AMLOs $7.4 Billion Tourist Train Threatens Rainforests

https://www.bloomberg.com/news/articles/2019-07-09/amlo-s-7-4-billion-tourist-train-threatens-rainforests

The Calakmul Biosphere Reserve is at the base of the Yucatán Peninsula. 

Photographer: Julien Cruciani/Alamy

One day last December, Mexican President Andrés Manuel López Obrador donned a beaded necklace and bowed his head reverently before a fire pit, to ask Mother Earth for permission to build a railroad through the heart of Mayan territory.

The line, which will stretch 1,460 kilometers (900 miles) across five Mexican states, may carry more than 8,000 passengers a day. It will serve some of the country’s most popular tourist destinations, including seaside resorts Cancún and Tulum, Mérida and other colonial-era towns, and archaeological sites like Chichén Itzá. For AMLO, as Mexico’s leader is widely known, the Mayan Train is something of a passion project. Critics call it an expensive folly.

Rusty railways dating to the 1950s cover less than half of the proposed route, but they’ll have to be completely overhauled to handle modern rolling stock. That’s the easy part. To lay track along the rest of the route, construction crews will have to cut through miles of rainforest, home to jaguars, which are endangered in Mexico, and pumas.

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President Andrés Manuel López Obrador (center) takes part in a ceremony in Palenque to launch the construction of the Mayan Train, a rail network in the Yucatán Peninsula, on Dec. 16, 2018.

Photographer: Julio Munoz/Mexican Presidency/AFP

The most difficult part of the undertaking may be finding investors to finance the project’s cost of as much as 150 billion pesos (about $7.9 billion). AMLO’s government hasn’t specified how it came up with that number, nor has it commissioned a study to prove there will be sufficient passenger and cargo volume to make the line commercially ­viable. The agency in charge of the endeavor, Fonatur, has described the Mayan Train as a “social” project whose main goal is boosting the economy of the Yucatán Peninsula by way of hotel construction and tourism. “What we’re looking for is for the towns along the train’s routes to be profitable, and that goes beyond how many tourists use the train,” says Aarón Rosado, the Yucatán liaison at Fonatur, the national fund for tourism promotion. The median household income across the five states is half that of the capital, Mexico City. Chiapas, one of the states on the route, is the country’s poorest, according to statistics agency Inegi.

“It would be a huge mistake to plan this poorly,” says Alexandra Zapata, adjunct director at Mexico’s Competitiveness Institute, IMCO, a think tank that studies the impact of policy on the Mexican economy. “There’s a profound difference between betting on regional development and ending up with an abandoned ghost project because it cost 10 times more than what was originally thought.”

AMLO’s Mayan Train Project

Data: Tren Maya

Fonatur opened bidding for engineering work on the Mayan Train in May. The tender elicited enough questions from interested yet confused parties to fill a 253-page document. The session scheduled to respond to those queries had to be delayed a month to allow Fonatur enough time to come up with answers. “Look, I’m not against the train,” says Eduardo Ramírez, president of the Mexican Chamber of the Construction Industry. “But they need to prove this is economically feasible and that it won’t be a burden for future administrations. We can’t keep absorbing governments’ mistakes—it’s always the Mexican people who end up paying.”

Fonatur chief Rogelio Jiménez Pons told Bloomberg in February that “a group of 100 of López Obrador’s closest friends” has funded studies that contain traffic projections, but his agency “can’t share them just yet.”

The Mayan Train’s current estimates put its per-kilometer cost at $5.2 million, on par with France’s Valence-Marseille route, the sixth-­lowest among 22 lines worldwide that IMCO studied. “It’s not clear how they got to that number,” Zapata says. “But what is clear is that international experience shows these projects—even when they’re perfectly planned—tend to end up costing as much as 130% more.”

The only other passenger train that’s being built in Mexico will connect the capital to the nearby industrial town of Toluca. Started under former President Enrique Peña Nieto, it’s been beset by problems, including lacking the right of way in some parts. The line was supposed to be up and running in early 2018, but today there’s still no start date in sight and costs are running 92% over budget. Its price tag has grown to $66 million per kilometer, IMCO says, making it the third-most-­expensive line in its study. “You’d think the Mexican government would learn from this, but apparently they’re heading in the same direction,” Zapata says.

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United of Yucatan 66, circa 1953.

Photographer: DeGolyer Library/SMU/Railroads of Mexico

Peña Nieto’s administration also studied the idea of building a train in the southeast. It would have been about five times smaller, but ultimately the administration shelved the project when oil prices fell and the federal budget took a hit.

AMLO’s government is looking to fund 90% of the Mayan Train through a so-called Fibra—a hybrid of a master limited partnership and a real estate investment trust. This is the same vehicle that was used to fund part of the $13 billion cost of building a new airport for Mexico City, a project the president
canceled late last year,
triggering a sell-off in Mexican bonds, stocks, and the peso.

Environmentalists have voiced concerns about the impact a project this size will have on the region’s fragile ecosystem. The proposed route is home to an estimated 800 to 1,200 jaguars, an already endangered species, according to Panthera, a New York-based nonprofit focused on the conservation of wildcats.

To allow the animals to roam freely, the government is considering building large overpasses along sections of the track, likely modeled on those built in Canada’s Banff National Park for grizzly bears, beavers, and other big mammals. It’s unclear if the current budget for the Mayan Train includes money for any overpasses; the Canadian structures cost as much as $2 million each, according to Mircea Hidalgo, a member of Panthera Mexico’s scientific council. “It would be a tragedy if this destroys the natural heritage of the Mexican people, one of which is the jaguar,” says Howard Quigley, jaguar program director at Panthera. “It’s just a matter of the government deciding to do it right.”

The train’s route will include a stop near the Calakmul Biosphere Reserve, one of Mexico’s largest protected areas and home to 2,400-year-old Mayan ruins. The area around the reserve has few hotels and roads and isn’t used to big crowds, mainly because it isn’t easy to get to. In all of 2018 it had only 43,000 visitors. Building hotels, restaurants, and other accommodations for a large influx of visitors may strain the area’s precious resources, including water, which would have to be piped in from adjacent towns. “The entire world recognizes Calakmul’s importance. It’s a Unesco World Heritage Site,” says Carlos Alcérreca, a biologist consulting with Fonatur on conservation practices. “The project needs to find a way to mitigate the impact, but it won’t be easy.”

Experts’ warnings are unlikely to sway AMLO. “This is not just a whim or an imposition,” the president told the crowd on that December day as smoke billowed from the earth. “It’s an act of justice, because the southeast has been a­bandoned for too long. It’s their time.”

BOTTOM LINE –
Where López Obrador sees opportunity to develop an overlooked region, his critics see a boondoggle that risks upending a fragile ecosystem.

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