Ecuador invites world to save its forest

President Rafael Correa launches a proposal Tuesday for the international community to compensate Ecuador if the country prohibits oil drilling within its rain forest.

– Last year's presidential campaign posters for candidate Rafael Correa were lime green with the slogan "Citizen Revolution" blazed across them. Five months after taking office, the leftist leader is proposing another revolution, and again a green one – this time to save one of the world's most biologically rich regions.

Yasuni National Park – 2.5 million acres in the Ecuadorian Amazon – is home to some of the world's most diverse communities of birds, amphibians, insects, and trees. There are nearly as many species of trees in a single hectare (2.5 acres) of the Yasuni as in the entire United States and Canada combined. But it's also home to some of Ecuador's largest untapped oil fields. And with nearly 40 percent of Ecuador's people living in poverty, revenue from the estimated 930 million barrels under the ground in the oil block known as the ITT (Ishpingo-Tiputini-Tambococha) would give a significant boost to the country's economy.

In a radical shift from the traditional politics of oil timed with the United Nations' World Environment Day on Tuesday, Mr. Correa is asking the international community to come up with a viable plan to compensate Ecuador for not exploiting the ITT. If foreign governments, businesses, and environmental organizations match half of the projected revenue for 10 years worth of oil extraction, Ecuador will not allow drilling in the region.

If the proposal succeeds, it would be unprecedented. But the clock is ticking. Foreign companies are preparing to bid on the oil extraction, and the plan must be developed before the bidding process is up (an estimated eight to twelve months).

"The proposal will be emblematic, a banner project for nature, for the future," says Vice President Lenin Moreno. "If we obtain at least 50 percent of the revenue that would be generated by the oil, we are willing to sacrifice the other 50 percent that we would have been able to apply to another noble cause, that of social development."

Indigenous groups also at risk

Cultural heritage is at stake along with biodiversity. Indigenous communities live in isolation deep within the Yasuni region and oil exploration could put them at risk by damaging their habitat and exposing them to disease.

In April 2007, the government published a national policy promising "to put forth its greatest efforts to overcome all threats of extermination and guarantee the defense of the individual and collective rights ... of the peoples involuntary isolation." In May, the Council for the Development of Indigenous Peoples and Nationalities in Ecuador lobbied at the UN in New York for keeping the ITT's oil in the ground, arguing that protection of the Yasuni is critical to the indigenous groups' survival.

As the country gears up for elections for its constituent assembly – a body that will rewrite Ecuador's constitution – it is to Correa's advantage to demonstrate his commitments to the indigenous and to the Amazon, say analysts. "The area of greatest political risk for Correa is the Amazon region," says political analyst Marco Ordoñez. "That's the territory of [former President Lucio Gutierrez]," he says. Mr. Gutierrez was forced out of office by civil protests in April 2005, but remains popular in the Amazon, his native region, and is a contender in the upcoming battle for control of the constituent assembly.

The government estimates that the revenue from the ITT block would be $700 million per year for ten years, putting the original compensation figure proposed at $350 million per year for ten years. While the government speaks of "sacrificing" the other 50 percent, the reality is that if the oil were to be extracted, it would be in conjunction with foreign oil companies, which would take home a hefty chunk of the revenue.

A memo of understanding was recently signed between the state-owned oil company, Petroecuador, and the state oil companies of China, Chile, and Brazil, putting onto paper the interests of the latter three in developing and exploiting the ITT's oil reserves. Companies from many other countries have also expressed interest.

A financing plan for Correa's proposal to not allow drilling has not yet been detailed, but Ecuador's minister for energy, Alberto Acosta, envisions a combination of "bilateral and multilateral debt-for-conservation swaps, bilateral donations, individual contributions, contributions from environmental and human rights NGOs, and the placement of certificates for non-exploited crude on international markets." Foreign governments are expressing interest. Spain has stated that it is open to the possibility of a debt-for-conservation swap, while Norway has indicated the possibility of a bilateral donation.

"The money would be held in a trust fund outside of Ecuador," Mr. Acosta says. "An international watchdog group would keep an eye out to ensure not only that the Yasuni is not being exploited, but that the compensating funds go to development-related activities as promised, and not, say, to purchase arms," he says. If a future administration were tempted to allow drilling in the Yasuni, Ecuador would risk losing its cash flow from the trust fund.

How environmentalists see it

The reaction of international environmental organizations ranges from enthusiastic to skeptical.

Luis Suarez, executive director of Conservation International's office in Ecuador, calls the proposal "innovative and interesting," particularly because it is spearheaded by the president and the minister for energy, rather than by the environmental community.

Regional Director of the World Conservation Union, Robert Hofstede, describes the proposal as "interesting, and not unfeasible, but very difficult" due to the challenge of placing a dollar value on the environmental, cultural, and social value of the Yasuni.

Similar concepts have been floated before but not realized, says Michael Dorsey of the Sierra Club. Papua New Guinea, for instance, has led an 11-country team in championing the idea of awarding carbon-trading credits in exchange for the preservation of rain forests at UN Climate Change conferences. Under the arrangement, developing countries with rich forests that offset carbon emissions would earn credits for maintaining those forests. Those credits are called Certified Emissions Reductions (CERs) and can be bought on international carbon-trading markets by developed countries that are exceeding their carbon emission targets as set forth in the Kyoto Protocol. But, so far, no credits have been granted for preserving forests.

"In general, these ideas are positively received," says Dorsey. "But there is not much of a movement [to support them] in the mainstream." Dorsey attributes the hesitance to the power of corporate interests.

No environmental groups have announced a compensation plan yet, but this may change after receiving official contact and further details about the proposal following Tuesday's launch.

"The priority option would be to keep the oil of the ITT underground," says Correa. Meanwhile, he is holding talks with Petroecuador about the bidding process to drill.