Psalidi is a cape that has the shape of an irregular triangle. At some point near the middle of the cape the ground has given in gradually leading to the creation of a wetland. Even though there are hotels and other tourist businesses in close vicinity to the wetland, the institutionalization of a General Urban Plan by the municipality of Kos helped preserve this rare ecosystem. The vegetation of the wetland is divided in 5 categories of natural habitats: purely marine ecosystems including Posidonia meadows, wet meadows including Juncus spp., scrublands including Tamarix smyrnensis, halophytic vegetation including Arthrocnemum spp. and Halocnemum spp. and garrigue scrublands.
The lagoon of Psalidi is a vital stopover for many rare or endangered migratory birds, such as the Little Egret, the Grey Heron, the Purple Heron, the Black-crowned Night Heron, the Glossy Ibis and the Western Marsh-harrier. This is also the place where hundreds of wild ducks, Eurasian Coots and flamingos spend the winter. Flamingos visit Psalidi almost every day because the water of the area is filled with zooplankton, namely their food source. Anyone wanting to observe life in the wetland can visit this place using special trails that have been built for this reason.