'Positive and Negative, Usually Both': In Central America, a Booming Economy Comes At a Cost

Playa Venao, Panama — Just a little more than a decade ago, Ángely Miranda would drive to the pristine, horseshoe-shaped bay of Playa Venao for asados, a traditional South American barbecue for family and friends. Back then, the road was entirely unpaved, but those bumpy, rugged journeys are some of Miranda’s most joyful memories of growing up along Panama’s Pacific coast.

A lot has changed since then, for the beach, the community that surrounds it and an entire region that is being rapidly transformed. Massive infusions of capital from the U.S., Israel and European nations have made Central America a magnet for tourist getaways or plush, tropical retirements. But there are larger stakes at play, for the global environment and native lifestyles, on the one hand, and for the economic transformation of developing nations on the other.

That balancing act has Panama teetering between economic boom and environmental and cultural disaster. Playa Venao, the point where jungle meets ocean, is also where rapid development meets its more challenging consequences.

“I used to walk on the beach, just go to the water and drink sometimes,” Miranda told me, using a mix of Spanish and English. “I used to come with a lot of people. We used to grill, and it was really fun.”

Now, Miranda’s favorite beach is unrecognizable. Playa Venao of today has hotels lining the shore, mansions nestled on the hilltops and a vibrant downtown strip boasting trendy shops fashioned from repurposed Evergreen shipping containers. Miranda herself works as a receptionist at Selina, one of the biggest hotels.

Like Miranda, most longtime residents of Playa Venao see the development as a mixed blessing, a welcome source of jobs, on the one hand, and a destruction of a way of life on the other. But to ecologists and environmentalists, the widespread destruction of plant life and the rise of energy-consuming luxury towers are unambiguous sources of concern, because environmentally sensitive development in the southern hemisphere is widely considered a key to containing and mitigating the consequences of global warming.

“Migration is accelerating under a changing climate,” Mark Wishnie, the former director of the Smithsonian Tropical Research Institute's Native Species Reforestation Project, said. “As a result, the ability for Panama to serve as a corridor for species movement in a warming climate is, of course, only more and more important.”

Complicating the situation is the fact that growth and development are widely seen as the physical manifestation of the country’s rising position on the world stage. Panama's stable transition to democracy and robust economy, the fastest growing in Latin America, have attracted droves of investors. U.S. Foreign Direct Investment in Panama was 5.3 billion in 2019, a 3.9 percent increase from 2018. These investors even enjoy special protections under the 2012 U.S.-Panama Trade Promotion Agreement.

“Because of the history in Panama, the Noriega regime, the invasion, etc., people weren't comfortable investing in Panama,” Wishnie said. “But that clearly has changed.”

Since 2020, Panama has focused on spreading this investment outwards from Panama City, and this year the government began a $240 million highway project to the rural Darién province. Moves such as these stimulate rural economies, but also come with an environmental cost. Panama has the highest forest cover of any country in Central America. However, since 2000, Panama has lost 8.5 percent of those trees and in 2022 alone, 67 square miles of land was deforested.

The rapid deforestation is of great concern to scientists given the unique importance of Panama’s flora and fauna. Adriana Bilgray, academic programs manager at STRI, explains that Panama is the only strip of land that connects North and South America. Its position at the cusp makes the country a critical funnel for the movement of bird, animal and plant species across continents.

“Panamanians always say that God is from Panama,” Bilgray said. “The bridge that was formed when the two Americas united, that bridge is Panama.”

The country has two main regions, separated by a mountain range that runs through the flesh of the isthmus. Playa Venao is situated on the Pacific side, meaning it’s largely dry and has very productive soil. But the bountiful landscape is both a blessing and a liability, as the conditions make it ripe for overcultivation from agriculture and environmental destruction from real estate development.

“All along the coast there's been development,” Wishnie said. “It does create opportunity. It obviously also creates dislocation for rural communities because they change very quickly driven by forces external, exogenous to the communities.”

Foreigners own 90 to 95 percent of the land in Playa Venao, often with differing objectives. The downtown area owned primarily by Israeli investors is where the largest-scale construction is unfolding. In contrast, the land on the western side of the beach, known as the Reserva Natural Achotines, was bought by two Americans and transformed into an ecological sanctuary to prevent development.

The two pulls of intense development mirror the divided opinions of the locals. Many work in the service industry for foreign business owners; it’s more lucrative and less physically laborious than activities like fishing or farming. These people also enjoy the added convenience of new amenities like the SuperVenao grocery store and Terpel refueling station.

But many Panamanians have begun to feel sidelined in their own community. They are concerned about the ecological cost and loss of their traditional lifestyle — a tension that reverberates throughout the country and continent.

“I'm really glad there’s an ATM and there's a gas station, but I think there should be more for the local Panamanians,” Miranda said. “It's mostly people not from the area who are coming in and doing their thing, their own way, for their people.”

The Eco Venao represents a more balanced, third vision for Playa Venao. This piece of land situated on the beach’s eastern end is a model for how a community seeking economic development can balance growth with environmental preservation. Founded by two brothers from Boston, Eco Venao is a privately owned 0.5 square mile reforestation and sustainable accommodation project.

The brothers are known for their quiet, behind-the-scenes approach. Locals say they keep a low profile, and since Playa Venao has gotten busier, they haven’t been living in the area. Unlike more recent foreign investors, tourists and expats weren’t on their minds when they bought the land in 2003. Rather than immediately developing, they instead reforested native plant species with the help of STRI.

“The owners’ idea was to have a little reforestation project,” Eco Venao head hotel manager Esteban Colo said. “But then the tourist explosion started in Playa Venao, and they said ‘hey, let's start building a house and maybe a hostel.’ Now we have the cabañas on the beach and different accommodations.”

While the project required initial investment, it is now self-sustaining with the revenue generated from hotel guests. Eco Venao plans to expand, but not nearly to the degree of their neighbors. As other construction is built flush to their property line, they remain firm in their commitment to reforest, consume water carefully and employ locals for skilled labor. Even though Eco Venao is less than a mile away from downtown Playa Venao, the impact of their work reverberates.

“I can tell you from experience when it rains in Playa Venao, sometimes it rains more here in Eco Venao than on the other side because the trees attract the rain and it permeates more,” Eco Venao receptionist Manuel Villareal told me in Spanish. “Our soil is more humid.”

Jonathan Clay, co-founder and real estate broker at Panama Sovereign Realty, said that Eco Venao’s efforts are gaining buzz among developers. While he admits that most developers don’t see value in Playa Venao’s natural landscape, some of his clients look to Eco Venao as a north star as they attempt their own ambitious development projects.

“We've closed a couple of land sales recently with investment and hospitality groups planning larger-scale residential projects,” Clay said. “The developers are committed to a low-impact, sustainable development model. They rightly consider part of the ‘sellable product’ to be the natural ecosystem that exists in Playa Venao.”

However, if a developer isn’t interested in conservation, there’s little blocking them from bulldozing. The massive real estate interest in Playa Venao is overwhelming the small local government’s ability to control it; it took years for the town hall even to begin to regulate and inspect construction projects.

“One of the main challenges has been the lack of a comprehensive, cohesive development plan,” Clay said. “It's been quite disorganized. As Playa Venao and the Pedasi district have grown, the need for a more unified development plan has become more urgent.”

In a fragile landscape already burdened by settlement, Covid further accelerated the pace of construction. The area welcomed its first supermarket, gas station, ATM and, most pivotally, 20 miles of solid road that wouldn’t wash away during rain. Playa Venao now has 800 full-time residents, with numbers rising on weekends and swelling during holidays. About 90 percent of those people are from outside Panama.

“During the pandemic, Playa Venao was the most popular place in the whole country for people to leave to do their quarantine,” Villareal said in Spanish. “Many have stayed and bought into the idea of coming to invest in Playa Venao.”

The impact of the pandemic-inspired development is now tangible; numerous massive building projects are underway, and the construction is overwhelming to many locals.

“Large, rapid capital flows like that can be positive and negative, usually both,” Wishnie said. “But they can be very destabilizing, and it can be very difficult for local people to have much say in how those capital flows work — particularly private capital flows, because they're private individuals and entities making decisions.”

Thus, there is palpable tension: resentment as many locals who wish for a slice of Playa Venao’s future become priced out by foreign investors and others are forced to drastically change their lifestyle to keep up with the pace of change.

Gilad Sivan first came to Panama from his hometown of Tel Aviv, Israel, to raise his children in a quiet, remote paradise. Moving out of their 200 square foot apartment gave Sivan and his family space to breathe.

“It was something about the energy in this space.” Sivan said. “There were other people, but they were literally in their corners of the bay. We could still walk barefoot, meet a horse on the way and pet it.”

At the time, Playa Venao had only 200 full-time residents and Sivan operated a restaurant out of his home. Two years ago, he reluctantly moved his business to the main street. He named his new restaurant Hummuseria to blend his Israeli heritage with the culture of Playa Venao. Ería roughly translates to “place of” in Spanish, so Sivan’s restaurant means “Place of Hummus.”

As a longtime resident, he found this move to be bittersweet. Sivan fervently insists that he’s different from the current wave of expats; he considered his cozy, in-home restaurant a beacon of the old, pre-development Playa Venao. However, he ultimately had to put his family first.

“It’s nice to be in an isolated corner far away,” Sivan said. “But then again, we need to be on the street to be known. After all, it's a business, of course. I need people to eat my food so I can feed my girls.”

Alarmed by the environmental impact of development, members of the Playa Venao community have also taken direct action. Scott Crystal is the founder of Tortugas Playa Venao (also known as Save The Turtles Playa Venao), a grassroots organization committed to protecting the nests of the Olive Ridley Sea Turtles, a critically endangered species that lays eggs on the beaches of Playa Venao each year.

Crystal is originally from northern Maine and has been visiting Playa Venao for nearly ten years. However, the first time he saw a turtle laying its eggs was in 2020. He said witnessing this phenomenon was a pivotal moment.

“I lay down in the sand beside the mama turtle while she was putting her eggs and looked up at the stars,” Crystal said. “So, I set up a GoFundMe campaign and raised $900, which was enough to build the nursery out of fencing and PVC and landscaping paper. The first day it was completed, we ended up relocating three nests.”

In their first year, Crystal and his volunteers collected 55 nests and released 4,541 baby turtles. The next year, they collected 237 nests and released 18,066 babies. This past June, Tortugas Playa Venao became Panama’s second project to engage in turtle tagging and scientific data collection in collaboration with marine biologists from MiAmbiente, Panama’s Environmental Ministry.

While Crystal sees this as a big win, it comes after years of frustration. Most of that time, Crystal found himself at odds with the government. He said he had to work extensively with attorneys and consultants to file documentation to be considered a “community-based organization,” the lowest tier for non-profits in Panama under MiAmbiente.

“Every time I went to submit the documents it was a different experience,” Crystal said. “Oh, this is not a blue pen. Nope, this isn't the right size paper. No, this doesn't have the accompanying letter.”

His experience highlighted the government’s failure to prioritize environmental protection, even for a critically endangered species.

“It's a very common thread of communities all throughout Panama,” Crystal said. “Development tends to win over because of the lack of transparency. The government is not really in favor of the environment.”

The local government did not respond to requests for comment. But Crystal’s claims of lack of oversight are not shocking: Panama received only 36 out of 100 in the 2022 Corruption Perceptions Index by Transparency International, an NGO that annually ranks countries’ perceived levels of public sector corruption based on a combination of surveys and institutional assessments.

Those working with the government argue that the truth is more complex. Adrien Benedetti is the former director of Panama’s National Parks Program and current director of the 1,000 Kilometer Trails Project, a collaboration between Panama’s Tourism Authority and MiAmbiente to build recreational trails and inspire green tourism in rural communities.

Benedetti acknowledges Crystal’s frustrations and said that many Panamanian environmental activists feel similarly.

“What we say here in Panama when you have a very small crowd of folks is ‘tienes tres gatos,’” Benedetti said. This expression directly translates as “there are three cats,” but in Spanish, the idiom means there’s hardly anyone. “It can feel like the environmental community is made up of the same ‘tres gatos’ who do a ton of work, but the community doesn't grow.”

However, Benedetti insists that the government is shifting priorities towards environmental preservation in rural communities. He said that the collaborative nature of 1,000 Kilometer Trails is evidence of that.

“In all my years working here, the Ministry of Environment and the Tourism Authority weren't really talking to each other or working together,” Benedetti said. “Especially after the pandemic, more people are aware of the vulnerability of rural communities, so there is a unique window to really make this happen. When I look at the future, I see a country that is a lot more comfortable with its nature.”

Even if government priorities are changing, the current reality is that Tortugas Playa Venao still runs on the support of volunteers and donations. Crystal himself has taken on the responsibility to educate animal poachers, work with beachfront properties to establish green corporate responsibility initiatives and encourage compliance with existing environmental regulations that go unenforced by the government.

The new post-pandemic wave of construction has made their work even more challenging. Despite existing regulations, many of Playa Venao’s new multi-level complexes and beachfront properties are built essentially right up to the high-tide line. This construction right on the shore leaves the turtles no room to lay their eggs in a safe place. So, Crystal worries that the upcoming turtle nesting season could be a physical representation of development encroaching too close onto nature.

At the national level, these stakes are more high-profile. In Panama, water and the economy go hand in hand. However, fresh water has become a vulnerable resource, putting the country’s most powerful economic engine — the Panama Canal — in jeopardy.

The 50-mile passageway connecting the Pacific and Atlantic oceans transports over $270 billion worth of cargo annually, generating over $2.5 billion in toll revenue. However, in 2019, fresh water supplies dropped to 106 billion cubic feet — significantly less than the 185 billion needed to operate the canal.

Wishnie said that the Panama Canal Authority turned to reforestation as an effective water management solution for this urgent crisis. They support reforestation efforts like Eco Venao across the nation.

“In drought years, there have been periods where they've had to reduce canal transits in order to maintain water supply,” Wishnie said. “So, finding ways to improve the management of that watershed for water supply is of high national interest.

Crystal is less optimistic than Wishnie that this will be enough to curb environmental destruction in rural Panama. However, he does see a glimmer of hope: Playa Venao’s biggest draw for locals, visitors and developers alike is its natural beauty. Without actively protecting biodiversity, the location loses not only the small beach-town magic, but also its coveted real estate appeal.

“Maybe we can make this the epicenter of regenerative tourism,” Crystal said. “There are several things that will not be as attractive if the environment is not protected. Knowing that I don't think we can count on the environmental authorities or the government entities to protect those standards, it’s up to us to take that responsibility."

Playa Venao’s future is unfolding in real time. The small homes that once speckled Playa Venao’s hilltop are already turning into a sea of wooden construction foundations. Ensuring these big changes come in conjunction with environmental protection and the empowerment of locals is a battle that many have taken up.

But the future of how these many groups reconcile their goals — and where the Panamanian government will put its full support — remains to be seen.

“Playa Venao has a special renown around Panama,” Miranda said. “I just hope they try to preserve our area as they increase. Make it better and not take so much or make us a small city. Have you been to Cancun? I wouldn't want Playa Venao to be something like that.”

This story was supported by a grant from the Pulitzer Center on Crisis Reporting.