A controversial hydro-electric project which threatens a highly endangered remnant of Brazil's Atlantic forest now looks likely to go ahead.
Deforestation has resumed in the gorge of the Pelotas River dividing the southern Brazilian states of Santa Catarina and Rio Grande do Sul, to prepare for the filling of a reservoir behind the 180m (590ft) Barra Grande dam.
Hundreds of families will have to move because of the dam
It follows the ending of a long impasse during which the $400m project was threatened by blockades from local people affected by the dam and court proceedings brought by environmental groups.
The Movement for Dam-Affected Peoples have agreed to lift their protest after the international consortium behind the dam, Baesa, agreed to expand its compensation programme.
Baesa will now pay an extra 200 families who had previously been left out of the scheme to resettle those whose land will be flooded.
The company has also promised to use the wood collected from the cleared area to construct new homes for displaced families.
But the deal has left Brazilian environmental groups furious, and they have pledged to continue their fight in the courts to prevent the remaining forest from being felled or flooded.
The project has been especially controversial because it involves the most highly threatened ecosystem within the Atlantic forest.
The forest once stretched along the entire eastern coastline of Brazil - but has lost at least 93% of its original cover.
Within the many eco-regions of the forest the most devastated is the domain of the Brazilian pine or araucaria, a relative of the monkey-puzzle, which occurs only in the far south of the country.
Only after the dam was nearly finished was it revealed that the reservoir would engulf 20 sq km (8 sq miles) of untouched primary forest, including 5,000 araucaria trees, and a further 20 sq km of forest recovering well from earlier human interference.
The licence for the dam was only issued because the original environmental impact assessment had completely overlooked this rare remnant of a unique ecosystem, which supports a rich variety of plants and animals.
The president of the consortium earlier told the BBC that the project would probably never have begun if that assessment had been accurate - but he said the dam was built and Brazil needed the energy, so it should be allowed to operate.
The consortium has recently increased its spending on environmental measures in the region to compensate for the dam - and it now stands at $30m.
Most of Brazil's araucaria forest has been felled
Following the agreement with the representatives of the affected families, Baesa has succeeded in overturning a previous court order which had blocked the deforestation.
But the two groups of environmental campaigners who had brought the action say they will continue their legal battle, as the flooding of the Pelotas gorge will cause irreparable damage.
The Brazilian environment ministry has given its backing to the compensation measures promised by the company, but it has pledged to review its procedures to prevent a repeat of the mistake which saw the original licence being issued based on a faulty assessment.
Although the deforestation of wooded areas along the gorge has continued, the main area of intact araucaria forest is still standing - but time is running out for the environmentalists if they want to prevent if from disappearing for ever beneath the waters of the Barra Grande reservoir.