In Nicaragua, activists challenge the value of international ‘green’ financing

The Ortega-Murillo regime relies on “green financing” from international institutions like the World Bank, Inter-American Development Bank and Global Environment Facility. But critics say that money hasn’t made a real impact on Nicaragua’s environmental issues.Since 2018, the Ortega-Murillo regime has approved 27 green financing projects related to climate change and conservation, totaling $384.8 million, according to a Fundación Del Río investigation. Nevertheless, deforestation and carbon emission rates have increased.Fundación Del Río’s report said sources of green financing and their intermediaries need to monitor more closely whether investments in Nicaragua are leading to tangible improvements to the environment.

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Nicaragua has spent the last several years shuttering over a thousand civil society organizations, universities, media outlets and other organizations, often for criticizing President Daniel Ortega and his wife, Vice President Rosario Murillo. Their government has been sanctioned for acts of repression and human rights abuses, and the state-run mining company has been blocked from global trade by many major importers.

Some of the worst abuses are happening along the country’s Caribbean coast, where Indigenous and Afro-descendant communities continue to fend off land grabbing in ancestral rainforests ripe for mining, logging and agriculture. The Inter-American Commission on Human Rights (IACHR) has held numerous hearings accusing the regime of exacerbating the issue.

Yet at the same time, the government continues to pursue “green financing” through the Ministry of Environment and Natural Resources (MARENA) as well as international backers like the World Bank, Inter-American Development Bank (IDB) and Global Environment Facility (GEF), among others. Environmentalists in the country are concerned about how that money is used given the government’s track record. They want to make sense of a regime they believe has exploited the country’s natural resources while continuing to accept funding for conservation projects.

“On the one hand, we have a commitment from the international community, from financial organizations, for the conservation of those territories. On the other hand, we have an internal policy of destruction,” said Amaru Ruiz Alemán, head of Fundación Del Río, an organization that monitors land invasions and environmental issues in Nicaragua.

A home in Bosawás, Nicaragua. Photo by Alam Ramírez Zelaya/Flickr. CC BY-NC-ND 2.0

Since 2018, the Ortega-Murillo regime has approved 27 green financing projects related to climate change and conservation, totaling $384.8 million, according to a Fundación Del Río investigation. The World Bank led the funding with $176.9 million while the IDB and GEF funded $23.4 million. Six other entities funded the rest.

None of the banks responded to a request for comment for this story.

The country ranks second to last in total funding in Central America, behind only El Salvador. But it also gets some of the most generous funding structures in the region, with over half of it coming in the form of grants rather than loans, meaning there’s no pressure to pay off interest in the future.

But the projects have made little progress in resolving the country’s environmental issues, Fundación Del Río’s report argues. The health of Nicaragua’s rainforests has declined by 11.4% over the last decade, according to the Environmental Performance Index, which tracks climate change performance, environmental health and ecosystem vitality in 180 countries. The health measurement includes factors like primary forest loss and net change in forest cover, among other things. Carbon emissions have also risen through 2021, according to Climate Watch’s Greenhouse Gas Emissions indicator.

If millions of dollars are being spent on climate change and conservation, then those numbers should be going down, critics said.

“We need to see important changes,” Ruiz said, “and hopefully a change to the environmental indicators.”

Río San Juan Biosphere Reserve. Photo courtesy of El Nuevo Diario.

The Fundación Del Río report said green financing isn’t having the desired effect partly because conservation projects are carried out inefficiently and in bad faith. One indicator of the government’s attitude towards the environment is that the annual budget for MARENA continues to decline even as the total government budget goes up. Its budget has dropped 55% since 2018 while the national budget has gone up by 40% since 2021.

One initiative, known as the Bio-CLIMA project, received $116.6 million in grants and loans to promote sustainable land and forest management in degraded landscapes in Bosawás Biosphere Reserve, near the northern Caribbean coast, and the Río San Juan Biosphere Reserve, in the south, with the aim of reducing greenhouse gas emissions and improving the livelihoods of vulnerable communities in the Mesoamerican Biological Corridor. Planting shade trees for crops and reducing cattle grazing areas could help improve carbon absorption capacity by 14%, an initiative outline said.

But in 2020 local communities asked the Green Climate Fund (GCF), a main backer of the initiative, not to move forward with the project out of concern that it would lead to more environmental degradation and attacks from non-Indigenous armed settlers, who have been pushing into ancestral territory to take advantage of unregulated farming, logging and mining.

“The financing of these projects has affected and devastated our forests as a result of deforestation,” the Alliance of Indigenous and Afro-descendant Peoples of Nicaragua said in a 2020 letter to the GCF board of directors. The project was ultimately cancelled earlier this year.

GCF didn’t respond to a request for comment for this story.

Fundación Del Río said the sources of green financing and their intermediaries need to more closely monitor whether investments in Nicaragua are leading to tangible improvements to the environment. It also encouraged them to strengthen oversight, transparency and follow-ups to financing.

“We want the international community to be responsible with the resources that are coming into the country when it comes to getting results,” Ruiz said. “…We need them to increase the level of follow-up, monitoring and evaluation of programs that they finance, not leaving it to the state or auditors that we know are co-opted by the regime.”

Banner image: The San Juan River in Nicaragua. Photo via Wikimedia.

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