Destruction of the Nicaraguan environment stopped briefly during the 1980s. The Ortega administration generally did not emulate the governments of El Salvador and Guatemala, where a scorched-earth policy was used to fight insurgency. In addition the Contras were usually based across the Honduran and Costa Rican borders and did not hold significant territory in Nicaragua. The Sandinistas moved 200,000 people out of the combat zones, creating huge land tracts where hunting, fishing, and farming seldom took place. Abandoned agricultural lands returned to their natural states, animal life prospered, and some forests remained uncut. Hunting was minimal because carrying a gun invited disaster. For a short time at least, the Contra war had the accidental effect of stopping the aggressive exploitation of Nicaragua's natural resources.

The Sandinista government established the Nicaraguan Institute for Natural Resources and Environment (Instituto de Recursos Naturales--Irena) in the 1980s to direct environmental conservation on a national scale. Irena created Bosawas, a 1.4- million hectare nature reserve and Central America's largest protected natural area. The institute also attempted management of watersheds, conservation of rainforests, and the establishment of windbreaks. In addition, Irena created a peace park on the border with Costa Rica. This combination of accidental and intentional environmental conservation in the early 1980s temporarily delayed the destruction of land associated with expanding export agriculture.

These conservation measures were not permanent, however. Like many social programs in health and education, environmental programs established in the early years of the Sandinista government soon fell victim to the Contra war. As public-sector spending after 1985 increasingly shifted away from social programs to defense, early environmental efforts were mostly ignored. Hundreds of state farms created by agrarian reform began to imitate their larger predecessors, expanding agricultural development into previously undeveloped, rain forest areas. As poverty increased because of the weakening economy, rural dwellers turned more and more to forests for fuel wood and supplemental food, thus depleting previously abundant stocks. Although in the 1990s Nicaragua's tropical forests were less than 1 percent the size of the Amazon rain forest in Brazil, Nicaraguan rain forests were disappearing at a rate ten times faster than that of the Amazon. If that rate continues, the Nicaraguan rain forest will have disappeared by 2010.

Much of the government's hopes for economic recovery has remained pinned on exploiting Nicaragua's abundant forest resources, casting serious doubt on any success for the country's future environmental efforts. In 1991 Equipe de Nicaragua, a Nicaraguan branch of a large Taiwanese firm, was granted a logging concession on 375,000 hectares in the Caribbean lowlands. The firm agreed to invest more than US$100 million in a modern plywood manufacturing facility. As part of the deal, the Taiwanese firm offered to help the Nicaraguan government i433 in its reforestation efforts in other parts of the country. In 1992 the government signed an agreement with Equipe de Nicaragua for a large wood-processing plant.

Mostly as the result of environmentalist opposition to a Taiwanese-inspired forestry project, Irena created a new national forest institute to regulate and control the use of the forests. The institute received initial financing and support from foreign governments and international organizations for the conservation of the biological reserve named Indio-Maíz. This reserve, encompassing 4,500 square kilometers, is located in southeast Nicaragua between the Río San Juan and Río Punta Gorda. Together with the previously existing Bosawas reserve, they are the largest forest reserves in Central America.

Data as of December 1993