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Leaving oil underground in Ecuador: The Yasuní-ITT initiative from a multi-criteria perspective

Abstract:

The Ecuadorian proposal to keep 846 million barrels of crude oil in the Yasuní National Park underground-for the purposes of avoiding CO2 emissions and to protect both the biological diversity and the indigenous peoples in isolation who inhabit this area of the Amazon-is evaluated from a "multi-criteria" analysis. The main purpose of the paper is to compare this policy option with other alternatives across different values. An analytical framework is used that recognises the inherent complexity of a problem of this nature, in which the financial values are indeed relevant for policy, but other values are also relevant: the economic (in a broad sense), social, environmental, cultural and political. The results confirm that from a financial standpoint, extracting the oil is preferable, but by incorporating the non-monetary values into the multi-criteria decision process, one can plausibly defend the Yasuní-ITT Initiative as the most desirable policy option. Indeed, the social and environmental benefits (or "criteria") signalling an economic transition towards a model based on renewable sources of energy, along with the protection of critical environmental and social capital, make up for the financial gap.