Abstract
Land cover change in watersheds affects the supply of a number of ecosystem services, including water supply, the production of timber and nontimber forest products, the provision of habitat for forest species, and climate regulation through carbon sequestration. The Panama Canal watershed is currently being reforested to protect the dry-season flows needed for Canal operations. Whether reforestation of the watershed is desirable depends on its impacts on all services. We develop a spatially explicit model to evaluate the implications of reforestation both for water flows and for other services. We find that reforestation does not necessarily increase water supply, but does increase carbon sequestration and timber production.