Panama Canal Water Crisis: Threats to Business and International Trade

2023-08-26 14:58:15

25/08/2023

The Panama Canal must improve the availability of water if it does not want to lose its business, warned this Friday the last administrator of the Panamanian highway, Jorge Quijano, at a time when the maritime route has had to restrict transit due to the drought.

In context: Due to drought, the Panama Canal imposes navigation restrictions and will put pressure on international trade

“When I say that it is going to affect the business, it is not that it is going to close. Ships are always going to pass here, ”he added. According to Quijano, the canal generates 2.5 billion dollars in profits for the state, but without the necessary water “we are simply going to lower that to 1.8 billion or something like that.”

His statements come at a time when the canal is facing a water crisis, which has led to restrictive measures in transit and the draft of ships, causing lines of vessels waiting to cross the road.

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The Panama Canal uses rainwater to move ships through the locks.

For each ship that crosses the route, some 200 million liters of fresh water are discharged, which the canal obtains from a hydrographic basin through the Gatún and Alhajuela lakes.

However, this basin, which also supplies the country with drinking water, was modernized for the last time in 1935, when there were some 6,000 transits through the canal, less than half the number now.

In addition, at that time the Panamanian population did not reach half a million people, once morest 4.2 million today, half of whom are supplied with water by the canal.

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“There is exponential consumption on both sides, human consumption and consumption by the Panama Canal, for which the two reservoirs were built.”

The Panama Canal Authority is conducting studies to find new sources of water, but the restrictions have triggered fear that the shipping companies will decide to change the route to transport their merchandise.

If the costs of going through the canal under these circumstances are “excessive,” users “will look for another route and the route that normally competes with us is the Suez Canal,” Quijano said.

“Let’s focus on finding that water to survive and maximize the three locks we have today,” he added.

You can also read: Three out of four people will live in drought in 30 years

Up to 6 percent of world maritime trade passes through the 80-kilometre canal. Its main users are the United States, China and Japan.

In the last fiscal year, 518 million tons of merchandise transited through the isthmus and the canal generated 4,323 million dollars, of which it delivered 2,500 million to the State.

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