The demographic and economic boom of the seventeenth century ended abruptly in the 1690s. Epidemics and natural disasters combined to decimate the native population, thereby depleting the labor supply so crucial to the continued success of Quito's agricultural and manufacturing sectors. For Spaniards, the disasters of the 1690s represented a severe economic setback; but for natives, the effect of the disasters was much more profound. The sudden loss of up to one-half of the population created serious social and economic crises in Indian communities. And for the remainder of the colonial period, these problems were exacerbated by the unyielding demands of the struggling colonial economy.

The reforms of Palata, migration, and epidemics

Because the highlands of Ecuador never had the political and economic importance of the major mining centers of central and southern Peru, the area remained somewhat isolated from events in other parts of the viceroyalty. But during the 1680s, policies aimed at reforming the mining economy produced serious repercussions in the audiencia of Quito. In 1681, Viceroy Don Melchor de Navarra y Rocafull, Duque de la Palata arrived in Peru determined to revive the failing mining system and to increase government revenues. Palata attributed much of the decline in output to a shortage of mita laborers, so he decided not only to enforce mita regulations more tightly but also to expand the number of corregimientos subject to the labor draft.

The first phase of Palata's planned reforms called for a census of the viceroyalty's native population.