While the region boasts extraordinary biological diversity, it is also a place of deep poverty, leaving many people desperate for development.
Balancing the need to protect the ecosystem with locals' demands for jobs has not been easy.
The sugar project, to be run by Kenya's Mumias Sugar Company, is the latest in a string of proposed development ideas for the delta.
And other producers have been showing increased interest in the area in recent days.
Mat International Sugar announced this week that it has snapped up 223,000 acres (90,000 hectares) of land adjacent to Mumias's claim as part of a second, two-billion-dollar sugar project.
The firm hopes to produce 1.2 million tons of sugar each year.
"We intend to have seamless sugarcane farms where each village will have a plantation in addition to farms to take care of food security," Mat's project co-coordinator Moses Changwony told the East African Standard newspaper.
One of Mumias's most important backers is the Tana and Athi Rivers Development Authority (TARDA), whose chair is a nephew of Kenyan President Mwai Kibaki.
President Kibaki has expressed his support for the project, which comes at a crucial time for the Kenyan economy.
Next February Kenya is expected to drop tariffs for sugar imported from other countries in the regional trading group known as Common Markets of Eastern and Southern Africa (COMESA).
Sugar from elsewhere in COMESA is about 40 percent cheaper than Kenyan sugar.
Government officials fear that without its own cheap source, Kenya's sugar industry could be wiped out—unless the country decides to extend the tariffs.
"In 2008, once COMESA starts bringing duty-free sugar [into the country] it means we will lose out, so we have to produce sugar at low production cost so that we bridge the deficit gap," said TARDA spokesperson Damaris Kiarie.
An environmental impact study of the proposal is underway.
But even the team conducting the assessment acknowledges that it is under pressure to come up with a solution that doesn't just leave the delta in its current state.
"We have to be neutral and ensure that we come up with a solution which is all-inclusive so that the environmental crusaders will not say, Oh, they are biased on the others' side," said an environmental studies professor involved with the assessment.
The professor spoke on condition of anonymity because his contract bars him from talking publicly to the press.
"And we don't want the local people to say, Oh, we gave in to the international organizations and the local people, we leave them suffering," he added.
"In the delta, the poverty level is 73 percent—73 percent of the people live below one dollar per day. So if it is not a sugar project, we must recommend something which can be done which is viable."
Over the years the delta has seen several failed attempts at bringing in money and development.
Among the most notorious was a World Bank project meant to protect the region's red colobus monkey and the crested mangabey—two species counted among the world's top 25 most endangered primates by the World Conservation Union.
(Read "Extinction Risk for 1 in 3 Primates, Study Says" [October 8, 2002].)
The bank's solution was to relocate people, an idea that only fanned anger and resentment toward wildlife. Eventually the project was abandoned.
In a similar vein a reserve established in 1976 to protect the animals was abolished earlier this year.
Experts found that the reserve only increased locals' resentment toward the animals and put the primates under new threats of retaliation.
And in 2000 and 2001 deadly clashes erupted between two ethnic groups living in the delta: the Orma, who are traditionally herders, and the Pokomo, who are mostly farmers.
Many observers believe that the conflict over use of land and water was caused in part by numerous failed irrigation projects in the delta.
The newly proposed sugar projects would also require irrigation networks using water pumped in from the delta.
The Pokomo are largely in favor, while the Orma are opposed.
Tentative plans call for many farmers to be moved away from the delta, an idea that could lead to new animosity.
Critics of the sugar plans have suggested that developers focus instead on the resources that the delta already has: freshwater fisheries, mango plantations, rice, and tourism.
"The product is there already, why do they want to destroy that with sugar?" said Hadley Becha, head of the Conservation Program at the East African Wildlife Society.
Becha argues that the studies on sugar growth cited by proponents of the projects have not been submitted for peer review or public scrutiny.
"There are those who are saying that sugar is the only development," Becha said.
"But we are saying that sugar is not the only development, because it is not for and by the [local] people. It will displace them, it will make them lose their livelihoods."
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