CHAPTER SEVEN JULIE C. RODRIGUEZ ENVIRONMENTAL TRANSITION IN ECUADOR: DEALING WITH THE GROWING PAINS "It takes a special kind of arrogance for a citizen of as rich and oil-greedy a country as the United States to decide that an impoverished nation like Ecuador should not use its principal natural resource[--oil]." Jan Reid, Texas Monthly, November 1995. Introduction Ecuador, like many developing countries, faces the challenge of providing for its people while preserving its precious natural resources to the greatest extent possible. At the same time, outsiders tug at the tiny country from every direction-environmentalists, creditors, multinational oil companies-everyone wants a piece. For better or for worse, development of Ecuador moves forward. This paper analyzes the environmental transitions that are occurring in the wake of Ecuador's development. The primary factors addressed are oil exploration, agricultural development, and deforestation in the Ecuadorian Amazon. Throughout this paper the reader will note some common themes seen in other chapters of this monograph. For example, many of the countries discussed in these chapters are driven to provide for growing populations under the strict constraints of limited resources such as water and arable land. Ecuador and other countries discussed in this monograph, such as Vietnam and Thailand, struggle to alleviate the population pressure in urban centers by redistributing the populations to less populated areas. Several of the countries also redistribute their populations to assert sovereignty or political control over a region; this can be seen in Ecuador as well as in the Israel and Iraq. (See, e.g., Lipchin Chapter). Such redistribution efforts often foster more problems because the transplantations lack adequate planning, investment in infrastructure, investment in education, and protection for the environment. Thus, a broad view of the countries discussed in this monograph reveals some common opportunities and challenges. Ecuador illustrates many of these. Setting Although Ecuador is not a large country, roughly the size of Colorado, it is more geographically and biologically rich than most countries in the world, large or small. Much of this richness is probably attributable to its location on the northwestern side of the South American continent where it straddles the equator and borders the Pacific Ocean. (See Map 1). This location produces a tropical climate along the coast that becomes cooler as one moves inland. Its biological richness also reflects its diverse topography. In the west, coastal plains shape the horizon. The Andes form a sharp boundary to this region, running parallel north-south through the middle of the country. Several active volcanoes checker this region. The east is dominated by the jewel of South America, the Amazon rain forest, which is drained by the scenic Napo River and other Amazon tributaries. (Reid, 1995). Ecuador's topography divides the country into three distinct regions: the Costa (coastal plains), the Sierra (inter-Andean central highlands), and the Oriente (flat to rolling eastern tropical rain forest). (CIA, 1995). (See Map 2). Aside from the Amazon, Ecuador also claims another biological gem -- the Galapagos Islands. Off the north-eastern coast of South America, these islands contain an oasis of biodiversity, including giant sea turtles and blue-footed boobies. Like the Amazon, the Galapagos are threatened by human encroachment. However, the primary threat to the Galapagos is over-enthusiastic tourism. This presents a serious problem that could compose an entire paper on its own. The challenges facing the Galapagos are beyond the scope of this paper. The Ecuadorians Composed of Indians (25%), Mestizo (mixed European and Indian ancestry -- 55%), Spanish (10%) and African (10%), Ecuador has a rich ethnic component as well. (Lonely Planet, 1996). Its population currently lingers around 11.5 million with an estimated growth rate of 2.4%. (Lonely Planet, 1996). Ecuador's mean population growth has continued to decrease in the last few decades, as have the mean growth rates of neighboring Brazil, Colombia, and Peru. (See Figure 2). Reflecting this transition, Ecuador's population is relatively young with 36% of the population below the age of fifteen. (See Figure 1). Consequently, although fertility is moderate (currently between 2 and 3), the population is still expected to double by the year 2030 (Pichon, 1992), because of the demographic transition that is expected as the population comes of age. Thus, much needs to be done at these earlier stages to provide for the expanding population of the future. Map of Ecuador showing rivers.

Increasing exploitation of Ecuador's precious natural resources, such as the Amazon Rain forest, is largely a result of rural transition and urban population density rather than excessive overall population growth. Ecuadorians are moving eastward to the Oriente region to settle. (See Table 1). The rural population in the Oriente increased 37% in less than ten years. The primary causes of this migration are increased access due to road building for oil exploration and favorable land tenure practices because of the government's inability and unwillingness to police the forest area. (See Land Clearing discussion below). Thus, three transitions in the Oriente region are closely intertwined: the energy transition, that is the move to oil development and use that began in the 1970's; the forestry transition as forests were cleared for the oil development and rural farming; and the ultimate agricultural transition. Map of South America.

Figure 1. Age Structure of Population. Pie chart.

TABLE 1 Trends in Ecuador's Rural Population, By Region Province 1974 1982 Relative Change (%) Sierra 1,943,769 2,078,767 6.9 Costa 1,708,855 1,719,671 0.6 Oriente 150,492 206,246 37.0 Source: Instituto Nacional de Estadistica y Censos (INEC), Encuesta Nacional de Fecundiad (Quidto: INEC, 1982) cited in Douglas Southgate and Morris Whitaker. "Promoting Resource Degradation in Latin America: Tropical Deforestation, Soil Erosion, and Coastal Ecosystem Disturbance in Ecuador", Economic Development and Cultural Change, July 1992, p.796.

Economy Ecuador enjoys one of the most stable republics in Latin America. (Reid, 1995). However, this free government is held captive by an economy saddled with high levels of foreign debt and very low national income levels. Ecuador is a relatively poor country. GDP per capita income hovers around $1,000, ranking it 71st in the world for per capita GNP. (Lonely Planet, 1996). (See Map 3). The bulk of its GNP is derived from oil production and banana exports. (See Figure 3). The discovery of oil reserves in the eastern portion of Ecuador has resulted in a steady and steep increase in GNP. (See Figure 4). Growth rates in the Ecuadorian economy are largely a function of the prices of its primary exports, oil and bananas. (CIA, 1995). When these products are doing well, Ecuador's economy follows. Consequently, its heavy reliance on a limited number of products has made it vulnerable to international shocks and economic slow downs in other countries. (MIEB, 1994). Foreign Debt/Debt Service Ecuador's foreign debt has steadily increased over the last two decades, brimming at over $14 billion in 1995. (See Figure 5 and Table 2). A large portion of this was a result of overly optimistic expectations of oil revenues. The government borrowed from other countries to fund Ecuador's oil development activities and social programs but was unable to repay the debts when oil prices dropped substantially. (MIEB, 1994). "Under newly renegotiated international debt agreements, the country must achieve 5 percent-a-year growth over the next 20 years or face default." (Goering, 1996). Without oil development, Ecuador has no chance of meeting the demands of its foreign creditors. Map. GNP per Capita by Country.

Figure 3. Estimated Exports, 1994.

Figure 4. GNP per Capita.

Figure 5. Ecuador's Total External Debt (Stocks).

Figure 6. Rainforest Distribution in South America.

TABLE 2 Ecuador's External Debt in 1995 Type of Debt Millions of U.S. Dollars Total External Debt 14,366 Long-Term Debt 12,172 Short-Term Debt 2,015 Total Debt Service 1,234 Interest Payments 750 Source: "Executive Summary", Statistics and Quantitative Analysis, Ecuador: Basic Socio-Economic Data, http://iadb6000.iadb.org/~http/ecuador/ecbsed.html, 1996.

Inflation Compounding its financial troubles further, Ecuador historically experienced high rates of inflation, at times reaching as high as 55%. However, a series of economic reforms helped decrease this considerably in 1994 to 25%. (CIA, 1995). This was primarily due to former President Sixto Duran-Ballen's policies that, inter alia, cut subsidies, balanced the budget, and raised fuel prices and utility rates. (CIA, 1995). These reforms helped stabilize Ecuador's shaky economy. II. The Ecuadorian Amazon Ecological characteristics, biodiversity While merely the size of Colorado, Ecuador packs a powerful punch of biodiversity. It houses more plant and bird species than all of North America. (Conniff, 1991; 39-40). Ecuador is one of the richest in South America in terms of flora species (including a large number of endemic species). "The country perhaps features as many as 20,000 plant species, compared with an estimated 20,000 for all of Central America including southern Mexico, and 25,000-30,000 for all of Brazilian Amazonia." (Myers, 1980; 141). The region remains largely unstudied so biologists can only guess what lurks in Ecuador's misty forests. Unfortunately, huge amounts of forest have already been lost. The western half of the country, where the bulk of the human population resides, has lost 95% of its forests in the last two decades. (Conniff, 1991; 40). The bulk of the islands of forest that remain are perched atop coastal ridgelines that are more difficult to access. (Conniff, 1991). In the eastern third of the country Ecuador's Amazonian rainforest is a hotspot for biodiversity. It contains only about two percent of South America's rain forest, (See Figure 6), but contains a disproportionate amount of the region's biological diversity. The region is very wet with little variation in rainfall as a result it is composed of predominantly upland moist forest (mostly evergreen rain forest from tree-like on the eastern side of the Andes to the lowland plains). (Myers, 1980; 141). The lush region is threatened with destruction. Estimates of deforestation in Ecuador vary. An estimated two percent of Ecuador's existing rain forest is lost annually. (Pichon, 1992; 664). Consequently, Ecuador has experienced the highest rate of deforestation of all the Amazon countries. (Pichon, 1992). "All estimates indicate a significant deforestation that could lead to a total depletion of closed forests by the year 2030." (Pichon, 1992; 667 citing Hicks, Daly, Davis, & Lourdes, 1990). Land Clearing and the Link to Oil Exploration and Land Tenure Laws Historically the rain forest and its indigenous people were protected from disturbance by a lack of access. The bulk of forest land is owned by the state as forest patrimony or as part of a public park or reserve. However, the government failed to take control of these lands because the government lacked the resources to police the area and the forest resources were not seen as valuable enough to warrant development. (Southgate and Whitaker, 1992; 790). Instead, the undisturbed land was classified as "unproductive" under the Land Colonization Laws passed in the 1960's and, therefore, up for grabs by new settlers. (Myers, 1980; 142). The purpose of these laws was threefold. First, the Amazon was perceived as an "area with almost infinite space and resources, mak[ing] it an excellent 'escape valve' for socioeconomic imbalances and population pressures in other regions, offering a 'land without people' to 'people without land' . . . ." (Pichon, 1992; 666). Ecuador's growing population was applying increasing pressure to Ecuador's urban centers (See Map 5; Figure 7); and, as urban populations became more dense, the numbers of urban poor continued to increase as well. The government could solve the problem of urban population pressure and the poor at the same time by sending them east. One caveat, however, was that there were no efforts to help establish the colonists in the east. Although the policies stated that settlement would only occur if adequate infrastructure was created, in most cases this did not occur, and any infrastructure that was created was to support multinationals working in the area. (Pichon, 1992). Second, the agricultural production that would result from this new settlement would, hopefully, create a surplus that could help support the growing population. Third, the new settlers would help create a "live border". For many years Ecuador and Peru have been in conflict over the border. Ecuador is particularly sensitive to further encroachments on its territory because it has lost "more than 70% of its original territory to Colombia, Brazil, and Peru" since 1830. (Pichon, 1992; 666). Populating the unoccupied land with Ecuadorians was viewed as a prime national security move to keep out Peruvians. Thus, under the land tenure laws a commons was created, but for several years no one took advantage of it because gaining access was so difficult. The discovery of oil in the Oriente region, which encompasses the Ecuadorian Amazon, stole the forest's protection. Oil companies had the capital to build the extensive road systems necessary to exploit the forest. This also allowed outsiders to free-ride on the new road system and penetrate the rain forest borders. Settlement ballooned thereafter, particularly near petroleum zones which grew at a rate of 8% annually between 1974-82 compared to the national average of 2.5%. The entire Amazon region is estimated to have a growth rate of 5% annually; naturally, the bulk of this growth is derived from immigration. (Pichon, 1992; 667). (See Table 1). Map. Percent of Population Living in Urban Areas, by Country.

Settlement occurred spontaneously as individuals and groups migrated east from the densely populated west in search of a better life. Settlers were primarily subsistence peasants looking to make a living on the pristine lands; under the land colonization laws, settlers could eventually gain title to land that they cleared and maintained. (Myers, 1980; 142). A large number of these settlers engaged in agriculture such as cattle ranching and farming. Figure 7. Ecuadorian Population Living in Urban Areas.

Ecuadorian land tenure laws further contribute to deforestation because land claims remain insecure until the complex requirements to create title are fulfilled. (Southgate & Whitaker, 1992). Adjudication of claims takes years because of the country's antiquated record-keeping system. Until title is established, claimants are vulnerable to other settlers establishing conflicting claims. As long as title is insecure, settlers do not bother to invest in soil conservation measures or other land improvements; indeed some measures such as land fallowing put the farmer at risk of having another come along and claim the idle land. Additionally, they clear more land around the perimeter of their farmed areas to discourage other settlers from laying conflicting claims. Both of these factors do not bode well for Ecuador's forests. Thus, land clearing under this regime occurs for two reasons: first, it establishes ownership; and, second, land must be cleared to make up for loss of productivity -- rain forest soils are frequently exploited without care so their productivity decreases rapidly. (Rudel, 1995; 187). Logging Logging the tropical forests is uneconomic. Profits from non-wood forest products exceed those from timber extraction. (Southgate & Whitaker, 1992). For example, rare mahogany trees are harvested and sold for a mere $3 a tree for plywood. (Conniff, 1991; 44). Logging prices are depressed primarily because of governmental regulations. In 1982 a ban was imposed on logging concessions. Consequently, timber may only be obtained through agricultural settlers that are far less efficient loggers. Settlers agree to sell their trees to lumber companies in exchange for a price and infrastructure support, such as construction of roads and schools. (Gonzalez, M., 1995a). When the lumber companies contract to cut down the settlers' trees they will destroy large amounts of trees in pursuit of the "three or four commercially-viable trees" on each hectare. (Gonzalez, M., 1995a). The heavy machinery used to extract the trees is the main culprit of forest destruction. It destroys the many trees that just happened to be in the path of the commercially viable trees and crushes the fragile soil below. The settlers' logging is also subsidized by low gasoline (subsidized) prices because the gas is needed to power their chain saws. But, the biggest reason for low timber prices is the prohibition on log exports. From an environmentalist perspective, such a ban sounds like a good idea; no chopping down of the forest to ship it off to the developed countries to make paper plates. However, the result is essentially the same with a lot less profit. The trees have such a low cash value that they are not preserved at all and no reforestation occurs. A tree in Ecuador valued at $2-$4 each would be valued in markets such as Italy at $15 each. (Southgate & Whitaker, 1992; 797). There is not much of an incentive to grow trees at the Ecuadorian rate. Additionally, forestry research is weak so production returns are low, (Southgate & Whitaker, 1992), and the government subsidizes conversion of forests to pasture. (Pichon, 1992). III. Oil Production The discovery of oil in Ecuador in the late 1960's/early 1970's transformed the country. (See Figures 4 and 8). Almost instantly, petroleum became the predominant source of energy, and the country experienced explosive economic growth. (Pichon, 1992). Although the amount of oil reserves in Ecuador, 2 billion barrels, is small in comparison to others (e.g., Venezuela has 63 billion and Mexico has 50 billion), the country was so poor that such an influx of revenue from oil sales had the potential to overhaul the Ecuadorian economy. (Reid, 1995). As a result, the Ecuadorian government became captured by petroleum interests. Oil was seen as a quick fix to the problems that had been plaguing the country for decades. "Petroleum development offers immediate, predictable benefits for which the most influential social groups are clamoring." (Pichon, 1992; 672). Thus, many other interests, such as the protection of natural areas (including those that were officially protected), were rolled over in favor of oil development. Indeed, under the Law of Mineral Resources and Hydrocarbons, prospecting regions in protected areas and other government land are ceded to oil companies. (Pichon, 1992). No amelioration of environmental damage is required, and even if it was, there is no enforcement of such environmental measures. Oil development does seem to have had substantial positive effects on the economy. For example, after the oil boom began, average incomes increased 500% since the 1960's. (MIEB, 1994). In addition, oil now makes up 60% of the government's budget, which does not make the government too keen on reducing oil development. The government sees oil development as necessary in light of the need to support its economy and pay off external debt. But, others are pressuring it to preserve the forests first. The Environment Unit Chief of Ecuador's oil branch of the government (Petroecuador), Manuel Navarro, stated it plainly: "All of a sudden we have pressures from organizations from Europe, from the States, claiming the Amazonian jungle has to be untouched, the same way they're demanding we pay off the debt; they're still getting cheap export goods. I think it's a little unfair the pressure we have from different sides. They say, 'Don't use this, don't touch this,' but do we have an alternative?" (MIEB, 1994 (citing National Public Radio, "Vanishing Homeland: Ecuador, Amazon and Oil," Morning Edition, January 13, 1992)). Hence, the conflict pervades national policy. Figure 8. Total Commercial Fuel Production.

Enter U.S. Multinational Oil Companies Multinational oil corporations immediately took notice and began infiltrating Ecuador's natural areas in search of more oil. The Ecuadorian government receives hefty benefits from the presence of the multinationals through royalties based on production levels and taxes. (MIEB, 1994). In addition, after the multinationals' contracts are up the operations are taken over by Petroecuador. Low and behold, a mutually symbiotic relationship was formed between the U.S. multinationals and the Ecuadorian government. Multinational and Petroecuador oil production activities have resulted in extensive pollution as a result of dumping untreated toxic wastes into unlined waste pits and water sources. For example, the waters that are brought up from the oil wells that have naturally high chemical content are typically re-injected into the wells in the United States to prevent contamination of the water supply and other ill effects. However, in Ecuador oil companies frequently pump the contaminated water directly into nearby rivers and streams. Thus, local people are poisoned by water pollution and wildlife and plant life are also put at risk. A 498 km pipeline was built by Texaco in the early 1970's that connected the Oriente to the refining and processing stations in the capitol, Quito, and then on to the port city of Esmeraldas. (MIEB, 1994). (See Map 2). The pipeline is the main source of oil transport and a major source of environmental damage. Leaks from the pipeline have resulted in a larger quantity of spilled oil (10 million gallons) than was spilled from the Exxon Valdez. (MIEB, 1994). While multinational oil companies have taken much away from the Amazonian region, little has been invested in the region itself. The bulk of revenues generated are "capitalized outside the Amazon region." (Pichon, 1992; 668). Thus, oil production does little for the livelihood of most Ecuadorians in the region who rely primarily on the agricultural sector. Current Situation Since the oil boom, Ecuadorians have become increasingly reliant on petroleum domestically. Government subsidization of oil prices contributed to this greatly. As a result, "[e]xperts predict, that, if new fields are not developed, Ecuador will have no oil exports by the end of the century." (MIEB, 1994). Nonetheless, established oil reserves and oil exports are increasing. (See Figure 9). Ecuador's oil exports for September 1996 were at 7.21 million barrels of crude oil, up from 6.27 million at the same time last year. (Reuters, 1996b). To facilitate this increase, Ecuador has sold oil concessions for an additional 1.6 million hectares. (Ward, 1994). The primary motivator for this sale was the push to reduce the ballooning foreign debt. Recently, Indigenous groups and environmentalists from Ecuador and abroad have been successful in pushing those developing oil in sensitive areas such as the Amazon to implement sound environmental practices. For example, Occidental, a multinational oil company that is preparing to drill in Ecuador has planned several environmental steps including "cutting seismic trails by hand for the smallest disturbance to 'surface vegetation' and having a width no greater than 1.5 meters; keeping road construction to a minimum by supporting seismic shooting by helicopter; clustering drilling of production wells, should development go that far; re-injecting all effluents; having central facilities for separating and pumping crude at new fields, rather than having each field with an individual unit; and planting new trees to replace those cut in all operations." (Schneider, 1996). In addition, oil companies such as Maxus, are establishing security measures to keep out colonizing settlers to maintain the integrity of the indigenous populations in the regions. (Reid, 1995). It is unclear whether the government will continue these measures when the companies leave the region when their contracts are up and Petroecuador takes over. Figure 9. Crude Oil Reserves in Ecuador.

Figure 10. Arable and Permanent Cropland.

In addition, the government has made some efforts to ameliorate environmental damage caused by oil production. For example, companies exploring for oil must now pay a $100,000 tax to cover environmental clean ups, (MIEB, 1994), in addition to conducting environmental impact studies prior to drilling and seismic tests. (Goering, 1996). The government has also developed environmental operating guidelines for these companies. For example, recently the government announced that a new oil field franchise in the Amazon would be required to build facilities to safely process contaminated water and to bury the 165 kilometer pipeline that would be required to transport the oil out of the pristine region. (American Political Network, 1996). The regulations increase operating costs substantially, discouraging some companies from becoming involved. It remains to be seen whether the government will vigorously enforce environmental regulations, but its past record makes it seem doubtful. If enforcement does occur, it is likely to be linked to a company's failure to share its proceeds with the Ecuadorian government, i.e., Petroecuador; Ecuador has banned Maxus from operating in one area of the Amazon because it failed to share its revenues with Petroecuador. (Reuters, 1996a). One of the risks that Ecuador faces when it demands a high level of environmental protection from multinationals is that of driving away potentially good companies because of the high costs and political pressures (externally and internally applied). For example, Conoco, a multinational oil company with an excellent environmental record relative to others in the industry, withdrew its plans to develop oil in Ecuador's Amazon because of strong environmentalist opposition, potentially low economic returns, and high environmental protection costs. (Haines, 1996). Shortly after the contract was awarded to a multinational with a spottier environmental record -- Maxus. Maxus has promised to enact environmental protection measures. Time will reveal the extent of their commitment. IV. Agriculture Although more land has continued to be cleared for agriculture in Ecuador, productivity has not significantly increased because of the inefficiency of current farming methods. As a result, the agricultural transition has stalled. Net gains from land clearing seem to be slim. The causes for this stagnation are discussed below. Agriculture has declined in importance as an export commodity because it has been replaced largely by oil exports that are far more profitable. In 1970 food exports comprised 94% of exports. By 1985 food exports plummeted to only 28%. Nonetheless, in the 1990's food exports are rebounding and have reached 50%. (Gonzalez, G., 1996). Agriculture makes up a substantial portion of Ecuador's land uses and it has increased substantially in the last few decades. (See Figure 11 and Table 3). Deforestation is the main cause of this increase in agricultural land. However, arable cropland and permanent cropland have been increasing at a more moderate pace recently. (See Figure 10).

TABLE 3 Agricultural Land Use Trends in Ecuador (Hectares) 1965-67 1984-85 Change Tropical crop land* 1,205,000 1,360,000 +155,000 Pasture: Sierra 899,000 1,917,000 +1,018,000 Costa 516,000 2,005,000 +1,489,000 Oriente 226,000 484,000 +259,000 Source: M. Whitaker and J. Alzamora, "Production Agriculture: Nature and Characteristics," in Agriculture and Economic Survival: The Role of Agriculture in Ecuador's Economic Development, ed. M. Whitaker and D. Colyer (Boulder, Colo. Westview, 1990). * Defined as the area planted to bananas, cacao, cassava, castor oil, coffee, cotton, fruits, hard corn, manila hemp, oil palm, plantains, rice, soybeans, and sugar cane.

Undervaluation of agricultural inputs causes further damage to the environment because farmers have no incentives to conserve land, water, forests, and wildlife. (Southgate & Whitaker, 1992). Under pricing inputs such as pesticide can lead to excess application and pollution of the environment as the chemicals run off. Former President Duran-Ballen's economic reforms may reduce this waste because the reforms ended a large number of subsidies. Land will continue to be undervalued as long as the free access and title-for-clearing policies continue. With cheap land, there is no incentive to invest in agricultural research to improve farming productivity on the fragile lands; thus, more land is deforested as the cleared land becomes less productive. (Southgate & Whitaker, 1992). Agricultural development in the Oriente is unlikely to raise the status of most poor settlers because of the way that the land tenure laws are designed. Even if a peasant is able to clear an area of forest and begin farming or ranching, obtaining title to the land is difficult. To obtain permanent title the peasant must pay for the land based on a price scale established by the government that is based on the land's location and characteristics. (Pichon, 1992; 670). The price is amortized over a 25 year period but this is of little help since most settlers barely break even in their agricultural production. (Pichon, 1992). Little is left over to pay on the amortized amount. In addition, the settlers cannot obtain their title until the amount is paid in full; so they cannot even sell the property and retain the value of their investment. All is lost if they fail to complete the payments. Without proper title, the settlers cannot obtain credit either. Thus, the system is not favorable to poor settlers and may even widen the gap in wealth distribution between the rich and poor. (Pichon, 1992). Figure 11. Land Use; pie chart in landscape orientation.

Ecuador's current approach to agriculture, land tenure and oil exploration spells trouble for a growing population. Ecuador's population is expected to double by 2020-30, reaching approximately 20 million people. (Pichon, 1992). Without sustainable development and a reduction of the current deforestation rates, Ecuador will not be able to provide for such a large population. Agricultural production cannot expand to support this demand unless more research is done to develop more efficient practices. In addition, deforestation must slow because the forest soil is being destroyed. Farming without fallowing the land leads to eventual infertility. Deforestation in unsuitable areas, i.e., those with unstable soils and steep slopes, causes heavy erosion that further undermines agricultural production. (Pichon, 1992). Much of the land that is being cleared has limited fertility, high erodibility, and/or poor drainage making it unsuitable for agricultural production. Chopping down the rain forest to convert it to agricultural land has further ramifications than loss of wildlife. It also results in increasing carbon-dioxide and other greenhouse gases. Cattle production exacerbates the problem by contributing to increased methane levels. (Southgate & Whitaker, 1992). Forest clearing also leads to erosion and pollution of the water supply because of sedimentation and runoff. This is an inefficient result. Clearly, Ecuador has a need for productive agricultural land. The best result would require limited land clearing in the areas most suitable for agriculture combined with proper soil conservation measures. Then productivity would remain high and more of the country's natural resources would be preserved. V. The Indigenous People of the Ecuadorian Amazon As with the Homesteading laws in the United States, the Ecuadorian land tenure and colonization laws paid little attention to the notion that there were already indigenous people living in the region that should have a claim to the land themselves. The "unoccupied" lands were considered property of the state. "According to the terms of [the land tenure laws], 'unoccupied' lands are those that (a) as part of the nation's territory have no other owner; (b) have been returned to the State due to any legal cause; or (c) have been uncultivated for more than 10 years." (Pichon, 1992; 669 (citing Hicks et al, 1990)). This last element strongly encouraged intense land clearing and discouraged fallowing of land to preserve the soil. Consequently, when settlers arrived and land tenure was based on land clearing, many indigenous people began to clear as well in an effort to protect their rights to the land. In addition, like the reservations established in the United States for Native Americans, the Ecuadorian government threw the indigenous people a few crumbs under the Law of Amazon Colonization, providing for the selection of certain areas to be set aside for the use of indigenous people. (Pichon, 1992). It is doubtful that the government enforced the boundaries of such reserves. Fortunately, Ecuador's native people have become a strong force in Ecuador. Although they come from a variety of cultures, the indigenous groups have organized into a powerful coalition, known as the CONFENIAE, that has become a force to be reckoned with. The coalition is aided by the support of non-governmental organizations (NGOs) from the community development and environmental conservation arenas. In 1992, the coalition succeeded in obtaining land rights to more than three million acres. The Indians were able to accomplish this through a variety of measures. First they threatened to boycott the presidential elections if their demands were not met. Also, they staged an "uprising" in which "[t]hey paralyzed the country by blocking the main highways, cut[]off food supplies to the capital, and [took] over private land." (Farah, 1992). This evoked fear in non-Indians living in the region that the Indians were demanding title to and aroused dismay in the military who feared that felt it would endanger national security to leave such a large block of land near the Peru-Ecuador border unsettled. The government soothed these fears by requiring that current non-Indian settlers in the area be allowed to stay and by requiring that the military continue to have unrestricted access. (Farah, 1992). In the land grant, the government stipulated that title was granted to the groups and not individuals and that the land could not be sold. (Farah, 1992). Another important caveat: the government retains title to subterranean products, i.e., oil and has access to explore for oil on the land ceded to the Indians in consultation with the affected communities to minimize environmental damage. (Farah, 1992). The Quicha and the Shuar were the main indigenous groups responsible for the land rights reform. (MIEB, 1994). The smaller groups in the northern Amazon have lost a very large percentage of their populations since the introduction of westerners and oil companies to the region. (See Table 4). Pollution and introduced disease has lead to the death of many Indians. (MIEB, 1994). The most vulnerable groups are those that rely extensively on forest resources. Logging and oil spills have drastically reduced such resources. Indigenous groups have also been successful in bargaining with oil companies planning to operate in their territories. For example, Arco negotiated with the Indians to build a pipeline through their communities in exchange for payment for socio-environmental damage, development of job training programs, and creation of a fund for environmental and cultural restoration. (Gonzalez, M., 1996b.). Essentially, Ecuador's indigenous people are some of the best organized and politically powerful in the world. They have representation in government and real clout. Currently, the indigenous groups hold eight seats out of eighty-two seats in Parliament. (Gonzalez, M., 1996b.). Partly as a result of support from this contingent a law was passed recently that would increase protection of biodiversity. (Gonzalez, M., 1996b.). Thus, their political force promises to make a real difference in the protection of Ecuador's natural resources.

TABLE 4 Indigenous People of the Oriente Native Group Population Oriente Region Quicha 40,000 Shuar 35,000 Achuar 2,000 The northern Amazon Cofan 350-400 Siona-Secoya 400-500 Huaoroni 850-900 Source: Management Institute for Environment and Business (MIEB), Beckenstein, Alan R., Frederick J. Long, Matthew B. Arnold and Thomas N. Gladwin (eds.). "Rain forest Negotiation Exercise", Stakeholder Negotiations: Exercises in Sustainable Development, 1995.

The Indians have also successfully flexed their muscles in the United States oil and legal communities. In Maria Aguinda v. Texaco, poor Ecuadorian indigenous groups filed suit against Texaco in U.S. District Court to seek civil damages for Texaco's alleged pollution of the rain forest and subsequent poisoning of the local indigenous population. Unlike many similar cases against multinationals, the Aguinda case survived the initial stages of litigation. Usually, these cases are thrown out for improper forum. Texaco sought dismissal not on the grounds that it did not do what was alleged, but on the grounds that it obeyed the laws of the country during its operations. (Millman, 1996). Of course these laws resulted in operations that were far less environmentally friendly than its U.S. operating practices. Texaco also argued that its foreign subsidiary created the mess (in compliance with Ecuadorian operating standards), not the parent, so the case should continue in Ecuador not the U.S. The foreign subsidiary is far less solvent than its U.S. parent. Texaco also argues that Ecuador's national oil firm, Petroecuador, owned 60% of the project while Texaco was involved and has been operating since. (Millman, 1996). Texaco asserts that the government monitored all of its operations and decisions, and it asserts that it cannot be shown that the pollution existing now was caused by Texaco's presence 10 years ago and not Petroecuador's operations there in the meantime. Thus far, it appears that Ecuador is supporting Texaco's position. If Texaco should lose, Ecuadorian officials fear that other multinational oil companies developing oil in the region will pull out. (Goering, 1996). Most in the government find this to be more frightening than cleaning up Texaco's mess. It is unlikely that the Aguinda case will actually go to trial. The legal hurdles are considerable. Nonetheless, the case may force multinational oil companies to raise their environmental standards for operation in Ecuador even when local enforcement is weak. VI. Management and Protection Reforms in Ecuador must be carried out carefully. Too often, well-meaning policy makers and NGO's push for broad sweeping changes that wind up having a severe impact on the most vulnerable members of society, those without a safety net, the rural and urban poor. The poor should not be an afterthought. Reforms should focus on reducing the need for the poor to clear land. The first step is land tenure policy reform. The current system discourages improvement of cleared land and encourages excessive clearing. Reform would make titles secure faster to encourage investment in the land; clearing of land should not be required to obtain title. However, such title-granting must be limited to a certain extent to retain much of the forest in its pristine state. The trick will be finding the proper balance where citizens can make a living and where the forests are protected to the maximum extent. The second step is investment in agricultural research and informing poor settlers of effective land management techniques. Greater efficiency will reduce the need to clear more land while also increasing productivity levels to provide for a growing population. (Southgate & Whitaker, 1992; Pichon, 1992). NGO's can assist in this effort by bringing in techniques developed in other rain forest countries and teaching the techniques to local farmers. Research should also focus on identifying crops appropriate for Ecuador's soil, climate, topography and population. NGO's, such as the United Nations, can assist in this endeavor as well. The third step in striking a balance between environmental protection and providing for the people of Ecuador should be greater reliance on market forces, i.e., no more subsidies and price controls. (Southgate & Whitaker, 1992). These undermine resource conservation because people have no incentive to produce efficiently or conserve resources. For example, elimination of agricultural product subsidies would reduce waste of items such as pesticides and fertilizer. However, these reforms must be combined with educational programs to teach farmers how to use the products more efficiently. Otherwise, removal of the agricultural subsidies could have a terrible impact on subsistence farmers. Petroleum subsidies should be the primary target for elimination. The subsidies should be phased out slowly to reduce the impact on the poor and to allow technological adjustments. Reducing domestic reliance on petroleum will prolong the economic benefit of oil exports, where profits tend to be higher. Former President Duran-Ballen moved Ecuador in the direction of the market. This trend should continue provided there are adequate efforts to preserve resources. The focus for forest policy reforms should be identification of high priority regions, i.e., areas with especially high levels of biodiversity and indigenous populations that rely on their natural resources. No doubt all of the Amazon should be protected, but at this stage that does not seem feasible because of economic pressures and the demands of a growing population. Thus, careful planning can allow for more efficient land uses that maximize the number of areas that are protected by increasing the productivity of those that are not. For example, if agricultural techniques improve such that land cultivation is sustainable, the need to clear more land will subside. NGO's can play a key role in this planning process, but they must act quickly. NGO's can help develop the priority list that incorporates several key factors: biodiversity levels, indigenous populations, soil stability, accessibility, and oil development potential. The next step is greater investment in forest research and management. Better silvicultural methods could lead to increased reforestation and less damaging tree-removal methods. If settlers learn to manage their forests for selected logging and long term sustainability of its biodiversity, the need to clear indiscriminately will decrease. This research should be combined with careful forest planning so that the areas that are of lower priority for preservation purposes and that have a higher value for agricultural purposes become the focus of forestry efforts, leaving the remainder in tact for less consumptive forest practices and biological protection. NGOs and governmental environmental organizations must keep a sharp eye on loggers entering the Amazon region to harvest. Improved logging technology is a real threat to South America's forests. For example, Chinese logging companies recently purchased large tracts of rain forest land and built state-of-the-art processing plants for high level wood production in Brazil's Amazon. (NPR, 1996). This new technology allows faster destruction of the forests, leaving them no time to regenerate. Logging rates will continue to rise in an effort to keep the factories at full capacity. Like Ecuador, Brazil has good environmental laws in place but they have only meager enforcement. Probably the most effective way to keep these international loggers in check is through media exposure to inform the public of their misadventures. Although the Amazon is no longer being written about on the cover of TIME like it was in the 1980's, it may still be able to attract public attention and, hopefully, some public outrage. NGOs can mobilize the international community to put pressure on the governments to control the logging rates. However, external funding will be needed to improve enforcement of logging laws to have any real impact. "Nonconsumptive" uses of the rain forests present a potential avenue for economic expansion while preserving the forests. These uses include the harvesting of plants for pharmaceutical research, harvesting of forest products such as nuts for sale to general public, and the opening of the forest to ecotourism. However, thus far, these nonconsumptive uses have not been that effective. For example, in the first case the pharmaceutical harvesting has lead to very little revenue for the rain forest country itself. In most cases the pharmaceutical companies pay a small price for the plants; the plants are then taken to a developed country where they are cloned into a new miracle drug that makes millions of dollars for the pharmaceutical company. Ecuador and other rain forest countries need to establish more beneficial contracts with these companies, requiring the companies to hand over a good portion of their royalties from successful products. In the second case, the forest product market has not been too successful because such harvesting is uneconomic in comparison to the broad scale production that occurs outside of the forest. This was the case for rubber production. Finally, in the third case of ecotourism there is real potential for economic development. However, ecotourism projects have often had ill effects on indigenous populations and the environment because they have not been sensitive to either. Ecotourism in the Amazon must be monitored closely to ensure that tourist capacity does not rise to the level where it destroys the natural areas that the tourists come to see. Ecotours should be well planned so that they avoid more sensitive areas and avoid exploitation of indigenous populations. At the international level, Ecuador's large foreign debt must be dealt with to reduce the pressure on the government to develop its natural resources without regard to long term impacts. Debt-for-nature swaps are one possibility, but definitely not a sufficient solution. Through debt-for-nature swaps, environmental groups buy up Ecuador's foreign debt at a discounted rate and then forgive the debt in exchange for the establishment of nature preserves in Ecuador. It is a good idea, but has limitations. First, the swaps have been known to cause inflation because of increased domestic spending. (U.S. News & World Report, 1989). Second, the preserves will not make a difference if the government does not effectively curb destruction within it. As long as there are large numbers of poor people, they will continue to clear the land, preserve or no preserve. 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