Environmental Correctness Threatens Costa Rican Economy

Abel Pacheco, recently inaugurated as President of Costa Rica, kicked off his administration by declaring a new era of “peace with the environment.” But his first “peacemaking” decision looks more like a declaration of war against jobs and economic recovery in a nation that badly needs both. His ruling forbids drilling and mining projects that promised new possibilities for hundreds of unemployed Costa Ricans in depressed areas of the country.

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Pacheco’s decree was issued largely without the benefit of technical studies or supporting scientific analysis, but was instead based on politics and ideology. Keeping out “large multinational companies” seems to be the main aim of the groups opposing offshore drilling in Costa Rica, judging from their lack of regard for much more serious environmental problems, such as the heavily polluted Gulf of Nicoya, which has been called an “environmental disaster” by the media, or the spilling of fuel into rivers by RECOPE, the government oil refinement monopoly.


The Natural Resources Defense Council (NRDC) applauded President Pacheco’s decision, pointing out that Costa Rica is the most economically successful country in Central America. But a per-capita annual earning average of less than $3,000 can hardly by considered successful for a country that, unlike its neighbors, has been free from civil wars and major natural disasters. And new policies promoted by radical environmental groups could further hinder the development of an already stagnant economy.


Pacheco’s bow to environmental groups puts a stop to plans to drill along the shores of Limon, the poorest province in the country, where the project was expected to produce billions of barrels per year. Environmental groups argue that any spill of crude oil there would have caused irreparable damage to coral reefs and protected marine areas. They seem to have forgotten that just a few miles away, in the port of Moin, tankers carrying tons of fuel dock every day, also posing a potential threat to the environment. According to the U.S. National Academy of Science, offshore oil operations are responsible for only 5 percent of the oil spilled in the world’s oceans, while tankers and other forms of transportation account for 20 percent. Natural oil seeps, by contrast, constitute 15 percent of the oil released into the oceans, and as Costa Rican geologist Gregorio Escalante has pointed out, there are natural oil seeps all over Central America, including one in the province of Limon.


Opponents of drilling also claim that allowing oil exploration would spoil the natural scenery, driving away tourists and depriving the region of its primary source of income. But oil platforms would have been located 7 miles away from the coast and almost impossible to see from the shore.


In the end, Pacheco’s rejection of offshore drilling is one of many politically-motivated battles over control of government land going on around the globe. The United States witnessed its own version of this story during the debate over Alaska’s Arctic National Wildlife Refuge.


Perhaps the oil industry is not destined to play an important role in improving Costa Rica’s economy, since all previous attempts to develop the nation’s oil resources have similarly failed. Still, the new President’s ruling sets an ominous precedent for future resource industry initiatives and sends negative signals to individuals or companies thinking about investing their money in any future environmentally-sensitive business activities. These are perhaps the most damaging consequences of Pacheco’s decision.


In his inaugural address, Pacheco also proposed adding a section on environmental protection to the country’s Constitution, without specifying its scope. This is something that Costa Ricans should fear. An administration eager to be perceived as “environmentally correct” will likely follow the dead end path of placing increasing regulatory restrictions on development and private property, instead of pursuing a market-oriented path that will improve the economy and environment together. More restrictions and regulations will only lead to more poverty and economic stagnation – something average Costa Ricans neither need nor deserve.