MEXICALI, Mexico - Despite its name, the All-American Canal has been leaking water to the Mexican side of the desert border for more than 60 years, nourishing alfalfa, onion and cotton crops that might otherwise wither. Now the U.S. government is preparing to line the earthen channel with concrete. Mexican farmers' loss will be California's gain: Scarce water that will no longer be able to seep away instead will help flush toilets and water lawns more than 100 miles west in San Diego. And that would affect thousands of families whose fields cover thousands of acres around Mexicali, an industrial city of 800,000 that is gobbling up farmland on its outskirts. Critics of the project say the lining would prevent the replenishment of about 100 rural wells they use. Nazario Ortiz, who farms 100 acres about three miles inside Mexico, worries that his hardscrabble community will not survive. "Everything comes from the canal, so everything is going to be ruined," said Ortiz, 46, who lives in a village where old pickup trucks and unleashed dogs share dirt roads. "How are people going to make a living?" It will be hard, Ortiz says, to stop his sons — ages 22, 18 and 16 — from illegally crossing the border to join relatives in Los Angeles. For many of its 82 miles, the canal's green waters trace the U.S.-Mexican border, running through sand dunes and verdant fields to California's Imperial Valley, where it is the lifeblood for 500,000 acres of U.S. farmland. The project to line 23 miles of the canal is slated to begin this summer and be completed in 2008. Project managers expect that the refit canal will capture enough water for 135,000 new homes, mostly in San Diego and its suburbs. The deal is not, however, ironclad. A group of Mexicali farmers and businesses has sued in federal court in Las Vegas to stop construction; a hearing is scheduled April 24. Nearly 3,000 acres in Mexico depend entirely on the All-American, according to the Mexicali Economic Development Council. California also relies on water that the canal siphons from the Colorado River as one of the West's major water sources winds from the Rocky Mountains to the Gulf of Mexico. For years, water consumption spurred by breakneck growth in Southern California prompted Western states to complain they were not getting their share. A water-redistribution deal in 2003 cleared the way for the lining project, which, at an estimated cost of $225 million, will ease some of the pinch California feels from being able to gulp less water from the Colorado. Mexico already gets 489 billion gallons of Colorado River water each year. Supporters of the lining project say that that should suffice — that the canal's seepage is water Mexico is not entitled to get. The Mexican government estimates 90 percent of the canal's seepage ends up in Mexico, according to Enrique Villegas, environmental protection secretary for Mexico's Baja California state. "We don't mind sharing, but enough is enough," said Stella Mendoza, who serves on the board of the Imperial Irrigation District, which oversees the canal and solicited construction bids last month. Colorado River water first flowed to California's arid southeast in 1901 on the Alamo Canal, which dipped into Mexico. California farmers soon decided they needed a canal completely within the United States, leading to completion of the All-American in 1942. Many Mexicans remember fishing on the Alamo in the 1970s. Now it's a bone-dry ditch — full of old tires, empty jugs, soda cans and carcasses of dogs, cats and cows — that winds around sleepy villages in the Mexicali Valley. Farmers are not the only Mexicans fretting about the concrete casing. Opponents say lost seepage threatens about a dozen hidden lagoons in Mexicali enjoyed by outdoor enthusiasts and hunters. Critics also say migrants may die crossing the 175-foot-wide canal because the concrete lining will deprive desperate swimmers of tall grasses to grab. Although the canal appears calm, migrants who cram onto inflatable rafts can be swept away by a fierce undercurrent. Nine people died in the canal last year, down from 29 in 2001, according to the Imperial County coroner's office. The drop tracked a shift in border crossings to Arizona as the U.S. government heightened enforcement in California. The coroner's office says canal drownings could rise if California ever regains favor among illegal border crossers. To prevent such deaths, crews will build ladders 750 feet apart on both sides of the concrete lining to give desperate swimmers something to grab. While Mexican farmers protest the project most loudly, fearing that to recover lost water they'll have to dig deeper wells and pay higher electricity bills, there is surprising resistance in one California border town. The City Council of Calexico, Calif., voted in January to oppose the project. The symbolic gesture echoed the opinion of some Imperial Valley farmers. "I'm a farmer and those guys are farmers," said Tom Brundy, 49, who sends his four children to a private Catholic school in Mexicali. "I'd hate to have it happen to me."