Policy · Gulf of Papagayo, Guanacaste

Papagayo Building Rights Rule Repealed After Court and Forest Fight

On June 16, 2026, Costa Rica's government repealed the 'density and coverage compensation' rule that let developers in Guanacaste's Gulf of Papagayo Tourism Pole shift building rights between their lots. The rule was already under constitutional challenge and had triggered a court freeze on tree-cutting permits, but the repeal doesn't undo past approvals and the court cases remain open.

By Pura-Verde.com Editors · Published October 30, 2026
Original report: The Tico Times: Costa Rica Ends Papagayo Building-Rights Transfer Rule (2026-06-18)

For two years, resort developers in Guanacaste's Gulf of Papagayo could take building rights they weren't using on one lot and stack them onto another. On June 16, 2026, the government of President Laura Fernández scrapped that rule. It's a win for people who'd argued the coast was meant to stay low-density, but it doesn't put back any trees already cut, doesn't cancel approvals already granted, and leaves two constitutional cases still waiting on the court.

What the Gulf of Papagayo Tourism Pole is

The Polo Turístico Golfo de Papagayo is a state-owned coastal zone of about 1,658 hectares around Bahía Culebra, north of Playas del Coco, plus the public beach strip. It was declared a project of public interest by Law 6370 in 1979 and is governed by Law 6758 of 1982. The Costa Rican Tourism Institute (ICT) owns the land on behalf of the state and leases it to developers as long-term concessions. Today it's home to some of the country's best-known luxury resorts, and the ICT says it supports thousands of jobs in Guanacaste.

From the start, the zone's master plan was built around low density: limits on how much of each lot can be covered and how many hotel rooms fit per hectare. The area also holds tropical dry forest, mangroves and beaches that wildlife depends on, in one of Costa Rica's driest regions.

What the 2024 rule allowed

Executive Decree 44448-MP-TUR, signed in January 2024 under then-President Rodrigo Chaves and published in La Gaceta on May 21, 2024, added a mechanism called "density and coverage compensation." It let a concession holder with several lots in the same project shift building allowance from one to another, even if the lots didn't touch. Reports said up to 30% of one lot's area could be counted toward another, letting a developer build more on a single site than the per-lot limits would normally allow.

Critics called it a way to concentrate big buildings in the most attractive spots. In August 2025, activist Sergio Ortiz Pérez and lawyer Juan Pablo Xatruch filed an unconstitutionality action against the decree. In October 2025, the Attorney General's Office (PGR) told the court the rule was unconstitutional, arguing it weakened the master plan's environmental protections, skipped carrying-capacity and cumulative impact studies, and broke the principle that environmental protections shouldn't go backward, as Delfino.cr reported. The PGR's opinion is advisory, not binding.

The court freeze and the 748 trees

The fight got urgent in April 2026. On April 9, SINAC approved cutting 748 trees for Enjoy Hotels & Resorts' Bahía Papagayo project at Playa Panamá. On April 17, Constitutional Court magistrate Fernando Cruz Castro ordered a freeze on tree-cutting permits for hotel projects in the zone, plus construction and density changes, while the case is decided. In May, the court narrowed the construction freeze to projects that used or planned to use the compensation rule. A separate appeal against SINAC's permit for the 748 trees was also admitted. Business groups, including tourism chamber Canatur and concession holders, pushed back hard, saying the freeze had stalled development across the zone.

What the new decree does, and doesn't do

Decree 45823-MP, signed by President Fernández and Rodrigo Chaves Robles, now her Minister of the Presidency, was published on June 16, 2026, in a supplement to La Gaceta and took effect right away, as Delfino.cr reported that day. It deletes the compensation mechanism from the Papagayo rules. The government said the rule had been read in too many different ways, creating legal uncertainty and delays for developers and ICT staff. Papagayo goes back to the original per-lot limits, which CRHoy described as 30% maximum lot coverage and 20 rooms per hectare.

As The Tico Times reported on June 18, the change only applies going forward. Approvals granted under the rule since 2024 still stand, and the court cases aren't closed. Ortiz told Semanario Universidad the government should explain what was approved while the rule was in force and review each case's environmental impact. Lawyer Álvaro Sagot, who filed a second unconstitutionality action against other Papagayo rules, including one he says allows clearing forest on state land, told CRHoy that the repeal doesn't stop tree cutting, because the norms that permit it are still in force.

What happens next

The Constitutional Court now has to decide whether Ortiz's case still has a purpose after the repeal. If it's dropped, developers could ask the court to lift the freeze, CRHoy noted. Sagot's case remains open regardless. As of late October 2026, we hadn't found a final ruling in either case.

For travelers, nothing changes at existing hotels. For Guanacaste, the bigger questions are about how much more building the dry coast's forests and limited water can handle. Water shortages have been a recurring issue around Papagayo; see our story on communities facing water rationing, and the court order to protect the Tempisque River farther inland. If you're choosing where to stay on this coast, our guides to sustainable hotels and eco-lodges and green building in Costa Rica explain what to ask about water, density and forest.

Frequently asked questions

What was the Papagayo density compensation rule?

A 2024 change to the Gulf of Papagayo Tourism Pole rules that let a developer with several concession lots shift unused building allowance from one lot to another, even non-adjacent ones, concentrating construction on one site.

When was the Papagayo rule repealed?

Executive Decree 45823-MP, published in La Gaceta on June 16, 2026, removed the rule and took effect immediately.

Does the repeal stop tree cutting in Papagayo?

Not by itself. Past approvals remain, and a separate court freeze on tree-cutting permits came from the Constitutional Court, not the decree. A pending case also challenges other rules that allow clearing.

Who manages the Gulf of Papagayo Tourism Pole?

The Costa Rican Tourism Institute (ICT) administers the roughly 1,658-hectare state-owned zone and grants long-term concessions to hotel and resort developers.

Sources and original reporting

1. The Tico Times: Costa Rica Ends Papagayo Building-Rights Transfer Rule (2026-06-18)
2. Delfino.cr: Gobierno elimina regla que permitía concentrar construcciones en Papagayo (2026-06-16)
3. CRHoy: Gobierno elimina decreto de Chaves sobre Papagayo: estas son las implicaciones (2026-06-19)
4. Semanario Universidad: Activista exige aclarar impacto ambiental tras derogatoria de polémica normativa en el Polo Papagayo (2026-06-18)
5. Semanario Universidad: Gobierno reformó reglamento de Polo Turístico Golfo de Papagayo (2025-09-03)
6. Delfino.cr: Procuraduría: decreto de Chaves que permite concentrar construcciones en Papagayo es inconstitucional (2025-10-17)
7. Instituto Costarricense de Turismo: Polo Turístico Golfo de Papagayo

We wrote this story from the published reports and official sources above. We didn't interview the people named unless the story says so.