Fresh alarms have circulated over the Panama Canal and news reports that it has suffered one of the most severe droughts in recorded history. The Panama Canal Authority (ACP) has raised toll rates and restricted the number and size of vessels that can transit through the canal over the past months, leading to soaring shipping costs, particularly for US energy products. The ACP and many analysts have blamed the intense and prolonged El Niño season, the trade wind–driven drying season that hit the Pacific in 2023, extending into 2024.
Warming ocean temperatures and dry conditions have undoubtedly affected the canal. Still, a more ominous issue has been consistently ignored: The deforestation of the Amazon and the driest rainy season on record seen in 2023 are raising doubts about the viability of a human-made waterway that was a marvel of engineering when constructed a century ago.
It is a little-known fact that the Panama Canal is highly dependent on rainfall volume. The canal comprises a series of interconnected artificial freshwater lakes, the largest and most important of which is Gatun Lake. Water levels at Gatun Lake are at their lowest in the last five years and since the ACP first began recording the data in 1965 (see figure below).
As a result, the ACP has reduced daily traffic in the canal from 36 to 24 vessels and imposed restrictions on vessel size by limiting draft size (the draft of a ship’s hull is the vertical distance between the waterline and the bottom of the hull, or the ship’s keel). The measures have mostly affected energy product carriers, container vessels, and ships transporting grains from the United States. More than 71 percent of the canal’s traffic either originates in the United States or is destined for the US market. The second largest user of the Panama Canal is China.
Connecting the Panama Canal to the Amazon
The Amazon rainforest produces rainfall, generating a self-sustaining cycle that also moderates the regional and global climate, as all tropical forests do. Because it is the largest rainforest in the world, the Amazon is often called “the planet’s air conditioning system.” However, as discussed in this policy brief in 2019, it is much more than that. The forest removes carbon from the air and stores it underground, keeping it from rising into the atmosphere. To continue this vital function, the rainforest needs to be preserved. As discussed here, deforestation can bring the rainforest to a point where it can no longer produce the amount of rain it needs to survive. There is growing evidence that parts of the Amazon are releasing more carbon into the atmosphere than they can capture. That produces two effects:
- More trees die off because of lack of rain, diminishing the rainforest and contributing to more intense and prolonged droughts, such as the one seen in 2023.
- As more carbon is released into the atmosphere, local and regional rain cycles are affected. A drier climate can result thousands of miles to the north and to the south of the Amazon. Put differently, there is evidence that the Amazon’s hydrological engine is beginning to fail, exposing the Americas and the rest of the world to catastrophic damage.
In 2023, the Amazon experienced its worst drought in recorded history, which scientists attributed to El Niño in Panama, and also more broadly to climate change and deforestation. El Niño has grown increasingly severe in recent years because of climate change, which in turn contributes to worsening climate and to forest loss. Thus, climate change, deforestation, and the warming of Pacific Ocean waters and their consequences are all intertwined into a vicious circle.
Contrary to some public perceptions and assertions, Panama cannot resolve the problems afflicting the canal by pumping seawater into Gatun Lake. The lake serves as the main source of drinking water for the Central American nation. Other solutions involving the deviation of rivers to feed the canal are likely to face objections over their environmental impact and damaging effect on indigenous communities.
Since climate change and deforestation feed on themselves with recurrent, intense, and prolonged El Niño cycles, the future of the Panama Canal seems bleak. That prospect endangers global trade, especially US exports and imports, and shipping costs. These factors threaten regional political stability, to name only a subset of issues directly related to the survival of the canal.
What can be done to save the canal?
As noted, there is no saving it without addressing climate change, and notably, the deforestation of the Amazon. Some South American countries harboring the rainforest have embarked on individual initiatives to reduce forest loss. But greater coordination among them is desperately needed. The United States, recognizing its stake in reducing deforestation through the impact on the Panama Canal, should play a greater role in helping countries in the region fight the illegal activities causing forest loss. Failure to do so might lead to the extinction of a major global trade route, as well as one of humanity’s most remarkable US-led engineering feats.
This publication does not include a replication package.