Speech

May 23, 2006

As Delivered by John J. Danilovich, Chief Executive Officer

location

Ambassador Danilovich Addresses World Wildlife Fund Board Dinner

subtitle

Thank you, Carter, for such a warm introduction and thank you, my good friend Roberto Abdenur, and his wife Maria, for being such gracious hosts, this evening and always. I always enjoy speaking on behalf of the Millennium Challenge Corporation, but tonight I’m especially pleased to be here as you celebrate the tremendous work of the Amazon Region Protected Areas (ARPA) program.

I know first hand of the commitment and hard work that both the Government of Brazil and the World Wildlife Fund have brought to this initiative, and I congratulate you on all you have done and will continue to do in the coming years.

As an Ambassador you sometimes get asked the most extraordinary and peculiar questions, and I want to tell you about one unusual incident I was confronted with soon after I arrived at my post in Brazil and traveled to Manaus for the first of many trips to the Amazon. I was very taken aback by the very first question at my very first interview was: “Mr. Ambassador, would you please elaborate on the well-known military plans of the U.S. Government to take over the Amazon River?”

I’ll say now what I said then: “We got the Mississippi ; Brazil got the Amazon,  and let’s just keep it that way.”

Although my position on river entitlement is not what brought me here tonight, I am very pleased to celebrate with you this unprecedented effort to establish and maintain the careful balance between the critical need to preserve and protect such a vast environmental gift as the Amazon Basin – and the challenges of realizing sustainable poverty reduction through economic growth. Maintaining this balance can be complicated, but – in the long run – to do so will have a tremendous impact on the future of the Amazon and future of the planet.

I want to highlight this notion of balance because I think it is something that links Brazil ‘s own strong steps to responsibly manage and preserve its tremendous natural resources with MCC’s own approach to the environment.

While the size and scope of responsibility for such vast ecological wealth might appear daunting for Brazil – a country with very real human needs –  this ecological diversity is an inseparable part of life, part of livelihoods, and part of the answer to sustainable economic opportunity for many Brazilians.

We are focusing on the Amazon this evening, but in Brazil, it is not just the Amazon that is remarkable. No matter where I went in Brazil, I encountered the country’s staggering diversity and extraordinary natural beauty.

During these travels, I learned that more than half of the birds of South America live in Brazil, making Brazil one of the earth’s richest bird habitats. In fact, almost one-third of South America’s threatened birds live in Brazil, creating an especially urgent need for instilling an interest in birds and a conservation ethic among Brazilian citizens. And, much to my surprise, I also learned from my good friend Edith McBean, Vice Chair of the Board of Trustees of the Wildlife Conservation Society,  that no compact bird field guide exists for Brazil . Edith asked me to do “one last good deed for Brazil ” prior to leaving my post for Washington, a request I could not resist.

So, I reached out to Coca Cola and asked them to sponsor the effort to produce a series of richly illustrated field guides that will be accessible to the international community, but most importantly, to the Brazilians, to assist them in learning and caring about their own incredibly rich and unique avifauna. Coca Cola is joining the conservation community to fund the Portuguese translation of these guides.

Moving beyond the birds to the ecosystems that sustain them, when I visited Cikel’s operations in the Fazenda Rio Capim forest in 2005, I was able to see first hand the impact of the Forest Stewardship Council (FSC), an organization whose work I know is of interest to everyone here. It is abundantly clear that the work of the FSC has been instrumental in strengthening legal,  responsible forest management by leveraging market-based incentives in Brazil - and around the world, notably through its internationally recognized and respected forest certification system.

Watching the operations at Cikel, and later visiting the Instituto Foresta Tropical – the FSC certification training center – I was struck by what a significant contribution these efforts have brought to maintaining the balance between environmental stewardship and national economic growth. FSC-certified products have expanded to other sectors in Brazil, such as cosmetics and medicinals from Paraná, and they provide business and investment opportunities and jobs that lift people out of poverty. WWF, as an original founder of the FSC, should be proud of this effort and its far-reaching results.

And how does this relate to MCC?

At MCC we recognize that poor people disproportionately pay the price of environmental degradation:

             
  • in days of work lost to illness from water-borne diseases;
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  • in higher morbidity and mortality rates from air pollution;
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  • in lost agricultural productivity due to soil erosion from deforestation.
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At the same time, a country’s natural resource base is an asset that, if managed well, can provide the basis for investment that can grow the economy and reduce poverty.

To manage these natural resources well takes awareness of – and respect for – a healthy balance between economic growth and stewardship of the very resources that may sustain that economic growth in the long term. Our engagement with countries on environmental issues occurs in two distinct ways:  first, in the way countries are selected to participate in the program,  and second in the activities that MCC funds.

Let me start by telling you about the MCC country selection process.  Countries are selected to apply for MCC assistance based on their performance against sixteen political, economic, and social indicators that measure their efforts to Rule Justly, to Invest in their People,  and to Promote Economic Freedom.

Much as accountability is a cornerstone of ARPA, MCC believes that foreign aid should be about results, not simply a grant. I call this “Foreign Aid with Accountability.” So, we endeavor to work with countries that are committed to adopting and to adhering to those policy and institutional reforms throughout the life of our MCC Compacts. This is not too much to ask and in the spirit of partnership, of mutual responsibility and mutual accountability, it is about time that it was asked.

Assistance that encourages and rewards good policies has the potential to achieve improvements in both institutional infrastructure and physical infrastructure, and in standards of living that go far beyond the grant itself. As our Board selects countries, we also provide information on candidate countries’ policies to promote the sustainable management of natural resources.

Last year we launched a public process, chaired by MCC Board member Governor Christine Todd Whitman, to search for a natural resource management indicator to use in the country selection process. Through two conferences and smaller working groups, we sought broad input from the academic community,  public and private sector practitioners, researchers, think tanks and non-governmental organizations.

Here I would like to extend a special thank you to WWF for your support and engagement in this effort. We also continued our discussions with other organizations working on similar initiatives. In this process, we catalogued and reviewed approximately 125 potential indicators, which will be available soon on MCC’s website.

Following a public call for ideas, we received multiple suggestions that were reviewed and evaluated by independent experts in the Natural Resources field, and I am happy to announce that two main measures have emerged:

             
  • The FIRST is an index of Natural Resource Management proposed by a consortium including:
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    • Columbia University ‘s Center for International Earth Science Information Network (CIESIN) and Center for Tropical Agriculture;
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    • The Yale Center for Environmental Law and Policy;
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    • The Water Systems Analysis Group at the University of New Hampshire,  and;
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    • Wildlife Conservation Society.
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The index includes measures of access to improved water and sanitation, as well as countries’ efforts to protect different types of eco-regions,  or biomes. This index reflects a concerted effort to combine environmental outcome indicators with policy inputs.

             
  • The SECOND is a measure of secure land tenure recently published by the International Fund for Agricultural Development. Secure land tenure is a critical component of sustainable natural resource management because those who lack clear ownership or use rights to their land are less likely to make long-term investments in land productivity and more likely to make short-term decisions with negative environmental impacts, such as deforestation or slash and burn agriculture.
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We have been very encouraged by the intensive engagement of the environmental community in this effort and will be gathering the data and starting further consultation around these two ideas. Our goal remains to have a stand-alone indicator or index in place at our MCC Board meeting in November.

In addition to addressing environmental issues through our selection process, MCC also manages the balance between environmental responsibility and economic growth and poverty reduction through the investments that we fund within our Compacts. Following extensive review and public consultation, we gained MCC Board approval in January for Environmental Guidelines that we use to examine the potential impacts of the activities proposed by the countries. These Guidelines make clear to our partner countries that we recognize the pursuit of sustainable economic growth and a healthy environment are related and establish a review process that helps us ensure that our investments are environmentally sound.

Our overall approach of partnership with countries can also be seen in our environmental approach. First and foremost, we expect eligible governments to work within the framework of their own environmental legal, regulatory, and institutional processes. Ministries of any sort –environment or otherwise – have a hard time managing their portfolio if donors circumvent domestic legal and regulatory authorities. MCC works to support those authorities.

MCC’s focus on country ownership should not be confused with setting a lower analytical bar for investments. Strong domestic institutions are a prerequisite for managing the delicate balance between environmental responsibility and economic growth and poverty reduction.

We do ask countries to conduct quality impact assessment,  and we do expect those studies to meet international best practices. But, we make every effort to do that in a manner that engages and empowers local environmental authorities and oversight institutions. We support those efforts with our funds and technical assistance, and we work with other donors as well.

Much as ARPA is striving to create a network of parks and protected areas through scientific planning, private sector engagement and extensive public consultation,  MCC is also committed to the principle of country ownership, ensuring that programs reflect public participation during all phases of the program, integrating governmental interests with those of private business and civil society.

In this spirit, we work to ensure that the preparation of environmental studies also includes consultation with affected parties and public disclosure of the associated documents. MCC engages extensively with NGOs like WWF here in Washington and with your local organizations in MCC countries.  We also require MCC countries to engage their civil society from program definition and project selection through design,  implementation, monitoring and evaluation. This transparency and public engagement is a fundamental piece of managing the balance between environmental sustainability and economic growth and poverty reduction.

In closing I want to thank you again for inviting me to share in this celebration of ARPA - a truly transformational program in Brazil, and giving me the opportunity to discuss with you the Millennium Challenge Corporation’s transformational program that I now have the privilege to lead on behalf of the United States. My heartfelt hope is that we will both achieve success with our innovative approaches. I thank you again for the opportunity to speak to you tonight, and look forward to answering any questions. Thank you.