Panama: Unveiling the Ecological Dilemmas Along the Canal
The Panama Canal is a manufactured waterway that connects the Atlantic and Pacific Oceans, providing a significant shortcut for international maritime trade. Owned and administered by the Republic of Panama, specifically by the Panama Canal Authority (ACP), the Canal operates using a system of locks that function as water lifts, raising ships from sea level to the level of Gatún Lake, which is 26 meters above sea level. Ships then navigate through the channel of the Canal in the Central Cordillera of Panama. In 2016, the Canal underwent a significant expansion to accommodate larger vessels, directly increasing its demand for water. This resource is scarce and more than half of the country's population rely on the Canal's reservoirs — Gatún Lake and Alajuela Lake. The passage of one ship is estimated to consume as much water as half a million Panamanians use in a day.
The Panama Canal has both positive and negative impacts on the environment. The Canal helps significantly reduce global greenhouse gas emissions by offering a shorter traveling distance for ships, saving time and fuel. In 2020, it helped reduce more than 13 million tons of CO2 equivalent emissions. However, negative impacts include heavy deforestation rates in the surrounding rainforests due to logging and agriculture; an increased risk of invasive species being introduced to new habitats; water quality and supply issues — for both the Canal and local communities; habitat destruction and altered ecosystems, leading to species migration; and finally, increased vulnerability to the effects of climate change.Â
In addition to these challenges, the Canal has been facing a severe water shortage due to droughts, which has disrupted its operations and global trade. Recently, the drought has left the Canal without enough water to raise and lower ships, forcing officials to reduce the number of vessels they allow through. This has led to expensive problems for shipping companies and raised difficult questions about the Canal’s future.
This week, I talked to Allison Fedirka (AF), who is the Director of Analysis for Geopolitical Futures and a Senior Fellow at Global Americans.
In the following conversation, you will read about a range of topics related to the Panama Canal's operation, the challenges posed by water shortages, and the environmental impacts, with a focus on the resilience and sustainability of the waterway in the face of climate change.
1. Water Management Strategies
How does the Canal balance the water needs of maritime operations with those of the local population, especially during periods of drought?
AF: Approximately half of Panama’s population relies on the same freshwater supply as the Canal. These individuals are concentrated in Panama, Chorrera, Arraijan, and Colon districts. The Canal’s reservoir system also supports hydroelectric generation, food production, and other industries like tourism. In other words, the various actors draw on the same water source to complete activities that make important contributions to the national economy. The government and Canal authorities are two separate players that must work together when accessing these water resources. Priority favors local consumption over Canal transit, which also competes for water access with the previously mentioned economic activities. It’s important to keep in mind that the question of balance involves more than just water allocation. It must also accommodate declines in supply due to drought as well as behavioral changes in consumption, trade flows, and industrial activity.
2. Environmental Impact and Mitigation
What role does deforestation play in the water shortage issue, and are there reforestation efforts or land management policies being implemented to combat this?
AF: Forests help stabilize the overall climate by promoting carbon capture, retaining moisture in the soil, and reducing flood risks. In their absence, the environment is more prone to dramatic events and swings. For this reason, Panama introduced its National Forestry Plan 2050. It aims to conserve, preserve, and promote sustainable use of forest resources. This main strategy is buttressed by complimentary projects that include direct reforestation, water basin restoration, responsible consumer education, sustainable farming and ranching, development of indigenous communities and incentivizes to introduce carbon neutrality in the private sector.
3. Economic and Global Trade Considerations
How does the Canal's water shortage and environmental challenges affect Panama's role as a strategic logistics hub in the Americas?
AF: Panama’s role as a strategic hub in the Americas - and globally - stems from its geographic location, first and foremost. Water shortages in the Canal obviously reduce the transit of goods between the Atlantic and Pacific oceans, thereby putting into question this role. However, even prior to this drought, the government has been studying options to develop a dry Canal (i.e., land-based) that will ensure interoceanic transit in the event Canal operations become jeopardized. Additionally, the Foreign Ministry identified in its recent white paper other activities and roles Panama can fulfill to help maintain its relevance as a strategic hub in the Americas. This includes leadership in carbon neutrality projects, growing processing/distribution centers, and hosting global events, among others. The government remains committed to leveraging its geographic advantages in tandem with mitigating climate impact on Canal operations.
4. Future Projections and Planning
How does the Canal's water management strategy align with broader national and international efforts to address climate change and sustainability?
AF: Panama takes a proactive approach to address climate change and carbon capture and promote sustainable business practices. The country’s Canal, low-lying lands, and long coasts mean it cannot afford or recover easily from major climate disasters or events. The government also supports international efforts to fight climate change, such as UN programs and U.S.-led efforts like the Our Oceans Conferences. That said, climate disruptors and systems do not know or respect international boundaries. While Panama makes strong efforts to improve its environmental health, it cannot strongly influence the actions (or lack thereof) of other countries contributing to climate change and remains exposed to climatic events regardless.
To find out more about Allison’s work and research, click here. You can also follow her on LinkedIn.
Despite the environmental challenges highlighted above, the Republic of Panama has actively enacted relevant legislation to support mitigation and adaptation efforts. Policy highlights include:
The National Climate Change Strategy of Panama:Â focuses on addressing the potential impacts of climate change and developing public policy options to mitigate these effects.
The National Forestry Plan 2050: revolves around restoring and conserving the country’s forests to foster climate resiliency and improve environmental stewardship.
The National Energy Plan:Â includes a transition from fossil fuels to renewable energy sources, as the country aims to run on 70% renewable resources by 2050.
The Water Management System Program Reformulation:Â aims to provide a comprehensive solution to water scarcity in the Panama Canal, considering sustainable development, growth projections, and the impact of climate change on the waterway.
In conclusion, the role of the Panama Canal is undeniably significant in global trade and in Panama’s economy. However, it is equally crucial to recognize the environmental constraints it faces, heightened by the effects of climate change. The tug-of-war between its operational needs and environmental sustainability presents a complex issue. While Panama has taken proactive steps to address these challenges through various policy measures and strategic plans, the future resilience of the Canal is also much dependent on global efforts to combat climate change and the ability to adapt and innovate in the face of these problems.Â