Digging Depressions in seafloor to create artificial islands in nearby areas
Small islands have been built in inland waters since prehistoric times, but using sea floor material to build an offshore island is a much larger project. As Peter Taylor and JBH have pointed out, it has been done twice off the coast of Dubai. Both those projects have been monitored for erosion and local environmental effects, some of which were significant. There is also Samphire Ho, which is not an island but a coastal extension of the British mainland built out of spoil from the Channel Tunnel.
The technology for such a project is clearly available but the volume of rock/sand/mud to be moved makes it extremely expensive in energy and money, and probably not financially sustainable in most cases. If extra land is the aim then Dutch-style sea walls, or large platforms on stilts or floats, would be cheaper.
The environmental impact would depend on the location, geology and the source of energy for the work. Any bottom-dwellers that couldn't swim out of the way would be destroyed, but the depressions and islands would provide a larger habitat with a range of depths, which might give a net increase in biodiversity. If the islands were simply piled-up sand, their footprints would be huge.
Any minerals exposed by the digging would mix with seawater, which might (temporarily) pollute a wider area with iron, silt or heavy metals.
The finished islands would affect waves, currents and the erosion patterns of any nearby coasts for as long as they lasted.
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This is already done today
The UAE artificial islands use material dredged from the sea bottom to ceate the islands.
But is it sustainable?
The easy answer is "no." You're not creating islands out of bedrock, you're creating islands out of sand. You might remember the old ditty based on the Bible... "The wise man built his house upon the rock..." Wave and current erosion is constantly eating at the nearly insubstantial sand construction and causing it to slip back to where it came from.
Having said that, could it be sustainable?
let's throw cost and sanity to the wind. Could the idea be sustainable? The answer, I believe, is yes.
If you created a fairly large island and worked very hard to cover it with vegetation such that the root structures bound the sand in place, then you'd have a sustainable solution with the possible exception of being hit by a tsunami.
A worthwhile axiom to keep in mind is, "Mother Nature can always prove the arrogance of Man."
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