Ecuador endangered by extreme extractivism A report outlining the historical context and perspectives for a sustainable development model in the

face of intensifying extractivism in Ecuador and globally.

Prepared for the Rainforest Information Centre by Jefferson Mecham, Carlos Zorrilla, Daniel Thomas,

and Liz Downes on 17 December 2017. Version 1.1 (updated 20 January 2018)1

CONTENTS

1.- Abstract

2.- Introduction

3.- Historical setting

4.- A new menace

5.- The economic imperative

6.- An alternative path

7.- Conclusion

8.- Bibliography

9.- Annexes

1) Protected Forest Reserves/ Bosques Protectores

2) Main deregulatory reforms by the Correa government to promote mining

3) Extractivism and indigenous peoples in Ecuador

4) Websites

1.- Abstract

In 2016 and 2017, the Ecuadorian government granted concessions to over 2.9

million hectares (7.17 million acres) of land for mining exploration. Most of these

concessions are within indigenous territories and legally declared forest reserves

in headwater ecosystems and biodiversity hotspots of global importance.

Additionally, many of these concessions appear to have been granted in violation

of Ecuadorian law and international treaties. Here, we relate this process to

Ecuador’s history of extractivism, outline potential impacts of mining, and

present an alternative biodiversity-based development model. We conclude by

situating the Ecuadorian experience in global context.

1 Please cite as follows:

Mecham, J., C. Zorrilla, D.C. Thomas, L. Downes. 2018 v1.1. Ecuador endangered by extreme extractivism.

Nimbin, New South Wales, Australia: Rainforest Information Centre.

2

2.- Introduction

Ecuador is a small country of huge conservation significance for the world. It is among the

most biodiverse nations with a myriad of complex ecosystems, endemic species, and

indigenous cultures that has suffered one of the world’s highest rates of deforestation, as well

as cultural and species loss (Mosandl et al, 2008). It is also the first country to recognize in its

Constitution the principles of ‘Buen Vivir’ (Living Well) and the ‘Rights of Nature’: a concept

of development upholding the rights of citizens and ecosystems to thrive in their full integrity.

Ecuador’s biodiversity and the progress made to protect it, embodied in the principles

recognized in its Constitution of 2008, are now endangered. The government of Ecuador has

concessioned to transnational mining companies from China, Canada, Australia, and Chile

over 2.9 million hectares (7.17 million acres) to exploration for metals like gold and copper.

This includes one million hectares of indigenous territories and 41 protected forest reserves

totaling nearly ¾ million hectares, for a total of over 1.7 million hectares (4.25 million acres)

or 60% of the total area concessioned.

The government is granting exploratory concessions at an accelerated pace. In the past 24

months 237 concessions were awarded and another 615 are in process (852 total), resulting in

the presence of 28 new mining companies. In April 2016 the total surface area affected by

mining concessions was 790,000 hectares. By January 2018, the area of concessions granted

or in process had increased to 3.9 million hectares, representing over 14% of the country’s

territory, and affecting hundreds of local communities totaling approximately 2000.

Most of these concessions were granted unannounced to the public and without free, prior and

informed consent of affected communities as required by both the Ecuadorian Constitution and

the United Nations Declaration on the Rights of Indigenous Peoples. In addition, many of these

concessions are illegal because they are in areas that had been revoked by the Mining Mandate

in the Constitutional Assembly of 2008. The concession process has also been plagued by

ongoing human rights abuses including criminalization and silencing of dissent, and forced

displacement of people whose homelands are jeopardized by mining projects.

Another concern is the situation of the forty-one Bosques Protectores (Protected Forests), a

natural areas category consisting of public, private, or community-owned areas specifically

created to protect biodiversity and watersheds (see Annex 1). While grazing and agriculture

are prohibited, these reserves are now open to mining exploration which means that, in effect,

their “protected” status was rescinded without due process.

Mining would have devastating and irreversible consequences on communities, indigenous

territories, fragile ecosystems of high biodiversity, and on thousands of water sources vital for

the country. Most of the concessions are located in the Tropical Andes Biodiversity Hotspot,

the most biodiverse of the 36 ‘hotspots’ worldwide, and home to hundreds of threatened species

of mammals, birds, amphibians, and plants. Read more about Ecuador’s endangered

biodiversity here (*, *, *, *), and about the acceleration of mining concessions here.

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3.- Historical setting

The opening of the country to industrial mining is only the latest chapter in a long history of

exploitation and extraction in Ecuador. This story goes back to the Spanish Conquest and

colonial rule from the early 1500 to early 1800’s and the decimation of over 90% of the

indigenous population (Galeano, 1971). Ecuador gained independence in 1822 but legal

changes to abolish feudal bondage of indigenous peoples on the large hacienda estates only

began in 1964. At that time most of Ecuador’s forests were still intact with exception of the

severely deforested Andean highlands and locally in the Pacific coast region (Larrea, 2006).

In the late 1940’s Ecuador’s banana boom began. In the 1960’s, both ‘Agrarian Reform’ and

the ‘Green Revolution’ were introduced under the U.S. ‘Alliance for Progress’. By the late

1980’s over 90% of Ecuador’s lowland coastal forests had been devastated by logging and

were replaced by bananas and other export crops such as oil palm, sugarcane, soybeans, rice,

corn, and shrimp farming (*), as well as the traditional cattle pasture, cacao and coffee crops.

As a result, one of the world’s richest ecosystems with an untold number of endemic species

was wiped out before it could be documented (Dodson and Gentry, 1991). Today the landscape

is dominated by large monoculture plantations dependent on chemical fertilizers, pesticides

(*), and intense use of plastics that have done incalculable harm to ecosystem and human

health. The Agrarian Reform and Colonization laws (1964, 1973) did little to change the

concentration of land ownership but helped reduce social pressure for land by incentivizing the

colonization of “vacant land”, mainly primary forest in areas unsuited for agriculture.

In the late 1960’s petroleum was discovered in the Ecuadorian Amazon and by the mid-1970’s

crude oil had replaced bananas as the country’s top export and source of national income. The

region of oil fields centered in Lago Agrio in the northern Amazon has been deforested due to

the invasion of colonists following the oil roads. The area is known internationally for the

severe pollution that affected the Cofán and Siona-Secoya indigenous peoples among the tens

of thousands of inhabitants who filed the historic class action lawsuit against Chevron-Texaco.

Although the petroleum extraction-based economy has generated large revenues, it has lead to

even greater debt, and to loan repayment and ‘structural adjustment’ policies that siphoned

away the chances of a better life for the majority of Ecuadorians2.

In recent years, after failure of the Yasuní ITT Initiative in 2013, oil drilling is now taking

place within Yasuní National Park, a UNESCO Biosphere Reserve, home to the Tagaeri and

Taromenane indigenous tribes living in voluntary isolation, and arguably the most biodiverse

spot on Earth. The largest intact area of tropical rainforest remaining in Ecuador is in the

territories of the Achuar, Andoas, Kichwa, Sapara, Shiwiar, Shuar, and Waorani indigenous

peoples in the southern Amazon. The Ecuadorian government has opened the whole region for

oil and gas development with the next international auction scheduled for early 2018.

2 Ecuador’s per capita debt rose 30 times between when the oil rush began in the early 1970’s and the year 2000.

In 1972 Ecuador’s population was 6.4 million and the foreign debt was US$ 244 million, or $38 per inhabitant.

By 2000 this had risen to 12.6 million and US$ 15.9 billion debt, or $1262 per inhabitant (Acosta, 2004).

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4.- A new menace

Ecuador is the smallest of the world’s 17 megadiverse countries, and is the only Andean nation

free of large-scale metal mines. In line with its agenda for Ecuador, the World Bank (1984),

financed the ‘Mining Development and Environmental Control Technical Assistance Project’

(PRODEMINCA) operated by the Ecuadorian Ministry of Mines from 1995-2002. This project

accrues to Ecuador’s national debt and achieved two objectives: to produce mineral maps based

on regional geochemical prospecting conducted by the project on 3.6 million hectares to make

subsequent exploration easier for the mining industry; and to rewrite the mining law to attract

foreign investment. The new law eliminated royalties to the Ecuadorian treasury, granted

exemption from export, income, and value-added taxes, weakened labor, community, and

environmental protections, and facilitated water concessions with priority for mining. This

legislation was signed into law in December 2000 without public participation or congressional

debate and by 2005 over 20% of the country was under speculative mining concessions.

Public outrage over such betrayals of national sovereignty contributed to the protests that

ousted the country’s president (Lucio Gutierrez) in 2005 and led to the election of Rafael

Correa in 2006. The Constitutional Assembly of 2007-2008 passed the Mining Mandate in

April 2008 that revoked most of the nation’s mineral concessions and declared a moratorium

on new concessions until a new mining act could be approved. In addition, it granted amnesty

to hundreds of community anti-mining activists. In May 2008, Correa announced his

government’s policy for ‘responsible’ mining and pushed through a new Mining Law passed

in January 2009. The Mining Mandate was only partially fulfilled and large areas concessioned

to transnational corporations did not revert to the State. In 2013 and 2015 the Mining Law was

revised to deregulate, lower taxes, and create incentives to make Ecuador more lucrative for

foreign investors (see Annex 2). Consequently, the mining industry gave Ecuador the “Best

Country of the Year” award and expects eightfold growth in investment to $8 billion by 2021.

Meanwhile, in late 2008 Correa broke relations with the World Bank and IMF after defaulting

on over half of Ecuador’s external debt, found to be illegitimate based on an audit

commissioned by the government. After losing access to the usual sources of finance, China

became Ecuador’s largest creditor; since 2010 it has provided over $15 billion in loans to

bankroll the largest expansion of public sector spending in Ecuador’s history. China is to be

repaid in the form of oil and mineral exports under questionable terms, in deals fraught with

corruption. To meet these terms Ecuador has contracted record levels of debt for highway and

hydroelectic dams positioned to facilitate new resource extraction projects. Vice president

Jorge Glas who headed the Strategic Sectors Ministry responsible for negotiating these

contracts has been convicted to a 6-year jail term for his role in the Oderbrecht corruption case.

Ecuador’s Mining Law contravenes the Constitution of 2008 by violating the Rights of Nature

(Article 72) and the principle of ‘Living Well’ as the means for development (Art. 275); the

human right to water (Art. 12) and the priority use of water to ensure food sovereignty (Art.

318), as well as food sovereignty (Art. 281); the collective rights of indigenous peoples

including the right to free, prior and informed consent (Art. 57) (see Annex 3); the right of rural

communities to prior consultation (Art. 398); and the prohibition of extractive activities in

protected areas (Art. 407).

5

To have a clear idea of the consequences of large scale mining, the following is summarized

from the Environmental Impact Study (EIS) prepared for the Japanese International

Cooperation Agency (JICA, 1996) for the Junín mine in the cloud forest region of Intag,

northwest Ecuador. Based on a proposed 72 million ton ore deposit containing 0.7% copper3

the EIS projects: Massive deforestation leading to local desertification; Direct impact to 4000

hectares (10,000 acres) of mostly primary forest and to 12 species of endangered mammals;

Impact on the neighboring Cotacachi-Cayapas Ecological Reserve; Alteration of three

watersheds to treat millions of tons of copper ore that will need tens of millions of cubic meters

of water; Reduced water flows and pollution of rivers, streams, and water tables with heavy

metals (e.g., arsenic, cadmium, chromium, lead) to levels up to 100 times normal; Impacts on

health of the local population due to noise, poisoned water, and air polluted with toxic dust and

gases; Displacement of local communities; Social impacts such as an increase in crime, and

indirect impacts include those generated by road construction and migration.

Now multiply this example by the dozens. This is an environmental and human disaster not

only for Ecuador, but the entire world. Most of the areas affected by these concessions are

within the ‘Tropical Andes’, the most diverse of the world’s 36 ‘Biodiversity Hotspots’, the

world’s top priority areas for conservation. Andean cloud forests in particular provide critical

hydrological functions at local, regional, and global levels. The Andes are the headwaters for

the Amazon (Atlantic Ocean) and Chocó (Pacific Ocean) watersheds. Industrial mining is the

world’s most broadly destructive and toxic industry4, impacting not only communities nearby

but whole watersheds and downstream industries such as agriculture, fisheries, and tourism.

Mining consumes extreme quantities of water and up to 10% of the world energy supply while

producing 12% of sulfuric gases that contribute to acid rain and climate change. In the U.S.

mining generates eight (8) times more solid waste than the total produced by all the nation’s

municipalities. Most mine wastes contain heavy metals and other poisons (e.g., mercury,

cyanide), many of which remain toxic for centuries as they bioaccumulate in the bodies of

living organisms, and biomagnify as they move up food chains.

As was the case with petroleum, mining is now promoted by the government and official media

as the only alternative capable of funding Ecuador’s future development and that the country

must “sacrifice” to derive its benefits. However, mining contributes less than 2% of income

generated by all economic activities globally and employs under 1% of the labor force.

Developing countries dependent on mining have below average indices of human

development. After factoring in the loss of revenue due to generous incentives to attract mining

together with the costs of mine closure and remediation, temporary economic benefits are

insignificant compared to the social and environmental ruin that remains for the long term.

3 Or a 450,000 ton pure copper deposit. In 1998 five times more copper was discovered: 2.26 million Ton deposit

of pure copper, contained in 318 million tons of ore. Currently CODELCO is conducting advanced exploration.

4 The gravest long-term problem from mining is acid mine drainage. Ecuador’s mineral deposits contain sulfur

that, when opened in contact with air and water, acidifies the water and releases heavy metals, contaminating the

water and all life forms that come in contact with it, virtually in perpetuity. This process is uncontrollable and

even more serious in high rainfall headwater ecosystems, such as cloud forests.

6

5.- The economic imperative

Ecuador faces a challenging economic scenario as petroleum reserves are in decline and the

price of oil in recent years has dropped sharply. Although Correa promoted moving away from

raw materials toward a more diversified and sophisticated economy, the major focus was on

mining as the new engine of growth to replace decreasing oil revenues. The new government

of Lenin Moreno has inherited a heavy debt burden and is under pressure to continue down the

same path to make loan payments and cover the high costs of expanded social programs. The

Ecuadorian Mining Ministry projects US$8 billion in private investment in the mining sector

by 2021 that would generate $800 million in annual fiscal revenues. However, these

calculations do not consider all costs, such as water and electricity, subsidies, harm to existing

productive activities, or environmental and social impacts. Nor the fact that mining companies

are notoriously unreliable partners for staking a country’s dreams of development.

A development model based on extraction creates more problems than it solves. Mining of

non-renewable metals is a relatively short term activity that causes long term damage to even

more valuable renewable resources (biodiversity, water, soil) and ecosystem services essential

to sustain life, livelihoods, and entire economies. The most complete study on this topic in

Ecuador concludes: The economic value of the (Intag) watershed is greater than all of the built

assets or underground minerals…the environmental and social costs of extracting the copper

are much greater than the value of the copper itself (Kocian, et al 2011)5.

Mining also impairs the potential to develop better economic opportunities. A multi-criteria

study of development alternatives in the same region found that: Nature-based tourism and

sustainable agriculture lead to more equitable and inclusive development with advantages in

sustainability and job creation. In contrast, the mining alternative is less articulated in the

region and generates limited local employment that would last for only about 18 years.

Subsequently the regional economy would suffer a severe lack of opportunities, worsened by

the environmental impacts of mining and deforestation. Local investment of mining royalties

does not make up for the difference between these scenarios (Larrea, et al 2011)6.

Mining might make sense in situations where a country has no other economic alternatives;

Ecuador has them in abundance. Its wealth and future development prospects now depend on

wise investment in its biodiversity, ecosystems, and human potential, but requires significant

resources to realize. Meanwhile the government struggles to meet national budget priorities

and an onerous external debt financed by the unsustainable extraction of non-renewable

resources. This dilemma is not unique to Ecuador, rather it is the model typical to the

economies of developing countries throughout the world. Nevertheless, in 2017 El Salvador

approved a nationwide ban on metal mining to protect its water. Costa Rica banned all open-

pit mining in 2010, and in 2011 placed a moratorium on petroleum extraction to base their

future on the sustainable use of renewable resources. Today Costa Rica has much better socio-

economic indicators than Ecuador (Larrea, 2013).

5 Kocian, M., D. Batker, J. Harrison-Cox. 2011. An ecological study of Ecuador’s Intag Region:

The environmental impacts and potential rewards of mining.

6 Larrea, C., P. Belmont, J. Paguay, M. Walter, S. Latorre. 2011. Análisis multicriterial sobre las alternativas

de desarrollo en Intag: Escenarios prospectivos para las opciones de turismo-agricultura y minería.

7

6.- An alternative path

At a time that we witness climate chaos daily and our best science suggests we are headed

toward systems collapse, our only hopeful option is to rapidly implement available alternatives

to heal our planet. Development of a regenerative economy is viable now and has been since

the 1970’s when Amory Lovins outlined a ‘soft energy path’ to an alternative future where

energy efficiency and appropriate renewable energy would have gradually replaced our

centralized energy system based on fossil and nuclear fuels.

Unfortunately, this energy strategy was the road not taken and today we see the consequences.

The extractive ‘hard path’ industries do not pay their true costs as they depend on massive

subsidies and legal exemptions. They invest heavily to influence politicians, political

processes, and regulatory agencies to serve their interests, and for decades have impeded

development of urgently needed alternatives. They knew (*) of their own role in damaging the

biosphere but chose to conceal and deny it rather than to update their business model.

The growing trend of corporate concentration of power needs to be reversed. Widespread

adoption of sustainable alternatives requires parallel political-legal reforms to revive

democracy by making corporate rights subordinate to human rights and rights of nature. In

these conditions there are many policy options to create incentives that harmonize economic

efficiency, social equity, and environmental stewardship. These include full-cost pricing;

simple consumption taxes in lieu of complex tax codes that favor the rich; financial transaction

taxes and abolishment of tax havens; general education for voluntary and beneficial lifestyle

changes; and comprehensive planning for a stable population and a steady-state circular

economy that operates safely within Earth’s carrying capacity.

Permaculture provides a solid framework to design solutions based on three ethical principles:

care of the Earth; care of people; share surplus to reinvest toward these ends. Mining in

rainforests does the opposite: it devastates ecosystems and communities to amass wealth in the

hands of a few, leaving gaping wounds that leach toxins into the biosphere for centuries. This

is totally unnecessary to meet the real economic needs of civilization. Minerals for industry

can be provided without destroying our life-support systems (IUCN-WWF, 1999).

Metals are necessary industrial inputs for a modern technological economy. Mining need be

only a minor source since input substitution, materials efficiency, reduction of obsolescence,

‘true cost’ accounting, and recycling of raw materials already mined could supply most of

world demand. In addition, the amount of energy saved by recycling instead of producing from

virgin minerals is from 50 to 95% (Weizsäcker and Lovins, 1997). This should be our first

option before converting the world’s most biodiverse regions into “sacrifice zones”.

Global financial institutions must stop subsidizing destructive mining and invest instead in

such alternatives. Due to low recycling rates, many urban landfills contain higher

concentrations of metal than do mines themselves. This is an opportunity for extractive

companies to embrace the circular economy by investing in recycling to supply metals without

mining; and for manufacturing industries to apply sustainable procurement practices to require

recycled materials and metal substitutes for their products. Final customers (all of us) need to

escalate this process by demanding it of the tech companies that we purchase from.

8

Ecuador is the first nation to establish in its Constitution (2008) both the ‘Rights of Nature’

and the indigenous concept of ‘Sumak Kawsay’ (in Kichwa) or ‘Buen Vivir’ (Living Well) in

harmony with nature. In 2009 Ecuador presented to the world the Yasuni-ITT Inititiative, an

unprecedented proposal to maintain the crude oil in the ITT field indefinitely underground if

the international community would contribute half of the opportunity cost of doing so. The

fund’s capital would be invested in the country’s vast solar, wind, geothermal, and

hydroelectric potential, thus ending dependence on fossil fuels (Larrea and Warnars, 2009).

The failure of the Yasuní ITT Initiative, as well as the breach of human rights and the Rights

of Nature in Ecuador’s Constitution, are failings of the Ecuadorian government under Correa.

However, as proposals originating from the Ecuadorian people, their validity and the need to

fulfill them are now greater than ever. Correa perverted the principles of Buen Vivir to promote

extractivism. Today, Ecuador has a singular opportunity to regain its position as a global

sustainability leader by applying a development model that is coherent with its own

Constitution. The Yasuní-ITT Initiative contains the basic elements of such a model and should

be applied to the country’s current situation. Now not only fossil fuels but metallic minerals

also should be kept underground indefinitely, at least in “water sources and recharge areas, the

National System of Protected Areas and their buffer zones, special conservation areas including

forest preserves and fragile ecosystems, indigenous territories, cities, towns and archeological

sites”. This is the petition (*, *) of a broad coalition of Ecuadorian civil society organizations.

Open public debate and a national referendum are needed to decide, not only about mining, but

about the development model that best serves the entire people of Ecuador: Extractivism or

sustainability? Such decisions on essential issues cannot be delegated to politicians. On the

mining issue, Ecuador may choose to follow the examples of Costa Rica and El Salvador, who

passed nationwide bans on open-pit and metal mining to protect their water. In any case, mining

and fossil fuel development should be allowed only where benefits exceed total costs, with all

economic, environmental, and social costs internalized. The right of communities to refuse

projects that would have a negative impact should be guaranteed. Any exception to this, or any

other important national policy, should be by popular referendum, not by executive or

legislative decree.

Ecuador currently has pending a critical national investment decision. The $12 billion

investment planned since 2008 for the Pacific Oil Refinery and Petrochemical Complex

(PORP) would make it the biggest megaproject ever in Ecuador. There is question whether

enough oil remains to refine over the lifetime of the project and may be viable at current prices

only by exploiting the remainder of its Amazon region. Regardless, oil and gas will soon be

“yesterday’s fuel” (*) as the world races to adopt renewable energy and costs of production

plummet. The immense investment in the PORP would become either a stranded asset, obsolete

before capital costs are recovered, or zombie energy that is not economically viable without

government subsidies. The opportunity cost would be yet much higher as it would also destroy

Ecuador’s greatest remaining asset: its largest intact rainforest. Ecuador should abandon this

dead-end and take the path straight to a sustainable-regenerative economy based on

decentralized renewable energy and its extraordinary biodiversity, its principal areas of

strategic advantage. This solution (*) is not only possible, it is more cost effective and available

for implementation now.

9

To accomplish this Ecuador needs to terminate outdated plans that impoverish future prospects;

end oil frontier expansion; ban mining in vital ecosystems; reduce its debt burden and payments

to meet national budget priorities for human development; and obtain funds in favorable

conditions for investment. To do so, access recently enlightened global financial institutions

(*, *) and investors (*) that are divesting (*, *) from fossil fuels and redirecting investment (*)

to sustainable alternatives; arrange ‘debt for nature’ swaps and cancel debts pertaining to

extractive projects (e.g., PRODEMINCA); raise public funds from taxes on waste, pollution,

and excess consumption; and negotiate compensation for ecosystem conservation, biodiversity

protection, and climate change mitigation in a revived and expanded ‘Yasuní-ITT’ concept (*)

within and beyond the framework of the Paris Climate Agreement (*).

Funds made available through such measures should be invested in a rapid transition to a post-

petroleum economy founded on renewable energy, conservation of remaining ecosystems,

sustainable uses of biodiversity, tourism, agroforestry, and eco-technological development7.

This is also compatible with the new Environment Minister’s bioeconomy policy to integrate

conservation with economic development based on biodiversity and ecosystem services.

Good alternatives abound.

Alternatives to extractivism

Extractive-Degenerative Industries Sustainable-Regenerative Enterprises

Mining

- Fossil fuels: petroleum, natural gas, coal

- Nuclear fuels: uranium

- Metallic minerals

Tourism (*)

Biodiversity (*, *)

Ecosystem Services (*)

- Carbon sequestration

- Watershed protection

Recycling

Fossil Fuel and Nuclear Energy

Centralized generation

Decentralized Renewable Energy (*, *, *)

- Solar (*) - Wind (*) - Biomass

- Micro-hydro - Geothermal - Wave - Tidal

- Distributed generation and energy efficiency

Bioremediation and Living Machines Hydroelectric dams (*)

(e.g., Ecuador, Napo watershed)

River dredging and diversions

(e.g., Río Napo, Proyecto Rios Orientales)

Hydrological design, Rainwater harvesting

Integrated watershed management

Water conservation and efficiency

Industrial chemical agriculture - monocultures

Factory farming, Food security (see also)

Regenerative organic agriculture - polycultures (*)

Carbon farming, Food sovereignty (*, *)

Industrial forestry and tree plantations (*) Restoration forestry and agroforestry (*) (see also)

Grey cities, highways, and urban sprawl Green cities, ecological infrastructure, and

rural revitalization

7 Larrea, C., et al. 2017. Está agotado el period petrolero en Ecuador? Alternativas hacia una sociedad más

sustentable y equitativa: Un estudio multicriterio.

10

• Nature-based tourism

Travel and tourism (T&T) is one of the world’s leading creators of employment, representing

more than 3% of all jobs. When induced and indirect impacts are included, T&T contributes

about 9% of jobs worldwide. T&T generated a total of USD$7.6 trillion in GDP in 2016, which

makes the sector’s contribution larger than that of mining (USD$5.0 trillion), agriculture

(USD$5.8 trillion), banking (USD$4.8 trillion), automotive manufacturing (USD$6.1 trillion),

and chemicals manufacturing (USD$6.5 trillion).

In Ecuador tourism contributed US$1.5 billion to the economy and was the #4 source of income

(after petroleum, bananas, and shrimp). The number of visitors to Ecuador’s protected areas in

2015 was 2 million and the contribution just from protected areas to the economy was $527

million, which was 35% of total national tourism revenue. In addition, 5.7 million people

depend on water sourced from protected areas and $37 million was saved by preventing or

reducing sedimentation in hydroelectric dams.

Protected areas are the fastest growing and most profitable sector of Ecuador’s tourism

economy. The five main protected areas generated 5,735 tourism jobs and the number of

tourism operating licenses have increased by 56% since 2012. Every dollar invested in

protected areas in 2014 generated a return of US$10. In 2015 one of 13 Ecuadorians visited

protected areas, compared to one in 49 in 2010. 68% of international tourists reported that their

principal motive for traveling to Ecuador was to visit the country’s protected areas. The visitors

who arrive at these areas stay five days longer in the country and spent an average of US$2,797.

This is $1200 more than the average tourist expenditure.

• Biodiversity and biomimicry-based technologies

This is a promising area of scientific research, technological innovation, ecological design and

engineering, and business development in virtually all fields: agriculture, architecture,

building, energy, food, water, medicine, and materials including substitutes for metals, plastics

and other synthetics, as well as for high-tech applications such as computing and solar cells.

For example:

- Biomaterials from and diverse applications for Algae , Bamboo , Banana , Fungi , Hemp

- Plant-inspired solar cells Manufacture of standard silicon-based solar panels use highly-purified material that require large amounts of

energy, toxic solvents, and bulky infrastructure to support rigid panels. Plant-inspired solar cells mimic

photosynthesis to generate solar energy at much lower cost than silicon-based photovoltaics. These solar cells use

photo-sensitive dyes and common, flexible materials that can be incorporated into building exteriors, such as

window panes, paints, or textiles. Although conventional silicon-based photovoltaic cells currently have higher

solar energy conversion ratios, dye-sensitive solar cells have higher overall power collection potential due to low-

cost operability under a wider range of light and temperature conditions, and more flexible application. This

technology was inspired by Kokia cookei, a hibiscus native to Hawaii with a status of “extinct in the wild” on the

IUCN Red List (http://enperitus.com/biomimicry/). See also this.

For many more examples see:

Biomimicry Institute , Project Drawdown , Sustainia , The Blue Economy

11

7.- Conclusion

Ecuador is endangered by the imposition of an extractive development model that would

sacrifice the advanced democratic principles of its own Constitution, the human rights of

indigenous peoples and rural communities, the rights of all people to clean water and a healthy

environment, the integrity of its spectacularly biodiverse ecosystems, and its prospects to

realize its own development model of ‘Living Well’ in balance with nature.

The most biodiverse regions remaining on Earth are endangered by the same forces. An

unprecedented avalanche of interconnected roads and highways, railroads, ports, pipelines,

hydroelectric dams (*), and extractive industries such as mining (*), fossil fuels (*), logging,

cattle ranching, and industrial agriculture (*, *, *) projects are planned or have already

commenced in countries throughout Africa, Asia, and the Americas. In this context, progress

toward achieving the goals of the Paris Climate Agreement, including the climate change

mitigation mechanism of “Reducing Emissions from Deforestation and forest Degradation”

(REDD+) would be sabotaged by this multitude of projects driven by contrary ‘business-as-

usual’ incentives that subsidize destructive and obsolete industries (*).

In South America the initiative for the Integración de la Infraestructura Regional

Sudamericana (IIRSA) includes the Manta-Manaos Corridor that dissects Ecuador. The

country’s prior experience with giant infrastructure schemes (*, *) has been mostly negative,

with costs far exceeding benefits and formidable debts yet to be paid. Typically, beneficiaries

are international banks, contractors, corrupted politicians, and subsidized industries that profit

enormously from project construction and finance, irrespective of benefit to the host country.

Adequate cost-benefit studies, consideration of alternatives, and meaningful public

participation are the exception rather than the norm. Among the unaccounted costs are

displacement of indigenous peoples and rural communities, loss of livelihoods, urban

migration, large-scale deforestation, land degradation, desertification, habitat fragmentation,

wildlife poaching and trafficking, air and water pollution, and greenhouse gas emissions. If

these projects are completed as planned our chances of halting the global climate and extinction

(*) crises are near zero. So too would be our opportunity to implement the abundance of

solutions (*, *) we already possess to heal the biosphere while improving the lives of all people.

Ecuador proposes a ‘regenerative’ development policy based on Buen Vivir, on respect for and

reciprocity with the human and natural communities that sustain us. This is in stark contrast to

the extractive model aimed at unlimited growth, exploitation, privatization, and concentration

of wealth for a few and costs for everyone else. These two models of development are mutually

exclusive. The time, resources, and pervasive infrastructure required for extractivism, and the

human and ecological damages incurred, progressively diminish possibilities to attain a more

just and sustainable alternative.

We must replace the extractive development model or be consumed by it. Now is the time to

defend democracy and the health of our planet by insisting on the right of people to be informed

of and to choose the model of development they want for their future. Otherwise our children

may not have the same opportunity.

12

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15

9.- Annexes

Annex 1.- Protected Forest Reserves/ Bosques Protectores

In Ecuador, Protector Forests (Bosques Protectores) are a legal category to conserve forests

and other types of vegetation and associated soil, biodiversity, and water resources that lie

outside the official National System of Protected Areas (SNAP-Sistema Nacional de Áreas

Protegidas). The SNAP is made up of national parks, wilderness areas, and other similar

conservation areas of relatively large size, generally more than 10,000 hectares.

Bosques Protectores can be private, community, or publicly owned, and there is no limit to

their size. Currently there are 174 Bosques Protectores covering over 2,400,000 hectares

spread across the country, ranging from a few, to over 300,000 hectares. These forests protect

watersheds and, thus, water quality. The Ecuadorian government estimates that 5.7 million

people depend on water originating in its protected areas, and they are a major tourist

destination.

Mining and Bosques Protectores

Since 2016, the government of Ecuador opened the floodgates for mining companies to acquire

concessions. Bosques Protectores were not exempted, even though mining would clearly defy

the reasons for their creation. To date 735,000 hectares within 41 Bosques Protectores (22%

of their total area) are affected by mining concessions. Currently the Ministry of Environment

has a backlog of 400 petitions from mining companies for environmental licenses needed for

exploration activities to begin within these areas.

Since the 1980’s dozens of private and community initiatives, many with international support,

have spent millions of dollars to create, protect, and maintain the majority of the nation’s

Bosques Protectores. For example, in 1988 the Rainforest Information Centre (RIC) was

instrumental in obtaining funds from the Australian International Development Assistance

Bureau (AIDAB) to help create the 5000+ hectare Bosque Protector Los Cedros. Since then

the Los Cedros Biological Reserve has hosted numerous scientists conducting original research

on cloud forest biodiversity and ecosystem services; and RIC has supported Los Cedros on

multiple occasions to protect this area from illegal logging and land trafficking.

Currently at least 68% of the territory of Los Cedros was granted in exploratory concession by

the Ecuadorian government to a Canadian speculative mining company. This was done without

prior consultation of local communities, reserve founders, or the scientists with many years of

research based in this reserve. While Ecuador provides special incentives, subsidies, and legal

guarantees for mining investment (see Annex 2), there are no similar measures to promote or

secure investments for its outstanding network of “protected” forest reserves and their

exceptional biodiversity.

16

Annex 2.- Main deregulatory reforms by the Correa government

to promote mining

Permitting and Environmental Deregulation

Topic Reforms Source

Concessions A concession gives the right to companies

to prospect, explore, exploit, process, and

refine minerals, for 25 years renewable.

Mining Law

Fast Tracking

Does away with mandatory Environmental

Impact Assessments (EIA) for all phases of

mining.

No studies of any kind for prospection.

Now only for exploitation is an EIA

required.

Ecuador

Ministry of Environment

–

Environmental

Regulations for Mining

Activities

Initial Exploration

A simple ficha ambiental, an

environmental form that can be filled out

by a non-professional suffices.

Advanced Exploration

For Advance Exploration a simple

Declaration of Environmental Impact

suffices, and Terms of Reference (ToR)

are not required. The declaration should be

done by a qualified expert recognized by

the Ministry.

Exploitation Both ToR and EIA are required, done by

qualified expert(s) under guidance of the

Ministry of Environment.

Only for those projects designated as high

impact will the services of a top-notch

environmental consultant be necessary.

One study rules all One Term of Reference and one EIA is be

sufficient for exploitation, beneficiation,

and refining.

Mining Law

Art. 21

Mine suspension and

closure

May occur under two situations:

1) By a court sentence for human rights

violations. (This is difficult to obtain

lacking true judicial independence, and is

very expensive for communities to incur

legal costs.)

Mining Law

2) Based on environmental damage.

Can lead to closure but the Ministry of

Environment has to classify the damage,

and after the miner is given a chance to

respond.

Mining Law

Art. 115

Bosques protectores

(Protector Forests)

Concessions must have a document from

the Ministry of Environment certifying

activities will not affect BP’s and other

Protected areas. However, it can secure a

environmental viability certificate from the

Ministry of Environment, and proceed.

Environmental

Regulations for Mining

Activities in Ecuador

Art. 9

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Economic and Fiscal Incentives

Topic Reforms Source

Fiscal/ Tax Breaks

* See image ‘Additional

fiscal and legal reforms’

below for more details

No income tax on earnings for 10

years until after companies begin to

show profits in mining,

petrochemical, shipyard, and other

“basic industries”.

The break is for 12 years in border

counties and 15 years in economically

depressed areas.

Incentives under the

Organic Code of

Production Commerce and

Investment - OCPCI

Presentation by

Pro Ecuador in

Berlin, 10 October 2017

Ministry of Mines

Value Added Tax is refunded to

mining companies.

Corporate income tax reduced from

25% to 22% for mining companies.

100% deduction for 5 years on items

like travel expenses, training, and

business promotion.

Tax burden reduced from 30% (2014)

to 23% by 2016.

Windfall tax reduced from 70% to

nearly 0 as it is applicable only under

certain circumstances and only 4

years after repyment of loans to open

and operate the mine.

Capital gains tax only applicable

when transaction is over 20% of

company’s value.

Investment Agreements Maintain tax rates for minimum 15

years and limits legal stability.

Private-Public enterprises No customs taxes on importation of

equipment; 0 taxes for the first 10

years of operation; exoneration of the

5% currency outflow tax. (Ordinary

citizens and companies pay this when

sending money or paying bills

overseas).

Tax Havens Mining law was changed to permit

companies based in tax havens to

operate in Ecuador. However, it is

prohibited for politicians to have

accounts in these.

2013 Amendments to the

Mining Law Environmental Bonds

(guarantees)

Not required in case of State-Private

enterprise projects.

(Such as the Junin-Llurimagua project

in which the state-owned ENAMI

partners with a private firm.)

Disputes Agreeable to international arbitration

in case of controversy.

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Source: Presentation by Pro Ecuador in Berlin, 10 October 2017, Ministry of Mines

Annex 3.- Extractivism and indigenous peoples in Ecuador

It should come as no surprise that indigenous people throughout the world have suffered more

than any other group at the hands of extractive industries including rubber, logging, petroleum,

oil palm, and- especially- mining. Ecuador is no exception. What may be surprising is the fact

that many more indigenous people in Ecuador have been criminalized for protesting against

extractive projects during the “socialist” revolution led by ex-president Rafael Correa than at

any other time in modern history. This, even though Ecuador’s 2008 Constitution enshrines

the right of Ecuadorians to resist projects or activities that violate their Constitutional rights.

As early as 2012, over 200 indigenous and campesino protesters had been charged from

anything from terrorism to sabotage for expressing their opposition to the government´s plans,

but mainly for protesting against mining and petroleum projects8. As recent as December 2016,

the Correa regime sent 3000 military and police to hunt down Shuar indigenous leaders in the

southeast of the country, whom the government claims shot a police officer during an anti-

mining protest. The altercation ocurred after indigenous residents were forcefully expelled

from their homes by the Ecuadorian military on behalf of a Chinese-owned mining company9.

8 http://dayumaecuador.blogspot.com/2012/06/para-recordar-ecuador-la.html

9 https://www.theguardian.com/global-development/2017/oct/17/signs-of-lasting-trauma-in-people-evicted-to-

make-way-for-giant-mine-in-ecuador

19

‘The New War in the Condor’10

Populations erased from the map. Schools in shambles. Women and their children displaced

from their homes in the middle of the night. Extractivism not only leaves its mark on the

environment, but also on the social fabric as a map that records deaths, intimidations, and

arrests in this biodiverse mountain range.

In the history of private mining projects in partnership with a national State, the "Nankints"

case is emblematic. Ecuador has violated its own mining mandate and the rights of ancestral

peoples with repressive and brutal military operations. Nankints was “disappeared”: this places

other communities within mining concessions at similar risk. The Shuar community of

Nankints had been settled in its territory since 2006. In 2016 it was destroyed by a military

attack ordered by the government of Correa. The attack came after a court ruling in favor of

the mining company ECSA, which had been trying to use the 40,000 hectares illegally granted

by the government. After the destruction of Nankints, the mining camp "La Esperanza" was

built in its place.

The Nankints women were forced to leave with their children in the middle of the night.

Although they did not turn it into a mining camp, something similar happened with Tsuntsuim.

200 people were expelled in December and the women had to do the same: flee through the

jungle at night. It is not certain that Tsuntsuim is free of military incursions. In the national

dialogue, it is urgent that the government firmly address responsibility for legal violence

against the Shuar people that subjects them to poverty and death.

The Ecuadorian Constitution enshrines the right "to a safe and healthy habitat, and to adequate

and dignified housing." It is contradictory that a country that guarantees the right to housing

would displace its population. In the section on the rights of peoples and nationalities, the

Constitution dictates: "Preserving the inalienable and indivisible property of their lands that

cannot be denied." There had been no dialogue when these rights were violated. This is a great

debt to the Shuar people that must be rectified by the new president (Lenin Moreno) if he is to

avoid being seen as an another aggressor regime of these ancestral peoples.

10 Translation by Carlos Zorrilla of article by Cristina Burneo Salazar in the 15 October 2017 edition of the

Ecuadorian newspaper La Hora: https://www.lahora.com.ec/noticia/1102107081/la-nueva-guerra-en-el-condor

20

Annex 4.- Websites

See the following for more information about the current situation of extractivism in Ecuador.

www.facebook.com/cedenma/

www.cedhu.org

www.ecuarunari.org.ec

www.coordinadoracaoi.org

www.accionecologica.org

www.decoin.org

www.codelcoecuador.com

www.facebook.com/OMASNE/

https://es-la.facebook.com/MinkaUrbana/

www.geografiacriticaecuador.org

www.pachamama.org

www.amazonwatch.org

http://www.rainforestinformationcentre.org

www.ecuadorendangered.com

See the following for more information about local conservation and sustainable development

initiatives that work to create alternatives to extractivism in Ecuador.

www.actiweb.es/reddebosques ; https://redbosques.condesan.org

www.toisanintag.wordpress.com ; https://es-la.facebook.com/Hidro-Intag-234552089903378/

www.altropico.org.ec

www.cambugan.org

www.colectivoagroecologicoec.wordpress.com

www.agroecologia.ec

www.redsemillas.org

www.allpa.org

www.uasb.edu.ec/web/unidad-de-informacion-socio-ambiental