Bahía de Banderas (Bay of Flags) is both a bay and a municipality in the Mexican state of Nayarit.
The bay, site of the tourist destination Puerto Vallarta, is bounded on the north by Punta Mita and on the south by Cape Corrientes. It straddles the states of Jalisco and Nayarit and is the largest natural bay in Mexico. The municipality had a population of 83,739 in 2005 (59,808 in 2000) in a total area of 773.3 km². The municipal seat is Valle de Banderas with a population of 5,057 in 2005. Other towns are San Juan de Abajo (8,159), Bucerías (5,711), San José del Valle (5,188), San Vicente (3,543) and Jarretaderas (3,426). The municipality was created in 1989.
In the north the municipality borders Compostela, in the east with the state of Jalisco, in the south with the Pacific Ocean and the state of Jalisco, and in the west with the Pacific Ocean.
The economy is based on tourism, fishing and agriculture. The main crops are corn (maize), beans, sorghum, tobacco, rice, watermelon and mango. Exotic fruits like papaya, litchi and guanábana are also grown. Most of the planted area is irrigated. There are several packing houses for papaya and other fruits.
Tourism is very important and Bahía de Banderas is the most important site of touristic development in the state. With a coastline of 68 kilometers, Bahía de Banderas has attractive beaches and landscapes that have spurred development in the touristic sector. The long valley and abundance of water allow for extensive cattle raising. The mountains constitute an important ecological reserve.
Banderas Bay is also an important breeding and birthing ground for the Humpback whale (Megaptera novaeangliae).
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The Bahía de Banderas is regarded by most geologists as the original attachment point for the southern cape of the Baja California Peninsula before it was rifted off the North American Plate millions of years ago, forming the Gulf of California.[1]