Nicaragua said a Hong Kong-based company will start building a $50 billion waterway next month, despite opposition from farmers and environmentalists against the mega-project aimed at rivaling the Panama Canal.

Hong Kong Nicaragua Development won the contract to build the waterway -- which will link the Caribbean and the Pacific. Presidential adviser Paul Oquist said initial groundwork will begin December 22.

He said environmental impact reports paid for by HKND would be completed before the start of construction.

The canal was designed to limit environmental and social effects, and construction will be staggered to minimize impact.

Water levels, fishing activity and biodiversity in Lake Cocibolca "will not be affected," said HKND deputy construction manager Pang Kwok Wai.

But environmentalists are worried about the effects of ship traffic on the health of Lake Cocibolca, the largest freshwater body in Central America.

Farmers have demonstrated against the canal, fearing it will strip them of valuable land.

The Great Inter-Oceanic Canal Commission, which is managing the project, said it would pay fair prices to landowners whose property is taken for public use.

The project is expected to include two ports, an airport, a resort and an economic zone for electricity and steel companies, while a 600-meter (2,000-foot) bridge will span the width of the canal.

Nicaragua Canal Development office chief Manual Coronel hailed the "unprecedented" project.

For Nicaragua, it is almost like "going to the moon," he said.

President Daniel Ortega has said the project will create enough work to help alleviate the poverty hitting more than half the population of this Central American country.

Panama earns about $1 billion annually from its canal.