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.