Environment

In Ecuador, striking it rich by keeping oil in the ground

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Ecuador is working on a deal to lock up 1/5 of its oil reserves in exchange for $3.5B. The deal would also preserve  some of the most bio-diverse forest on earth. Dan Grossman has the story. (Photo: Rodrigo Buendia/AFP)

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MARCO WERMAN: Two thousand miles or so to the south of the Gulf spill, Ecuador has its own legacy of devastating oil contamination. That’s where Texaco dumped billions of gallons of waste from its oil operations in the Ecuadoran Amazon in the 1970s and ‘80s. The waste fouled huge areas of the forest. The pollution is the subject of a long-running lawsuit against Chevron, which later took over Texaco. And the Ecuadoran government seems to be taking a lesson from the disaster. Ecuador says it may put several major Amazon oil deposits off limits to drilling if other countries help cover at least some of the lost revenue. As Daniel Grossman reports, the deal would also protect one of the richest ecosystems on Earth.

KELLY SWING:  We’ll go back this way and then we’ll go out to the canopy tower.

DANIEL GROSSMAN:  Biologist Kelly Swing strides down a windy path in the daytime twilight of Ecuador’s Yasuni National Park. Only a few thin shafts of sunlight make it through the multiple layers of vegetation in this rain forest reserve the size of Puerto Rico in the eastern foothills of the Andes Mountains. Swing is heading for the steel stairway of an observation tower.

SWING: This is a part of the forest that receives relatively low light.

GROSSMAN: Swing directs the Tiputini Biodiversity Station, operated by Ecuador’s Universidad San Francisco. It’s a long climb to the top of the tower. More than 130 feet. Finally nearing the top, Swing steps through the canopy’s leafy cap.

SWING: So now you can look out across the forest in every direction. All intact forest. There is no gap anywhere around.

GROSSMAN: The forest here in the Yasuni Park is among the most biologically rich places on Earth. 655 tree species grow in an average hectare, the size of two football fields. Each hectare also has more than 100,000 insect species. The park is home to 130 species of frogs and 600 species of birds. But recently Yasuni has been getting attention as much for what is below ground as above.

SWING: The area that’s referred to as ITT is a block that is maybe 80 kilometers to the east. And that’s the area that’s getting lots of attention right now as far as keeping the oil underground.

GROSSMAN: The ITT block is named for three oil fields, Ishpingo, Tiputini, and Tambococha. They contain about a billion barrels of oil, 20% of Ecuador’s crude and are located mostly inside the park. Visitors, roads and logging are strictly controlled here. Yet Ecuadoran law permits oil drilling and if history is any guide, extracting the oil could seriously damage the forest. But Swing is hoping a proposal to forego drilling here will keep Yasuni’s wildlife safe. Ecuador has virtually run on petroleum for 40 years. This 1972 newsreel celebrated the completion of a new pipeline that helped make Ecuador South America’s second biggest petroleum producer. As a barrel of the first oil parades through Quito, delirious crowds grab handfuls of the black liquid to rub on their bodies.

SPANISH SPEAKING

GROSSMAN:  Economist Alberto Acosta says the Ecuadoran people and society were very hopeful back then. Leaders of this poor, small country promised that oil would usher in an era of prosperity.  But the pronouncements were overly optimistic. The poor stayed poor and the rich got richer, he says. And the environment and human health suffered.

SPANISH SPEAKING

GROSSMAN: Oil drilling led to deforestation and erosion, Acosta says, along with contamination of water, soil and air. Oil companies dumped billions of gallons of toxic waste in unlined pits at hundreds of sites. Who will pay to clean up the polluted land and water and compensate people harmed by the chemicals is the subject of a 17-year-long lawsuit against the oil giant Chevron. It was against that backdrop that in 2007, during a stint as Ecuador’s Minister of Energy, Acosta made a radical proposal. Have the world pay Ecuador not to develop the ITT bloc’s oil, and keep the Yasuni forest untouched. Former Quito Mayor Roque Sevilla was appointed to sign up donors.

ROQUE SEVILLA: The idea is keep the oil underground. Receive the compensation by the developed world. Put all that money back in a trust fund. Invest the totality of that fund in environmental friendly energy systems, hydro, solar, wind.

GROSSMAN: The cost to the developed world would be about three and a half billion dollars, roughly half of what Ecuador would otherwise earn from the oil. The plan would not only protect the forest but also reduce carbon dioxide emissions by nearly a billion tons, something that the rest of the world is very keen to do in the fight against global warming. Sevilla says that’s why other countries will want to get involved.

SEVILLA: Why should you invest in this? Because it’s an example that everybody must follow and we can use that example to polish it, do it better. And everybody follow the leader.

GROSSMAN: Of course some Ecuadorans think it’s foolish to leave valuable resources out of bounds. They say if developed countries want to cut greenhouse emissions and slow global warming, they should just burn less fuel. Opponents of the plan also say modern drilling techniques similar to those used on ocean drilling rigs can keep the forest safe. But the plan is moving forward.  Ecuador just completed an agreement for a UN agency to hold donations to the Yasuni project in trust. And Ecuador’s president is scheduled to sign the document later this summer. That leaves only the question of whether other countries will step up to support the plan. Biologist Kelly Swing says it should be a simple call.

SWING: If we can’t justify saving a place that has more species per square kilometer than any other place on the planet, what are we going to decide to keep?

GROSSMAN:  Germany has pledged 750 million dollars to the fund. Backers say France, Belgium, Spain and Italy have also offered unspecified amounts. Supporters also expect some private companies, perhaps even oil companies, to pitch in as well. For the World, this is Daniel Grossman, Quito, Ecuador.

WERMAN: That report was supported by the Pulitzer Center on Crisis Reporting and the Whole Systems Foundation.

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