Millennium Challenge Corporation Adopts Environmental and Land Access Criteria for Selection of Eligible Countries

Washington, D.C. — The Millennium Challenge Corporation (MCC) will add two new measurements to those it already uses annually to determine country eligibility for funding of economic development initiatives through the Millennium Challenge Account (MCA), the Board of Directors announced today.

Beginning with selection of Compact-eligible countries in November 2006, candidate nations will be measured on two new performance benchmarks and the non-binding results used to supplement data already compiled annually by MCC. The two new indicators will measure efforts by candidate countries to provide clean drinking water, expand sanitation services, streamline the property registration process, and make land rights accessible and secure for poor and vulnerable populations.

Ambassador John J. Danilovich, chief executive officer of MCC, said he will soon recommend the Board formally adopt the two new indicators for use in determining a country's eligibility for MCA funding in November 2007 (FY'08 selection process), bringing the number of measurable indicators from 16 to 18. The gradual integration of the two new indicators into MCC's selection framework – to be used initially in FY '07 as supplemental information prior to proposed full adoption in FY'08 - gives candidate countries an opportunity to understand how the new benchmarks will be used in the eligibility selection process, said Danilovich.

The two new indicators, a Natural Resources Management Index and Land Rights and Access Index have been in development for more than a year and are the result of a public process led by MCC Board Member Christine Todd Whitman and involved extensive consultations with Congress, executive agencies, non-governmental organizations, think-tanks and academics.

Eligibility for MCC Compact assistance is based on a country's demonstrated commitment to policies that promote political and economic freedom, investments in education and health, control of corruption, and respect for civil liberties and the rule of law, as measured by 16 policy indicators.

MCC's performance indicators are publicly-available data on each candidate country gathered by a number of independent groups, including Freedom House, the World Bank Institute, the World Health Organization, and the International Monetary Fund.

“At the core of MCC's mission is how -- together with our partner countries -- we can reduce poverty through sustainable economic growth,” said Danilovich. In addition to reviewing a country's demonstrated commitment to just and democratic governance and economic freedom, MCC has a legislative mandate to evaluate how countries promote the management of their natural resources.

Whitman, former Administrator of the Environmental Protection Agency said, “In the developing world, lack of access to drinkable water, inadequate sanitation, and indoor air pollution are three of the greatest environmental threats to human health and labor productivity. We are eager to help candidate countries better understand how they can improve policies in this area and to see them invest their resources, however limited they are, in ways that will enable poor people, particularly women and children, to live productive lives in a healthy environment,” Whitman added.

The Natural Resources Management Index was created with the assistance of Columbia University's Center for International Earth Science Information Network (CIESIN) and the Yale Center for Environmental Law and Policy (YCLEP). It includes four subcomponents: protection of eco-regions, access to improved water, access to improved sanitation, and child mortality among 1-4 year olds, which is determined largely by efforts to reduce indoor air pollution and expand access to potable water and sanitation services. Governments can improve their performance on the Natural Resources Management index by adopting a series of low-cost or no-cost policy reforms such as shifting from long-term subsidies for water consumption to those that help poor people afford the one-time, upfront cost of getting connected to a water network. Governments can also dramatically reduce the number of deaths related to indoor air pollution by launching public awareness campaigns about the importance of proper ventilation. With modest investments, these deaths and illnesses are preventable.

The Land Rights and Access index combines the International Fund for Agricultural Development's (IFAD) Access to Land indicator with the International Finance Corporation's (IFC) Time and Cost of Property Registration indicators. “Experience tells us that landowners, especially farmers, with secure land tenure are much more likely to make long-term investments in land productivity and forgo immensely destructive practices such as deforestation and slash and burn agriculture,” Danilovich said, adding, “land ownership is repaid with good environmental stewardship.”

With targeted policy interventions and modest investments, governments can significantly improve their performance on the Land Rights and Access index by removing legal or administrative impediments that keep poor people, particularly women and vulnerable populations, from owning land and by allowing for free buying, selling, and renting of private land, Danilovich explained. “Governments can easily lower the time and cost of property registration by simply eliminating and streamlining cumbersome bureaucratic procedures,” he said. The IFC indicators are highly actionable and, in some cases, improvements require only administrative changes. MCC has already seen dramatic reforms on two IFC indicators – Days to Start a Business and Cost of Starting a Business – since introducing them into the annual MCA country selection process.

Additionally, the Land Rights and Access index will help MCC better identify countries that are committed to investing in the entrepreneurship of their people and empowering people to more fully harness their skills and talents to improve their livelihoods, Danilovich explained. “Equitable access to land in particular is essential if all members of society are to benefit from economic growth and therefore, MCC is pleased to incorporate an additional measure of gender equality,” he added.

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Millennium Challenge Corporation (MCC), a U.S. government corporation designed to work with some of the poorest countries in the world, is based on the principle that aid is most effective when it reinforces good governance, economic freedom, and investments in people that promote economic growth and elimination of extreme poverty.