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A consortium of two Danish companies is building a hydroelectric dam on the Changuinola River in Panama. This hydroelectric project is in virgin rain forest and requires substantial infrastructure development in order to even start the project. A fourteen mile long road has been built to a base camp and crushing plants have seen built to process mined gravel for use in the dam. When completed the hydroelectric dam will be 325 feet tall and 2000 feet wide.

As might be expected with a large hydroelectric project being developed in a tropical rain forest there are a number or competing issues. On one hand Panama is trying to develop a level of energy self sufficiency in a world where the demand for oil will only go up over the years. Hydroelectric power does not burn fossil fuels and discharge greenhouse gases.

The dam itself will be constructed of 35% concrete and 65% black fly ash. Black fly ash is the material left over after burning coal. It is usually sent to a land fill. The “recycling of this very fine material for combination with cement to make “RCC” for a hydroelectric dam would seem to be an environmentally friendly idea.

On the other hand with hydroelectric projects there is evidence that when rain forest is covered with water from a dam such as in this Panama hydroelectric project, methane is produced by the decomposition of vegetation under water and released into the environment. Methane is said to be twenty times worse than carbon dioxide as a greenhouse gas.

Indigenous people in Panama, the Ngobe, live in the area and many will be displaced by the large hydroelectric project. There is a suit lodged against Panama in regard to this hydroelectric project with the Interamerican Commission on Human Rights, (Comisión Interamericana de los Derechos Humanos (CIDH)).

Cyclonaire Corporation of the United States, which builds conveyance systems to move the black fly ash from storage to the plants where it is mixed with concrete, describes technical aspects of the project in a press release. “The main [hydroelectric] power plant will have two very large turbines with a joint generating capacity of 207 Megawatts. The mini hydro plant at the dam will ensure there will always be an ecological flow of water in the original river bed. The mini hydro plant has a capacity of 9.4 Megawatts.” Within the constraints of building a project of this magnitude in a remote, ecologically and culturally sensitive environment the two Danish companies seem to be making a good faith effort. The problem is which set of needs supersedes the others.

Panama’s economy is growing at roughly 10% a year. It appears as though Panama will weather the world current economic crisis better than most countries. Panama is planning for its future and that includes making investments in its natural resources. Panama does not have oil reserves but it has mountains, rivers, and wind. With inflation a continuing issue and fuel prices likely to climb again after the credit crisis is resolved Panama will likely continue to make its infrastructure investments in ways to produce its own electricity from its own resources.

At the same time Panama is a democratic country with an active press and institutions to protect the rights of the disadvantaged. It will be instructive to see how this project and its complications play out.

Foreign investment in Panama is the highest per capita of any Latin American country. As Panama business, infrastructure, and real estate investment proceeds, helping drive Panama’s economy Panama will need to keep balancing hydroelectric and other energy projects with environmental and human rights concerns.