The Wallace Global Fund commits $100,000 to support the Ecuadorian government's groundbreaking proposal. The Fund's goal is to help realize a new economic paradigm based on well-functioning natural resources (natural capital) and human capital, rather than on extraction of non-renewable resources. The Wallace Global Fund and partners commit funding and technical assistance to the Ecuadorian Government in its exploration of the viable economic options to acquire compensation for keeping the oil in the ground, and in seeking private and public sector financial support through the launching of a US awareness and fundraising campaign.
The one-year commitment will fund the following economic and ecological analyses that will serve as critical instruments to advance Ecuador's initiative:
1. An estimate of the value of the oil resources in Yasuni Nation Park.
2. An estimate of the value of the ecosystem services provided by an intact ecosystem within the Yasuni.
3. An estimate of the damage to these ecosystem services from oil extraction.
The Fund will also support the work of an organizer who will work both in the US and Ecuador to build understanding and support for the project, in addition to leveraging a matching grant from the CS Mott Foundation to World Resources Institute to explore financial compensation options (debt forgiveness and climate finance).
Stemming current unprecedented rates of biodiversity loss and global climate change are arguably the two most urgent challenges facing humanity today, challenges that the Ecuadorian government is proposing to meet with the groundbreaking Yasuni-ITT proposal. In addition to abating carbon emissions, the proposal would also mark a giant first step towards shifting Ecuador's economy from oil dependency to a more sustainable model based around intact natural systems and by the social and cultural values of the communities within and around them. The Wallace Fund recognizes that perhaps at no other time in history has such a highly oil dependent, developing country come forth with a call for international collaboration to make a transition from a crude economy to a clean economy. Wallace seeks to advance the proposal from a conceptual stage to the implementation phase by financing baseline studies which layout the economic and environmental arguments for the Yasuni-ITT proposal and serve to garner international support.
Yasuni is a UNESCO world Biosphere Reserve and boasts the highest concentration of floral and faunal species anywhere in the world. For more than ten years, the Ecuadorian state has moved towards the exploitation of ITT's estimated 920 million barrels of oil. Associated environmental impacts would include deforestation, watershed damage, and loss of biodiversity. Opening up the ITT oil block would threaten the existence of two isolated indigenous groups. The administration of President Rafael Correa is breaking with tradition, and offering a bold, creative alternative to development of ITT - an alternative with global implications.
For more than three decades, oil has been a mainstay of the Ecuadorian economy. Oil accounted for one third of the Ecuadorian state's revenues between 1972 and 2006 and, by 2006, 60 percent of exports. Yet this oil-based economic model has not benefited ordinary Ecuadorians, causing external debt to skyrocket, wreaking environmental havoc, and sending national poverty and health indicators to near crisis levels. As a consequence, one indigenous people in the Ecuadorian Amazon, the Tetetes, has ceased to exist. Meanwhile, indigenous and campesino communities have lost access to natural sources of potable water, face rising cancer rates from contamination, battle erosion of their cultural traditions, and are among the poorest members of Ecuadorian society.
The Ecuadorian government's Yasuni proposal recognizes the need for natural resource conservation and investment in alternative energy as a sustainable source of Ecuador's national wealth. The success of this proposal will depend on cooperation from the international community - governments, international development and aid agencies, private sector investors and donors, and contributions from civil society. CGI is a nexus of these actors.
With carbon emissions, global temperatures, oil prices, and deforestation rates all at record highs, this forward-thinking proposal addresses climate change by preventing greenhouse emissions from both oil extraction and deforestation, while charting a new vision of social and economic development for Ecuador.
It would also protect one of the natural wonders of the world - Yasuni's stunning and irreplaceable biodiversity, including uncounted endemic species. Often referred to as the 'cradle of the Amazon,' Yasuni is comprised of more than 2.4 million acres of pristine primary tropical rainforest. Boasting some 4,000 plant species, 173 species of mammals, and 610 bird species, the Park has almost as many tree species in 2.5 acres as all of North America. The Park also contains more than 100,000 species of insects per hectare - the highest level of insect diversity in the world. The Tagaeri and Taromenani are two nomadic indigenous groups living in voluntary isolation within Yasuni's 1.8 million acre No Go Zone, and their cultural survival depends on protecting the Park.
Beneath Yasuni, inside the ITT oil block, exists 920 million barrels of proven and probable heavy crude, more than 20 percent of all Ecuador's oil reserves. Ecuador has committed to forgo the estimated $9.2 billion in revenue it would receive from developing the ITT oil field. Instead, it is asking the international community to support the proposal by matching half of the foregone revenue, totaling $4.6 billion.
This commitment to forego government revenues, reduce greenhouse gas emissions and conserve biodiversity is a highly significant contribution from an oil-dependent country with 14 million people, 40 percent of which live in poverty. Each barrel of oil emits 970 lbs. of CO2. The Yasuni initiative would save $4.3 billion in terms of the avoided costs of carbon abatement, not counting the avoided carbon emissions from deforestation, plus all other environmental and socio-cultural ancillary benefits.
The responsibility for reduction of greenhouse gases is shared but disproportionate. Industrialized countries, such as the US, Western Europe, together with other countries like Japan, are responsible for the majority of greenhouse gases. Unfortunately, those who suffer the largest share of the impact of climate change are countries in development-impoverished societies of the world who have barely contributed to global warming yet bear and will bear the brunt of its effects. This discrepancy in carbon emissions of the North is considered by many developing countries as an ecological debt, owed to a majority of the global population by a minority of industrialized nations for its continued level of exorbitant resource consumption.
How will the project be managed?
The Wallace Fund, through its partners, will work closely with the Ecuadorian government to produce the studies and begin to carry out a campaign to seek support and collaboration.
In Ecuador, institutions within the executive branch of government under President Correa are currently carrying out the project. The Ministry of Foreign Affairs is working to promote the proposal internationally. A trust fund, monitored by national and international institutions, is being created where donations can be received with security and transparency. International compensation for the Yasuni proposal will come in a variety of forms, including: debt for nature swaps and/or cancelation of Ecuador's external debt from bilateral, multilateral and Paris Club creditors; donations from foreign governments; support from NGOs and individuals; donations from private companies and civil society; issuing bonds equivalent to oil barrels not extracted; and carbon offsets. Offers of support already coming in include pledges from the Spanish and Norwegian governments. A coalition of NGOs in the US is committing to garner private financial support for this initiative and carry out a campaign to raise awareness and funds towards the initiative. Meanwhile, the state oil company and various interested international oil companies' negotiations for the Yasuni-ITT block are on hold.
How will the project be executed?
The Yasuni-ITT studies and campaign will serve to garner the needed matching compensation funds from the international community. With these funds, the Government of Ecuador will establish the Yasuni-ITT Environmental Trust Fund, which will help the country finance other social and environmental needs. These include: the development of alternatives to oil extraction; energy efficiency; promotion of green technologies such as solar, wind power, and geothermic; a broad social program to include construction of new homes and schools, energy efficient public transportation; investment in, and development of, ecotourism; and a comprehensive program to address the effects of environmental damage, which will include health and educational components. To ensure transparency, an international oversight and monitoring agency will be set up. In this way, the proposal will drive a new economic boom of environmentally friendly services.
The following terms are some of the measurements that will be used to determine success:
- Reduced carbon emissions resulting from the avoided burning of the ITT reserves
- Reduced carbon emissions from avoided deforestation
- Carbon offsets purchased
- Amount and type of international contributions
- Amount of Ecuadorian debt reduction/cancellation
- Number of countries enlisted in support
- Number of countries interested in pursuing similar models
- Number of NGOs dedicated to advancing the initiative in their respective countries
- Amount of new investment in clean technologies
- Type of clean technology use and implementation
- Were rights protections upheld for isolated indigenous peoples?
- Number of signatures gathered in Ecuador's national campaign in support of the Yasuni-ITT proposal