Pan-American Highway

Pan-American Highway and the Environment (PANAM)

          CASE NUMBER:        143  
          CASE MNEMONIC:      PANAM

1.        The Issue
     Along the border between Colombia and Panama there is an area
called the Darien Gap.  It is a lush rain forest with one of the
highest degrees of bio-diversity in the entire world.  Currently
this region, its wildlife, and its indigenous inhabitants are
protected by the national reserve status of these lands in both
countries.  There is, however, a problem.   The long-time dream of
many in the Americas is to connect one giant highway network
running from Alaska to Argentina, is on the verge of becoming a
reality.  In fact, only 54 miles remains to be built.  The
technical difficulties that previously stopped construction are now
surmountable and the funding is there too.  In Colombia and Panama
where the last 54 miles are found, there is also considerable
political force behind the idea, both on symbolic and economic
grounds.  While the completion of the highway would make these
countries more accessible to trade and would greatly increase the
volume of trade in their area while reducing transport costs, it
does not come without a price.  That price is the Darien Gap rain
forest which lies directly in the path of the oncoming highway. 
2.        Description
     Since the Conference of American States in 1923 there has been
a plan to build a Pan-American Highway, a continuous linkage of
highways running the full 16,000 miles from Alaska to Argentina. 
Now, all but 54 miles are complete, but the proposed route cuts
through Panamažs 1.3 million acre Darien National Park and
Colombiažs 172,800 acre Los Katios National park.
     These parks were originally established as a buffer zone to
protect cattle in Central and North America from foot and mouth
disease effecting many South American herds.  As that is no longer
a problem in Colombia, the USDA has, lifted its objection, to the
completion of the highway through the parks.  The bill for
completion is estimated at between $115 and $300 million, of which
the US agreed to in May of 1971 to pay two-thirds.  Panama and
Colombia are responsible for the rest.  The 34 remaining Colombian
miles, for example, will come from a four year, $6 billion road
improvement project aimed at modernizing their economy, and
encouraging free trade and investment in the region.   Foreign
ministries as well as public works and transportation ministries in
both countries have come out in favor of the highway as a way to,
"facilitate their economic integration."  The Colombian transport
ministry under Juan Gomez is firmly in the pro-highway camp calling
it outrageous, that today there is still no road that connects all
of the Americas.   Even Colombian Ex-President Gustavo Gavaria has
entered the debate saying that: "It is not possible that, as we
reach the 21st century, the Americas are not united because of a
few kilometers of road.  The road would help the two governments to
preserve sovereignty on their frontiers and it would benefit trade
and tourism..."
     Foreign trade, both legal and illegal, is growing in both of
these countries and in the region as a whole.  Project proponents
claim the highway will allow better management of legitimate trade
and a better chance of controlling the drug trade.  The road will
help them subdue a now largely lawless region which has served as
a hiding place for guerrillas, and drug-traffickers.   Opponents
say it will only provide an easier route for smuggling drugs
through what will still be an effectively lawless area.  The volume
of trade has even grown to the point where pilots for the Panama
Canal have begun protesting their workload and hours saying they
are dangerously high if safety standards are to be maintained.  So,
while the highway might weaken the canalžs primacy in regional
shipping, the market is clearly ready for another major transport
corridor (see PANAM case).
     The problem with the plan is the 54 miles of land over which
it would be built.  The Darien Gap Rainforest, in and around the
Pacific side of the isthmus between the two countries, has been
described as a "laboratory of biodiversity," and a critical bridge
for the interchange of plant and animal species between North and
South America.  The average rainfall and genetic diversity there
are among the worldžs highest.  Naturally it has become the focus
of considerable attention from environmental groups, including the
Bio-Pacifico Project which was created in 1993 by the UNDP to help
the regionžs countries draft sustainable development plans by 1997. 
     The road is also opposed by environmental officials such as
Colombiažs new environmental ministry, MINAMBIENTE, which claims to
have the right to veto Colombian involvement in the project on
environmental grounds, and by the local small-scale farmers who
feel that, "the road will destroy their pastures but will bring no
benefits to them."  It is also opposed by the indigenous groups
inhabiting the Darien Gap region who are dependent on its natural
ecosystem for their lives and livelihoods.
     The first environmental impact studies of the plan, done by
Bio-Pacifico and completed in October of 1994, found that the
damage would go well beyond these more obvious sources.  It would
only intensify the regionžs environmental problems (largely caused
by the previous highway extension) and do irreparable harm.  The
report points out that the regionžs resources would be left open to
uncontrolled development stimulated by the highway, "the negative
effects of which include intensive commercial timber-felling, the
conversion of active forests to cattle ranches and banana farms,
contamination caused by mining, and over-hunting and fishing." 
Further, Claudia Leal of Bio-Pacifico says that despite measures to
protect the Darien Gap such as Colombian transport minister Juan
Gomezžs suggestion to add a research center and, "corps of trained
guards," it will be impossible to stop the destruction once the
highway is extended.
     Bio-Pacific and other environmentally conscious groups are
examining possible compromises.  They are seeking ways to link the
two highway systems without sacrificing Darien Gap.  Of these the
ones that truly avoid the park are the most likely to succeed
environmentally, but also the most difficult to get accepted by the
project planners.  Bio-Pacificožs proposal, involving a water link
between the two highway sections, that may result in a mutually
acceptable agreement.
3.        Related Cases
     Keyword Clusters
     (1): Trade Product       = TRANSport
     (2): Bio-geography       = DRY
     (3): Forum               = PANAMA
4.        Draft Author:  J. Lance Alloway
B.        LEGAL Clusters
5.        Discourse and Status: AGReement and INPROGress
     There is now a tentative commitment between Colombia and
Panama to finish the Pan-American Highway.  The public works
ministries of both countries have also asked the US Federal Highway
Administration for the funds (est. $80-200 million) agreed to in
the May, 1971 agreement.  The point of contention is not if the
highway should be completed, but if the plan for doing so should be
reworked to avoid damaging the Darien Gap Rainforest.  While many
agree that something should be done to protect the region, few
highway proponents want to commit the time, resources, and effort
necessary to completely revise the plan.  Instead they offer
mitigating options such as Gomezžs guard suggestion.  Opponents
insist that any plan which goes through Darien Gap will inevitably
result in the parkžs destruction, and is therefore unacceptable.
     A number of studies have been called for to determine the
highwayžs probable impact.  Bio-Pacificožs is already complete, and
very critical of the current plan. One of the new studies will have
two years and $1 million dollars from Colombia to draw up an impact
statement.  The Inter-American Bank has also approved $1.5 million
for outlining an environmental study.  While the newly proposed
studies sound like continued interest in avoiding environmental
damage, they are more likely a way for governmental highway
proponents to prolong the debate while seek evidence to counter or
mitigate Bio-Pacificožs dire findings.  Bio-Pacifico is now
proposing an alternative route which connects the highway while
circumventing the Darien Gap.  It is unclear if the parties to the
agreement will accept this new plan as it involves a break in the
land route bridged by a ferry.  The success or failure of the
agreement will depend largely on the degree of pressure put on the
Panamanian and Colombian governments to change or abandon the
current extension plan.
6.        Forum and Scope: PANAMA and UNILATeral
     The decision whether or not to complete the highway involves
a number of actors at various levels of political organization. 
The core debate which they all seek to effect, however, are the
planning discussions between Colombia and Panama.  The United
States favors the project and is unlikely to prove a stumbling-
block, though budget-cutting Republicans could complicate the
process once Colombia and Panama are ready to go forward with
     Other international bodies are actively seeking to influence
the agreement outcome. The OAS headed by Gustavo Gavaria, is being
used as a side forum to discuss the highway with other American
states.  The UN is involved through the UNDP Bio-Pacifico Project. 
Then there are a number of international environmental and
indigenous rights groups that have come out on the issue.  For
example, the General Assembly of the World Conservation Union
passed a resolution denouncing the project, in January of 1994.
     The most significant side-discussions are the domestic debates
going on within the Colombian and Panamanian governments.  These
are just as important as the international discussions.  Colombia
illustrates this perfectly.  Lopez points to elements of Colombian
Constitution to justify her opposition and MINAMBIENTEžs authority. 
These include: 
     o    The government has a duty to protect the diversity
     and integrity of the environment, conserve areas of
     special ecological importance.
     o    There must be respect for ethnic, cultural, and
     ecological diversity is guarantee.      
"The indigenous reserve areas are collective property, inalienable
and governed by councils composed of and regulated by  community
custom and habit, responsible for the preservation of natural
     The Darien Gap is actually a national park not an indigenous
reserve but the two are functionally the same.  Token protection
plans have already been offered.  Ministerial debates revolve more
around how to make the highway politically feasible than
environmentally sound.  It remains to be seen though if both
countries can overcome domestic opposition and finalize their
agreement.  Unless both Panama and Colombia decide to finish their
portions, it would serve little purpose for either to bother.
7.        Decision Breadth: UNILATeral
     Colombia, Panama, and because of its funding commitment, the
United States are the states that would be legally effected by the
proposed agreement.  While completion of the highway would
certainly impact the other states of North, South, and Central
America, these effects will generally be economic in nature not
legal.  One could make the argument Indigenous groups should also
be included here but, their existence as sovereign states is
questionable and largely dependent on the acquiescence of the
respective national government.  If one did include these groups
then the effected population would include not only the twelve
groups in the targeted area, but indigenous groups all over Latin
America through precedent.
8.        Legal Standing: TREATY
     The issue is similar to the Panama Canal Treaty  of 1903 which
involved the US, Panama, and Colombia.  The United States purchased
the canal zone from Panama for $10 million plus $250,000 per year. 
As Panama rebelled from Colombia only two days prior to the treaty,
the United States paid Colombia $25 million in 1921 to smooth the
waters there.  However, the US funding for the Pan-American
Highway only pays for construction, not ownership.  That will
remain with Panama and Colombia.  Should the pro-highway faction in
either statežs domestic debate fail to win out, the prospects for
the highwayžs completion would be very dim.  Without international
consensus between Colombia, Panama and the United States the
project is also dead.  Thus, the international and domestic
elements are co-dependent.  
C.        GEOGRAPHIC Clusters
9.        Geographic Locations
     a.   Geographic Domain:  North America [NAMER]
     b.   Geographic Site:    Southern North America [SNAMER]
     c.   Geographic Impact:  PANAMA
     The Darien Gap Rainforest is found in the very northwestern
area of South America on and around the isthmus where Colombia
connects with the small Central American state of Panama.  It is
one of the most genetically rich and unique areas of wild habitat
in the world. Both the issuežs domain and site are centered in this
trans-border region of virgin rainforest and swampland.  The impact
of the Pan-American highway is, however, somewhat broader,
including Colombia and Panama entirely. 
10.       Sub-National Factors: YES
     In addition to the Darien Gap and Los Katios national parks,
the highwayžs proposed route would pass through a dozen Indian
reservations in Colombia and Panama.  Until now the national parks
have protected these peoplesž livelihoods and communal land tenure
systems.  The coming of the highway, and the changes that it will
set in motion within the region, will undercut their economic base,
which will in turn draw these indigenous groups into the respective
statežs economic system as they attempt to support themselves.  The
inevitable flood of colonists that will follow will further weaken
the indigenous groupsž position in the region.  The net result of
these changes will be considerable, if not total, erosion of
indigenous political and economic independence.   Furthermore,
their position and prospects within the formal economy will be
unsatisfactory at best.    
11.       Type of Habitat:  TROPical
D.        TRADE Clusters
12.       Type of Measure: ADMINistrative Measure
     The effects that the Pan-American Highway will have on
regional and even hemispheric trade will stem from the final
decisions of the Colombian and Panamanian administrations on the
road competition plan.
13.       Direct vs. Indirect Impacts :  Direct
     The trade effects will be felt mostly by those states which
trade heavily with or through the region.  The new route would
decrease the cost of transporting goods between Colombia and
Panama.  For this reason they can expect to reap the greatest
rewards in terms of increased trade and economic activity.  The new
trade route will also reduce the strain placed on existing trade
routes, such as that now effecting the Panama Canal, and at the
same time increase the regionžs total transportation capacity. 
Another effect of the highway that will be felt directly at the
border involves transportation efficiency and cost.  One more route
through the region means more competitors in the transportation
sector which will lower overall transportation costs.  It may also
mean lower revenues for the Panama Canal.   
14.       Relation of Measure to Impact
     Directly Related         :  NO 
     Indirectly Related       :  YES  TRANSportation 
     Not Related              :  NO
     Process Related          :  YES  HABITat Loss
     The environmental impact of the Pan-American Highway, as
currently proposed, would result from three main sources.  First,
the construction process itself will cut through 54 miles of
rainforest disrupting the ecosystem and perhaps causing
biodiversity loss along with the obvious deforestation.  This
damage would then be exacerbated directly by the traffic that would
eventually use the highway.  By far the greatest threat though will
be the huge numbers of settlers seeking free land in the Darien Gap
region.  Both Panama and Colombia have serious land distribution
problems which will drive the landless poor (and short-term land
speculators) into the Darien Gap.  The Highway will provide a main
artery into the region from which access roads will spring.  In
view of Colombiažs "Positive Administrative Silence" policy such
roads will be nearly unstoppable.
15.        Trade Product Identification:  TRANSportation
16.       Economic Data
     Colombia is involved in a considerably greater volume of trade
than Panama, so the Colombians have more trade that would benefit
from reduced transportation costs.  While Panamanian trade would
also benefit from these lower costs, there would be a negative
side-effect on their economy as well.  Only some 8.8 percent of
Colombiažs GDP comes from the transport and communication sector as
opposed to Panamažs 20.3 percent.  The difference comes primarily
from the crucial Panama Canal.  Increased competition in this
sector, and the resulting transport costs reductions, would mean
decreased profits if the canal were challenged as the primary
transport corridor in the region.  Still, business for the canal is
up and its 230 canal pilots have protested against the , "heavy
workload," of sometimes 16-18 hour workdays.  Perhaps the transport
sector in Panama will see the actually benefit of expanding the
     Another reason for the stronger Colombian interest might be
the economic activity resulting from the oil finds at Cusina (see
COLOMOIL case).  The Colombian economy
counts on that source of revenue, and their ability to ship it. 
Crude oil will still be shipped by sea, but new land transport
corridor would help Colombian based petro-chemical firms ship
petroleum products throughout the region.  Oil and its derivatives
are Colombiažs second most important export product after coffee at
$1,173.8 million of $8,572.7 million in total exports.  The
windfall that these new oil finds has caused has also been
accompanied by an increasing trade imbalance in favor of imports
from $542 million in 1990 to $-2,833 in 1994.  Panamažs imports
have also increased, but their current account is basically stable.
17.       Impact of Trade Restriction: MEDium
18.       Industry Sector: SERVices
     The project primarily involves the transport sector of the
relevant economies.
19.       Exporters and Importers: MANY and PANAMA
     The primary exporters and importers involved in the case are
Colombia and Panama.  However, the repercussions of a completed
highway will effect their trade relations with other nations in the
region more than trade with each other.  This does not rule out the
possibility that they might become more important to each other it
merely points out the absence of such a relationship now.
E.        ENVIRONMENT Clusters
20.       Environmental Problem Type:  DEFORestation
     The repercussions of the Pan-American Highwayžs completion, as
currently proposed, would have a devastating effect on the entire
ecosystem in the Darien Gap region.  Most of the destruction will
be caused by largely poor settlers, or colonists following the road
in search of free land.  In Colombia, for example, colonists are
responsible for 76 percent of all deforestation.  The process
generally involves razing the area for timber and then planting it
with bananas, coffee, or other crops such as marijuana, coca, or
more recently, poppies.  Still other areas of virgin forest or
exhausted pre-cleared land are bought up by drug traffickers and
powerful landed elite to be turned into pasture lands for their
cattle. (29)  The original rainforest habitat, and the species
dependent on it are devastated.  This includes the indigenous
peoples.  With the soil exposed and exhausted, other grave problems
such as erosion follow.  The usual response of settlers is to sell
their land to a cattle rancher if they can and, in any case, move
on to a new plot.   Should the highway be extended through the
park the Darien Gap region will quickly and inevitably fall victim
to this process. 
21.       Species Information
     Species    :  MANY
     Genera     :  MANY
     Diversity  :  9,915 higher plants per 10,00 km/sq (Panama)
     Colombia has the distinction of being one of the richest
nations in terms of biodiversity (see BIODIV
case).  It is home to approximately 10 percent of the worldžs
wildlife species.  As a result of deforestation, some 1,000 species
of plants and 24 animal species are threatened with extinction.  Of
the countryžs endemic birds (for which the Darien Gap is especially
known) two-thirds are threatened.   One of Colombiažs richest
areas is the Darien Gap region which it shares with Panama, and
which is the site of the planned construction.  It is also
important to note that the species in the area have a high degree
of endemism leading.  Should they be lost they cannot be replaced. 
Finally, it should be noted that international scientists believe
the region to be a laboratory of biodiversity in that it serves as
a critical bridge between the species of North and South America. 
It is unclear what far-reaching effects might result from clearing
the area, but it is certain that a unique and pivotal genetic
reserve would be lost.
22.       Impact and Effect  HIGH and SCALE
     The main source of the problems that would result from the
highwayžs completion are tangent in nature.  While it is obvious
that the roadžs construction of the road will destroy some of the
forest, and the traffic using the highway will disrupt and damage
the parkžs ecosystem, these effects pale next to the damage done by
those who will follow the highway and settle in the region.  An
idea of how great the damage will be can be found in a study done
by the Bio-Pacifico Project on the last portion of the highway
completed.  This 23 mile stretch of road, completed in 1983, ends
only some 20 miles from the park area.  The study found that 60
percent of the forest had been lost on both sides of it by 1992. 
Clearly, building the highway through these parks is an effective
death sentence for their indigenous ecosystems.
23.       Urgency and Lifetime:  MEDium and 100s of years
     Bio-Pacifico estimates that the regionžs ecosystem will be
destroyed in only 15 years if the plans move forward unchanged. 
As the area is ecologically very complex (having between two and
four whole layers of vegetation under the main canopy), and the
degree of endemism there is very high, only a portion of the native
species could be expected to ever recover should the road go
through and the Colombian and Panamanian governments later decide
to reverse the damage.
24.       Substitutes :  LIKE
     There is hope that a compromise solution can be found.  The
Bio-Pacifico Project has suggested an alternate route that avoids
Darien Gap.  This plan will extend the existing Panamanian section
of the Pan-American Highway along the Caribbean coastline and then
use a ferry at a Panamanian city to cross the Gulf of Uraba and
hook up with existing Colombian roads on the other side of the
Darien Gap frontier.  Supporting their idea they note that, "[a]
road connecting the northern pan-American highway terminal to the
Caribbean coast of Panama is already planned and could connect with
the Colombian section."  Another point in Bio-Pacificožs favor is
the fact that such a ferry is already in operation between the
Panamanian city of Colon and the Colombian city of Cartagena.  This
alternative that they point out, "will make a more relaxing trip
than battling through rain, mud, fevers, and bandits in the
Darien," while protecting an ecosystem that would otherwise be
irreparably damaged.
F.        OTHER Factors
25.       Culture: YES
     Culture is involved to the degree that the indigenous peoples
of the Darien Gap region will be culturally or physically displaced
by the influx of settlers.  Deforestation and biodiversity loss
would endanger their way of life and the ecosystem on which it is
26.       Trans-Border : YES
     By definition the Pan-American Highway is a trans-border
phenomenon.  Economically it is intended to expand and facilitate
trade throughout the hemisphere.  Certainly it would increase the
flow of goods between Central and South America generally and
between Panama and Colombia specifically.  This would also include
the drug trade, though some argue it will result positively in
better Panamanian/Colombian drug interdiction efforts, while others
claim the highway will only make trafficking through the region
simpler and cheaper.  Environmentally, the effect of the highway
will impact the Darien Gap region on both sides of the
Panamanian/Colombian border.  If the route is changed to involve
the ferry option any impact will be trans-border but will involve
the coastal waters of the two countries.   
27.       Human Rights :  YES
     The indigenous peoples of the Darien Gap region live within
what are now government protected national parks.  They will be
negatively effected to a great degree by the expected damage the
current highway plan will cause to the region. The expected influx
of colonists following the highway into the region would also
result in a displacement effect that will greatly weaken, and
probably destroy, their communal land rights.   Settlers would also
greatly compound the cultural and economic problems the indigenous
groups will face. 
28.       Relevant Literature
"Age-Old Question Blocks Highway," The Sunday Gazette Mail, (March
     26, 1995), 22A.
Barnes, Jon., "Driving Roads Through Land Rights: The Colombian
     Plan Pacifico,"  The Ecologist 23/4 (July/August 1993),
"Colombia Begins to Battle Environmental Degradation," World
     Environmental Reports, (September 1, 1994). 
Colombia Country Report. The Economist Intelligence Unit,
     (London), 2nd Quarter 1995.
Goldsmith, Edward et al., Imperiled Planet: Restoring Our
     Endangered Ecosystems, (Cambridge: MIT Press, 1990).

"Impact Study of Pan-American Highway Warns of Possible
     'Irreversiblež Effects on Region," International
     Environmental Daily , (Bureau of National Affairs Inc.,
     (October 25, 1994).
Kendall, Sarita., "Business and the Environment," The Financial Times,
     (July 20, 1994).
LaFeber Walter. The American Age: United States Foreign Policy at Home
     and Abroad since 1750. (W.W. Norton & Co.: New York, 1989.
Panama Country Report. The Economist Intelligence Unit,
     (London), 2nd  Quarter, 1995.

World Resources Institute., The 1994 Information Please Environmental
     Almanac, (Massachusetts: Houghton Mifflin Co., 1994).


[End notes will be added]

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