SANTA URSULA, Mexico (AP) – People in the hamlet of Santa Ursula began to worry when the logging started. In a few short weeks, more than a mile of densely forested riverbank was stripped from the Arroyo Sal to make way for heavy dredging equipment.
Work was just beginning in late 2010 on an ambitious, three-year, $30 million project to build a 15-megawatt hydroelectric plant directly adjacent to the Cerro de Oro dam, with support from a US government agency in Washington.
Next came dynamite explosions as crews blasted through rock to create a tunnel designed to feed power-generating turbines. In Santa Ursula, some 1.5 miles away, the ground shook and cracks formed in homes, some residents say. Finally murky gray water began flowing from the taps, leading locals to fear the worst: contamination in the gurgling mountain spring that provides drinking water for nearly 2,000 people and feeds the arroyo.
“For us, the arroyo is life,” said Federico Cohetero, a farmer in Santa Ursula, a hamlet in Oaxaca state six hours southeast of Mexico City.
The project was financially supported by the Overseas Private Investment Corp, a US government agency with a low profile but global mission. OPIC provided an $8.5 million loan guarantee for the hydropower retrofit in Mexico, part of its $60 million commitment to an investment fund focused on Latin American power projects.
On the ground in Mexico, the blasts and water worries triggered protests that put the project on hold. By late 2011, the protests resulted in a rare instance of a community fighting off development in a country where projects are often pushed through over local objections.
The fight also opened a window into the impacts that residents sometimes encounter in developments backed by OPIC. Its projects, intended to spur economic progress, have prompted protests in Liberia, Mexico and Chile, an Associated Press review found. Even as it approves $3 billion a year in global financing, the US agency receives scant public attention or regulatory scrutiny. OPIC said its developments spur thousands of jobs and environmental upgrades, but the agency does not regularly disclose the status of its projects.
In Mexico, it took vocal community protests to bring the friction to light.
Gabino Vicente, a Santa Ursula town official who acts as a liaison with governments, showed AP journalists the area where the logging took place. It remains treeless, though tall grasses and shrubs point to a gradual recovery. Next to the arroyo, a gully-like channel carved out of the earth is strewn with boulders, an eyesore amid the lush green canopy.
“When they started cutting down the trees of the Arroyo Sal… That’s when we understood the magnitude of the damage they were beginning to do,” Vicente said.