Nicaraguan canal 'an environmental disaster'

A proposed Nicaraguan waterway rivalling the Panama Canal would cause an environmental disaster threatening drinking water supplies and fragile ecosystems, conservationists say.

Congress, controlled by President Daniel Ortega's ruling Sandinista party, approved the US$40 billion deal, granting the concession to little-known Hong Kong-based firm HK Nicaragua Canal Development Investment Co, known as HKND Group.

Environment groups say the project linking Nicaragua's Atlantic and Pacific coasts will jeopardise the watershed that supplies water to most of the impoverished country's population when it transits Lake Nicaragua.

Under the deal, worth double the national GDP, the company led by Chinese tycoon Wang Jing, gets 50 years of exclusive rights to build and operate the canal in exchange for Nicaragua receiving a minority share of the profits.

But the rights mean HKDN will "extend, expand, dredge or reduce bodies of water and water resources that are subject to protection and conservation safeguards", according to the Nicaraguan Alliance for Climate Change, which brings together 20 environmental groups.

"We have to think about it twice" before breaking ground on the project, said geographer Jaime Incer Barquero, of the Nicaraguan Foundation for Sustainable Development, who also advises the government on environmental issues.