MCC and Water: The Water-Energy Nexus

Investments in Water and Sanitation


Lack of access to high-quality potable water and reliable service are major development challenges for many MCC partner countries. Unserved and underserved households spend large amounts of time and money coping with inadequate or no service and the adverse impact it has on health, income and education. Poor service is widespread and disproportionately impacts women and children. Since 2004, MCC has invested $2.1 billion in water supply and sanitation, water resources management, and increasing productive uses, including irrigation.

Water and energy are woven tightly into MCC-funded programs through water used for energy; energy for the production of water; effective and well-managed utilities; and access to water and services. Here’s a look at how some of these programs are creating opportunities for growth in MCC’s partner countries.

Water for Energy


The compact includes an innovative $25.9 million market-based approach to improve watershed management. It reduces aquatic weed infestation and excessive sedimentation in the Shire River, which cause costly disruptions to downstream power plant operations. It does this by developing a long-term partnership between upstream farmers and downstream water users, including power generators, using an environmental trust that will receive payments for ecosystem services (PES). The project will enhance food security for local communities and improve water quality for both the hydroelectric plant and others who depend on the Shire Basin as a water source.


The majority of Indonesia’s poor live in rural areas that are rich in natural resources. One in seven villages does not have access to reliable and affordable electricity. Illegal logging, conversion to agriculture and water pollution taint the watersheds that people rely on. The compact’s $332.5 million Green Prosperity Project is designed, in part, to increase productivity of and reduce reliance on fossil fuels by expanding renewable energy, including small and medium-scale hydropower systems.

Energy for Water


Renewable freshwater resources in Jordan total only 150 cubic meters per person per year, compared to over 9,000 in the U.S., and cover less than two-thirds of estimated total demand. Rapid population growth, urbanization and rising standards of living have put water resources under severe stress, and with virtually no untapped sources of additional water, the country has begun to rely heavily on non-renewable aquifers and to “mine” its groundwater resources well beyond their sustainable yield. The Jordan Compact addresses leakage and revenue losses due to faulty or nonexistent water meters in the potable water distribution system in the Zarqa Governorate and seeks to increase the availability of network water to Zarqa residents.  The Jordan Compact will also expand the collection and treatment of wastewater in Zarqa. The expansion of the As-Samra Wastewater Treatment Plant, which treats wastewater from the Amman and Zarqa governorates, allows high-quality treated wastewater to be used in irrigation, and also frees up fresh water for higher-value, municipal purposes. The treatment plant also will produce 12.8 megawatts of renewable energy, or 78 percent of the plant’s energy requirements, through biogas and hydropower.


Cabo Verde II

Cabo Verde is an extremely dry country that faces challenges in water and sanitation. Part of MCC’s five-year $66 million compact with Cabo Verde will make investments in water sector reforms and infrastructure to expand access to clean water and sanitation. This $41.1 million Water, Sanitation and Hygiene Project (WASH Project) is designed to establish a system for the delivery of water and sanitation services to Cabo Verdean households and businesses across the country that is managed responsibly and openly. The project’s approach to improving performance is a three-pronged strategy: reforming the government’s way of setting policy and conducting oversight; transforming inefficient utilities into independent corporate entities operating on a commercial basis; and improving the quality and reach of water and sanitation infrastructure.



The Zambia Compact will support infrastructure managed by the Lusaka Water and Sewerage Company (LWSC), the utility primarily responsible for managing the city’s water and sanitation system, as well as the Lusaka City Council (LCC), which manages Lusaka’s drainage infrastructure. A major portion of the investment is focused on the rehabilitation of Lusaka’s core water supply network, including components designed to reduce water system leaks. Hundreds of thousands of Lusaka’s residents lack access to clean water and sanitation, and many suffer from endemic flooding. MCC’s investments are designed to promote economic growth by reducing water-related disease, the cost of water, the number of work days lost due to disease and water collection, and residential and business flood losses. The Zambia Compact has a strong gender and social inclusion component which includes a robust public awareness campaign focused on topics like how to connect to the water and sewer system and stay connected, household water management, care and maintenance of facilities, hygiene, and solid waste management. The goal is to build the long-term capacity of LWSC and LCC to develop and implement best practices with respect to promoting service access, affordability, and sustainability for the poor. In addition, the compact has a new grant program that will seek involvement from people and organizations with expertise in sustainable water and sanitation initiatives. The Innovation Grant Program is designed to increase and sustain people’s access to quality water and sanitation, with a strong focus on women and vulnerable groups.