How Climate Change Threatens Global Maritime Trade

The Panama Canal (Image source: National Geographic)

To understand why, a bit of background first. Built in 1914, the Panama Canal provides a vital shortcut between the Atlantic and Pacific Oceans. By passing through Panama instead of navigating around the southern tip of South America, it allows ships to travel in half the time. The canal isn’t a river between two oceans though. The Panama Canal is an engineering marvel that works as an elaborate water elevator; using a system of locks, ships are lifted 26 metres above sea level to cross Gatun Lake—an artificial freshwater lake—and then lowered to sea level on the other side.[2]Today, the waterway facilitates the passage of up to 14,000 ships, representing 2.5% of global trade, with the US and China being its biggest users.[3]

Map of the Panama Canal, with a side view diagram showing ships are lifted and lowered to connect between the Atlantic and Pacific Oceans (Image source: Thomas Römer/OpenStreetMap data)

So how is the Panama Canal threatened by climate change? Every time a ship passes through the waterway, 200 million litres of freshwater from Gatun Lake is released into the sea while operating the locks.[4] While Panama is one of the wettest countries in the world, longer droughts, less predictable rainfall, and more frequent El Nino events under climate change have prevented the lake from replenishing water fast enough. During late-2023 and early-2024, water levels at Gatun Lake have lowered to the point that the Panama Canal Authority had to restrict the daily number of ship transits and the size and weight of ships that can pass—heavier vessels are at a higher risk of scraping the lake bottom in shallow waters.[5] A smaller quota means fewer ship passages, bigger backlogs from longer queues, and delays in deliveries. Trade isn’t the only aspect impacted by a drier Gatun Lake; over half of Panama’s population depends on the lake for drinking water.

Climate change is making it harder for Gatun Lake to recover after a dry season (Image source: Woodwell Climate Research Centre)

To adapt to climate change, the authority has pledged US$8 billion into upgrading its infrastructure to decarbonise and better manage water use, such as a developing a port for ships to unload cargo onto a land transport and reload them at the opposite end of the passage.[6]Among its many measures include a US$1.6 billion mega-project to dam the Indio River and secure water for the canal’s operation.[7] The proposal is controversial as it would involve deforesting large swathes of land, disrupting ecosystems, and displacing local communities.

From extreme rainfall, wildfires, and more, the threat of climate change is far and wide. Its impacts however can sometimes manifest in subtler ways in the case of the Panama Canal. Ensuring that a vital artery of global trade can continue to function under a warming world requires ingenuity, investment, and a willingness to adapt.