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September-October 2010
Vol. 35, No. 5

Ecuador: Trust fund to keep oil un-drilled

In early August, Ecuador signed an agreement with the United Nations Development Fund (UNDP) creating a trust fund to support Ecuador’s commitment to keep 20 percent of the country’s oil in the ground and un-drilled. This development could serve as a model for protecting environmental and indigenous habitats while generating revenue. At the same time, some fear that the Ecuadorian government has created a brilliant smokescreen: While it garners praise for its progressive environmental policies it may be planning to exploit oil in other regions of the Ecuadorian Amazon.

Because oil represents 60 percent of Ecuador’s exports, making a decision not to exploit oil in the Ishpingo, Tambococha and Tiputini blocks of Yasuni National Park is quite novel. The Ecuadorian government claims that drilling in this region that is knows as the ITT–Yasuni could bring in at least $7 billion at today’s prices. Instead it is seeking contributions from donors for a $3.6 billion trust fund to protect the area.

The ITT–Yasuni initiative represents the first time an arrangement has been made that provides an incentive for a country not to drill oil. At the signing of the agreement UNDP administrator Rebecca Grynspan stated: “We are witnessing the inauguration of new instruments of cooperation, which will act as a basis for supporting other national and international efforts directed toward the search for economies that are in harmony with society, nature and the planet.”

At the international climate negotiations that continued in Bonn, Germany in August, there were some active proposals for rich industrialized countries to pay less-industrialized countries to not exploit their forests, but the idea of paying countries not to develop oil reserves is extremely forward-thinking. The UNDP estimates that leaving this area un-drilled will spare the earth 400 million tons of greenhouse gases while preserving an area rich in biodiversity.

Yasuni National Park is situated where the Amazon, the Andes and the equator meet. Recently it was found to be home to more than 20 threatened mammal species, including jaguars, otters and monkeys, and several hundred bird species. Six hundred and fifty species of tree and shrub lie within a single hectare, representing more than in the entire continent of North America.

This is the first experiment in recognizing the removal of oil from the land and its accompanying environmental destruction and pollutions is actually a loss, not a gain. Ecuador has placed a price on the gift of biodiversity and asked for donors to pay to preserve that gift. So far a few European countries (Germany, Spain, France, Sweden and Switzerland) have shown interest by collectively committing $1.5 billion to the trust fund. Ecuador has been asked by Guatemala and Nigeria for assistance in coming up with similar program for their own countries.

The UNDP will administer the trust fund money to protect 4.8m hectares of land in Ecuador’s other national parks – including the Galapagos Islands – and to develop renewable energy sources and build schools and hospitals for indigenous communities.

While the idea has potential to preserve biodiversity and prevent pollution, this agreement was years in the making. Ecuador’s civil society and the Huarorani (indigenous people of the affected region) kept the idea alive with citizen action, petitions and national and internationals public opinion campaigns.

While recognizing the importance of this agreement to protect this fragile bio-region, many environmentalists and human rights activists are wary. In the past, contribution pledges have been made and not kept and commitments toward environmental protection have fallen to the wayside. All parties must be held to their word. Oil remains a major source of tension in many Amazonian communities dividing governments and people. Some fear that Ecuadorian President Correa will use the ITT-Yasuni conservation initiative as a smokescreen masking plans to open other areas of the Amazon for oil development that will offset income lost from the ITT–Yasuni closure.

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