Pottuvil Lagoon separates the main bay from the town of Pottuvil to the north — a shallow, mangrove-fringed body of water that is excellent for birdwatching. Species seen regularly include purple herons, painted storks, kingfishers, and various egrets. Crocodiles are present and visible most mornings if you scan the banks.
The best way to explore is by canoe or kayak — several guesthouses in Arugam Bay organise early morning lagoon tours that take you through the mangrove channels into the quiet interior. The flat, glassy water and the early light make this one of the more photogenic experiences in the area. The tour typically takes two to three hours.