Carbon market may fund dam in Panama that threatens natural reserve

The UN's Clean Development Mechanism (CDM) — a scheme that provides funds to projects that reduce emissions in developing nations — may be used to finance a hydroelectric dam in Panama which, according to environmentalists, threatens a biologically rich World Heritage site and an indigenous tribe, the Ngobe.

AES Corporation, a Virginia-based company, is overseeing the dam's construction in the Palo Seco Protected Forest on the Rio Changuinola. The river flows out from La Amistad International Peace Park and Biosphere Reserve (UNESCO World Heritage sight), a park that is shared by Panama and Costa Rica.

The American firm has requested carbon credit certification under the CDM for the project, claiming that the dam will help against global warming. However, recent research suggests that tropical dams release methane, a gas which has more than 20 times the global warming potential of carbon dioxide.