Community-driven development (CDD) investments use a variety of mechanisms to empower communities to define priorities and take charge of their own development investments. Typically, CDD programs provide resources, often through cash grants, to enable communities to undertake local development activities. Initial community projects frequently involve small-scale infrastructure, but increasingly productive projects become a priority to address poverty and income issues. Agricultural projects are potentially an important element of the subproject portfolio, though experience to date offers limited guidance on how to maximize sustainable impact on agricultural production systems with CDD investments. Supporting IGAs without introducing unsustainable subsidies and market distortions is a challenge to be addressed in future analyses of CDD investments.
CDD is an approach to poverty reduction that seeks to empower communities and local governments with resources and decision-making power so that they can take charge of their own development. “Empowerment” refers to increasing the assets and capabilities of poor people to participate in, negotiate with, and hold accountable the institutions that affect their lives. Achieving empowerment means promoting a stronger voice, access to information, social inclusion, accountability, and organizational strength. CDD is an established corporate priority of the World Bank and a key design principle in an increasing number of projects in rural areas. At present, approximately 45 percent of the lending to the agricultural sector uses some variant of the CDD approach—a proportion that is likely to increase.
Typically, the CDD approach gives communities access to funds to implement subprojects of their choice. Local investment funds are often, but not always, provided in the form of matching grants, whereby participating communities are expected to make a contribution in cash or in kind. To the extent that rural communities consider food security and income from agricultural sources as their priority needs, projects using the CDD approach are expected to promote agricultural development.
Policy and Implementation Issues
Local investment that is explicitly guided by community priorities and, in most cases, implemented by communities themselves, is the hallmark of the CDD approach. In order to respect the diverse needs of the poor, eligibility criteria for selection of subprojects are typically kept fairly open, either using a negative list of things that may not be financed (for example, religious structures or investments with potential negative environmental impacts); or a broad positive list of eligible subprojects for project financing (for example, social and economic infrastructure, natural resource management). Most World Bank lending using the CDD approach over the past decade has focused on infrastructure and social services, but other options are increasingly being explored, such as IGAs and NRM. Community choices are conditioned by several factors:
  
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