By Edgar Aguilar
Gas flaring at oil drilling site on the Napo river, Amazone, Ecuador (image: flicker)
In 2007 Ecuador’s President Rafael Correa introduced the Yasuní-ITT Initiative, with ITT referring to Ishpingo, Tambococha, and Tiputini, three oil fields located in Ecuador’s Yasuní National Park. Correa novel proposal was to leave the approximately 846 million barrels of oil in these fields unexploited in exchange for $3.6 billion in international compensation—half the projected revenue from these reserves. This plan aimed to preserve one of the world’s most biodiverse regions and respect indigenous territories while addressing Ecuador’s economic needs. However, contradictions in Correa’s governance—marked by ambitious social spending funded by extractive industries—highlighted the difficulty of reconciling economic development with long-term environmental commitments.
During Correa’s tenure, Ecuador saw a significant increase in public spending, rising from 20 percent of GDP in 2004 to 43 percent in 2014. This expansion was largely financed through renegotiated oil contracts and an increased state share of oil revenues. Social investments, such as doubling government health expenditures from 2006 to 2016, led to substantial improvements in poverty reduction and infrastructure development.
However, this economic model deepened Ecuador’s reliance on oil, which highlighted the problem of directly linking social progress goals to environmentally destructive practices. While Correa promoted the Yasuní-ITT Initiative internationally, Ecuador simultaneously expanded oil exploration elsewhere, such as in the Amazonian blocks outside Yasuní. Oil concessions in the Amazon in 2007 covered 5 million hectares; 4.3 million of them conceded to foreign companies. In 2011 these numbers doubled with the incorporation of 20 more oil blocks. This inconsistency weakened the credibility of the initiative, making it difficult to secure international funding.
From the outset, the initiative faced skepticism. Donor countries were reluctant to provide funds without enforceable guarantees that future Ecuadorian administrations would uphold the agreement. Additionally, the initiative lacked a clear legal framework to ensure that the pledged conservation funds would lead to sustained economic diversification. Consequently, by 2013 the initiative had secured only $116 million in pledges, with a mere $13 million received, falling significantly short of the $3.6 billion target. The global oil market likely also played a role. In 2014 a sharp decline in oil prices significantly impacted Ecuador’s revenues, further reducing the feasibility of keeping Yasuní’s reserves untapped. With mounting fiscal deficits, Correa’s administration abandoned the initiative in 2013, citing insufficient international contributions.
As Yasuní ITT illustrates, Correa’s government struggled to maintain a coherent environmental policy, oscillating between conservation rhetoric and extractive expansion. This eroded trust among both domestic and international stakeholders. While his administration positioned itself as a defender of indigenous rights and nature, its policies often prioritized oil revenues over sustainability.
The abandonment of the initiative’s conservation goals sparked resistance from environmental and indigenous groups, leading to the formation of YASunidos, a coalition of youth activists, environmentalists, and indigenous advocates. Their activism sought to hold the government accountable, culminating in a push for a national referendum. Although the Ecuadorian government initially obstructed these efforts, the movement continued to pressure policymakers for conservation-oriented reforms.
In an August 2023 national referendum, 60 percent of voters supported the cessation of oil drilling in Yasuní National Park. In response to the vote, the government initiated plans to shut down oil operations in the Ishpingo, Tambococha, and Tiputini fields. The Energy Ministry announced the closure of the Ishpingo B-56 well, with the full decommissioning process expected to take over five years and cost more than $1.3 billion. However, concerns have been raised regarding government compliance, since the court mandated that the oil industry infrastructure be dismantled within a year.
The failure of the initiative led to the expansion of oil drilling in Yasuní National Park. Oil extraction has contributed to deforestation, biodiversity loss, and contamination of water sources, threatening endemic species and fragile ecosystems. Indigenous communities have faced territorial encroachment, social displacement, and health crises linked to pollution.
The Yasuní-ITT project illustrates the complexities of balancing economic development with environmental sustainability. Ecuador’s experience highlights the contradictions within populist environmental policies and discourse—where ambitious social programs depend on extractive revenues, ultimately undermining conservation efforts. While the 2023 referendum offers a renewed opportunity for environmental protection, long-term success will depend on sustained public pressure, policy consistency, and international cooperation.
To increase the likelihood of success 1) governments must credibly align environmental with economic policies. Contradictory approaches undermine long-term policy effectiveness. 2) Future conservation-based economic models should incorporate strong institutional safeguards, cross-administration continuity, and financial incentives for long-term compliance. 3) Reducing dependence on oil requires long-term investment in alternative sectors such as renewable energy, ecotourism, and technology.
Edgar Aguilar is a Researcher at the Center for Latin American and Latino Studies and a graduate student in International Economics at American University
Edited by Rob Albro, Associate Director, Research, at the Center for Latin American and Latino Studies
*This post continues an ongoing series, as part of CLALS’s Ecuador Initiative, examining the country’s economic, governance, security, and societal challenges, made possible with generous support from Dr. Maria Donoso Clark, CAS/PhD ’91.
