On the spiny ridge of Romania's southern Carpathian mountains, cool streams tumble down gorges, providing a stirring sight to visitors and a vital source for aquatic species.

Precious as the stuff of life, the water also carries economic bounty, posing an anguishing problem for environmentalists.

Across the region, entrepreneurs are furiously installing small-scale hydro-electric plants, harnessing water to help meet Romania's energy needs.

But environmentalists say a rush of permits unleashed by fat subsidies and slack official oversight poses lasting threats to biodiversity.

Sixty-nine green groups have addressed a letter to Romania's environment minister, Laszlo Borbely, charging that the glut breaches national and European laws.

"Construction has reached such a scale that it now constitutes a major threat to the ecological integrity of these areas," they said.

Nationwide, the Romanian water agency has approved 297 projects for constructing 536 power units of up to 10 megawatts each.

"Some of these rivers are part of Natura 2000, a network of natural sites set up to preserve Europe's most valuable and threatened species and habitats," said Nicolae Galdean, head of the Natural Science Faculty at the Ecological University in Bucharest.

Small-scale hydro generally does not involve the construction of a dam.

Instead, part of the flow is diverted through a pipe, ranging from 70 centimetres (28 inches) to 1.20 metres (48 inches) in diameter, to a downstream turbine which generates the electricity.

In theory, this should not have a big impact on the environment.

The pipes are supposed to be installed parallel to the stream or above it, so that they do not affect the direction of the watercourse or disrupt aquatic life, said Galdean.

In addition, the volume of water that is extracted (and later replaced downstream after it flows through the turbine) should not be so big as to affect the stream's ecosystem.

But in many cases pipes have been installed in the bed of the stream. In the Fagaras mountains, diverted water amounts to as much as 80 percent of the flow, according to hydro specialists.

The issue leapt to national prominence last month when ProTV channel showed mechanical diggers ripping up the bed of a stream in the Fagaras during the trout breeding season.

The work was for a permit to build 10 small hydro plants on the Otic, Buda and Capra streams, generating 57,000 megawatts a year, or enough power for about 23,000 families.

In return, the investor will get some 10 million euros ($13.6 million) a year in green bonuses, according to National Geographic Romania.

On November 2, a team of AFP journalists visiting a site in the Fagaras saw excavators ploughing up the bottom of a stream as big pipes were installed in its riverbed.

A worker told AFP the team were not allowed to dig into the stream "but there are some places where we cannot do otherwise."

Responding to the outcry, Borbely ordered work suspended for several weeks while the ministry carried out checks and ordered a moratorium of several months on new permits in order to reassess the law.

After initially challenging the work in a televised outburst, the chief of the environmental police, Silvian Ionescu, said there was no problem.

He told AFP that digging into the riverbed was indeed "damaging for biodiversity" but that the law did not allow him to intervene.

Green groups disagree.

"The problem in Romania is that we do have the necessary legislation protecting rivers but it is not implemented. This is the case in the Fagaras," Orieta Hulea, head of the World Wildlife Fund (WWF) programme for freshwater in the Carpathian and Danube areas told AFP. Some NGOs are pondering a court case.

Similar projects are sprouting elsewhere in the Balkan countries, including Bulgaria, Serbia and Montenegro.

NGOs and scientists do not oppose small hydro installations as such, said Hulea.

But careful planning is needed to determine which areas are too vulnerable and tighter controls on investors are required, she added.

"The problem with biodiversity is that once it is destroyed you cannot re-do it, even with a million euros (dollars)," said Galdean.