Ecuador, the OPEC member with the smallest amount of proven oil reserves, has gained outsized attention in the debate over the future of oil extraction in recent days and may well play a decisive role in the outcome of the global tension between economic development and environmental conservation.
On August 15, President Rafael Correa announced that “the world has failed” Ecuador in its UNDP-supported goal of attracting $3.6 billion from the international community to offset the opportunity costs of not exploiting oil reserves located beneath a sensitive region of Yasuní National Park. Known as Ishpingo-Tambococha-Tiputini (ITT), the area is closely tied to two indigenous groups that have chosen to live in isolation and is touted by the government as “the most important reserve for biodiversity on the planet.”
Having received only $13 million for the initiative in six years, Correa argues that his government can no longer afford to leave the area, which represents approximately one-fifth of the country’s known reserves, unexploited. The decision infuriated indigenous leaders, who are working to bring the question up for a national referendum.
The battle over Yasuní-ITT is representative of similar conflicts taking place throughout the world, and its outcome will have long-lasting impacts on broader global trends related to environmental preservation and indigenous rights. From the Belo Monte dam in Brazil to “fracking” in the United States, debate rages over who should pay for the negative externalities of major development projects and the opportunity costs of not carrying them out.
What are the possible outcomes of the current situation in Ecuador, and how could they affect global trends in the debate between development and conservation? Three possible scenarios hold particular relevance for the rest of the world:
1) Ecuador Moves Forward With Extraction
If Correa is able to overcome opposition to the measure, the Ecuadorian government has promised that the extraction will affect no more than one percent of land in the park and that it will take precautions to prevent damage to the environment. Past experience suggests that impacts will not be minimal, however. However, the potential economic benefits of extraction are hard to ignore. Oil is a critical funder of the Ecuadorian government budget, making up a projected 23 percent of revenue in 2013.
2) Local Actors Legally Block Extraction
Local groups ranging from lawyers to youth and indigenous organizations are working feverishly to prevent Correa’s decision from being carried out. In the most likely effort, activists hope to raise the 580,000 signatures required to hold a national referendum on whether to block extraction in Yasuni-ITT.
3) Correa Delays Extraction
Because both of the two previous scenarios carry heavy costs, Correa could delay extraction in Yasuní-ITT to give the international community more time to act. It is possible that this was his plan from the beginning, and that the decision to move forward with extraction was intended to force the world to take the situation seriously.
The Bottom Line
If drilling begins immediately, indigenous groups and conservationists will continue to lose ground to economic development. The opposite will occur if local actors prevent extraction. But by giving the international community more time to act, Ecuador may be able to convince the world’s largest polluters to pay for the preservation of Yasuní-ITT. Doing so successfully would prove that environmental health and economic development need not be mutually exclusive.