The completion and opening of the Panama Canal in 1914 spurred unprecedented major advancements in world trade as well as a significant impact on Panama’s economy. The canal, funded by the United States and remaining under U.S. control for much of its history, was handed over to Panamanian control in December of 1999. In 2006, Panamanians voted with 78 percent approval to go through with a proposed massive canal expansion project that is expected to significantly increase the amount of cargo that can be transported through the canal, thus generating considerably more revenue for Panama from canal operations.

A major economic advantage of the massive canal expansion will be the ability to accommodate the much larger shipping vessels which have become widely utilized due to an upsurge in trade between the Americas and Asia. Ships meeting the size requirements to travel through the existing Panama Canal and locks are termed Panamax ships, and with expansion, the canal is expected to have the capacity to facilitate the transport of so called post-Panamax vessels, measuring up to 50 percent wider than Panamax ships. Currently, cargo from such vessels which do not meet size requirements is commonly unloaded on the United States west coast, and transported via railroad to its final destination. The Panama Canal expansion project is expected to alleviate this logistical deviation, allowing cargo to be transported directly to the eastern United States by water and facilitating more efficient delivery and lower prices for end consumers.

Construction plans for the canal expansion include the implementation of modern water pumps as well as reforestation along the canal aimed at maintaining adequate water levels in the locks without having to create new reservoirs. Such improvements are intended to manage erosion and help maintain sufficient levels of water, even during long periods of low rainfall.

Concerned with the displacement of thousands of people that took place during the original canal construction, many Panamanians are skeptical about the underlying consequences of the expansion despite extensive preliminary research and environmental precautions.

The expansion, expected to cost more than five billon U.S. dollars and be completed in 2014, will add an additional lane along the canal as well as two additional three chambered locks at each end of the canal. Funding will be acquired through a series of toll increases for canal customers, and current traffic is expected to be unaffected during the construction period. The year 2014 marks the canal’s 100th year of operation.

About the Author: Laurie Cooper, of Cpanama Real Estate Corp., is an expert on Panama real estate. For more information, please visit http://www.cpanama.com