Environmental economics — who will pay?

From The Economist:

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.

Scientists at the Smithsonian Tropical Research Institute, in Panama, think that reforesting the canal’s denuded watershed would help regulate the supply. One of them, Robert Stallard, a hydrologist and biogeochemist who also works for the United States Geological Survey in Boulder, Colorado, has operated in the country for two decades, and knows the terrain well. A deforested, grass-covered watershed would release far more water in total than a forested one, he admits, but that water would arrive in useless surges rather than as a useful steady stream. A forested watershed makes a lot more sense…

Viewed this way, any scheme to reforest the canal’s watershed is, in fact, an investment in infrastructure. Normally, this would be provided by the owner. But in this case the owner is the Panamanian government, and Panama is in debt, has a poor credit rating and finds it expensive to borrow money. And yet investing in the canal’s watershed clearly makes economic sense. Who will pay?

More here.