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Breaking the Resource Curse

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Breaking the Resource Curse Breaking the Resource Curse A Case Study of Smallholder Empowerment and Environmental Stewardship in Chone, Ecuador David S. Emmerman April, 2011 Submitted to the Department of Environmental Studies of Amherst College in partial fulfillment of the requirements for the degree of Bachelor of Arts with honors. Faculty Advisor: Edward Melillo Faculty Readers: Manuela Picq Rick López 2 Acknowledgements Researching and writing this thesis was the high point of my undergraduate studies. There are more people to thank for their help and support than I can name here, but I will do my best. I will never be able to repay Glenda, Don Freddy, Sofia and Freddy Barón García Muguerza for their hospitality, generosity and warmth during my stay in Chone. That the life they have built together is the focus of this thesis demonstrates the impact they had on me. I am sincerely grateful to my advisor, Professor Edward Melillo, for his guidance throughout this project. From the beginning, Ted helped me frame my ideas and tighten my writing in a way that no one else was able to. His perspective on the global environmental struggle is the broadest of anyone I have met. I was extremely fortunate to take his class on Global Environmental History of the 20th Century the first semester he taught it at Amherst College, as it was our discussions in that class that planted in my mind many of the seeds that grew into this thesis. I would also like to thank my readers, Professor Manuela Picq and Professor Rick López for their constructive critiques. Manuela’s advice led me to discover a far more powerful way to frame my arguments. Rick challenged me to more clearly identify the conceptual boundaries between my points and organize them in a logical, precise manner that had previously eluded me. I am greatly indebted to Fabián Rodríguez for his assistance in making many of the contacts that enabled this project. I owe many thanks to Judy Monseratte, Alonso García and Jorge Andrade for their assistance in my research, to the staff of the Cooperativa de Producción Agropecuaria de Chone for their daily conversations, and to all those who took the time to speak with me. Finally, I deeply appreciate the support of my wonderful friends and family during this project. Thank you to my parents, Kathy and Scott, and my brother, Jamie, for your emotional support. Thank you, Laura, Chloe, and everyone in Newport House for raising my spirits and keeping me sane. Thank you, Catherine, for being my partner in discovery all of these years; I would not have found my way here without you. 3 4 Table of Contents Introduction ......................................................................................................................15 Chone, Ecuador as a Case Study .................................................................................. 17 Methodology ................................................................................................................. 21 Organization .................................................................................................................. 23 Chapter 1 Behind the Resource Curse: A History of Dependency, Environmental Destruction, and Export Economies in Ecuador ...........................................................25 Land Use at Hacienda Santa Cecilia ............................................................................. 27 The Resource Curse Theory ......................................................................................... 31 The Dutch Disease .................................................................................................... 32 Volatility ................................................................................................................... 33 Rent Seeking and Corruption .................................................................................... 34 Unproductive Public Investments ............................................................................. 35 An Economic and Environmental History of Ecuador ................................................. 36 Traditional Life in Ecuador ....................................................................................... 37 Ecuador’s Colonial Legacy ....................................................................................... 38 The Cacao Boom ....................................................................................................... 40 The Banana Boom ..................................................................................................... 43 The Oil and Mineral Boom ....................................................................................... 45 Beyond the Boom ......................................................................................................... 48 Commoditizing Natural Capital ................................................................................ 49 The Resource “Curse” ............................................................................................... 51 Human Capital .......................................................................................................... 53 Conclusion .................................................................................................................... 56 Chapter 2 The Ecuadorian Rentier State: State Failure and Market Failure .............................59 State vs. Markets ........................................................................................................... 60 Import Substitution Industrialization ............................................................................ 61 The 1990s: The Decade of the Market .......................................................................... 63 Political Institutions and Populism in Ecuador ......................................................... 65 The Results of Market Reform ................................................................................. 67 The 2000s: Statist Backlash Against Market Reforms ................................................. 71 5 The “Free” Market and its Institutions ...................................................................... 72 Rentier State Theory ................................................................................................. 76 The Co-Evolution of Democracy and Free Market Capitalism .................................... 79 “Free” Land ............................................................................................................... 79 The North American Narrative ................................................................................. 81 Grassroots Development ........................................................................................... 82 Conclusion .................................................................................................................... 83 Chapter 3 The Smallholder: Market Investiture, Political Institutionalization, and Environmental Stewardship ....................................................................................87 Environmental Stewardship .......................................................................................... 89 Silvopasture Agroforestry ............................................................................................. 90 Increased Pasture Growth ......................................................................................... 95 Increase in Cattle Productivity .................................................................................. 96 Flood and Drought Prevention .................................................................................. 98 Wood Sales and Feed ................................................................................................ 99 Ecotourism .............................................................................................................. 100 Payment for Environmental Services ...................................................................... 101 Intercropping ............................................................................................................... 102 Economic Success ....................................................................................................... 104 Costs of Silvopasture Agroforestry ............................................................................. 106 Planting ................................................................................................................... 106 Grazing Time Loss .................................................................................................. 107 Chemical Use .......................................................................................................... 107 Cost-Benefit Analysis ............................................................................................. 108 The Smallholder Solution ........................................................................................... 110 Previous Proposed Solutions to the Resource Curse .............................................. 111 Political Institutionalization .................................................................................... 113 Economic Stability and Investiture ......................................................................... 114 Environmental Stewardship .................................................................................... 115 Conclusion .................................................................................................................
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