This was at one time an important link in the transportation route which supplied the Dutch colonial administration. you could get the historical experience while you are traveling by boat. The canal itself is a hive of activity with all the fishermen traveling up and down in their gaily painted boats. On the shores of the canal, you will find many homes and churches and many species of birds. You will continue your ride through the Canal to the lagoon which is surrounded by a densely-populated region containing rice paddies, coconut plantations, and grassland. The lagoon has extensive mangrove swamps and attracts a wide variety of water birds including cormorants, herons, egrets, gulls, terns and other shorebirds.
The Dutch Canal is a 14.5 km (9.0 mi) canal connecting Puttalam to Colombo, passing through Negombo in Sri Lanka. The canal was constructed by the British in 1802 and completed in 1804. It was designed to drain salt water out of the Muthurajawela wetlands. The canal was named after Gavin Hamilton, the Government Agent of Revenue and Commerce. The first mention of the canals along the western seaboard of Sri Lanka was in the 8th century, when the Persian geographer, Abu Zayd al-Balkhi reported a voyage lasting week along the 'Gobbs of Serendib', the Arabian term for the linked lagoons along the coast.
Six centuries later the King of Kotte, Veera Parakramabahu VIII (1477–1496), had a network of canals constructed connecting outlying villages with Colombo and Negombo Lagoon so that produce such as arecanuts, cloves, cardamom, pepper and cinnamon, could be more easily transported to the kingdom’s main seaport at Negombo. In 1613 a Portuguese missionary, Father Manoel Barradas, describes how "Near Columbo the Fathers embarked on a canal by which they entered into the River Calane [Kelani Ganga], and going down the river they proceeded into another canal as narrow as shady, so that the oars, although they were very short, could scarcely fulfil their office". "By this they went as far as Negumbo, which is six Chingala leagues." In the 17th century the Portuguese constructed a canal from Hendala to Pamunugama.
The Dutch established the centre of their colony at Colombo. They then attempted to grow paddy rice in the surrounding marshes in Muthurajawela, but found that—as the previous Sinhalese kings had before them—the coastal tides inundated the fields with sea water. Around the 18th century, the Dutch commenced the construction of a series of structures, dams and canals using and enhancing the original system of waterways in an attempt to drain the salt water from the rice fields and to transport cinnamon in barges through to the seaport at Negombo. This system, known as the 'Dutch Canal', formed a "continuous line of waterways between ports and the remote sections of territory under the Dutch". In 1796 the British took control of the island and in 1802 a new Colombo-Negombo canal was built, conceived by George Atkinson, the Colonial Surveyor General and supported by Gavin Hamilton (1494–1803), the Government Agent of Revenue and Commerce. The Hamilton Canal, as it became known, ran parallel and west of the old Dutch Canal, closer to the sea, from the mouth of the Kelani Ganga at Hekitta to the southern edge of the Negombo Lagoon at Pamunugama, a distance of 14.5 km. Hamilton had accompanied Frederick North (first British Governor of Ceylon 1798–1805) to Ceylon in 1798, where he became the private secretary to Hugh Cleghorn, Colonial Secretary of Ceylon. He subsequently became the private secretary to Governor North. In April 1799 Hamilton was appointed Acting Civil Paymaster and in 1802 the Deputy Paymaster General. He succeeded Joseph Greenhill as Agent of Revenue and Commerce for the District of Colombo. Hamilton died in February 1803 prior to the completion of the canal in 1804. After his death he was found to have embezzled £19,675.
The canal was designed to connect the original Dutch canal by a series of parallel waterways in order to drain the already damaged Muthurajawela but created the opposite effect, as the coastal tides brought increasing salinity not only from Negombo Lagoon but also the Kelani Ganga.