MCC needs to identify and attempt to address potential unintended impacts of its investments on surrounding communities and account for political economy dynamics to ensure project success and sustainability. The downstream conveyance system (DCS) that connects Metolong Dam to WASCO’s urban water network runs through rural communities whose water sources are managed by Lesotho’s rural water utility. As noted in the evaluation, people in those communities began vandalizing the DCS to access water during a drought. The vandalism became so widespread that the Ministry of Water installed taps along the pipes to better control the offtake. The taps, however, created unclear institutional responsibilities because WASCO is not required to service the rural communities the pipes traverse, and the rural water utility does not have authority to provide services using the infrastructure owned by WASCO. Furthermore, no plan currently exists for how to compensate WASCO for the water taken out of their system; so although the taps reduce the amount of water that was simply wasted, the controlled offtake still contributes to WASCO’s nonrevenue water problems and difficulty covering its costs. Finally, because the rural water utility has stopped maintaining water points in some communities that are considered accessible to the taps installed along the DCS, many of the villagers consider themselves worse off than before. In 2012, MCC adopted the International Finance Corporation’s Environmental and Social Performance Standards, which provide a framework to guide project preparation and implementation that should reduce the potential for unintended and unplanned consequences such as these to occur. In particular, Performance Standard 1, Assessment and Management of Environmental and Social Risks and Impacts, requires that MCC conduct rigorous stakeholder engagement and consultation with potentially affected populations, integrate findings from such consultations into project planning efforts, and anticipate, plan and account for such risks in a methodical manner during the entire lifetime of the project. In addition to the Environmental and Social Performance (ESP) practice group which is responsible for applying the IFC’s performance standards, MCC has also established a Gender and Social Inclusion (GSI) practice group which is tasked with assessing how women and other disadvantaged groups are likely to benefit from or be affected by MCC’s interventions. The agency restructuring that took place in 2014 designated Practice Lead/Senior Directors (PLSDs) for ESP and GSI. MCC’s current compact development process allows PLSDs to review proposed investments and raise and help resolve potential issues before programs are approved. If and when issues arise subsequently, PLSDs can help bolster arguments made by technical leads on country teams to ensure these issues receive appropriate attention and resources.
Lesson Learned