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Pre-Release 2017: Bridging the Development Gap: Development in Panama, Costa Rica and Nicaragua SUMMARY DOCUMENT Unit Three: Contested Planet Contents: Section 1 Key Terminology Background Information: Panama Costa Rica Nicaragua Historical Context Development and Development Goals Section 2 Transoceanic mega-projects: The Panama Canal Transoceanic mega-projects: The Nicaragua Canal Transoceanic mega-projects: China´s Transoceanic Railway Section 3 Examples of possible questions 1 1.1 KEY TERMS Page No. Key Term Definition Isthmus A narrow strip of land connecting two large land areas otherwise separated by bodies of water Migration The movement of people of one place to another Emigration The act of leaving a country to settle permanently in another Economic migrantion The movement of people from one area or country to another in order to improve their standard of living Forced migration The movement of refugees and internally displaced people as well as people displaced by natural or environmental disasters, chemical or nuclear disasters, famine or development projects Remittances The transfer of funds; a transfer of money by a foreign worker to an individual in his or her home country Income poverty When a families income fails to meet an established threshold that varies across countries Poverty rates The ratio of people who’s income falls below the poverty line; taken as hard of the median household income of the total population Extreme poverty The amount of the population living under $1.25 a day. Changed in 2015 to $1.90 Indigenous groups Social groups with a social and cultural identity distinct from the dominant society. They may have historical ties to a particular territory and are vulnerable to being disadvantaged in the development process. Informal employment Jobs performed outside the formal structures that govern taxes, workplace regulations and social protection schemes, Youth unemployment The % of labour force 15-25 who are out of work 2 Millennium Development The Millennium Development Goals (MDGs) are the Goals world's time-bound and quantified targets for addressing extreme poverty in its many dimensions-income poverty, hunger, disease, lack of adequate shelter, and exclusionwhile promoting gender equality, education, and environmental sustainability. Ecotourism Tourism which attempts to minimise the environmental impacts and promote cultural and ecological understanding Globalisation The economic process of increased global connections and inter-dependance resulting from rapid increase in trade, financial flows, global trade and migration. Intermodal containers A leader standardised shipping container which can be used across different modes of transport without requiring the freight itself to be unloaded. Containerisation Transportation of cargo in standardised (intermodal) containers. Mega-projects An extremely large scale investment project, which may cost in excess of US$5billion Transoceanic megaprojects An extremely large scale investment project, which may cost in excess of US$5billion, which traverse an ocean Locks A short section of a canal enclosed by gates, designed to raise or lower a vessel from one water level to another. Biodiversity hotspot A biogeographic region that is both a significant reservoir of biodiversity and is treated with destruction. There are 25 of these areas. 3 1.2 Theories of Development/Key Concepts Links to the pre-release? Rostow´s model Modernisation Theory Cumulative Causation Dependancy theory core-periphery Globalisation TOP TIP: Refer to the development documents in the appendix to help you! 4 1.2 DEVELOPMENT INDICATORS Match up the following: Freedom index, Life Expectancy, Secondary school enrolment rates, Poverty Line, Income per person, Annual GDP, Infant Mortality Rate (per 1000 live births), Happy Planet Index, (Human), National Poverty Line,, Poverty Rates, Ecological Footprint A measure of human well being and environmental impact that was introduced by the new Economics Foundation. Calculated using wellbeing times life expectancy and inequality of outcomes, divided by the ecological footprint A broad measure of human freedom around the world through the use of 76 indicators of personal, civil and economic freedoms The average number of years a person is expected to live The percentage of the population of school age who are enrolled in school This measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. It is calculated by dividing the area's total income by its total population. 5 The monetary value of all the finished goods and services produced within a country's borders in a specific time period The number of deaths under one year of age occurring among the live births in a given geographical area during a given year, per 1,000 live births occurring among the population of the given geographical area during the same year. The line below which a persons´s minimum nutritional, clothing and shelter needs cannot be met in a country. The new global poverty line is set at $1.90 using 2011 prices (was previously $1.25) The ratio of people who’s income falls below the poverty line; taken as hard of the median household income of the total population 6 1.3 Country Information: PANAMA KEY STATISTICS Population: 3.6 million Area: 75,517 square km Major Languages: Spanish, English Major Religion: Christianity (Source: UN World Bank) PHYSICAL GEOGRAPHY Overview Forested, volcanic mountains extend from the Coasts Rica border to the Colombian boarder. The east is characterised by rainforests, rivers and swampy low lands. Natural Hazards Hurricanes, earthquakes, volcanoes, floods, landslides. • December 52, 2003 magnitude 6.0 earthquake shook Puerto Armelles (2 dead, hundreds homeless) • Hurricane Mitch (1998) : 7,000 people dead, 250,000 homeless. • Arenal volcano erupted in 2010, in 1968 it destroyed the town of Tabacon. A BRIEF HISTORY1 • US supported it’s succession from Columbia in 1903, and secured a sovereign zone in which to build the Panama canal. The canal was completed in 1914. • 1968-1969 Panama was under military rule. • US invaded Panama in 1989 to depose a former ally, military ruler Manuel Noriega, over his repressive rule and drug trafficking. 1 BBC country profiles 7 • 1999 Panama takes full control of the canal. • Juan Carlos Varela, who won the presidential election in 2014, leads the conservative Panamenista Party. • 2016 Panama is revealed as a popular tax haven when the ‘Panama Papers’ are released. 1.4 Country Information: COSTA RICA KEY STATISTICS Population: 4.8 million Area: 51,1000 sq Km Major languages: Spanish (official) Major Religion: Christianity (Source: UN World Bank) PHYSICAL GEOGRAPHY Overview Tropical forests are home to many species of flora and fauna, including 1,000 species of orchid and 850 species of birds. The beaches of the Caribbean coasts also attract tourists. Natural Hazards 1991: Magnitude 7.6 killed 27, damaged the Limón rail line so severely that repairs have never been attempted. 2004- Magnitude 6.2 quake near the Pacific coast tourist destination Manuel Antonio killed 8 locals and damaged several buildings and roads. 8 A BRIEF HISTORY2 • Gained independence from Spain in 1821 (fully independent by 1838). • 1948: six-week civil war over a disputed presidential election result. • Democracy since 1953, oldest working democracy in Latin America. • 1958-73 Costa Rica is mainly governed by conservative administrations. • 1963-64 Irazu Volcano erupts, causing serious damage to agriculture. • High level corruption led to two former presidents being arrested in 2004. Rafael Angel Calderon is sentenced to 5 years in jail. • A free trade deal approved by the US in 2007. • First woman to be elected president was Laura Chinchilla, who took up office in 2010. She held socially conservative views. • Luis Guillermo has been president since 2014. His ´Rescue Plan´ is focused on anti-corruption, economic growth and reducing income inequality. 1.5 Country Information: NICARAGUA KEY STATISTICS Population: 5.9 million Area: 120,253 sq km Major languages: Spain, English, Indigenous (Source: UN World Bank) PHYISCAL GEOGRAPHY Overview A wide variety of climate and terrains, but can be roughly divided into Pacific lowlands, the 2 BBC Country Profiles 9 wetter and cooler central highlands, and the Caribbean lowlands. Presence of wildlife rich rainforests. Natural Hazards 19 volcanoes - (due to northeastward subduction of the Cocos Plate beneath the Caribbean plate along the Middle American Trench) e.g. Cerro Negro and Concepción. 1998: Hurricane Mitch killed thousands and caused billions of dollars of damage. A BRIEF HISTORY3 • Nicaragua gained independence from Spain in 1821. • An American mercenary assumes power in 1856 and becomes the first president. • Carlos Solórzano was elected president in 1924 along with vice president Juan Bautista Sacasa. • President Solórzano forced out of power win 1925 by a conservative group; Sacasa flees. • 1926-1927 civil war started by former vice president, Saracas, returning to Nicaragua and claiming presidency. • Guerilla conflicts led by Saracas were ongoing. • In 1934 the US withdraws, leaving Nicaraguan military officer, Anastasio Somoza to lead a dictatorship. • The Somoza family governed Nicaragua from 1930-1979. • In 1978 the Sandinista National Literation Front lead a violent uprising against the regime. • In 1979 the Sandinistas´ National Liberation Front replaces the Somoza family • Also in 1980 conflict broke out between the Sandinistas and the Contras, a US backed anticommunist group. • 2% of Nicaragua's population died in the conflict´, during which the Contras were backed by US funding and CIA support. 3 BBC country profiles Source: http://www.fsdinternational.org/country/nicaragua/devissues 10 • US-Nicaraguan tensions are high due to new governments leftist orientation • The US withdrew FDI, halted trade and aid as they perceived the Sadinista´s government as a communist threat. • Civil war ended in 1990 with the election of Violeta Chomorro • Former Marxist guerrilla leader Daniel Ortega made a comeback in the November 2006 presidential race. • Ortega is reelected in 2011 amid controversy (the courts blocked the main opposition coalition from participating in the election; Mr Ortega is in charge of the courts, and international observers were banned by the government from overseeing the casting of ballots). Additional notes ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… 11 INDICATORS OF DEVELOPMENT COMPARED Green: Most Amber: Middle Red: Least Costa Rica Panama Nicaragua From the resource Freedom Index Scores (rank) 39 49 79 Human well being 7.3 7.3 5.7 79.3 76.1 74.0 Ecological footprint (gha) 2.5 3 1.6 HPI score 64 57.8 57.1 13900 19630 4670 23 28 32 99.5 90.9 77.9 Infant Mortality Rate (per 1000 live births) 10 18 24 Urban population (%) 79 66 58 Percentage of workforce in agriculture 13 17 30 48.5 50.7 47 Life expectancy Income per person (US $PPP) Population aged 0-14 Population with electricity (%) Additional Indicators GINI Index HDI Literacy rates GDP GDP Per Capita GDP real growth rate Internet users Debt as % of GDP Health expenditure as % of GDP World Disaster Risk Index 12 Thinking Questions Which country is most developed? Which is least? Consider economic, environmental, social and political indicators. REMEMBER: You may be asked to compare the levels of development between countries in an exam, or you may be asked to explain these differences (See section 2.0 for ideas) Additional notes ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. 13 Panama’s Development ECONOMIC OVERVIEW • Trade and market liberalisation and privatisation of state-owned enterprises in 1990s helped secure international investment for Panama. • FDI encouraged thorough tax regulation and guaranteeing ease of business • Economy is primarily based on a well-developed service sector. • Panama has a large logistics and storage services sector, as well as a modern banking and insurance industry. • Agricultural sector has lost importance over the year. • The Panama Canal accounts for 10% of trade. • The Colon Free Trade Zone (CFZ) is the second largest free port in the world and accounts for more than 7.0% of the national economy. • Trans-Panama Pipeline allows for the transport of crude oil between the Pacific and Atlantic coasts. • Bilateral free trade agreement with the USA since October 2012. • Significant investments in infrastructure development projects e.g. metro systems which opened in April 2014 and enhancements to Tocumen International Airport. ACHIEVEMENTS Increase in GDP • Benefitting from revenue generated by the Panama Canal. Strategic spending plan: • Ricardo Martinelli (President 2009-2014) implemented a USD 15 billion strategic spending plan in key sectors including: financial services, agriculture, logistics, tourism, as well as in airport, port and road infrastructure. Expansion of infrastructure and reformation of teacher training • The Ministry of Education’s budget increased from US$1 billion in 2013 to US$1.29 billion in 2015 under President Varela (2014). Improving education • Increase in secondary school enrolment, led by female enrolment 14 • Increasing female enrolment in higher education (53% of students in higher education are women). Improving health • Declining fertility and mortality rates, suggesting development levels increasing. • Expansion of access to clean water. • Health expenditure was 5.9% of GDP in 2016. DEVELOPMENT CHALLENGES Social Challenges • High poverty and extreme poverty rates amongst the indigenous communities e.g. in indigenous territories, known as “comarcas”, poverty is above 70 percent and extreme poverty above 40 percent4. • Lack of education/skills (literacy rate 95%). Environmental Challenges • Loss of agricultural productivity due to land being lost as a result of soil erosion and desertification • Poor resilience to natural disasters Political/Economic Challenges • Poor long term planning- change in administration every 5 year means progress can be inconsistent • Poor infrastructure and inadequate access to sanitation • High levels of debt (US$23 billion) and concerns over future stability with 25 European and American banks severing ties with Panama over money laundering concerns • Decreasing GDP growth (2011: 11.8%, 2014 6.1%) • Very poor income distribution WHY DO THESE CHALLENGES STILL EXIST? Poor government spending • e.g. on un-targeted subsidies for fuel, water and electricity 4 Source: http://www.worldbank.org/en/country/panama/overview 15 • Better policies needed for an increased social investment needed to tackle alarming levels of inequality Poor educational systems • Out of 139 nations, Panama's primary education ranks 129th, according to the World Economic Forum's "Global Competitiveness Report" for 2010-2011. • 365,000 prospective students in Panama unable to pursue post-secondary study due to lack of available spaces • Relaxed child labour laws- minimum working age of 15 isn't always adhered to and agricultural and domestic industries allow children to work from age 12 Corruption • Martinelli accused of profiting personally from construction boom Risk Profile: Source: http://www.inform-index.org/Countries/Country-profiles/iso3/PAN 16 Costa Rica`s Development ECONOMIC OVERVIEW 5 • Abolished army in 1949, allowing for increased spending elsewhere • Political stability attracts investment • Free Trade Zones (FTZ) law in 1981. First this attracted low-tech sectors (textiles), and gradually attracted companies in high-tech sectors (electronics, advanced manufacturing, medical devices) . By 2014, FTZs accounted for 53 percent of exports, and Costa Rica’s economy is very intensive in FDI (4.2 percent of GDP) due to political stability and relatively high education levels • Decision by Intel to set up a semiconductor assembly and test plant in Costa Rica in 1996 was clearly a turning point in attracting foreign investors. Examples of TNCs include Abbott Laboratories (now Hospira), Baxter Healthcare, and Procter and Gamble have invested in the country. • Electronics, medical devices, and other manufactured goods now make up about 60% of goods exports. • Member of CAFTA-DR since 2009 (Dominican Republic-Central America Free Trade Agreement) • Tourism continues to bring in high levels of foreign exchange ACHIEVEMENTS6 Economic growth • Benefited from steady economic growth • Well diversified exports • Only 1.6 percent of the population lives under the global US$1.90 poverty line. Improvements in healthcare and education • Healthcare access for all 5 (Source: CIA Factbook https://www.cia.gov/library/publications/the-world-factbook/geos/cs.html) 6 Source: https://openknowledge.worldbank.org/bitstream/handle/10986/22023/K8319.pdf? sequence=4&isAllowed=y 17 • Sustained social spending (20% of GDP) has resulted in improved education, healthcare, clean water, sanitation and access to electricity • Life expectancy at birth improved from 61.6 years in 1960 to 72.5 years in 1980 and to 79.7 years in 2012, similar to the OECD average of 80.7 years. Strong Environmental Protection Policies • Payments for Environmental Services (PES) program has been successful in promoting forest and biodiversity conservation; making Costa Rica the only tropical country in the world that has reversed deforestation. WHAT CHALLENGES STILL EXIST? • Poverty reduction has stagnated, and between 2010 and 2014, with poverty increasing by 0.4 percentage points • Inequality is rising • Poor infrastructure, high energy costs and weak investor protection and difficulties enforcing contracts still deters investment into Costa Rica • Insufficient maintenance on existing infrastructure has led to congestion and poor quality public transport such as railways. • Increasing debt is eroding social security measures WHY DO THESE CHALLENGES STILL EXIST? Social Factors • Nicaraguan migrants (an important source of unskilled labour) put strain on social welfare system Little growth in sectors providing low-skilled jobs (e.g. construction and agriculture) • Many indigenous groups have poor school completion Political/Economic Factors • Poor government communication around infrastructure projects has led to strikes and protests agains some infrastructure projects e.g. the USD $650 million toll road Corredor San José - San Ramón, had its contract rescinded in 2013 • Increasing taxes are forcing more into the informal sector 18 • Rising public debt due to increased government expenditures • The shift from a two party to a multiparty political system in the last 15 years has resulted in more complex and lengthy reform processes • Infrastructure investments difficult due to excessive institutional fragmentation, which reduces transparency and accountability of public sector agencies, poor strategic planning, which results in haphazard infrastructure development and poor intermodal connections Risk Profile: Source: http://www.inform-index.org/Countries/Country-profiles/iso3/PAN 19 Nicaragua´s Development ECONOMIC OVERVIEW • Economically dependant on export of low value primary products (Textiles and agriculture combined account for nearly 50% of exports) • Massive debt relief by the International Development Association • Poverty remains high and the second poorest in the Western Hemisphere, has widespread underemployment and poverty. • The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) has been in effect since April 2006 and has expanded export opportunities for many Nicaraguan agricultural and manufactured goods. ACHIEVEMENTS Improvements in infrastructure and sanitation • Improved access to drinking water, sanitations and ameliorated its life expectancy, infant and child mortality and immunization rates • World Bank board of directors approved US$ 96.8 million credit to help improve road systems for nearly 550,000 residents of urban and rural areas of the country (March, 2017) WHAT CHALLENGES STILL EXIST? • • • • • • High levels of inequality Poverty remains high High levels of public debt (350% of GDP in 1990´s) Indigenous groups still lack basic healthcare services Low literacy rates and school enrolment Poor infrastructure, particularly in the more remote areas 20 WHY DO THESE CHALLENGES EXIST? Social factors • Roman Catholic religion, non-existent sex education and rural culture prevents people, especially adolescents, accessing to contraception. Creates perpetuating cycle of poverty. • Reliance on low value added exports Political factors • Poor social funding, for example whilst primary education is free and compulsory, schools and students must pay for their own materials. Only 72% of children finished primary school in 2009 7 • Corruption and the erosion of democracy under Ortega`s leadership (appointment of his wife as Vice-President and prominent roles for his son and daughter widely thought to be a move to attempt to secure a dynastic succession similar to the Somoza family dictatorship) Risk Profile: Source: http://www.inform-index.org/Countries/Country-profiles/iso3/PAN 7 The Guardian 21 TASK: What comparisons can you make between the countries? Consider the following factors: Economic Political Environmental Social ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… 22 Millennium Development Goals Background: The 8 millennium development goals were set the United Nations in 2000, with a target of completion in 2015. These 8 goals have largely been considered effective, and are being built in on the Seventeen Sustainable Development Goals. Some Examples: Goal 1: Eradicate extreme poverty and hunger A graph to show Poverty headcount at $1.90 a day (PPP) in Panama, Nicaragua and Costa Rica. 23 Goal 4: Reduce Child Mortality A graph to show infant mortality rates in Panama, Nicaragua and Costa Rica. Goal 7: Ensure environmental sustainability A graph to show the percentage of the population with access to sanitation in Panama, Nicaragua and Costa Rica. 24 Extrapolated data from the graphs: ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. 25 Sustainable Development Goals (SDG´s) What are they? • Otherwise known as global goals, they were developed by the UN in 2015 • The sustainable development goals are time-bound, quantified targets for addressing extreme poverty • The 17 Sustainable Development Goals (SDGs) – part of a wider 2030 Agenda for Sustainable Development – building on the success of the Millennium Development Goals (MDGs). • Each goal has specific targets to be achieved over the next 15 years 26 Additional Notes: ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. 27 SECTION 2: TRANSOCEANIC MEGAPROJECTS THE PANAMA CANAL The impacts of the original construction: Social: High worker mortality rate: 200 a month killed during the French attempt to build the canal, 27,000 died. Overall Indigenous groups and rural communities forced off their land. Water directed away from the eastern side of the country. Many subsistence farmers found their land too dry. 12,852 people were hired, though mostly migrant workers from the West Indies as Panamanians were too expensive. Environmental: Flooding the area behind the dam on the Chagres River, which became known as Gatun Lake. Huge water requirements. Pristine rainforest lost (more than 150 square kilometres). This region is an important migratory route for animals including eagles and jaguars, remaining forest was fragmented. Conservation of forest either side of the canal to protect the water source (660 KM2 corridor) Economic: Expensive: French firm which began building went bankrupt. Canal route is within American territory with very little trickle down to the Panamanian economy. After 1991, the USA relinquished control of the canal and this lead to a huge economic advantage for Panama as they can collect tolls on the ship using the canal. This leads to other benefits (positive multiple effect). Time saved on long and dangerous routes around the continent has facilitated global trade and allowed for globalisation. 28 PANAMA CANAL EXTENSION PROJECT Background • Referendum in 2006 Panamanians approved a referendum (2006) to expand the canal • September 2007 at a total cost of US$5.2 billion due to increasing demand • Funded by canal revenue and $2.3 billion financing package (e.g. European Investment Bank lent US$500 million) • The cost did not include interest on the loans taken to fund the project • Chanel has been deepened and widened • New locks built to accommodate 95% of ships currently in use, expected to drop to 87% by 2019 • Aims to raise the maximum operating level of Gatun Lake from 26.7 to 27.1 metres, to improve the Canal’s water supply. The project will enable additional water storage capacity for Gatun Lake by nearly 200 million cubic metres, which will allow for approximately 1,100 additional transits every year. • Project began in 2007 • June 26th 2016 opening 29 Social Advantages • No significant relocation of communities needed. • It is possible that the money generated could be invested in schools and hospitals. • 76% of Panamanians approved the expansion • Creation of about 30,000 construction jobs • Increasing demands on water could lead to water stress elsewhere Disadvantages • 24% of Panamanians did not approve the expansion in 2006 • Construction jobs are low skilled and many temporary Economic Advantages • Improvement of navigational channels (dredging) allows large ships benefit from economies of scale • Government expected to double the revenue it receives from the Panama Canal Authority, to reach around $2bn in 2021 Wider economic advantages Benefit to US markets that rely on exports e.g. cotton Industry; New Jersey plans to spend $2.7 billion on enlarging its terminals and shipping lanes Disadvantages • Cost: 5.2billion through loans and investment of revenue from the canal. • Lost revenue due to 16 month delay in completion estimated at $200 million. • Still cannot accommodate largest ships so less to remain competitive. Environmental Advantages • Increased shipping may lead to the transfer and establishment of non-indigenous species that. • More efficient transport as larger ships, known as post-Panamax vessels, can use the canal , meaning less pollution through the reduced use of fuel which may have a positive impact on climate change. 30 • Shorter journey time, since ships are not waiting to traverse the canal or take longer routes such as the Suez Canal. • Reforestation of previously degraded land to preserve water supplies. Whilst this will increase carbon sequestration, some studies suggest little impact on water supplies8 ‑ Disadvantages • Increased shipping may lead to the transfer and establishment of non-indigenous species. • Increased water withdrawals from Gatun Lake (more than 55 million gallons for each ship). • Substantial increased demands on the watershed during dry seasons. Political Advantages • Government seeks to benefit • Will collect $1.6 billion annually from passage fees, a significant sum in a country with a total budget of $25 billion, thus further strengthening the nation’s social programs and economy. • The revenue it receives each year from the Panama Canal Authority (ACP) is expected to double to around $2 billion in 2021 • Panama Savings Fund has been set up to manage the increased revenue, which can, for example, be used in the event of a natural disaster Disadvantages • Could lead to political instability if the government fail to make a good return on their investment • Already criticised as too little too late, since the new canal will still not be able to fit the largest vessels • The government has doubled it´s budget deficit to negative 4.2% (2016) 8 Proc Natl Acad Sci U S A. 2013 Jun 4; 110(23): 9326–9331. 31 Key Player Summary Additional Notes Panama Canal Authority Panama Government Local communities China Harbour Engineering Company Ltd. (The 4th locks) 32 Panama Canal Expansion, Additional Notes: Include any future challenges (e.g. water stress and the impacts of climate change) ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… 33 PANAMA CANAL: 4th Locks • Proposed development would allow it to accommodate the largest ships. • Would allow ships to carry 18,000 containers including 400-meter-long ´Triple E´ vessels. • • • • Would become a competitor for those ships using the Suez Canal. Estimated cost $16-$17 billion (cheaper than the Nicaraguan canal). Funded by revenue from the canal itself as well as bonds and loans. CHEC (China Harbour Engineering Company), a subsidiary of a state-owned company, has shown an interest in building the 4th locks. • Chinese involvement could increase political tensions, (particularly with the anti-China Trump administration). • It could take up to 15 years to build. 4th Locks, Additional Notes: ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… 34 NICARAGUA CANAL Background9 • In 2013 the Nicaraguan government granted HKND a concession for the construction of the canal, as well as a series of sub-projects (e.g. an oil pipeline, a highway, a railway system and international airports, a tourist complex…). • No EIA was developed in advance10 so the Nicaraguan government have been heavily criticised. • British company ERM, employed by HKND, carried out an EIA after the commission was given. • HKND will build the 186 mile (200km) long canal and run it for for 116 years • The largest civil engineering project in history, it will require the removal of 4.5bn cubic metres of earth11. • More than 70 past proposals to construct a route across this stretch of the Central American isthmus. • The canal will be between 27-29m deep, with a maximum bottom depth of 280m. • Concerns over feasibility of the project as funding is not secured and the HKND have no prior experience. • The project started in December 2015 with the upgrade of roads around the site 9 Source: http://hknd-group.com/portal.php?mod=view&aid=235 10 http://pubs.acs.org/doi/ipdf/10.1021/acs.est.5b00215 11 The Guardian ´Land of opportunity -and fear- along route of Nicaragua´s giant new canal, 2015 35 Social Impacts Advantages • The government estimates that 400,000 people will be lifted out of general poverty by 2018 due to the revenue the project will bring. • Employment and opportunities for training and developing skills. • Compensation offered for displaced peoples and resettlement area included power, water, sanitation, education, policing and security facilities. Disadvantages Water supply • Lake Nicaragua is an important source of fresh water for local people (e.g. living in San Juan del Sur and Cardenas). • Fresh water increasingly scare as a result of climate change. Forced migration and Impacts on indigenous groups • Forced migration of groups to make way for development under Canal Law 840- little chance of appeal against compensation figures. • Many communities in the Southern Atlantic Autonomous region are indigenous, and the land belongs to them e.g. Rama. • Resettlement of 7,200 families and 29,000 citizens living along the canal including a Rama-village with 25 households will have to be resettled (the only village where the native language is still spoken). • Protests 11 injured in November when police used tear gas and rubber bullets to disband protesters. • Resettlement of 7,200 families and 29,000 citizens living along the canal including a Rama-village with 25 households will have to be resettled (the only village where the native language is still spoken). • A study by the International Federation of Human Rights found that all 131 people it surveyed complained of state intimidation. 36 Economic Impacts Advantages • Substantial increases in the level of employment. • Some universities offering courses related to the shipping and canal industry. • Impacts on global trade- A shorter route to able to accommodate vessels with capacity up to 25,000 TEU which is twice the size of vessels allowed to pass through the Panama Canal after expansion. • Increased efficiency and operating costs lowered Disadvantages • Ecotourism opportunities on Lake Nicaragua lost e.g. on Ometepe Island • Benefits HKND rather than Nicaragua - also through the subproject offered • Estimated cost of $50 bn Political impacts Advantages • Increased revenue to allow for increased government spending (see economics section). • Building the canal incurs no upfront costs- government will increase revenue from the development of ports etc. • Economic gains can be reinvested in increased social spending. Disadvantages • Government heavily criticised for lack of transparency and little public consultation. • Government criticised for passing a new law which allows the land to be taken away from indigenous groups. • Political instability a risk if the project fails. 37 Location of the Canal Map source: https://www.theguardian.com/world/2015/jan/20/-sp-nicaragua-canalland-opportunity-fear-route Environmental Impacts Advantages • Provides and alternative option for employment, which may reduce pressure on Nicaraguas natural resources. Deforestation currently occurring at al alarming rate. • Large scale reforestation either side of the canal. • The project will assist the Government in moving the illegal residents currently located in Indio Maiz ecological reserve. Disadvantages • Significant impact on MesoAmerica Biological Corridor, which incorporates the nearby Bosawas Biosphere Reserve, the Indio Maíz Biological Reserve and the Cerro Silvia Nature Reserve. 38 • Large amounts of biodiverse-rich rainforest and wetlands will be destroyed, around 400,000 hectares- biodiversity hotspot. • Shipping and the construction and operation of deepwater ports8 on the Atlantic and Pacific coasts will affect the nesting and egg-laying habitats of several endangered sea turtles and threaten coral reefs and mangroves. • Important migratory route for birds. Impacts on Lake Nicaragua • Conservationists say the canal will disrupt the lake ecosystem with pollution, traffic, noise, salinity. • Dredging may release these contaminants to the lake, already present in the form of heavy metal and pesticide residuals. • Dredging will be compulsory to make the lake deep enough for ships. • Locks will need to be constructed both sides of the lake. •Pollution in the form of diesel. •Threat of introduction of new species and pathogens from bilge discharge. •Ometepe islands itself is a UNESCO reserve. •Likely to be very susceptible to the effects of sediment resuspension due to its shallow depth (13m average). •The arrival of non-native fish can have catastrophic results, as demonstrated by the dramatic decline in Lake Nicaragua's cichlid fish population since the introduction of African tilapia in the 1980s. Cichlid fish, jaguar and harpy eagles are among the many species threatened by the Nicaraguan Canal 39 • Could lead to hypoxia (a sharp decrease in biodiversity) • Species at risk include bull-sharks, large tooth sawfish and other endemic fish species. 40 Nicaragua Canal: Key Players Key Player Summary Additional notes CATO institute New Economics Foundation China Harbour Engineering Company HKND Group UNICEF International Development Association World Bank Nicaraguan Government Nicaraguan Canal Authority 41 Nicaragua Canal, Additional Notes: ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… 42 CHINA´S TRANSOCEANIC RAILWAY • In 2013, China proposed a Transcoeanic Railway across Honduras • Discussion between CCEC (China Harbour Engineering Company) and Honduran Government. • It would be 600km with 10 lines, and an estimated cost of US$20 billion • Miguel Servellón, an official with the state agency promoting the project, said it was “still a long way from happening,” listing obstacles like a complex environmental approval process. Honduras Background • In 2014 more than 33% of its population lived in poverty • In rural areas 6/10 households live in extreme poverty • In 2015, the country’s economy grew by 3.6 percent and is expected to grow by 3.5 percent in 2016. • The highest level of economic inequality in Latin America. • One of the world’s highest homicide rates (67 homicides per 100,000 inhabitants in 2014) • Vulnerable to shocks in the agricultural sector • Susceptible to adverse natural events such as hurricanes and droughts. World Bank studies have highlighted the importance of improving the quality of education and diversifying sources of rural income given that most of the country’s poor live in rural areas and depend on agriculture for their livelihood. 43 Possible Impacts of the Transoceanic Railway Environmental Social Economic Political May cut through areas of protected land such as the Parque Nacional Sierra de Agalta, a 27,000 hectare national park which holds the largest tracts of virgin cloud forests in Central America with more that 400 species of bird and 61 mammal species. Would provide jobs in construction Facilitate trade and transport Positive multiplier effect Increase GDP/ reduce government debt Increased developments at the south-western end of the proposed route would take place in Refugio de Vida Silvestre Punta Izopo. Currently fairly inaccessible, important mangrove habitats are home to caimans, turtles and many bird species. Manufacturing Industries may Disruption to National develop alongside the Parks could damage railway tourism (e.g. popular hiking trails in Pico La Disruption to Picucha and Talgua indigenous people Caves) including the Lenca who live in the south Development could have western region a negative impact on growing ecotourism Could bring a flow of industry migrant workers Allow for increased government spending elsewhere in the economy e.g. education and hospitals Will reduce cost of transport of raw materials to other countries e.g. China Damage an ecologically important area- Proposed route cuts through cloud forests and tropical forests Open up forests for exploitation Encourage logging by decreasing transportation costs 44 China´s South American Transoceanic Railway? Background China has proposed a Transoceanic Railway (also known as he trans-Amazonian railway). Political/Social Campaigners for Indigenous rights are concerned that indigenous land will be opened up for development Disruption to unconnected tribes . Unknown impacts for example from disease like the measles to which they have no resistance Will bring a flow of migrant workers, creating pressure on infrastructure and services Economic Reduce costs of transport for raw materials including oil, iron ore, soya beans and other commodities to China Some construction carried out by local firms, therefore providing employment Environmental Main concerns include the Isconahua Reserve and Vale do Rio Jurauá Cut through endangered habitats Will open up access for deforestation, cattle ranchers, poaching and illegal mining Indirectly the railway could exacerbate deforestation by making logging more profitable Disruption to Peruvian cloud forests 45 SECTION 3: Examples of Questions Development, Poverty and Inequality Compare the development levels between Panama, Coasts Rica and Nicaragua Explain the differences in development levels 46 ! between Costa Rica, Nicaragua and Panama Explain how physical and human factors have influenced development in Central America Explain why there are barriers to development in some countries within Central America Assess the extent to which progress has been made towards bridging the development gap in the region Assess the economic and political factors that affect poverty levels in the region. To what extent is Costa Rica more developed than its neighbouring counties? Transoceanic mega-projects Assess the environmental and economic consequences of the different transoceanic mega-projects in the region Examine the environmental and political challenges to the different transoceanic mega-projects in the region. Assess the extent to which transoceanic mega-projects are a sustainable solution for promoting development in Central America Evaluate the potential for success of the different transoceanic mega-projects in the region. Examine the environmental and political challenges to the different transoceanic mega-projects in the region. 46 SECTION 3: ESSAY PLANS Compare the development levels between Panama, Coasts Rica and Nicaragua ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… 47 Explain how physical and human factors have influenced development in Central America ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… 48 To what extent is Costa Rica more developed than its neighbouring counties? ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… 49 Assess the environmental and economic consequences of the different transoceanic mega-projects in the region ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… 50 Examine the environmental and political challenges to the different transoceanic mega-projects in the region. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… 51 Examine the environmental and political challenges to the different transoceanic mega-projects in the region. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………..…. ………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………… 52 APPENDIX Source: http://www.inform-index.org/Countries/Country-profiles/iso3/PAN 53