Sir,

In your issue of June 21st you dismiss the tentative decision of the new government of Ecuador to leave in the ground the one billion barrels of heavy oil in the Yasuni National Park.

There are good economic reasons for the moratorium. The costs of oil exploitation are probably higher than the benefits.

First, there are the extraction costs, particularly high compared to price since this is heavy oil.

Second, there would be the local externalities, in the form of air and water pollution, deforestation and loss of biodiversity, threats to the health and culture of the Huoarani indigenous peoples. Such costs are not easy to translate into money terms but they are very real, and often irreversible.

Third, the oil would finally be converted into dissipated heat and carbon dioxide, and the production of carbon dioxide worldwide is increasing at over 3 per cent per year (emissions doubling in twenty-two years instead of decreasing by half, as they should). Normally, nobody pays for such local and global externalities - a case, if you wish, of market failure, or rather, I would say, a case of cost-shifting success.

Some influential members of President Rafael Correa's team are rationally in favour of leaving the oil in the ground, and are asking that one part of the foregone revenue be compensated by outside donors. Oil exploitation from Yasuni would yield a positive financial revenue because the externalities are not factored into the accounts. Contrary to your assertion that such donations (which could take the form of reductions of the external debt) would inevitably go to "populist" policies, I think that an environmental conditionality could be accepted in the form of transfer of wind and solar energy technology, energy efficient new housing and transport, and eco-tourism expertise and investments.

Professor Joan Martinez-Alier

Universitat Autonoma de Barcelona

(phones 3493581282, 34935811200, 34932682591)