Conference of Party Perspectives - Adaptation of Costa Rica's and Panama's Hydropower Generation to Climate Change*

Arturo Sanchez, with Max Campos and Daly Espinoza
Complex Systems Research Center University of New Hampshire

(*reprinted with permission)
Preliminary results from the vulnerability and adaptation study to climate change in Central America are present in this paper. A methodology was conceptualized in order to tailor in- country needs and lack of data. Additionally, the developed methodology takes into account El Niño-Southern Oscillation (ENSO) as a climatic scenario for Panama and Costa Rica.

The main objective of this research is to describe possible adaptation measurements to potential impacts of climate change, using Costa Rica and Panama's water resources as a case study. Results obtained for countries such as Costa Rica and Panama, where 98% and 73% of all electricity comes from hydropower, are critical for a sustainable management of water resources under climate change conditions.

Adaptation measurements are directed to sectors dealing with availability, use, distribution and operation of water resources for hydropower generation in tropical countries, as they serve for discussion of a regional strategy of water resources adaptation to climate change. Measures such as building of new reservoirs, adaptation of old ones, and programs on energy efficiency addressed to the residential sector are proposed as alternatives to confront potential impacts due to climate change.

In addition, variables such as implementation of costs and environmental impacts are also addressed and discussed.

Latest scientific estimations indicate that changes in the global temperature may have an effect on the intensity and frequency of tropical cyclones affecting Central America (Brenes & Saborio, 1994). Additionally, changes in the intertropical convergence zone, and the speed and seasonality of the trade winds area are also expected. According to the scientific assessment of the Intergovernmental Panel on Climate Change (IPCC), it is also expected that climate change may affect important economic activities such as: forestry, biodiversity, water resources, agriculture, human health, and coastal and marine ecosystems (Houghton, et al., 1990).

Because of Central America's water resources richness, most countries have high dependency on hydropower generation. Changes in circulation patterns that might affect seasonality and the amount of rainfall would represent a major impact on energy generation. Recent experiences with El Niño-Southern Oscillation (ENSO), provide important evidence of these important changes. ENSO manifestation in Costa Rica and Panama is mainly related with a decrease in the amount of precipitation, especially along the Pacific coast. In Costa Rica ENSO affects directly important hydropower sites such as the Arenal and Ventanas-Garita dams where a significant reduction on runoff is observed (Costa Rica, 1989).

In this paper we study the importance of water resources for electricity generation in both countries, as well as the benefits for income that this sector generates for Costa Rica's and Panama's gross domestic product. Trends in energy production are studied, and the growing dependence of their economic activities on hydroelectricity is evaluated.

It is hypothesized that vulnerability and future responses of the energy generation sector to climate change are correlated with their response to ENSO; there might be differences between climate scenarios from Global Circulation Models (GCMs) and ENSO scenarios.

This paper is based on preliminary results from the Central America Project on Climate Change (CAPCC), whose main objective is to estimate the vulnerability of water, agricultural and coastal resources to potential climate change. Climate scenarios developed for CAPCC are at this stage under review, but they will constitute a source of improvement for this study. Seven countries are involved in the project. Each country has organized their own national team and developed their own studies. The activities are executed under the guidance, coordination and cooperation of the Central America Technical Team on Climate Change formed by a group of experts on each field with the assistance of the United States Country Study Management Team (USCSMT).

Climatic change scenarios developed by the CAPCC are based on considerations from Global Circulation Models (GCMs), and represent regional scale climatic conditions. This presents a problem of scale for regional watershed planning (Sanchez, 1993). Therefore, for the purpose and objectives of this study, in which the basins have been used as the main studying scale, a climatic approach, related to climate variability (ENSO) is considered.

Utilization of climate variability as a climate change scenario, is considered because of the observed relationship between changes in patterns of electric generation (thermic and hydraulic).

ENSO phenomenon is an important source of interannual variability in weather and climate around the world. The Southern Oscillation (SO) is a global pattern principally consisting of a seesaw in atmospheric mass involving exchanges in air between eastern and western hemispheres centered in tropical and subtropical latitudes. El Niño is an anomalous warming of the eastern tropical Pacific Ocean but, in major "warm events," it extends over much of the tropical Pacific and, it is in these cases, where it is clearly linked to changes in the atmosphere, manifested as the SO. ENSO results from an interaction between changes in the tropical Pacific Ocean and the global atmosphere. Surface atmospheric winds drive tropical ocean currents and change the sea surface temperatures, which in turn, alter the location and strength of atmospheric convection and precipitation in the tropics, and so change the atmospheric heating patterns, atmospheric waves and the winds in the tropics (Trenberth, 1989).

Costa Rica's and Panama's Case Study

Vulnerability studies for the water resources in Costa Rica and Panama indicate that there is a high dependence between vulnerability of water resources and economic and population growth.

Costa Rica has a high capacity for hydropower generation. Total power generation for the 34 main drainage basins is being estimated on 223,000 GWh/yr and total theoretical energy power is estimated to be 25,450 MW (Costa Rica, 1990a). There are also several small drainage basins each with a generation capacity around 20 MW for a combined production of 1000 MW.

Energy demand in Costa Rica is strongly correlated with population growth (r2 = 0.87), gross domestic product (r2 = 0.85), number of people with electricity (r2 = 0.90) and the urban growth (r2 = 0.93). The rate of growth of energy consumption has oscillated since 1966 with a strong relationship to population growth, but also reflects impacts of climatic variability and different economic crisis experienced in the country (Figure 1).

Figure 2 presents Costa Rica's evolution of installed capacity for the 1965-89 period. It can be observed that most of the demand is supplied by construction of new hydropower complexes. During 1982-87 Costa Rica's installed capacity covered 80% of the demand and for 1989 it covered 84%. Current installed capacity covers 98% of all energy demand.

Despite Costa Rica's high availability for hydropower generation; population growth, high rates in energy consumption and ENSO have produced a greater gap between offer and demand. As a result, Costa Rica imported 77.8 GWh electricity for the first time on 1986. Energy imports have grown steadily since then, 159.5 GWh in 1987, 190.6 GWh in 1988 and 152.0 GWh in 1989 (Costa Rica, 1990b; Costa Rica, 1992).

Current Costa Rica's policies to confront energy demand consider building of new hydropower complexes, geothermic generation, and lately, wind generation as the main resources. Less than 2% of all the global demand is covered by thermic generation, but it is expected to grow as a result of current cuts from the government expansion plans of critical hydropower complexes.

For Panama, by the middle of 1960 and early 1970, most of the electricity was generated by burning fossil fuels. Despite the fact that during the late 1930s hydroelectricity was already generated at the "Macho Monte Station," it was until the middle of the 1970s when the "Bayano" started its operation that hydroelectricity balanced the thermic generation (Figure 3). Thermic generation has been almost constant since the 1970s, however, hydroelectricity production received a large impulse in 1984 when "La Fortuna" station was built.

The energy demand in Panama, as in Costa Rica, is strongly related with the growth in the gross domestic product and population growth. The direct contribution of the electricity sector to Panama's economic growth, even though it is small when compared with other sectors (3.4% for 1994), represents a large benefit when it is associated with sectors such as industry (9.3% for 1994) and commerce (11.6% for 1994).

Panama's thermic and hydroelectric generation is driven mainly by demand, but also is affected by changes in climate. This, as mentioned before, can be exemplified by the relationship between ENSO and the changes in generation patterns.

Analysis of Results

From Figure 4, you can see Costa Rica's heavy dependence on hydropower generation. Long term vision of previous governments as well as highly efficient management of demand since 1966 has produced a set of hydropower complexes at critical points of demand. These policies have produced high storage capability that tends to buffer effects related to climatic variability. It can be observed that only during the 1977-78 El Niño, was there an increase on thermic generation; extraordinary for the whole time series (Figure 4). As a result of construction of new hydropower plants, the 1982-83 and 1986-87 El Niño anomalies were not even detected in terms of hydropower generation. In Panama, it can be observed from Figure 5, that during the years that follow El Niño occurrence, there was a clear decrease in hydropower generation, having to generate more thermic energy in order to satisfy the demand (Panama, 1994). This phenomenon increased the dependence on fossil fuels and increased greenhouse gas emissions.

It can be inferred that, if a phenomenon such as El Niño has a strong impact on hydroelectricity, a decrease of 15-20% in the total amount of precipitation for the region, and changes in distribution as a result of climate change may cause a severe impact not only on the electricity sector but also on the associated activities that depend on this service.

Adaptation Measures

Adaptation policies of Costa Rica's and Panama's water resources depend on measurements related to long range planning, demand management, and supply development and management. Implementation of these measurements is complicated by the difficulty to distinguish between natural variability and long- term climate change.

Long-term planning should look at energy system robustness and the expansion capability of current hydropower plants. This means that current planning goals should consider a "wide soft component" that can be reviewed over time to evaluate the system's response to climate change as our knowledge increases over time. Long term plans should also be related to economic sustainability, ecosystem integrity, social desirability, implementability and equitability (Klemàs, 1993).

Aspects such as demand management and supply development and management are even more difficult to implement. The general paradigm related to price control, legislation, current consumption practices and allocation of resources from governments, more concerned with satisfying current demand and short term problems, complicates long term climate change visions. Despite the existing knowledge of the potential problems from climate change, it is difficult to implement measurements in developing countries which are more concerned with what is going to happen in the next 5 years than in the year 2075. As a result, it is almost impossible to implement climate change adaptation measurements for long term scenarios. We hypothesized that reactions given in the past and related to climatic variability, can be a good example or analogy of a potential response to climatic change in the long term.

As has been shown before, Costa Rica and Panama are countries with high dependency on hydropower energy, a 98% dependency for Costa Rica and 73% for Panama. In both cases a sound and broad set of measures is required to confront possible climate change. These measures are based on current Costa Rican and Panamanian institutional policies regarding energy planning.

The goal is to provide an adaptive response and discussion framework for policy makers on areas related to availability, use, distribution, and operation of water resources for hydropower generation. The proposed strategy is developed around the question addressed by Stakhiv (1993): should we adapt incrementally to the explicit signals of climate change, or should society develop an anticipatory strategy to ameliorate the expected adverse impacts?

A strategy regarding adaptive measurements should consider the environment, the human society, and their social and economic development as a whole, as part of a national strategy for sustainable development.

As a first measure, Costa Rica is implementing a national strategy to improve energy efficiency. A nationwide strategy to reduce energy consumption and to encourage use of more efficient appliances is currently implemented by Costa Rica's Electricity Institute (ICE). This strategy focuses on a newspaper, radio and television campaign which gives emphasis to current environmental and climatic stress over key reservoir sites, and their impact on hydropower generation. In addition, incentives are also planned for people who reduce their energy consumption. This first step is probably the most important taken by the government towards energy savings. The previous measures were addressed to adapt incrementally to explicit signals of climate change, and deal more at a conscience level. Under the new policy people learn the value of energy savings and take responsibility towards society.

In Panama's case study, measures are related to the improvement of bill collection and price control. At the same time a huge effort is undertaken to decrease energy losses from energy generation, transmission and distribution which reaches 72% GWh for 1994 or 21.4% of all energy generated by the country (Panama, 1994).

Anticipatory measurements are more complex to implement. In the first place, they have to deal with short and long term energy plans, as well as consider the uncertainties related with estimates of impacts produced by climate change.

As a result of potential impacts of climate change in Costa Rica and Panama water resources we can foresee an increase in construction of new hydropower plants as a priority as well as an increase in thermic generation. Two consequences are expected: direct impact on the economy and an increase on greenhouse gasses from fossil fuel burning.

Measures to confront potential climate change impacts in Costa Rica and Panama, related to the increase on number of hydropower plants and the improvement of old ones will produce the greatest ancillary benefits.

Hydropower energy is a "clean energy" and in some cases the more expensive in short term. Hydropower construction policies are expected to have direct impacts on the environment, especially on un-explored areas where hardly anything is known regarding issues such as biodiversity.

Even though this form of "clean energy" has the highest priority for the countries, it will have direct impacts on the national economy. In general, these hydropower plants are constructed using international loans from organizations such as the Inter-American Development Bank, the International Monetary Fund or the World Bank. If the construction of such projects are not carefully planned, impacts on the local economies and the social system must be expected as a result of an increase of the external debt.

The second measure to consider: increase in fossil fuel use by thermic plants, presents the highest risk for the global environment, not helping with the general agreement stated by the United Nations Framework Convention on Climate Change. In the short and middle term, we expect an increase in the "petroleum bill," which will be passed directly to the people as the "thermic factor."

Despite the uncertainties on the issue of climate change, the first of the options (clean energy) is more realistic for middle and long term planning. It is also important to consider that most of the current climate change scenarios are considering impacts around the year 2050. Under this timeframe, most of the current projects will be out of operation, and even the ones being considered for construction around the year 2010, will be close to their life expectancy. In this regard, it will be necessary to plan new mitigation and adaptation measurements that will consider a sustainable management of the drainage basins in terms of land use as well as a constant evaluation of the soft component element of future hydropower plants. As part of this evaluation, use of state-of-the-art tools such as remote sensing, digital elevation models and geographic information systems will give new insights in terms of natural resources management in the tropics (Sanchez & Harriss, 1994). At the same time it will be necessary to increase people's awareness of climate change's potential impacts through education.

It is also important to address that Costa Rica's and Panama's response to climate change must be considered not only as a nationwide plan, but as a part of a regional initiative. For example, Costa Rica's annual electricity deficits are supplied from Honduras. As a result, construction of new hydropower plants to confront the impact on runoff reduction must consider current interdependencies between countries.


Funding for this work was provided by the U.S. country Study Program, Federal Grant Number EPA-CX822535-010, Sanchez-Azofeifa was also supported by a Fulbright scholarship for Ph.D. Studies at the University of New Hampshire. We would like to thank the Central America Committee for Hydraulic Resources (CRRH), the Central America Commission on Environment and Development (CCAD), and the Central America Project on Climate Change (PCCC) for their support. Special thank to Dr. Joel Smith and the reviewers for their contributions.


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