Another spot in Baja was identified 30 years ago by Fonatur as a prime tourist destination, Loreto, 318 miles north on the gulf and the oldest permanent Spanish settlement in the Californias. Mission Nuestra Señora de Loreto was established there in 1697, and Franciscans under the well-known Padre Junípero Serra launched the chain of missions in 1769 that would extend far up into mainland California.

Loreto avoided much notice in Mexico City for about two centuries until, in the 1980s, Fonatur drilled wells into the one aquifer originating in the dry Giganta range, built roads on an undeveloped stretch of land 12 miles south of the town, and put in streetlights. The bay it faced was full of fish, could boast of six species of whales in season and beautiful islands just offshore in a sea alternately bottle green and cobalt blue.

It took years for a group of investors to come up with a workable plan for a new community, Loreto Bay, and to take over where Fonatur left off. This unusual development plan, still being put into effect, calls for a resort hotel, golf courses, 6,000 houses and condominiums of neocolonial design built largely of organic materials, walkable streets, shops, canals, and native flora: a “sustainable” vision on a grand scale. When complete, the community is expected to grow from 15,000 people to 120,000.

Sufficient water for all this, the developers say, will come from desalination plants, power to run them from windmills to be built on Baja’s west coast, everything funded by investors from the United States and Canada. This enormous, new-constructed “old” Mexican village is meant to function as an upscale, new urbanist retreat in the unblemished air of southern Baja.Okay,” says Peter Clark, squeezing lime juice into his can of Tecate, “here’s the sustainability story.”

He’s the director of sustainability for the Loreto Bay development, and he obviously loves his job. “The gnarliest problem,” he confides, “is the social one.”

The Loreto Bay Company imported thousands of men from the impoverished mainland to do the manual labor. But they clashed with townspeople and contributed to already chronic housing, trash, sewage, and water problems. To address them all, Clark says, “we had to be flexible.”

For instance, the development was making its own adobe bricks that unfortunately absorbed moisture, held in the heat of 110-degree summers, and required 2,000 additional workers to create and install. “So we came up with walls made of panels of recycled Styrofoam that cut the price, shortened production time, and reduced by half the number of strange workers swimming in their underwear and chasing local girls.”

One contribution the Loreto Bay Company made to the sustainability debate was to seriously put forward the idea that it could be done on such a massive scale. But Loreto Bay has yet to fully emerge. Distant cranes stand against droughty mountains, and in the foreground partially completed streets and man-made “lagoons” snake among new foundations in the Agua Viva neighborhood, lending it, according to a salesperson, “a Venice feel.” The completed houses are close together even by new urbanist standards. Local plants—mesquite, palo blanco, cordon cactus, and other species—provide the community with what Clark refers to as “a native palette.” Some brackish water from the estuary is being used on the golf course.

Clark’s intense gaze matches his enthusiasm. I want to believe that sustainability can do all this, but every claim gives rise to questions similar to those in Cabo: Can desalination really provide the vast amounts of freshwater required to augment the aquifer? What will be the effect of various sorts of runoff on Loreto’s fragile bay and the whales that swim there? Taking tourists out to watch the whales has become one of few new economic opportunities for Loreto’s fishermen.

The development uses, and pays for, treated waste water from the town of Loreto, Clark says. Although a sewage treatment plant is nearly complete, there’s still no desalination plant. Ditto the landfill. The Loreto Bay Company currently recycles cans, but it trucks garbage as far as Tijuana for disposal, at great expense. These questions have occurred to others. So far only 788 homes have been sold, and of those only 294 sales have actually closed.

This evening, the Inn at Loreto Bay has lots of happy American guests drinking margaritas out of frosty fishbowls, paddling in kayaks near the beach, and loudly playing ping-pong under the palms. The view out to sea is hard to beat. “We have to make this work,” Clark says. “In the end it’s all about caring. It’s about love.”

Last year the Loreto Bay Company ran into financial difficulties because early investment in the new houses lagged, so Citigroup Property stepped in and assumed controlling interest. Now the question is whether a major multinational will continue to back the original, expensive vision in hard economic times. As a member of Loreto Bay’s management team later tells me, “Loreto’s going to be the next big thing. It’s going to be the next Cabo. But Citigroup has pointed out that sustainability must also extend to the corporation.”There’s a spout!…two!” Winter whale-watching season is officially over, but there they are, making rainbows with mighty exhalations of seawater, two dark, glistening finbacks sleekly cleaving the surface, apparently indifferent to our presence. Then, as effortlessly as they have appeared, they sound, leaving telltale slicks on the surface where their flukes have driven them toward the bottom. “Ah,” adds Fernando Arcas, “they’re gone.”

I’ve come to Arcas for another point of view on the impact of development in Loreto. He wears a padded windbreaker and two pairs of glasses on strings looped around his neck: one pair for seeing up-close, the other for blocking the Baja sun that bounces off an undulant sea like intermittent strobes. Slightly ominous against a cottony pink sky is the dark profile of Carmen Island, one of five off the coast of Loreto in the 1,300-square-mile Bahía de Loreto National Park, established in 1996. The park was initially patrolled by only one agent of Profepa, the government enforcer of environmental law, and Arcas was instrumental in hiring two more with funds from the nonprofit Grupo Ecologista Antares (GEA), of which he’s the executive director. GEA was established with help from various environmental groups, including the Nature Conservancy and Wildcoast, and works for the preservation of marine and desert ecosystems.

Arcas’s deep-keeled fiberglass panga, Rebelde (Rebel) II, is fitted with a ten-foot observation tower bolted to the forward deck. For 26 years he’s been studying marine mammals, not as a biologist, but as a devoted amateur: sperm whales, finbacks, blues, humpbacks, orcas, dolphins, and most things living within this broad, blue view. All of them are, in his opinion, threatened by too many people. “Only 15,000 live in Loreto now,” he says, indicating the green line of palms in the distance. Old Loreto’s picturesque traditional stucco houses face the malecón and the little marina. “In ten years there could be 120,000. Imagine what this coast will look like then.”

Arcas’s office in Loreto, a modest structure a few blocks from the playa, is an enthusiast’s careful collection of local marine flora and fauna and exhibits explaining the life cycles of sea organisms. Schoolchildren are regularly taken to GEA headquarters to be introduced to the wonders of the bay, and broader educational programs are undertaken there. Putting visitors in close proximity to sea mammals is both a growth industry and a way to bring more support to GEA and Loreto’s national park.

Whales move people emotionally by their mass, majesty, and apparent indifference to boats and brightly dressed observers bristling with cameras. The whales’ aura of invincibility, however, is an illusion. “There were once many whales in San Diego Bay, and they’re all gone,” Arcas tells me. The colossal drop in the populations of fish and other species in the Sea of Cortés, including sardines and plankton upon which whales feed, he estimates at 80 percent. “It’s a problem of overfishing and pollution.”

Any large-scale resort affects the quality of wild waters, he adds, and that includes Loreto Bay south of town, in Arcas’s view. “What they’re doing with the estuary is more like a Disney water park. Desalination won’t solve their long-term freshwater problems. For one thing, de-sal is very expensive to run, and they’re not talking about electricity from windmills anymore. Even if that worked, what would they do with all the brine from desalination? Dump it in the water and the bay will die.”

Loreto Bay is just one of many new resorts on the drawing boards. Add to those proliferating cruise ships that already stir up the bottom of the bay. “I’m not a scientist,” Arcas says, “but I collect useful information,” like the acoustical monitoring of whales’ heartbeats to gauge their reaction to the number and proximity of boats. “The number of heartbeats rises in direct proportion to how close we get. That’s an indication of stress. We have only a few pangas on the bay now. What’s going to happen when there are a thousand?”

Some seven hours north of Loreto, about halfway to the U.S. border, a new, empty highway leaves the main road and shoots eastward toward a gap in the Giganta range. It crosses a high valley dotted with blooming ocotillo and the weirdly drooping cirios trees that grow nowhere else on Earth. And suddenly there it is: a bay of such luminous blue that it seems lighted from beneath. This is the Bahía de Los ángeles, up to 3,000 feet deep and backed by huge Guardian Angel Island, floating on its surface like a sea-weary leviathan.

Bahía de Los ángeles struck John Steinbeck as mysterious when the author passed through on a scientific expedition in 1940. Discovered by Francisco de Ulloa in 1539, on the last expedition financed by Hernán Cortés, it has been declared a Biosphere Reserve by the Mexican government and is on the UNESCO World Heritage list. The close to one million acres include a rich maritime diversity—fin and killer whales, yellowfin, halibut, corvina, roosterfish, dolphins, whale sharks, and the threatened and endangered eastern Pacific green turtle—and are referred to as Baja’s Yellowstone.

Four species of sea turtle are doing better in these waters than elsewhere in Mexico. “We still catch 50-year-olds in the nets,” says Antonio Reséndiz, a voluble, barrel-chested marine biologist who has done research in Bahía for 30 years and on whose beachfront ramada locals and ex-pats often gather at sundown for a beer or a glass of wine, among them two Californian expedition leaders involved in turtle protection who founded Baja and Beyond Tours. It was Reséndiz’s tagged loggerhead turtle, captured off Bahía de Los ángeles, that swam from Baja to Japan in 1999, proving the sea turtle’s formidable homing capabilities. But many turtles caught hereabouts, either incidentally or intentionally, make their way to the black market in Ensenada. And onto plates in Bahía. Despite the ban on taking turtles, some Bahians still consume them as an antidote to colds and respiratory problems, and as a spiritual connection with the deep.

Although Bahía’s coastal waters and bordering desert are officially protected, several years ago Fonatur picked Bahía as one of the launching points for another of its grand visions, Escalera Naútica. According to this plan, American yachts would be trucked from the Pacific across the peninsula on a “land bridge”—that new, empty road I drove in on—to the Sea of Cortés so the long, difficult sailing and cruising passage around the southern cape could be avoided by deep-pocketed vacationers. If this becomes reality, Bahía and little towns like it all down the coast will have new harbors, docking facilities, and hotels.

However, despite Fonatur’s long-lived determination to see its projects through, Bahía de Los ángeles may avoid becoming the next next big thing. That’s because the local ejido, one of thousands of landholding cooperatives set up after the Mexican Revolution for the redistribution of property to the rural poor, opposes it. Ejidos have controlled vast acreage in Mexico for almost a century, and in 1992 the Mexican Constitution was amended to allow individual members to sell. This caused an upheaval in the national real estate market, and in the ejidos, too, as people clashed over who owned what.