The lush river valleys of El Zaino y La Arenosa in western Panama, home to hundreds of families that eke out a living farming, fishing and raising cattle, could soon be submerged by a massive man-made reservoir designed to ensure the viability of the Panama Canal in the face of a changing climate.

The lush river valleys of El Zaino y La Arenosa in western Panama, home to hundreds of families that eke out a living farming, fishing and raising cattle, could soon be submerged by a massive man-made reservoir designed to ensure the viability of the Panama Canal in the face of a changing climate.

Tres Hermanas, with its farms, two schools, churches and a medical clinic, is one of dozens of towns that would disappear in the next six years if the state-owned Panama Canal's ambitious $1.6 billion project goes ahead.

While the Rio Indio dam project was first proposed two decades ago, more extreme weather in the last decade, including a severe drought in the past year that restricted vessel traffic on the canal, has lent greater urgency to the proposal.

The canal accounts for 3.1% of the Central American country's gross domestic product. The waterway, which allows up to 14,000 ships to cross per year, accounts for 2.5% of global seaborne trade and is critical to U.S. imports of autos and commercial goods by container ships from Asia, and for U.S exports of commodities, including liquefied natural gas (LNG).

Residents are divided: some do not want to leave, while others are focused on getting fair compensation if they are forced to move. If they are not satisfied, recent history suggests public opposition could endanger the entire project.

The project still needs to pass a long approval process including a public consultation, discussion by the cabinet and the National Assembly's final green light.

The Canal Authority aims to create a massive dam 840 meters in length and 80.5 meters in height to secure freshwater for its locks. It says the reservoir's 1.25 billion cubic meters of water would allow up to 15 additional vessel transits per day during the dry season, and help provide drinking water to Panama's growing 4.5 million population.

If it wins approval, the dam is expected to be completed by 2030 or 2031, but the clock is ticking: Last year was the third driest in the waterway's 110-year history. The second driest was 2015. Meteorologists forecast Panama will face more severe droughts and faster water evaporation due to higher temperatures in the future.

According to an initial survey by the Canal, the project would demand the relocation of some 2,260 people, and would impact at least partially an additional 2,000 people in the reservoir zone.

A census to count more accurately how many people will be affected is expected to be completed in January, the canal's deputy administrator, Ilya Espino de Marotta, told Reuters in an interview in October.

From an environmental damage point of view, the Rio Indio project could have a greater negative impact and few positive benefits that could not be obtained otherwise, said Professor LeRoy Poff, an expert on aquatic ecology from the University of Colorado, referring to displacement of people and livelihoods, damages downstream for the fish and for the forests.

The recurrence of the El Niño weather phenomenon has accelerated to every three years, extending Panama's dry season and exhausting much of the water resources in the country with the fifth most rainfall in the world.

In preparation for the next drought, the Canal has changed its reservation model, is calling on shippers to consolidate cargoes and is preparing water recycling measures.

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