PLANS to enlarge the tiny tax haven of Monaco by building a new district at sea have hit opposition from environmentalists, who warn that the ambitious expansion would produce an “undersea desert”.

They argue that the construction, a bit like a giant oil rig and a project close to the heart of Prince Albert, ruler of the principality, will put at risk protected “meadows” of sea grass.

“The building will make a huge shadow and the marine ecosystem will suffer from this,” said Hélène Granouillac, of the Blue Earth marine protection association in Nice. “There is a danger of creating a sea desert where nothing can live.”

The idea is to erect the new district on giant pillars but Granouillac said that these could affect currents “that are so precious to the sea grass”. She was referring to a nearby field of Posidonia oceanica, more commonly known as Neptune grass, a genus that grows in the Mediterranean and off the coast of Australia.

This, she said, was a “nursery” for many species of fish, including sea horses. The sea grass, which has been protected under European Union regulations since 1988, also absorbs carbon dioxide from the atmosphere, helping to slow climate change.

Wedged between France and Italy, Monaco, which measures less than a square mile, is the world’s second smallest country after the Vatican. Containing some of the most expensive property in Europe, it is eager to acquire more space to accommodate a growing demand for homes.

Various companies – with the help of renowned architects such as Frank Gehry and Lord Foster – are competing for the contract to build a 25-acre site that would include moorings for superyachts, offices, shops and some £2.5 billion worth of luxury flats. It is estimated that the development, which is expected to take a decade to complete, will allow Monaco to let in another 4,000 residents.

Of today’s 32,000 population, only 20% are native Monegasques, the rest being foreigners, including well-heeled Britons, in search of respite from high taxes at home.

Albert, who drives an electric car, prides himself on being a zealous environmentalist. Hence his insistence that, unlike previous, more modest extensions to the national territory accomplished by building embankments at sea, the new district should be erected on pylons.

His plans to reduce traffic in Monte Carlo have not been welcomed by residents fond of Ferraris.

“We have to be inventive,” the prince said recently, justifying the push into the sea. Even so, experts say that the destruction of flora and fauna is inevitable.

“Monaco thinks that technology can answer all its problems,” said Ion Cepleanu of the Mer Nature association in Toulon. “Just attaching these pillars to the rock will be enough to scare off most wildlife. It won’t come back.”

Ever since it exchanged half its territory for cash and independence from France in 1861, Monaco has been looking for ways to expand. About one-fifth of its territory is reclaimed from the sea.

The new district, like various other parts of Monaco, is expected to be named “Princess Grace” after Albert’s mother, the actress Grace Kelly. Her marriage into the centuries-old Grimaldi clan brought an air of glamour that clings to Monaco almost a quarter of a century after her death in a car crash.

Having recently celebrated his 50th birthday, the “bachelor prince” has been coming under growing pressure to settle down but recently denied rumours that a marriage to his girlfriend Charlene Wittstock, the South African swimmer, was imminent.

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