[NYTr] Ecuador tries novel balance of oil and environment

[nytr at olm.blythe-systems.com]

Reuters via Yahoo - Jul 22, 2007
http://news.yahoo.com/s/nm/20070723/lf_nm/ecuador_oil_conservation_dc_1;_ylt=AunrdaIJtNiN4nb0LnFAHYaAsnsA

Ecuador tries novel balance of oil and environment

By Alonso Soto

EL COCA, Ecuador (Reuters) - Under pressure to preserve the environment
while at the same time ease the poverty of his people, Ecuadorean
President Rafael Correa has come up with an unusual solution.

Correa wants wealthy nations to pay Ecuador $350 million a year in
exchange for leaving an estimated 1 billion barrels of oil under the
ground in the pristine Yasuni rainforest.

"I think oil has brought us more bad than good," said Correa during a
recent visit to the bustling Amazonian oil town of El Coca. "We need to
do something about it."

Environmentalists around the world have celebrated the idea, apparently
the first of its kind, as a way to preserve a delicate environment
without creating an economic burden for the cash-strapped nation where
six in ten people are poor.

The move come amid growing popularity of "carbon offsetting," in which
first-world residents concerned about climate change make donations to
compensate for the environmental damage their consumer habits cause.

But critics wonder if the politically unstable Ecuador, which relies on
oil for nearly half of its export revenues, can keep this promise to the
international community or whether authorities are trying to have their
cake and eat it too.

CLIMATE CHANGE

The plan involves creating a trust fund for donations or accepting debt
pardons from other countries or multilateral lenders like the
International Monetary Fund.

The $350 million would constitute about half the annual revenues Ecuador
thinks it could make from extracting oil from the field, partly located
inside the 2.4 million-acre (982,000-hectare) Yasuni National Park.

Former energy minister Alberto Acosta has pointed out that all the oil
in the Ishpingo-Tambococha-Tiputini field would only be enough for 12
days of global crude consumption.

Government officials say Norway, a group of Italian lawmakers and even
one undisclosed oil company have inquired about the plan.

"It sounds ridiculous, but when you compare that money with Ecuador's
foreign debt its actually a small quantity," said Matt Finer a scientist
with U.S.-based environmental coalition Save America's Forests. "Rich
nations have to chip in."

The Yasuni is home to species ranging from endangered white-bellied
spider monkeys to rare jaguars that live alongside indigenous groups
that live isolated from the outside world and still hunt with spears
and blowguns.

Correa, a close ally of Venezuelan leftist President Hugo Chavez, has
startled Wall Street by threatening not to pay Ecuador's $10.3 billion
foreign debt. He is embroiled in a power struggle with Congress and
opposition lawmakers who say he is scaring off oil investment.

He also openly backs a $6 billion lawsuit filed by indigenous groups who
accuse U.S. based Chevron of polluting a large swath of the Ecuadorean
Amazon.

DOUBTS ABOUND

The proposal's detractors say Ecuador cannot ensure the park's sanctity
given political turmoil that has at times halted oil operations and has
made Correa the eighth president in 10 years.

[One thing they are forgetting is that just postponing the burning of
the oil is already a good thing (better technology
in future years, and more need due to peak oil) versus burning it
today. So how much would they pay for just
not burning it this year? Maybe not 350m but it's worth far far more
than zero to the world. Ergo, even if you were
100% it would be burned later, it would still be worth paying them
_something_. And we're far far from 100%
sure they will "end up reversing" -ED]

"Correa is asking the international community to dive in to see if
there is water in the pool," said Daniel Erikson, an analyst with the
Inter-American Dialogue, a Washington-based think tank.

Correa has said Ecuador will begin oil development next year if the
government cannot secure the funds by then.

Even if Ecuador can promise to halt the contamination of multinational
oil behemoths, it may struggle to control an equally serious
contamination threat to Yasuni -- migrants already setting up farms and
shantytown dwellings there.

[Farms are "contamination" comparable to massive oil pollution?! Earth
to Reuters, come in Reuters! -Ed]

But supporters of Correa's idea say the best way to limit the migration
to the park is to ensure there are no oilfield jobs to draw them there.

"Oh God, what I wouldn't do to halt oil development," said Alonso
Jaramillo, chief of eight rangers that watch over the park, roughly the
size of Vermont. "I shake every time I hear about new oil development
in my park."