The Paraguay-Parana Waterway

Abstract:
The governments of Argentina, Bolivia, Brazil, Paraguay, and Uruguay proposed in 1996 a US $85 million program of dredging and navigational aids to allow year-round barge operations on the upper reaches of the Paraguay-Parana river system. The proposed program was dramatically scaled back from an earlier US $1 billion version that had been opposed by environmentalists world wide because it threatened to bring development to the Pantanal, a giant pristine wetlands with many unique and endangered species in the heart of the continent. The environmentalists were still concerned that the new program was just a first step to opening up the Pantanal. This case can be used to discuss how to incorporate risk into project evaluation as well as the relationship between pricing and project evaluation.