Water

This paper develops a stochastic dynamic programming model to optimize water allocation in the Panama Canal System under climate uncertainty. By incorporating economic trade-offs across navigation, hydropower, and municipal supply, the model derives welfare-maximizing reservoir release policies that enhance system efficiency and resilience.

This paper examines how climate-induced water shortages in the Panama Canal act as non-tariff trade barriers, reducing U.S. trade by up to 8.4% during extreme droughts. Using a structural gravity model, it quantifies the economic impact of localized climate shocks on trade flows through a critical global chokepoint.