Fact Sheet

November 10, 2009 | www.mcc.gov

The Environment and Poverty Reduction

The Millennium Challenge Corporation recognizes environmental stewardship as an essential component of 

reducing poverty through sustainable economic growth. MCC’s focus on long-term economic growth, sound policies, and country-led development encourages countries to establish policies and institutions conducive to the type 

of community-based support required to improve land and natural resource use. MCC’s eligibility criteria, including a Natural Resource Management Index and a Land Rights and Access Index, encourage candidate countries to 

strengthen their environmental and land tenure policies. MCC’s environmental and social assessment procedures 

encourage partner countries to address environmental and social issues at the earliest phases of compact development. MCC-funded programs are subject to environmental and social 

review in accordance with MCC Environmental Guidelines and Gender 

Policy to ensure that projects are environmentally sound, are designed 

and implemented in accordance with applicable regulatory requirements, 

and are not likely to cause a significant environmental, health, or safety 

hazard. For MCC, environmental and social assessment is not just about 

safeguards and mitigating risks; it also serves as a basis for identifying 

opportunities to enhance the natural environment and improve social 

outcomes through innovative investments.

Poor land use and agricultural practices, heavy reliance on biofuels, and 

weak environmental governance are common factors that contribute to 

environmental degradation and increase the vulnerability of developing 

countries to global environmental threats. Natural ecosystems provide basic needs and services that are necessary for healthy and productive lives, 

including building materials, food, water, medicines, and fuel. Healthy 

ecosystems also help to mitigate floods and droughts, preserve soils, control agricultural pests, regulate disease, 

and contribute to climate stability, among other things. Depleted or polluted resources, especially water, soils, 

forests, and fisheries, affect everyone, but disproportionately impact the lives of the poor because they typically do 

not have the means to mitigate adverse environmental impacts and adapt to changes (natural or anthropogenic) in 

Sixty percent of 

the world’s ecosystems are 

being degraded or used in 

an unsustainable fashion. 

Much of that has taken 

place in the last 50 years 

to meet increased human 

demands for food, 

fresh water, timber, 

fibers and fuel. 
The Environment and Poverty Reduction, November 10, 2009 2

their environment and natural resource base. Global environmental 

threats such as climate change, water scarcity, pandemic disease, and food 

security have added urgency to these issues. 

For these reasons, it is important to design effective poverty reduction and 

economic growth strategies, which not only increase incomes and improve 

social well-being, but also provide incentives for adopting more sustainable and equitable land, water and resource management practices. Local, 

community-based ownership and support for projects are important 

because they promote a vested interest in using and maintaining resources 

responsibly, help reduce uncontrolled or over-extraction of resources, and encourage people to pursue sustainable 

livelihoods.

Across 19 compacts worldwide, MCC is funding a variety of projects to help partner countries improve the management of natural resources, strengthen the capacity of their institutions, 

and pursue less carbon-intensive strategies for growth. A few of these 

projects are described below.

El Salvador

As part of the $23.6 million Human Development Program in El 

Salvador, MCC is investing in water and sanitation projects which involve 

participatory planning and development of micro watershed management 

plans intended to establish integrated, long-term strategies for ensuring the sustainability of water resources in 

beneficiary communities.

Tanzania

MCC and the Government of Tanzania are taking precautions to ensure that upgrading roads does not 

threaten wildlife migration corridors and facilitate illegal poaching. In order to mitigate potential adverse impacts 

to wildlife and other natural resources, the Compact is funding the development and implementation of two 

Wildlife Management Areas (WMAs) which will support community-based conservation programs by providing 

rural communities with the responsibilities, rights, knowledge, and skills to promote wildlife and tourism as competitive and legitimate land-uses.

Namibia

In Namibia, MCC is funding a $6.7 million natural resource management project focused on increasing 

Approximately 1 billion 

people do not have access 

to safe drinking water, and 

2.5 billion lack access to 

basic sanitation services.

Scientists estimate that 3 

billion people 

will experience 

water scarcity by 2025. 
The Environment and Poverty Reduction, November 10, 2009 3

household incomes by conserving several indigenous plant species that have commercial value. Communities 

are provided with the technical resources and tools to improve the management and productivity of the plants. 

Beneficiaries will also receive technical assistance to help them establish associations to improve their earnings 

from the resource.

Lesotho

In Lesotho, MCC is funding a $5 million wetlands conservation and management project which will bring 

together government, traditional chiefs, and local community members to devise measures for restoring and 

protecting fragile highland wetlands at the headwaters of the Orange River Basin. These wetlands naturally store 

and release water and provide pasture land and other subsistence benefits to rural communities. The conservation 

program will rehabilitate several severely degraded wetlands and examine alternative land management practices 

which could be implemented to reduce adverse impacts from grazing and other activities, and enhance the social 

and economic value of the wetlands to local populations.