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People took to the streets to protest against the decision to allow oil drilling
Ecuador has abandoned a conservation plan that would have paid the country not to drill for oil in previously untouched parts of Yasuni National Park in the Amazon rainforest.
President Rafael Correa said rich nations had failed to back the initiative, leaving Ecuador with no choice but go ahead with drilling.
The park is one of the most biodiverse areas in the world.
Hundreds of people gathered in Quito to protest against Mr Correa's decision.
End Quote Rafael Correa Ecuador's presidentIt was not charity that we sought from the international community, but co-responsibility in the face of climate change"
Oil exploitation has been taking place in parts of the Yasuni National Park, which covers nearly 10,000 sq km (3,860 sq miles), since the 1970s.
Oil is Ecuador's main export. Exploitation of the new area is expected to start in the coming weeks.
'World failed us'The UN-backed scheme to attract donations to forego drilling in the east of the park was launched by Mr Correa in 2010.
The aim was to raise $3.6bn (£2.3bn), 50% of the value of the reserves in the park's Ishpingo-Tambococha-Tiputini (ITT) oil field, over 13 years.
But in a televised news conference on Thursday, Mr Correa said the initiative had attracted only a fraction of the cash it had aimed to raise.
With only $13m so far in actual donations, he said he had not other option but to abandon the fund as "the world has failed us".
"I have signed the executive decree for the liquidation of the Yasuni-ITT trust fund and through it, end the initiative," the president said in a televised address.
Continue reading the main storyHe called the decision one of the most difficult he had had to take as president.
"It was not charity that we sought from the international community, but co-responsibility in the face of climate change," he said.
The president added that the oil exploration would leave most of the park untouched, affecting less that 1% of its area.
- Measuring 10,000 sq km (4,000 sq miles), it supports a huge variety of wildlife, including unique species of birds, monkeys and amphibian
- One hectare in Yasuni contains more tree species than are native to all of North America
- Yasuni oilfields hold an estimated 846 million barrels of crude, 20% of Ecuador's reserves
- Home to indigenous communities, including the Tagaeri and the Taromenane
Environmental activists demonstrated outside the presidential palace in the capital, Quito, about the announcement.
According to the Yasuni-ITT trust fund, 78% of Ecuadorian are against drilling in the park, which is also home to indigenous communities, including the Tagaeri and the Taromenane.
The fund, administered by the UN Development Programme, argues that stopping the drilling would prevent more than 400 million tonnes of carbon dioxide from going into the atmosphere.
A scientist working for the US-based Center for International Environmental Law said it was "deeply disappointing" the funding initiative had failed.
"The Yasuni-ITT Initiative was the lone exception to the relentless expansion of hydrocarbon projects deeper into the most remote tracts of the western Amazon," Matt Finer told AP.
"Now there is really no viable alternative to stop the wave of drilling slated for the most biodiverse region of the world.''
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