The Panama Canal is without a doubt an iconic example of a mega-infrastructure project in our Region. It represents 5% of the world’s cargo traffic, 5% of world trade, and 25% of Panama’s Gross Domestic Product (GDP). Impressive.
If we pay attention to the different news, academic papers, research reports or editorials that are written about the Canal, we find a trove of documents addressing recurring (though no less important) themes representing points of view from engineering, technology, legal and trade standpoints, etc. In this entry, I want to talk about water. And about transportation. And about energy. And in particular, natural resources.
The agenda for infrastructure is increasingly requiring a more multi-sectorial vision. From this point of view, the Panama Canal is not merely an element of transportation. What would happen if an insufficient amount of water flowed through the Panama Canal? Those previously mentioned figures of 5%, 5% and 25% would drop.
We rarely ask ourselves about the close relationship that exists between this inter-oceanic waterway and the natural resource that surrounds it, an essential element for its optimal functioning. Specifically, I want to point out very simply the economic role of ecosystems that coexist with mega-infrastructure like the Panama Canal.
On June 5th, World Environment Day, we are celebrating the crucial importance of the environment that surrounds us. We are reminded that if we do not adequately protect it, then nothing else matters. The natural capital of our Region plays a key role in our current and future development. In Panama, this significance has its own name: The Panama Canal Watershed. This biodiverse ecosystem is a key piece of the Region’s economy and world commerce, and provides the perfect example of the importance that the natural environment has on the development and economic growth of Latin America.
The Panama Canal Watershed provides 95% of the drinking water for the area’s inhabitants, especially those in Panama City. It also feeds the artificial Lake Gatún, which enables transit for the boats crossing from one ocean to another. In addition to supplying water, the basin’s forested areas (around 50%) regulate water flows, making it a powerful instrument for mitigating the risks of extreme climatic events. Thanks to the ecosystem services provided by the forested areas, water levels during the big storm of 2010 were 20% lower than if the basin had been covered by pasture, thereby preventing floods and incalculable losses to the Canal’s infrastructure.
Transit statistics for the Panama Canal indicate that 13,000 to 15,000 ships of varying sizes traverse the route’s 12 locks each year. Each time a vessel crosses through the canal, 200 million liters of water are needed to fill every lock so that it can function. By taking these numbers into consideration, one can derive the magnitude of the volume of water necessary to move the vessels through. This doesn’t take into account the new locks that are being built as part of the Canal’s expansion project, or the requirements imposed by the growing size of the world’s fleet. The steadily increasing dimensions of seafaring vessels –over the past 30 years their cargo capacity has grown six times–, together with the construction of the Canal’s third lane, indicate that there will be an increase in the amount of water required.
Therefore, the value of these natural resources is incalculable. Well… not entirely. We can apply various methodologies to evaluate the economic impact of the Panama Canal Watershed on the Region. However, for a first approximation, we can assume that without a lake there would be no canal, and without a canal, that 5% of worldwide cargo traffic, 5% of worldwide commerce and 25% of the GDP of Panama would be in danger. What’s more, the water that is used to make this hydro-route function is reused to generate the energy needed to move the gates, operate the locks, and supply water to the country’s most populous area. By the same token, all of the current discussions regarding the financing of the expansion, the impact on the rest of the Region, its economic development and impact on world trade become irrelevant without this valuable resource.
In this sense, it is clear that without natural resources, there is no viable infrastructure.
Title: ©Andrej Pol, Shutterstock
Text: Panama Canal, ©Alfredo Maiquez, Thinkstock
Texto: Gatún Lake of Panama Canal, ©Vilant, Thinkstock
Texto: Cargo vessel at Panama Canal, ©Mathew Ragen, Thinkstock
Néstor H. Roa is currently Manager a.i. of the Infrastructure and Environment Sector and Chief of the Transport Division. Before joining the Bank in 2001, Mr. Roa was Director and Commissioner of the Communications Regulatory Commission of Colombia. He also worked at the National Planning Department where he was Director of Infrastructure and Energy, Chief of the Transport Division, Chief of the Infrastructure Policy Division and Transport Specialist. He has also worked in the Colombian private sector. Mr. Roa holds a Master’s Degree in Management of Technology (MSc.) from the Sloan Business School of the Massachusetts Institute of Technology (MIT), a Master’s Degree in Transportation Engineering (MSc. in Civil Engineering) from Virginia Tech and a BS. in Civil Engineering from the Javeriana University of Bogota Colombia (1986).