Much as the “Chunnel” did for the European Union, the ambitious Hidrovía project served as an early symbol for South America’s Mercosur trading bloc. Though perhaps not as dramatic as the tunnel under the English Channel, the plan as conceived was ambitious enough: to straighten and deepen a 2,100-mile water route along the Paraguay and Paraná rivers to create an aquatic superhighway linking the economies of Argentina, Bolivia, Brazil, Paraguay and Uruguay.

Yet while Mercosur has flourished since its inception in 1991, the Hidrovía has remained largely on the drawing board. It has been dogged by concern that it lacks an economic raison d’etre and might do serious harm to the Pantanal, one of the world’s largest wetlands.

Evidence of that concern came in March, when Brazil signaled it was backing away from intensive work on the controversial northern stretch of the waterway—the portion that traverses the Pantanal. The apparent about-face occurred as studies used to justify the project drew criticism from disparate sources ranging from Brazilian environmental groups to consultants from the U.S. Army Corps of Engineers.

There is, of course, a possibility that even in the absence of a cymbal-crashing regional waterway effort, Hidrovía dredging will occur piecemeal in future years as the nations along its route respond to commercial demands for channel improvements. Indeed, environmental groups assert that dredging now being carried out ostensibly for channel maintenance has in some cases amounted to far more.

Still, criticism of the Hidrovía appears at the very least to have prompted serious debate about its most controversial feature: large-scale channel-digging and straightening through the heart of the Pantanal.

The original Hidrovía strategy, outlined in a 1996 study financed in part by the Inter-American Development Bank, IDB, contemplated significant dredging in the Pantanal. Now, IDB officials and others distance themselves from that approach.

“Dredging would be counterproductive there,” says Marko Ehrlich, an environmental specialist with the IDB. “River navigation is still viable and should be improved. It’s a matter of how and at what cost—financial, environmental and social.”

Barges and butterflies

The Paraguay and Paraná rivers have been an important regional transportation route for centuries. In 1989, the four nations that would eventually form Mercosur—Argentina, Brazil, Paraguay and Uruguay—joined Bolivia to create the Hidrovía Commission, which would oversee a coordinated drive to develop the waterway further.

The goal was to permit heavy, year-round barge traffic along a2,100-mile (3,400-km) route from Cáceres, in the interior of the Brazilian state of Mato Grosso, to the Uruguayan port of Nueva Palmira in the Paraná delta. (See illustration.)

The lower portion of this route already has been dredged extensively. From the mouth of the River Plate to the interior Argentine grain ports of Rosario and Santa Fe, the channel is deep enough to accommodate ships. The upper reaches of the Hidrovía, however, would traverse highly prized wetlands—most notably the Pantanal, a vast ecosystem comprising low-lying marshes and forests and dry, upland savannas.

In the rainy season, rivers and streams flood 80% of the Pantanal, covering an area roughly 10 times the size of the Florida Everglades. The seasonal inundations limit flooding downstream along the Paraguay River. They also sustain myriad plant species as well as wildlife ranging from rare migratory birds and butterflies to jaguars and giant otters.

To explore the project’s potential economic and environmental effects, the Hidrovía Commission engaged two groups of consultants with financing from the IDB and the U.N. Development Fund. The studies, presented to the commission in late 1996, argued that large-scale dredging and straightening of the river would have minimal environmental costs and significant economic benefits.

The plan seemed to gain momentum. But last year, a follow-up report by 11 scientists from the United States, Brazil, Argentina and Paraguay took sharp issue with the consultants’ conclusions and the studies used to support them.

“The studies are too narrowly defined, ignore significant indirect and cumulative impacts, overestimate the project’s benefits, and underestimate its costs and social effects,” said the follow-up report, financed by the Environmental Defense Fund (EDF), and the Brazilian Reference and Cultural Support Center, (CEBRAC).

The earlier studies overestimated the economic benefits of the project and relied on flawed methodology to gauge the project’s hydrologic effects, the report said. And deepening the river channel, it said, could draw down water levels enough to dry huge tracts of the wetland, destroying the ecosystems that rely on them.

Full development of the Hidrovía, the report contended, also would likely lead to new population centers along the river, the clearing and draining of wetlands and water pollution in the Pantanal and the Chaco, a vast wetland further downstream.

And it said the earlier studies downplayed the risk that dredging and increased barge traffic would stir up mercury, pesticides and other mining and agriculture pollutants that have entered the Pantanal watershed over the years, becoming embedded in the river sediment.

Bean counting

The Mercosur nations envisioned Hidrovía not only as a way to boost exports but also as a catalyst for further regional economic integration, a trend they’ve promoted aggressively by removing barriers to trade and cross-border investment.

Various projections have estimated the cost of channel improvements at anywhere from $100 million to $1 billion. Supporters expected the investment would pay off in increased economic development spurred by reduced transportation costs.

Development projects abound. A group of businessmen in the Brazilian state of Mato Grosso do Sul, for example, has plans for industrial plants there that would produce everything from packaged beef to cars assembled from what are called completely-knocked-down kits.

The kits would be imported from Argentina, then the cars would be assembled and shipped throughout Brazil, possibly via container ports at the upriver cities of Corumbá and Ladario. Brazil’s Ministry of Transportation has long-term plans to improve either Corumbá or Ladario for container traffic.

Upriver from those cities, Cáceres already is designated as a Special Export Zone, which gives tax incentives to exporters.

Agriculture looms largest among the economic justifications offered for the Hidrovía. The IDB-financed report predicted soybeans would account for 60% of the increased traffic on the waterway, followed by timber and iron ore, among other goods.

Indeed, the Chamber of Commerce at Rosario expects soybean production in Brazil, Argentina, Paraguay and Bolivia to increase 20% by 2005. Soybean exporters hope that the cost of floating soybeans from Mato Grosso by river will be half the price of trucking it to Atlantic ports.

“This Hidrovía can link arable lands in the interior of South America [with seaports], and this can become a way of solving part of the need for food that humanity will have in 20, 30 years,” says Pablo Farras, president of the Private Ports Association, a grain exporters trade group in Argentina. “There will be a huge increase in the demand from Asia.”

But the study financed by EDF and CEBRAC argues that other waterway and rail projects are banking on the same soybean business, such as the Madeira-Amazonas, which provides exporters a route to the European market via the Amazon River.

Glenn Switkes, Latin America director for the International Rivers Network of Berkeley, California says the plan recalls past economic failures.

“European consumers are refusing to buy from countries which plant genetically-altered soy, and Japanese are preferring organically grown soy for human consumption,” he says. “That means that Brazil’s dependence on a wonder crop may take the country down the path it took during the quinine and rubber booms.”

The EDF-CEBRAC report also questioned the demand for iron-ore exports from Brazil, noting that while iron-ore prices have fallen during the last 20 years, the IDB-financed study assumed they would remain at a steady, relatively high level.

Ramping down

Although the project falls under the purview of the Hidrovía Commission, it must conform to the national legislation of each country along its route. Since Brazil is home to virtually all of the Pantanal, some of the project’s most important environmental questions will therefore be decided in Brasília.

Thus, it was significant when the Brazilian government told the other members of the Hidrovía Commission in a March meeting in Asunción, Paraguay, that it would not follow the recommendations of the IDB-financed study.

Some environmentalists question the sincerity of Brazil’s stance, speculating it might have been a ploy by federal officials to garner political support for last month’s national elections.

But Maria Luiza Viotti, Brazil’s representative to the Hidrovía Commission, said the country’s Transportation Ministry studied the matter and concluded, “that there doesn’t need to be anywhere near as much dredging of the waterway as that recommended in the IDB-UNDP study.”

In fact, even some agricultural exporters question the need for extensive dredging. The down-river stretch from Corumbá to Santa Fe, Argentina, could be improved substantially by adding buoys and using electronic navigational aids linked to Global Positioning Satellites, they say.

On the upriver stretch from Cáceres to Corumbá, an earlier feasibility report done in 1990 had recommended dredging at 141 sites, but even the IDB-financed study had acknowledged that work in this particular stretch of the river would not be cost-effective. Exporters now say buoys, navigational aids and maintenance dredging would suffice to keep that stretch open, too.

What constitutes maintenance dredging to an exporter, of course, might mean something quite different to an environmentalist.

Switkes of the International Rivers Network says some heavy dredging was recently done in the 5-mile (9 km) Tamengo channel, an existing artificial waterway in the Pantanal. Last November, he says, Bolivia petitioned Brazil to allow it to dredge both the Bolivian and Brazilian portions of the Tamengo.

Despite the risk that heavy metals in the canal bottom could contaminate drinking water in Puerto Cáceres, Puerto Quijarro and Arroyo Concepción, Switkes says, Brazil approved the dredging.

“The subsequent dredging of the Tamengo channel was far, far greater than anything which could be called maintenance dredging,” he said.

More concern about maintenance dredging has surfaced since July, when Brazil’s environmental regulatory agency, Ibama, approved an “environmental control” plan for “emergency maintenance” along a 75-mile (120-km) stretch of the waterway near Cáceres. The plan has been criticized for focussing too narrowly on the impact the dredging would have on the river bed, failing to take into account long-term effects on the surrounding flood plain.

Separately, environmentalists also complain that at numerous sites, barge operators have broken through river banks to create more direct routes.

Despite such objections, Brazilian officials insist they are serious about restricting dredging in the Pantanal.

“Brazil today believes that this project does not have much strategic value and would put the Pantanal at risk,” says Eduardo Martins, who heads Ibama.

Around the bend

A vast array of factors will likely determine whether the Hidrovía will indeed be carried out on a more modest scale than first envisioned. Rising soybean demand or ambitious upriver development projects, for instance, could boost barge traffic and pressure for dredging. So could diminished rainfall, which could lead to reduced channel depths.

Still, those urging less aggressive dredging along the Paraguay-Paraná river route appear to have caught the attention of Hidrovía decision-makers.

Leading the charge has been Live Rivers, a 300-member international coalition based in Mato Grosso do Sul. CEBRAC and the EDF, the groups that funded the follow-up study of the Hidrovía project, also have made a difference.

Brazilian officials acknowledge NGO arguments and studies have had an effect.

“There have been constant dialogues between the NGOs and the Brazilian government concerning the waterway project,” said Viotti, the Brazilian representative to the waterway commission. “The NGOs have enriched our considerations of the matter.”

Also weighing in was an unlikely group—the U.S. Army Corps of Engineers. Criticized over the years for draining, dredging and damming U.S. rivers without regard for the environmental consequences, the Corps now feels it knows how not to develop a water project. It shared that knowledge in a presentation to the Hidrovía Commission.

The Corps’ involvement grew out of a visit to the United States last year of Paraguay’s president then, Carlos Wasmosy. State Department environmental officials took
Wasmosy, a trained engineer, on a tour of the Mississippi River and the Everglades to view environmentally destructive water projects.

Wasmosy then invited a team of four engineers from the Corps to visit Paraguay and review the IDB-financed report. The engineers did not try to estimate the project’s environmental effects, but they concluded the earlier report was inadequate, says Phil Combs, who led the effort from the Corps’ River Engineering and Stream Restoration Center in Vicksburg, Mississippi.

Combs says Paraguay appears to be taking the criticism to heart. While such commitment might permanently alter the Hidrovía equation, so too, paradoxically, might the fast-growing trade among Mercosur nations.

“When this project was getting life nine or 10 years ago, when the notion of the Southern Cone free trade zone was emerging, [the nations] saw this as a physical manifestation of regional integration and free trade,” says Deborah Moore, who helped write the EDF-CEBRAC report. “Now Mercosur is happening, trade is happening, with or without the Hidrovía. That has taken some of the wind out of the project’s sails.”