Official websites use .gov
A .gov website belongs to an official government organization in the United States.

Secure .gov websites use HTTPS
A lock ( ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

  • Closed Compact Report:  Closed Compact Report: El Salvador Compact
  • April 2018

Human Development Project

  • $95,070,000Original Compact Project Amount
  • $84,210,865Total Disbursed

Estimated Benefits

Estimated Benefits for Activities and Sub-Activities
Activity and Sub-Activity Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
Community Development Activity Community Infrastructure Sub-Activity At the time of signing 10.4 percent 92,923 $156,923
Updated July 2010 following mid-term review 15.2 percent 92,923 $2,011,000
At compact closure 11.3 percent 92,923 $530,000
Rural Electrification Sub-Activity At the time of signing 23.6 percent 207,270 $23,228,000
Updated July 2010 following mid-term review 18.4 percent 104,031 $13,724,650
At compact closure 19.4 percent 160,770 $15,720,700
Water and Sanitation Sub-Activity At the time of signing 13.8 percent 140,000 $3,738,810
Updated July 2010 following mid-term review 5.7 percent 173,132 $-4,477,480

Any project with an ERR below 10 percent will result in negative net benefits—this is one reason why MCC now uses a 10 percent “hurdle” rate for project ERRs when making investment decisions—a different hurdle rate was in place at the time this compact was developed.

At compact closure 3.6 percent 33,516 $-5,869,102
Education and Training Activity Formal Technical Education Sub-Activity At the time of signing 6.5 percent 7,831 $-3,572,710
Updated July 2010 following mid-term review 11.5 percent 16,445 $4,041,443
At compact closure 11.5 percent 25,052 $4,264,050
Non-Formal Skills Development Sub-Activity At the time of signing 35.9 percent 20,065 $7,818,000
Updated July 2010 following mid-term review 18.3 percent 12,965 $2,488,120
At compact closure 12.1 percent 23,267 $1,148,738

Project Description

At the time of compact signing, significant numbers of El Salvador’s poor lacked basic public services required for human development. This problem was particularly acute in the Northern Zone, where an estimated 25 percent of the population (roughly 225,000 people) was not connected to water systems, over 20 percent (nearly 200,000 people) lacked improved sanitation services such as latrines, and 28 percent (over 235,000 individuals) lacked electricity. Poor community infrastructure (e.g., impassable local roads) forced many of the rural poor to forgo opportunities to seek education, health care, or employment. Human development was also hampered by gaps in and constraints to education and training. In 2007, the average Northern Zone student attended school for approximately four years—two years less than their peers in the rest of the country. Less than one in ten children completed high school, and the quality of that education was poor. Many young people chose to emigrate to other countries or major urban centers, where their lack of skills often trapped them in poverty.

The Human Development Project was designed to address these critical issues by increasing the human and physical capital of residents so they could take advantage of employment and business opportunities. The project increased physical and social infrastructure in the Northern Zone through investments in education and vital community infrastructure. The Human Development Project contained two activities:

  • Community Development Activity: This activity was designed to increase access to basic public services and infrastructure for the poor in the Northern Zone through three types of investments.

    The Water and Sanitation Sub-Activity sought to increase access to water systems and improved sanitation services for thousands of the poorest inhabitants of the Northern Zone in order to reduce the incidence of disease and the time and cost of seeking or purchasing water. This included funding potable water and sanitation systems (e.g., household latrines), capacity building in the communities so the systems would be maintained, and community education to ensure households were aware of appropriate health and sanitation practices.

    The Rural Electrification Sub-Activity was designed to extend electricity to at least 97 percent of households in the Northern Zone that were not connected to electricity distribution networks to save beneficiaries money and increase household productivity. The sub-activity included extending 1,500 km of new distribution lines, connecting over 20,000 households to the grid. MCC funding covered 85 percent of the projected investment amount in electrification, with contributions from the Government of El Salvador and executing entities comprising the balance. The sub-activity also installed approximately 950 solar power systems.

    The Community Infrastructure Sub-Activity aimed to connect isolated communities and villages in the Northern Zone and address a lack of access to local infrastructure such as market, healthcare, and education facilities. This included the rehabilitation and construction of community infrastructure as well as technical assistance to communities on infrastructure operations and maintenance.

  • Education and Training Activity: The Education and Training Activity sought to increase education and skill levels of the poor in the Northern Zone by expanding the quality of and access to vocational and technical education and training. This activity included three sub-activities.

    The Technical Assistance Sub-Activity was designed to improve the capacity of institutions and organizations involved in policy, planning, and administration of education and training in the Northern Zone. The compact funded technical assistance to support government institutions by conducting a diagnostic analysis of vocational education and non-formal training programs in the region, identifying measures to ensure sustainability of compact investments in the sector, and supporting the Education and Training Advisory Committee, which was formed by the compact and provided oversight and recommendations on investments.

    In addition to investments in technical assistance, the Education and Training Activity also included the Formal Technical Education Sub-Activity aimed at strengthening technical and vocational education institutions in the Northern Zone. This included the construction of the Chalatenango Technical College, a post-secondary institution, and strengthening approximately 20 middle technical schools in key municipalities with links to other activities funded under the compact. This sub-activity also established a competitive scholarship program to reach poor youth in the region.

    The Non-Formal Skills Development Sub-Activity worked to complement the Formal Technical Education Sub-Activity by expanding access to non-formal education and training to the poor, women, at-risk youth and others who were unlikely to attend formal programs. This included support to short-term pre-employment training.

At the end of the compact, the Human Development Project funded construction of a new technical community college; improved curricula, course offerings, and teacher training; expanded and rehabilitated 20 high schools; improved approximately 39 km of rural roads; and constructed 20 small br idges. The rehabilitation of the high schools alone is expected to benefit more than 9,700 students each year. An estimated 12,000 people (60 percent of whom are women) received vocational training in areas such as electricity installation and bread-making. At compact close, an estimated 35,412 households had electricity in their homes thanks to the installation of new power lines and solar power systems. The project also funded the drilling of more than 20 deep wells, the installation of approximately 6,500 micro water meters, and almost 170 miles of pipes—equivalent to the length of El Salvador—that connected 7,634 households to potable water.

Evaluation Findings

Community Development Activity

Rural Electrification Sub-Activity

The impact evaluation for the Rural Electrification Sub-Activity was designed to determine the impacts of electrification on the cost of energy, energy consumption, time allocation, and household income.

The evaluation results showed that households that received a subsidy to cover a portion of the costs of connecting were more likely to get a formal connection to the grid and that connected households used electricity instead of kerosene for lighting. As a result of reduced kerosene use, indoor air pollution and the incidence of acute respiratory infection among children under six declined by 37-44 percent. In addition, children in connected households were more likely to participate in education activities, such as studying at home, spending time at school, and going to and from school. Adults were more likely to engage in self-employment and in non-agricultural activities. In particular, women in connected households were more likely to operate a home business. Finally, the evaluation found an increase of 8.8 percent in annual household income (the equivalent of $111) for connected households

Status of the evaluation
Component Status
Baseline Report Completed in June 2011
Final Report Completed in October 2017
Solar Panel Component

A performance evaluation of the solar panel component of the Rural Electrification Sub-Activity assessed the use and sustainability of household solar panels six to eight years after they had been installed. The evaluation interviewed 80 participants (out of 1,950 total participants) and those individuals reported the following:

  • 78 percent of the solar panels were still in use.
  • Participants used less kerosene, wood, and candles.
  • All but one of the interviewed participants saved money on energy since they began using their solar panel systems.
  • Participants believed that the solar panel systems allowed them to have more time for activities primarily related to leisure, housework, and education.
  • Women spent the additional time on housework (e.g. cooking and cleaning), while men used the additional time for leisure activities.
  • Nearly half of the participants believed that school age children have more time to study at night.
  • Almost 90 percent of participants interviewed reported that air quality in their homes had improved greatly since they began using the solar panel systems; however, effects on health outcomes could not be determined.
  • Finally, due to the limited electricity capacity, very few households reported using the extra time for income generating activities.
Status of the evaluation
Component Status
Final Report Completed in October 2017

Water and Sanitation Sub-Activity

The impact evaluation of the Water and Sanitation Sub-Activity measured the benefits of MCC’s intervention in the following categories: 1) coping costs and cash expenditures on water 2) health 3) education 4) household welfare, and 5) gender and social inclusion.

Positive effects were found on the ownership and use of improved water and sanitation services, as well as on the reliability of service. The time households spent gathering water decreased by 3 hours per week and the time spent doing laundry outside the home for those households who did laundry outside the home decreased by three hours per week, primarily benefiting women and girls. Consistent with the ERR estimates at the end of the compact, no effects were detected on water consumption, diarrhea incidence, or school enrollment and attendance – which was not surprising because water consumption and school enrollment were high in the baseline, and diarrhea incidence in the Northern Zone had substantially decreased prior to program implementation. There was no evidence of increased time spent on income-earning activities such as wage labor or a household business. A small increase in household expenditure was found, but no effect on household income was detected.

Through this evaluation, MCC learned that providing private water connections for households can be effective at freeing up time for household members, but additional interventions may be necessary to turn that time into income generating time for the household. In addition, if impacts do not occur as expected, evaluations should be designed to answer the question “why not?” Unfortunately, the design of this evaluation did not ask evaluators to examine reasons why impacts did not occur as expected.

Status of the evaluation
Component Status
Baseline Report Completed in February 2012
Final Report Completed in August 2016

Community Infrastructure Sub-Activity

The evaluation for the Community Infrastructure Sub-Activity has been placed on hold because learning potential is limited. MCC is currently assessing the potential costs and benefits of conducting an independent performance evaluation for this sub-activity.

Status of the evaluation
Component Status
Final Report On hold

Education and Training Activity

Formal Technical Education Sub-Activity

The Formal Technical Education Sub-Activity evaluation assessed the effects of MCC’s investments in secondary and post-secondary school improvements and scholarships in the Northern Zone. Specifically, the evaluation examined 1) program design and implementation, 2) the characteristics of program participants, 3) the impact on students’ education and labor market outcomes, 4) impacts and results by key subgroups, including boys/girls, 5) explanations for impact findings, and 6) the sustainability of MCC’s investments.

While strengthening 20 secondary schools and providing scholarships to technical secondary school students increased enrollment, especially among boys, it showed no impact on income one year after students were scheduled to complete general or technical degrees. This was due in part to increased enrollment in post-secondary education, so students had less time for income generating activities. As for the construction and offerings of the Chalatenango Technical College, employment rates one year after graduation fell below the compact target of 70 percent. This was partially due to students’ further engagement in post-secondary studies, but also likely due to low labor market demand in the region.

Status of the evaluation
Component Status
Baseline Report Completed Middle School Admin Data in March 2010 and Survey Data in March 2011
Interim Report Completed in May 2013
Final Report Completed in October 2016

Non-Formal Skills Development Sub-Activity

The performance evaluation of the Non-Formal Skills Development Sub-Activity examined its effects on employment rates and personal income by comparing outcomes for enrolled participants before the start of the program with outcomes for the same individuals approximately one year after the end of the program. While this methodology cannot fully attribute differences to MCC’s training program because factors outside of the program – including broader economic developments during the study period – could have also affected outcomes, the analysis offered insights into how participants’ labor market outcomes and income changed after completing the non-formal skills course.

Evaluations showed higher employment rates for participants after the training. When all survey rounds with income data were pooled in 2015, total net annual income increased by $298 on average after completing the non-formal skills course. This was slightly higher than anticipated in the 2012 closeout ERR, leading to an increase in the post-compact ERR from 12.1% to 13.2%. However, it is likely that this estimate is biased upward due to the limitations of the survey instrument used in early survey rounds. The post-compact ERR was conducted by MCC using data from the evaluator.

Status of the evaluation
Component Status
Interim Report Completed in May 2014
Final Report Completed in June 2015

Key performance indicators and outputs at compact end date

Key performance indicators and outputs at compact end date
Activity and Sub-Activity/Outcome Key Performance Indicator Baseline End of Compact Target Quarter 1 through Quarter 20 Actuals (as of Dec 2012) Percent Compact Target Satisfied (as of Dec 2012)
Community Development Activity Community Infrastructure Sub-Activity Population benefiting from strategic infrastructure 0 80,437 81,699 102%
Rural Electrification Sub-Activity Households benefiting with a connection to the electricity network
  • Note that this indicator measures households and MCC’s beneficiary estimates include all people living within a household.
0 24,426 35,412 145%
Households benefiting with the installation of isolated solar systems 0 1,950 1,950 100%
Kilometers of new lines of electrical distribution construction under contract (contracts signed) 0 1,415 1,523 108%
Water and Sanitation Sub-Activity Households with access to improved sanitation 0 1,967 7,169 364%
Households with access to improved water supply 0 6,935 7,634 110%
Persons trained in hygiene and sanitary best practices 0 1,967 2,406 122%
Education and Training Activity Educational facilities constructed/rehabilitated and/or equipped through MCC-supported activities 0 22 22 100%
Instructors trained or certified through MCC-supported activities 0 500 566 113%
New scholarships granted to students of middle technical education (female) 0 1,464 1,842 126%
New scholarships granted to students of technological education (female) 0 359 424 118%
Non-formal tranined students that complete the training 0 6,888 11,345 165%
Students participating in MCC-supported education activities 0 26,927 30,672 114%

The Formal Education Sub-Activity cost-benefit analysis, which was completed nine months after the compact closed, showed benefits deriving from an assumed increase in income per student, based on the average income difference in the region for those with and without the education level achieved. These increased incomes were not seen in the impact evaluation, which was completed four years after the compact ended.

The reduction in the ERR for the Non-Formal Education Sub-Activity at the mid-term review resulted primarily from costs per beneficiary being higher than anticipated. At closeout, the ERR was further reduced because preliminary survey data of beneficiaries showed the estimated impact on income per beneficiary was lower than originally expected.

The reduced ERR for the Water and Sanitation Sub-Activity at the end of the compact is largely attributed to a lower impact on disease incidence than expected in the original model, which assumed a zero incidence rate for households with piped water. The evaluation found no evidence of a reduction in the diarrhea rate among children under five.