Since its completion in 1914, the canal has been one of the most important international waterways, handling approximately five percent of world trade. To put things in perspective, an average of 34 ships go through the canal every day, and it takes 52 million gallons of water (roughly 82 Olympic-sized swimming pools) to move each ship through. This summer (2016), a $5.4 billion dollar expansion project was completed following nine years of dredging, land-blasting, and 16 100-ft tall sluice gates for the canal’s locks. “We knew for a long time we had to think about expanding, otherwise we would lose relevancy in the world,” said Ilya R. Espino de Marotta, who oversees the project for the Panama Canal Authority, an autonomous agency of the government of Panama.
However, the relevancy of the canal lies in question due to climate change, which could negatively affect both the Panamanian economy and the efficiency of global supply chains. Extreme weather conditions that lead to floods and droughts could pose a huge risk to the consistent water supply the canal operates on.
The expanded canal promises improved shipping options for global manufacturers, retailers, and shippers, enhanced logistics, maritime service and supply-chain reliability. The project has not been anything short of colossal with the construction of a new set of locks on the Atlantic and Pacific sides of the waterway that create a third traffic lane that doubles cargo capacity on the canal. But the expanded canal survive the threat of climate change?
The World Bank found that between 1982-2008, Panama suffered 32 natural disasters that cost the country $86 million. Beyond the obvious threats to human and ecological systems in the region, the risk of global warming also affects shipping traffic on the Canal. In August 2015, as a result of El Niño (which causes sea surface temperatures in the eastern Pacific to rise) ship traffic was restricted for 20% of the 14,000 shops that travel through the waterway annually. The Panama Canal has been a central node for world trade, facilitating more than 300 million tons of products every year between the Atlantic and the Pacific oceans, but events such as this could lead to Central America and the Panama Canal becoming a less reliable passageway for vessels. On a larger level, sever restrictions on the use of the canal could put pressure on transport systems that would undoubtedly lead to changes in global supply chain patterns going forward.
“Climate change will lead to reduced river flows or lake levels in some areas with severe implications for navigation and port access. Increased shipping or improved inland transportation in areas where higher temperatures will increase ice-free periods is likely to benefit some ports. For instance, the opening of the Northwest Passage could provide a commercial alternative to using the Panama Canal, which would decrease shipping movements in Central America.”
The Panama Canal Authority has already taken steps towards using water efficiently and sustainably – the canal expansion project has reduced overall water use by 7 percent. “For Panama, it’s extremely critical to have a sustainable management of water resources throughout the basin of the Canal, particularly in the section that maintains appropriate water levels in Gatun Lake,” said Mr Ricardo Mena, head of the Regional Office for the Americas of the United Nations Office for Disaster Risk Reduction (UNISDR).
Beyond water management policies, the Panamanian President, Juan Carlos Varela confirmed Panama’s commitment to Sustainable Development Goals (SDG’s) and the 2030 UN Sustainable Development Summit’s agenda. The Panamanian government needs to take a stronger stance on sustainability and consider the long-term implications of climate change on the canal more seriously, rather than focus on short-term profitability for the private sector.
This week, the Panama Canal Authority launched the Environmental Premium Ranking to rewards shippers with vessels that meet high environmental efficiency standards starting January 1, 2017. “With the addition of the Environmental Premium Ranking to our Recognition Program, we’re rewarding those who make conscious efforts to reduce greenhouse gas emissions and invest in technology that will make shipping even more efficient,” said Panama Canal Administrator Jorge L. Quijano. Initiatives such as this are steps in the right direction for the Panama Canal.
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 McDonnell, Patrick J. and Natalie Kitroeff. “$5.4-Billion Expansion of Panama Canal Could Reshape World Trade Routes”. Los Angeles Times 2016. Web.
 The World Bank,. Panama, Impacts And Vulnerabilities. Climate Change Knowledge Portal, 2016.
 Panama Canal Expansion Study. U.S. Department of Transportation – Maritime Association, 2013. Print. Developments In Trade And National And Global Economies.
 Ng, Koi Yu Adolf et al. Climate Change And Adaptation Planning For Ports. New York: Routledge, 2016. 159.
 “Easing Impact of Drought On The Panama Canal – UNISDR”. Unisdr.org.