Roosevelt Institute | Cornell University

The Nicaraguan dream--or nightmare?

By Kavin LamPublished February 18, 2015

The Hong Kong Nicaragua Canal Development company has began construction on the Nicaragua Canal. The canal is threatens many different ecosystems including Lake Nicaragua. Does the economic advantages of the canal justify the threat to the environment?

By Kavin Lam, 2/18/15

The 19th century seafarer dream was to build a canal through Latin America to increase the ease of travel between the Pacific and Atlantic oceans. Panama's small geographic size made it the natural location for such a canal, and due to the United State's aggressive Monroe Doctrine policy in the region, the canal was quickly completed.

In June 2012, Nicaragua revived its dream of having its own canal. The Hong Kong Nicaragua Canal Development received approval for a 50 year land lease, renewable to 100 years, by the Nicaraguan National Assembly. With an estimated cost of $50 billion, measuring 278 kilometers long, and 230-520 meters wide, the Nicaragua Canal will pass through Lake Cocibolca (Lake Nicaragua) which is the largest tropical lake in Central America.

The Nicaraguan government sees the canal as a key to economic growth. "With this great canal, Nicaragua expects to move 5 percent of the world's commerce that moves by sea, which will bring great economic benefits and double the GDP," said Nicaraguan Vice President Omar Halleslevens. Scientists and economists around the world are much more pessimistic for the fate of the Nicaraguan canal.

Scientists are concerned that this project may have been approved before their environmental concerns could be addressed.  Many scientists, for instance, are appalled that the HKND bid was accepted without any environmental assessment of the project's long term economic and environmental impact. If the effects of building the canal are unknown, then how could the country be ready for a natural disaster? Scientists are also concerned about the local habitats surrounding the region of the canal. There are worries concerning the mangroves, local fisheries, and the introduction of invasive species from the Caribbean and the Pacific into the delicate ecosystem of Nicaragua's wetlands. The Association for Tropical Biology and Conservation (ATBC) estimates that 4,000 square kilometers of forests, coast, and wetlands would be affected by the canal, and 22 endangered species would be threatened as well.

The only environmental impact report completed was paid for by HKND and performed by an independent consulting firm, which poses multiple conflicts of interest. Even more interesting is that the impact report released wasn't based on the environmental impacts of the whole canal project, but  the portion of damage done to the environment by the preliminary construction of the canal. The report finds that there are multiple preliminary construction problems that will exist regardless of measures to prevent environmental degradation. These problems include displacement of communities in the path of the canal, and the destruction of historical artifacts (the company has actually unearthed thousands of pre-Columbian relics). The worst potential problem at hand is that a fuel spill will occur, which would affect freshwater fish, disrupt of agricultural activity, and disrupt to native people's reserves.

Economists are concerned with the practicality of the canal. The canal currently faces engineering concerns, which could deter  potential investors. The major argument of HKND is that large volumes of globally traded goods would go through the Nicaraguan Canal instead of the Panama, even as the Panama looks at expansion. The size advantage, HKND, argues is the key to their success. Al Jazeera analyzed the revenue from the Panama Canal and if the Nicaragua canal absorbed all of the Panama's business, it would take 30 years to pay off the initial cost without interests. The costs of this project simply aren't reasonable.

Completing this canal was once the Nicaraguan peoples' dream. The HKND and Nicaraguan government may still be stuck in that dream. For the people of Nicaragua and the environment, this canal may become their greatest nightmare.