- Daniel Ortega Pacheco
- The Conversation *
When Columbus set sail from Huelva, he did not imagine meeting America and transforming the world. His purpose was to find an alternative route to reach the Indies from the East.
He crossed that sea that filled him with new hope, as sleep gives a man dreams – according to a quote attributed to him.
What is probable is the need for Spain, Portugal and other European kingdoms to find another way to get there. Not surprisingly, his journey was financed by those interested in giving back control of the Ottoman Empire from trade to the Indies.
In the same way, at present, global society has the need to find an alternative way in its economic and social relations. to harmonize with nature.
Some countries see potential in the enhancement of their natural wealth to obtain products and services as another way to displace the use of oil as a source of energy and raw material. The bioeconomy It is that sea that gives new hope.
The following lines show how Ecuador can turn away from its oil rush and attract the necessary financing to achieve the seemingly impossible.
The current development model of Ecuador that depends largely on the income generated from a extractive economy of non-renewable natural resourcesLike oil and minerals, they have three fundamental problems, such as:
- The depletion of reserves.
- Questionable environmental and human health implications.
- Economic structure that generates little added value and imports of capital goods.
Oil and minerals are not the cause per se but, during their exploitation process, the ecosystem, biodiversity and communities generally suffer unwanted impacts.
These aspects include the transformation of the environment and the accumulation of waste or spills that irreversibly contaminate water sources and lands, even entering our organisms.
The impact of exploitation affects the human rights of present and future generations (to water, health) and the rights of nature (regeneration of life cycles).
In addition, the consumption of hydrocarbons, whether at a national or international level, contributes to climate change as industry and transport are the main sectors of energy consumption from fossil sources worldwide.
What do we understand by bioeconomy?
The bioeconomy involves the use of biological resources, processes and principles to provide goods and services to all economic sectors.
Higher added value products such as antioxidants, proteins or pigments or processes such as combustion or synthesis of biomass as a raw material for chemical substances and for energy purposes (ethanol, biodiesel, biogas).
These bio-based products and services replace the use of products derived from fossil fuels. (See Figure 1).
To guarantee the replacement of the Ecuadorian extractive model, the bioeconomy should at least equal or exceed the economic contributions of oil.
A huge challenge considering that 45% of all exports are related to the oil sector and contribute 11% of GDP. As a point in favor, the contribution of the bioeconomy to the Ecuadorian GDP in 2017 would be of 13,06%.
The second question would be to determine if there are sufficient productive capacities and scale to replace the intensity of the contribution of the oil sector.
While in 2017, the oil sector contributed USD $ 12.21 billion and 640,000 jobs, the bioeconomy generated USD $13,8 billion and 1,5 million jobs.
Despite this fact, the quality of these jobs can be improved. In particular, if we consider that these monthly income per person would be US $ 207. A value significantly lower than the salary reality of other productive sectors.
The incidence and contribution of oil resources to the fiscal sector have been reduced given the vulnerability to international price cycles.
It reached 5% in 2016 compared to 15% in 2013. Most notably in 2020 with the sharp drop in international oil prices.
This scenario is even less encouraging given that global demand is projected to decrease due to the effects of global warming.
Ecuador faces a high risk due to exposure to the physical effects of climate change and the transition to a low-carbon global model according to global risk raters such as Moodys.
A limited production
Except for the production of biofuels, there are limitations to increasing the growth rate of the production of goods and services in the bioeconomy.
The country has clear regulations and technical capabilities on an experimental scale in its innovation ecosystem. However, it must be escalated with the involvement of the private sector.
It is important to identify that a precipitous increase in production without a comprehensive policy that safeguards its sustainability carries some risks.
On the one hand, a higher demand for biomass would introduce possible effects on deforestation, conversion of arable land and depletion of water resources.
In addition, problems would arise in the access to genetic resources of biodiversity due to a possible uncontrolled exploitation. This could lead to potentially serious food supply problems as well as effects on the rights of communities.
Thus, a sustainable growth of the bioeconomy and the transition of the extractive model would require coherence with the sustainable development of national public policies for its promotion. They can point to the substantial improvement of processes, productive capacities and remuneration scales.
Similarly, mobilize investments for its scaling and competitive insertion in international trade chains.
These investments can be conditioned by positive social and environmental impacts as in the case of sustainable finance.
The transition is possible within the framework of the “build-back better” concept or of green, inclusive and competitive economic recovery promoted by the main agencies of the post-pandemic multilateral system.
Additionally, the attraction of impact investment in the bioeconomy, as well as accelerators and risk investment in bio-enterprises, proves to be an important catalyst factor in the European case.
To conclude, we can say that the bioeconomy can, progressively, guide the transition towards a sustainable and resilient economic model.
Its current importance is moderate because productive capacities are still incipient. It requires a public policy consistent with sustainable development.
Sustainable finance offers a vehicle to mobilize the resources necessary for its development by 2050, without causing environmental or global health problems.
Finally, the bioeconomy will make sense if conditions are created for a socio-ecological transition that requires structural changes in the global consumption model, the concentration of wealth, and the internalization of environmental and social costs.
The certainty of the bioeconomy must convince the global village to wake up, react and take the initiative to give a twist on their relationships with nature.
Today Europe is the epicenter of that change with its Green Pact. It should mobilize all its resources beyond its technology transfer interests.
Its financing must focus on transforming and making viable these alternative routes to reach the Indies. Public announcements from Europe’s largest banks on their decision to phase out commercial services for the export of oil from the Ecuadorian Amazon this is encouraging news.
We hope that Ecuador, like other mega-biodiversity countries, will motivate us not to lose the capacity for improvisation, adaptability, to see “impossible” opportunities and alternatives. To return to the sea for more dreams without falling into past mistakes.
Daniel Ortega Pacheco is director of Center for the Development of Public Policies, Escuela Superior Politécnica del Litoral ESPOL (Ecuador). this artThe article appeared on The Conversation. You can read the original version here.
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.