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Panama Canal crisis as £1.2bn fix needed to stop it 'running out of water'


Unlike the Suez Canal, the 51-mile Panama Canal in southern America is fed by a freshwater lake, Lake Gatun. However, last year, the country of Panama suffered its worst drought on record, resulting in water levels in Gatun falling critically low.

“The level, as you see on the rulers, is 81.20ft,” said Nelson Guerra, the Panama Canal Authority’s (ACP) hydrologist to the BBC in March this year. “The level should be five feet more than now.”

Lake Gatun is reliant on rainwater, which has been in drastically short supply. October was the driest month since records began, seeing 41 percent less rainfall than normal.

As a result, the drought has continued to threaten the £213 billion worth of cargo that flows through the Atlantic-Pacific shortcut each year.

At the time of formation, Gatun Lake was the largest human-made lake in the world.

On average, 20 million litres of fresh water is used in a single passing of a ship. With reduced freshwater to operate the locks, the ACP was forced to cut the number of transits in half.

Beginning in 1904 and completed just over a decade later, the Panama Canal saved ships a significant amount of time and distance, which was about 8,000 nautical miles longer and saved travel time by about five months, according to Lindbald Expeditions.

The original locks are 33.5 metres wide, while a third, wider lane of locks was constructed between 2007 and 2016, allowing the transit of larger ships. Annual traffic has risen from about 1,000 ships in 1914 to over 14,200 ships in 2022 according to Statista.

To stop the Panama Canal from drying up completely, a new $1.6 billion, or £1.2 billion, reservoir is in the works to address the water shortages. According to the ACP administrator Ricaurte Vasquez, it is likely to take six years to build.

The future reservoir along the Indio River is expected to provide water security for years ahead to maintain a minimum of 36 transits a day to a maximum of 40 transits a day, according to SeatradeMaritime News.

The new Indo River reservoir will form part of the existing network of artificial lakes that have been built since the canal’s inauguration in 1914.

The project is estimated to cost an eye-watering $1.2 billion (£930 million), with an additional $400 million (£310 million) for investments in neighbouring communities.

Providing some relief, with the return of the rainy season, the canal has increased its daily transits to 35 slots after August 5 in both its Neo-Panamax and Panamax locks – relating the size limits for ships travelling through.

It was previously forbidden to build additional water reservoirs for the canal’s expansion outside of its watershed due to legislation passed in 2006. However, a recent court ruling returned the watershed to its original boundaries, extending and widening it and “giving the Canal a territorial assurance that we did not have before,” Vasquez said.

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