About 400 properties will be directly affected by the construction of the Patuca III dam. In 2010, the Honduran government adopted a decree that forced residents to negotiate the sale of their property, under penalty of expropriation. When a first agreement on the properties' values was reached, ENEE immediately adopted the land titles without preliminar compensation. Part of the compensations has been payed, but mostly to the larger landowners. A majority of (smaller) landowners is still awaiting their compensation.

Construction of the Patuca III dam project has started without any preliminar consultation of affected people, despite the fact that the dam is likely to negatively impact both Tawahka and Miskito indigenous communities that are located downstream. Damming the river will alter the seasonal flooding of land, which is crucial for its fertility. The indigenous communities are highly dependent on the river for their livelihoods, for food and transportation.

The lack of consulting the affected indigenous peoples is a violation of ILO Convention 169 and the UN Declaration on the Rights of Indigenous Peoples, signed and voted for by the government of Honduras.

Patuca River is the second-largest river in Central America and flows through the Moskitia reserve, the largest forest conservation area in Latin America north of the Amazon. This remote and thinly populated rainforest area has a great biodiversity and is a habitat for many endangered species. The construction of the dam is feared to alter this fragile ecosystem. The conducted Environmental Impact Assessment has failed to adequately investigate downstream impacts, let alone the combined impact of all three dams on the Patuca River that are planned. 

Furthermore, environmentalists fear the now remote area may be opened up to logging and plantation activities when access roads are constructed. Especially palm and banana plantations are growing in size and number over the last years in Honduras.