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.
HKDN spokesman Ronald MacLean said the company was considering four possible routes for the waterway, and all would cross Lake Nicaragua.
In the lake lies an island with an active volcano and 300 islets that serve as breeding grounds for the American crocodile, the largest reptile living in Central America and the Caribbean.
One of the possible canal routes would pass through the sprawling Cerro Silva nature reserve between the southern Caribbean coast and the El Rama River port, home to coastal ecosystems, wetlands and tropical forests that environmentalists warn could disappear. Also in its path is the Punta Gorda nature reserve in the southern Caribbean, home to more than 120 species of animals and birds.
"The natural resources involved in the construction of the canal mean it comes at a high cost" and poses "the greatest threat" to the country's ecosystems, the Nicaraguan Alliance for Climate Change said.
The vast leeway given to HKDN - which will have absolute powers over manning the waterway, autonomy in deciding what land should be expropriated and freedom to set fares and tolls - led opposition lawmaker Victor Tinoco to declare that "the president went crazy".
Work on the canal should begin in May next year after a feasibility study is completed.
The Panama Canal handles 5 per cent of world trade and has hosted more than one million vessels since it was inaugurated in 1914.