Panama’s highest court on July 2 struck down a law that blocked creation of a new reservoir that would help alleviate water needs of the Panama Canal. The Plenary Session of the Supreme Court of Justice of Panama ruled that Law 20 of June 21, 2006 was unconstitutional, restoring a 1999 law that established the limits of the canal’s hydrographic basin.

Read ENR's recent story on the Panama Canal Authority's ongoing efforts to bolster the water needs of the historic waterway.
Panama Canal Proposes New Reservoir to Secure Water Supply

The change allows the Panama Canal Authority, known by its Spanish-language acronym ACP, to undertake conservation of water resources in areas outside of the canal’s immediate watershed—permitting construction of a reservoir on Rio Indio, located to the west of the waterway.

The new reservoir would meet growing water needs of the canal and the country for the next half century, according to recent studies by ACP and the U.S. Army Corps of Engineers. Officials estimate the project would cost about $900 million and could be completed in five years.

[UPDATE 7/9/24: The ACP now estimates the project will cost $1.6 billion and will require six years to complete.]

In a statement after the ruling, canal officials said they would move to safeguard the country’s water resources although they did not directly mention the proposed reservoir.

“The Board of Directors of the Canal and its Administration will coordinate with the administration of President José Raúl Mulino on actions necessary to advance in the search for long-term solutions to the water crisis that Panama has faced, and thus permanently guarantee the water necessary for the consumption of the population and the operations of the interoceanic route,” said the statement.

Publio Cortés, the attorney who filed the lawsuit last December challenging the 2006 law, said in a statement that ACP can move forward on the reservoir to bolster canal water supply.

“Thanks to this decision, the legal framework necessary for the Panama Canal Authority to carry out the engineering works required to improve the water reserves for the operation of the waterway as climate change requires,” he said.

The need for new water sources for both the canal and the nation became acute last year when an historic drought and El Niño conditions led to precipitous drops in water levels of Gatun Lake. Canal officials were forced to dramatically reduce transits and launch a battery of water conservation measures.

The proposed Rio Indio reservoir is outside of the canal's current watershed.
Map by Scott Hilling/ENR, original inset map by Getty Images

The 2006 law that allowed construction of the canal's new locks included restrictions on its watershed and prohibited construction of reservoirs outside of it. 

Cortés argued that Panama’s constitution required that any alterations to the geographic perimeter of the watershed must originate with the ACP board of directors. Since the 2006 law was produced by the national assembly and not by the board, it violated the country's constitution. The current Environment Minister, Juan Carlos Navarro, and another lawyer Juan Ramón Sevillano also filed a similar claim before the court in January.

Last September, ACP officials presented a proposal to the Panama government to create the Rio Indio reservoir. It included a request for the National Assembly to expand canal operating limits beyond restrictions set by the 2006 law. That request is no longer necessary, Cortés says.

“In this case, repealing the Law of 2006 was declared unconstitutional by the Plenary of the Court ... [and] the Boundary Law of 1999 returned to force,” he said.

An increase in rainfall in recent weeks has led to improved conditions on the waterway. Last week, canal officials announced that the number of transits through the neopanamax locks would increase to 35 per day on Aug. 8, and the maximum permitted draft boosted to 47 on July 11.

In a June 26 statement marking the eighth anniversary of the opening of the new locks, canal Administrator Ricaurte Vásquez Morales said impacts of climate change remain a key concern for waterway operation.

The anniversary "is different from previous ones because we have had to adapt our operations to the drought conditions, a product of the climatic variations that affect the levels of the Gatún and Alhajuela lakes," he said. "During this critical period, we have sought the well-being of the population, guaranteeing the supply of drinking water and, on the other hand, ensuring the reliability of the service to our clients.”