Impacts on livelihoods:  The Gulhifalhu project has the potential to significantly impact livelihoods in the Maldives, particularly in the fishing and tourism industries. As shown in the project’s Environmental Impact Assessment (EIA), this could disrupt traditional fishing practices and bait fishery areas, potentially leading to declines in fish stocks and directly impacting fisherfolk, their livelihoods and food security. Additionally, as the Maldives’ biodiversity sector is a source of livelihood for many, contributing 71% of the nation’s workforce and 89% of GDP, damage to the natural environment and marine ecosystems could lead to a decline in tourism, which in turn could result in job losses and economic hardship. 

Lack of meaningful rights-holder consultation: Local communities and rights-holders have not been adequately consulted ahead of the project’s development, particularly those who depend on the marine ecosystem for their livelihoods. Formal opportunities to participate in the project's EIA were limited, with very short consultation periods. In fact, the Environmental Protection Agency of the Maldives gave five days to stakeholders to provide feedback on the EIA, at the height of the COVID-19 pandemic in April 2020. In addition, the EIA was only made available online in English, making it even more of a challenge for local non-English speaking rights-holders and communities to take part in the consultation. Furthermore, the environmental and social concerns raised by rights-holders who did take part in consultations, have not been addressed, as shown by the superficial responses to these concerns, which are included in the EIA. The project also does not offer any compensation or resources for those affected by the development. 

Impacts on cultural rights: The project involves the destruction of critical marine habitats, such as coral reefs and biodiversity, which are integral to the local cultural practices and traditions. The Maldives' rich cultural heritage is deeply connected to the sea and marine environment, and many traditional practices are tied to the use and conservation of marine resources. The loss of these habitats could have far-reaching impacts on the culture and way of life of local communities, especially those reliant on fishing and other marine-based livelihoods. 

The Gulhifalhu port project is expected to have negative impacts on the climate, particularly in terms of greenhouse gas emissions. The project involves dredging and land reclamation, which will inevitably increase carbon dioxide and other greenhouse gas emissions. Additionally, the project will disrupt natural ecosystems, local hydrology, and have detrimental effects on the natural carbon cycle, further contributing to climate change. The project is also expected to significantly impact coral reefs, which will contribute to making the Maldives more susceptible to coastal erosion, and consequently to other climate change-related impacts such as rising sea levels.

Biodiversity, wildlife and protected nature areas: The project is expected to destroy a marine area known as Hans Haas Place (or Kiki Reef) protected under Maldivian law since 1995. There are multiple other marine protected areas and environmentally sensitive areas within the impact zone of the project. The EIA estimates that the project will use 24.5 million cubic metres of sand dredged from an area of nearly 18 square kilometres in the already decimated North Male’ atoll. The project area is the sand borrow zone for multiple smaller projects that are causing a cumulative effect of unaccounted damage to the atoll seabed, including sediment depletion, coastal and hydrological changes compromising the environmental stability of the North Male’ region. None of the ecological and environmental loss and damage has been accounted for, nor has the loss of ecosystem services or the sand resources the project will use. In fact, the contractor that did the sand survey has refused to disclose the results of the survey to the Maldives authorities claiming intellectual property rights. The Divers Association of Maldives estimates the project will negatively impact about 30 dive sites in the area. The project involves the deepest reclamation activity in Maldives history, with unknown consequences. It is also expected to have serious impacts on Villingili island and its reef, located a few hundred metres from Gulhifalhu. 

Damage to coral, with ineffective coral relocation: The land reclamation for the development of a new port in Gulhifalhu will result in the permanent loss of natural habitats and corals, which cannot be avoided or mitigated. In order to compensate for this loss, coral relocation activities have been a key recommendation outlined in the EIA as a mitigation measure for major impacts of this project. However, coral relocation has been criticised by environmental commentators as a form of greenwashing due to its use to facilitate destructive projects and the absence of scientific evidence to support the practice. A 2021 UNEP/ICRI coral restoration guideline specifically discourages coral reef disturbance and disruption. To date, there have been no studies in the Maldives on coral relocation success that has any recovery of benefits for lost ecosystem services or community livelihoods. Coral relocation is an extractive activity with permanent loss to communities dependent on natural resources. These activities have questionable conservation credentials, as coral relocation involves experimentation to re-grow corals sourced from elsewhere; additionally, the coral relocation activities that took place within the scope of this project  were carried out by NGOs and several resorts which have partnered with Boskalis.

Corruption and weak governance in the Maldives: Reportedly, the Maldives awarded the reclamation project of Gulhifalhu to dredging company Boskalis Westminster for USD 53 million without a bidding process. A case was submitted to the Maldives Anti-Corruption Commission (ACC), which after three years is still pending. The Maldives also has a serious record of political corruption that puts the natural environment at great risk, whereby numerous allegations emerged about the government leasing out islands to developers without bids. This practice most notably came to light because of the Maldives Marketing and Public Relations Corporation (MMPRC) corruption scandal, the largest embezzlement of state funds in the history of the Maldives. State-owned MMPRC leased out 57 islands and lagoons to resort developers without public tender, and funnelled undue benefits to public officials, including parliamentarians and lawmakers, amounting to over USD 220 million of stolen public funds. Assets stolen by the MMPRC have not yet been fully recovered, and corruption continues to be a problem and have an impact on the people of the Maldives and on its pristine nature. This is shown for instance by the recent dissolution of the Asset Recovery Commission, responsible for recovering assets lost to corruption including in the MMPRC scandal. 

Credibility and transparency of the project’s Environmental Impact Assessment (EIA): The project started in May 2020 with little consideration given to climate change impacts and possible loss and damage to ecosystems and services. For example, as "there was initial confusion over the boundary” of Marine Protected Areas such as the Hans Hass Place as “published information showed [...] a wider buffer which overlapped with the proposed reclamation area”, the EIA changed the buffer zones (p. 85) of protected areas to fit the project. Furthermore, the EIA envisaged little to no consultation of stakeholders, and left their concerns unaddressed. This raises concerns about the credibility and soundness of the assessment. Concerns have also been raised as additional EIAs are carried out by external consultants working remotely who do not know the national and local context.