An Economic and Environmental Evaluation of The Nicaragua Canal

Abstract The proposed Nicaragua Canal would both complement and compete with the Panama Canal. The lock sizes for the proposed Nicaragua Canal would enable it to handle significantly larger Nicmax vessels, even larger than the New Panamax vessels permitted by the Panama Canal’s 2016 expansion, offering additional operating economies and environmental benefits. The larger locks of the Panama Canal’s 2016 expansion can only operate in each direction every other day. The Nicaragua Canal would help overcome the Panama Canal’s capacity constraints and delay them from becoming binding. The cost of the project will be estimated along with the demand it is likely to face between 2030–2060, and whether the revenue it will generate can amortize such a project. JEL codes: Q35, Q37, Q38, Q53, R41.