I think canals as tile improvements is an excellent idea. I'd also think that you could move ships up and down them to harbor in your city that's connected to it.
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Hermann - My preference would be the tile improvement. Would make city placement more enjoyable when faced with city sites one space from the water. Chaining lakes would be nice, too.
The Panama Canal seems like a world or national wonder, or was at the time it was built. If I can't get canals as a tile improvement, I'd settle for the wonder option.
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