Ecuador’s untapped oil

What is a barrel of oil worth? Generally, the answer depends on a number of factors, including the mood of the commodities markets, the grade of the oil and demand at the gas pump. The basic assumption, however, is that the oil has a value because it eventually will be available for use.

But in a historic move, Ecuador is asking the world to put a dollar figure on oil that will not be used — oil it intends to protect from excavation. On Tuesday, Ecuador and the United Nations Development Programme began soliciting donations for a trust fund that would remunerate the country if it forgoes drilling in a pristine portion of its Amazon rain forest for 10 years. The deal is this: In return for leaving 846 million barrels of proven reserves undisturbed in three major oilfields in the Yasuni National Park, Ecuador would be paid $3.6 billion — about half of the expected value of the oil if it were extracted. By leaving the land untouched, Ecuador also keeps 410 million metric tons of carbon dioxide trapped underground, leaves a jungle that is a biological treasure intact and preserves the way of life of three indigenous tribes.

It may be unorthodox, but countries are signing on. Germany has pledged $50 million over 13 years, and according to news reports, Spain is expected to contribute $250 million. France, Sweden, Belgium and Switzerland said they will add to the fund. So far, promises come to about half of what Ecuador says it needs if it is going to refrain from drilling. And donations are not restricted to countries: Corporations, nonprofits and individual citizens are welcome to give. Ecuador notes, however, that the main contributors are the Ecuadorian people, 40% of whom live in poverty, but who collectively will sacrifice billions they otherwise would reap.

Since President Rafael Correa officially proposed the idea at the U.N. in September 2007, many obstacles have emerged, and again and again the project was pronounced either dying or dead. The fund’s creation this week is a testament to the Andean nation’s determination to be a world leader on environmental issues. This is, after all, the country that amended its constitution to assert nature’s right to “exist, persist, maintain and regenerate its vital cycles, structure, functions and its processes in evolution.”

Whether the world community will step up to meet the fund’s goal, only time will tell. But if Ecuador succeeds in raising billions of dollars to keep oil underground and rain forests unblemished, then the value of a barrel of oil is going to have a whole new meaning.