As Panamanians chose a new president on May 5, showers marked the start of the rainy season, raising hopes that the country would exit a punishing drought linked to the most recent El Niño weather pattern. The winner, center-right President-elect José Raúl Mulino, faces thorny domestic challenges such as high unemployment and a faltering social-security system. But few issues are as nettlesome as those highlighted by the now-easing drought and the prospect of more dry spells to come.

A key question on that score is how to meet the vast water-supply needs of the Panama Canal while simultaneously serving those of the country’s growing population—all without depriving key ecosystems. The answer, many experts argue, is more water storage—namely, the construction of one and perhaps two new reservoirs, which, given their large footprint and expense, would pose a steep political challenge.

Steven Paton of the Panama-based Smithsonian Tropical Research Institute says the latest El Niño weather pattern created some of the driest conditions Panama has ever seen. Rainfall in 2023 totaled 1,703.8 millimeters at the institute’s monitoring station at Lake Gatún, the main reservoir serving the canal. That was the second-lowest level since record-keeping began there in 1925 and was just 4.8 millimeters above the lowest total, registered in 1997.

Under outgoing center-left President Laurentino Cortizo, Panama’s Canal Authority responded to the drought by capping ship transits and reducing the maximum allowable vessel draught. This reduced the quantity of fresh water required to fill the canal’s locks, whose water consumption in normal times is roughly the equivalent of that of New York City.

But limits on the number of ship transits have cost an estimated US$200 million in canal-transit revenues. Current and past leadership of the Panama Canal Authority (ACP), the Panamanian agency that manages the canal, argue that without new reservoir capacity, the waterway will face ever-greater uncertainty in the future. They warn Panama risks losing ship traffic to other maritime routes.

“The time to act is sooner rather than later,” Canal Authority Administrator Ricaurte Vásquez said in a January interview on the television station Telemetro. “No problem is resolved by waiting.”

Indio River eyed

Vásquez favors damming Panama’s Indio River to create a new artificial lake. (See "Pressures push Panama Canal watershed to its limit" —EcoAméricas, October 2023.) He believes that of the two sites that have been mentioned for reservoir construction—the other is on the Bayano River—the Indio location is preferable because it is closer to Lake Gatún.

John Langman, the Canal Authority’s vice-president of Water Projects, agrees. “The Indio River is the most convenient solution,” Langman said at a January forum hosted by the Chamber of Commerce, Industry and Agriculture of Panama. “It’s the efficient solution. It’s the logical solution to confront the water challenges in the shortest time possible."

Langman said that without action on new reservoir capacity, canal revenues would decline over time, potentially reducing the annual amount the waterway generates for the government by $400 million by 2075. Currently, the canal generates about $2.5 billion a year for the government, an amount equivalent to 8% of the national budget. Previous Canal Authority Administrator Jorge Luis Quijano is blunt in his assessment, pointing out that the two reservoirs currently serving the canal, Lake Gatún and Lake Alhajuela, are also relied on to help slake drinking-water demand.

“The reality is that we have two reservoirs, one is 109 years old, the other is 80 years old,” Quijano said in a September interview on the television channel TVN-2. “We have grown the [Panamanian] population 10 times [since the canal’s completion in 1914]. Sixty percent of the population consumes water from [Lake Gatún and Lake Alhajuela]. The canal has grown from 6,000 transits [annually in its early years] to 14,000 transits. And we think these two [reservoirs] are going to keep providing enough water for the canal and for the population? It’s not so.”

Quijano endorses the Indio River reservoir proposal favored by the current Canal Authority leadership. He and other experts cite the long timeline for a reservoir project as a reason to get the work underway now.

Legislative obstacle

Another hurdle is 2006 legislation, Law 20, that shrinks the area within which the Canal Authority is empowered to build new reservoirs. Law 20 repealed 1999 legislation, Law 44, that had granted the Canal Authority wider latitude to expropriate land for reservoir projects. The restrictions were imposed despite the construction of wider Panama Canal locks to accommodate larger vessels known as Neopanamax container ships. The Neopanamax locks use approximately 120 million gallons of water per ship transit, while the original, still-functioning Panamax locks consume about 50 million gallons per transit, according to Vásquez.

During the presidential campaign, candidates spent most of their time accusing each other of corruption and promising improvements in salaries, pensions and health-care coverage. But the country’s water crisis also came up, with all candidates recognizing a need for more water-storage capacity.

Candidate Martín Torrijos, who served as Panama’s president during 2004-09, was criticized in an April debate for having signed Law 20. Torrijos responded that studies at the time suggested a new reservoir was not necessary, and that improvements such as water-reuse pools alongside the expanded locks would suffice. But he said new reservoirs now appear necessary in light of the drought and the drinking-water demands of a growing population.

Ricardo Lombana, another candidate, said he would build reservoirs on both the Indio River and the Bayano River. Though the Canal Authority has studied the possibility of a reservoir on each river, its aim for the Bayano project would be exclusively to supply water to Panama City’s eastern suburbs. This would ease drinking-water demands on Lakes Gatún and Alhajuela—and, thus, on the canal.

Mulino, the president-elect, did not appear at the debates, but he said at campaign events that expanding the Canal Authority’s jurisdiction to once again include the Indio River would be a priority of his administration.