Ecuador is considered to be one of the most ecologically diverse countries in the world, boasting the highest number of plant and animal species per kilometer squared on the planet. This global treasure is administered by the Ecuadorian Ministry of Environment (MAE - Ministerio del Ambiente), which manages most major projects on the national level and is the driver behind key organizations, including: the Ecuadorian Centre for Cleaner Production (CEPL - Centro Ecuatoriano de Producción más Limpia), the National Committee on the Climate (Comité Nacional sobre el Clima), the Ecuadorian National Office for the Promotion of Clean Development Mechanisms (CORDELIM - Oficina Nacional de Promoción del Mecanismo de Desarrollo Limpio (MDL) del Ecuador), the Unit for Management and Monitoring (UGM - Unidad de Gestión y Monitoreo), managing the environmental and social reparation of zones affected by hydrocarbon and mining activities).

At the local level, projects are administered by the Association of Ecuadorian Municipalities. All major municipalities have environmental departments that manage water resources, waste disposal, parks and green areas, air quality, and other related items. Smaller municipalities have begun acknowledging the importance of environmental management and, consequently, are allocating resources to this area.

Activity within the environmental industries sector is increasing substantially, in part as a result of previous neglect of environmental projects by various private and public entities, especially regarding municipal waste and water programs. Environmental market growth in Ecuador exists in a number of areas where Canadian companies have interest and expertise: remediation work in the mining and oil and gas sectors, municipal water and waste projects, disaster and spill containment, air pollution control technologies, and Certified Emissions Reductions (i.e. carbon credits). The latter exists in great part due to the CDM (Clean Development Mechanism) Memorandum of Understanding signed by Canada and Ecuador in January 2004 and the burgeoning global market for Certified Emissions Reductions (i.e. carbon credits).

Financing for environmental projects is achieved through international financial institutions (IFIs), including the World Bank (with US$ 316.61 million in active projects) and the Inter-American Development Bank (approved US$ 604.6 million, for May 2006-April 2007). These sums include major contributions to environmental projects in the areas of eco-tourism/biodiversity and potable water/sanitation amongst others, such as the World Bank financed project to support biodiversity protection valued at US$ 22 million and IDB financed sanitation projects in Ecuador’s three largest cities (Guayaquil, Quito and Cuenca) totalling US$ 153 million. These IFI-approved operations largely determine areas of opportunity for Canadian companies, through the competition for contacts or the provision of related products and services to contract winners.

Beyond IFI-funded projects, other areas of activity include solid waste management (with both private and public partners including municipalities of all sizes), clean development mechanisms (with private partners and facilitated by CORDELIM), waste-to-energy (with private partners), green buildings (with private partners), and bio-remediation (with private and public partners including the state-owned petroleum company Petroecuador). Private sector opportunities exist mostly as related to Corporate Social Responsibility strategies or where profitable through clean development mechanisms or waste-to-energy.

More specifically, opportunities for Canadian involvement exist in the following areas:

• Solid waste collection and processing for the cities of Quito and Guayaquil, as well as many smaller municipalities.
  
  
• Waste-to-energy systems for Agroindustrial Valango, Pacifpetrol, and municipal projects.
  
  
• Bioremediation technologies and services for contaminated soils surrounding Petroecuador operations and various mining operations and for contaminated soils and waters in the Guayaquil estuary.
  
  
• Potable water and sanitation for various World-Bank and IDB-funded projects in both urban centres and rural areas.
  
  
• Green buildings technologies and services for consultant Sambito.
  
  
• Clean Development Mechanisms with Pronaca, the Municipality of Cuenca, and other partners.
  
  
• Ozone Depleting Substances Phase Out II Project, Choco-Andean Corridor Project, Wetlands Inventory Project, Galapagos Monitory Project.
  

Market and Sector Challenges (Strengths and Weaknesses)

One of the biggest challenges in the Environmental Industries sector in Ecuador is the issue of costs. While there is clearly a significant demand and need for environmental technology and management expertise, both public and private sector local partners generally seek technology, equipment, and services that are as inexpensive as possible. This can be a particular difficulty with environmental technologies, which often offer cost-effective solutions in the long run, but which require a large initial investment.

Another challenge is related to the need to work with different levels of government on environmental projects. Working with public institutions on regulatory and administrative issues is often a lengthy process and projects generally must go through a period of consultation in order to be approved. As is the case with any business venture in Ecuador, fluency in Spanish is essential and having a local partner/agent is advisable.

Major foreign competition in this sector in Ecuador comes from the United States (in particular, in the areas of waste water recycling, bioremediation), the United Kingdom (water management systems), Holland (potable water), Israel (irrigation systems), France (composting), and Germany (waste management technology).

Despite uncertainties related to the current political climate in Ecuador, foreign investors are protected by several provisions under Ecuadorian law. As long as foreign business entities are officially constituted in Ecuador, they are granted the same benefits and rights as Ecuadorian investors. This includes the freedom to transfer profits abroad, access to Ecuador’s preferential tariffs granted by other countries, and access to the domestic financial system. The environmental industries sector, in particular, offers foreign investors the opportunity to participate in infrastructure and other projects with the support of IFI’s and public funding.


Sub-Sector Identification

The four main sub-sectors in Environmental Industries on which efforts are currently focussed to promote Canadian capabilities in Ecuador are the following:

• Solid waste management: Key local contacts interested in solid waste management systems include waste collection companies for the cities of Quito and Guayaquil, municipal governments, and private companies which are developing landfill management projects.
  
  
• Bioremediation: Outreach to extractive and other industries to promote Canadian remediation and bio-remediation technologies.
  
  
• Water and wastewater management: Potential water treatment projects with municipal authorities in Guayaquil, Cuenca & Quito; Ministry of Environment projects.
  
  
• Green buildings: As the construction industry in Ecuador grows, the market for green building technologies and products increases. In addition, the construction of new housing units is a major government priority. Significant opportunities exist with consulting and construction companies interested in applying green building techniques.
  

Extracts from: Environmental Industries Sector Profile - Ecuador, November 2007, Foreign Affairs and International Trade Canada