Shipping firms should pressure the Nicaraguan government and the Chinese backer of a proposed canal to ensure that the project does not force indigenous people off their land and inflict massive environmental damage on the country’s ecosystem, an environmental advocacy group has urged.

The proposed 178-mile waterway seeks to rival the Panama canal by offering an alternative Atlantic-Pacific passage which cuts voyage times. Construction is scheduled to begin in December with $50bn (£31bn) funding from the Hong Kong Nicaragua Canal Development Investment Company (HKND), which is owned by Chinese lawyer Wang Jing.

But Danish NGO Forests of the World has accused the Nicaraguan government and HKND of failing to involve indigenous people in the planning process, saying the canal will wreak havoc on forests and force people to move.

“The canal is to be built straight through the Rama and Kriol territory, fragmenting it into two parts,” said Claus Kjaerby, Central America representative at Forests of the World. “It’s just like if someone wanted to build a bicycle trail through your garden and they do not consult with you.”

The Nicaraguan government said it has shared information about the canal with indigenous people, but conceded that no formal discussions had taken place.

Paul Oquist Kelley, executive secretary of the Nicaragua Grand Canal Commission, said: “Inasmuch as there was no definition of the canal route in 2013 there were no formal consultations with the communities to be affected, but informative presentations on the canal project were made throughout the country.

The route of the canal will cross Lake Nicaragua.

“After the presentation they were asked if anyone opposed the canal project. Not one person objected. Their concerns were about inclusion, participation and receiving their fair share if the canal were to traverse their territory.”

Nicaragua’s indigenous groups have appealed to the Inter-American Commission on Human Rights for legal counsel, citing violations of Nicaraguan law and international labour standards, according to Kjaerby. They say they will be forced to relocate under the current plan, with little support from the government.

The course of the canal will slice through the Reserva Natural Cerro Silva and then cross Lake Nicaragua close to the island of Ometepe, which is formed of two volcanoes; one of them, Concepción, is active.

But Nicaragua’s government said business and political leaders considered five different routes before settling on the least destructive course. “Route four that runs from Punta Gorda on the Caribbean Sea to Brito on the Pacific Ocean was chosen precisely because it was the route with the least environmental and social impact. Despite the fact that route four was not the lowest cost option, it was chosen because it has the lowest environmental and social impact,” Kelley said.

A great green macaw, one of the species reportedly at risk from the proposed route of the Nicaragua canal. Photograph: Juan Carlos Ulate/Reuters

The canal will plough through two Unesco-established biosphere reserves, which are inhabited by endangered species including jaguar, great green macaw, tapir and sea turtles, according to Forests of the World.

“The list of potential environmental threats is long and includes negative impact on protected wetlands vital to migratory birds, the Central American biological corridor, destruction of freshwater habitat, deterioration of drinking water reserves and the inevitable pollution of Lake Nicaragua,” Kjaerby said.

The NGO has urged Danish firm Maersk – one of the world’s biggest shipping companies – to use its influence to protect the rights of indigenous people and prevent environmental damage.

“Maersk’s interests are being used as an argument for building the canal,” Kjaerby said. “This gives Maersk a unique opportunity to ensure that the project is not implemented at the expense of indigenous peoples’ rights and unique natural habitat. We urge Maersk to use this unique position to influence and stop these violations that would mar the canal and its users throughout its future.”

The shipping firm said the project could reap economic benefits for Nicaragua. A Maersk spokesman said: “In principle, we are positive towards infrastructure development such as the Nicaragua canal. Efforts to promote the expansion of industry and commerce in Latin America – and the world – is positive and has the potential to increase the competitiveness of the countries in the region. We do not have the information to evaluate the specific Nicaragua canal project.”

Shipping firms say Nicaragua’s watercourse would provide a faster trip than the Panama canal, shaving as much as 800km off the New York to Los Angeles route. The proposed canal will be able to accommodate ships of up to 250,000 tons – more than double the freight allowance of the Panama canal.

A spokesman for HKND said: “HKND will strictly comply with the principle of being legal, transparent and fair in implementing the project. HKND is committed to explore canal route area with care and adhere to international standards of environmental responsibility. Our aim is to make impacted communities and indigenous peoples better off and not worse off in terms of livelihoods and living standards, through the project.”