Intro: Ecuador’s Yasuní-ITT Could Work Today with Crypto

In 2007 Ecuador proposed to keep a billion barrels of oil in the ground. The project failed, but it left a model that could work today.

For me, this story started when I moved to South America for a job that didn’t materialize.

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In 2011 I worked at the World Economic Forum (WEF) in Geneva, Switzerland. At the organization’s annual event in Davos, I met an Ecuadorian diplomat named Ivonne Baki, and we hit it off. I was married to an Ecuadorian, had lived in Ecuador, and was generally enthusiastic about the Andean nation’s potential. As a follower of Ecuadorian politics, I was also excited to meet her because she is a rarity in Ecuadorian politics: Ivonne Baki is a survivor, and she had seen it all.

The daughter of Lebanese immigrants, she started her career at the Ecuadorian Consulate in Beirut during the country’s civil war. She then went on to help negotiate peace with Peru during the short-lived Cepena War between the two countries.

She’s served as a government minister, she’s been Ecuador’s ambassador to the United States twice, and she’s managed to work for Presidents of all political persuasions. In a small country with a vicious political culture and rampant corruption, Ivonne Baki has managed to stay above the fray.

When you meet her it’s easy to understand her success: a charismatic presence that fills rooms with her laugh, she can engage anyone on topics ranging from politics to art to environmentalism. Few Ecuadorian Presidents from the right or the left of the past 40 years have resisted her charm. It helps that in a country marred in corruption scandals, Ivonne Baki’s integrity remains intact.

Her presence at Davos was a bit of a surprise. In 2011, Ecuador’s reclusive socialist government did not like to be seen in circles that included its supposed ideological adversaries, so instead of sending its foreign minister to the WEF’s annual gathering, it sent Baki.

Baki, after all, had a mission for which she needed access to power and wealth. 48% of Ecuador’s landmass is the Amazon jungle, and within that jungle lies the Yasuní National Park, an almost 10,000 km2 area of primary rainforest that is arguably the most biodiverse place on the planet. Home to an incalculable number of discovered and undiscovered plants and animals as well as two documented uncontacted indigenous tribes, the Yasuní also contained the seed of its own destruction: over one billion barrels of oil. Baki’s goal was to keep that oil in the ground.

In 2007 Ecuador’s national government had a novel idea: what if, instead of extracting the oil, Ecuador offered the international community the opportunity to preserve the land in perpetuity in exchange for compensation?

In total, the government sought $3.6 billion USD in exchange for not drilling in the rainforest, a total derived from 2007 oil prices. I myself was passionate about the Yasuní-ITT (pronounced ya-sue-knee-e-teh-teh) project: if the world can assign a monetary value to extract the oil, why couldn’t the world assign a value to not extracting the oil? If a group of buyers could get together to pay to drill, why couldn’t a group of buyers get together to not drill?

After all, we would find it hard to believe the French would allow for drilling under the Eiffel Tower, or that the English would dig up Stonehenge for the black gold, so why should Ecuador have to destroy the Amazon simply because its natural richness is not easily accessible?

When I met Ambassador Baki at Davos in 2012 I gave her my ideas about how to structure the campaign’s digital strategy. My main idea was that the government should give buyers a token to represent their purchase, like tiny barrels of oil.

Baki liked my ideas and she suggested I come work for the initiative. Initially, I declined; my wife and I had just moved to Switzerland and we’d yet to have our fill of wine and gruyere. I would then meet up with Ambassador Baki at different WEF events across the globe and we kept talking. Finally, at Davos in January 2013, she insisted again that I come to work for the initiative, and this time I accepted. By May I was back in Ecuador. I handed in my paperwork and I waited.

I knew I would have to wait because everything in the Ecuadorian government works slowly. The role was considered a special project of the Ecuadorian President’s office, so I would need to pass a security clearance and jump through a few other bureaucratic hoops.

In June my communication with Ambassador Baki and her team started to break down. They were, as we say in Spanish, dejándome en visto, which is a way of saying they saw my messages, as confirmed by the double-blue checkmarks that Whatsapp, the popular messaging app, uses when a message has been read, but they didn’t respond.

In July I was watching the news with my wife’s grandfather when I learned, alongside the rest of the country, that the Yasuní-ITT initiative would be canceled.

Calling world leaders hypocrites, President Rafael Correa announced “the world had failed us”. Receiving commitments of only $200 million USD or 5% of the desired amount after 6 years of selling the initiative, rather than looking inward the government blamed the world for its own failure and immediately launched oil extraction activities in the virgin forest. Things only got uglier from there.

Despite having announced with much fanfare that Ecuador’s newly-written constitution would be the world’s first to inscribe nature’s rights into the Magna Carta, the Ecuadorian government ignored the legal constraints they themselves had written into law.

When a group of activists collected enough signatures to trigger a national referendum on the subject, the government used the police to monitor and harass the leaders of the initiative and allegedly employed foul play in order to avoid having to put their plan to a national vote.

When faced with the fact that the government’s commitments to protecting the uncontacted tribes of the area would prevent oil activities, the government simply changed the maps that showed the uncontacted tribes’ territories based on no criteria other than political expediency.

After making the Yasuní-ITT conservation effort one of the centerpieces of his presidency, President Rafael Correa lashed out at the opposition to drilling, calling opponents “infantile environmentalists” and suggesting they were all naive to how the world works. He claimed the environmentalists were privileged enemies of the poor.

Indeed, speak to any Ecuadorian political observer, and they’ll tell you that the splintering of the big-tent coalition that enabled Rafael Correa’s historic electoral triumphs began with the end of the Yasuní-ITT, leading Correa towards increasingly desperate and authoritarian tactics to retain his hold on power.

In truth, I should not have been surprised that things would play out this way.

When I told some friends at the WEF that I was returning to Ecuador to work on the Yasuní-ITT initiative, one of them remarked, “oh yeah, that’s the plan where the government points the gun at the forest and says ‘pay me or I’ll shoot’”.

According to many people I spoke with, the problem with the Yasuní-ITT lay with the lack of trust in the country’s leadership.

Ecuador was/is a volatile country. Between 1996 and 2007, the country had nine different Presidents. Three were overthrown in popular protests.

Rafael Correa himself had a questionable track record as the custodian of the Yasuní-ITT project. After agreeing to co-manage the funds raised for the Yasuní-ITT initiative with the UNDP, in 2010 Rafael Correa decided unilaterally to end the trust fund, claiming that the global community was threatening Ecuador’s sovereignty through the trust’s governance, despite the fact that the Correa-led government appointed six of the fund’s nine directors.

Years later, the man who led the initiative to drill for oil in the Yasuní-ITT, then vice-President Jorge Glas, would be tried, convicted, and jailed for receiving bribes worth tens of millions of dollars in exchange for greenlighting numerous infrastructure projects, including oil exploration in the Amazon. Correa’s government was mired in corruption, and we’re still learning to what degree.

For many good reasons, the global community didn’t trust Ecuador or its then government to keep its word. The Yasuní-ITT failed because of a lack of trust.

Having returned to Ecuador for the express purpose of working for the Yasuní-ITT initiative, I wasn’t sure what to do next. Luckily received a call from former Google colleagues telling me that Twitter was looking to set up its Latin American operations, and they needed someone with my profile. I was still committed to building a life in Ecuador, so I negotiated to work from Quito, the capital, in order to be closer to Twitter’s clients in the reion.

I did that job for a little less than a year, but in all honesty, Twitter wasn’t that happy with me and I wasn’t very happy with Twitter.

In 2014 I left Twitter and started a company, and in 2022 I sold that company. All that time I couldn’t stop thinking about Yasuní-ITT and its premise: there had to be a way to make not destroying the Amazon more profitable than not destroying it.

In 2013 I wrote my first article about Bitcoin, though I didn’t really understand the technology or its larger societal implications.

Four years later I bought my first Bitcoin, and then I started to see that we were on the verge of something important. I went deep down in the crypto rabbit hole, and I’ve been down here ever since.

If you look at the waves of crypto innovation, you’ll notice a pattern: in the beginning, there was Bitcoin and nothing else. Bitcoin is like a calculator. Then along came Ethereum, and Ethereum is like a more sophisticated computer.

With Ethereum came Defi, or decentralized finance, an attempt to replace banks with automated software, and then we saw NFTs, non-fungible tokens, or digital private property. The potential of the metaverse or an alternative digital reality drove the world’s largest social media company, Facebook, to change its name to Meta.

We’re now entering the wave of regenerative finance, or Refi in short, in which we attempt to use the tools of capitalism to regenerate the planet, rather than destroy it.

Refi may be our last chance to save ourselves from the dire consequences of climate change. Though it comes late, it’s better late than never. The promise of Refi is the question I posed earlier, which is to make not destroying the Amazon more profitable than destroying it.

Saying that the solution to climate change is likely to be found in crypto should make a lot of people feel uncomfortable.

After all, when we say the word “crypto” what comes to mind is not necessarily environmental technologies.

Instead, people think of pyramid schemes, money laundering, the dark corners of the internet, massive hacks, unbridled energy consumption, and rabious tech. bros rambling on about freedom from government oppression. It’s easy to dismiss crypto as simply another manifestation of the latest internet fad, soon to disappear like LolCats.

As a normie, I’m here to tell you that with crypto, there is a there there.

Crypto likely holds the key to the development of a sustainable planet, and this blog series aims to demystify how crypto and Blockchains can help solve the problems that hold us back from an environmental revolution.

In many ways, the written word is not ideal for the aforementioned task.

After all, the crypto world changes so fast that from the moment you publish something, it becomes outdated. I hesitated to hit “publish” because I feel my knowledge is incomplete.

I then realized that in the fields of fast-changing technology there are no experts, only some people who are less confused than others.

With that in mind, this blog series purports to act asan on-ramp for those seeking to understand how we can harness Blockchain technology to save the planet.

The distance between where we are now and where the goals of this blog series would place us is far. We have to embark on a journey that takes us through computer science, environmental science, finance, economics, and politics. My goal is to make these topics accessible and dare I say fun.

In the process, we may even find hope. I am not referring to the hope that comes from a prayer or self-delusion, but a hope born of technical knowledge, of seeing clearly how we can get from point A, an unsustainable planet on the pathway to self-destruction, to point B, a sustainable and self-healing planet. We have a short window of time to get there.

So here’s the kicker: if we were to create the Yasuní-ITT today, the project would seem far less far-fetched.

The government could create carbon credits based on the emissions offset from leaving the oil in the ground. Any number of buyers could purchase those credits, including individuals, companies, and governments. Funds would be kept in the equivalent of an escrow account, and if the government did exploit the oil, the funds would be paid back to the original donors. In the meantime, the government could pad its annual budget with interest earned from locking up its crypto-earnings. If the carbon credits were registered on a blockchain, we could easily see where they went so that no one else could re-sell them unbeknownst to the wider public. As I mentioned before, the Yasuní-ITT project failed because of a lack of trust. Crypto-based technology reduces the need for us to trust.

The scenario I just described requires a de-bungling of a lot of concepts, all of which we’ll get into. My larger point is that in 2022 we’re living in a different world than in 2017. If we want to take advantage of the tools available to us, we have to jump on the on-ramp to crypto, carbon, and climate. Let’s begin.

Reminder: If you’d like to receive my weekly newsletter about crypto, climate, and carbon, please sign up to my substack here.