Panama canal Flashcards
Social impacts of the Panama Canal (before extension)
-High worker mortality rate: 200 a month
killed during the French attempt to build the
canal, 27,000 died.
-Overall Indigenous groups
and rural communities forced off their land.
-Water directed away from the eastern side of
the country. Many subsistence farmers found their
land too dry.
-12,852 people were hired, though mostly migrant workers from the
West Indies as Panamanians were too expensive
Environmental impacts of the Panama Canal (before extension)
Flooding the area behind the dam on the Chagres River, which
became known as Gatun Lake.
-Huge water requirements. Pristine rainforest lost
(more than 150 square kilometres).
-This region is an important migratory route for
animals including eagles and jaguars, remaining forest was fragmented.
-Conservation of forest either side of the canal to protect the water source (660 KM2
corridor)
Background of the Panama Canal extension project
- Referendum in 2006 Panamanians approved a referendum (2006) to expand the canal
- September 2007 at a total cost of US$5.2 billion due to increasing demand
• Funded by canal revenue and $2.3 billion financing package (e.g. European
Investment Bank lent US$500 million)
• New locks built to accommodate 95% of ships currently in use, expected to drop
to 87% by 2019
• Aims to raise the maximum operating level of Gatun Lake from 26.7 to 27.1 metres, to improve the Canal’s water supply. The project will enable additional water storage capacity for Gatun Lake by nearly 200 million cubic metres, which will allow for approximately 1,100 additional transits every year.
Social advantages/disadanatages of the Panama canal extension project
No significant relocation of communities needed.
• It is possible that the money generated could be invested in schools and
hospitals.
- 76% of Panamanians approved the expansion
- Creation of about 30,000 construction jobs
• Increasing demands on water could lead to water stress elsewhere
Disadvantages
- 24% of Panamanians did not approve the expansion in 2006
- Construction jobs are low skilled and many temporary
Economic advantages of the Panama Canal expansion project
• Improvement of navigational channels (dredging) allows large ships benefit from
economies of scale
• Government expected to double the revenue it receives from the Panama Canal
Authority, to reach around $2bn in 2021
Wider economic advantages
-Benefit to US markets that rely on exports e.g. cotton Industry; New Jersey plans to spend
$2.7 billion on enlarging its terminals and shipping lanes
Economic disadvantages of the Panama expansions
Cost: 5.2billion through loans and investment of revenue from the canal.
- Lost revenue due to 16 month delay in completion estimated at $200 million.
- Still cannot accommodate largest ships so less to remain competitive.
Environmental advantages of the Panama Canal expansion project
Increased shipping may lead to the transfer and establishment of non-indigenous
species
• More efficient transport as larger ships, known as post-Panamax vessels, can use the
canal , meaning less pollution through the reduced use of fuel which may have a
positive impact on climate change.
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• Shorter journey time, since ships are not waiting to traverse the canal or take longer
routes such as the Suez Canal.
• Reforestation of previously degraded land to preserve water supplies. Whilst this will
increase carbon sequestration, some studies suggest little impact on water supplies
Environmental disadvantages of the Panama Canal expansion project
• Increased shipping may lead to the transfer and establishment of non-indigenous
species.
• Increased water withdrawals from Gatun Lake (more than 55 million gallons for each
ship).
• Substantial increased demands on the watershed during dry seasons.
Political advantages of the Panama canal expnasion
Will collect $1.6 billion annually from passage fees, a significant sum in a country with a total budget of $25 billion, thus further strengthening the nation’s social
programs and economy.
-The revenue it receives each year from the Panama Canal Authority (ACP) is
expected to double to around $2 billion in 2021
-Panama Savings Fund has been set up to manage the increased revenue, which can, for example, be used in the event of a natural disaster
Political disadvantages of the Panama canal expnasion
Could lead to political instability if the government fail to make a good return on
their investment
• Already criticised as too little too late, since the new canal will still not be able to
fit the largest vessels
• The government has doubled it´s budget deficit to negative 4.2% (2016)
Panama Canal:4th Locks
Proposed development would allow it to accommodate the largest ships.
- Would allow ships to carry 18,000 containers including 400-meter-long ´Triple E´ vessels.
- Would become a competitor for those ships using the Suez Canal.
- Estimated cost $16-$17 billion (cheaper than the Nicaraguan canal).
- Funded by revenue from the canal itself as well as bonds and loans.
• CHEC (China Harbour Engineering Company), a subsidiary of a state-owned company,
has shown an interest in building the 4th locks.
• Chinese involvement could increase political tensions, (particularly with the anti-China Trump administration).
