Long-term reservoir plan would displace about 2,500 people
A photograph credited to Panama Landscapes by Oyvind Martinsen/Alamy showed drought in the lake of Cienaga de las Macanas in El Rincon, Herrera province. The wider water crisis has reached Azuero, an agricultural region in Panama’s Arco Seco, or Dry Arc. This year’s rainy season, typically from May to December, brought little rain to parched fields. Watering holes, streams and rivers used by farmers were not replenished, and pastures, the vital source of animal feed during the dry months, did not regenerate. The failed rainy season has deepened the strain on the region’s farmers.
Panama’s government declared a national state of emergency in August, and the declaration will remain in place until June 2027. Authorities forecast rainfall deficits of more than 50% in some regions until December. Environment Minister Juan Navarro said, “The situation is dramatic.” He said, “Climate change has undoubtedly increased the frequency and also the gravity of El Niño, as well as other climate extremes; we used to get an El Niño every 10 or 20 years. The last, in 2023, cost the Panama canal almost a billion dollars in revenue.”
Navarro, citing scientists, said the latest El Niño was pointing toward being the worst in history. He said: “We are already starting to feel the impact, but we have seen nothing yet. For Panama, this is life or death. The canal is life and death for our economy, and for our drinking water supply.”
Panama’s economy relies heavily on the Panama Canal. The 50-mile (80km) waterway links the Atlantic and Pacific oceans, and about 5% of global maritime trade flows through it. The canal accounts for up to 7.7% of Panama’s GDP. The freshwater lakes that supply its locks, Gatún and Alajuela, also provide drinking water for about 2 million people, nearly half the population, and a sizeable chunk of the country’s hydroelectricity generation depends on the watershed.
In September, low water levels twice triggered restrictions on daily vessel transits. Some restrictions have been lifted, but officials are braced for worse when the El Niño-intensified dry season begins in December. A Bloomberg/Getty Images photograph from September 2023 showed ships waiting in the canal for congestion caused by intense droughts in the country to pass.
The government is directing $80 million (£60 million) toward “resilience actions” to prepare for El Niño, Navarro said. In the long term, the government is investing about $1.5 billion in a reservoir on the Indio River intended to supply Lake Gatún and meet demand for the next five decades. Navarro called the reservoir “the most important investment we are making – Indio is the ultimate bet on resilience.” An Ivan Pisarenko/AFP/Getty Images aerial photograph showed Lake Alhajuela, which supplies water to the canal’s locks, at historically low levels in May 2024.
The Indio River reservoir would flood the lands of 550 families in 38 rural communities, where about 2,500 people live in the basin. Cropland would be swept away, graves exhumed and reburied elsewhere, and communities, including homes, schools and churches, would be dismantled. A Reuters photograph by Enea Lebrun showed a farmer crossing the Indio River on horseback at Tres Hermanas community, one of the towns threatened by the reservoir project.
People opposing the project have held street protests, taken legal action and set up blockades, while authorities forecast completion in two to three years. A Daniel Gonzalez/Anadolu/Getty Images photograph showed farmers protesting the reservoir plans in Panama City in April 2026. Florentino Chirú, vice-president of the Coordinadora Campesina por la Vida Contra los Embalses, or Peasant Coordinating Committee for Life Against Dams, said, “For us, this isn’t merely a matter of changing homes,” adding, “It means leaving behind the history of entire generations. Furthermore, we would lose fertile land.” According to Chirú, farmers rely on small-scale livestock farming for their livelihoods, meaning they would lose their only means of feeding themselves and generating income.
Chirú also said, “The impact would be absolutely devastating. There are no words to describe it. I’ve lived on this land for 63 years; my whole life is here.” He added, “If we were to be displaced, well, this is our life insurance. We would be left with nothing.”
The Panama Canal Authority said resettlement would include compensation for homes, land, crops and livelihoods, along with support to restore families’ income sources. It said residents can choose from different relocation options, including moving together to preserve community ties. An Enea Lebrun/Reuters photograph showed cattle at Tres Hermanas in Capira, one of the towns that would be drowned if the reservoir project moves forward.
Robert Delgado’s cattle slumped in the shade, tongues lolling, as they tried to avoid the blistering heat. With no grass expected to remain, he is selling off cattle as the dry season approached after his milk production fell by half. Delgado said, “I and other producers have had to slaughter or sell animals of high genetic value simply to avoid the heartbreaking prospect of watching them die of thirst or starvation. The lack of water has greatly affected us, and it is going to continue to do so.”
Along with legislation to pave the way for public-private partnerships and infrastructure investments, the government announced an $8.2 million emergency package, including funding for livestock feed, irrigation equipment and the like. For Azuero farmers, rice growers in Coclé and others already grappling with drought’s effects, long-term investments will do little to ease the immediate crisis.
Delgado asked, “If there is no regrowth during the rainy season, how are we going to sustain the animals during the dry season when there is absolutely nothing?” He said, “What we lose today, we sorely need in the future.” He feared the cattle population would drop drastically and that rebuilding breeding herds for milk or meat would take a long time. “This combination of problems, compounded by the climate crisis has made the agricultural sector’s situation so dire that we risk disappearing altogether,” he said.
Experts cited by The Guardian said a greater supply will not solve all Panama’s water-management and storage problems and that the crisis has exposed structural failings in the country’s relationship with water. Despite Panama’s status as one of the wettest countries on Earth, hundreds of thousands of people lack access to reliable drinking water. Drought is compounding a chronic lack of potable water in places such as Azuero, while government estimates put water losses through aging, leaky pipes at about 50% in some areas. A recent El País investigation found that 240,000 Panamanians lack regular access to drinking water, and even communities within the canal watershed rely on rainwater, tanks and informal deliveries.
Navarro acknowledged, “We have a challenge with water.” He said: “The number-one challenge is the watersheds. Number two: our water purification and treatment facilities to produce potable water are inadequate. Three, we have a horrendous problem with loss. Because we have such abundant water, we haven’t taken adequate care of it in the past.”