Climate Change

Climate change is an environmental and social stressor that poses many potential risks to economic growth. It can disproportionately affect the world's poorest countries, which already face severe economic challenges when responding to disaster shocks or when planning for future climate-related uncertainties. These shocks, both manmade and natural, can intensify existing issues for poor countries in times of crisis, making an already vulnerable population even more vulnerable to the interrelated effects of a changing climate on economic growth, from food insecurity to land degradation to vulnerable infrastructure:

Effective Water Management in Cabo Verde

Cabo Verde is surrounded by ocean, but it is one of the most water scarce countries on the planet and only nine percent of poor households are connected to a networked public water supply. Even the limited water resources people have is threatened by climate risks like changing rain patterns, increased sea-level rise, salt water incursion in coastal aquifers and water loss from increased temperature. The effects of water scarcity are interrelated: health and well-being deteriorate; agricultural crops fail; tourism slows; and economic productivity falters. Through a $39.7 million water, sanitation and hygiene project, MCC assisted the Government of Cabo Verde in consolidating nine small water utilities and developing a strategic management plan to enable the country to manage its limited fresh water supply. This information was also included in the development of a 25-year management plan that clarifies the climate risks and assists Cabo Verde to manage its infrastructure and resources in the face of climate change. Consultants from the Canary Islands contributed to this project, bringing valuable lessons from their own islands to a very similar situation in Cabo Verde.

Reducing Greenhouse Gas Emissions in Indonesia

The majority of Indonesia’s poor live in rural areas that are rich in natural resources, but over-extraction and poor resource management threaten Indonesia’s ability to sustain high rates of economic growth and reduce poverty. One in seven villages in Indonesia does not have access to reliable and affordable electricity, and many rely on expensive and inefficient diesel generation. MCC’s compact with the Government of Indonesia includes a $332.5 million Green Prosperity Project designed to increase productivity, raise rural household incomes, reduce reliance on fossil fuels, expand renewable energy, increase productivity, and reduce land-based greenhouse gas (GHG) emissions by improving land use practices and management of natural resources.

As Indonesia's President Widodo noted at the 2015 Climate Change Conference (COP21) in Paris, Indonesia’s expansive forests are the “lungs of the world” and its preservation is of great importance. The Berbak Green Prosperity Partnership, a $17 million public-private partnership project of the Millennium Challenge Account-Indonesia, will contribute to peatland restoration and GHG emission reductions in one of the largest peatland forest conservation areas in southeast Asia. The Berbak Project is one example of how MCC and Indonesia can work together toward a greener Indonesia.

Efficient Irrigation in Moldova

A $130.3 million agriculture project in Moldova aimed to rehabilitate dilapidated irrigation systems as well as to transition farmers to higher value crops. Climate change and models pointed to an uncertain future for Moldova where there could be increased floods and droughts, and Moldova’s agriculture had already suffered from low productivity, contributing to high rates of rural poverty. With just 16 systems (10 of which MCC improved under the compact), the models showed a deficit of up to 22 percent in the river basins that are the key source of irrigation water during droughts. Given the uncertainty, MCC worked with the Moldovan Government to reform water laws, assisted them to build capacity to manage water resources by consolidating information from nine agencies into one modernized system, and developed a plan to better manage water resources.

Sustainable Land Use in Mongolia

Prior to the MCC compact with Mongolia, herders lacked proper land rights due to the complexity and expense of the registration process. This led to herders sharing pastureland, which resulted in overgrazing and land deterioration. An MCC-funded property rights project in Mongolia facilitated the leasing of pastureland near cities to herder groups and invested in infrastructure and training to improve livestock productivity and herder incomes. MCC also funded the design of a land-leasing system for pasture areas around cities (peri-urban areas), providing land leases to nearly 1,300 herders, installing 346 wells on leased lands providing water to the majority of herder households, and training herder groups on sustainable pasture use and improving livestock productivity. With an effective land-leasing system, quality infrastructure and training, herders can prevent pastureland deterioration and have the capability to increase their income by up to 30 percent.

Energy Efficiency and Renewable Energy in Mongolia

Development of a $40.4 million Energy and Environment Project (EEP) in Mongolia was a result of a collaborative effort with the Government of Mongolia and other stakeholders on addressing the growing phenomenon of winter-time air pollution in Mongolia’s capital city of Ulaanbaatar. The primary source of pollution comes from the emissions produced by burning raw coal in inefficient stoves that are used to heat poorly insulated homes in the city’s vast ger districts. The EEP was designed to increase economic growth by reducing urban air pollution in the capital, decreasing related health costs, and lowering energy costs through more efficient fuel consumption. This was done by providing financial incentives for residents to adopt energy-efficient and lower-emission technologies, and funded the upgrade of the electrical network. The project also included a small component to support the development of Mongolia’s first on-grid commercial wind farm—MCC’s first investment in wind energy.

Resilient Roads in the Philippines

In the Philippines, a $222.5 million road development project aims to build 222 kilometers of roads on Samar Island. The project includes the rehabilitation or replacement of 60 bridges and the construction of 35 slope protection areas to minimize erosion. During project design, a risk assessment concluded that over the next 20 years, the road would be vulnerable to an increasing frequency and intensity of rainfall, as well as a potential rise in sea level. In response, for a modest investment of approximately 10 percent of project costs, MCC developed a climate-resilient design. The value of these investments became clear in November 2013. When it struck the Philippines, Typhoon Haiyan had sustained winds of over 190 mph, making it one of the strongest storms ever to make landfall. The road was directly on the storm's path, but it survived largely intact. It provided a crucial artery for the emergency response, subsequent reconstruction, and the ongoing development of Samar Island. The Government of the Philippines is now applying these design standards to other national roads.

Guidelines and Policy on Climate Change

Development programs that don’t address the risks associated with climate change can leave the poor particularly vulnerable.

MCC is committed to helping its partner countries address climate change by focusing on issues that can be the most difficult for a developing country to tackle, including climate resilient infrastructure, sustainable agriculture and food security, public policy, land rights management and energy efficiency and renewable energy.

MCC also assists countries address uncertainty and adapt to changes associated with climate change by integrating climate risk screening into project design from the policy and institutional level to the activities interfacing with people on the ground. MCC recognizes that the pursuit of sustainable economic growth and a healthy environment are interrelated.

Through its Environmental Guidelines and impact assessments—like the award-winning approach to environmental and social impact—MCC screens for climate change risks and opportunities and taking them into account in designing compact programs. MCC also screens for climate risks, using tools developed as part of a U.S. Government-wide initiative under President Obama's Executive Order on Climate Resilient International Development, which MCC co-chaired, and will continue to collaborate with other USG agencies and our partner countries to improve operational effectiveness.

Climate Considerations in Practice

Through MCC's country-led development approach, partner countries are empowered to identify the greatest barriers to their development. For some partner countries, this may include addressing the impacts of climate change. MCC integrates climate change considerations into its programs in two ways. The first is through adaptation, or designing projects so that they are resilient in the face of a changing climate. The second is through mitigation, or reducing GHG emissions.

Climate resilient infrastructure can last longer and is a better value for communities and for MCC’s investments, as it plays a key role in how we calculate the economic rate of return. Also, renewable energy and energy efficient resources and products are increasingly more affordable than alternatives and can put countries on a path to less energy-intensive development and to avoid energy sources that are a large contributor to greenhouse gases.

MCC is also working with partner countries to invest in systemic change. Policy and institutional reform can help integrate climate resiliency into national development plans and build an enabling environment for the private sector to invest.

The 17 Sustainable Development Goals

MCC’s work makes an ongoing contribution to achieving the 17 interconnected Sustainable Development Goals. In its work to achieve sustainable economic growth and a healthy environment for its partner countries, MCC is proud to contribute toward achieving SDG Goals 9, 11 and 13 as they relate to building a more sustainable, climate-resilient world.

• SDG Goal 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
• SDG Goal 11: Make cities and human settlements inclusive, safe, resilient and sustainable
• SDG Goal 13: Take urgent action to combat climate change and its impacts