital for the swift transit of goods around the world. Yet because the canal is operated by a series of freshwater locks, the whole system depends on a continuing supply of water from the environment. It turns out that this fact has not escaped the scientists who work in Panama, nor the money men and various plans are already underway to try and reforest the canal watershed in order to maintain a regular supply of water. In researching the piece, it became clear that this is very much part of an emerging approach to the environment that involves payments for environmental services--and that science is the key to defining and quantifying these for economists. The result was a three-page article in The Economist that was tied to a cover and leader (op-ed) about rescuing environmentalism. The full article can be read free online from the link below. Environmental economics Are you being served? Apr 21st 2005 | PANAMA CITY Environmental entries are starting to appear on the balance sheet. Perhaps soon, the best things in life will not be free AT THE Miraflores lock on the Panama Canal it is possible to watch the heartbeat of international trade in action. One by one, giant ships piled high with multi-coloured containers creep through the lock's narrow confines and are disgorged neatly on the other side. If it were not for the canal, these ships would have to make a two-to-three-week detour around South America. That would have a significant effect on the price of goods around much of the world. It is therefore sobering to consider that each ship requires 200m litres of fresh water to operate the locks of the canal and that, over the years, this water has been drying up. (Continues...)