Court Ruling Clears Path for Panama Canal’s $1.6B Reservoir

A recent court ruling may pave the way for the construction of a new reservoir to support the Panama Canal, but the project could take up to six years to complete, according to the canal's management. This development comes as the Panama Canal Authority has reduced the daily ship traffic through the waterway due to a severe drought that has diminished the fresh water supply essential for the locks' operation.

For many years, Panama has wanted to build another reservoir to add to the main water source from Lake Gatun. However, a 2006 regulation stopped the canal from expanding beyond its usual boundaries. This changed with a recent decision by Panama’s Supreme Court, which reinterpreted the boundaries and potentially cleared the way for the project, canal administrator Ricaurte Vásquez explained.

“The fact of having a defined watershed gives the Panama Canal a territorial assurance we did not have before,” Vásquez said. Despite this progress, authorities must still engage with and gain the approval of the roughly 12,000 residents living in approximately 200 villages around the Indio River basin, the proposed site for the new reservoir.

Experts estimate that discussions with the affected communities could take around 1.5 years, followed by three to four years of construction. The estimated $1.6 billion project, including $400 million for investments in nearby communities, is crucial for maintaining the canal's operations and ensuring a reliable passage for ships.

The canal's current reduced capacity, down to 31 ships per day from the usual 36 to 38, has disrupted global shipping. This reduction comes amidst other issues for international waterways, including security threats in the Red Sea. 

The successful completion of the new reservoir is expected to restore and enhance the canal’s capacity, providing a more reliable route for global maritime traffic and securing fresh water supplies for Panama City, home to half the country's population.