In Nicaragua, civil society has been waiting for a confirmed route of the Grand Canal in order to assess its full impact. However, the announcement, made at the beginning of July, has thrown up more questions than answers, the most significant of which concerns the lack of an Environmental Impact Study (EIS), required under both national and international law.

In June 2013, the Nicaraguan government hurried through a law authorizing construction, without any prior consultation with environmental experts.

A hitherto unknown Chinese company, the Hong Kong Nicaraguan Development Investment Co. Ltd (HKND), has been granted the $50-billion contract to build the Grand Canal. In return, it will have rights to the canal for 50 years (with the option to renew for a further 50).

Rivalling the canal in neighbouring Panama, but a good deal longer, the Nicaraguan project will link the Atlantic and Pacific Oceans along a route nearly 280 kilometres long (including 105 kilometres across Lake Nicaragua) and between 230 and 520 metres wide.

The canal will start at the east Caribbean Sea coast, at Punta Gorda, then head west to the lake before passing the city of Rivas to reach the Pacific at the Brito River.

En route, it will put at risk the San Miguelito Wetlands (a protected site), the Southeast Biosphere Reserve and the Ometepe Island Biosphere Reserve. Private wildlife reserves will also be vulnerable, and a number of endangered species threatened. There are also fears that the canal lock system will deplete Lake Nicaragua, the country’s largest supply of fresh water.

HKND officials have argued that ‘the canal operation will not cause any significant changes to the level of Lake Nicaragua; it will basically maintain its actual condition. It will not even affect the supply of water for productive or domestic use for the inhabitants of the basin.’ It is unclear, however, how can such broad conclusions be drawn without an EIS.

When questioned about the potential environmental damage, Environmental Resource Management (ERM), the consultancy firm hired by HKND to research the best route, stated that ‘crossing protected areas is inevitable’.

An estimated 119,298 people, including those from 270 villages, four towns and one city within 10 kilometres of the route, will be directly affected by the construction; the inhabitants of a further 320 villages and five towns, while not directly affected, could feel the impact once the canal is in operation – for instance, by having to cross it to get to work or take their produce to market.

 These are already incredibly isolated areas, where the poorest people in the country live on $1-$2 a day – they will now have to struggle even more to make a living.

It is not only environmental issues that are at stake. The law that permits the construction has wider implications for Nicaragua’s control of its own natural assets.

HKND and other investors have agreed to pay Nicaragua up to $10 million a year over a 10-year period and will gradually transfer ownership of the canal back to Nicaragua, fully handing it over after a century.  

However, payments only begin if and when the canal itself begins operation. As part of the agreement, HKND also has control over five tax-free ‘sub-projects’: two ports, one free-trade zone, several holiday complexes in tourist hotspots, one airport and a number of new highways.

What would happen if HKND decided not to build the canal, but simply to embark on these other potentially very lucrative projects? Some believe that this is its true intention, exploiting the advantages of the agreement, and that the government has opened itself up to a huge amount of risk, which could see it lose ownership of the canal completely.

Centro Humboldt, a Christian Aid partner working in many of the potentially affected areas, promotes environmentally sustainable land development and climate change adaptation. The organization has been consistently outspoken against the potential environmental impacts of the project and has demanded transparency on all fronts of the operation.

Since the route was announced, Centro Humboldt has highlighted its serious technical irregularities and lack of research, and is particularly concerned about the absence of an EIS.

ERM had also completed preliminary social and environmental viability studies into a number of proposed routes, putting forward its recommendation on which route should be chosen. However, despite several promises by HKND and the Nicaraguan government to share these results with the public, this has yet to happen.

The lack of impartiality demonstrated by HKND concerning the public assets of Nicaragua is another reason for worry. According to director Victor Campos, ‘[the canal follows] a route decided exclusively by ERM, who are contracted by the investor, with no time given for the national canal commission to do a rigorous technical review and provide an opinion on its quality.’

Ordinary legislation gives the Nicaraguan Environmental Ministry eight months to evaluate and respond to an EIS. However, HKND and the Nicaraguan government have announced that construction will start in December 2014.

Civil society continues to ask the government and HKND for answers, but both continue to disregard correct procedures, ignoring environmental concerns and the country’s legislation.This does not bode well for the communities and wildlife that will be affected by this mega-project, or the people of Nicaragua, who could lose one of their greatest assets.

Emily Schechter is programme officer for Christian Aid in Nicaragua.