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Many migratory waterbirds spend as much as three quarters or more of their annual cycle in migration or on the wintering grounds. Their populations depend not only on places to breed but also on the quality and continued availability of habitats within winter areas and along migration routes. The importance of identifying and protecting these nonbreeding habitats has been recognized by conservation organizations throughout the world and represents a formidable international conservation challenge. Due to its geographic position, Panama exists as a continental crossroads where large numbers of intercontinental migrants converge. The United States Department of Defense controls and manages greater than 32,000 hectares of land surrounding the Panama Canal. In 1977, President Carter signed the Panama Canal Treaty that ensures the transfer of United States landholdings to the Republic of Panama by the year 2000. In anticipation of this historic transfer and in recognition of the extraordinary natural resources contained within these lands, the Legacy Resource Management Program of the Department of Defense has funded a series of investigations designed to identify lands with exceptional ecological value so that they may be incorporated into future management plans. During the fall of 1997, the Center for Conservation Biology in collaboration with the Department of Defense and the Smithsonian Tropical Research Institute conducted an investigation of waterbirds within the canal zone and the greater Bay of Panama. Weekly aerial surveys were conducted along a 100 km segment of shoreline to determine the abundance, phenology, and distribution of intertidal waterbirds. Ground surveys were conducted twice per week within 15 field sites to determine habitat use patterns, abundance, and phenology of waterbirds using nontidal habitats. Banding operations were conducted weekly to determine population structure and turnover rates of Western Sandpipers. Migratory shorebirds were the most diverse and abundant waterbird group using the intertidal zone. The number of shorebirds using the tidal flats east of Panama City exceed the criteria of the Western Hemisphere Shorebird Reserve Network for classification as a hemispheric site (i.e. host to > 500,000 shorebirds). The Western Sandpiper was the most abundant species with a seasonal population estimate of 1.1 million. Other abundant species included Semipalmated Sandpiper, Semipalmated Plover, Short-billed Dowitcher, Black-bellied Plover, Willet, and Whimbrel. Information on habitat use and temporal patterns of abundance was collected for more than 70 species of waterbirds across three nontidal habitats. Open, nontidal wetlands supported the most diverse and abundant waterbird community followed by short grass and tall grass habitats. All three habitats supported a group of obligate species that used them nearly exclusively, as well as, a group of facultative species that used them as alternate habitats. Temporal patterns of abundance were highly variable and species-specific. Nontidal habitats within the canal zone do not rise to the significance level reached by the intertidal habitats east of Panama City. These lands do provide habitat to a diversity of both resident and migratory waterbirds. However, the conservation significance of these habitats is primarily on a local to regional scale.