Canals and Costa Rica

Peter asks about past Nicaragua canal plans; Randy asks about the environment and Costa Rica.

Nicaragua was in fact considered for a trans-Isthmian canal.  Only one project got past vaporware:  between 1887 and 1893, the Maritime Canal Company excavated 1½ miles of canal and built 11½ miles of railroad in pursuit of the project.  Their planned route to the Atlantic followed the dashed line above.  Meanwhile, their plan to avoid the rapids and shallows of the San Juan River east of its junction with the San Carlos River was brilliant in its simplicity, if not in its feasibility:  build a giant dam at Ochoa and flood everything all the way to Lake Nicaragua.

It turned out that the land slopes pretty shallowly to the south of the river, which meant two things.  One, Costa Rica needed to be paid off.  Two, giant embankments needed to be constructed, which drove up the cost.  The Maritime Company went bankrupt.  When the U.S. government started to seriously scout routes in 1901, it identified the Nicaragua route as feasible, but significantly more expensive.  It estimated that a Nicaragua route would cost $189 million versus $144 million for a canal through Panama.

How much is that in real money, you ask?  (Well, maybe you didn't, but you should.)  In 2007 dollars, the Nicaragua route was estimated at $4.0 billion, while they figured the Panama route would cost only $3.1 billion.  But that doesn't tell you how much effort they planned to put into the project, because the world was much poorer back then.  Equivalently-scaled projects today, relative to the size of the economy, would cost $117.7 billion and $89.4 billion respectively. 

A $28 billion difference ain't nothing to sneeze at.  While there were many political twists and turns (including a lot of politicians with a vested interest in the Panama route), at the end of the day that was the reason Panama got a canal and Nicaragua did not.

In 1931, the U.S. once again considered a second canal through Nicaragua.  These plans were rather less environmentally destructive.  (See the solid line on the map.)  There would still be a dam and some flooding, but very little compared to the 1887 plan.  Most of the rapids would be bypassed by short stretches of canal.  This plan, of course, didn't come cheap:  $722 million in 1931 dollars, or $8.4 billion in real money, or $130.3 billion as a percentage of national income. 

Considering that the Panama Canal had run over-budget by at least a factor of 2.5, those estimates seem a bit low.  Then again, a bad recession was in the process of turning into the Great Depression, and people were willing to work for smiles.  So you never know. 

Anyway, the plan never happened.  Although the Panama Canal had been a huge economic success, there wasn't much of a case for expansion.  The military case was equally dicey. 

Costa Rica was also dead-set against it.  In fact, the Central American Court of Justice died in 1917 precisely when Costa Rica protested over Nicaraguan canal plans, arguing that an 1888 arbitration reward (decided, ironically, by President Grover Cleveland) gave it a veto over canal plans.  Nicaragua told the court to f*** off (meaning that the United States told the court to f*** off, since the U.S. effectively ran Nicaragua at the time) and that was the end of that.

But I haven't yet answered Randy's question about Costa Rica.  The new canal plans, you see, don't involve the San Juan River at all. 

The Nicaraguans evaluated six possible routes, and selected the one shown above.  They rejected the San Juan route because of the cost of the dams and the ecological damage they would cause.   They rejected two routes that would plug into the Escondido River for the same reasons.  Finally, they rejected two cross-country routes to Punta Gorda (more-or-less) because they were simply infeasible given the terrain.

In other words, because technology has changed, the environmental and political objections are less than they once were. 

Still, with an estimated cost (in 2006) of $20-25 billion and a worldwide recession gathering force, I don't see this thing happening anytime soon.  I wouldn't discount it forever, of course.  Traffic between Brazil and China will only grow, and despite the trans-South American road and rail links now under construction a second Isthmian canal might become something reasonable.  In addition, if oil prices rise further (something I'd bet against, but I've been wrong), then our friend Hugo might decide that this is just the investment to bank his spare change in.  After all, the Banco Central de Venezuela is sitting on $39 billion in reserves, and it would make his dream of exporting to China instead of the U.S. much more feasible ... but no, I don't think he's that irresponsible. 

Thoughts?

Comments

[Leticia A.]

I thought that the Nicaraguan canal initial plan was abandoned due to active volcanoes and frequent earthquakes. I read somewhere that it all started with a stamp that showed a steaming volcano ca. 1900 (not sure how reliable this story is).

[Noel Maurer]

Lobbyists for the Panama route distributed pictures of volcanos to Congresspeople during the debates, but they weren't decisive. Nobody's vote was swayed because of a postage stamp; the actual volcanic risk was negligible. Rather, their votes were swayed because the Nicaragua route was more expensive, and much of the GOP leadership had a financial stake in going through Panama.

The story about the stamp, though, is true, not apocryphal.