Panama Canal Plans New $1.6bn Reservoir

Panama Canal’s ongoing water shortage problems have prompted the Panama Canal Authority to explore the possibility of creating a $1.6bn reservoir to safeguard the globally-important canal against future droughts. 

The decision to explore a reservoir follows a ruling by Panama’s supreme court which has loosened the canal’s defined watershed. This widens the scope of the canal’s watershed, opening up the possibility for the creation of a new reservoir for the first time.

At present, the Panama Canal depends upon freshwater from Gatun Lake to operate its system of locks - with the canal’s new larger locks using as much as 50 million gallons of water per ship transit. 

However, as we’ve written previously, the arrival of the El Niño phenomenon in late 2023, combined with the impacts of anthropogenic climate change, has seen the canal having to introduce major water-saving measures - especially reductions in the number of daily transits. 

Naturally, this has caused significant issues for the global shipping industry, with lines such as Maersk having to temporarily switch their routes to a land bridge. 

As a result, the Panama Canal Authority has been exploring ways of maintaining water levels - with the most promising solution being the creation of a new reservoir. 

Whilst details remain scant, a statement from the authority suggested that, ‘One promising solution we are exploring is the construction of a new reservoir, which would provide capacity for an additional 11 transits’. 

Should the project proceed, it is expected to involve utilising the Indio River to create the reservoir. Construction will be carried out with the assistance of the U.S. Army Corps of Engineers. Initial plans would see the construction of a giant concrete-faced dam and a five-mile tunnel through a hillside to reach the canal’s current main reservoir. 

According to canal administrator Ricaurte Vasquez, the project will take approximately six years to complete at a cost of around $1.2 to $1.6 billion.

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