ORANGE BEACH, Ala. ? The newest, multibillion-dollar wave of construction on the northern Gulf Coast is along the piney banks of a manmade ditch, protected from the twin threats of storms and high land prices.

With beachfront acreage in ever-shrinking supply and much of the coast still recovering from hurricanes, developers are putting up luxury condominium towers, shopping areas and marinas on the 1,300-mile Gulf Intracoastal Waterway, despite concerns that the trend could endanger navigation on a vital commercial artery.

For decades, the canal resembled little more than a meandering river with dirt banks, huge barges pushed by tugboats and the occasional fishing boat. Today, workers on its banks are planting palm trees beside buildings with penthouse views of marinas built for 100-foot yachts.

Alabama and southern Texas are at the heart of the boom, with 6,000 condominiums worth more than $3 billion planned in just one Alabama county.

But developers, the Army Corps of Engineers and waterway users agree that the work going on now in just a few hot spots could spread quickly and alter hundreds of miles of land fronting the channel along the Gulf of Mexico coast.

"The waterway will look completely different in 20 years," said Beason Wilkes, a vice president of AIG Baker, which is building an $800 million complex called the Wharf along a half-mile stretch of the waterway in Orange Beach, where the beachfront was devastated by Hurricane Ivan in 2004. It includes 1,750 condominium units, more than 200 marina slips and dozens of shops and restaurants on 223 acres.

Hundreds of miles to the southwest, subdivisions and high-dollar homes are going up on the waterway near the old fishing village of Port O?Connor, Texas. The three-phase Dolphin Point community caters to fishing boats with a protected marina that spills anglers into the same water used by barges that haul 120 million tons of bulk resources annually.

The lure of the waterway is twofold. Being on the canal instead of the beach offers some protection from monster storms like Katrina. Also, land is far cheaper on the waterway: While beachfront lots quickly reach $1 million or more, Wilkes said the Wharf was built on land that initially cost about $50,000 an acre.

Yet the development of what amounts to a second coast worries the Gulf Intracoastal Canal Association, an advocacy group for the barge industry based in Friendswoods, Texas.

"It?s an issue we need to focus on with the (Army Corps of Engineers) and sit down with developers and them to come up with a plan for doing it safely," said Raymond Butler, executive director of the association.

Winding through the gulf coasts of Alabama, Florida, Louisiana, Mississippi and Texas, the waterway is dotted with hundreds of barges carrying minerals, grains or chemical products on any given day. About 520 miles of the waterway pass through open bays or coastal sounds; the remaining 780 miles are manmade canals.

Butler said it?s the development along canals that?s worrisome. With a 12-foot channel that?s only 125 feet wide in many places, tug pilots already are forced to make delicate passes through bridge pilings and around tricky bends. Adding thousands of recreational boats coming and going from canal marinas won?t help, he said.

Butler?s group doesn?t have much problem with the massive development at the Wharf. Crews carved out more than 200 feet of shoreline along the waterway to create the development?s marina, meaning the canal didn?t lose any of its normal width.

Trying to get a handle on the development, the Corps of Engineers is holding up 16 permit applications to build along the waterway while contractors complete an environmental impact study that?s being funded in large part by a consortium of developers.

If the government eventually slows down development, the answer might be more construction like Cypress Village, a 343-home residential development that is on the waterway but doesn?t have a marina. Instead, residents will be able to walk to the Wharf, which will lease slips.