Market News

 January 16, 2017
Ecuador has begun drilling for oil in the world's richest rainforest

 As many of the planet's last hectares of wilderness give way to roads and towns, farms and soccer fields, gas stations and Starbucks, the Anthropocene marches on. Perhaps nowhere does the struggle between wild and manicured feel more palpable than in Ecuador, and nowhere in Ecuador is the battle for biological and cultural diversity more profound than in Yasuní National Park.

Situated on Ecuador's easternmost flank with Peru to the south and east and Colombia only a short distance north, the 6,101-square-mile park sits at the confluence of the western Amazon basin, the Andean foothills, and the equator. The park's boundary encircles one of the most biodiverse ecosystems on the planet. A single hectare, an area roughly the size of a soccer field, might boast as many as 655 different kinds of trees, more than all native tree species in the continental US and Canada.

Some 500 fish species and 600 kinds of birds live in Yasuní's streams and skies. Among the thousands of mammals that call this forest home are the endangered white-bellied spider monkey (Ateles belzebuth) and giant otter (Pteronura brasiliensis), and the near-threatened golden-mantled tamarin monkey (Saguinus tripartitus). The park is also the ancestral home of three indigenous tribes, the Huaorani, Tagaeri, and Taromenane, who still rely almost exclusively on the rainforest's abundance for their food, medicine, and shelter.

Beneath this ecological and cultural gem sits another kind of treasure: crude oil. Almost a billion barrels of it, around 20 percent of Ecuador's untapped oil reserves. (By comparison, North America's largest oil field, in Alaska's Prudhoe Bay, originally held 25 billion barrels.)

For a small country dependent on oil exports for a third of its federal budget, those riches have been tantalizing. Yet Ecuador has resisted, even going so far as to ask other countries to contribute to a campaign to help it avoid extracting Yasuní's oil. The move wasn't intended as a bribe, proponents said, but rather as acknowledgement that the health of Amazonian forests has global climate implications.

Then in the spring of 2016, in a move that shocked the international conservation community, Ecuador began trucking the first barrels of crude out of Yasuní. Is this the beginning of the end for one of the world's most biodiverse ecosystems? It's certainly a pivotal moment. The tiny country is now poised to cash in on one of its most valuable assets --- but at what cost to Yasuní's countless inhabitants, and to the world?

To understand how oil extraction begins inside a UNESCO Biosphere Reserve such as Yasuní National Park, we need to step back a decade.

In 2007, Rafael Correa ascended to Ecuador's presidency in part on the basis of his promise to distance the nation from American interests.

Then in 2008, the country defaulted on some $3 billion worth of debt. Desperate for an influx of cash, Correa struck a deal in 2009, not with the US but with China: oil for cash. The $1 billion loan agreement stipulated that Ecuador's state oil company, Petroecuador, would sell crude oil to Petrochina, the world's second-largest publicly traded oil corporation.

"At the outset, many people talked about how mutually beneficial this was for both countries," says Kevin Koenig, Ecuador program director for AmazonWatch, a nonprofit devoted to working with indigenous groups to protect the environment.

But the loans kept coming. In all, China has loaned Ecuador some $15 billion, plus another $7 billion in financing for the development of an oil refinery in Ecuador's port city of Manta. According to documents obtained by Reuters in 2013, China at the time was responsible for nearly two-thirds of Ecuador's financing, while holding claim to almost 90 percent of its oil exports.

When the deal between the two countries was first struck, oil prices were soaring. But the value of a barrel of oil has since fallen to roughly half what it was then. Which means Ecuador has to come up with a lot more oil to repay its loans from China. As this need has grown, the crude resting beneath Yasuní has only looked more tempting.

Ecuador was the first nation to explicitly protect the rights of nature in its constitution, which prohibits the extraction of nonrenewable resources like oil from protected areas. It was in keeping with those regulations that Correa announced the innovative Yasuní-ITT initiative in September 2007.

Launched on the eve of the global economic crisis and well before climate scientists officially declared that a bulk of the world's oil reserves must be left in the ground to limit global temperature increases to 2 degrees Celsius or less, the Yasuní-ITT initiative now seems ahead of its time. The oil sitting beneath the Ishpingo Tambococha Tiputini (ITT) oil fields at the eastern edge of Yasuní was worth an estimated $7.2 billion in 2007 prices. Correa's initiative proposed to leave it in the ground, but he wanted the rest of the world to pay Ecuador for half of the oil's value to do so.

"Ecuador doesn't ask for charity," Correa said at the time, "but does ask that the international community share in the sacrifice and compensates us ... in recognition of the environmental benefits that would be generated by keeping this oil underground." What Correa didn't say at the time was that the initiative also had a plan B: drilling.

It seemed like a no-brainer. Surely other countries would pitch in.

Unfortunately, the initiative came far short of raising the necessary funds. By 2013, the world had only ponied up a scant $13 million in actual donations, with another $200 million in promises. "The world has failed us," Correa said in a televised address. "I have signed the executive decree for the liquidation of the Yasuní-ITT trust fund and with this, ended the initiative." Plan B was going into effect.

At risk following the failure of the Yasuní-ITT is not only the area's tremendous biodiversity but also the vast ecosystem services it provides, both to local indigenous communities and to the world as a whole. All the oil beneath the ITT fields would feed the world's energy demands for a mere 17 days, yet would release some 410 million metric tons of carbon dioxide into the atmosphere. Protecting it could have --- and might still --- set an example for the rest of Amazonia, and indeed the rest of the world, demonstrating a new strategy for simultaneously preserving biodiversity and combating climate change while allowing an oil-rich nation to remain economically prosperous.

Even weighed against the astounding biodiversity of the Amazon rainforest in general, Yasuní National Park is noteworthy. "Yasuní has always stood out to me because of its species richness. It's unbelievable, unparalleled," says wildlife biologist and photojournalist Phil Torres, who spent two years running a research station nearby.

The nearly 4,000 kinds of plants documented within Yasuní's boundaries provide habitat for a whopping one-third of the reptile and bird species known in the Amazon, and nearly as many amphibians and mammals. Out of every 10 Amazonian fish, at least two swim in its streams and rivers. "No other place on the planet has so many species of reptiles and amphibians in one single location," says herpetologist Alejandro Arteaga, co-founder of the ecotourism and research group Tropical Herping. All of this in an area that comprises less than one-fifth of 1 percent of the entire Amazon rainforest.

While no one knows for certain which environmental factors have played the biggest role in creating Yasuní's extreme biodiversity, it's likely the combination of precipitation, temperature, and topography. The ecosystem in and around the park soaks up more than 3 meters of rainfall each year, with no real dry season. Because it is perpetually warm and wet, fruit and flowers remain available year-round.

Another factor is its location, at the confluence of the Andes and the equator. The wide variety of habitats here has given rise to an equally wide variety of plants and animals specifically adapted to exploiting what those habitats have to offer. Yasuní is home to at least 20 species of amphibian, 19 birds, and four mammals found in the region and nowhere else on the planet.

Indigenous people are an integral part of the ecological fabric in and around Yasuní as well. Groups like the Huaorani, the Tagaeri, and the Taromenane have carved out niches here, finding shelter, sustenance, and medicines in the natural resources of this rich landscape.

In 1998, Ecuador ratified the International Labor Organization's (ILO) 169th convention, which guaranteed its indigenous people the right to free, prior, and informed consent before the government would allow anyone to extract natural resources from indigenous territories. The Ecuadorian constitution itself even describes extractive operations in indigenous territories as "ethnocide."

In practice, the government can override these constitutional regulations if officials determine that drilling would be in the national interest. In such cases, oil companies send representatives to negotiate with indigenous groups living in the territories that the companies have leased from the government.

"My experience is that the indigenous groups get manipulated into accepting anything the oil company wants," says biologist Kelly Swing, who has observed more than two decades of these negotiations in the area while directing the Tiputini Biodiversity Station, a research facility near Yasuní's northern border.

Swing explains that representatives typically offer educational opportunities, access to medical facilities, electricity, and jobs, as long as the indigenous people will allow them access to their lands. "But the financial incentive is for companies to follow through on as little as possible to save themselves money in the long run." Even when health clinics are established, he adds, most are often left without supplies or personnel after a short while.

Not all of Ecuador's indigenous groups have capitulated to the oil industry. In 2015, a delegation from the Kichwa community in Sarayaku, just south of Yasuní, attended COP21, the United Nations climate change meeting in Paris. "Our people are committed and determined to make sure that there is no oil, no mining, no industrial development on our territories," said Kichwa leader Patricia Gualinga through a translator. Her Kichwa community has successfully kept oil out of their territory for a decade.

Despite the failure of the Yasuní-ITT, all is not lost. Scientists and conservationists say there's still time to protect Yasuní from severe ecological harm even after drilling has begun. According to Swing, oil extraction itself is not the primary cause of ecological devastation. That can happen in the event of a massive spill, "but loss of forest, horizon to horizon, is much more likely to be caused by squatters who show up along access roads."

When Torres first came to Ecuador in 2010, he became familiar with one road near his research station. Initially, the dirt track was narrow enough that the forest's canopy remained intact, allowing passage to monkeys, macaws, and everything else. Before long, the road was widened, spanning 30 meters in some spots. Then came electrical lines, and road lights. "As I was leaving in 2012, they were going to bring in asphalt," he says.

Initially built and subsequently expanded to transport supplies and workers to the oil fields, and to haul out the oil, roads end up providing an irresistible pathway for the illegal harvest of timber and bushmeat and the extraction of precious metals and gems. "We had photos of hunters on the camera traps we set up to see wild animals," says Torres.

As a result, the forest was slowly being deprived of its megafauna. "There was one jaguar sighting in three years. I saw a pair of macaws only twice in one year," Torres recalls. Small tamarin monkeys that aren't worth hunting stuck around, but the meatier howler monkeys, whose calls can travel more than 3 miles through the jungle, were only heard two or three times each year. After leaving Ecuador and spending time in a well-protected part of the Peruvian Amazon, Torres began to understand what Peru had and what this part of Ecuador had lost. "There were macaws everywhere, and I'd see 50 monkeys every day," he says.

The consequences from the loss of large animals has been called "empty forest syndrome." To the naked eye, these forests appear intact. Only a closer look reveals what's missing. Jaguars may not be formally extinct, but if their populations have been reduced to such an extent that they can no longer perform their ecological role in maintaining the Amazon ecosystem, then they might be thought of as ecologically extinct. "We must not let a forest full of trees fool us into believing that all is well," wrote tropical ecologist Kent H. Redford in 1992.

Yasuní does not suffer from empty forest syndrome --- at least not yet. "What really, really stands out are the amphibians, the reptiles, the insects, the plants," Torres says of his first visit to the park last year. "I've never seen so many different things in such a short period of time." The biodiversity won't disappear overnight, but as roads are carved through the forest, as rivers and streams are modified to accommodate larger barges, Yasuní risks becoming what biologist Daniel H. Janzen has called "living dead."

Swing has argued that "offshore" strategies, in which supplies and oil are transported via helicopter rather than by truck, could possibly keep empty forest syndrome away from Yasuní, which already has at least four access roads. "Having isolated oil platforms scattered across the landscape," Swing wrote in 2011 in the journal Nature, "has to be better than horizon-to-horizon deforestation."

Koenig from AmazonWatch takes a different tack, hoping instead that existing oil fields can be squeezed to produce enough oil that whatever remains beneath Yasuní can still be left alone. While just one well operates today, plans call for as many as 200. "If we're talking about 200 wells, I'm not sure why it's still called a park," he says.

Conservationists like Koenig have a way of remaining pathologically optimistic, perhaps as a psychological bulwark against the daily onslaught of upsetting news. He imagines a future in which Amazonian oil extraction becomes so socially unacceptable, in which indigenous groups are so well supported by the rest of the world, that the oil industry finds leasing new concessions to be too financially risky. That could force Ecuador and China to negotiate a new arrangement.

"It's kind of a grim picture, but there's now a growing awareness in Ecuador of the amazing place they have, and a huge evolution and recognition of indigenous rights for Ecuador's Amazonian people," says Koenig.

"It's not only a struggle of indigenous peoples, it's not only those who are on the front lines. It's all of us," said the Kichwa leader Gualinga in concluding her speech at COP21. "Yes, we have to have respect for indigenous people, but we have to respect all life. We have to respect future generations. If we do this together, we will make change," she said.