Abstract
Ecuador is well known for becoming the first country giving rights to nature, including them in its own national Constitution approved in 2008. This country has always been rich in oil and mineral resources, making it a desirable investment and extraction destination for foreign countries. The Yasuni National Park, situated in the Amazon basin, is one the Ecuadorian areas protected under national environmental law. Nevertheless, in 2017 the government decided to approve drilling, an action that led to a huge protest, and later to a national referendum in 2023 making Ecuador the first country to deny oil drilling. The results of the Referendum may influence Ecuador’s economy in certain ways. The scope of this paper is to show how the 2023 referendum on oil extraction arrived, in which legislative context it happened and what consequences there will be for environmental and energetic policies in Ecuador.
Miriam Viscusi (Junior Researcher G.E.O. Environment) & Matilde Pierattini (Senior Researcher G.E.O. Environment)
Ecuador environment
Ecuador is well known for its peculiar attention to environmental issues and how to regulate and protect ecosystems. Reasons for this vaste environmental regulation are found in its great availability of natural resources and high variety of ecosystems. Despite its small dimensions – 253 square km - Ecuador is the eighth most bio-diverse country on Earth, holding 46 different ecosystems (Convention on biological diversity). Almost half of its surface is covered by forests, including human tropical forest, montane forest, Andean forest, mangroves, Amazon tropical rainforest and dry forest. The country has in total 45 protected areas: 11 national parks, nine ecological reserves, four biological reserves, one national geo-botanical reserve, four reserves for the production of fauna, 10 national wildlife refuges, two marine reserves, and four national recreation reserves. There are also two UNESCO Natural Heritage sites (Ministry of Environment). The eastern part of Ecuador is particularly rich in resources:is where the amazon forest lies (13 million hectares) and it is home for some indigenous groups.
Environmental legislation in Ecuador
Following a legislative hierarchy, first of all comes the Constitution, followed by organic laws and ordinary laws. Various numbers of the latter include references to the protection of the environment. For example, the Health Law (Ley Orgánica de Salud), the law for the special regime for Galapagos (Ley Orgánica de Régimen Especial para la Conservación y Desarrollo Sustentable de Galápagos); the Environmental Management Law (Ley de Gestion Ambiental); the Forest Law (Ley Forestal); the Law of Contamination Prevention and Control (Ley de Prevención y Control de la Contaminacion); the law of biodiversity Protection in Ecuador (Ley que protégé la Biodiversidad en el Ecuador); the Law of Preservation of Reserves and National Park (Ley para la Preservación de Zonas de Reserva y Parques Nacionales) and the Water Statute. After these, come the regional and district norms, decrees and regulations, like the Mining Environmental Regulation and the regulation for hydrocarbures or the one for the energy or the basic environmental policies.
Ecuador became the first country giving rights to nature, including them in its own national constitution approved in 2008. From that moment onwards, environmental law has been particularly important in the country, as well as its social and economic implications. The first attempt to add environmental laws into the Constitution came in the 1983 Constitution (a reformed version of 1979 text), following some concerns about nature protection that were raised in the 70s. The 1983 Constitution established the right of the people to a clean environment because this was considered one factor for material and moral progress (Tigre, 2013).
After that, in 1996 a Ministry of the Environment was created, becoming the chief of the whole environmental regulatory system, not only the Constitutional provisions. The ministry had – and currently has – three essential tasks: to be the national authority regarding environmental policy; to coordinate and unify, as well as execute such policies; and to unify the laws. (Ecuadorian constitution, art 141). In the same period, the Environmental Management Law (1999) established a decentralized system of environmental management, meaning that each autonomous government of the country must be responsible. There is a reminder of it in the 2008 Constitution, too: autonomous decentralized governments oversee many environmental attributions. (Tigre, 2013; Ecuadorian constitution, art.123)
The current Constitutionis the final evolution of a constitutional protection of nature. It acknowledges customary law, the authority of indigenous communities, system of law, and territories(Tigre, 2013). For this version, the Community Environmental Legal Defense Fund was involved in the drafting of the text(Tigre, 2013). A further tool is the presence, in the National Assembly, of a Committee for Biodiversity and Natural resources, often working with the Committee for Collective Rights and Inter-culture.
While the Constitution provided for the general framework, other kinds of laws and especially regulations and statutes were conceived for being effective tools of action in this field (Tigre, 2013). As said earlier, environmental regulation is mostly delegated to provincial governors and councilors, who have financial, administrative and functional power. They have the authority to control environmental activities under their jurisdiction and also to impose fines and to bring individuals or companies to the court in case they do not comply with environmental laws.
This regulatory and legal system in the environmental sector develops in a country that is considered a desirable destination exactly because of its natural resources. Indeed, Ecuador is a foreign destination for extractivist projects and exploitation from foreign companies.
This is why under environmental regulation law two different aspects can be found. The first intends to protect the environment in a nationalist sense, meaning that the country should be the first to extract and use its own mineral resources and to have the primacy in making economic profit from it. The second is more related to the indigenous presence and the indigenous conception of nature, and the protection of nature for the sake of nature itself. A notorious example is the “Sumak Kawsay” concept (“good living”, “Buen vivir”) typically associated with indigenous communities, but also mentioned in the 2008 Constitution. According to this principle, in every project the State should consider nature as a whole and remember to respect ecosystems. The application of this vision was often in conflict with the other aspect of protection. And its application was especially difficult in times of economic crises and dependance from foreign extractivist policies.
Yasuni’s project and communities opposition: a referendum against oil extraction
One of the most notorious projects in Ecuador was the one that covered the Yasunì national park. The area is part of the Amazon forest, Unesco biosphere since 1989 and home to some communities of original peoples. However, in its subsoil there are rich oilfields.
In 2007, Rafael Correa tried to protect the area by proposing the creation of an international Fund (3,6 billion dollars) to help Ecuador in keeping the oil in the ground without economical suffering. The fund was acclaimed as a great idea but it did not turn into a success: only a few countries contributed to it. And when Ecuador’s public debt started to increase and economic conditions were getting worse, the government considered that there were no other options but to start drilling in the so-called Bloc 43, a name that includes the areas of Ishpingo, Tambococha and Tiputini. In 2016 extraction in Yasunì park began. According to Correa, the exploitation of such oil reserves was essential to reduce poverty in the country. Moreover, he stated that the environmental damage would be minimal, and thus justified the operation.
At the same time opposition grew, from indigenous, ecologists and even from some political groups. According to them, oil drilling would soon turn into huge deforestation of Yasunì Reserve. Protests brought to the 2023 referendum proposal to keep 846 barrels of crude oil in the underground of Yasunì park. 58,9% of people voted for Nature, thus the drilling was stopped. This result obtained came after a long process, many campaigns in the civil society and is currently considered an environmental success. It also showed an episode where financial values were overcome by the non-monetary ones such as social, cultural and environmental ones. This is of course a great success in terms of environmental policies, but it also brings challenges in the economy of the country.
Dependence on oil in Ecuador
Extractivism is a development model focused on “exploitation and accumulation of natural resources for exportation and profit in global markets” (Bernal, 2021). Although it might be considered a globalization product, its first stage was more than 500 years ago (Acosta, 2013), when the economic capitalist system merged with the European colonization of other continents. Many countries considered to be part of the Global South have always been rich in raw materials such as coal, copper and others, whereas many Global North countries have not. This phenomenon engendered the creation of a new global order where countries, later considered to be developed, imported most of the raw materials produced in countries considered less developed.
The countries rich in natural resources are more inclined to consider environmental issues as one of their primary focuses. Countries such as the Latin Americans directly face the consequences of the exploitation of their soils and its natural resources. The extractive action itself is destructive, it damages the balance of nature. Extractive operations are responsible for half of the world’s carbon emissions. They cause the increase of pollution and toxic wastes, especially in common goods such as water, air and soil. (UNEP)
The consequences are not only environmental but social too. In many countries extractivism is based on the underpaid and/or unsafe labor. Furthermore, the wealth derived from extraction processes is not equally distributed in the local territory, but it is accumulated by few rich people.
Thus, transnational economic actors have a fundamental role in the extractivism sector. As the Ecuadorian economist and former Minister of Energy Alberto Acosta affirmed, transnational companies often influence the leadership of the country where they established their business by having their lawyers or directors covering prominent roles in government. Consequently, companies become the main decision makers weakening the state and its institutions in the local territory. (Acosta, 2013)
In the 2000s, Ecuador seemed to be facing changes with the so-called ‘Citizen’s Revolution’ guided by the former president Rafael Correa. Including Indigenous society’s concepts appeared to lead towards the reconsideration of collective ownership and to the freedom of Latin American countries from extractivism. The first attempt in the name of the ‘good life’ was the creation of the state-owned Petroecuador. Poorer people received a small social benefit from that, but Correa’s policy towards extraction increased polarization and violence between the citizens and the Indigenous groups. During his administration, extractivism augmented, consequently causing protests and conflicts. Violence against activists arose to the point that some of them were accused of terrorism. According to Correa, the extraction of natural resources was fundamental to reduce poverty and was the main goal for the government. To Correa, being against it meant going against public needs. (Bernal, 2021)
According to the former Ministry of Energy Acosta, the drop in extractivism would help sustainable activities to intensify, but it would not have been possible until the Ecuadorian economy continued to mainly rely on the Global North’s demand on their natural resources. (Acosta, 2013)
According to Mordor Intelligence, the extraction market is expected to only slightly expand due to the increase of the renewable energy demand. Foreign companies are still numerous in Ecuador: Eni SpA (ITA), Sycar LLC (USA), Occidental Petroleum Corporation (USA) are only a few of the major oil companies that operate there. (Mordor Intelligence, 2022)
Chinese interests in the Ecuadorian wealth
Chinese-Ecuadorian relations started to increase between the 1990s and 2000s. As Ellis reported, in 2016 the Asiatic economic giant sold $3.1 billion of goods, while Ecuador only $784 million, making its trade deficit rising. China has always been interested in Ecuadorian oil, reaching the 25% of control on the oil production. When Rafael Correa became president in 2006, Chinese companies engaged themselves in multiple projects in different sectors involving the major Chinese development banks. Since the beginning of Chinese companies’ establishment, indigenous groups did not embrace the Chinese commercial purposes. Instead, they were dissatisfied with Chinese companies focusing on business in mining and extractive sectors. Indeed, natives faced problems when Sinopec, the China Petroleum & Chemical Corporation, put its eyes on Yasuni park. On many occasions, organizations and associations of environmental activists protested against Chinese ambition of starting exploration in Yasuni. (Ellis, 2018)
Furthermore, it is important to highlight that on a few occasions China showed to be greatly interested in establishing an economic partnership. Ecuador was the first non-regional country to join the Asian Infrastructure Investment Bank (AIIB) and China helped Ecuador to lift up Ecuador’s economy after the COVID pandemic with a $50 million loan. (Harán, 2021) As Xi became president and launched the Belt and Road Initiative, China invested a lot on infrastructural development in foreign countries including Latin America too. In December 2021, 20 out of 24 countries in the CELAC area (Latin America and Caribbean region) became part of BRI. Of course, China’s actions were not moved by exclusive magnanimity. As mentioned above, on one hand China is interested in the natural resources Ecuador owns. On the other hand, China is interested in transforming Ecuador's energy matrix. It has been recorded that in 2021, 92% of the energy was generated by hydroelectric power. Since China implemented seven hydropower dams and one wind farm project from 2011 to 2018, it can be deduced that most of the energy was produced by Chinese energy plants. (Gunderson, 2023)
Nevertheless, it should be considered that the positive results of the Referendum on Yasuni park extractions may have a negative effect on the capacity of refunding the debt Ecuador contracted with China in the last few years. The Latin American country signed many oil sale agreements with Chinese companies. This is the reason why reducing the extracted oil amount may cause problems in the long-term repayment agreed with China. (Griffin, Valencia, Nidumolu, & Feast, 2022)
Future perspectives: will there be room for sustainable practices despite the high debt?
In the 1980s, the scientist Thomas Lovejoy wrote an article where he argued that when governments had to cut national expenditures, the environmental protection programmes were considered the most useless and thus the first to be cut off. He proposed a capsize approach defining the necessity of a “debt-for-nature” mindset: debt should be reduced or canceled if the debtor commits to protect natural resources or the creditor could reserve part of the initially agreed amount to environmental conservation programmes (Robert Soutar & Koop, 2021). Some experts affirmed that the “Debt-for-nature” approach could be considered as a valid approach in the restoration of Ecuadorian debt towards China which is showing to be keen to invest in renewable energy initiatives. China-Ecuadorian relations showed to open the doors for the transition towards a bioeconomy.
The European Union defined “bioeconomy” as a “more with less” process that turns natural resources into sustainable and competitive products(Sassona & Malpica, 2018). In this kind of economy, organic wastes are the main resources to produce energy and goods. According to (Salvador, et al., 2022), Ecuador appears to be interested in the transformation of urban waste into energy. This is because the agricultural sector is generally the most productive sector in Latin America. As a consequence, Latin Americans are among the countries that produce the largest quantity of agricultural wastes. Films, bio-chemicals, biomass, biogas and bio-plastics can be produced by using organic wastes generated by the agricultural sector.
Despite the great quantity of organic waste and consequently the potential of generating bioenergy, Latin America does not have enough tools to make the transition toward an economy mainly based on organic waste exploitation. Latin American governments have not implemented enough environmental protection laws yet, they lack biorefineries and efficient resources management models(Salvador, et al., 2022).
Conclusion
Ecuador is one of the richest countries in the world in terms of biodiversity. Unfortunately, in the global economy this can be both a strength and a weakness. Successive governments tried to formalize the importance of nature conservation that the indigenous people have always recognized, including some of the fundamental concepts such as ‘Sumak Kawsay’ (good life). However, bridging the gap between immediate economic interests and environmental issues seems to be one of the main concerns of most of the governments around the world. It must also be underlined that the victory of the Referendum is a huge change in the global fight against climate change, but it could result in more difficult repayment of national debt. As mentioned above, in the last few years Ecuador contracted an ever-increasing debt, relying on huge loan agreements also based on selling oil barrels.
As the oil sales will stop, Ecuador will have to find a solution to repay that debt respecting the will of its citizens expressed with the Referendum. Two approaches could be the debt-for-nature approach or the transition to a bioeconomy, where the waste from agricultural production is used to generate energy. As the world is moving towards the ecological transition and renewable energy is starting to be appealing to most of the world economies, Ecuador has the potential to make its first steps to be one of the great renewable energy producers in the world.
Bibliography
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1 | Confirmed | Confirmed by other independent sources; logical in itself; coherent with other information on the topic |
2 | Presumably true | Not confirmed; logical in itself; coherent with other information on the topic |
3 | Maybe true | Not confirmed; reasonably logical in itself; coherent with some other information on the topic |
4 | Uncertain | Not confirmed; possible but not logical in itself; no other information on the topic |
5 | Improbable | Not confirmed; not logical in itself; contradicts with other information on the topic |
6 | Not able to be evaluated | No basis to evaluate the validity of the information |
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