Letter to President Nieto: Put Mexico First! The People Support Don Diego

Enrique Peña Nieto
President of Mexico
Los Pinos
Mexico City, MEXICO

Dear President Pena Nieto,

The people of Mexico are showing their support for the Don Diego phosphate project and they want to make sure you hear their voices.  In fact, over 1,000 citizens recently signaled their sentiment by “liking” this Facebook article “Semarnat Steals Large Opportunty from BCS and Mexico.”

It is unusual to see such an outpouring of public support for a mine, but Don Diego is not your typical project.  Don Diego will not only help to provide affordable nutrition relief to the most impoverished in Mexico, but it will also help revitalize the domestic agriculture sector, improve national security, and create jobs and wealth.  Importantly, it will do so while bringing net benefits to the environment.   Such sustainable, win-win projects are rare.

Semarnat rejected the project in a poorly considered decision last April.  Semarnat’s decision was based on a single element; the threat the project posed to sea turtles.  Yet we know, based on scientific studies, that sea turtles do not inhabit the seafloor at the depths which this project will operate.  Don Diego will have no impact on sea turtles, fishermen, or the tourism business in BCS.  The Mexican people are depending on you to correct Semarnat’s unfortunate and costly mistake.

Some groups have tried to mislead the public by claiming that the project is too risky and that it has never been done before.  None of this is true.  In fact, marine sand and aggregate dredging projects have been operating for 50 years all over the world.  Today they extract as many as 100 million tons of the material annually (page nine) in three European nations alone (versus the seven million proposed for Don Diego).  The environmental impacts of marine sand and gravel extraction have been carefully studied for decades, highly accurate models have been developed, and we have a full understanding of how extraction should be practiced to minimize environmental disturbance.

Mexico needs strong leadership right now.  It needs leaders who work for the people, who can create wealth and opportunities, and who can offer resources to those who live in poverty.  Mexico needs a revitalization of its domestic agricultural sector, and inexpensive fertilizers will be crucial to achieving this end.  The people understand that Mexico needs Don Diego.  Do you?

 

Thank You,

Environmentalists for Don Diego

 

SEMARNAT Steals Large Opportunity from BCS and Mexico

 

You may not know it, but off the coast of BCS lies one of the largest and most attractive phosphate deposits in the world.  The one billion tons which we believe will ultimately prove recoverable from the deposit is approximately equal to the phosphate reserves found in the entire United States.  Phosphate is a critical resource, as it is a primary component in fertilizers, and there is no substitute for the mineral.  Without the phosphate supplied by mines around the globe, much of the world’s population would starve and perish.

The deposit, named Don Diego, is attractive both for its low economic costs of production, and for the low costs its extraction imposes on the environment.  Those low costs could mean hundreds of millions in royalty revenues to BCS, jobs to BCS and to Mexico, a healthy fertilizer industry for Mexico, and lower food costs and greater food sovereignty for the country – helping millions who suffer from malnutrition.  Those low costs also mean that the project will create net benefits to the environment (which is a big part of why we vigorously support the project) as will be discussed in more detail later.

The timing of this project is especially important because the falling peso and the threat from US President Trump have left Mexico vulnerable to rising import prices for food and fertilizers, meaning even more hardship for the millions who already struggle with malnutrition and food poverty.  Creating a measure of food sovereignty has become a matter of crucial strategic importance for Mexico.

For No Maiz Gringo, the push to boycott US corn has two fronts, playing on both regional developments and social and economic weight around corn in Mexico. “The first one is to identify other countries that could potentially sell corn to Mexico…. And second, part of the reason that we have received great support from the Mexican people behind this campaign is because an aim of this campaign is also to pressure Mexico to invest in Mexican production of corn. Mexico used to produce its own corn before the early 1990s.”  Link

Politicians Denying Opportunity

Yet residents of BCS are being robbed of the opportunity that Don Diego affords because of weak political willpower.  Semarnat rejected this project a year ago based on its impact to sea turtles.  Evidence from scientific studies show, however, that the project will not impact sea turtles at all.  This is because sea turtles occupy the warm waters along the coast line, not the cooler waters 30km out to sea where this project will operate.  Nor will the project impact sources of food for sea turtles as the project’s footprint is inhospitable to most sea-life due to the toxicity of the high phosphate content in the sands.

Similar conclusions have been reached by Swimmer et al (2003) who estimate that loggerhead turtles spend 100% of their time at less than 50 metres. A correct ‘Habitat Map’ for loggerhead turtles in the Gulf of Ulloa that includes their vertical distribution in the water column shown in Figure 21 thus indicates that the turtles are to be found on or near the seabed only in shallow waters close to the coastline, and are completely spatially separate from the seabed in the 80 meters depth at the “ Don Diego ” site. There is thus no possibility of dredging in the 80 meter water depth at the “ Don Diego ” site having an impact on the ‘Habitat’ of turtles in the surface waters of the pelagic zone.  Page 26

Mexican government obstructionism around natural resources is not uniquely related to Don Diego.  Mexico has been blessed with enormous stocks of rich natural resources, yet due to the corruption and mismanagement of those resources by the government, the people have not benefited to the degree that they have in other countries.  Despite the fact that Mexico is a top ten oil producer worldwide, half of its citizens live in poverty.  Pemex has been rocked by constant allegations of corruption and mismanagement.  Mexican governments have consistently found ways to deny citizens access to the benefits afforded by an abundance of natural resources.  In this respect, Semarnat’s decision to withhold the benefits of Don Diego from the people of BCS and Mexico is not a surprise.

Why Doesn’t BCS Deserve the Same Opportunities as Florida?

While it isn’t surprising, it is still egregious.  To understand just how backward this decision is, it is useful to compare the situation in BCS with that of Florida.  Florida hosts some of the largest phosphate extraction operations in the world, at great costs to the environment.  Florida phosphate strip mines destroy 30 feet of highly sensitive overburden to extract phosphate in environments such as wetlands and old forests, taking habitat from endangered species.  Enormous amounts of freshwater are used, settling ponds are created, and occasionally sinkholes open up and spill waste into the water table that feeds drinking supplies.  Many times the land used is not even reclaimed.  Naturalists have filed lawsuits to stop the expansion of mining activities in Florida.

Yet Florida puts up with the considerable ill-effects from phosphate mining and fertilizer manufacturing because the benefits are so meaningful to the state and to the country.  As noted in this article, the industry employs around 6,000 people in jobs that pay an average of $72,000 USD a year.  It also has created over 5,000 jobs in port-related activities, and another estimated 30,000 jobs indirectly.  The industry paid almost $90 million USD in sales and property taxes in 2003 alone, a figure which may be higher today.    Of course, another important benefit that the industry brings is access to abundant and relatively inexpensive domestic fertilizer, used to grow crops – some of which are then sold to Mexico.

BCS and Mexico have the opportunity to enjoy the same benefits as Florida (possibly even greater) as the Don Diego site may be larger than all of Florida’s reserves.  Yet BCS doesn’t have to absorb environmental costs anywhere near the scale of those the phosphate industry imposes on Florida.  This circumstance makes it particularly unfair to the people of BCS and Mexico to have Semarnat deny them this resource and all of the opportunities that accompany it.

Why is the Don Diego project so much more environmentally friendly than those currently operating in Florida?  Many of the answers can be found reading this article, or some of the others on our website.  The short answer is that Don Diego doesn’t require any overburden removal at all, and this is the most environmentally damaging aspect of phosphate mining.  In addition Don Diego won’t use any fresh water for extraction, it will be undertaken in a non-sensitive area of the ocean (containing little flora or fauna because of the toxicity caused by the high levels of phosphate in the sands.)  It won’t displace any people or animals, require settling ponds, threaten water supplies, or require the building of infrastructure.  It uses one of the gentlest extractive processes known, called dredging, which has been practiced every day for over 50 years all over the globe.  The impacts of dredging have been carefully studied by marine scientists for decades and are very well understood.

Don Diego creates a net benefit for the environment because this low-cost project can put some marginal phosphate projects, that are much costlier to the environment, out of business.  Florida is an excellent example.  Florida operations are generally more costly than Don Diego’s because they are land-based and have to deal with overburden removal, land reclamation, fresh water usage, road and electric infrastructure, etc., etc..  Florida is also more expensive because projects there are extracting lower concentrate phosphate that is distributed in thinner layers of sediment.  Without getting into too much detail, the lower concentration means that it takes more rock to generate a unit of finished fertilizer, and the thinner layers mean that the rock is extracted over a wider area relative to Don Diego.  The bottom line is that Don Diego can generate more finished product from a smaller footprint, thereby sparing the environment and creating a net benefit in terms of land usage and in terms of impact.

The project will have zero impact on fishing or tourism in BCS.  It is located approximately 30km off the coast, so the only way to see it would be by a boat that goes a long way from shore.  Even then, it would be hard to find a single slow-moving dredging ship.  The process of extraction is all mechanical, will extract phosphate over a single square km per year, and no chemicals or other foreign substances are introduced to the environment.  Dredging projects just like this are worked every single day in ports and along coastlines all over the world, and have been for over 50 years.  The impacts have been studied in government funded programs by marine scientists and are well-documented.  The greatest impact of the project is a small plume of sediment that is created within 2km of the extraction activity and only at depths of 40m+, but this settles rapidly.  The impact of this plume is dramatically less than that from a storm which can create a plume for hundreds of kilometers along the shoreline, in far more sensitive ecosystems.

While Don Diego’s environmental costs are far fewer than in Florida, the project’s benefits are likely greater.  Not only can the project create jobs, wealth, and royalty revenue for BCS and Mexico, but it can help the country feed the millions who are malnourished, improve trade balances and create increased trade with important partners in Asia and South America, all while weaning the country from its increasingly dangerous and expensive reliance on foreigners for food and fertilizers.  Fertilizer prices spiked over 600 percent in 2008, helping to cause food riots in Mexico – yet Mexico has not responded, and is still dangerously exposed to foreign sources of phosphate.    Don Diego’s operation would make fertilizer more abundant and less expensive, creating the same impact on food in Mexico.  This should be especially welcome at a time when becoming less dependent on the US is important and the peso has lost so much value.

Politicians Play Games, People Suffer

Don Diego offers BCS residents much to gain and very little to lose.  So, why is it that BCS residents and Mexican citizens are being denied something that Floridians fight for, despite threats to drinking water and sensitive environments?  Why don’t Mexicans deserve the opportunities that Floridians have, especially when they come with far lower risks and costs?

Semarnat has no legitimate environmental reason to deny the project.  Semarnat has been bullied by some non-Mexican extremist environmentalists who have told lie after lie about the project.  We have documented these lies in a number of articles (here and here).  Yet, as this recent court case against Greenpeace shows, old-school environmental groups make a business out of spreading false and exaggerated claims.  Doing so helps them to raise money, but when they are brought to court to give a full explanation for their statements they admit that they never expected anyone to actually believe their stories.

Don’t the people of Mexico deserve better than to have groups like this determine policies impacting national security, food security, and industrial development?  Who will hold groups such as AIDA accountable for their actions?  Who will represent the estimated 36% of Mexican children who go hungry each day because of the lies these groups tell in order to raise money and mobilize votes to impose their ill-conceived moral agenda?

Yet there may be an even darker explanation for Semarnat’s reluctance to issue an approval.  As noted earlier, the Mexican government has a history of exploiting natural resources in a manner that benefits those in power while leaving the working people behind.  Denying the project until the applicants give up would allow the government to step in and take over.

If this is the case, it won’t be the first time something like that has happened.  Still, it would be a big loss for the Mexican people.  Not only would the government run the industry into the ground while enriching those in power, leaving many citizens to suffer from food poverty, but it would in effect put a huge “Closed” sign up for Mexico’s economy, scaring away investors and potential partners, setting Mexico back further at a time when it desperately needs to encourage growth and investment.

closed

Let’s hope that this is not Semarnat’s objective, but we should watch closely.  Semarnat’s decision to deny Don Diego, at minimum, represents a dereliction of duty to country.  It is clear that this project is sustainable and approvable.  The environmental application has 16,000 pages of science behind the work, compiled by some of the preeminent global experts in the field, demonstrating that it can and will be undertaken safely.  There is no reasonable excuse for Semarnat’s actions.  A full investigation into Semarnat’s denial of the application is warranted.

BCS residents should also be asking themselves why their local politicians are not vocally fighting for the royalties, investment, and jobs that Don Diego will bring.  Aren’t they supposed to be looking out for the interests of their constituents?  Where is Carlos Mendoza Davis?  Where is Francisco Pelayo Covarrubias?  Where are the Senators and Congressional representatives for BCS?  Why are they not fighting for the people of BCS and Mexico?

This is not a time for weak political leadership in Mexico.  The country needs leaders who will step up to the plate and do their job to make Mexico strong and self-sufficient again.  They need leaders who appreciate facts, who are not bullied by extremists, and who appreciate opportunity.  Mexico needs someone to take charge, or it needs change.  The people deserve better.

 

Time for New Leadership at Semarnat

alaman
Semarnat Secretary Rafael Pacchiano: Enemy of the Mexican People

 

With Mexico under serious threat from both external and internal sources, the country is desperately in need of strong leadership.  Yet Mexico is not getting this from the head of Semarnat, Rafael Pacchiano, who denied the Don Diego phosphate project last April, leaving Mexico exposed to rising food and fertilizer prices, withholding proper nutrition from millions of Mexicans who live in food poverty, and denying the nation the opportunity to build wealth, trade, and food self-sufficiency.

Each day that passes, Pacchiano’s poor choice is causing increased misery for Mexicans.  Don Diego would provide an inexpensive source of rock phosphate to a country that has the potential to benefit from a thriving, domestic fertilizer industry.  Pacchiano’s stance leaves the country dependent on the US for the bulk of its food imports.  And the situation is bound to worsen, with the threat of tariffs, as well as the low-valued peso, imports will only become more expensive.  At the same time, Mexico depends on illegally sourced phosphate from a dangerous and unstable regime overseas, leaving the country vulnerable to price spikes and supply shocks for this crucial, life-giving commodity, such as the painful one that Mexico witnessed in 2007 & 2008.  Food sovereignty has become a matter of paramount importance to Mexico.

Yet Rafael Pacchiano stands in the way of food sovereignty in Mexico.  As the result of his obstructionist position with respect to Don Diego, Mexico doesn’t fertilize half of its arable land.  Even compared to Latin American peers, Mexico ranks almost at the bottom in terms of fertilizer use per arable acre.  Domestically produced rock phosphate is currently too expensive to create fertilizer economic enough to be widely used in Mexico.  Today it is mainly mined in an expensive and dangerous underground operation that barely meets half of the country’s needs.  The operation’s high costs explain why the firm that ran the operation had to be saved from bankruptcy by Pemex last year.  Don Diego offers much larger volumes of high-grade, low-cost rock, that would make fertilizer more affordable for farmers and would make nutrition less expensive for the people of Mexico.  Don Diego would save lives and reduce misery for millions.

Politicians realize the importance of inexpensive and abundant domestically-sourced food in Mexico.  The top contender for President in the next election, Andres Manuel Lopez Obrador (Amlo), is running on a platform that emphasizes energy and food sovereignty for the country.  Amlo has tapped into a powerful nationalism that is sweeping Mexico in response to American threats, and that wants to make Mexico strong and self-sufficient.  Amlo realizes that Mexicans need a return to domestic production of food – he understands that the country is needlessly exposed to rising commodity prices because of the peso, and he also knows that Mexico has the capacity to feed itself, if input costs were reduced to make farmers competitive.  Pacchiano appears oblivious to the rising tide of nationalism in the country, the need for growing and vibrant internal industry, the need for self-sufficiency, and the desperate situation facing the 50 percent of the country who live their lives in poverty.

Pacchiano’s poor policy decision is not just hurting ordinary Mexican citizens.  It is certainly hurting his own PRI party as well.  He has left PRI vulnerable to claims by the opposition that the party doesn’t care about the Mexican people.  People are wondering why he opposes a project that produces a net benefit for the environment while providing people with less expensive nutrition.  The people can rightly look at Pacchiano’s action and claim that his decision defies common sense, just as it goes against the mission of Semarnat which is to help insure sustainable development.  Pacchiano’s obstructionism keeps Mexico vulnerable to outside attack from Trump and from the weak peso, denying Mexicans the inexpensive nutrition, the jobs, and the potential wealth creation that can result from a robust fertilizer industry.

Why is Pacchiano reluctant to help the Mexican people and approve this low-cost phosphate project?  In his rejection, he stated that it was for the sake of sea turtles.  Yet, scientific evidence has demonstrated that the sea turtles don’t inhabit the sea floor anywhere near the project’s footprint, because of the relatively cool temperatures found there.  Neither would turtle food sources be impacted as there is very little flora or fauna in the vicinity of the project’s footprint due to the inhospitable conditions caused by the toxicity of high phosphate content in the sands.

But if not because of sea turtles, why would Pacchiano deny the Mexican people such an important resource?  Is it because he is afraid of standing up to a couple of extremist environmental groups who have made absurdly inaccurate claims about the project (and who would surely struggle to defend themselves if brought before a court of law)?  It might be that Pacchiano is too afraid to stand up for the people and do the job he was charged with doing.  There are only a couple of underwater phosphate operations approved today, and he may not want the attention that would come from approving Don Diego despite the fact that doing so would help the environment and the people of Mexico.  He may not take into consideration the fact that sand and aggregates are being dredged all around the world every single day in operations that are identical to those proposed in the Don Diego application.  It is a shame for Mexico that such a narrow-minded and parochial viewpoint would limit the country’s access to a life-giving resource.

Approving Don Diego would send a signal of strength from Mexico at a time when the country is in dire need of one.  Don Diego’s world-class low costs mean that this project could prove the linchpin for a return of the Mexican fertilizer industry more broadly.  It may mean that the finished fertilizer plant in Lazoro Cardenas can operate profitably and expand.  It could make Mexico a world leader in fertilizer production, creating thousands of jobs, billions in trade goods, and millions in royalties for local governments.  It can help Mexico become self-sufficient and create trade demand from non-US sources, such as Asia.  It can help to make Mexico the leader in an industry that would bring the nation wealth, pride, and opportunity.

But Pacchiano may not be the man for the job.  He does not appear to possess the personal fortitude and moral character to do the right thing for Mexico.  If he cannot make things right for the country, Pena Nieto should consider replacing him in favor of a strong leader.

We close with a quote from a previous post made on this site:

If the project is not approved, Secretary Pacchiano will owe the people of Mexico an explanation.  He must give a full account to 36 percent of the country’s children who are starving, and explain why he is denying them access to more affordable nutrition.  He will need an answer for why he is not willing to approve projects that produce a net benefit to the environment.  He will need to provide a plan for what Mexico will do the next time fertilizer prices rise 400% and Mexico erupts in riots.  He will need to explain why Mexico should continue to shoulder the considerable risk of importing phosphate illegally from unstable areas of the world.  He will need to tell the people of BCS (the second poorest state in Mexico) why they must forego tens of millions in royalties each year, why jobs and growth are being sacrificed along with the environment, and why Mexico should not claim any advantage it may be able to gain in international trade.  Secretary Pacchiano will have to answer the simple question posed by the people of Mexico:  “Why are you willing to sacrifice our health and welfare, and the strategic interests of our nation?  Exactly whose interests do you serve?”

Sustainability of Don Diego Made Clear by Florida Phosphate Lawsuit

cop13

 

Semarnat hosted the COP 13 Convention on Biological Diversity in Cancun, Mexico last month.  Two of the key themes from the conference included the need to make sustainable use of resources, and the need to consider the environment as a single global community.  This blog post highlights Don Diego’s capacity to help Mexico honor its commitments with respect to each of these themes.

Phosphate Fight in Florida

 

A recent lawsuit brought in Florida that seeks to stop the permitting of a number of phosphate mines reminds us that if we look at environmental issues from a global perspective, we will appreciate Don Diego’s capacity to spare sensitive habitats.  The four plaintiffs in this suit maintain that mining will ruin the habitats for a number of animals which are endangered, destroy the landscape, and leave toxic waste behind.

From an article discussing the lawsuit:

The notice claims a series of violations to the Endangered Species Act in both agencies’ environmental reviews of mining impacts over the past three years within the Central Florida Phosphate District – an area with tens of thousands of acres of active and proposed mines spanning 1.2 million acres and six counties from Sarasota County to Polk County.

It also claims the agencies erred in approving a permit for the South Pasture Extension Mine, an expansion of an existing Mosaic Fertilizer mine in Hardee County.

“We’re taking a stand against the continued reckless expansion of phosphate mining,” said Justin Bloom, executive director of Suncoast Waterkeeper. “The industry has gamed the system time and again to make incredible profits by raping the land, mishandling hazardous waste and leaving behind a toxic moonscape and polluted aquifer.”   link

 

This follows closely behind a lawsuit filed against Mosaic regarding a sinkhole that drained 215 million gallons of toxic material from mine waste and sent it into the aquifer last August.  The phosphate industry in Florida has a track record of environmental issues, including other sinkhole problems, and residents in the state were already on edge before the sinkhole incident threated water supplies for much of the state.

sinkhole

The difficulties that the industry and the environment face in Florida due to the impacts of phosphate mining help to put into perspective the Don Diego mine’s relative advantages vs. terrestrial mining operations.  Don Diego doesn’t have the capacity to threaten human health and safety the way that the Florida mines do, because the project operates far from human habitats and because it is low impact.  Don Diego won’t destroy sensitive wetland environments and leave a topographical disaster behind because it doesn’t require the removal of vast quantities of overburden.  Don Diego won’t displace any animals, endangered or not.  It won’t create any hazardous waste – it involves a simple, mechanical process of vacuuming rock phosphate and redepositing non-phosphate sand and shell particles.  Don Diego won’t destroy freshwater resources because it doesn’t use any in the extraction process.

Keeping the COP13 objective in mind about a single global community, it is clear that for the sake of Florida’s environment, the global environment, and for the safety of the people in Florida, Don Diego should start production as quickly as is possible as phosphate from Don Diego could supplant that from new mines in Florida.  To delay Don Diego is irresponsible for its environmental and human consequences.  Of course, just as important is Don Diego’s potential to save and improve the lives of millions in Mexico who struggle with malnutrition each day.

It is also important to consider that Florida’s phosphate industry is now facing a number of important challenges which may impact US production over the long-term.  Even prior to the recent sinkhole disaster and the environmental lawsuit, residents of Florida had begun to fight the expansion of phosphate mining in the state.  A yearlong moratorium was put in place in one county and another county is considering a similar measure.  With the additional pressure and publicity from the sinkhole’s aquifer contamination and the environmental lawsuit, more resistance to phosphate mining in Florida is building.  Tensions are inflamed to the point that one County Commission meeting erupted into an altercation.  It is likely that at the very minimum, new phosphate production in Florida will be delayed.

flphos2

US phosphate production has declined slightly in the last two years, and this trend could continue based on recent events in Florida (which is where the US sources most of its phosphate).  With the future of US phosphate production in question, the country may need to increase its use of imports to meet demand.  The US is one of the top consumers of phosphate globally.  Mexico would have an advantaged position to meet America’s need given proximity and trade relations between the two countries.  The US currently buys most of its imported phosphate from Morocco which is less than ideal for political reasons, and it is entirely possible that the Trump administration will wish to distance relations with Morocco.

Sustainable Mining and Don Diego

The final point has to do with COP13’s focus on sustainability.  The Don Diego project shines when it comes to sustainable mining.  Indeed, it ticks virtually all the boxes.

According to the Brundtland Report one of the two key concepts for sustainable development is considering the needs of the world’s poor.  In fact, sustainability demands that overriding priority should be given to addressing these needs.  Of course, Don Diego is ideally situated to help the stunning 53 percent of Mexican citizens who live in poverty — many of whom do not receive adequate nutrition.  Don Diego’s promise of inexpensive fertilizer will help food become more affordable and accessible to those who suffer from poor nutrition in Mexico.  As far as sustainability goes, the project should be pursued for this reason alone.

Yet there are other important features of Don Diego that qualify the project as a first-rate sustainable development.  Sustainability in mining means reducing the use of scarce inputs.  Most notably these include fresh water, land, and energy.  Don Diego is superior to all terrestrial mines on all three of these important measures.  It won’t use fresh water.  It will not use any land above the water line, nor will it remove overburden.  Because the deposit is so thick, and is of high concentration, it will require a much smaller footprint per unit of production than terrestrial alternatives.  Last, because of the high concentration of the deposit, the loose nature of the matrix, and the buoyancy working under water, the energy intensity of the project is comparatively low versus terrestrial projects.

Last, Don Diego’s sponsors have agreed to help fund sustainable local initiatives in an effort to help the community of BCS.  They will provide backing for a sea turtle hatchery in the area which could lead to significant increases in turtle populations.  They will also help to fund new equipment for local fishermen that uses technology to decrease turtle bycatch problems.  Turtle bycatch has been a contentious issue in BCS, and was the source of a conflict with the US NOAA over the last year.  At one point, Mexico faced the possibility of trade sanctions as a result of the issue, and was forced to impose a fishing moratorium in the area over the summer.

Moving forward with Don Diego will make Semarnat and Mexico global leaders in promoting the use of technology to create sustainable development.  Sustainable dredging for aggregates, diamonds, and sand, happens every day, all around the globe, and tens of millions have been spent proving the environmental sustainability of marine dredging.  But Mexico has the opportunity to sponsor the first marine phosphate dredging project in thirty years, and show the world that it can play an important role in promoting sustainable mining.

Trump Win Sends Semarnat Urgent Message on Don Diego Project

 

The election of Donald Trump as the next President of the United States, and the potential economic and social fallout from this event in Mexico, have sharpened focus on the strategic importance of the Don Diego phosphate project.  The election results and the populism behind them also serve to underline the serious mistake that Semarnat Secretary, Rafael Pacchiano Alaman, made by rejecting this project last April.

trump-pena-nieto
Trump and Pena Nieto Meet

In previous articles, we have chronicled Semarnat’s ill-advised rejection of Don Diego.  The project promises to provide relief to millions of the poorest Mexicans who live in food poverty, while creating a net benefit to the environment.  With Trump’s win, these arguments take on a higher level of importance and urgency.  Mexico is under a new threat of destabilizing trade and general economic contraction.  In addition, as seen in the US election and in other recent contests, the nation will face a growing level of populism and a rejection of liberal political elite ideals.

In this climate of uncertainty, Mexico needs Don Diego to move forward more than ever.  By ignoring the obvious and substantial economic, trade, and humanistic benefits of the project, Secretary Alaman endangers the prospects of not only his political party, but more importantly, the best interests of his country.  In light of the Secretary’s current stance on Don Diego, the Mexican people must ask themselves, “exactly whose interests does the Secretary serve if not those of the Mexican people?”

A common thread across the US election, the Brexit vote, and political movements currently sweeping much of Europe, is the repudiation of the political establishment and the “liberal cultural elite” by the working class.  This growing populist fervor is driven by a proletariat that has become disenchanted with governments that continually pursue policies contrary to the group’s interests.  Mexico isn’t immune from these forces, and the rejection of Don Diego is certainly emblematic of how the population is suffering at the hands of elitist liberal policies.  That rejection is undoubtedly helping to fuel a rising tide of populism in Mexico.

The majority of people in Mexico struggle each day to put food on their tables, and are unable to make sense of the rejection of a project that will appreciably improve their lives.  The explanation offered by the political elite and narrowly focused liberal environmentalists, that the country must deny itself inexpensive nutrition to save one or two sea turtles per year, is entirely unsatisfactory.  This is especially true because the Don Diego project would increase turtle populations indirectly.  Regardless, it is policies such as the nonsensical rejection of Don Diego, that are causing popular uprisings across the globe.  This unmistakable trend should not be lost on Mexican politicians.

The election of Donald Trump is likely to create economic challenges for Mexico.  We do not know how great those challenges will be at this point, but under a worst-case scenario the country could find itself in a deep recession or even a depression.  Were Trump to make good on his vows to deport illegal Mexican aliens from the US, to build a wall and force Mexico to pay for it, to tear up NAFTA and impose a stiff 35 percent tax on goods imported from Mexico, the economic costs would be almost unimaginably high.  President Trump is unlikely to follow through on each of his promises, but if he does half of what he has pledged, the Mexican economy will be sent reeling.

Mexico’s leaders understand the gravity of the situation and have signaled their intent to protect the country’s interests by seeking new avenues for growth, by balancing the budget, and by expanding trade with countries outside the United States (the US currently accounts for approximately 80 percent of Mexico’s exports).

The Don Diego project is poised to help Mexico address the existential risk posed by the US President-elect’s threatened policy changes.  The potential human toll from Trump’s policies are substantial and real.  The population is especially vulnerable as many in Mexico already suffer from poverty and malnutrition.  Don Diego can ease this suffering by delivering low cost fertilizer to farmers.  This is an especially important advantage at this juncture because, as an importer of phosphate, Mexico is now paying inflated prices for rock due to the steep declines in the value of the peso.  Just as important, Mexico is importing rock phosphate from some unstable parts of the world in contravention to international law.  Becoming self-sufficient in phosphate rock production will immunize Mexico from the inevitable supply shocks and price spikes that have occurred in the past and are likely to occur again, due to the geopolitical instability surrounding the greatest concentration of phosphate reserves.  A secure, long-term, domestic source of rock, under a low-cost contract, will help protect Mexico’s people from an unstable and increasingly expensive rock market.

peso-dollar-chart
Mexican peso in dollar terms

Mexico is in urgent need of leverage in its trade negotiations with the US, and Don Diego can help restore a measure of balance.  Mexico is aware that the US is seeing a gradual decline in phosphate production, as quality deposits are increasingly difficult to mine in environmentally sensitive Florida wetlands.  This problem has only been compounded by Mosaic’s recent difficulties in Florida, where processing operations are reported to have sent radioactive material into water supplies (note that Don Diego is not a processing operation, and doesn’t create or use any toxic chemicals).  Operations in Florida will become more expensive as producers navigate lawsuits and wetland destruction, while new mines will become increasingly difficult to open with some activists now proposing an industry ban.

Don Diego is positioned to become the dominant source of phosphate in the western hemisphere in the next 5-10 years.  Because phosphate is such a crucially important commodity for human well-being, and because of its relatively scarcity in the west, developing this highly strategic asset will boost Mexico’s trade leverage with the US and make the US more reliant on Mexico for 50 years or more.

Don Diego delivers exactly what Mexican politicians and financial experts have recommended to address new uncertainties, and the project promises to help ameliorate the blow of a strained relationship with the US.  Mexico needs to diversify its international trade by creating more goods that embed a comparative advantage, and that allow the country to establish greater trade lanes with non-US trading partners.

Opening Don Diego represents one large step toward this end.  Production from Don Diego will transform Mexico from a net importer of rock phosphate to a net exporter.  Importantly, the business is positioned as a natural trading partner with Asian countries who are seeking new fertilizer sources to support high growth rates and declining Chinese exports – potentially offsetting some of Mexico’s trade imbalances with these partners.  Don Diego’s phosphate can serve as a cornerstone, along with the country’s abundant and inexpensive natural gas, to establish a high value-add, agro-chemical industry.  Mexico has comparative advantages in these natural resources, and those advantages need to be exploited.  The industry could provide thousands of jobs (direct and indirect) and billions in trade goods – strengthening the country’s balance sheet as well as its trade accounts.

The Trump win sends a resounding message to Semarnat’s Secretary, Rafael Pacchiano Alaman.  Mexico needs the Don Diego project, and soon.  Mexicans need affordable and abundant nutrition, they need jobs, they need greater and more diversified trade relationships, and they need wealth.  Mexicans, like Americans, are tired of nonsensical policies that ignore the masses and that cater to the elitist wishes of narrow special interest groups.  These elitist groups impose their moral agenda without regard to the needs and welfare of the people (and often without regard for facts) and encourage perverse policy decisions.

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Tortilla Riots – “Without corn there is no country”

The Secretary of Semarnat has a dual mandate whereby he must balance the protection of the environment with the need for sustainable development.  Don Diego allows the Secretary to honor both sides of this mandate. It is thus a project that Semarnat should display proudly – a shining example of how the environmental agency is successfully promoting human and environmental interests at the same time.  Reversing his prior decision on Don Diego, Secretary Alaman will transform a lose-lose decision into a win-win.

If the project is not approved, Secretary Alaman will owe the people of Mexico an explanation.  He must give a full account to 36 percent of the country’s children who are starving, and explain why he is denying them access to more affordable nutrition.  He will need an answer for why he is not willing to approve projects that produce a net benefit to the environment.  He will need to provide a plan for what Mexico will do the next time fertilizer prices rise 400% and Mexico erupts in riots.  He will need to explain why Mexico should continue to shoulder the considerable risk of importing phosphate illegally from unstable areas of the world.  He will need to tell the people of BCS (the second poorest state in Mexico) why they must forego tens of millions in royalties each year, why jobs and growth are being sacrificed along with the environment, and why Mexico should not claim any advantage it may be able to gain in international trade.  Secretary Alaman will have to answer the simple question posed by the people of Mexico:  “Why are you willing to sacrifice our health and welfare, and the strategic interests of our nation?  Exactly whose interests do you serve?”

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Semarnat Secretary Rafael Pacchiano Alaman

 

 

 

 

 

 

Namibia Approves Seabed Phosphate Mine

The Namibian Environment Ministry has just announced the approval of an application to extract phosphate from the seafloor off the coast of the country.  This is welcome news to supporters of the Don Diego phosphate project as it highlights this project’s approvability.  The Namibian approval is also welcome news for progressive environmentalists around the world who recognize that seabed mining can create net benefits to the environment as it displaces more environmentally costly terrestrial mines.

While the media will promote the fact that this is the first underwater phosphate project approved, and highlight it as an untested and controversial practice, this is not the case.  Underwater mining for phosphate dates back to the 1800’s when it was practiced in lakes and rivers in the United States, and seabed phosphate extraction has been practiced as recently as the 1980’s when the Mexican government was involved in a project along the west coast of Baja California Sur.  Just as important, seabed mining for other bulk materials has been practiced safely for more than fifty years using techniques identical to phosphate dredging.  Aggregates and sand are dredged every day of the year all around the world and the environmental consequences have been carefully studied.  The seabed mining of diamonds has been practiced in Africa for almost three decades.

Because Don Diego will have less impact on the environment and greater strategic value than the Namibian mine, the Namibian approval will heighten pressure on the Mexican environmental authority, SEMARNAT, to reverse course and approve Don Diego.

There are a number of important specifics to consider when comparing the projects:

  • The Namibian mine is in an environmentally sensitive fish spawning ground while the Don Diego footprint is in an area that is not environmentally sensitive, and is known for its lack of biodiversity.
  • Africa hosts most of the world’s phosphate resources, thus the Namibian mine is not particularly strategic. Don Diego is situated in a geographic location that makes it highly strategic due to the paucity of accessible and economic phosphate resources.  Florida holds the largest resources in the western hemisphere, but those resources are underneath environmentally sensitive wetlands, making extraction difficult for political reasons, and making operations relatively expensive.
  • The Namibian seabed phosphate resource is under a layer of overburden while Don Diego is generally not. Thus Don Diego’s environmental impact will be lower (overburden removal is one of the most environmentally costly aspects of mining generally).
  • The Namibian resource is a thin layer of sediment, deposited over a wide area. Don Diego’s deposit is exceptionally thick, and its lower bound has not yet been defined.  This means that the amount of phosphate extracted per square km will be greater at Don Diego, and that the mining footprint and overall environmental impact at Don Diego will be relatively small.

 

As noted in previous posts, the Mexican government is in an uncomfortable position with respect to its earlier decision to refuse the Don Diego project.  The project will save Mexican lives by making food more affordable across the country.  At the same time, it creates net benefits to the environment by displacing phosphate production in environmentally sensitive terrestrial locations.

The rejection cited only one issue, that being impact on sea turtles, but since the rejection, the US has given Mexico the green light on its new turtle bycatch regime.  Don Diego will never have much impact on sea turtle populations because of the lack of overlap and the protective devices installed on its equipment, nonetheless, removing the threat of US economic sanctions around sea turtles makes a Don Diego approval more politically palatable for the government of Mexico.

For the sake of Mexico’s people and for the environment, we hope that the Namibian approval serves as a catalyst for Semarnat to reverse itself on Don Diego.

US Officially Certifies Mexico Sea Turtle Bycatch Policies

Last week the the US National Ocean and Atmospheric Association (NOAA) announced that it had positively certified Mexico’s new Sea Turtle bycatch program.  This certification will allow fishermen to resume fishing (with new equipment) in the Bay of Ulloa, under new rules, and it should help clear a path for approval of the Don Diego phosphate project.

The regulations implement fishing gear restrictions, limit the number of sea turtle deaths due to fishing, and establish a fisheries refuge. Mexico says these measures will remain in place to ensure loggerhead conservation and long-term fishery sustainability and resiliency.  Link

 

This news does not mean that Don Diego is approved, however, as noted in previous articles, we believe that it removes the political pressure from Semarnat that may have prevented the original approval.

We believe that Semarnat would be derelict in its duty of protecting the environment while promoting sustainable development were it not to approve the Don Diego phosphate project.  Mexican citizens are suffering for the lack of adequate, low-cost, domestic fertilizer sources.  Every day that Semarnat withholds approval sets the country further back in its Crusade Against Hunger.  Every day that passes is another day that Mexico relies on expensive and illegal phosphate imports from Western Sahara.  Every day that passes means more global destruction of habitats that would otherwise be spared in preference for Don Diego’s low-impact extraction process.

Find more information on why Semarnat must approve Don Diego in some of these articles:

https://environmentalistsfordondiego.wordpress.com/featured-one/

https://environmentalistsfordondiego.wordpress.com/semarnat-refusal-a-loss-for-mexico/

https://environmentalistsfordondiego.wordpress.com/2016/07/20/semarnat-starves-thousands-of-mexicans-to-save-one-sea-turtle/

https://environmentalistsfordondiego.wordpress.com/2016/07/07/how-aidas-lies-risk-mexican-lives/

Earthquakes, a Hurricane, and a Military Standoff Highlight Don Diego’s Value to Mexico

A number of recent macro events have pointed to the tenuous nature of phosphate supplies to Mexico, and the necessity of bringing more secure and lower cost phosphate supplies online from Don Diego.

In late August, the area surrounding La Paz, Mexico shook as a result of 70 tremors.  These tremors all registered below 3.2 on the Richter Scale, but nonetheless served as a reminder that the area sits on an unstable fault line that has produced large earthquakes in the past.

According to one person who is familiar with the underground Fertinal/Pemex phosphate mine in San Juan de la Costa, the mine is not very safe and is susceptible to collapse.  According to him, “cracks in the mine’s underground ceilings and poor orientation of the mine tunneling running parallel to the fault lines (north – south) … there is a real danger of collapse if a high caliber earth quake were to take place.”

Another real danger with this particular mine is damage from hurricane.  The mine closed from 2001 to 2006 after Hurricane Juliette dumped more than 10 inches of rain in the area, flooding the mine and destroying some port facilities.

Earlier this week, the Fertinal mine was threatened by a hurricane with the potential to be as damaging as Juliette.  Hurricane Newton leveled a direct hit on BCS, moving up the west coast of the peninsula before turning east on Tuesday.  While forecasters originally thought the storm could produce 10-12 inch rains with up to 18 inches locally, the final totals were less dramatic.  Most areas only received 2-3 inches.  This was a good outcome for Mexico, and for Fertinal, because Juliette-like totals might have left the country without any real phosphate production, just as one of Mexico’s largest phosphate suppliers is entering a potential military conflict.

As we’ve noted in the past, due to Mexico’s current paucity of economic phosphate supplies, the country is forced to import expensive rock phosphate from Western Sahara, violating international law in the process.  Western Sahara has been under an illegal occupation by Morocco for years, but in the last few weeks tensions have flared in the area.  Morocco is accused of violating a buffer zone, which has led to armed conflict between it and Western Sahara’s Polisario independence movement. The UN is attempting to mediate the conflict, but Morocco expelled some UN forces recently stoking fears that an escalation in fighting is probable.

The US is concerned that the situation is harming counterterrorism efforts in the area.  North Africa is a known breeding ground for radical islamists.  One fear has been that a terrorist group wishing to disrupt supplies of phosphate to the developed world could easily do so by destroying any part of the 61-mile conveyor belt that transports rock phosphate from Western Sahara to port.

Regardless of whether the Western Sahara conflict deteriorates and threatens phosphate supplies, there is an ever-present threat that this outcome could happen, which could create another food crisis in Mexico.  The same is true with respect to earthquakes and hurricanes.  Mexico has been lucky in avoiding these threats for the time being, but a policy of “hoping” that limited high-priced domestic supplies remain safe is not in the best interests of the country, and the millions of citizens who suffer from food poverty.

US to Give Mexico Green Light on Sea Turtles

In an important development for Mexico and for the Don Diego project, the US National Ocean and Atmospheric Association (NOAA) has announced through a White House press briefing that it will issue a positive certification with regard to Mexico’s sea turtle bycatch regime in the coming weeks.

Today, President Pena Nieto announced Mexico’s commitment to continue strengthening its implementation of an improved sea turtle bycatch regime to protect endangered loggerhead sea turtles in the Gulf of Ulloa from harm by fishing interactions to ensure their long term protection.  President Obama welcomed this step.  The National Oceanic and Atmospheric Administration intends to positively certify Mexico’s improved sea turtle bycatch regime in the coming weeks.  Link

 

Just one year ago, NOAA had issued a negative certification to Mexico and the country’s bycatch program, “for not adopting a regulatory program comparable to that of the United States to address bycatch of North Pacific loggerhead sea turtles in the Gulf of Ulloa, Baja California Sur under the High Seas Driftnet Fishing Moratorium Protection Act.”

The negative certification was a threat to Mexico’s economic interests.  NOAA’s website notes that a negative certification carries certain consequences:

A negative certification may result in denial of U.S. port access for fishing vessels of that nation, and potential import restrictions on fish or fish products.  Link

Mexico’s problems with NOAA were directly tied to turtle bycatch issue associated with gillnets used by local fishermen in the Gulf of Ulloa.

In NOAA’s 2013 Biennial Report to Congress on improving international fisheries, Mexico was identified for not having effective management measures for mitigating bycatch of North Pacific loggerhead sea turtles in the gillnet fishery in the Gulf of Ulloa. link

The Mexican government and NOAA have been working together over the last year to create a fishing regime in Baja California Sur that meets US standards and reduces turtle bycatch.  Fishing was halted over the summer in the Gulf of Ulloa while the two sides worked toward a solution.  It appears that the problem is being addressed satisfactorily, and though we don’t know the specifics that have allowed the positive recertification, it may involve the use of green LED light-sticks.  This article from NOAA’s website, written in April, references a study that used the light-sticks to reduce turtle bycatch in gillnets by up to 50%.

It’s an expensive solution relative to the economics of the very small fishing industry in the Gulf.  The story notes that it would cost around $2,000 per boat for a three-year term.  To put that in perspective, Baja fishermen were compensated around $275 a month for not fishing, so $2,000 is almost eight months of business.  These are subsistence fishermen.  The cost of this technology is prohibitive and will have to be subsidized.

Regardless of the cost, the news is good for all stakeholders.  The fishermen will get back to work and providing for their families.  Turtle bycatch which had averaged at least a couple hundred per year, may be reduced by 50 percent or more.  It is also good news for the Don Diego project because that project has a much clearer path to approval.  This, in turn, is good news for the millions in Mexico suffering from food poverty who will benefit from the introduction of a domestic source of low cost fertilizer.

Recall that the Don Diego project’s MIA was denied by Semarnat in April for a single reason: potential sea turtle impact.  We thought that this was a questionable reason for rejecting the project.  In a previous post (Semarnat Starves Thousands of Mexicans to Save One Sea Turtle) we discussed the fact that the preponderance of scientific and empirical data supports the idea that Don Diego’s direct impact on sea turtles and their food sources will be de minimis (limited to one or two sea turtle entrainments per year).  We also noted that Don Diego’s indirect benefits to sea turtle populations in the Gulf of Ulloa (a new sea turtle hatchery, funding for improved fishing gillnets) will be far greater than the costs imposed by the project.

We believe Don Diego was not rejected because of its direct impact on sea turtles, but instead because of political issues stemming from NOAA’s negative certification around the sea turtle bycatch problem.  Politically it would have been difficult for Semarnat to approve an extraction project in the Gulf of Ulloa while Mexico was working to gain compliance with NOAA’s turtle bycatch regulations in that area.

The removal of the negative certification should mean that a big hurdle to the approval of Don Diego has been cleared.  Semarnat understands that dredging projects are undertaken every day in Mexico and all over the world with very little impact on sea turtles.  This explains why groups dedicated to sea turtle protection don’t list dredging as a top threat to these creatures, despite dredging operations’ prevalence in sea turtle habitats. Furthermore, it is possible that the Don Diego funding could help to pay for the new LED light-stick program if this is the agreed solution.

Don Diego promises to help bring low cost fertilizer to a country that is in desperate need of it, helping to address Mexico’s devastating malnutrition problem.  As noted previously, those who oppose Don Diego, threaten to bring additional pain and even death to innocent Mexicans who suffer from food poverty.  They also threaten to harm the environment by encouraging production of phosphate from more environmentally damaging terrestrial extraction operations elsewhere.  They encourage Mexico to continue importing phosphate illegally from Western Sahara.  Finally, they inhibit the establishment of an important new industry for Mexico – one that could create thousands of jobs, reduce the trade deficit, and create wealth and more inexpensive food for the population.

A positive certification from NOAA is likely to help clear a political path for Semarnat to make the right decision for Mexico, and grant an approval for the Don Diego phosphate project.

Semarnat Starves Thousands of Mexicans to Save One Sea Turtle

Summary:

In April, Semarnat rejected the Don Diego environmental application to extract phosphate off the coast of Baja California Sur due to the project’s impact on sea turtles.  In this article we quantify the impact of Semarnat’s decision, both for citizens who are forced to forego the benefit of lower food prices and more available food that would have accompanied Don Diego phosphate production, and for the sea turtle population in Baja California Sur.

Using existing studies and empirical data, we find that the rejection of Don Diego is costing at least 11 lives per year while causing 22,000 to become malnourished.  Suffering is likely to increase for millions more.  The project was rejected for its impact on sea turtles, but we find that not operating Don Diego saves approximately one sea turtle per year.  Semarnat’s decision is at odds with other Mexican programs designed to alleviate widespread hunger, moderate income inequality, encourage new industries, and reduce food inflation.

 

Food Inflation and Income Inequality in Mexico

Bank of Mexico Governor Agustin Carstens surprised global markets last month, raising interest rates by a half point.  The move was unexpected because core inflation rates have remained below the central bank’s target, leading some to speculate that Carstens’ move was designed principally to bolster the peso which has dropped over 25 percent over the last year-and-a-half (vs. the US dollar).  Carstens defended the move, saying Mexcio was seeing evidence of increased inflation in core areas such as food, which is averaging close to four percent, while he hinted that inflation could get worse due to the weak currency.

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Inflation, especially food inflation, is an issue that is politically charged in Mexico.  An astonishing 53% of the 122 million people in Mexico live in poverty, and have difficulty meeting basic nutritional needs.  36% of children suffer from malnutrition, and 8,500 people die from starvation each year in the country.  Food inflation makes the situation worse, particularly when wage inflation does not keep up with food prices, leaving the poorest with less and less purchasing power and furthering the divide between rich and poor in the nation.  In Mexico, this divide has become highly pronounced, creating a dangerous level of inequality and the potential for political instability:

…Salaries for Mexico’s poorest continue to decline. According to a study by the National Autonomous University of Mexico (UNAM), over the last three years, real salaries in Mexico – already among the lowest in Latin America and by far the lowest of OECD economies – lost 9.65% of their purchasing power. This trend has been fueled as much by rising food prices as by dwindling salaries. Between 2005 and 2014, the price of food in Mexico increased on average by 23.3%, the highest level of any OECD nation. The OECD average was just 8%.  Link

DD3Mexico’s inequality and food poverty issues have moved to the forefront due to the rapid decline of the peso over the last two years.  The nation was living on the edge prior to the peso’s decline, but the currency’s loss of value makes imports such as fertilizers more expensive, and could create a volatile situation for the government.  The circumstance is all the more concerning because the government has fewer levers to pull to avert a full-blown food crisis because Pemex is not producing as much tax revenue as it did a few years ago.  The government saw food riots a few years ago when fertilizer and food prices spiked, causing significant political fallout, and wants to do anything it can to avoid the same destabilizing factors in the future.

Measured on the basis of income levels alone, the percentage of people living in absolute poverty in Mexico — now a staggering 53.2% — is one percentage point higher today than it was in 1992, giving Mexico the rather dubious honor of being the only Latin American country to have registered a regressive tendency on poverty reduction, according to the OECD.  Link

Phosphate plays a sizable role in food poverty and food inflation issues in Mexico as it is a key component of finished fertilizer and its price has been increasing.  As the chart below demonstrates, imported phosphate prices are up 25 percent in Mexico over the last two years.  Unlike many other commodities which have fallen in price against a strong US dollar, phosphate has maintained a relatively steady price level causing peso-based phosphate prices to increase considerably.  Mexico is an importer of phosphate as well as a domestic producer.  The country may be paying an average of $130/ton for the commodity after taking into account freight charges.

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The Consequences of Semarnat’s Rejection

Amidst this worsening food poverty crisis and escalating food inflation, Semarnat has moved to withhold the introduction of a new low cost supply of phosphate fertilizer from Mexico that could make food more affordable and available.  The agency did so because it was worried that the phosphate extraction operation could harm sea turtles in the area.  This rationale, however, looks questionable for two reasons.

First, the project’s impact on sea turtles will be de minimis.  Don Diego will operate in the relatively cool, deep waters 25-30 kilometers off the coast of Baja California Sur.  Turtles are generally found in warm, shallow waters near the coast.  The Don Diego benthic footprint is known for its lack of vegetation and organic matter (due to high phosphate concentrations), meaning that turtles would have no ability to feed at the bottom where the project’s dredge operates.  Last, dredges now operate with gear that protects turtles from being entrained.  Since this gear was introduced, a study by the US Army Corp. of Engineers showed that turtle entrainments had declined from 71 per project per year, to less than 1 per project per year.  Dredging projects don’t even register among the top threats to sea turtles on environmentalist lists.

The reality is that Don Diego is likely to have a strong positive net benefit to turtle populations in Baja California Sur.  The project’s sponsors have agreed to fund a turtle hatchery and to equip fishermen with nets that reduce turtle bycatch.  These programs would overwhelm the impact of the Don Diego project, increasing turtle populations by the hundreds each year.

Second, the project can help save the lives of children and adults who are living in food poverty in Mexico by making food more available at lower cost — putting sea turtle impact into perspective.  Food inflation is directly correlated with malnutrition and death.  Many global studies have shown this relationship.

Focusing on any departure of health indicators from their respective trends, we find that rising food prices have a significant detrimental effect on nourishment and consequently lead to higher levels of both infant and child mortality in developing countries, and especially in least developed countries (LDCs).  Link

This study from the Asian Development Bank in 2013 showed that a 1 percent increase in food inflation can increase child mortality by 0.2 percent and can increase malnutrition prevalence by 0.4 percent.   .

A 1% increase in contemporaneous price inflation rate is associated with a 0.2% increase in infant and child mortality rate and a 0.4% increase in prevalence of undernourishment, all things being equal.

Based on these relationships, we can assume that when Mexico sees a one percent increase in inflation it will kill an incremental 20 people and 44,000 more people will suffer from malnourishment.  The mortality number assumes that the child mortality figure applies to the population broadly, the malnourishment figure assumes 11 million people in Mexico are malnourished today.

How much will Don Diego’s production impact food inflation?  Fertilizers are a major cost component for farmers, usually making up approximately 30 percent of production costs.  This study notes that if labor costs, which average approximately 40 percent of production costs in India, rise one percent, then food inflation rises 0.3 percent.   Thus it is not unreasonable to assume a 1% increase in the price of fertilizer in Mexico could impact food inflation by 0.25 percent.  If rock phosphate makes up 20% of the cost of finished fertilizer, then a one percent rise in the price of phosphate would translate into .05 percent rise in food inflation.

Don Diego’s production is likely to be sold at a 30 percent discount to current market prices (assuming a price of approximately $85/ton and $115/ton market price).  According to the relationship cited in the study above, this could have the effect of tempering food inflation by 1.5 percent.  For conservatisms sake, however, we will assume that Don Diego’s inexpensive phosphate were to reduce food inflation by just one-half of one percent.  If this were the case, it would save the lives of 11 people in one year and keep 22,000 people from becoming malnourished. So, in hope of saving one sea turtle per year, Semarnat is sacrificing at least 11 people, and starving 22,000 more.

Conclusion

Mexican President, Enrique Pena Nieto, has vowed to fight food poverty in Mexico with his National Crusade Against Hunger.  His central banker is doing his part in helping the cause, attempting to hold down food inflation.  Yet the President’s Environmental Secretary, Rafael Alaman, is working in the opposite direction, bringing pain, suffering, and death to the poorest and most vulnerable in the country by rejecting a project that can greatly help feed this population.

There is zero doubt that Alaman in sacrificing human lives and well-being for the benefit of sea turtles.  The magnitude of the numbers is subject to argument, but we think that compelling evidence supports the notion that dozens may die and tens of thousands may be brought to the brink of starvation thanks to Alaman’s rejection of Don Diego.  The Mexican people deserve to know why this has happened and what is being done to remedy the situation.  The more time that Mr. Alaman allows to pass without allowing the Don Diego project to bring relief, the more suffering Mexican citizens will have to endure.  Mr. Alaman’s agency is supposed to balance economic, humanitarian, and environmental interests, however, based on empirical evidence and robust logic, we find little evidence of balance from Semarnat.