The future of the annual Brownhills Canal Festival is in the balance because of essential repairs to the Chasewater Reservoir.
It follows news yesterday that two other canal festivals in the Black Country - which attract thousands of people - have been called off due to the vital work.
Billions of gallons of water are being drained out of Chasewater Reservoir, to allow essential £2.5million safety improvements to take place to avoid flooding in the future.
The reservoir, at Chasewater Country Park, is one of the largest in the West Midlands and the draining of it could have a knock-on-effect on water levels on the canals it serves, including the Great Wyrley and Essington, Rushall Daw End and other systems around Lichfield, Walsall and Birmingham.
British Waterways is in the process of drawing up an action plan of how to cope when the disruption is likely to be at its peak during the popular summer months.
Doug Birch MBE, chairman of Brownhills Local Committee, said: "We are sitting on the edge of the chair at the moment.
"We are awaiting advice from British Waterways, it is down to things like lock usage and water levels and whether there is going to be any water left in the canal or not.
"At the moment we are optimistic but it might be that British Waterways comes back and says no way and then it will have to be cancelled or postponed. Our festival is more of a canalside festival compared to those which have been cancelled which are more boater festivals. However we do rely on visiting boaters as well."
A final decision over the event in Brownhills will be made on April 12 over the day which is always held on the last Sunday of June.
Around 3,000 people turned out for the occasion last year to enjoy the seventh annual Brownhills Canal Festival.
A total of 12 colourful boats were on show and visitors flooded in throughout the day at the Silver Street basin.
The annual Birmingham Canal Navigations Society (BCNS) marathon cruise in May has been cancelled as has the long awaited return of Pelsall Canal Festival in June for the first time since 1997.
The popular seven day BCNS Explorer Cruise - which allows boaters to navigate hidden routes - will go ahead on June 5 but will be restricted to 20 boats rather than the usual 30.
British Waterways spokesman Stephen Hardy said: "We are assessing the situation. The reservoir is the main feed for the canal network in the area.
"We are trying to understand what the effect will be on the water levels. We are not asking people to stay away at this stage, but restricting the use of the canals is one of the measures we are looking at."