Nicaraguan President Daniel Ortega endorsed Tuesday a route chosen by a Chinese firm commissioned to dig a 40 billion dollar canal linking the Caribbean and the Pacific.

HK Nicaragua Canal Development Investment Co. (HKND) announced Monday it settled on one of six possible routes for the 278 kilometer (174 mile) waterway to rival the Panama Canal.

Construction is scheduled to begin late this year.

This particular path, known as No. 4, was picked because it would be the most respectful of the environment, according to the company.

It will take advantage of the presence in Nicaragua of Lake Cocibolca, Central America's largest body of freshwater.

"We are happy with the information that the company has provided to the Nicaraguan people," Ortega said during a televised meeting with Wang Jing, chairman of HKND.

Ortega said studies carried out by the company over the past year since it was hired to build the canal "have shown us that the result of their work is going to bring benefits to the people of Nicaragua."

The Chinese firm plans environmental mitigation efforts such as reforestation and moving animals to other parts of the country, said the president.

Ortega said the project will create so much work it will help alleviate poverty that affects more than half the population of Nicaragua.

Wang, who appeared with Ortega as he concluded a four day visit to the Central American country, said the waterway would be "environmentally friendly."