Episode 433: Holding A Rainforest Hostage?

Feb 7, 2013
Originally published on February 6, 2013 5:12 pm

Ecuador's Yasuni National Park is an amazing rainforest — home to jaguars, giant otters, the golden-mantled tamarin and woolly monkeys. The park also sits on top of hundreds of millions of barrels of oil, worth billions of dollars.

The government of Ecuador faces a choice: Should it protect the park, or go for the money?

The country is trying to do both. The government says it will leave its rainforest untouched — if rich counties give Ecuador billions of dollars.

Music: Mumford & Sons's "Below My Feet." Find us: Twitter/ Facebook/ Spotify/ Tumblr. Download the Planet Money iPhone App.

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DAVID KESTENBAUM, HOST:

Hey, this is David. Just a note that today we are replaying a podcast we did earlier this year because we now know how the story ends. It's a story about a beautiful national park in the Amazon and a pretty unusual economic proposal for how to protect it. So here's the original story. If you want to just skip to the new material, jump ahead about 14 1/2 minutes. All right. Here it is. Previously, on PLANET MONEY...

(SOUNDBITE OF ARCHIVED BROADCAST)

CHANA JOFFE-WALT, HOST:

Our show today is about a place. To get to this place, you have to fly to Quito, Ecuador. Then you have to transfer and fly to a small regional airport, and then...

IVONNE A-BAKI: You have to go in a motorboat (laughter). (Speaking Spanish) in Spanish. Motorboat. You have to go for, like, an hour and 45 minutes. And then to enter the park, you have to go in a canoe for two hours because even the sound of a motor and the oil, it will spoil the very fragility of this place.

JOFFE-WALT: The park is called the Yasuni. It's a rain forest in the Amazon in Ecuador. That's Ivonne A-Baki describing the trek to get there. And I should say before playing this next piece of tape from Ivonne A-Baki, this is not a woman who thinks of herself as an environmentalist. A-Baki could not name a lot of the animals in the park or tell you much about the trees. But she says just being there, just being in the park, is transformative.

A-BAKI: Oh, my God. You know, you breathe and you see the difference of oxygen that you breathe. The life of everything that we could find as animals is there. In the evenings, if you put the recording, you can have the best natural orchestra you have ever heard.

(SOUNDBITE OF RAIN FOREST NOISES)

A-BAKI: It's like being - how do you explain? Born again. Seeing what it means to start at the beginning of life. It's like the beginning of life. You believe in God when you go there. It's creation, pure creation, completely.

KESTENBAUM: There is just one problem. There is something underneath the park - oil, a lot of oil. And extracting that oil, that would mean going in with a lot more than a canoe.

A-BAKI: According to the studies, it's around 900 million barrels of oil. It's 20 percent of the oil of Ecuador is there. It's huge. And it could be more. They are saying that it could be a billion, it could be five billion. But what the studies shown when they did it, it's 900 - 846 million barrels, to be exact. Now, if you take it at the hundred dollars a barrel, it will be around 20 billion.

KESTENBAUM: So it's like you just found $20 billion hidden underneath your park.

A-BAKI: Yeah. We are sitting in a treasure.

KESTENBAUM: It's quite a bind to find yourself in.

A-BAKI: Yeah, it is (laughter). You know, it's a big dilemma. What do we do? We keep the oil on the ground or we take it out.

KESTENBAUM: Hello and welcome to Planet Money. I'm David Kestenbaum.

JOFFE-WALT: And I'm Chana Joffe-Walt. Today on the show, what Ecuador decided to do. It had two options - take the oil out, make a lot of money but potentially ruin the pristine jungle, or leave the oil in the ground and let go of all that money. Now, what Ecuador decided to do is go for both money and paradise. Ecuador may have come up with an ingenious plan to have it all.

(SOUNDBITE OF SONG, "BELOW MY FEET")

MUMFORD AND SONS: (Singing) Keep the earth below my feet.

JOFFE-WALT: A lot of countries find themselves in this situation where they discover some valuable resource in the ground and there's some environmental cost of extracting it, and the country just has to choose. Which one do they want? Do they want the money from the natural resource, or do they want the environment?

KESTENBAUM: And in Ecuador, this decision was particularly painful. Ivonne A-Baki works for Ecuador's government, and she says Ecuador has defined itself as being pro-environment. Ecuador has the Galapagos. And in its constitution, in the country's constitution, they have written that nature has its own rights. It can't speak for itself so people have to look after it. So there's that. But on the other hand, Ecuador desperately needs the money that that oil would bring.

A-BAKI: It was really tough. The environmentalists, they will say, of course, don't touch it, don't touch it, don't touch it. But then you have to be realistic. I mean, we don't have anything. I mean, we are a developing country that needs everything. You name it - electricity for places that are remote, education. You need schools. Infrastructure - we don't have it. I mean, we are just starting. For health and health issues - we need so much - basic things - for infant mortality. So it's the basics. We're starting from zero. And so when you need so much, you're sitting in something that has so much money and you are in need, and you're saying, we're going to save the birds and the trees. And what about the human?

JOFFE-WALT: It was an impossible choice. And so Ecuador's president, Rafael Correa, invented a third option. In 2007, he got up on stage at a United Nations Development Conference and proposed something new.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT RAFAEL CORREA: (Speaking Spanish).

JOFFE-WALT: Here's Ivonne A-Baki again.

A-BAKI: He proposed that we want to keep the oil there. What we need in exchange is compensation.

JOFFE-WALT: Compensation meaning money.

A-BAKI: Money, but it's still we're ready to forego half of what we will get if we extract the oil, and we will ask for you to give us the other half.

KESTENBAUM: How much money?

A-BAKI: At that time, half, it was 3.6 billion in the next 13 years.

KESTENBAUM: So we won't drill it but we would like the world to give us $3.6 billion?

A-BAKI: And not we're talking about everyone in the world. We're talking about developed countries that we are giving a service. It's an environmental service.

KESTENBAUM: This is a really interesting idea. Ecuador is basically asking to be paid to do nothing. Ecuador promises not to touch the oil, but it wants to be paid basically for its inaction. The president tried this idea out on a few international audiences. There was the United Nations and the Clinton Global Initiative.

(SOUNDBITE OF ARCHIVED RECORDING)

CORREA: (Speaking Spanish).

A-BAKI: He got a standing ovation during the Clinton Global Initiative. He got a standing ovation.

JOFFE-WALT: This idea of paying someone not to do something bad, there are some isolated examples. The U.S. has a small program to pay farmers not to farm their land to preserve the soil, but it gets really tricky when you're asking one country to fork over money to another country.

KESTENBAUM: This comes up a lot in climate change talks. It came up when I was at the talks in Copenhagen. And the reason is that there's this fundamental problem, which is, rich countries have gotten rich by burning fossil fuels. That gives them cheap electricity and cheap gas for cars, but that has obviously caused some problems including climate change, right? So now we're in a situation where developing countries also want to enjoy cheap gasoline and electricity, but that's bad for everyone. So how do you get them not to do that? One solution is you could pay them somehow, pay them not to do the thing that's destructive. In a broad sense that is what Ecuador is asking for here.

JOFFE-WALT: And Ecuador is asking for it through Ivonne A-Baki. Ecuador has been sending Ivonne A-Baki all around to make the pitch, and she says she gets lots of different reactions.

A-BAKI: They tell me, are you stupid? You have oil in such a big amount there and you are not taking it out?

KESTENBAUM: Is it awkward going around and basically asking for money and you're not giving anything super concrete in return? You're basically saying...

A-BAKI: This is the point, David. Exactly what you're saying. For me, it's so difficult because how do you sell oxygen? How do you explain to somebody, I want money because I'm giving oxygen to the world? I mean, what is - are you crazy? (Laughter).

KESTENBAUM: She told us how she makes her pitch. Basically she'll have some meeting with a foreign minister or an elected official, and she'll walk into the room armed with DVDs and photos showing how special the Yasuni is. She's got a fact sheet that includes details like one hectare in the Yasuni contains more tree species than are native to the whole of North America.

JOFFE-WALT: She said she also makes sure to sit on the same side of the table as the person she is talking with, not across. The same side. And she's very careful about the words she uses. She never wants to sound like what she is proposing includes a threat.

A-BAKI: We're saying we have a unique place that has value to the world, and we want to conserve it.

KESTENBAUM: Just to be clear, do I understand the terms of this correctly? Ecuador has pledged it will leave that oil in the ground as long as it gets $3.6 billion.

A-BAKI: No, it's not the way we're putting it. I'm not putting it that way. We're not saying we will leave it unless we get this. We are saying we would like to be compensated because we need the money. And it's something that - it's an environmental service to the world, and we would like to be compensated.

KESTENBAUM: What happens if you don't get the money?

A-BAKI: I don't want to even think about it. I don't want to think about it because I don't want to see this place destroyed, and it might be. It might be. I'm not saying that it's not. It might be, yes. It might be.

KESTENBAUM: You might drill under this park.

A-BAKI: We are not going to drill under this park.

KESTENBAUM: You just said it might happen, though.

A-BAKI: I said it might. I didn't say it will.

JOFFE-WALT: But now you just said you're not.

A-BAKI: Because I...

JOFFE-WALT: You know we're recording this.

A-BAKI: Because I believe in it.

A-BAKI: Ivonne A-Baki has this really, really fine line to walk, if you think about it. I mean, if you're making this pitch you don't want to say, give us the money or we're going to destroy the rain forest. On the other hand, if you don't have that threat, it's hard to make your case that people should just give you money. You have to say we want to preserve this area and look, here's this fund you can contribute to. And if we don't get enough money, I can't promise what happens next, which can sound a little mafia.

BILLY PIZER: I mean, the joke we used to always talk about was, you know, give me the money or I'll shoot the trees.

KESTENBAUM: This is Billy Pizer. He was the deputy assistant secretary for Environment and Energy under Obama. He's an economist now at Duke University. And I should just say, our wives happen to be old friends. When he was at Treasury, he says, someone came by to present the Yasuni idea to him. And he says personally, he would love to see the rain forest kept safe, but the way this proposal was set up, this paying a country for not doing something bad, it was worrying.

PIZER: You kind of set up a situation where you're encouraging people to find resources that they could extract and then shop around for people to potentially try to pay them not to extract them.

KESTENBAUM: Yeah. You could argue it feels a bit like blackmail.

PIZER: Blackmail, or extortion or something like that. I mean, I wouldn't accuse anyone that is behind this of that sort of an intention. But you could just kind of imagine anybody that had a valuable ecosystem - a large forest or, you know, some really rare biodiversity - threatening to destroy it unless they were paid some ransom. And you could also be worried about people getting a payment one day and then 10 years later saying, OK, I'm going to do it again, and it's not really clear where that stops.

KESTENBAUM: Where does it stop? This is something A-Baki heard from a few countries as she was touring around the world. Germany was excited about the idea of supporting the rain forest, but did not like how the whole thing was set up.

JOFFE-WALT: Yeah. We actually have this press release here from the German development minister, I think you pronounce his name Dirk Niebel, and he says, quote, "Germany will not contribute to a fund that is based on the philosophy of payment for nonaction. It is action that must be rewarded."

KESTENBAUM: Exclamation point. There is an exclamation point.

JOFFE-WALT: That's right.

KESTENBAUM: A-Baki says the Germans asked her, if we pay you not to extract your oil, what's to stop Saudi Arabia from demanding payment for not drilling its oil? Here's what she says about that.

A-BAKI: It's different. I mean, the Saudi Arabia is a desert. And you put, as I said, a toothpick in, you get oil. It's not something that you're spoiling or damaging, a unique place in the world that gives oxygen to the world. But it's different.

JOFFE-WALT: And this argument with the Germans, that's a big reason why preserving the environment is fundamentally a really hard problem to solve because what Ecuador actually wants is to be paid to preserve its rain forest, but there's no established way to put a price on nature, on oxygen, as A-Baki puts it. There's no way to put a price on all those insect species.

KESTENBAUM: People have talked about a way of putting a price on trees as a way of dealing with climate change since trees suck carbon out of the atmosphere. Right now you can get a special credit for not cutting down a tree, which you can sell to some coal plant operator in Europe who needs or wants to offset the carbon the plant is emitting, but there really is not a big global marketplace for these things. And so in place of something like that, Ecuador is saying, look, there is one thing in this jungle that has a very clear price. It's the oil that's beneath the ground. So just give us - I don't know, give us half of what it would be worth on the market.

JOFFE-WALT: A-Baki did have these arguments with some countries. She had people tell her she was crazy not to drill, that this was a weird or bad idea, but Ecuador pressed on. The country set up a special fund. It outlined exactly how the money would be spent, only on renewable energy projects or conservation. The money would be overseen by a trusted international authority, the United Nations. And the rules would stay in place even after the current president and Ivonne A-Baki have moved on.

KESTENBAUM: So in 2010 the fund opened up officially, and some countries started handing over checks.

A-BAKI: The first country to contribute to the fund was Chile. After Chile, it was Spain, then Italy, France - not as a government business, but as regions of France, region of Belgium, Turkey - so many other different - Georgia.

KESTENBAUM: Even Germany that had raised objections, Germany found a way to contribute. The government says it is simply paying Ecuador to help conserve. It is not paying for inaction.

JOFFE-WALT: The United States?

A-BAKI: No. The United States, the government, not yet.

KESTENBAUM: How much money is in the fund now?

A-BAKI: We are counting just what we have now. It's around 350 million. So we have a lot of money.

KESTENBAUM: You have about a tenth of the amount you want.

A-BAKI: Yeah.

(SOUNDBITE OF SONG, "BELOW MY FEET")

MUMFORD AND SONS: (Singing) Keep the earth below my feet.

KESTENBAUM: So that's where we left things back in February. It's now August of 2013 and, you know, in the past month, there were hints that things were not going well. There were no new huge contributions coming in, and every day there was still that temptation - oil worth billions of dollars sitting in the ground. And a couple weeks ago President Correa got on TV to have a little talk with the nation.

(SOUNDBITE OF ARCHIVED RECORDING)

CORREA: (Speaking Spanish).

KESTENBAUM: Correa said he was ending the Yasuni initiative. Ecuador is giving up on getting the money from the rest of the world. It's going to drill for oil. He said it was one of the most difficult decisions of his presidency.

(SOUNDBITE OF ARCHIVED RECORDING)

CORREA: (Speaking Spanish).

KESTENBAUM: Correa said the international community had failed Ecuador. He was left with little choice.

(SOUNDBITE OF ARCHIVED RECORDING)

CORREA: (Speaking Spanish).

KESTENBAUM: "The real dilemma is this," he said. "Do we protect 100 percent of the Yasuni and have no resources to meet the urgent needs of our people, or do we save 99 percent of it and have $18 billion to fight poverty, especially in the Amazon, which has the highest poverty rate in the country?" I called up Ivonne A-Baki to get her reaction. She told me she'd be happy to talk, but then I got an email from her staff saying that the interview had been canceled. Environmentalists in Ecuador are clearly upset. This was a huge deal in the country.

Something like 90 percent of the people supported the project. Environmentalists have been protesting in the street. A lot of people just do not believe the president when he says that this is just some little corner of the park and drilling there isn't a big deal. Remember, this is a place that's so remote you have to take a canoe to get there, and drilling will definitely mean building roads, and a road can change everything. I talked to Jim Wyss. He is a correspondent for the Miami Herald, covers the region, and actually visited the park recently. He told me about this one road there that environmentalists point to a lot. It's called the Max-cess Road.

JIM WYSS: It's about a 121-kilometer road that got built through one of the northern boundaries of the park, I guess about 20 years ago, and the idea was it was going to be a very little, narrow gravel road that they were going to tap the oil at the end of it and then it was going to grow over and disappear into the underbrush. You know, and 20 years later, they're still finding oil in the area, the road has kind of all the marks of permanence. There are settlements along it. And that's not how it's supposed to work out. You know, that's kind what people point to is the unpredictability of what happens.

KESTENBAUM: Big picture - the Yasuni was this interesting experiment in environmental economics, an experiment that did not work out. It's hard to know exactly what that means. It could mean that no one will ever try something like this again, or maybe just that the world is still getting used to that idea of one country paying another not to do something, not to cut down trees, not to risk extracting oil that's underneath the rain forest.

(SOUNDBITE OF SONG, "BELOW MY FEET")

MUMFORD AND SONS: (Singing) Keep the earth below my feet.

KESTENBAUM: As always, let us know what you think. You can send us email, planetmoney@npr.org. Or, leave a comment on the blog, npr.org/money. We're also on Facebook and Twitter and Spotify. I'm David Kestenbaum. Thanks for listening.

(SOUNDBITE OF SONG, "BELOW MY FEET")

MUMFORD AND SONS: (Singing) Keep my eyes to serve, my hands to learn. Keep my eyes to serve, my hands to learn. Transcript provided by NPR, Copyright NPR.