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| Friday, 03 July 2009 | |
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An ambitious scheme to save pristine forest starts to take shape
The government of President Rafael Correa now wants help to keep pristine one of Ecuador’s most important remaining jungle areas, in the Yasuní national park. In a corner of the park known as ITT (after the Ishpingo, Tambococha and Tiputini rivers) lies an oilfield which preliminary seismic studies show holds almost 846m barrels of oil, or around 20% of Ecuador’s reserves. The ITT area is unusually biodiverse. It is thought to be home to several hundred tribesmen who shun the modern world and whose way of life is protected under a new constitution promoted by Mr Correa.
Oil
companies, including Spain’s Repsol and Chinese-owned Andes Petroleum,
are already extracting about 59,000 barrels a day elsewhere in the
Yasuní park. Repsol tightly controls access to its field, keeping out
would-be colonists. Further east, Petroecuador, the state oil company
and the country’s worst polluter, is developing a block adjacent to ITT.
In
2007 when Mr Correa first mooted the idea that the world should pay
Ecuador not to exploit the ITT oil this was widely dismissed as
half-baked. Under the influence of a group of politicians from across
the spectrum and environmentalists the idea is gaining flesh and
credibility.
It
now centres on issuing bonds for the value of the carbon emissions
avoided by not burning the oil and by preserving the forest. These
would be worth up to $5.2 billion at the current carbon price in the
European emissions’ market. The money would be lodged in a trust fund
managed by international bodies such as the Inter-American Development
Bank, and spent on alternative-energy projects in Ecuador. Bondholders
would have a say in how the money is spent.
Last
year Germany agreed to give €300,000 ($425,000) for feasibility
studies, and last month reiterated its support. The scheme will go
ahead once the first $350m is raised, says Roque Sevilla, a former
mayor of Quito who is promoting it. The hope is that most of this money
will come from European governments. If a future government in Ecuador
opted to exploit the oil, it would have to repay the bondholders with
interest, says Francisco Carrión, a former foreign minister who is
another of the promoters.
He
accepts that the main obstacle is Ecuador’s poor reputation. In
December the government defaulted on $3.2 billion in bonds—the third
default in as many decades. As a result of Mr Correa’s expansionist
fiscal policy, Ecuador risks running out of foreign-exchange reserves,
increasing the temptation to tap the oil. Nevertheless, the Yasuní-ITT
initiative, as it is called, is now worth a closer look.
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THOUGH half of Ecuador lies in the Amazon basin, its rainforest is
shrinking faster than in neighbouring countries (by 1.67% a year). It
has been ravaged by logging, poachers and oil extraction. Settlers have
streamed in to carve out a precarious life. Over the past decade they
have been joined by thousands of refugees fleeing violence in Colombia,
as well as guerrillas and drug traffickers who inflict it. Native
tribes have been uprooted, forced deeper into the forest or have
disappeared.
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