Seemingly against all odds, stakeholders in Ecuador have reached agreement on a sweeping proposal to improve forestry practices and promote conservation.

Starting from starkly contrasting positions four years ago, negotiators from the NGO, government and business sectors have produced what all sides consider a promising blueprint for the protection and sustainable development of the country’s natural forests.

Questions about the measure—particularly its financing—remain. But potentially, the proposal represents a significant step forward for forest stewardship in Ecuador. Government officials expect it to be sent to Congress this month and acted upon by the end of the year.

Among other things, the proposal would:

- declare Ecuador’s 20 million acres [8 million hectares] of natural forests as permanent forest zones where other land uses, tree plantations included, would be banned;

- require that cutting in all forested areas be carried out according to sustainable timber-management practices;

- create subsidies and reimbursements to promote conservation and reforestation;

- fund forest initiatives in part through “pollution taxes” on the consumption of electricity, fuels and liquefied gas;

- leverage forest conservation gains through the sale of carbon sequestration credits in the international marketplace.

Participants in the talks say the proposal balances development and conservation.

“The timber companies have realized that our positions were neither fundamentalist nor extremist,” says Vicente Polit, president of the Ecuadorian Committee for the Defense of Nature and the Environment (Cedenma), an NGO here. “The law establishes clear rules for the long term, which benefits all of us.”

Andrés Guarderas, president of the forestry commission at the Ecuadorian Timber Industry Association (Aima), agrees: “The forestry bill creates an up-to-date legal framework for forest development within the context of sustainable management.”

Says Meg Symington, director of the World Wildlife Fund’s Latin America program: “It’s a comprehensive and progressive law… . It’s definitely a step forward.”

Lending urgency is the relentless destruction of Ecuador’s forests, among the world’s most biologically diverse. Hans Thiel, director of the Environment Ministry’s forest department, estimates the deforestation rate is 247,000 acres (100,000 hectares) annually, with reforestation a relatively scant 12,400 acres (5,000 hectares) a year.

Key causes include settlements, expansion of agriculture, unsustainable timber operations and mining and energy projects.

From the 1950s into the ’80s the government exacerbated the problem by requiring that settlers clear forest in order to gain rights to land. Says Thiel: “There was no sustainable forest-management policy, just exploitation.”

Aima attribute deforestation largely to settlers and other “informal” cutters—not to the country’s 200 established timber companies.

However, former Environment Minister Yolanda Kakabatse, president of the nonprofit Latin American Future Foundation, blames both. Says Kakabatse: “They are part of a regional culture that exploits natural resources in the least time and for the greatest profit possible.”

How does the bill address such problems? Ana Puyol, coordinator of the government’s National Biodiversity Strategy agency, says the key is the new proposal’s incentives.

Among other things, the legislation calls for subsidies for landowners who conserve their forests. It also would reimburse landowners who plant trees—100% if the planting is done for forest-conservation purposes and 50% to 75% if it’s to create tree plantations.

Improved forestry practices also loom large in the bill. Sustainable management would be required of all timber projects. Reflecting a strategy used in Costa Rica, private-sector foresters would monitor compliance.

And at least on paper, the legislation has teeth. Offenders would be subject to fines of up to $18,000 and jail terms of up to one year—by far the strictest penalties ever created in Ecuador for violations of forestry law.

Meanwhile, local communities—indigenous groups, settlers and others—would for the first time have a formal role in overseeing forest lands. They’d also be assured a share of the income from timber projects.

Doubts persist about lawmakers’ willingness to raise funds for the new program amidst Ecuador’s economic crisis, its worst in 70 years. Among the funding sources identified are a 3% levy on electricity bills, a 2.5% tax on fuel consumption, a 1% charge on liquefied gas and a 0.5% tariff on oil-export earnings.

Officials say that in all, locally raised funds would amount to about $30 million a year. They’re trying to persuade lawmakers that by seizing the chance to conserve forests, Ecuador could help offset the cost by participating in the market-based conservation mechanisms being created to combat climate change.

Says Puyol: “Few countries have the biodiversity of Ecuador, which creates a competitive advantage for us in the international market.”