Industrial Park in Caracol: A "win-win" situation?

7th of 7 articles

Why did the Haitian Ministry of the Environment warn of “great potential adverse impact” from the new Industrial Park of the North Region (Parc Industriel de la Région Nord - PIRN) being built in Caracol with over US$200 million in public and private financing?

Why did the consultants’ study call the nearby Caracol Bay “unique, productive and precious” and say that even if all regulations are followed, the PIRN “could endanger this ecosystem?”

Why did the same consultants – who originally suggested the Caracol site, but who later admitted they did not take environmental considerations into account – tell the Government of Haiti (GOH) to consider moving or even cancelling the project? [See The Case of Caracol - Story #6 for background]

All relevant and urgent questions.

But even though two extensive environmental and social impact studies – listing numerous risks – are public and posted online, and even though there are also several other studies on the Caracol Bay marine habitat available, no Haitian or foreign media outlet (except for Haiti en Marche)  has looked further than the press releases from the project’s champions and investors: the US State Department, the Inter-American Development Bank (IDB), the GOH and Sae-A Trading.

Instead, the Wall Street Journal, Miami Herald, Associated Press, Le Nouvelliste, Haiti Press Network, and others are largely cheerleaders for the PIRN and the mostly sweatshop wage jobs it will provide.

It comes as no surprise that there are numerous environmental and social risks associated with any industrial park – “free trade” or not. But these risks are exponentially greater in poor countries due to poor zoning, lack of legislation and/or government control, large unemployed populations, etc. [See Stepping stone or dead end? Experiences in other countries - Story 5] This does not mean a project should not be undertaken, but studies should be done and the benefits vs. the risks put before the public.

As noted above, studies were done, including one released May 13, 2011, by Koios Associates, hired by the Ministry of Economy and Finance (MEF) in 2010 [See The Case of Caracol - Story 6] and a second one, released on August 5, 2011, and commissioned by one of the project’s major investors, the IDB.

Both studies have potential conflict of interest issues: Koios chose the site in the first place, and the IBD is donating or loaning over US$50 million for the PIRN. But it appears the potential conflicts of interest, and the numerous risks outlined in the documents, were not of significant concern to the power-brokers. Construction has started and a US$15 million power plant contract was awarded in September.

Haiti Grassroots Watch lacks the space and the human resources to list all the sources and fully list all the risks, but here are some of the major ones:

Risk 1 - The Caracol Bay environment

Among the most obvious risks are the dangers to Haiti’s fragile environment, specifically the Caracol Bay.

The original, MEF-commissioned study recommending sites for the PIRN was done by the US-based Koios group. The 110-page study identified the Caracol site as #2 out of 18 possible sites in the north. However, their own follow-up Environmental and Social Impact Study, in May, 2011, admitted – shockingly – that the environment had not been taken into consideration the first time around. [See also The case of Caracol - Story 6]

Also, equally astoundingly, in their impact study, the Koios team claimed

“It wasn’t possible to anticipate the presence of the complex and precious ecosystem of the Caracol Bay before we conducted this environmental evaluation.”

The claim is nothing short of outrageous. The bay – home to mangrove forests and the country’s longest uninterrupted coral reef – has been the subject of international study for some years and is part of several plans to make the region into a park, according to publicly available documents.

1.) A 2009 study for the Organization of American States and the Inter-American Biodiversity Information Network (IABIN) put the “value of ecosystem services” a of the mangroves and coral reefs in the bay at US$ 109,733,000 per year.

2.) In 2010, the UN Development Program and the Haitian Ministry of the Environment (MOE) initiated plans to set up a “Système national d’aires protégées (SNAP).” Over US$2.7 million has been invested in the program already, according to the MOE. One of the first areas on the list is the Caracol Bay.

3.) The bay also lies in the Caribbean Biological Corridor (CBC), an area designated by Dominican Republic, Haiti and Cuba back in 2009, and is part of that US$7.4 million project.

Even if Koios somehow “missed” the literature on the bay, the Interim Haiti Recovery Commission (IHRC), co-headed at the time by former US President Bill Clinton, cannot claim ignorance. In October, 2010, the IHRC approved US$1 million of the CBC’s US$7.4 million in funding. That was two months before the Commission approved the PIRN.

Risk 2 - Wateri

Another risk involves water usage and water pollution. The PIRN is located in the middle of the Trou du Nord River watershed, identified as a “priority watershed” in a recent study from the US Agency for International Development.

Map showing the Trou du Nord river watershed and the location of the park.

Water for the PIRN and surrounding settlements will likely be drawn from the river and the water table. One study however, by a Washington-based firm commissioned by the IDB, recommends that water is taken from the water table only because the Trou du Nord River empties into the fragile Caracol Bay. Writing in August, 2011, the Environ International Corporation said: “[W]e strongly recommend that only subterranean water is used to satisfy the needs of the site.”

But other studies noted that if too much water is taken from the water table, it could be polluted by salinity due to an intrusion of saltwater from the Atlantic Ocean. Over-exploitation of the water table could also harm agriculture in the region at large, and make it difficult to develop other water-needy businesses, such a tourism. The Environ group disagreed, saying there was ample water.

A study by the Louis Berger Group, commissioned by the MEF and quoted in the Koios study, recommended that water come from both below ground and from the river. The study said the PIRN and surrounding population (current and new) should not use more than 11,000 cubic meters per day. According to the same study, the park will likely need at least 5,800 cubic meters of water per day during Phase 1 (2012-2014) and at least 9,800 cubic meters during Phase 2.

(An internal study from the Ministry of Environment – leaked to Haiti Grassroots Watch – called these estimates “conservative” and “minimalist,” saying they don’t take into account continuing deforestation and projected exponential population growth.” More on that study below.)

The other great water-related risk is, of course, pollution or other negative impact from the use of water from the river and water table. Here are the main ways water will be used:

1.)  For the textile factory being built by Sae-A Trading Company – A large amount of water is needed for the manufacturing and dying processes.  There will be significant waste waters needing multiple treatments.

2.) For cleaning and other processes at the Sae-Trading and other apparel factories, and possibly for a furniture factory. (Origins Holdings has been listed in some documents are potential tenant).

3.) For the drinking, cleaning and waste treatment needs of workers and other staff, some of whom will live inside the PIRN confines, while others live nearby.

4.) For the drinking, cleaning and waste treatment needs arising from the tens lf thousands of new residents the PIRN is expected to attract to the region.

A waste treatment plant is planned for the park, but while all of the dye run-off, industrial waste and human waste can hypothetically be managed with proper treatment, all waste waters – clean or not – will eventually end up in the Trou du Nord River and probably the Caracol Bay.

“Even if the wastewater of the park are treated, there are various other dangers related to the development of the industrial park on this site which could put the ecosystem in danger,” the Koios consultants noted.

Water will also be used to cool the electrical plant being paid for by the US government. The plant - being build for US$15 million by a Canadian company – will generate electricity using “heavy fuel oil,” also sometimes called “bunker fuel.” When dumped back into the Trou du Nord River, the temperature of water used to cool the turbines must not be more than 3 degrees C different than when taken out, or it could have significant negative impacts on aquatic ecosystems. Needless to say, the use of oil in that fragile environment also poses a risk.

Risk 3 - Social

The Koios study estimates that the local population could grow by between 100,000 and 300,000 people:

“Large industrial or mining projects in poor countries indicate that a large migration like this could occurt, no matter what efforts are taken to prevent it.”

Other studies put the number of potential migrants much lower, but even the addition of 10,000 workers and their family members – 50,000 people – will change the region, currently home to about 250,000 people, mostly farmers and fishermen.

Without zoing laws, urban planning, and heavy police presence, the PIRN might give birth to a new set of slums. The country has already witnessed the “slumification” of areas around industrial parks in the capital and in Ouanaminthe, home to the CODEVI park, and it is likely a similar process will once again occur.

The sudden arrival of thousands can have numerous negative impacts – more waste, uncontrolled use of water and trees (for cooking needs), and squatter settlements on farmland or in environmentally fragile areas. (US tax dollars are going to be used to build 5,000 homes, but these appear to be slated for “expatriates” and management.)

Also, the Koios consultants noted:

“There is… an elevated risk of tension between members of local communities and migrants coming to the region, especially if local residents feel they don’t have the opportunity to profit from the project, especially in terms of jobs.”

The Koios study warned that the negative repercussions of such conflicts might effect factory owners bottom lines, too.

“Local and overseas criticism of the multinational companies operating in the park, as well as negative publicity vis-à-vis relations with the local communities (bringing about costly consummer boycotts, lawsuits, and other expensive consequences in terms of reputations and legal risks) are among the greatest consequences of bad management.”

Mitigating the risks

Not surprisingly, despite the risks they identified, the Koios, IDB and Environ studies all ended up endorsing the project. However, they also listed numerous steps that need to be taken in order to minimize or eliminate the risks. For scores of pages, the consultants outline laws to be voted, programs to be followed and constructions that include the immediate creation of a marine protected area, an extensive 12 to 24 month environmental study, funding and building infrastructure and housing for the expected migrants both inside and outside the PIRN, and other steps.

Koios also optimistically wrote that “if a sufficient portion of the additional tax revenues are spent on development and on the improvement of the social and physical infrastructure in the region, many of these negative effects can be avoided of diminished.”

Indeed, massive funding could help mitigate risks. But Koios appear to have forgotten that park tenants – textile giant Sae-A and other companies – won’t pay any taxes at all for 15 years, meaning that all the “supplementary tax revenues” will need to come from factory workers, most of whom will earn little more than US$5.00 a day, who will thus be tax-exempt.

But even if the necessary funding is located, some critics, including the man currently serving as Minister of the Environment, say the recommendations don’t even go far enough.

In his 20-page report assessing the Koios study, dated June 30, 2011, and subtitled “Under what prerequisite a win-win situation could be envisaged from an environmental point of view?,” Joseph Ronald Toussaint said the document was a positive step but that it underestimated the “magnitude of impact,” “extent of impact,” “duration of impact,” and “biophysical changes.”

Then a ministry employee, and now the Minister of the Environment, Toussaint also said that the Haiti’s Minister of the Environment was not “associated in any thought in the identification of the site” [sic] nor in the terms of reference for the Koios impact study. As noted above, Toussaint also noted that the water-use estimates were too “conservative.”

Still, Toussaint’s report claimed a “win-win” situation was possible, if some US$54.5 million in studies and mitigation efforts were implemented.

What did the MEF think of the recommendations and were they followed? In August and September of 2011, Haiti Grassroots Watch (HGW) tried repeatedly to meet with both then-Minister of Economy and Finance Ronald Baudin, and with Toussaint, and even obtained promises of interviews from both offices. In the end, however, both offices refused to speak to journalists.

Maybe the Ministry of the Environment has given up its struggle to protect the bay?

No representative of said ministry was present at the November 28 inauguration of the PIRN construction site. The environmental question and the Bay of Caracol were not even mentioned.

What do Caracol residents think?

Pierre Renel, like most people in and around Caracol, is a farmer. He other farmers who lost their crops last January have formed an association called Association for the Defense of Caracol Workers (ADTC in French).

Pierre Renel, president of ADTC. Photo: HGW

“The spot they picked for the industrial park is the most fertile part of the department,” said Renel, president of ADTC.  “We grow a lot of plantains, beans, corn, manioc, etc. That’s how families raise their children, educate their children… its like our ‘treasury!’”

But Renel and other local residents are not opposed to the park. To the contrary, they are hopeful they and their children will get some of the jobs officials and consultants have described. Some local people already have been hired – as guards or workers at an information kiosk.

According to the PIRN website, all farmers have also received either land or remuneration for their lost crops or – if they were owners – the value of their land. While the PIRN website says all farmers have been paid damages, in a recent telephone interview, several denied this, saying they were originally promised land and money. Also, some say they were not paid the amounts originally promised.

“They told us peasants would get land and cash, and according to Michaël De Landsheer [of the MEF], landowners were supposed get US$1200 per hectare, but they are not respecting their word,” Renel told HGW.

Farmer Robert Etienne is excited about the factories.

“They should have built something like this already! Because there’s no work in this country,” he said, his eyes glittering.

But Etienne, in his seventies, won’t be one of those hired. He is too old. Maybe his children will get jobs? Maybe, maybe not. There will be stiff competition, even with their sweatshop wages.

Etienne and Renel and others are probably unaware of the how low salaries will be, and of how the local economy will likely change as construction moves forward and the factories start to open up: population explosion, higher rents, a grown in the “informal sector” and street merchants, lessened local agricultural production and perhaps even higher food prices.

As noted earlier in this series, assembly factories with sweatshop wages are not social projects, despite claims made in the media and in studies. The Koios study, for example, claims the PIRN will supply the “moyens de subsistance à un maximum de 500.000 personnes, soit 10 % de la population dHaïti.”

 The claim is very difficult to substantiate. Most workers will earn a wage that can’t even pay the rent, much less send children to school. [See Salaries in the “new” Haiti - Story 1]

In the very same study, the authors also offer up this more honest appreciation: the PIRN “a avant tout été conçu pour faciliter les investissements d’entreprises.”

As previously described, Sae-A and the other textile factories are moving to Haiti in order to take advantage of cheap labor, no US tariffs until 2020, a long tax holiday in Haiti, and proximity to the US market. The PIRN is part of a global economy predicated on the exploitation of the lowest wages and a “race to the bottom.” [See Anti-union, pro-race - Story 2]

Are exploitation, potential environmental devastation and social upheaval really a “win-win” situation?

Is it just to spend US$179 million in foreign public financing in Haiti, to the possible detrement of workers in other countries?

Can a “new” Haiti really be built on sweatshop wages and free trade zones?

Return to the Introduction and the video

i. The “Water” section is entirely based on the Koios study and on its citations from the Louis Berger study.