June 2015
In a collaboration between the Nicaraguan government and Chinese industry, a new 300km canal is set to be dug linking the Pacific and Atlantic Oceans
In a collaboration between the Nicaraguan government and Chinese industry, a new 300km canal is set to be dug linking the Pacific and Atlantic Oceans. Since the 1560s there have seventy three canal proposals, and those of the last fifty years have been plagued by unreliable and ineffective funding streams. However, at three times longer than the Panama canal and in places more than twice as deep, this successful proposal has been dubbed "the world's biggest civil engineering project" (Watts, 2015) by HKND, the lone Chinese Company that is going to dig, maintain and manage operations across the central American nation until 2070.
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Why is a canal needed?
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What environmental impact might the canal have?
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What social impact might the canal have?
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What economic impact might the canal have?
HKND, (the Hong Kong Nicaragua Canal Development Investment Company), a subsidiary of a Chinese trading company, aim to have the new canal completed in 2020. In its five year build, the canal will invariably have a wide ranging impact, both on the land it dissects and the people who will be displaced from its path and on trade routes and the economics of global trade. This study explores the environmental, social and economic impacts such a project creates.
2014 marked one hundred years since the opening of the Panama Canal, and this new development in Nicaragua seems set to rival it in both size and capacity. While Panama is still used extensively for trade, modern day supertankers are too large for its relatively small channels. As a result Nicaragua may become the new trade hub of the Americas, allowing goods to flow more easily from Asian factories to American markets.
The location of the proposed canal route.
Nicaragua’s relative lack of economic development, it is one of the poorest nations in the Americas, has meant that large parts of its rural landscape have remained unchanged since colonial times. Over thirty percent of the country's land is protected in some capacity (World Bank 2012), though the poorly managed legal status of this land leaves it vulnerable to a range of developments. Four nature reserves, of which Indio Maiz Biosphere Reserve at 4500km2 is the nation’s second largest rainforest area, will be dissected by the canal, which will also go through sensitive wetland areas too. While largely forested, these reserves encompass a variety of different biomes and land that is vital to the integrity of the ecosystems will be lost to the project. There are plans to build two 'green bridges' across the canal in the eastern half of the project, which will allow animals such as jaguars, ocelots and armadillos to move between the different parts of the reserves. However for the size of the forests in question, and for the vulnerability they represent, these bridges may be seen as only a small accommodation towards the wild landscapes of Nicaragua rather than a feasible and sustainable solution to the ecosystem management problems the canal creates.
As well as the physical disturbance that comes from building an artifical channel of this scale, once in operation the large tankers that it will service are likely to bring noise, vibrations and water pollution to these sensitive areas. There are fears for a number of rare and endangered species that occupy the land either side of the canal, which itself will be fenced off to its surroundings, preventing animals using its freshwater parts for drinking and feeding. Species like the endangered Geoffroy’s Spider Monkey and Great Green Macaw face a more vulnerable future as a result of the canal plans (IUCN, 2015).
Nicaragua’s Geoffroy’s Spider Monkey is listed as endangered on the IUCN Red list. (Source: BMlry)
In total, around 4.5 billion m3 of earth will be removed in order to create the canal and huge spoil heaps look set to make at least two new islands in Lake Nicaragua and large heaps of earth at the port entrances on both the Pacific and Atlantic sides. Dredging will take place both at Brito on the Pacific Coast and Punta Gorda on the Caribbean coast to enable tanker docks to operate. Deep sea sediment will be brought to the surface over a series of months, disturbing the coast-hugging migratory patterns of both Blue Whales and the endangered Sei Whale and feeding capabilities of other creatures like dolphins and the critically endangered Hawksbill Sea Turtle.
The canal is also planned to enter Lake Nicaragua, Central America’s largest body of freshwater, at Obrajuelo on its western coast and leave through the San Miguelito wetlands (an important RAMSAR site) in the east. The volcanic Ometepe Island in the centre of the lake, and just to the north of the proposed tanker paths, is also a biosphere reserve with areas of tropical dry forest creating unique and protected habitats for Nicaragua’s many populations of monkey species. The island is also home to the Ometepe Biological Field School which studies the botany and primate populations of the island. The lake is an important part of the canal route as it will provide a crossing point for tankers but with this comes concerns from Ometepe residents and the Field School’s instructors that at only fourteen metres depth, large parts of the lake will need dredging in order to accommodate the large tankers that will navigate the canal. It is estimated that 700m3 worth of sediment will need to be removed from the lake, and in some cases this may involve the blasting of the lake’s rock bed, something that will alter the entire nature of the lake and have a direct impact on the wildlife of Ometepe too.
Lake Nicaragua and Ometepe Island. (Source: David Armstrong)
The continual passing of tankers will cause sediment to become churned up within the lake (increased turbidity), changing the water salinity and clouding it, creating difficulties for fish and other aquatic species such as the lake dwelling Nicaraguan Shark to feed and respire. Plant life in the lake may not be able to root as easily, potentially depleting oxygen levels in the lake and causing respiratory problems for aquatic life there. Tankers may also pollute the water through oil deposits, accident spillages and are likely to create noise that will disturb the tranquillity of the setting and scare animal life on the island away from the shore line and to higher altitudes where they will come under increasing space, food and water pressures.
Additional infrastructure projects will also have an effect on the Nicaraguan environment. Atlanta, on the Punta Gorda River, will be the site of a series of small dams that will be designed to allow the water levels between the locks on either side of Lake Nicaragua, which stands at a higher altitude than the coastal regions, to be managed. Though these will have a small hydroelectric capacity, the area the dams will flood totals 450km2 and almost all of this will be in the Indio Maiz Biosphere Reserve.
Additionally, a new set of transport and communication networks will be needed to service the canal. Multi-laned roads will be built along its length, and through largely virgin land, to allow access for construction vehicles and excavators. As part of its plans, HKND has pledged to restore those areas not-permanently affected by the canal but local community leaders have argued strongly that the destruction of the land either side of the canal will go beyond the level at which restoration will then be possible.
Nicaragua has a long history of being territorially taken over by other countries and populations, but at its heart is a strong subscription to the agrarian movement (an upholding of farming and living from the land as the cornerstone of one’s personal wealth) which has already been deeply challenged by the plans for the trans-oceanic canal. Large areas of Nicaragua are relatively uninhabited and understandably HKND’s plans could be seen as therefore having a relatively low impact of the social structure of the nation. However those areas where habitation and the canal meet are likely to see large scale displacement and problems for indigenous communities in particular.
Concern has been raised about the lack of consultation that took place prior to the canal’s proposal plans being agreed. Few Nicaraguans were involved in any discussion and in total just two days were spent debating the new ‘Law 840’ which gives HKND the right to commandeer any Nicaraguan land they need for the project (Fendt, 2015). A top estimate of 60,000 rural dwelling people look likely to have their homes and lands seized, and many fear that they may be forced to move to some of the new satellite cities that look set to be built along the canal route, without land and with little compensation.
Many Nicaraguans are farmers who rely on the land to provide them with an income. (Source: Bread for the World)
The Bangkukuk Rama indigenous community on the Caribbean coast is one of the last set of Nicaraguan’s to speak the Rama dialect. They are one of many indigenous groups who still live in thatched mud brick homes, wear tribal clothing and practice traditional animal husbandry on land that has belonged to their community for centuries, and which will now see the canal built through it. Though diversions have been made from the original plans in order to avoid indigenous territory (and rent will be paid to other non-displaced groups) any disruption to indigenous land, without full consultation of those involved is unconstitutional according to the Nicaraguan land rights movement of 2003. However works have already started in some areas of the Rama-Kriol indigenous territory in the far east of Nicaragua with no consultation or agreement from the community groups that live there.
While there have already been violent clashes at demonstrations between community leaders and Nicaraguan security forces over the canal’s displacement of large numbers of people, Nicaraguan citizens themselves are somewhat divided by the project with, despite the disruption to their lives, younger Nicaraguans being overwhelmingly in favour of the scheme compared to their parents and grandparents who guard the more traditional side of Nicaraguan life. According to a CID-Gallup poll in September 2014, while forty one percent of Nicaraguans supported the project only nineteen percent said they fully understood the development and the way it may impact their lives (Fendt, 2015).
The building of a canal as large as this one does not come cheap. HKND are expected to spend around US$40 billion on the project, a large bulk of which will be fed directly into the Nicaraguan economy. This buys the Chinese company a fifty year concession to build and operate the canal, giving them substantial sovereign rights over a large part of the country and limited scope for other companies, Nicaraguan or otherwise, to influence its development. Similar rights were initially established between the USA and Panama when the Panama Canal was built, giving Americans complete reign over a five mile strip either side of the channel. With Nicaragua gaining back a ten percent stake in the project every ten years, the long term prospects for the country appear strong and Nicaragua may be able to make itself more resilient to external financial problems, such as aid dependency, from which it has previously suffered.
With a GDP per capita of US$1,851 (World Bank, 2015) Nicaragua is the second poorest country in the Americas and the Nicaraguan government hope that the canal project will provide a route out of poverty for the country. Upper estimate figures suggest that GDP would be expected to double by 2020 when the canal is set to be completed, creating 250,000 new jobs and tripling the country’s current employment rate (HKND Group, 2014). New developments such as an international airport, a rail terminal, a power station, cement and steel factories and the large ports at each end of the canal will employ local people who have the necessary skills but there are worries that migrants from China and from neighbouring Costa Rica, which has a higher literacy rate, will out compete the Nicaraguans for jobs. If the wealth is shared evenly between the country’s citizens, this could see more than 350,000 people come out of extreme poverty but many Nicaraguans fear that the money invested in the project will ultimately end up in the pockets of those who need it least.
Protests against the planned canal have led to clashes between protestors and Nicaraguan security forces. (Source: Jorge Mejía peralta)
Different areas of Nicaragua will see different levels of investment. Currently the eastern side of Nicaragua is less developed than the west and this looks set to be exacerbated further with Brito on the Pacific Ocean coast set to become the country’s second city as a deep sea port and free trade zone is set up there. Six lane highways are planned linking the current fishing village to the nation’s capital Managua. The east on the other hand will see a new HKND funded tourism resort being built on Ometepe Island and a range of compensation packages being offered to indigenous groups. However the east will also see the bulk of the negative economic impacts of the scheme: with the majority of people east of Lake Nicaragua reliant on subsistence farming and the fishing industry, the canal represents an uncertain future for their livelihoods. Those employed in the biosphere reserve fear that both the building and the operation of the canal will damage the tranquillity and remote feel there is to the area – the very thing that tourists come to experience (Watts, 2015).
Outside Nicaragua the canal will have wider ranging economic impacts. The opening of the trans-oceanic canal will allow China to trade more competitively within the USA, which has traditionally led trade through the Panama Canal. With the scope to bring larger tankers through Central America, shipping prices for large quantities of goods will come down, allowing companies to pass these savings onto consumers or invest larger profits in expanding their businesses.
The trans-oceanic canal has divided the opinions of Nicaraguan environmentalists, local communities and economists. Though many are able to see some of the positive and negative impacts the canal will bring to Nicaragua, few have a good understanding of the complete way in which the canal will change the country. As the project begins its construction phase, this top-down form of development seems likely to bring further social and environmental opposition but as the economic benefits start to be felt in Central America the question is whether these voices will still be heard.
Fendt, L. (2015) The $40bn canal project dividing Nicaragua, Al Jazeera News
HKND Group (2014) Nicaragua Canal Project Description, Environmental Resources Management
IUCN (2015) Red List Data
Watts, J. (2015) Land of opportunity – and fear – along route of Nicaragua’s giant new canal, The Guardian
World Bank (2012) World Bank Data
Agrarian Movement
Upholding farming and living from the land as the cornerstone of one’s personal wealth.
Displaced People
Those removed from their land, sometimes by force to make way for new developments.
Ecosystem
A set of living organisms that interact with non-living components to create a system of inputs, processes and outputs.
Endangered
A species that according to the IUCN Red List is likely to become extinct.
Hub
A place that displays multiple real and conceptual connections to other places.
Indigenous Population
The original inhabitants of a place.
IUCN Red List
An information source compiled by the International Union for the Conservation of Nature listing the conservation status of the world's species.
Sovereign Rights
The power of a governing body to govern itself without any interference from outside sources or bodies.
Subsistence Farming
The growing of crops to feed oneself and one's family, with a little left over for sale.
Students can consider why in large and expensive projects the future of the environment is often thought to be valued less highly than any future economic gain. With the knowledge that Nicaragua is a developing country, students can try to suggest for conserving its natural environment it order to also gain economically.
With the year 2050 as a marker, students can give suggestions of what the world of trade may look like. Ask questions that lead students to think about the most rapidly developing countries of today and how their relative position may change. Students can also comments on the impact the superpowers will have on other developing nations and whether there may be any regulation of foreign direct investment that includes deals on sovereign rights to land.
HKND has submitted a series of ‘safeguards’ and restorative promises to Nicaraguan land owners. Imagining themselves as part of a Nicaraguan indigenous group, students can draw up a plan of what those safeguards might be and how they would help all Nicaraguans, and their environment to benefit from the proposed canal plan.
Nicaragua Canal Project Description
Production Networks and Trade
The Commodity Trail of Cheap Goods
Global production networks
China today (KS3)