The Chagres River, in central Panama, is the largest river in the Panama Canal's watershed. The river is dammed twice, and the resulting reservoirs—Gatun Lake and Lake Alajuela—form an integral part of the canal and its water system. Although the river's natural course runs northwest to its mouth at the Caribbean Sea, its waters also flow, via the canal's locks, into the Gulf of Panama to the south. The Chagres thus has the unusual claim of drainage into two oceans.

Panama, officially the Republic of Panama, is a country in Latin America at the southern end of Central America, bordering South America. It is bordered by Costa Rica to the west, Colombia to the southeast, the Caribbean Sea to the north, and the Pacific Ocean to the south. Its capital and largest city is Panama City, whose metropolitan area is home to nearly half the country's over 4 million inhabitants.