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Climate change may ‘bottleneck’ the Panama Canal

By Autumn Spanne (The Guardian) - August 14, 2014

For the last century, the Panama Canal has been a key factor in world trade, enabling shippers to move more than 300m tons of products per year between the Atlantic and Pacific oceans. And its importance is only likely to increase: the canal, which celebrates its 100th birthday Thursday, is on schedule to finish a third lock large enough to accommodate massive 1,200-foot freighters, 25% longer than the largest ships that use the canal now.

But the canal faces a threat that could, potentially, keep it from functioning reliably in the years to come. As extreme weather events create periods of flood and drought, they threaten the consistent water supply that the canal needs to operate. A few days ago, the head of the canal authority announced that, by early next year, the worst drought in decades could force authorities to limit the weight of the cargo carried by ships on the canal.

Currently, an average of 34 ships go through the canal every day, and it takes about 52m gallons of water – roughly 82 Olympic-sized swimming pools’ worth – to move each one. That water comes from Gatun Lake and Alajuela Lake, which are fed by the Chagres River. A recent dry spell – linked to El Niño, the temporary warming of surface ocean temperatures in the eastern Pacific – caused the lakes’ water levels to drop significantly.
A bigger problem

While expensive and disruptive, the drought is indicative of a much larger concern. The latest report from the Intergovernmental Panel on Climate Change predicts that the region will experience more extreme weather: severe dry seasons that could diminish the canal water supply, and big storms that threaten to flood its infrastructure.

That could increase shipping times and costs of everything from Christmas toys and electronics moving from China to New York to midwest corn and wheat bound for the west coast of South America.

It’s too soon to know how exactly more extreme weather will affect canal operations. But while industries that do business through the canal are taking a wait-and-see approach, the Panama Canal Authority is paying close attention to models that suggest future climate trends.

Jorge Espinosa, manager of the canal authority’s water resource division, believes the agency will be able to respond to bigger storms by upgrading infrastructure. Over the long term, he’s more concerned about drought-induced water shortages.

“That’s going to hurt the business, definitely,” he said. “We as a country have to see how can we get more sources of water for the canal.”

The stakes are getting higher as the canal’s $5bn expansion project nears completion. A new lock, scheduled to be finished next year, will enable so-called post-Panamax ships, which can carry three times the cargo of the biggest ships that can squeeze through the existing canal locks. Ports in the eastern US have, in turn, invested billions to expand their capacity to accommodate the massive ships, which could transport 60% of global shipping cargo by 2030 (pdf).

Many are banking on doing brisk business with Asia, since the big ships carrying liquefied natural gas and other goods would no longer have to make the more expensive journey around the tip of South America or via overland rail and truck routes to move freight through West Coast ports.
Creating a bottleneck

But Adolf Ng, a professor of maritime transport and logistics management at Canada’s University of Manitoba, warns that climate change-induced weather extremes could lead to costly slow-downs that would actually make the canal a less-efficient shipping route and cause a ripple of delays.

“It would create a type of bottleneck in the canal which would choke the whole shipping system,” he said.

A preview of such a scenario occurred in December of 2010, when authorities closed the canal for 17 hours after an unprecedented storm dumped rain so quickly that Gatun and Alajuela lakes overflowed their banks and threatened the locks. It was only the third time authorities had ever closed the canal, and it backed up shipping for about a day.

“A huge storm can cause so much infrastructure damage,” said Robert Stallard, a hydrologist at the Smithsonian Tropical Research Institute in Panama City who studies how climate change and land use affect the canal watershed. “It would cost hundreds of millions to billions of dollars if a suitably destructive, large [storm] event were to occur and the canal had to be shut down.”

Intense storms pose another risk, too. The canal depends on the watershed to work as a sort of sponge, absorbing rain during the wet season and storing it for the dry season. If it rains too much all at once, trees and plants capture and store less water, which means less is available during the dry season.

But so far, climate change hasn’t registered as a big concern for shipping companies. Joe Cox, CEO of the Chamber of Shipping of America trade group, said shippers plan for more immediate problems and for events that have precedent, like labor stoppages in a particular port.

“I don’t think they are thinking about climate change and the Panama Canal,” he said. “When you [talk about] climate change and the Panama Canal having enough water to move ships through, they’ve got other issues on their plate.”