Saturday, August 17, 2013

Not putting the money where the mouth is: Ecuador's oil in Yasuni!

I love the natural environment as much as any regular person might.  A hike in the woods, the sight of a waterfall, the spray from the ocean waves, the gentle breeze, and, of course, my regular walk by the Willamette River, well, I would not want to trade these away.  To live where I live with so many natural wonders is a wonderful salary by itself.


At the same time, as I have often noted in this blog, I am not ready to tell less economically developed countries how they ought to deal with their natural resources.  That is where, I suppose, I begin to part ways from the typical American environmentalist.

Living in the USA, we have all the energy we need and all the material comforts--and more--that one might look for.  It is, therefore, easy to look at the vast majority of the countries across the planet and find fault with them for not doing more to protect the natural environment.

If they really mean it, then those advocating for the environment ought be willing to pay for it.  After all, if a much poorer country wants to tap into its natural resource, the objective there is economic growth.  Not using those resources means giving up on that potential economic benefits.  Those interested could then pay the country a comparable amount in order to conserve those natural resources.  Right?

Talk, is of course, cheap.  Thus, we engage in all kinds of rhetoric.  But, when it comes down to it, most environmentalists are like the rest of us who not only don't like to let go of what we have but also would love to have more.  Hence my lame joke that I rarely meet an environmentalist who doesn't want a pay raise!

The recent news item about Ecuador's government abandoning its idea to protect a bio-diverse habitat is a case in point:
OPEC-member Ecuador, where the rights of nature are recognized in the constitution, plans to develop crude deposits in an Amazon area declared a biosphere reserve by the United Nations as existing fields age and economic growth slows.
President Rafael Correa will ask the country’s congress to allow drilling in the Ishpingo-Tambococha-Tiputini oil fields in eastern Ecuador’s Yasuni National Park, he said yesterday in a speech broadcast on public television station ECTV. The area’s estimated oil reserves could be worth more than $18 billion, Correa said.
The decision reverses a policy to preserve nature in an area eight times bigger than Los Angeles, estimated by Correa to hold 920 million barrels of crude, or about 20 percent of Ecuador’s reserves. The proposal to develop the area comes as economic growth is forecast to slow for a third year.
While Correa and politics might be corrupt like any other country, one cannot blame the guy for the decision when economic growth is slowing down in a country with a per capita income that is barely a fifth of the US average--after adjusting for purchasing power parity.

Ecuador did try, of course, to sell the idea of the rest of the world paying the country to protect the area.
[In] 2007, Ecuador President Rafael Correa came up with a innovative proposal. He’d ask wealthy countries and donors to pay Ecuador $3.6 billion to leave that oil untouched.
It’d be an elegant way to help tackle climate change, he explained. The carbon would stay out of the atmosphere. Ecuador’s Yasuní National Park, one of the most biologically diverse spots on Earth, would remain unharmed. And Ecuador would be compensated for the billions in foregone oil revenue. (The three oil fields in Yasuní make up about one-fifth of Ecuador’s oil reserves.)
The problem? Those wealthy donors never materialized. Spain chipped in a couple million. So did the Andean Development Bank and the Inter-American Development Bank. The U.N. and other private individuals raised some funds. But in the end, Ecuador only raised $13 million, a far cry from the $3.6 billion Correa had sought.
If you were the president of Ecuador, wouldn't you also have taken this decision?
“Let no one be fooled, the fundamental reason this failed is because the world is hypocritical.”
“It was not charity that we sought from the international community, but co-responsibility in the face of climate change,” he said. His plan would have prevented the emission of about 400m metric tons of carbon dioxide, it was estimated. “The world has failed us.”
A big question then for the rest of the world is the same one from 2007:
“If we can’t justify saving a place that has more species per square kilometer than any other place on the planet,” Swing asked, “what are we going to decide to keep?”
We cannot expect the people of Ecuador alone to pay the price, can we?

Of course, later on we will target the oil companies for extracting oil for there and selling it, while conveniently forgetting that we really did not want to pay up!
Last year, in a paper in the Journal of Political Economy, Northwestern’s Bård Harstad argued that paying poorer countries to keep their fossil fuel resources unexploited could be one of the most cost-effective ways of tackling climate change. The big hitch, as always, is where the money will actually come from.
I will refrain from uttering the cliche about cake and eating!


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