The proposed Nicaraguan Canal project would build a shipping route connecting the Atlantic and Pacific oceans. While the Nicaraguan government claims it will boost economic growth, many citizens and environmentalists are skeptical due to the project's lack of transparency and potential environmental impacts. Tourism in Nicaragua, an important industry, could be negatively affected by pollution from ships and construction. The $40 billion project's impacts on biodiversity and indigenous communities require further independent study before construction begins.

1. Lucy Leonard
April 29, 2014
The Nicaraguan Canal: Tourism in the Face of Change
Mindful Traveler

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The Nicaraguan Canal: Tourism in the Face of Change
The year 2014 marks the 100-year anniversary of the completion of one of the
most well known feats of human engineering— The Panama Canal. But long before the
Panama Canal came into being, the country of Nicaragua was the clear leader in the race
to build a canal linking the Atlantic Ocean to the Pacific (The Economist). The San Juan
River, which borders Nicaragua and Costa Rica and flows toward the Pacific from Lake
Nicaragua, seemed to be the perfect starting place for the proposed canal. Since the
arrival of the Spanish conquistadors in the 16th century, the idea of the canal monopolized
the minds of developers from around the world. It was not until the very end of the 19th
century, however, that an American group, the Isthmian Canal Commission
recommended to Congress that Nicaragua was in fact a better route for the canal than
Panama. According to lore, however, the congressmen were frightened away from the
country by stamps featuring volcanic eruptions from the two volcanoes on the volcanic
island Ometepe in Lake Nicaragua (The Economist).
Today, however, even as the Panama Canal begins to receive its first upgrades
since its initial construction, the Nicaraguan Canal is again up for discussion. In June of
2013, Nicaragua’s president Daniel Ortega and Nicaragua’s National Assembly
announced that they had granted exclusive rights to a Chinese company to complete the
construction of a canal connecting the two oceans. The Hong Kong Nicaragua Canal
Development Investment Company (HKND) plans to spend $40 million on the canal that
will stretch more than three times as long as the existing Panama Canal (Smith). The path
for the planned canal is still under discussion, causing the expected construction to be

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pushed back to December 2014 (BBC). Also included in the plan are terms for the
construction of an oil pipeline, two deepwater ports, a railway, two free-trade shipping
zones and an international airport (Smith).
The proposed canal has brought much debate to the country. Though the canal
brings the possibility of economic prosperity to the region, the $40 billion canal also has
caught the attention of skeptics who believe the economic benefits will not trickle down
and that the canal poses serious environmental threats. Both the positive and negative
effects of this canal will affect tourism in the country, which is one of Nicaragua’s fastest
growing industries (WTTC). On the eve of great change in the country, it is important to
examine how the canal will affect the country and the tourism industry, as well as how
residents of the country feel about the possibility of such large construction. Due to the
staggering number of negative effects that the canal could have on the country of
Nicaragua, it seems that the proposed canal should be examined and debated more
closely before construction begins sometime this year.
According to the World and Travel Tourism Council’s 2013 Economic Impact
Study, the total contribution of travel and tourism to Nicaragua’s gross domestic product
has been growing relatively steadily since 2003. This contribution is expected to almost
double by the year 2023 making tourism an important factor in Nicaragua’s economy
(WTTC). The proposed canal across Nicaragua will certainly play a large role in the
development of this industry in the coming years. It begs the question, however, if the
expected economic benefits outweigh the consequences that also come with its
construction. For example, “Nicaragua's leaders claim the new canal will transform their
country from an impoverished Central American backwater to a global trade powerhouse,

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create hundreds of thousands of jobs, and boost annual economic growth to a world-
beating 14.6 percent” (Smith). Additionally, it is said that the canal will boost
Nicaragua’s GDP 11 percent, which could have major impacts on the country, which is
the second poorest of all the countries in the Americas (Nuwer). Beginning by examining
the case study of the Panama Canal, though, it begins to become apparent that the plan is
actually not as clear-cut as it may seem at first glance.
In general, tourism in Central America has been on the rise, and according to the
World Tourism Organization, the region led the Americas in its increase in tourism in
2013 (WTO). In Panama specifically, it is the cruise ship industry that has contributed the
most to this growth with the Panama Canal being one of Panama’s top visited attractions.
Between 1995 and 2004, Panama saw a 557 percent increase in the number of cruise ship
visitors. These visitors, who spend their time on land in the Panama Canal Watershed,
usually only spend around eight hours on land using a temporary visa and stay only an
average of 2.2 days per visit, compared to neighboring Costa Rica where travelers’
average stays lasted 10-11 days in 2004 (Schloegel 254). These statistics are extremely
relevant for Nicaragua. With the construction of a new canal in the country, the cruise
ship industry will play a prominent role in the use and development of the area. The canal
is proposed to be much wider and deeper than the Panama Canal in order to
accommodate much larger ships (Smith), which could allow for many more tourists to
visit the country. But if the tourists follow in the steps of Panamanian tourists,
Nicaraguan citizens may see many more ships without actually reaping the monetary
benefits.
Furthermore, the pollution caused by these behemoth ships has drawn the

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attention of environmentalists around the world. Large cruise ships can generate 210,000
gallons of human waste in a one-week trip (Friends of Earth). Many environmental
groups like the Friends of the Earth have spoken out against cruise ships. “Cruise ships
generate large volumes of oily bilge water, sewage sludge, garbage and hazardous
wastes. In addition, these luxury liners, which allow passengers a rare glimpse of some of
the most sensitive environments on the planet, spew a range of pollutants into the air that
can lead to serious public health problems and contribute to global warming” (Friends of
Earth).
The canal route is currently expected to run through Lake Nicaragua, one of the
country’s most important sources of drinking water and the largest lake in Central
America. For this reason especially, the canal’s environmental impacts have huge
importance to the country and to the world. The Nicaraguan government, however, has
not produced any environmental impact studies of their own on the area and is relying
only on studies done by the HKND. The proposed routes could destroy around 400,000
hectares of rainforests and wetlands, including possibly affecting the Bosawas Biosphere
Reserve and the Indio Maiz Biological Reserve and cutting through the northern sector of
the Cerro Silva Natural Reserve (Meyer, Huete-Pérez). The project would require
damming in an area of frequent seismic activity and the construction could change
composition of the waters signaling the beginning of a decline in native species. Eco-
tourism, alongside sport fishing, could be greatly affected by a decline in these types of
species, like euryhaline bull sharks (Meyer, Huete-Pérez). Axel Meyer and Jorge A.
Huete-Pérez are fighting for environmental assessments before construction begins. They
urge that, “An international community of conservationists, scientists and sociologists

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needs to join the concerned citizens and researchers of Nicaragua in demanding two
things: first, independent assessments of the repercussions of this mega-project; and
second, that the Nicaraguan government halt the project should the assessments confirm
fears that this canal will yield more losses than gains for the region's natural resources,
indigenous communities and biodiversity.”
Residents of Nicaragua have been voicing concerns over the possible construction
of the canal. Especially in areas already greatly impacted by tourism, like the coastal
beach town of San Juan del Sur, voices of opposition have been raised loudly. Jaime
Hunter, who lives and works in San Juan del Sur, is strongly opposed to the idea of the
canal, though she believes that it will never actually be built. Aside from the canal’s
environmental impacts, Hunter sees the expansion of tourism due to the canal as harming
to the country. “There is a lack of sustainable and educational development, and
sufficient planning on the effects of bringing Western ideas and enforcing them on
Nicaraguans,” she said. “Both tourism and the canal pose serious threats to the
biodiversity and way of life for Nicaragua.” But tourism is not all negative Hunter said.
“On the other hand, there are many opportunities for young people in San Juan del Sur to
study, work, live abroad, mix and get to know other people, cultures and languages and to
share ideas and collaborate globally.” Her view seems to be shared by many who
promote the global interaction of ideas but who want to avoid the cultural hegemony that
is often associated with western tourism.
Other residents, however, do not see the canal as bringing in tourism, but rather as
hindering it. Managua resident Sergio Rakotozafy Tercero believes that the pollution
caused by the construction and the use of the canal will cause a decline in beach tourism,

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an important part of Nicaragua’s tourism industry. In addition, Rakotozafy Tercero is
skeptical of the government’s plans. “The government has not been transparent regarding
environmental risks involved in this project nor has it informed us explicitly about the
terms of the contract with the Chinese investors in charge of the construction,” he said.
He also questions whether the economic benefits will be as noticeable as the government
claims. “It is obvious that someone is going to get richer from this project.” He said.
“Nonetheless, I strongly doubt that Nicaragua as a whole country will benefit from it.”
Despite the Nicaraguan government’s claims that the monetary benefits will be
large, it is unclear exactly how the benefits will be distributed if the proposed project is
completed. In his speech announcing the plan’s approval, Nicaragua’s president Daniel
Ortega said, “This is a project that will bring well-being, prosperity, and happiness to the
Nicaraguan people,” and that the canal would be a chance for Nicaragua to finally
become completely sovereign (Lee Anderson).
As of now, however, the rights to build and run the canal is in the hands of Wang
Jin from the HKND and will remain there for the duration of the 50-year contract with
the option of a second 50-year extension (Nuwer). The proposal for the canal moved
through the Nicaraguan government in only three days, unopposed, as there were no
other bidders on the project (Smith). This alone has caused further skepticism in the
international community. Pedro Alvarez, a Nicaraguan professor at Rice University, has
found the process very worrisome. He said, "The whole affair has lacked transparency,
open bidding, independent assessment, and opportunities for multiple stakeholders to
provide input." Furthermore, the HKND Company can keep all the income from the
canal, has a lot of legal exemption and will not pay taxes for 100 years. Nicaragua has

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even taken responsibility for any of the cleanup costs associated with environmental
damage caused by the canal. Parts of Nicaragua’s constitution actually had to be re-
written to allow for all the stipulations associated with the deal (Smith), including one
provision that deleted the word “property” from the constitution when it came to dealing
with “indigenous property rights” (Lee Anderson). Additionally, the deal gives no
geographical limits or details, basically giving full power of location to HKND (Lee
Anderson). These facts alone beg the question of how exactly Nicaragua is supposed to
benefit from the project without having any real control over the construction,
maintenance or security of the proposed inter-oceanic canal. Economic and geographical
concerns such as these will also affect the tourism industry. Without receiving profits
from the use of the canal, Nicaragua may not see as great of an increase in GDP due to
foreign tourists.
When weighing the positive and negative effects of the proposed inter-oceanic
canal in Nicaragua, it seems clear that the cons outweigh the pros. Firstly, the
environmental concerns are too great to ignore. The possibility of losing and endangering
many protected areas and species could be detrimental to both the ecology of the country
and to its environment-based tourism industry. Secondly, the lack of evidence that the
canal will actually provide any economic stimulation combined with the mystery
shrouding the actual deal brings into doubt that claim the canal will actually impact the
county’s citizens in any way besides negatively. Furthermore, the simple fact that the
citizens were not consulted about and, at least on the surface level, oppose the
construction of the canal provides the greatest reason to not move forward with the
proposed project. Though Nicaragua’s tourism industry is on the rise, it will not be

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through the construction of the canal by the HKND that tourism will reach its full
potential.

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Works Cited
1. Meyer, Axel, and Jorge Huete-Pérez. "Conservation: Nicaragua Canal Could Wreak
Environmental Ruin." Nature.com International Weekly Journal of Science.
Nature Publishing Group, 19 Feb. 2014. Web. 21 Apr. 2014.
2. "World Tourism Organization Annual Report 2013." World Tourism Organization.
World Tourism Organization, 2014. Web. 15 Apr. 2014.
3. Schloegel, Catherine. "Sustainable Tourism." Journal of Sustainable Forestry, 8 Sept.
2008. Web. 15 Apr. 2014.
<http://www.tandfonline.com/doi/pdf/10.1300/J091v25n03_02>.
4. Lee Anderson, John. "Who Will Benefit from Nicaragua’s Gran Canal?" The New
Yorker. The New Yorker, 10 Mar. 2014. Web. 21 Apr. 2014.
<http://www.newyorker.com/reporting/2014/03/10/140310fa_fact_anderson>.
5. Nuwer, Rachel. "Nicaragua Plans to Bisect the Country With a Massive Canal."
Smithsonian. The Smithsonian.com, 20 Feb. 2014. Web. 22 Apr. 2014.
<http://www.smithsonianmag.com/science-nature/nicaragua-plans-bisect-country-
massive-canal-180949838/?no-ist>.
6. Smith, Roff. "Is Nicaraguan Canal a Boon for Trade or a Boondoggle?" National
Geographic. National Geographic, 29 Mar. 2014. Web. 14 Apr. 2014.
<http%3A%2F%2Fnews.nationalgeographic.com%2Fnews%2F2014%2F03%2F
140329-nicaragua-canal-hknd-panama-wang-jin-world%2F>.
7. "Nicaragua Canal Construction Delayed." BBC News. N.p., 4 Jan. 2014. Web. 14 Apr.

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2014. <http://www.bbc.com/news/world-latin-america-25607757>.
8. "Travel and Tourism Economic Impact 2013 Nicaragua." WTTC. World Travel and
Tourism Council, n.d. Web. 14 Apr. 2014.
<http://www.wttc.org/site_media/uploads/downloads/nicaragua2013_2.pdf>.
9. "Cruise Ships." Friends of the Earth. Friends of the Earth, n.d. Web. 24 Apr. 2014.
<http://www.foe.org/projects/oceans-and-forests/cruise-ships>.
10. Hunter, Jaime. "The New Nicaraguan Canal." Interview by Lucy Leonard. n.d.: n.
pag. Print.
11. Rakotozafy Tercero, Sergio. "The New Nicaraguan Canal." Interview by Lucy
Leonard. n.d.: n. pag. Print.
12. "A Man, a Plan, a Canal— Panama?" The Economist. The Economist, 26 Sept. 1998.
Web. 20 Apr. 2014.