Panama Canal Capital improvementscanal, Central America Spanish Canal de Panamá

The first major capital improvement on the canal was the construction of the Madden Dam and Power Project, which was completed in 1935. This not only stemmed and controlled the flow of water moving into Gatún Lake to a rate of some 6 billion cubic metres (200 billion cubic feet) per year but also created a large reservoir, Lake Madden (now Alajuela Lake). It also increased the production of electric power in the region. The Boyd-Roosevelt Highway was then built across the isthmus, thereby adding a third means of transportation to the waterway and the railroad. In 1955 the Thatcher Ferry Bridge was built, which connected Panama City and Balboa to the west side of the canal. From 1957 to 1971 Gaillard Cut was widened from its original 90 metres (300 feet) to 150 metres; and from 1991 to 2001 it was widened again to 200 metres, permitting two vessels to pass each other in the cut.

Many of the ships built since the 1970s, notably supertankers and large naval vessels, are too large to pass through the canal. Thus, there has been much study on the feasibility of either widening the existing canal and locks or building a larger sea-level canal at another location. Proponents of the sea-level canal contend that it would be less expensive to operate and, since it would have no locks, less vulnerable to military attack than the Panama Canal. Opponents of such a project cite its enormous expense and the possibility that it could create serious environmental problems by permitting the exchange between the two oceans of long-separated plant and animal species.