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The Costs and Benefits of the Millennium Villages: Correcting the Center for Global Development

Michael Clemens, of the Center for Global Development (CGD) makes a number of incorrect assertions regarding the costs and benefits of the Millennium Villages Project (MVP) in his recent posting.

Clemens misrepresents the purposes and benefits of the project in an attempt to make the project look vastly more expensive than it is. For a new MV site in Ghana, he claims that only around 11,000 people will benefit from the project, when in fact there will be around 30,000 beneficiaries. He also seriously understates the benefits received by the community from the project.

Clemens asserts that the project is simply about the number of people or households crossing the poverty threshold. That is plainly wrong. The project's goal is about meeting the Millennium Development Goals (MDGs) by 2015, which is why the communities are called “Millennium” villages after all. CGD knows this.

What does the project's MDG mission mean in practice? It means that the entire community, roughly 30,000 individuals in Northern Ghana, will benefit from the project, typically in several ways for each member of the community. In every site, MVP works with governments and communities to create well-functioning health systems that provide life-saving interventions for mothers and children; to support schools and motivate teachers so that all learners have access to high quality education; to build basic transport infrastructure, mobile connectivity, and access to safe water and sanitation; to improve crop production, business development and market access. Any statement that attempts to value the program must consider the full range of services and benefits, not simply the number of households crossing a poverty line.

Clemens argues for a cash-transfer program instead. Cash transfer programs that motivate poor families to use health and education programs may work well in countries like Brazil or Mexico where basic services already exist and yet some households remain in poverty. However, in areas where MVP operates, most of the basic services are largely absent at the beginning at the project.

The costs of the Project are in fact incredibly low given the range of services that are spurred by the project. Nancy Birdsall, Clemens' boss at CGD, saw this herself on a recent visit to the MV site in Koraro, Ethiopia. She commented on the wide range of interventions that are transforming that rural community — “a micro-dam; village market; school (students there for tutoring help on a Saturday; a computer room with Internet access), health clinic; dug-wells, conservation ponds and terracing on spectacular Arizona-like mountains to minimize run-off and raise the water table, and other impressive waterworks for mini-irrigation schemes (2 farmers, 1 hectare); papaya/mango farm and seri-culture (silkworms) in Koraro where hadn't been before; modern more efficient beehives replacing traditional ones; a 17 kilometer road”.

And what has been the annual price tag? The Koraro site spent just $35 per person for each year of project-related support. In other MV sites, the cost has been around $60 per person per year in recent years.

In Northern Ghana, the project budget for the next five years is around $100 per person per year for the village-based interventions. Another $60 per person per year is expected to come from government, NGOs, and the local communities themselves. The direct project costs of $100 per person project costs are therefore $500 per household per year for a family of five, or $2,500 over five years.

Yet for these small sums — from $35 per person per year in Ethiopia to the projected $100 per person per year in Ghana — the MVP achieves remarkable results: economic growth, business development, education, schooling, hunger reduction, disease control, and more. And if one adds the $60 per year expected from outside the program budget for Northern Ghana, the costs will come to around $160 per person per year: $800 for a family of 5, or $4,000 over five years. This is still remarkably low for the range services and investments made in the community, and for their long-term benefits. The costs are nothing like the $12,000 per household that Clemens claims.

To get $12,000, Clemens arbitrarily counts only the roughly one-third of households that will pass a given poverty threshold. These are households that were initially below the $1.25-per-day poverty line who are estimated (as a minimum target of the project) to cross that line by the end of the project. For Clemens to imply these households are the sole project beneficiaries is plainly wrong for three reasons:
•First, the household estimate is a minimum target; many more may cross the threshold.
•Second, and much more important, by focusing only on the poverty headcount, Clemens neglects all of the rest of the benefits of the project other than household income, as outlined above.
•Third, by focusing only on the poverty headcount Clemens neglects the gains of all of the rest of the households that will raise their income substantially yet not cross the official “poverty line.” This will include the households that start slightly above the poverty line, e.g. those below $2 per day but above $1.25 per day, that will increase their incomes markedly. It will also include households that start below the poverty line, make significant gains, but still remain below the poverty line by the end of the five years. For example, a household in Northern Ghana that now earns an annual income of $347 per household and enjoys a massive 6-fold increase in income to $2,080 still won't cross the $1.25-per-person poverty line of $2,280 (5 people/household x $1.25/day x 365 days/year). Such a household is not counted as a project beneficiary in Clemens' scenario.

Also worth noting is that Clemens exaggerates the costs of the project by counting various expenses that don't constitute village-based interventions, e.g. for research costs.

It is unfortunate that CGD is playing games with the numbers rather than discussing the project honestly. The aim of the project is to achieve the full range of MDGs in a manner that can be sustained over time. If Clemens can point to cases of lower-cost pathways to achieve the MDGs we'll be very interested. Better yet, we'd be happy to see Clemens undertake his own approach to achieve the MDGs. At the least, however, Clemens should stop misrepresenting the MVP.

Dr. Paul Pronyk, Director of Monitoring and Evaluation for the Millennium Villages Project

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