The Expansion of the Panama Canal: An Opportunity for Triumph or a Perilous Blunder?
Overwhelming Public Support for the Expansion
In an October 2006 nationwide referendum, Panamanians overwhelmingly approved (by a 76.9 percent vote) an ambitious plan to widen the canal. According to Panamanian president, Martin Torrijos, an outspoken supporter of the canal expansion project, “never in the history of the country have we Panamanians taken a decision of this magnitude.” Torrijos stresses that the expansion of the canal, which is expected to cost at least $5.2 billon, is vital because the waterway is currently inadequate to accommodate both modern tankers and big cargo vessels. The project began in September 2007 and is expected to double the conduit’s capacity, enabling it to accommodate ships that are currently too large to navigate its 108 foot-wide locks. Furthermore, the Torrijos administration claims that the project will create tons of thousands of jobs and will bring a much needed boost to the country’s ailing economy. Of course, not all Panamanians were ebullient after the Canal’s expansion. Some, like Dr. Miguel Antonio Bernal, a distinguished professor at the University of Panama, fought the expansion as a boondoggle bound to throw open the door to major acts of corruption. Bernal is now running as an independent candidate in Sunday’s election for the mayor of Panama City.
Although the expansion was passed by a large majority, the plan has been a source of much disagreement. Many skeptics are concerned about who the actual beneficiaries of the project will turn out to be. There are still those that vehemently believe that the canal project will be detrimental to Panama’s well-being, such as the National Front for the Defense of Economic and Social Rights (FRENADESO), an organization that represents trade unions, grassroot organizations and civic groups, as well as the Peasant Coordination Against Artificial Ponds/Dams (CCCE) an organization representing the rights of rural peasants. “They claim that if they don’t enlarge the canal, it’ll become obsolete. So what? The canal has been obsolete for small farmers like us since the very start, since we haven’t received any benefits from it,” argues CCCE leader Francisco Hernández. When asked during a television interview whether or not farmers are willing to sacrifice themselves for the will of their country, Hernández responded, “I ask the viewers, how and when has the average citizen felt the benefits of the canal? When someone can answer that, or when a group of average working people tell us, ‘we benefit from the canal,’ then we can talk about the kind of sacrifice farmers would be willing to make.” With the proposed plans to expand the canal not calling for the construction of new dams, it appears that the voice and central concern of the CCCE and their supporters have been heard.
Those resisting the development also fear that the project will exceed the expected $5.2 billion, exacerbate Panama’s environmental degradation, and undoubtedly increase the country’s already steep debt. Skeptics also argue that only the elite will reap major benefits as a result of the surplus from the expansion. They raise a valid argument that those living below the poverty line — approximately 40 percent of the population — will be adversely affected because they suspect that canal growth will not generate a significant number of jobs to compensate the country for its expenses and various disconformities.
Panama Canal Authority’s Expansion Project
After replacing the Panama Canal Commission in 1999, the Panama Canal Authority (ACP) became the autonomous governmental agency responsible for the operation and maintenance of the canal. According to the ACP, without an expansion, the canal would cease being the country’s most viable vehicle of sustainable economic growth. Already having secured loans from such agencies as the European Investment Bank, the Japan Bank for International Cooperation, the Inter-American Development Bank, the International Finance Corporation and the Andean Development Corporation, the ACP contends that the rest of the development venture will have to be funded by increasing the cost of tolls required to traverse the canal and anticipates having to absorb more than $6 billion annually in revenue by 2025.
The ACP reports that the expansion project, slated to be completed at the time of the canal’s centennial in 2014, includes the construction of two new lock facilities. One lock will be located at on the Pacific end, southwest of the Miraflores Locks, while the other will be situated to the East of the Gatun Locks, with each new lock having three chambers and their own water reutilization basin. The project also includes the construction of access channels for the locks, both the widening as well as deepening of existing water channels, and the elevation of Gatun Lake’s water operating level. The expansion project will create a new lane via the construction of a new set of locks which will contain environmentally friendly basins. These troughs will allow for the reutilization of 60 percent of the water used during a transit through the canal and remove the need for the construction of dams that could potentially flood and displace communities making up part of the canal watershed.
Expansion Perceived as an Economic Stimulus
Both the ACP and Panamanian officials assert that the canal project would be an economic stimulus for the country. They also expect that the expansion would help address the growing problem of unemployment in Panama, claiming that the project will create approximately 35,000 to 40,000 jobs as a result of the construction-related activities during the execution of the project. By the year 2025, the ACP projects that between 150,000 and 250,000 jobs will be created. Moreover, they add that the existing locks will continue to operate during the expansion project and that the operational functions of the canal will not be disturbed.
As of early March, the ACP has been in the process of reviewing bids from Consorcio C.A.N.A.L, Consortium Bechtel, Taisei, Mitsubishi Corporation and Consorcio Grupo Unidos por el Canal, three organizations who have submitted their pricing and technical proposals. They will be competing to design and build the new locks of the canal. During this period, the ACP also received proposals for the dredging of the canal’s Atlantic entrance; additional proposals can be submitted until this July 15. “This is an exciting time for the Canal and for Panama as we move forward with the single most important expansion project. We stand committed to hiring a consortium that meets all technical requirements and provides the best value for the project,” said ACP CEO Alberto Alemán Zubieta.
Social and Environmental Concerns
From an environmental perspective, the ACP claims that no communities will be displaced during the project because all expansion activities will occur within the confines of the agency’s operational areas. In addition, both Gatun and Alhajuea Lakes will maintain their exceptionally stable ecosystems. The fact that the Panamanian Environmental Protection Agency (ANAN) has approved the project gives increased credibility to the proposal. Latin News reports that such approval was based on criteria accepting ecological responsibility for the canal’s surrounding areas, taking precautionary measures to prevent risks to animal life, the rescuing and relocation of species, and the implementation of a reforestation plan in the areas impacted by the canal project.
However, critics such as former president, Guillermo Endara, argue that the project creates a sense of false hope, as it promises Panamanians a rise in employment rates that will subsequently create a surge of people coming towards the city in search of jobs that, according to some, simply won’t exist. As a top-level banker explained to the Panama News, on the average, one should expect five applicants for every single job. He also pointed out that both the Panama City metro area and the city of Colon on the Atlantic side of the canal, are not adequately prepared to accommodate the influx of so many people, which in turn, will likely further exacerbate the area’s social problems. According to a Credit Suisse report entitled “Emerging Markets Economics: Panama,” the expansion project does entail some degree of risk. In spite of the fact that the national poverty level in Panama has declined by 28 percent since 2008, the unemployment rate remains staggeringly high. Panama historically has ranked as having the second most unequal income distribution in all of Latin America. Thus, the Credit Suisse report raises a valid concern when observing that the development could potentially send the country into further debt.
In addition, the increase in toll prices faces opposition from the shipping industry, whereby several companies have claimed that they would be motivated to find alternative navigational routes should the expansion be realized. Some shipping companies have already noted that the current economic crisis has severely affected them, so much that they may not be able to remain in business, and a surge in tolls will further intensify their economic woes.
Destiny of the Canal Must be in the Hands of Panama’s Citizenry
According to the Panama News, Egypt’s Suez Canal, which links the Mediterranean Sea with the Red Sea and provides an alternative shipping route, has even lowered its fares, allowing it to more effectively compete with the Panama Canal. Furthermore, as the impact of global warming puts the Arctic Ocean on thin ice, many specialists are beginning to wonder if the Northwest Passage will soon become a navigable shipping route. To boot, it even provides a more direct route from Asia to Europe compared to its Panamanian isthmian counterpart.
There is no doubt that the expansion of the Panama Canal is a massive undertaking, and as such, the transformation and concerns associated with the project will surely remain. Aware that the country’s main economic resource will have a direct impact on Panama’s future and the role it will play in the global economic system, both the ACP and the incoming Panamanian government that will be elected on May 3, would be well advised to tread carefully when dealing with the canal’s future management, as any misstep could bring about dire consequences to the country’s future development and environmental viability. Perhaps more importantly, Panamanian authorities must ensure that the benefits of the revenues achieved from the canal are ultimately fairly allocated to legitimate and accountable social development programs to ensure that all Panamanians benefit, and not just a select, well connected few.
The following is an updated independent research article published in June 2009, which sheds more light on the subject.
The Panama Canal Expansion:
Making It Non-Detrimental to Society
Bert G. Shelton, Research Scientist and Professional Engineer – June 8, 2009
It is said that expanding the canal will benefit everyone. The Panama Canal’s cargo capacity is to be nearly doubled by the planned expansion, which is to add a single new lane for transiting Post-Panamax ships.
Increasing the canal’s capacity has been long desired and seen as good, so it is difficult to argue against its expansion. However, is the chosen single-lane system really the best option and in the best interest of shippers and of society, who will ultimately fund the project?
An independent review of water-saving and operational techniques has identified better lock systems that have been around for more than 100 years, as well as more recent ones that would be far more beneficial and cost-effective.
As an example, an alternative single-lane system arrangement that has locks like those currently planned – but with 4 chambers (instead of 6) and 2 tanks per chamber (instead of 3) – would use 45 (instead of 52) million gallons per transit. Not only would this system have fewer parts and use less water per transit, a dike over geologic faults would be unnecessary and Gatún Lake would be spared from becoming brackish.
However, with any single-lane system, an unexpected problem at any chamber can shut it down.
To avoid shutdowns, a two-lane alternative with 8 chambers – and no tanks – that also uses 45 million gallons per transit could replace the currently planned system. The Panama Canal’s Pedro-Miguel Lock unit is an example of that system’s type of locks. Water use could be further reduced to 30 million gallons per transit by using a recent improvement that adds 2 tanks to each unit of that system.
As with the single-lane alternative, both two-lane systems would avoid the problematic dike presently planned, and Gatún Lake would be protected from salt intrusion.
Either of these two-lane arrangements would make it possible to markedly increase canal cargo capacity, which means more growth in future business.
The planned single-lane lock system presents no similarly obvious advantages. It offers relatively fewer transits for the water used, despite having many more components.
Benefits from the alternatives found during the review, on the other hand, are clear.
The single-lane alternative initially studied – which could transit at least 9, possibly 10, ships a day – has 2/3rds the chambers, fewer than half the tanks, and uses 13% less water per transit than the planned system.
At first glance, the simpler single-lane locks would appear to be more cost-effective than those planned, when considering the transits obtained for the money spent on locks. However, even though more efficient, the lower total capacity of these simpler locks would likely not generate sufficient profit margin to pay for the expansion’s total investment.
Thus, in addition to targeting higher efficiency, the new locks also need to be able to handle more transits.
The two-step two-lane system noted above – which also uses about 13% less water per transit – could easily transit more than the 12 ships a day now planned. Assessment of it confirmed that it would be more cost-effective to build than the planned three-step single-lane system with 6 chamber and 18 tanks.
Because of its two lanes, its chambers can perform the dual function of transiting ships and saving water. Increasing the number of chambers from 6 to 8 implies that this lock system will cost at least 1/3rd more than the planned system. However, that implied increase in cost is significantly reduced by the elimination of 18 tanks.
Additional money is saved by not having to build a very risky dam across geologic faults, as is now required. That not only reduces the cost differential, it also removes risk.
Because each transit uses less water, 14 ships can transit it instead of 12 a day with the same water. That increase in capacity pays for any remaining cost differential.
Furthermore, even more transit capacity can be extracted from it. When heavy rains are more frequent, transits can be increased to about 18 a day. That increase could be made permanent later by adding water storage to the canal.
Alternatively, transits could be increased by at least 50% simply by adding 2 tanks to each of the system’s two-lane lock units. With those tanks added, and when used most effectively, this two-lane system would reduce water-use to 57% of what the planned system will use per transit.
In contrast, there is no way to modify the planned system to reduce its water-use in the future, short of demolishing them and building anew.
Although a two-lane lock system could be designed and built so that tanks could be added in the future, if they were added at the outset they would immediately pay for themselves.
Adding tanks would virtually eliminate the plan to seasonally fluctuate the level of Gatún Lake over a greater range than it is fluctuated today, a change that is needed to increase the supply of water for operating the planned locks.
Eliminating that need would significantly reduce costly dredging.
The 40ft draft depth of the canal’s 35 miles of channel between the Atlantic and Pacific locks must be increased to accommodate 50ft draft ships. However, by not having to drop the lake to the low level the planned system requires, those 35 miles would not have to be deepened an additional 4ft.
Money spent on dredging those 4 extra feet to attain 12 transits a day would be better spent on tanks to attain 18 transits per day – which should also lower the tolls.
Unless eliminated, the plan to increase lake fluctuations will also seasonally force ships that transit the original locks to reduce the cargo they carry by a much larger amount than is the case today, because the bottoms of the original lock chambers cannot be lowered as the lake level drops.
The research shows that the two-lane system would permit canal service and reliability to be significantly improved at a cost about equal to what is currently planned.
By spending the money more effectively, a lower risk and less problematic expansion can be accomplished, offering lower tolls, many more transits, and effectively eliminating the risk of a protracted wait for Post-Panamax ships due to an unexpected lane closure.
None of the alternative systems call for a risky new dike across known faults as the planned new lane requires for traffic to bypass Miraflores Lake. The integrity of that planned dike cannot be guaranteed. Its failure would empty Gatún Lake. That puts the Panama Canal and Panama City at risk. It is a risk that can be totally avoided.
Society, shippers, and operators of Pacific port facilities would be foolish to accept risking an unnecessary dam failure.
Finally, there are additional impacts not accounted for in the present plan that do not arise with the alternative systems.
The planned locks are to operate transiting ships in groups, one direction at a time. Brackish water will be injected into Gatún Lake when ocean-bound ships exit by way of these. This happens today, but only at Gatún Locks. (At the Pacific end of the canal, Miraflores Lake interrupts that salt-injection process.) The excess water in today’s canal system falls just short of flushing all the salt reaching Gatún Lake. Consequently, its salt content has been rising very slowly over the last 100 years.
Relative to today’s Gatún Locks, about triple the volume of brackish water will be injected into Gatún Lake when ships exit each end of the canal through the planned locks. Because the planned locks will use less fresh water per transit – 40% of what a regular lock operation uses – the mix of water in them will contain much more salt than what is injected today via Gatún Locks.
As more lake water is used to move ships and less is spilled along with the salt it carries, Gatún Lake’s salt concentration will – without question – rise at a much faster rate than it is rising today.
Obviously, adding salt to the lake does not negatively affect transits. But the Gatún Lake freshwater resource, which belongs to the nation, will be ruined when its salt concentration rises. That loss – avoidable if higher-yield locks are used – has not been taken into account in the costing of the planned single-lane design.
Neither have losses from the predicted eradication of, or irreparable damage to, sea life along both coasts. Too much salt in the lake will permit coastal creatures to migrate across the Isthmus of Panama, which could lead to disastrous consequences, such as stronger species wiping out weaker ones.
If the cost of these damages to nature were to be properly assessed for the expansion as it is now planned, its price tag would rise far above the most costly of any of the alternative lock options noted here, all of which use existing, tried-and-tested equipment and operations, and which more effectively control salt intrusion.
Yet, the current plan continues. The perception is forming among many that the intent may be to deliberately damage Gatún Lake.
Whether that is the case or not, a brackish Gatún Lake will create a huge market for those who have recently acquired rights to the water of many of Panama’s rivers. Those special interests will profit handsomely from selling their water to the population.
Also – with Panama’s greatest freshwater reserve ruined – other special interests that have long wanted to install industries within the canal will be able to do so, without being blamed for polluting that invaluable global resource.
It is clear that building the planned lock system brings no added benefits to society. The damage it will cause in order to benefit third parties is irreparable and unconscionable. Once poorly performing locks are built they cannot be modified later to improve their performance and reduce their negative effects.
Several more effective lock alternatives to those misleadingly promoted as the best and only for the project exist.
An unbiased revision of the plan – before lock construction begins – is imperative to guarantee a truly sustainable development project that optimizes canal services and maximizes capacity and profits, while preserving a critical freshwater reserve for this and future generations.