The climate crisis in Latin America is a governance problem

Latin America is urban, unequal and increasingly exposed to climate disaster.

Today, 81.2% of the region’s population lives in cities, a figure expected to climb to 89% by 2050. This rapid urbanization magnifies climate risks: Nearly half of Latin America’s capital cities are already classified as facing extreme risk. Storms, water scarcity, extreme temperatures and wildfires are among the most pressing hazards, but adaptation has lagged behind, constrained by weak governance, entrenched inequality and corruption.

The region’s largest urban centers are warming fast. By mid-century, according to Inter-American Development Bank data, the urban heat island effect could raise temperatures in the biggest cities by about 5 to 14 degrees Fahrenheit, with extremely hot days becoming 5 to 10 times more frequent.

Water stress, already crippling Mexico City and La Paz, is expected to worsen across the region as higher air temperatures and poorly maintained infrastructure push vulnerable neighborhoods to the brink. If left unchecked, increased reliance on cars and air conditioning could slash nearly 6% of economic output in the average city, according to the IDB.

These figures tell a stark story: Latin America’s urban future is at risk not just because of climate change, but because of governance failures. And few cities illustrate this more clearly than Panama City.

With 1.3 million residents, Panama’s capital is the country’s economic hub. Its rapid expansion — tripling in size between 1990 and 2015 — has been fueled by land speculation and imported urban models, with little thought to resilience. The result: The city has lost nearly half its mangroves in the last half-century, stripping away natural flood defenses. Sixteen percent of the city’s residents now live in informal settlements in flood-prone and poorly serviced areas, according to the World Bank.

Climate projections are sobering. Under a business-as-usual scenario, annual flood-related losses in parts of Panama City could rise by 750% by 2050. Rising temperatures, erratic rainfall and sea-level rise compound the threat. But the city’s greatest vulnerabilities are political.

As an official from Panama’s Ministry of Environment, who requested anonymity, told me, “To be completely honest, there is zero preparedness [to combat climate change in the city]. There is no climate change adaptation plan specific to Panama City.”

Panama City’s predicament reflects a broader Latin American dilemma: centralized decision-making paired with weak local authority. While cities are on the front lines of climate risk, local leaders often lack the budget, mandate or autonomy to act.

In Panama, national ministries dominate planning, leaving local leaders sidelined. This leaves municipal officials without autonomy to make decisions.

This dynamic is hardly unique. Across the region, smaller authorities face steep barriers to proposing or implementing climate action within larger urban administrations. The result is fragmentation. Each city improvises, but few are prepared.

Developers, not citizens, often dictate Panama City’s growth. Imported designs — glass towers modeled on Miami or Dubai — trap heat and drive up energy use. Green spaces are razed for profit, while poor families are pushed into floodplains or precarious hillsides.

This story repeats across Latin America. Political short-sightedness and the elite’s hijacking of urban planning mean that climate resilience is deprioritized. And the poorest pay the highest price: Those living in economic exclusion, lacking access to basic services or dignified housing, are at high risk and more vulnerable when adverse climate conditions hit.

Corruption and disconnection

Governance failures don’t stop at centralization. Corruption and weak enforcement allow construction in ecologically sensitive areas and undermine environmental safeguards. International frameworks like the Paris Agreement and Escazú exist on paper but remain toothless locally.

Underlying it all is a cultural disconnection. Environmental education is minimal, and sustainability is often dismissed as an elite concern. Panama’s education system, in particular, tends to sideline nature, leaving citizens with little awareness of the role they can play in climate action.

This pattern resonates across the region, where mistrust in government and weak institutional capacity are common barriers to adaptation.

Yet there are flashes of what works. The redevelopment of Panama City’s Vía Argentina, transforming a commercial street into a mixed-use, tree-lined corridor, shows how urban planning can enhance both livability and resilience. Officials I interviewed emphasized the potential of nature-based solutions — rewilding cities, restoring wetlands, planting trees — to reduce flooding, mitigate heat and boost wellbeing.

The lesson from Panama City is clear: climate change is not just an environmental threat, it is a governance test. When central governments sideline local authorities, when short-term profit trumps long-term resilience, and when citizens are disconnected from environmental responsibility, cities become unprepared and unstable.

Across Latin America, the stakes are rising. Urban centers concentrate people, wealth and power, making them both engines of growth and flashpoints of vulnerability. If leaders fail to act, the region’s cities will grow hotter, wetter and more unequal, threatening not only public safety but also democratic stability.

Panama City is a warning. Latin America must invest in empowered local governance, accountable institutions and inclusive urban planning or risk seeing its cities slide into an ungovernable crisis.

Cristina Guevara is a Latin America policy analyst and writer. She previously served as a policy and legislative advisor in Panama’s National Assembly.

Part of our opinion series The Unraveling of Latin America, this essay examines how government actions in Panama have worsened climate concerns.