groundwater. Because watersheds are complex systems, each tends to respond differently to natural or human activities.

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1 The private development of Altos del María is located at an altitude between 550 and 1,000 meters above sea level in the environmentally sensitive Cordillera Central of Panama that separates the Pacific Ocean from the Atlantic. Altos del María covers an area of over 3,700 hectare s situated in the Municipalities of San Carlos and Chame. Altos del María is the natural habitat for Panama s unique fauna, animals and 100 s species of birds. Due to its location and altitude it is a natural area for the collection and distribution of water for this central area of Panama, feeding into the Municipalities of Chame, San Carlos and Capiera. Within the boundaries of Altos del María there is over 72 kilometers of roads and is broken down into small parcels of land which are then sold. To date just over 1,600 lots have been sold with 100 s more available or yet to be made available for purchase. Currently just over 300 homes have been built on these lots with just over 100 occupied by full time residents. The remainder of these homes are weekend homes or unoccupied and available for purchase. Annually an average of 20 new homes are built in Altos del María, with this number increasing as the economy of Panama strengthens. As with any development of this size, the environment is stress and changed. The pattern of animals have been disrupted and the natural fauna has been manipulated to meet the needs of the development. There is also indication that the natural flow and distribution of water within and outside of the development has been impacted. To better understand how the supply and distribution of water has been impacted by the ongoing development of Altos del María, we must first review how water is naturally collected and distributed. The total land area that contributes to surface or groundwater is called a watershed, drainage basin, or catchment area (This is the area where Altos del Maria is situated). The volume of water available for municipal supply depends on the size of the watershed, the slope of the ground, the type of soil and vegetation, and the type of land use. Water is in constant circulation, powered by the energy from sunlight and gravity in a natural process called the hydrologic cycle. Water evaporates from ocean and land surfaces and is held temporarily as vapour in the atmosphere, it than falls back to the Earth s surface as precipitation. When the rate of precipitation exceeds the rate at which runoff seeps into the soil, evaporates, or is absorbed by vegetation, bodies of surface water such as streams, rivers, and lakes are formed. Water that infiltrates the surface becomes groundwater, slowly seeping downward into extensive layers of porous soil and rock called an aquifer. Under the pull of gravity, groundwater flows slowly and steadily through the aquifer. In low areas or under pressure it emerges in springs and streams. Both surface water and groundwater eventually return to the ocean, where evaporation replenishes the supply of atmospheric water vapour. Winds carry the moist air over land, precipitation occurs, and the hydrologic cycle continues. Stream flow varies in response to climatic factors and human activities. Streams are a dynamic part of the environment and are good indicators of what is happening in a watershed (such as where Altos del Maria is located). Stream flow in a watershed area includes all water contributed from headwater areas, stream banks, channels, flood plains, terraces, connected lakes, ponds, wetlands, and

2 groundwater. Because watersheds are complex systems, each tends to respond differently to natural or human activities. The physical characteristics of a watershed (land use, soil type, geology, vegetation, slope, and aspect) and climate control the quantity and quality of water that flows from them. Changes to any of these characteristics can affect water quantity and quality. For example, the removal of vegetation or construction can change the water storage and infiltration characteristics of a watershed. Because developed areas contain less vegetation to slow runoff and hold soil in place, the rate and quantity of water that runs off the surface to streams increases and less seeps into the ground replenishing the aquifers. During heavy rains, the increased runoff and erosion can also result in the increased chance of flooding, mudslides, and impaired water quality. Groundwater is a significant source of drinking water as it not only is pumped from the ground, but a significate amount empties in streams and rivers to keep them flowing year round. As water seeps into the ground it creates an aquifer, the area where water fills the aquifer is called the saturated zone (or saturation zone). The top of this zone is called the water table. The water table may be located only a foot below the ground s surface or it can sit hundreds of feet down. Aquifers are typically made up of gravel, sand, sandstone, or fractured rock. Water can move through these materials because they have large connected spaces that make them permeable. The speed at which groundwater flows depends on the size of the spaces in the soil or rock and how well the spaces are connected. Groundwater can be found almost everywhere. The water table may be deep or shallow; and may rise or fall depending on many factors. Heavy rains may cause the water table to rise, or heavy pumping of groundwater supplies may cause the water table to fall.

3 Groundwater supplies are replenished, or recharged, by rain that seeps down into the cracks and crevices beneath the land's surface. In some areas people may face serious water shortages because groundwater is used faster than it is naturally replenished. In other areas groundwater can be polluted by human activities. Water in aquifers is brought to the surface naturally through a spring or can be discharged into lakes and streams. Groundwater can also be extracted through a well drilled into the aquifer. Shallow wells may go dry if the water table falls below the bottom of the well. Some wells, called artesian wells, do not need a pump because of natural pressures that force the water up and out of the well. Water has such a strong tendency to dissolve other substances and it is rarely found in nature in a pure condition. When it falls as rain, small amounts of gases such as oxygen and carbon dioxide become dissolved in it; raindrops also carry tiny dust particles and other substances. As it flows over the ground, water picks up fine soil particles, microbes, organic material, and soluble minerals. Groundwater usually acquires more dissolved minerals than does surface runoff because of its longer direct contact with soil and rock. It may also absorb gases such as hydrogen sulfide and methane. In populated areas the quality of surface water as well as groundwater is directly influenced by land use and by human activities. For example, storm water runoff contaminated with agricultural or lawn pesticides and fertilizers, as well as with road oils, can flow into streams and lakes. In addition, effluent from malfunctioning septic tanks and subsurface leaching fields can seep into groundwater. With the development of Altos del Maria some irreversible changes have occurred to this significant watershed area. One of these changes is a reduction of water that replenishes the groundwater supply, by building roads and homes less area is available for water to seep into the ground. The reduction of area for the replenishment of the groundwater supply increases the amount of surface water which quickly runs into the rivers than deposited into the ocean. This development has also had an impact on the natural flow of the water. Water that once naturally flowed into the river or ground has been diverted.

4 Roads and homes have reduced the areas where natural fauna provided shade and hold rain water. By providing less shaded areas, more water is available for evaporation, thus reducing again the amount of water that replenishes the ground and surface water supplies. Additional contamination to the water supply has occurred due to increased development and continues to increase as more people build homes in Altos del Maria. Use of herbicides, pesticides and home cleaning chemicals along with the effluent from septic systems are all on the rise. Based on reports from people who live in communities outside and for kilometers below the development of Altos del Maria there have been indications of natural springs drying up or the flow from these springs dramatically decreasing. The final impact is the amount of water consumed by residents and the developer. This water is used for construction, irrigation of gardens and lawns, pools and personal use. With the addition of new housing on existing properties, the consumption of water usage in Altos del Maria continues to increase annually. For each liter used in Altos del Maria it is one less liter available elsewhere. While none of these factors on the own have had a major impact, combined it adds up to a large amount of water that has additional contaminants or is no longer reaching the thousands of people who rely on water from this important watershed area. Within the development of Altos del Maria there are four sources for the supply of water to property owners. Three of these sources are from natural springs that have been dammed to create a reservoir and the fourth is a well. The water from these sources is moved through hundreds of kilometers of piping to strategically located holding tanks. From these tanks water is than distributed to each property owner. Due to limitations of this water supply infrastructure, property owners in a number of areas within Altos del Maria are regularly without water for up to a day at a time. It has also been reported that this infrastructure has flaws in it where up to 30% of the water is lost. Also with Altos del Maria some property owners have taken it upon themselves to build small dams to create ponds or to have a secondary source of water for irrigation. The development of Altos del Maria has provided a significant economic benefit to surrounding areas and will continue to do so as more homes are built on exiting lots. Altos del Maria has also provided a unique opportunity for people to live close to nature with a modern infrastructure. For the developer it has been a huge undertaking, investment with a long term vision. It would be difficult to reverse the development that has already been approved and it would have an impact on the dreams and investment of those who have purchased property in Altos del Maria and wish to build homes in the future. What must be considered at this point is: What impact will additional development have on this significant watershed area? How will the thousands of people who rely on this water supply be affected? More importantly how will future generations be impacted? Before providing any more approvals for development, an in-depth study needs to be conducted to fully understand what the impact will be to everyone s water supply before irreversible damage is done. Any immediate economic benefit from new development will not compensate those who have no fresh water today or in the future. Within 5 to 10 years the population in Altos del Maria will double within the existing infrastructure, this is without any further development being approved.

5 This document is intended for discussion purposes only. Further study by independent experts is required to validate and determine the short and long term implications of development with this important watershed area. No decision should be made based on information contained in this document alone, but in conjunction with an independent review.

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