Don’t Drink the Water, it is Canal-Bound

The crisis caused by the drought in the Panama Canal keeps getting worse and its effects on global trade are swelling. This event underscores the significance of this interoceanic waterway, but also the environmental liability of this Latin American hub. 200 million liters of freshwater are needed each time a ship crosses the Canal, and that water ends up in the sea. Moreover, the Canal’s water usage contends with the needs of the population.

Canal de Panamá - Panama Canal

By Cristian Ascencio

The calamity taking place in Panama reminds us of a reality we tend to forget: an event in a small country may affect millions of people thousands of kilometers away. 2023 was the hottest year on record in Panama. Its lakes and rivers reached minimum low levels, which is bad enough already anywhere, but in the isthmus, water is of the utmost importance. Those very lakes and rivers feed one of the country’s main sources of income: the interoceanic channel. Without its waters, the locks through which ships transporting 6% of the world’s trade cross just don’t work. And now, the supply of water for millions of Panamanians is short. 

Only the Suez Canal, with 10% of the world’s cargo ships, exceeds the traffic of the Panama Canal. But there is a huge difference between them. The former doesn’t require water to operate, because it is basically a ditch connecting the Red and the Mediterranean Seas. But the latter works with a system of locks (a type of pool) that raises and lowers ships until they get to the artificial Gatun Lake, in the middle of Panama, located 26 meters above sea level. This process requires the locks to be filled with freshwater. 

In order for a single ship to cross the Panama Canal, 200 million liters of nonreusable freshwater end up in the sea. The process causes the salinization of Gatun Lake, which also supplies freshwater to a large part of the country.

In the face of scarce rainfall, the administration of the interoceanic waterway decided to cut down the amount of ships crossing daily from 38 to 24. It also restricted the ships’ draft. An auction system ensued and last November, a Japanese shipping company paid almost four million dollars to secure its transit and skip the line altogether. 

Shipping companies are transferring those costs to their clients. According to Bloomberg, Hapag-Lloyd AG, Maersk and Mediterranean Shipping Co., announced surcharges to cross Panama. Economist Inga Fechner explained to that platform that higher transportation costs due to longer routes will have a trickle down effect on the world’s consumers. 

And even though the United States and China are the top users of the Canal, other countries in Latin America, such as Chile and Peru, have also been affected, mostly because it coincided with the fruit harvesting season in the South American countries – fruits meant to be shipped to cities all over Europe and the east coast of the United States. 

To tackle the crisis, the Canal’s administration suggests building a new reservoir in the Indio River, which would necessarily imply drowning populated areas and, most likely, result in a social conflict. 

Jorge Luis Quijano, former administrator of the Canal, says that it is important to consider that currently “the drinking water required by at least two million people is contending with the Canal’s needs.” For Quijano, this issue will get even more complex, and pressure will mount in a scenario with shortage of water resources. “In 2012, we detected that the projection of water consumption we had for 2025 had been fulfilled,” he says. 

Consequently, Quijano explains, the technical studies contracted determined that a reservoir in the Indio River would give continuity to the Canal and to the population’s demand for drinking water. “In 2019, I spoke to each presidential candidate, because whoever got elected would have to deal with this problem… Obviously, nothing has happened in these four years.”

For Quijano, building new reservoirs is the best and fastest alternative for the Panama Canal’s continuity, and thus, to sustain its position as the most transited route of the west, and to cover the population’s growing needs for drinking water.

In the meantime, other countries are seeing what’s happening in Panama as an opportunity. And it goes beyond the perennial Chinese project of building a canal through Lake Nicaragua. In Colombia, President Gustavo Petro proposes an interoceanic canal in Choco. “The only department in Colombia to have coastlines on both the Pacific Ocean and the Atlantic Ocean is Choco. Shouldn’t it be the richest? That makes canals possible, either for rail or aquatic systems. Of course it can be done, and several are thinking about it,” the ruler said, as Infobae cited.

And in Mexico, the Interoceanic Corridor of the Isthmus of Tehuantepec is underway. Spanning 200-kilometers between the Pacific Ocean and the Caribbean Sea, it is expected to mobilize 300,000 containers by 2028 by land.

The aforementioned in addition to the detour of ships through the Magallanes Strait, in southern Chile. The sea lane was the only route to cross from the Atlantic to the Pacific until the turn of the 20th century. 

The challenges of Colombia and Mexico justify the position of building a reservoir in Panama. But many criticize the initiative. “Yesterday, I saw a tanker unloading water in Arraijan, an urban area located 20 kilometers away from Panama City,” explains William Hughes, economist and teacher at Universidad de Panama. He believes that this exemplifies the fact that the Canal has taken precedence over citizens.

The academic (who is part of the organization Frente Nacional por la Defensa de los Derechos Economicos y Sociales) upholds that Panama has to realize that it is illogical to continue flooding lands to inject freshwater to the Canal just because global trade demands it. “We decided we need to break the idea we have internalized about Panama being the Canal, and that without it there is no Panama; we must accept that the Canal has a physical boundary.”

Hughes asserts that the prior referendum approving the expansion of the Canal (in 2006), as well as the current proposal of the reservoir, have overlooked the impact of climate change. “Without detriment to the current position on global trade transit, we must assume that climate change is upon us, and that we are experiencing its effects, so we have to limit the amount of ships and its size (…) We can’t just continue looking for water wherever to inject it to the Canal.”

Hughes adds that, even though the world will resent these limits, climate change is opening up new routes, for instance, in the Arctic. “New possibilities will rise, but we can’t take this bullet in the name of global trade,” he says.

Environmentalist activists and farmers that live in the area of influence of the new reservoir share Hughes’s position. Coordinadora Campesina por la Vida, Movimiento Despierta Donoso / Omar Torrijos and Coordinadora Campesina por la Tierra, all oppose building a reservoir in the Indio River. 

Architect Ricardo Bermudez stands in the middle ground. Although he says that the works are necessary to guarantee the continuity of the Canal, he explains that there are many problems pertaining to efficiency. One of them is that the toll is based on ships’ size and cargo, and not on the amount of water it requires to cross. “Without water there is no Panama Canal, and as hard it is to understand, water is not factored in the toll. If a small boat or a ship crosses, water usage and the toll are the same, but it is not like that.”

Also, Bermudez says that the supplementary infrastructure of the Canal ought to be used better, for instance, the oil pipeline that traverses the country and allows ships carrying oil from Alaska to unload it in the Pacific coast to be sent through the oil pipeline to the Caribbean Coast, where it could be sent again. “If we manage the full existing potential of the basin correctly, and if we put water as the main component of the toll, we could seamlessly coordinate the interoceanic waterway with the other movement operations (i.e., the oil pipeline and railway), and it would result in an unbeatable service infrastructure.”

All in all, the discussion surrounding the Canal divides Panamanians into those who claim that the country’s economic future is at stake, and those who support setting boundaries in their small and frail territory. Precisely in a country that recently protested against mining, a case in which use and abuse of water resources was a critical point. Can Panama balance the interests of global trade and of its thirsty population? Let’s not forget that the Canal has a real and symbolic value in the race between the United States and China for global supremacy. In other words, the decisions of Panamanians will have repercussions many kilometers away from their borders.

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