Panama Canal Dam Project Will Flood Many Communities
Authorities’ plans for a new reservoir to guarantee water for the canal will submerge villages along the Indio River, where residents voice anger over relocation talks
HAVANA TIMES – Two hours to the west of Panama City, 12,000 residents are fearing relocation, with their lands in line to be flooded by an artificial lake, proposed by the national government to ensure water supply to the Panama Canal.
“Tell the president to leave us alone. Does he know everything we are going to lose: the land, the crops, the homes? We are worried,” says Elizabeth Delgado, a resident of Limón de Chagres, a community on the banks of the Indio River that is the focus of the planned damming project. Along the river, the Delgados and roughly 500 other families face the prospect of seeing their homes submerged.
Proposals for the reservoir project have arisen as the scale of trade transiting through the Panama Canal has gradually increased in recent decades, but also in response to prolonged droughts that have hampered operations on the waterway, bringing disruption to a route through which 3% of global maritime trade passes.
In the first months of 2024, as one of the country’s driest years on record drove water levels in the canal system to historic lows, the interoceanic route operated at 63% of its normal capacity, explained Jorge Luis Quijano, the former administrator of the Panama Canal Authority. For the first time in its history, in 2023, the year the country’s irregular drought began, conditions forced the authority to limit the daily passage of ships, from the maximum capacity of 37 to 22.
The Panama Canal system is made up of a series of waterways and locks connecting the country’s Caribbean and Pacific coasts via the artificial Lake Gatún, created by the damming of the Chagres River, and Lake Alajuela, also an artificial body. Both lakes also supply water to just over half of the Panamanian population, including the cities of Panama, Arraiján, La Chorrera and Colón.
Driven largely by the El Niño weather phenomenon, the drought of 2023-24 led to such low levels in these lakes that it presented a challenge to supply water to citizens without restricting the transit of ships, whose passage requires 52 million gallons of water per vessel to navigate its system of locks.
Transit through the Panama Canal has also increased exponentially in the decades since Lake Alajuela was created in 1935, when 6,369 ships passed through, to 14,274 in 2022 – the year before the water crisis.
In addition to hitting Panama’s income, the drought and restrictions forced shipping companies to look for alternative routes, including the Suez Canal, which increased costs, delays and carbon emissions.
Faced with the uncertain projections over future droughts and rainfall, Ricaurte Vásquez, the current administrator of the waterway, explained that the proposed project to increase the canal’s water capacity involves the creation of a reservoir on the Indio River, which would cover an area of approximately 4,600 hectares. Construction of the planned dam – which has yet to receive approval from affected communities – is slated to begin in 2027 and would take four years, followed by two years to fill the reservoir, at an estimated cost of USD 1.5 billion, with an additional USD 400 million reportedly being allocated to compensation and social projects.
“We estimate that there are around 2,000 citizens who could be directly affected by this project, although the entire Indio River area has approximately 12,000 people,” Vásquez recently told a press conference.
A community fears for future
Along the road leading to the community of Limón de Chagres in the province of Colón, two hours’ drive from the Panamanian capital, there are numerous signs, hand-painted on fabrics, that reflect the local sentiment: “Ríos sin presas, pueblos vivos” (Rivers without dams, living towns), “Respeten nuestra tierra” (Respect our land), and, perhaps most directly, “No a los reservorios de río Indio” (No to reservoirs on the Indio River).
The Panama Canal Authority (ACP) is currently in the phase of censusing the affected areas and attempting to consult with the residents of the communities that stand to be impacted by the planned project, and recently approved funding to cover their compensation, resettlement and support.
Only this year will the first actions be taken: with many residents lacking official titles for their properties, the government is looking to assist in formalising these documents that would enable payment for the lands of those affected and their relocation. At this first stage of dialogue with communities, no estimated date for the bidding process for construction contracts has yet been released.
Upon completion of the proposed dam, the surface of the Indio River would expand to form a reservoir covering areas across the three different provinces that sit along the river’s current 98-kilometer course. The project also proposes a tunnel to transfer water to the Panama Canal basin, where lakes Gatún and Alajuela are located, to supply water to Panamanians and for the operation of the canal.
The ACP has insisted that the construction of the reservoir will guarantee both the supply of water for the population and the operation of the canal for a period of 50 years, and that this process will be carried out in dialogue with those affected, offering guarantees of better living conditions.
Despite such promises, the tension and anger of residents of the areas in line to be flooded is palpable. On some stretches of the journey during our reporting trip, we needed to travel by canoe, then walk for a further 30 minutes on dirt paths, mud often reaching our knees – the only way to reach some communities, such as Pueblo Nuevo. As we advanced, our attention was at one point drawn to voices coming from a house located on the top of a hill.
“Go look for something else to do!” and “We don’t want you coming through here” were the shouts of the indignant residents, while a young Indigenous man, mounted on a horse, came out to meet us on a track leading down from the houses.
On one side, pasted on a weathered wooden gate, was a handwritten note that read: “No entry to the ACP – private property – we will not grant the social license.” The sign draws our attention to another, with a drawing resembling a gun, beside the word “danger”.
We introduced ourselves as reporters from Dialogue Earth and explained that we were looking for information, to which the rider responded that “journalists have sold out” and that they do not want “dialogue”. After clarifying that we were reporting for an international media outlet, he finally agreed to talk.
“The ACP administrator, Ricaurte Vásquez, said that 90% of the community is in favour of the flooding, which is false,” claims the Indigenous rider, whose name turned out to be Abdiel Sánchez, a 28-year-old resident of Pueblo Nuevo. Once these initial differences were overcome, the community invited our team to join a group celebrating the birthday of a six-year-old girl, a celebration that they had delayed in order to go flyposting in the local area, affixing posters and materials demonstrating their opposition to the reservoir – the celebration’s postponement perhaps some indication of the strength of this rejection.
Among those present was Artemio Sánchez, a 52-year-old farmer and president of the local social development board, who said that they do not receive any “help from the government, much less from the canal [authority], not even ten cents to buy a box of matches.”
They also told us that they rarely encounter the authorities, so every time they see a stranger in the area, there is a paranoia that it may be an ACP official who is doing a census of the communities, as they are aware that the first property titles will be handed out in 2025.
“We were yelling at you because we thought you were from the ACP, because we do not agree that they walk around our area and river without permission taking photos of the school and the churches, knowing that we do not agree,” explained Sánchez.
“If the project happens, we hope that we are not left hanging,” said Nery Saenz, another of the party guests. She had recalled the building of Lake Gatún, which affected many families: “Nothing was recognised, and their lands were taken away… but to this day, they’ve received nothing.”
“We’re afraid this situation will repeat for us,” Saenz told us.
The artificial Lake Gatún reached full capacity in 1913 to enable the canal’s first operations. Historical records show that in 1912 – when the Panama Canal Zone was administered under a concession by the United States – the first eviction of populations near the waterway took place, following a decree issued by the then-US president, William Taft, precisely for the construction of the reservoir, which at the time was the largest manmade lake in the world.
Sources such as historian Marixa Lasso’s Erased: The Untold Story of the Panama Canal have described the US government’s actions in regard to the evictions at the time as being based on racist prejudices against a mostly African-descendant population, and on its own military and national security objectives.
Land and life in the community
What is an infrastructure project to support global trade, for Elizabeth Delgado means living a very painful situation of uncertainty. She says that ever since she heard about the proposal to flood the area to create the reservoir, around three months prior to our visit in November, she had begun to have trouble sleeping.
“We make our living off the land,” Elizabeth tells us, standing at the door of her wooden house, its white paint chipped and weathered. She lives with her husband and seven children, and given the lack of jobs in the area, they subsist on planting and harvesting agricultural products such as the ñampí yam, yuca, chili, cilantro and onion, among others, as well as raising chickens. She has lived here in Limón de Chagres for more than 18 years.
The Indio River is their natural source of water, since there is no service for potable water in the area. The residents of the basin extract water from the river or streams by pipes, search for it in wells, or walk long distances with filled buckets and pots. There is even less electricity and other basic services.
With everything that is happening, the children are afraid, says teacher Aurelia Castillo, who has cared for the past nine years for the children who attend school in Pueblo Nuevo, another of the communities threatened to be submerged. Castillo added that those who later attend sixth grade must travel for their schooling, to a nearby town called Coquillo, which is also expected to be affected by the reservoir. With a sad face, the teacher asks, “Where are we going to go to study with our children?”
Environmental impacts and alternatives
The Indio River is part of the Mesoamerican Biological Corridor, a key ecosystem that connects various areas of Central America, Panama and southern Mexico, and is a refuge for species such as monkeys, crocodiles and various endemic plants. This ecological corridor stands to be severely fragmented by the construction of the reservoir.
Isaías Ramos, a biologist at CIAM Panama, an environmental civil society organisation, describes the potential environmental impact of the project as significant. But he adds that it is the social effects that would be even more serious, claiming that many communities that stand to be affected have not yet been sufficiently informed about the project, which would be in contravention of the Escazú Agreement – the Latin American and Caribbean treaty that promotes transparency and access to information in environmental issues, which Panama ratified in 2020.
For its part, the canal authority has published reports of multiple meetings with Indio River residents, and claims it has maintained “permanent contact” and listening mechanisms with communities, with over 40 meetings reportedly held with around 2,000 residents as of September 2024.
Although water is abundant in the Indio River as a whole, its flow is decreasing in some areas, making transportation difficult. This has led the National Water Council (Conagua) to propose an alternative to the Indio River reservoir, which would instead channel water from Lake Bayano, 100 kilometres east of Panama City. Guillermo Torres, president of Conagua, has claimed that the Indio River project would only be a temporary solution given seasonal fluctuations in rainfall and the possibility of other droughts impacting the reservoir’s capacity. He also claimed that, if it had been built in 2006, another source would have been needed by 2025. The pipeline from Bayano, he claims, could guarantee water until 2075, which he says would offer a more viable option in the long term.
The Panama Canal Authority is also considering other reservoirs, such as those on the Coclé del Norte River in the country’s central region, and the Caño Sucio River, in the west.
In 2024, a Supreme Court ruling overturned a law that had blocked the creation of the Indio River reservoir, and which had since 2006 restricted the canal’s use of water to within its watershed’s boundaries. The ruling gave the ACP control over water resources beyond this watershed, and thus opened the possibility of the construction of the Indio River reservoir. However, residents of Limón de Chagres and Pueblo Nuevo that Dialogue Earth spoke with expressed a preference for the pipeline from Bayano, which they said would be less disruptive to the ecosystem and their communities. They strive to preserve the Indio River and its surroundings, valuing the tranquility and untouched nature it provides them.
Having approved the project on 21 February, the canal authority is now attempting to continue its dialogue with the communities to obtain their approval, and aims to conclude its census of the Indio River by the end of April. Discussions are likely to remain challenging, with protests in the days following the decision sending a further signal of communities’ continued resistance.
*First published by Dialogue Earth.
*Mary Triny Zea is an investigative journalist based in Panama, whose work has focused on environment, economy and politics. She has worked on numerous international investigations into misuse of public funds, and is an eight-time recipient of Panama’s top press award. She also won the Latin American Investigative Journalism Award twice and the Gabo Award in 2017. She tweets @mtrinyzea