Ecuador Refuses to Cash in on its Oil Reserves

18 August 2010 [MediaGlobal]: Ecuador’s recent decision to place the Yasuni Ishpingo Tambococha Tiputini (ITT) National Park under the protection of a UNDP trust fund is the first of its kind. This particular plot of Amazon forest is worth $7.2 billion because of the 846 million barrels of natural oil reserves resting quietly beneath its surface. But Ecuador refuses to cash in.

Bisrat Aklilu, Executive Coordinator for the UNDP’s Multi-Donor Trust Fund Office, told MediaGlobal, “This is a very, very unique decision. No oil-producing country has ever chosen not to extract it, especially in a time of economic crisis. It’s a historic decision.”

While Ecuador’s share of the Amazon comprises only 2 percent of the small South American nation, its biodiversity is unparalleled. A study conducted by Conservation International ranked Ecuador number one for richness of biodiversity as over 70,000 types of insects can be found in any one acre of forest. Overall, these 2.5 million acres contain more species than both the United States and Canada combined. The 600 species of trees, 1000 fish, and 400 birds, keep Ecuador’s Amazon buzzing with diversity day and night.

Aklilu added, “They realize their responsibility to the world to protect this world heritage, so they are sacrificing 50 percent of the income they could have generated from extracting the oil reserves.”

Forfeiting this income, however has positive global implications. The carbon emissions that would have followed the extraction and burning of the oil amount to more than 400 million metric tons of carbon.

In the sentiment of contributing to global environmental health, the trust fund will rely on international donors and provide mechanisms for small donations from global citizens as well. The idea is that Ecuador will put in half of the land’s worth, about $3.6 billion, from its own pockets and will rely on the rest of the world to provide the rest.

The incoming money will primarily be invested in renewable energy resources like solar power, wind power, and alternative sources of fuel. According to the agreement, Ecuador not only wants to preserve its natural resources but also seeks to become a leader in alternative resources.

Tarsicio Granizo, Ecuador’s Undersecretary of Policy and Planning stated, “The Yasuni ITT Initiative will promote a post-oil economy, a change in the country energy matrix and, most important, it will create a move towards a new development model based on means other than the use of non renewable resources as the first source of income.” He added, “We want to have the Galapagos Islands as the first place in the country free of fossil fuels by 2012.”

There is, however, a very critical timeline. If Ecuador’s trust fund does not receive at least $100 million by December 2011, they will revisit the decision.

Granizo stated, “Ecuador is asking the world to recognize the co-responsibility of developed countries in climate change… If these resources [$100 million] are not raised, or if in 13 years the country does not receive the $3.6 billion, Ecuador will extract the oil of the ITT field, within the Yasuni National Park.”

But, will they simply overturn the resolution that has made them instant environmental saints?

Aklilu said, “They had 70 percent of public support going into this; it will be very hard to overturn such a thing without massive disapproval from the public. But, reality is reality in the current economy. They will need support from the rest of the world to make this work.”

Ecuador is not a wealthy country, nor are they free from the threat of environmental disasters, as shown by last week’s magnitude 7.1 earthquake. They are, in fact, a country that could benefit tremendously from the capital generated from oil revenue. Yet they have set an example for the rest of the world, that it is feasible to make the right decisions when it comes to environmental policy.