Worsening drought threatens Panama Canal

Subject

Canal climate threats.

Significance

The Panama Canal Authority (ACP) has announced that it will introduce a 10,000-dollar surcharge on ships over 125 feet (38.1 metres) in length, with effect from February 15. Other fees will also be applied to vessels depending on water levels at the time of transit. Recent droughts in areas around the canal have reduced water levels, restricting the number of vessels that can transit the waterway. The situation -- largely attributed to climate change -- threatens to deteriorate further over the coming years, undermining the canal’s reliability as a logistics and transport hub.

Impacts

• Uncertainty over long-term canal revenue prospects may lead the government to rein in its spending plans.
• Canal water shortages are likely to boost environmental activism in Panama, not just related to the canal.
• The long-discussed Nicaragua canal would face similar water challenges, further reducing the likelihood that project will go ahead.