Paying to protect

Yasuni National Park in Ecuador is one of the most bio-diverse places on Earth, and has even been declared a world biosphere reserve by UNESCO. Some 644 species live in just one hectare of its 982,000-hectare sprawl. It is also home to 2,000 Huaorani indigenous people.

It also sits atop Ecuador's largest known oil reserve, around 850 million barrels worth an estimated $6 billion (4.3 billion euros).

One-third of the small South American country's economy is dependent on crude oil. Its other major industries are bananas and cut flowers. Hit hard by the global financial crisis and the dwindling price of oil, Ecuador is torn between meeting its economic needs and protecting a unique and important nature reserve.

The Yasuni-ITT Initiative, a plan to have developed countries pay Ecuador not to drill for oil in the nature reserve, was originally introduced in 2007 by Ecuadorian President Rafael Correa. It was hailed as an innovative way to help developing countries protect the environment, and the German government was the first to embrace the idea. Berlin proceeded to conduct a research study with the German Implementation Agency to answer some financial questions about the proposal.

Questions remain

However, there are still many unanswered questions. For example, how will the compensation money be spent. Ecuador claims they will spend it on renewable energy and social programs. Some are also concerned future governments would not stick to a no-drilling deal.

There are also doubts about Ecuador's commitment to rainforest conservation. They have allowed oil drilling in the area since the early 1970's, even after it was declared a National Park in 1979, and oil spills are a frequent occurrence. Spanish oil company Repsol YPF, which runs a large operation in Yasuni National Park, was contacted for this report but declined to comment on the Yasuni-ITT Initiative.

Although there are uncertainties, Dr. Claudia Kemfert, professor of energy and economics at the German Institute for Economic Research in Berlin, said the Yasuni-ITT Initiative is a good investment for rich nations to make.

"It's not as risky as we assume it could be," Kemfert said, adding that Ecuador has made the proposal so public and specific guidelines will have to be established beforehand.

She said the amount of money Ecuador is asking for to protect its rainforest is not that much on a global scale, especially "considering the amount that has been spent to protect the economy in the financial crisis."

Ecuador's main mission now is to enlist enough developed nations to make the initiative financially possible. The proposal calls for Germany to give $30 million to the Yasuni fund per year, with other nations contributing to the $7 billion total Ecuador would require over a 13-year period.

Germany: no funding promises yet

"We don't need a leader. There must be countries and other governments which give the signal that we support this too, and if there are enough, we can create it," said Erich Stather, Germany's deputy secretary at the Ministry for Economic Cooperation and Development, who recently met with Ecuador's Foreign Minister Fander Falconi.

Despite media reports following their meeting in Berlin that Germany had promised some $50 million per year to Ecuador, Stather said no financial commitment has yet been made. He stressed that Germany continues to support the idea of the Yasuni-ITT Initiative, but is waiting for Ecuador to finalize the proposal before committing any funds.

As developed nations prepare for the UN climate conference in Copenhagen at the end of the year, there is growing pressure to reach an agreement on curbing greenhouse gas emissions. Ecuador estimates that 410 million tons of carbon dioxide emissions would be spared by not exploiting the untapped oil deposits in Yasuni National Park.

Martin Kaiser of Greenpeace in Hamburg said the Yasuni-ITT initiative is a step in the right direction to combat climate change.

"Deforestation and the exploitation of oil resources are largely responsible for global warming," he said. "Without clear measures to mitigate the emissions from both sources, global warming would be out of control."

Author: Vanessa Johnston

Editor: Rob Mudge / Sean Sinico