This paper quantifies environmental effects of island-building operations in the South China Sea, which result from dredging and can negatively impact marine flora, fauna, and ecosystems. The extent of the damage caused by island-creation is believed to be large, as the South China Sea reefs support the largest concentration of marine biodiversity on Earth. Through use of satellite imagery, we investigate the island-construction on Mischief Reef in the South China Sea, showing backscatter increases of up to 350% in waters surrounding the reef, with plumes of excess sediment exceeding 250 km2 at times during island-construction, and the cumulative area impacted by dredging exceeding 1,200 km2. Comparison of satellite-derived chlorophyll-a, backscatter, absorption and remote sensing reflectance at 412 nm suggest that dredging activities led to a decrease in biological health of the region resulting from the smothering of natural benthic habitats and reef complexes with sediment. We anticipate this ex post facto quantification of the connectivity between island-construction, large particulate plumes and a decrease in absorption related to marine life in the water column to establish a starting point for further study into ecosystem impact. The potential associations between these damages and a long-term reduction in ocean life and resources could serve inter-governmental bodies with a baseline metric for evaluating the level of damage caused. This may result in both forward-looking deterrent policies that limit island-building as well as backward-looking compensation.