Panama BayThe Panama Bay is a large body of water off the coast of southern Panama, at. It is a part of the greater Gulf of Panama.Mangroves86 miles of mangroves run along the rural coasts of Panama Bay, protecting Panama City and agricultural areas from storms.Pollution ProblemsThe Panama Bay is considered to be in an eutrophic state by the World Resources Institute. This is a result of ongoing pollution from agricultural and livestock operations. Urban wastewater from nearby Panama City has also contributed to the eutrophication of Panama Bay.