Dear Editor,
Two of your recent reports caught my attention: the floods at Black Bush Polder and President Ali’s comments at Buzz Bee Dam regarding the arduous preparatory works required to build highways on Guyana’s low lying coastal plain.[1] Stabroek News (Jan 14, 2026) reported the President’s observations: “President Ali noted the extensive preparatory works required to construct the roadway, pointing out that contractors had to excavate up to six feet of swampy soil in some areas before meticulously rebuilding the foundation. This shows you the magnitude and level of work that is needed to achieve the type of development and transformation you will see.”
President Ali identified a capital constraint – or wedge – whose origins trace back to the early Dutch settlers’ decision (around 1740) to move from the upriver hinterland to the drained coastal plain (former swamp lands and peat) to build polders for plantation agriculture. This capital wedge means that machines and other tools are not fully effective or must work harder. It represents the portion of our investments lost to the mud before production even begins. The wedge also imposes a maintenance “tax,” as other forms of physical capital (roads, dams, kokers, and buildings) must be constantly maintained. The same is true for other human made natural assets such as canals, which face year round vegetation growth and re silting.
This historical capital wedge has had a fundamental impact on Guyana’s long term development trajectory by restricting the substitution between labour and capital. Moreover, it creates an investment hurdle, implying that our economy must work much harder just to remain in the same place. We must “over invest” in physical capital simply to offset the environmental friction that upland economies do not face (unless landlocked and/or mountainous). This reality was evident in the report on Black Bush Polder, where new mechanical pumps will be installed to help control floods.[2] These pumps themselves have an environmental depreciation rate and require heavy imported fuel to operate.
Finally, the capital wedge has also significantly influenced the country’s political economy, and its impact transcends party politics. In the next two months, we will present some rigorous mathematics on the consequences of the wedge as well as the possible escape hatch.