Chalillo Dam

Fortis in Belize – Comprehensive Summary and Analysis

Grainne Ryder
Probe International
May 4, 2009

In the tiny Central American country of Belize (population 300,000) there once was a forested river valley where scarlet macaws nested in giant quamwood trees and jaguars roamed, undisturbed by chainsaws and bulldozers.

The Macal river valley, one of Central America’s few remaining wildlife sanctuaries, was flooded by a Canadian power company in 2005, despite a five-year long international campaign and legal battle to save it.

Newfoundland-based Fortis brought the Chalillo dam online in November 2005, drowning a critical stretch of the upper Macal river valley. Further downstream, Fortis started building another dam in 2006 that will destroy more wildlife habitat and Vaca Falls, one of the country’s most popular tourist destinations.

The legal battle to stop Fortis ended in December 2004 when the country’s highest court of appeal (the British Privy Council) ruled 3-2 in favour of the Belizean government’s decision to approve the Chalillo dam.

The Privy Council judges criticized Fortis and the Belizean authorities for withholding pertinent information about Chalillo from the public and for approving the project based on a feasibility study that contained serious errors. On the legality of the government’s approval process, however, the judges ruled the country’s environmental law had not been broken: an environmental impact assessment was submitted to the authorities and public hearings were held, however flawed. Read Probe’s response to the decision.

For a detailed review of the legal case against the Chalillo dam, see “A Solid Foundation: Belize’s Chalillo Dam and Environmental Decisionmaking,” by Ari Hershowitz, published in the University of California’s Ecological Law Quarterly, Volume 35, Number 1, 2008. Probe International worked closely with Ari, who led the US campaign to stop Fortis together with Jacob Scherr of the Washington-based Natural Resource Defense Council.

Struggle for environmental justice continues

Now with Chalillo in its third year of operation, the local struggle for environmental justice continues. The Belize Institute of Environmental Policy and Law (BELPO) took the Department of Environment to court last year for its failure to ensure that Fortis implement an environmental compliance plan as the law requires. In July 2008, the Belizean court ruled in favour of BELPO, ordering the government to monitor water quality in the Macal River and establish an emergency warning system to protect downstream residents in the event of a dam break.

Since Chalillo came online, people living along the Macal river have witnessed the predicted decline in water quality. Swimmers and bathers complain of itchy skin and skin rashes. Several lodge owners have installed swimming pools on their property as a safer alternative to the river for their guests. Local residents, meanwhile, have no such option.

The authorities have warned people not to eat fish caught from the river because they could be contaminated with methyl mercury, a toxin that attacks the central nervous system in humans. Methyl mercury is formed through bacterial synthesis in flooded soils and vegetation, and can accumulate in fish to become a potential health hazard for anyone eating the fish. No studies have been done to determine the extent of the problem along the Macal river. [See Alan Penn’s chapter on methyl mercury in Damming the Three Gorges, Probe International]

Sharon Matola, founding Director of the Belize Zoo and Tropical Education Centre, reports that scarlet macaws still return to try and nest along the Macal river and its tributary, the Raspaculo, but their nesting trees are gone and the reservoir becomes “a big mud-hole” every dry season. Sharon says the nesting boxes the government nailed onto trees around the reservoir have been a “total failure.” She agrees with BirdLife International’s prediction that the scarlet macaw population will die out within a few years due to habitat loss and poaching by the recent influx of dam construction workers.

How much the Chalillo dam will ultimately cost Belizeans in terms of lost ecotourism dollars and other lost opportunities may never be known. Certainly, there can be no justice for Macal river residents until Fortis pays reparations for dam-related damages to their health, property and livelihoods.

New public utilities commissioner gets tough with Fortis

A newly-appointed chairman of Belize’s Public Utilities Commission is getting tough with Fortis. Under Fortis’s monopoly, Belizeans pay two to four times more for electricity than consumers in other Central American countries. The Chalillo dam was supposed to cost $25 million and lower electricity rates. In fact, it cost $34 million and rates have risen steadily in the last five years.

Under the previous government led by Said Musa, consumer complaints to the Public Utilities Commission fell on deaf ears. But that changed last year: Said Musa was democratically ousted by the people of Belize and a new chief of the Public Utilities Commission, John Avery, was appointed.

On March 3, 2009, following a regulatory review of Belize Electricity’s financial performance, Avery announced that the Fortis-owned utility had deliberately misrepresented its financial position in order to justify another rate increase. Not only that, Avery calculated that the utility had overcharged ratepayers by approximately $20 million. The PUC has ordered Fortis to return that money to ratepayers in the form of a rebate.

The new government also charged Said Musa and his right hand minister Ralph Fonseca – the two men responsible for the sale of Belize Electricity to Fortis – with theft of US$10 million worth of public funds.

For more on the politics behind Fortis’ investment in Belize, and the campaign to defend the Macal river valley, see US author Bruce Barcott’s latest book, The Last Flight of the Scarlet Macaw (Random House: New York). Also read Bruce’s 2003 article in Outside magazine

Probe International’s campaign

When Newfoundland-based power company Fortis bought Belize’s national power utility and the company that wanted to dam the Macal river for hydropower, the threat to the Macal river valley went from being a local concern to a global controversy.

Between 2000 and 2005, Probe International mobilized thousands of concerned citizens as well as environmental groups across Canada, particularly the Atlantic provinces where Fortis owns businesses. Our goal was to persuade Fortis that flooding this particular river valley for a few megawatts of electricity was environmental and economic madness.

More than 20,000 Canadian and US citizens joined the campaign to save the Macal river valley, including Canadian wildlife artist Robert Bateman US environmentalist and lawyer Robert F. Kennedy Jr, Hollywood actor Harrison Ford, and Elizabeth May, then Executive Director of the Sierra Club of Canada (now leader of the Green Party of Canada).

World renowned Canadian and British archaeologists also weighed in, urging the Belizean government to rethink investing in a dam that would flood hundreds of ancient Maya ruins, Belize’s cultural heritage.

To get the message out to Fortis shareholders, we helped organized press conferences at the Toronto Stock Exchange and the federal parliament buildings in Ottawa, we sent Belizeans to Fortis’ annual general meetings in St. John’s, and we briefed journalists, senators, parliamentarians, investment analysts, and documentary makers.

When Fortis defended Chalillo as an essential and least-cost power supply investment for Belizeans, Probe International and others exposed Fortis’s monopoly as the barrier to more sensible investments, including bagass-fired cogeneration and imports from gas-fired power plants in neighbouring Mexico.

Notably after the Chalillo dam was approved for construction, Belize Electricity signed an agreement to buy 13 MW of power from Belize Sugar Industries, which will generate cheaper power than BECOL using bagasse, a sugarcane byproduct. BEL also renewed its contract to purchase gas-fired power from Mexico despite earlier claims by Fortis that such imports were unreliable and would be unnecessary once Chalillo came online.

Fortis CEO Stanley Marshall often complained that environmentalists (particularly in North America) were making too big a fuss over a small dam in a tiny country. But this was precisely our point: Chalillo was no Churchill Falls in terms of hydro output, and was simply not worth building given the irreparable damage it would do to the Macal river valley and Belize’s nature-based economy.

CIDA’s dam duplicity

When Belizeans first contacted Probe International about a Canadian dam project, we immediately submitted an access to information request to the Canadian International Development Agency. We knew from experience that when Canadian dam builders are prospecting for business in developing countries, foreign aid is usually not far behind.
And sure enough, we discovered that CIDA had secretly paid AMEC, a Montreal-based engineering firm, $250,000 to prepare a feasibility study justifying construction of the Chalillo dam in Belize.

The purpose of the contract between CIDA and AMEC was not, as successive CIDA ministers later claimed, to provide Belizeans with a balanced assessment of the dam’s costs and benefits. The purpose of the contract between AMEC and CIDA was clear: “The Firm [AMEC] shall seek to interest the Client [Fortis] in assigning implementation of the Project [Chalillo] to the Firm [AMEC], or to interest the partner in continuing its cooperation in implementing the Project.”

AMEC’s report: “a masterpiece of spin and obfuscation”

The EIA CIDA funded was never intended to provide a balanced assessment. AMEC was an engineering company with no environmental expertise in Belize whatsoever. To prepare its wildlife impact assessment, AMEC hired scientists with London’s Natural History Museum. When AMEC tried to get the lead biologist, Chris Minty, to sign a confidentiality agreement, he refused. Based on a four month field survey of the Macal river valley, Minty’s 105-page report confirmed what local environmentalists had been saying all along: the area was a critical breeding ground for tapirs, jaguars, crocodiles, and for dozens of bird species migrating between North America and South America. Minty concluded that the effects of the Chalillo dam on the local food chain for these species and the species themselves would be “major, long-term and regional in extent.”

“Based on the rarity of habitat to be inundated, and the dependence on this habitat by several endangered species, the “No-Build” option is highly recommended as the most suitable and appropriate option for the long-term viability and conservation of wildlife in Belize.” Unable to adapt to the new conditions created by the dam’s reservoir, the scientists concluded that many species will simply either drown, starve or unsuccessfully relocate to other areas.
What happened next is not unusual as far as EIAs for dam projects in developing countries go. AMEC deftly buried the Natural History Museum’s unfavourable conclusions in an appendix and proceeded to dismiss, downplay or contradict their findings in a 1500-page main report and executive summary.

Where the scientists concluded that efforts to rescue and relocate wildlife would have little effect, AMEC cheerily recommended vague or unproven mitigation measures. Where the scientists predicted the dam would wipe out native fish and shellfish downstream of the dam, AMEC concluded that “downstream fish communities would benefit from a more stable flow regime.” And on and on it went. AMEC had produced what US author Bruce Barcott describes as “a masterpiece of spin and obfuscation” – one deliberately designed to win a “yes” vote from Belize’s national environmental advisory committee. AMEC presumably knew most committee members would not read the appendices.

Following protests against the dam in Belize, and shortly after a visit by Stan Marshall of Fortis, Inc., a government-led technical advisory committee rushed its decision to conditionally approve Fortis’ environmental impact assessment, without public hearings or an environmental compliance plan. The Belizean alliance of conservation groups (known as BACONGO) immediately sent a letter to the Minister of Natural Resources and Environment outlining how its review process violated Belizean environmental law. Thus began the legal struggle.

AMEC’s geotechnical errors

Apart from glossing over the dam’s environmental effects, AMEC also failed to warn Fortis of extensive bedrock fractures and faults in the project area, which could prove unstable and add to project costs. “No responsible company would build a dam at this site without first mapping it very carefully,” according to geologist Brian Holland, technical director and chief geologist for Belize Minerals Limited. Holland advised Belize authorities that the geological assessment prepared by Toronto-based AMEC (and paid for by CIDA) was wrong and should not be used as a basis for the dam’s design and construction.

Holland found that AMEC’s report:

  • wrongly identifies bedrock at the dam site as granite when the area is known to be made up of sandstones interbedded with soft shales which have poor load- bearing capacity;
  • fails to report geological faults and fractures in the project area, including the 30-kilometre long Comma Cairn Fault which is large enough to be visible from satellite images of Belize; and
  • fails to include a geological map of the area to be flooded by the dam, an area known for its extensive network of limestone caverns that could drain water out of the dam’s reservoir and render it useless.

Without an accurate geological assessment, Fortis can expect problems and increased costs during the design and construction phases, Holland warned. “The weight of the proposed 50-metre high dam could compress the soft shales and potentially lead to structural damage or dam failure if there is bedrock subsidence or seismic activity triggered. The implications of that, economically, environmentally, and with potential cost [to] human life in villages downstream, are immeasurable.”

In November 2001, Holland and a second geologist were hired by Fortis subsidiary, Belize Electricity Limited, to examine rock samples taken at the dam site by AMEC’s geotechnical consultants, Swiss Boring. No granite was found in any of the samples so Holland recommended that the geological maps and bedrock testing be redone before proceeding with the dam’s construction. Holland described AMEC’s claim that the dam site is granite an “inconceivable” mistake, since geologists and mining companies have mapped the area since the 1950s and all maps indicate sandstones, shales, and limestone.

As Holland informed us, AMEC’s assessment of the dam site was “so filled with errors” that it is “useless as a document for engineers to use in the design and construction of the proposed dam.”

Based on the findings of Holland and another leading US geotechnical expert, Probe International urged the Canadian government to recall the study. We argued that Fortis is courting disaster if it goes ahead with the dam based on AMEC’s faulty assessment, and called upon the minister responsible for CIDA to immediately recall AMEC’s report and notify the Belize authorities that its conclusions about the dam’s viability and cost are not valid.”

CIDA’s response was a pathetic abdication of responsibility: Because the geotechnical component of AMEC’s report was cut and pasted from an earlier study, CIDA wrote, the agency was not responsible for it. Despite all evidence to the contrary, CIDA insisted its study was helping Belizeans make a balanced and informed decision.

We then approached the professional engineering association of Ontario, figuring somebody there would take AMEC’s mistakes and the potential consequences for Belizeans more seriously than CIDA. The Association of Professional Engineers of Ontario is a provincial regulatory body authorized to license engineering firms in the province of Ontario and uphold professional engineering standards of conduct and ethics.

In our complaint, we alleged that AMEC’s errors constituted professional misconduct, negligence, and incompetence, based on geologist Brian Holland’s discovery that AMEC’s geotechnical assessment contained major errors and oversights. The APEO initially responded by saying the mistakes in AMEC’s report were merely a matter of debate between technical experts and, in any case, it was not possible to assign fault to any one engineer for the alleged mistakes in the report.

In our letter to the APEO we pointed out that:

  • AMEC incorrectly mapped the project area as granite – an ideal foundation for dam-building – when, in fact, the area consists of weaker sandstones and shales;
  • AMEC incorrectly states that there are no faults or fractures in the project area when, in fact, prior geological studies indicate an abundance of faults and fractures, some of which are open to a depth of at least 45 metres.

We also pointed out that AMEC has a professional obligation under the engineering act to immediately correct and report any mistakes to the Belize authorities and the general public.

Under the Professional Engineers Act, a member of APEO may be found incompetent if they display “a lack of knowledge, skill or judgement or disregard for the welfare of the public. . . .”

“Negligence” is defined as “an act or an omission in the carrying out of the work . . . that constitutes a failure to maintain the standards that a reasonable and prudent practitioner would maintain in the circumstances.”

“Professional misconduct” is defined as “negligence” or a “failure to act to correct or report a situation that the practitioner believes may endanger the safety or welfare of the public.”
Probe notified AMEC about the mistakes in its report in November 2001 but the firm did not correct or report the situation to the Belize government and to the general public. AMEC’s geological errors and related government secrecy figured prominently in the legal battle (See Ari Hershowitz’s case history in Ecology Law Quarterly 2008).

More Background

Probe International’s Gráinne Ryder made two visits to Belize over the course of the campaign to stop the Canadian-backed Chalillo dam. Gráinne visited the upper Macal river valley accompanied by wildlife conservationist Sharon Matola, the award-winning director of the Belize Zoo and Tropical Education Centre, and Gregorio Sho, a Maya naturalist and guide.

(Check out the National Geographic documentary about Belizean wildlife called “Paradise in Peril” featuring Sharon and Greg.)

On the banks of the Raspaculo, Gráinne saw Belize’s national animal, the three-toed tapir, gorging on figs under cover of darkness. By day, she saw the rare Morelet’s crocodiles basking on riverside rocks, iguana sprawled in overhead branches, countless exotic birds, thousand-year old Maya ruins, and the unmistakable scarlet macaws flitting high above the forest canopy.

Downstream of the dam site, Gráinne met with concerned residents and business owners. During an interview at a local radio station in the town of San Ignacio – which would be inundated by water if the dam were to break – host Lewis Garcia expressed the public’s fears about the dam’s effect on their river. Lewis said local government officials favoured the $30-million project because of the short-term jobs and revenue that will flood the area during the dam’s construction. Gráinne also appeared as a guest on a two-hour phone-in radio show on Love FM; a popular morning show broadcast by FM 2000; a prime-time television current affairs program; and was interviewed by the Mexican newspaper El Tiempo and Belize’s The Reporter.

What can the Chalillo experience teach or remind us? Consider the following:

  1. Environmental impact assessments typically serve project proponents, not the public interest. Rather than help to improve investment decision making, environmental impact assessments are intentionally designed to legitimize environmentally threatening and publicly contentious projects. See Fred Pearce’s article in New Scientist, “Concrete Jungle.”
  2. The Canadian International Development Agency does not, for all intents and purposes, respect the rights of Canadians (as taxpayers) or citizens in developing countries to know precisely what and who CIDA is funding in the name of development at any given time. CIDA puts its corporate clients’ request for confidentiality before the rights of citizens to know what CIDA is doing in their name or on their behalf. Secrecy remains CIDA’s core modus operandus. When Canadian taxpayers ask for transparency on specific issues or question CIDA’s quality control assurances, when CIDA is confronted with serious mistakes in its studies that potentially put people’s lives at risk, CIDA ministers resort to unacceptably political responses: first deny the problem then deflect responsibility then repeat official policy and recite from its annual report to parliament. The public deserves better.
  3. When governments bestow monopoly powers and privileges on electric utilities and private power companies the beneficiaries become all but impervious to public opinion. Fortis was shielded by the Belizean government from the real costs and liabilities associated with its unpopular dam; and it was assured a return on its investment from captive ratepayers regardless of the dam’s performance or the company’s popularity.
  4. Companies enjoying monopoly profits while people protest in the streets must know the party will end sooner or later, whether through a change in government or regulatory standards.
  5. The absence of effective regulatory oversight in the electricity sector increases the risk of imprudent investments that fail to win public approval and destroy the environment.

We’d love to hear your thoughts as always. And if you need help finding material in our Fortis Belize archive don’t hesitate to contact us.

Keywords: Access to information, AMEC, Belize, Belize Alliance of Conservation NGOs, Electricity, Belize Electricity Company, Canadian International Development Agency, Chalillo dam construction, environmental impact assessment, environmental compliance plan, engineering misconduct, feasibility study, Fortis, geotechnical errors, lawsuits, monopoly, Privy Council, public interest,Public Utilities Commission, secrecy, transparency, wildlife, water quality.

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1 reply »

  1. Thank you for the synopsis. I have spent some time in the wild beauty of Belize, beginning in the 70’s, and have witnessed how the country has changed. Belize, southern Mex and Guatamala contain the only rainforest standing in North America. Their political borders divide how it is treated and governed. Our hope to preserve this area is to help people see it as a treasure of North America, and to protect it from petty, ill-intentioned interests by coming from a much larger perspective and vision.

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