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The republic of panama is an irregular 30,193square-mile (78,200-square-kilometer) strip of land connecting Costa Rica and Columbia. Early in the 20th century, the United States backed Panama in seceding from Colombia, paving the way for the construction of the Panama Canal, which provides a gateway between the Atlantic and Pacific Oceans by way of the Caribbean Sea. By the end of the century, the United States had relinquished the canal area to the Panamanians in compliance with the original treaty.

Panama's natural resources include copper, mahogany forests, shrimp, and hydropower. With a per capita income of $7,300, Panama is ranked 109th in world incomes. Some 37 percent of the 3,039,150 people live in poverty. Even though the unemployment rate is 8.7 percent, Panama has a serious shortage of skilled labor. Approximately 21 percent of the workforce are involved in agriculture. Nine percent of the population lack access to safe drinking water, and 28 percent have no access to improved sanitation. The United Nations Development Programme Human Development Reports rank Panama 56th on general quality-of-life issues.

Bordering on the North Pacific Ocean and the Caribbean Sea, Panama has 2,490 square miles (6,449 square kilometers) of coast. The tropical maritime climate is hot, humid, and cloudy. The rainy season lasts from May to January and is followed by a fivemonth dry season. The interior terrain of Panama is made up of steep mountains interspersed with upland plains. Land along the coast varies from plains to rolling hills. Panama occasionally experiences severe storms, and forests fires are a constant threat in the Darien area in the dry season.

Panama suffers from water pollution caused by agricultural runoff that is also threatening fishing. The depletion of the tropical rain forest is of major environmental concern, as are land degradation and soil erosion. Some 57.2 percent of the population live in urban areas where air pollution is a serious issue. Mining industries have proved to be the biggest polluters in the country. Currently, 38.6 percent of the land area of Panama is forested, and the government has protected 21.7 percent of the land. Panama's forests contain more species of wildlife than any other country in the Americas. Of 218 endemic mammal species, 20 are endangered, and 16 of 301 endemic bird species are threatened. In 2006, scientists at Yale University ranked Panama 37th out of 132 countries on environmental performance, placing the country above both relevant income and geographic groups.

The Institute for Renewable Natural Resources, the Ministry of Agricultural Development, and the Ministry of Health share responsibility for regulating and protecting the environment. The autonomous National Environmental Authority assists in developing strategies that promote sustainable development. Under the General Environment Law, these agencies work with the National Council of the Environment to implement and monitor all environmental laws. These laws are based on the principle that prevention should be the goal in protecting the environment. Consequently, environmental audits of all companies are made every three years. Through the National Environmental Council, relevant government ministries develop environmental polices according to the Constitutional Ecological Regime based on the constitution of 1972. Panama participates in the following international agreements: Biodiversity, Climate Change, Desertification, Endangered Species, Hazardous Wastes, Kyoto Protocol, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, and Whaling. The agreement on Marine Life Conservation has been signed but not ratified.

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