To Drill, or not to Drill?

Yasuni is one of the most biodiverse places in the world. (photo courtesy of vhugopatricio via flickr)

Yasuni National Park is a 10,000 km2 preserve in Ecuador, nestled where the Amazon rainforest meets the Andes foothills. Virtually untouched by settlement, Yasuni may be the most biodiverse place in the world, with hundreds of thousands of species calling it home. Sharing the wilderness with the thousands of plants and animals are two indigenous tribes, the Tagaeri and Taromenane, who have chosen to remain isolated from the outside world. If Yasuni were only a home to immense biodiversity and isolated tribes, it would likely remain a protected national park, visited by almost no one, quietly sustaining its inhabitants as the world around it experiences drastic changes. If only.

In 2006, Petroecuador discovered oil – almost a billion barrels of oil in the Ishpingo Tambococha Tipituni (ITT) field, beneath Yasuni’s untouched paradise. Ecuador is a poor country largely dependent on oil, with approximately half of its export revenue coming from petroleum. Depending on oil prices, drilling would bring in over $7 billion to this impoverished country – over half of Ecuador’s citizens live below the poverty line and one third of its children are malnourished. As Ecuadorian biologist Hugo Navarette says, “At some point conservation and ecology are kind of a luxurious thing. People have to eat.” Seven billion dollars could go a long way towards feeding Ecuador’s population, towards building infrastructure, towards improving education and health care. However, these $7 billion must be balanced against the loss of biodiversity and habitat. Additionally, while $7 billion is a lot of money, there is certainly no guarantee of equitable distribution.  All these factors went into Ecuador’s innovative decision to develop the Yasuni-ITT Initiative, a novel proposal to leave the oil in the ground in exchange for foreign financial aid.

Not drilling the oil has benefits beyond simply protecting biodiversity, though that in itself is hugely important. Over 400 million metric tons of CO2 emissions will be prevented by not drilling. Additionally, accessing and extracting the oil would cause a certain amount of deforestation, even if done as environmentally as possible, as well as bringing the indigenous peoples in much closer contact to western civilization and the inevitable cultural changes that will go along with this contact.

The Yasuni-ITT Initiative seeks to prevent this sight from becoming common in the National Park. (photo courtesy of eMaringolo via flickr)

The general proposal is that Ecuador will not drill in return for approximately half what the oil is worth, or $3.6 billion, in foreign aid. The money would flow through a trust fund administered by the United Nations Development Fund (UNDF), and is earmarked for investment in renewable energy and sustainable development. The proposal has gone through multiple variations, changing both financial amounts and deadlines. In 2011, President Correa pledged to postpone drilling if $100 million was promised by the end of the year. It was, barely, with Germany (despite reservations from its development minister) and Italy being the largest contributors. The Yasuni Fund is now open to private contributions and celebrities, such as Leonardo DiCaprio and Al Gore have contributed. However, many countries, even those who would like to keep the oil in the ground, are reluctant to donate, with good reason. After all, there is no guarantee that drilling won’t commence sometime in the future.In fact, even as Correa tries to rally support for the initiative, he is drafting plans to drill, in case the initiative fails. In the event that drilling occurs, countries will be reimbursed for their respective donations. It is not difficult to imagine a future where Yasuni is exploited for the $7 billion to $10 billion in oil profits instead of $3.6 billion in foreign aid.

Yasuni’s uncertain future is compounded by Ecuador’s unstable government. In 2008, Ecuador adopted its 20th constitution, which was the first constitution in the world to grant rights to nature; President Correa has control of the press and has imprisoned journalists; Correa has been weakening ties with the United States and strengthening ties with Iran. With such instability and uncertainty, the Yasuni-ITT Initiative may appear disingenuous, but it all depends on how you frame it.

Sure, it’s easy to say that Ecuador’s stance essentially adds up to, “Pay up, or Yasuni gets destroyed.” However, if we look at biodiversity and ecosystem services as valuable goods, then protecting Yasuni becomes nothing more than a market transaction. We pay for valuable services all the time: roads, education, waiters, valets. Should it be any different to pay for an ecosystem service than a human service? In their 1997 landmark essay, “Economic and Environmental Benefits of Biodiversity,” Pimentel et al. argue that we can put price tags on ecosystem services. They assess various contributions of biodiversity: pharmaceuticals, nitrogen fixation, waste disposal, crop and livestock genetics, pest control, pollination, ecotourism, and soil formation. Based on their conservative estimates, the benefits from biodiversity worldwide are $2,928 billion annually. A similar study by Costanza et al. (1997) values ecosystem services at $33,000 billion annually. In comparison to these price tags, paying $3.6 billion to preserve one of the most biodiverse places on the planet no longer seems like extortion, but a bargain.

Only time will tell if Yasuni National park will retain its pristine state. (photo courtesy of sara y tzunky via flickr)

In State of the World 2012, Kubiszewski and Costanza investigate the utility of payments for ecosystem services. For example, Costa Rica established a payment system where farmers are paid to restore or preserve forested areas on their land. While forests provide no direct income for the farmers, they host valuable ecosystem services for the region, such as carbon sequestration, water filtration, and erosion protection. All of these services have direct benefits on farmland and in crop health. As Kubiszewski and Costanza argue, “we need institutions that can effectively deal with the public goods nature of ecosystem services… that use a balanced combination of existing private property rights systems and new systems that can prioritize ecosystems and their services without privatizing them” (pg. 181). In the context of the Yasuni-ITT Initiative, investment provides no ownership or management benefits, so it is different than most market transactions. However, its forests provide important, albeit mostly unquantified, services. If we value those services, we should be willing to pay for them.

It remains to be seen what will happen to Ecuador’s Yasuni-ITT Initiative.  Will the world decide to finance this creative new way of conservation? Will President Correa keep his promises? Will future presidents of Ecuador? Does this proposal, while perhaps groundbreaking, open the door to ownership of ecosystems and thus an entirely new market to be exploited? Will the $291 million Ecuador is requesting in 2012 and 2013 fail to materialize? If not, will plans to drill for oil go forward? Only time will tell.


(Written by Alison Singer; Edited by Antonia Sohns)

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