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Panama Canal Planning a New Reservoir to Mitigate Water Issues

Could relief be coming – in the future – for the Panama Canal and its low water issues?

Panama’s Supreme Court has issued a new ruling that could clear the way for a new reservoir to solve the canal’s low water level issues.

Due to low water levels in the Panama Canal, the Panama Canal Authority has been limiting the number of ships that can pass through the canal per day. This has led to extraordinary delays, and has been compounded by other problems in the global supply chain, such as the Red Sea Crisis blocking off the Suez Canal route, global instability, and more.

Panama’s goal has been to mitigate low water levels, which historically have occurred but at a lesser scale than in recent years. It has proposed for over 15 years a new reservoir that could be the solution. Currently, the Panama Canal relies on water in Lake Gatun for its water level regulation.

The project had been delayed for years due to concerns and regulations around what territory is the Panama Canal Authority’s and what is outside territory. The country’s high court has resolved that dispute for now with its latest ruling.

Even if the project moves forward, relief is still years away (literally).

The Panama Canal Authority has said that it could take as long as six years to fully build and implement the reservoir as part of the Panama Canal system. That’s a long way off, so shippers likely won’t see full relief for a while.

The new reservoir will cost upwards of $1.6 billion and as mentioned, will take over a decade. So, it will be a costly and laborious project with strong benefits if fully implemented. The Panama Canal hopes the new reservoir will allow a minimum of 36 ship transits each day.

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