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How climate change is impacting the Panama Canal
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The Panama Canal, an essential route in global trade, now faces a significant challenge from the growing impacts of climate change. As global temperatures rise and weather patterns shift, this engineering feat - vital for connecting the Atlantic and Pacific oceans - is confronting issues of water scarcity that threaten its operational efficiency. This situation reflects a broader, global concern, highlighting the far-reaching effects that local environmental changes can have on an international scale.
👉 In this article, we examine how climate change impacts the Panama Canal's operational efficiency and what can be done to solve the water shortage.
What is the Panama Canal?
History of the Panama Canal
Completed in 191, the Panama Canal reshaped global shipping by creating a direct route for ships to cross between the Atlantic and Pacific Oceans. This engineering project meant that vessels no longer had to travel the longer and more dangerous route around South America's Cape Horn, cutting the length of the journey by a whopping 8,000 miles! The canal's construction was a significant undertaking that overcame geographical and logistical challenges, and international trade routes forever.
The decision to build the Panama Canal was fuelled by the need for a shorter maritime route between the Atlantic and Pacific Oceans. The United States undertook the massive project in 1903 and it was completed by 1914, a decade later. The construction was a notable engineering achievement, involving extensive excavation and the creation of a complex lock system.
The cost of building the canal was huge, amounting to over $350 million at the time, which is equivalent to billions in today's dollars! The project also had a significant human cost, with thousands of workers losing their lives due to diseases and accidents during construction.
Why was the Panama Canal built?
Stretching approximately 50 miles (82 km) in length, the Panama Canal allows ships to save an enormous amount of time compared to the alternative route around the bottom of South America. Transit time through the canal varies but typically takes around 10 hours for a ship to cross from one ocean to the other. This shortened travel time results in significant savings for shipping companies in both time and operational costs.
💡 The cost for a ship to transit the canal varies widely depending on its size, type, and the cargo it carries. Tolls are calculated based on various factors including the vessel's tonnage and the type of cargo. These fees typically range from a few thousand dollars for smaller vessels to several hundred thousand dollars for the largest cargo ships. However, recently, due to long queues to cross, some ships have managed to secure quicker transit slots, paying up to $2.4 million for the privilege!
“ The Panama Canal is a crucial link in global maritime trade, offering a shorter, safer, and more economical route between the Atlantic and Pacific oceans. Its construction marked a significant milestone in engineering and continues to play a vital role in international commerce. ”
Economically, the canal plays an important role in modern global trade. It reduces shipping time and costs by offering a more direct route, significantly impacting the logistics and economics of maritime trade. The canal is particularly crucial for certain commodities, such as agricultural products and manufactured goods, allowing for quicker and more cost-effective transportation between production sites and markets.
💡 On average, about 35 to 40 ships transit the canal each day (though this is reduced when the level of water in the canal is low).
Through its operation, the Panama Canal not only serves as a key transit point but also contributes significantly to the economy of Panama. The fees collected from the transiting vessels are a major source of revenue for the country.
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How is climate change impacting the Panama Canal?
Climate change is significantly impacting the functioning of the Panama Canal, reducing its operational capacity and forcing ships to take alternative routes. Let’s take a closer look at the effects of global warming on this vital maritime transportation system:
Decreasing water levels: the role of climate change and El Niño
Climate change and rainfall
Reduction in rainfall: Climate change is changing weather patterns in the region surrounding the Panama Canal. Central America, including Panama, has experienced a decrease in average rainfall due to these changing climatic conditions. The shift in rainfall patterns - linked to the broader effects of global warming - has resulted in lower levels of water in the lakes and reservoirs that supply the canal.
El Niño's Impact
El Niño phenomenon: El Niño is a climatic event characterised by the warming of Pacific Ocean waters. The phenomenon, which arrives once every two to seven years, significantly impacts weather patterns globally. When it comes to the Panama Canal, El Niño tends to exacerbate drought conditions, leading to even lower rainfall in the region. The combined effect of general climate change and periodic El Niño events results in a more pronounced and sustained reduction in water levels.
💡 Spring 2023 marked the start of a new El Niño period.
👉 Learn more about El Niño and what sort of impact it could have on global weather patterns in our article.
Operational challenges due to lower water levels
Draft restrictions and reduced transit capacity
Recent developments: The Panama Canal Authority (ACP) is in charge of operating the canal. Following a particularly dry October - October 2023 was the driest October on record for the Canal Watershed - APC reduced the maximum number of daily ship transits to only 22, compared to an average of 36 daily ships under normal conditions. In January 2024 this number is expected to rise to 24. This reduction is a direct response to the drought that has depleted fresh water needed for the locks.
Impact of draft restrictions: In addition to the limit of the number of ships permitted to pass through the canal, the APC has also imposed restrictions limiting the depth at which ships can transit. This restriction means vessels must carry lighter loads, reducing the efficiency and profitability of their journeys. Essentially vessels must either transport less cargo, or unload cargo before entering the Panama Canal, and transport it to the other side via road.
Economic implications: Fewer transits and lighter loads translate into reduced revenue for the canal and increased costs for shipping companies. This situation can lead to higher prices for goods transported through the canal, affecting global trade and consumer shipping prices. Additionally, the decrease in the number of daily transits leads to longer waiting times for vessels, contributing to delays in global supply chains.
Environmental implications: The drought-induced restrictions at the Panama Canal are leading to longer shipping routes and additional land transportation, which can increase overall fuel consumption and therefore carbon emissions. Ships taking alternative, lengthier routes around the bottom of South America (an additional 8,000 miles!) or unloading cargo for overland transit across Panama contribute to a higher environmental impact compared to direct, shorter transits through the canal.
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What is being done to counter the Panama Canal water shortage?
To tackle the water scarcity issue, the Panama Canal Authority (ACP) is implementing a multi-pronged strategy focused on optimising water use and exploring long-term solutions to ensure the sustainability of the canal. These efforts are crucial given the significant decrease in freshwater levels in the canal's reservoirs, primarily due to climate change and the El Niño phenomenon.
Water-saving measures and resource optimisation
The ACP initiated the Water Program in 2020, a forward-looking initiative aimed at addressing water scarcity over the long term. The goal of this program is to ensure a reliable water supply for the canal and the surrounding communities for the next 50 years. Measures include:
Cross-filing technique in Panama Canal locks: This method involves reusing water from one lock chamber in another, thereby significantly reducing the amount of water needed for each transit. This technique saves the equivalent of the average consumption of five daily transits.
Simultaneous lockages: To further conserve water, the ACP performs simultaneous lockages whenever the size of the vessels allows. This approach allows two ships to transit through the same chamber at the same time, optimising water usage.
Optimised transit schedules: The ACP has revised the transit schedules to maximise water savings in each lock chamber. This involves careful planning to accommodate as many vessels as possible while minimising water usage.
Transparency and communication with customers: The ACP emphasises transparency in its operations, regularly informing customers about any necessary adjustments. This approach ensures that shipping companies can plan their routes with the latest information on canal operations.
Long term solutions
To address the long-term water scarcity issues at the Panama Canal, the ACP is working closely with experts like the US Army Corps of Engineers on a variety of solutions. These efforts are aimed at enhancing the canal's water management systems, ensuring its operational efficiency for years to come, especially in the face of evolving climate conditions.
Development of new reservoirs: A significant part of the strategy involves the construction of new reservoirs. This initiative would increase water storage capabilities, ensuring a consistent supply to manage the canal's operations and address the seasonal fluctuations in rainfall.
Advanced water management systems: The ACP is exploring the implementation of more sophisticated water management systems. These systems could involve state-of-the-art technology for water conservation, efficient distribution, and perhaps even desalination processes.
The controversial proposal to dam the Indio River
One of the proposals which has generated the most controversy is the plan to dam the Indio River. While this could create additional water storage capacity, it raises multiple environmental and social concerns:
Environmental concerns: The Indio River region is known for its rich biodiversity. Damming this river could have significant ecological consequences, including habitat loss and disruption of local ecosystems. The environmental cost of such a project is a major concern among conservationists and environmentalists.
Impact on local communities: Beyond the environmental impact, there's also the social aspect to consider. The construction of a dam and the creation of reservoirs would likely involve flooding areas currently inhabited by local communities. This raises issues related to displacement and the alteration of the livelihoods of these communities.
👉 To understand why drought presents a problem for the global economy head over to our article on the topic.
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Round up
The Panama Canal water shortage is a clear example of how widespread the impacts of climate change can be. The issues of water scarcity and altered shipping patterns due to higher temperatures and El Niño are not just problems for Panama but are indicative of the larger, global challenge posed by climate change. These changes affect not only local environments and economies but also have implications for people and businesses worldwide.
The water management struggles of the Panama Canal highlight the critical need for addressing climate change more broadly. Stopping further global warming is essential, not only for the canal's preservation but for the stability of global ecosystems and economies. The efforts to adapt and manage the current situation at the canal also emphasise the importance of global cooperation in reducing emissions and adopting sustainable practices. Tackling climate change effectively requires collective action and commitment beyond just local or regional efforts.
👉 To find out how you can implement your own practices for water conservation head over to our blog.
What about Greenly?
At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. Why not request a free demo with one of our experts - no obligation or commitment required.
If reading this article has inspired you to consider your company’s own carbon footprint, Greenly can help. Learn more about Greenly’s carbon management platform here.
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