I first visited the Galápagos Archipelago in 2019. One of Ecuador’s 24 provinces, these islands—located 603 miles off the Pacific coast—stunned me with their crystal-clear waters and unique flora and fauna.
During my stay, however, I noticed everyday challenges affecting the islands, the country’s most visited and luxurious tourist destination. Grocery shortages and higher prices compared to mainland Ecuador caught my attention. Another striking detail was that diesel-run vehicles far outnumbered electric cars—especially in Santa Cruz, the most populated island.
These concerns came back to my mind after reading “Galápagos: A Crisis in Evolution,” a study released on February 17, 2025, by the Ecuadorian Institute of Political Economy (IEEP). Led by economist Francisco Zalles, the report examines how to balance the archipelago’s environmental preservation with human activity.
🌊🐢 Galápagos: una crisis en evolución. Lo que creías saber está a punto de cambiar.
— Economía Política (@ieepecuador) January 24, 2025
¿Estás listo para descubrir la verdad detrás del paraíso? 👀🔍
#CrisisEnEvolución pic.twitter.com/62115YVWXO
The report exposes public-policy failures that have led to daunting environmental and economic difficulties in the islands. By addressing the adverse effects of those mistakes, the study encourages less intervention from afar and locally led conservation initiatives.
Published with support from the freedom-oriented Atlas Network and Rising Tide Foundation, the IEEP study analyzes the unintended consequences of: (1) population-growth control, (2) subsidies, and (3) excessive bureaucracy and protectionism.
1. Unintended Effects of Population Growth
Tourists notice population-control policies from the moment they arrive on the islands. Strict migration rules require both foreigners and Ecuadorians to answer routine questions like: “How many days are you staying?” and “How many people are traveling with you?” Then authorities disinfect visitors to prevent harmful contaminants and provide clear instructions, emphasizing recycling, reduced plastic consumption, and water conservation.
Entry fees also regulate access. Ecuadorians pay US$50; visitors from neighboring countries (Argentina, Bolivia, Brazil, Colombia, Paraguay, Peru, and Uruguay) pay $120; and other foreigners pay $220. The Galápagos National Park and the archipelago government divide the income from these fees.
In the IEEP report, Zalles identifies migration restrictions as the key failure. While failing to curb population growth, they have made residency seem like a privilege due to better economic opportunities. The minimum wage on mainland Ecuador is $470 per month. In Galápagos, however, the law mandates a 75-percent higher wage for private-sector workers and double for public-sector employees. In addition, tourism businesses must prove that at least 51 percent of their shareholders are Galápagos residents to obtain operation permits.
Despite these controls, the islands’ population has grown at an annual average rate of 1.6 percent from 2010 to 2022—higher than the mainland Ecuador’s 1.3 percent. If this trend continues, Zalles argues that locals will struggle to satisfy the food needs of tourists.
Tourism drives 80 percent of Galápagos’s economy. In 2023, the islands received around 330,000 tourists—23 percent more than the average of the past two years. In 2024, arrivals reached 279, 277, still exceeding the 2022 and 2021 numbers. Zalles warns that without tourism, the economy would collapse, pushing locals toward illegal activities like wildlife trafficking, illegal fishing, and other illicit practices.
One example of these economic pressures is marriages arranged merely for residency. The Impunity Observer interviewed Galápagos residents attending San Francisco University of Quito—which has a campus on San Cristobal island. They revealed that, despite a 10-year wait with marriage for full/permanent island residency, these arrangements remain lucrative.
Typically, a foreigner pays a resident an initial payment of around $10,000, plus a monthly allowance of $600–$800, until obtaining a residency. Some Ecuadorians also bypass migration laws by overstaying their allowed period and living illegally on the islands. This has even led to hundreds of people being deported back to mainland Ecuador.
2. The Perverse Incentives of Subsidies
Subsidies present another major problem. The report highlights how artificially low fuel prices have encouraged excessive energy consumption and worsened environmental contamination.
Zalles explains that, despite the islands’ huge potential for establishing renewable energy, most electricity in Galápagos comes from diesel-powered thermoelectric plants. Following the 2030 Galápagos Plan—a sustainability strategy prepared across various government agencies, including the administrative directors of the Galápagos district—consumers pay only a quarter of the actual generation cost.
Source: Plan de Transición Energética de las Islas Galápagos, Ministerio de Energía y Minas (2023)
The low price drives higher fuel consumption and, in turn, more pollution. The IEEP report warns that cheap fuel attracts organized crime, potentially turning the archipelago into a refueling station for drug trafficking vessels. In this regard, Zalles argues that ending fuel subsidies should be a top environmental priority.
3. The Harmful Impact of Central Planning
In Galápagos, protectionism and bureaucracy have resulted in more burdensome economic and environmental challenges than those they were expected to solve. Excessive regulations and investment restrictions have expanded bureaucracy. According to the IEEP study, 13.4 percent of total employment is in the public sector—almost equal to tourism (13.6 percent) in spite of the isolation from Quito.
Zalles notes that, in addition to a portion of the entry-fee income, this bureaucracy survives on central-government transfers funded by Ecuadorian taxpayers. This arm’s-length funding removes incentives to reduce inefficiencies and creates an unsustainable economic dependency.
Source: Dirección del Parque Nacional Galápagos (2025)
The study also highlights how protectionism has fueled monopolies and overexploited natural resources. One example is coffee cultivation, a key product in Galápagos due to its taste and quality. To protect local producers, the government banned roasted coffee imports in 2020.
However, coffee farming requires large amounts of fresh water—a scarce resource on the islands—exacerbating environmental degradation. Moreover, the government lifted the import restriction twice in 2022, when there were production bottlenecks that exposed flaws in the legal framework.
Ecuadorian taxpayers fund subsidies and perks—some of them counterproductive—granted to Galápagos residents. The Galápagos Islands are an Ecuadorian treasure, and their stewardship requires broad engagement from the public sector, academia, and civil society. The investigation, “Galápagos: A Crisis in Evolution,” goes a long way toward providing necessary clarity and initiating accountability.
The next step toward curbing privileges and avoiding adverse incentives is to standardize entry fees for Ecuadorians and foreigners. This would better internalize the externalities associated with Ecuadorians traveling to and polluting the islands. Correspondingly, there is now a strong case for the elimination of electricity subsidies for residents. That would raise awareness towards responsible consumption and foster sustainable generation.
