REVIEW & OUTLOOK
A Different Consensus
The Wall Street Journal, June 7, 2008; Page A10
Even as the U.S. Senate debates a vast new tax and spend regime in the name of fighting climate change, a more instructive argument was taking place in Copenhagen, Denmark. Some of the world's leading economists met last week to decide how to do the most good in a world of finite resources.
Scarcity is a core economic concept, though politicians and even many economists prefer to ignore it. There isn't an unlimited amount of money to be spent on every problem, so choices have to be made. The question addressed by the Copenhagen Consensus Center is what investments would do the most good for the most people. The center's blue-ribbon panel of economists, including five Nobel laureates, weighed more than 40 proposals to improve the world by spending a total of $75 billion over the next four years.
What would do the most good most economically? Supplements of vitamin A and zinc for malnourished children.
Number two? A successful outcome to the Doha Round of global free-trade talks. (Someone please tell Barack Obama.)
[A Different Consensus]
Global warming mitigation? It ranked 30th, or last, right behind global warming mitigation research and development. (Someone please tell John McCain.) The nearby table lists other rankings.
"It's true that trade doesn't immediately save lives," explains Bjorn Lomborg, the political scientist who heads the Copenhagen Consensus Center. "But it's proven that when people have more money" – as tends to be the case when trade barriers fall – "they improve their health, their education and so on." The resulting prosperity reduces such problems as malnutrition and disease, while improving education. All three of those ranked high on the priority list.
The benefits of freer trade were estimated in a paper presented by Professors Kym Anderson and Alan Winters. They found that a successful Doha Round could generate up to $113 trillion in new wealth during the 21st century, at a cost of $420 billion or less from inefficient industries going bust. If you like ratios, that's a return of $269 for every $1 of cost. A less conservative projection puts the gains three times higher. More than 80% of this global windfall would go to the world's poorest countries.
Meanwhile, providing vitamin A and zinc would help some 112 million children in sub-Saharan Africa and South Asia for merely $60 million a year. The minerals would help prevent blindness and stunted growth – increasing lifetime productivity by an estimated $1 billion. Similar if not quite so bountiful returns apply to investments in iron supplements, salt iodization and deworming, all low-cost measures that the economists in Copenhagen ranked highly. A private charity would be smart to seize on these opportunities, the way that Rotary International led the fight to all but eradicate polio in the 20th century.
No doubt there is room to debate these priorities, and that was the point of the Copenhagen sessions. But it's also instructive that the rich world's political cause du jour, global warming, fell well down the list. Research into low-carbon energy technologies, at No. 14, was the only climate-related proposal to reach even the middle of the priority list.
As Mr. Lomborg recently explained, the costs of mitigating climate change would be enormous for what are highly speculative benefits. He prefers research on new technologies, rather than a global cap-and-trade regime that would raise energy prices and thus reduce overall economic growth. Meanwhile, societies that are wealthier due to free trade will be better able to cope with the consequences of warming, if it occurs.
The Doha trade round has fallen out of the news, largely because there is so little political will to compromise and get a deal. As the Copenhagen Consensus shows, this is a global tragedy that will do far more harm to more people than a modest increase in global temperature.
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OPINION
How to Think About the World's Problems
By BJORN LOMBORG
The Wall Street Journal, May 22, 2008; Page A15
The pain caused by the global food crisis has led many people to belatedly realize that we have prioritized growing crops to feed cars instead of people. That is only a small part of the real problem.
This crisis demonstrates what happens when we focus doggedly on one specific – and inefficient – solution to one particular global challenge. A reduction in carbon emissions has become an end in itself. The fortune spent on this exercise could achieve an astounding amount of good in areas that we hear a lot less about.
Research for the Copenhagen Consensus, in which Nobel laureate economists analyze new research about the costs and benefits of different solutions to world problems, shows that just $60 million spent on providing Vitamin A capsules and therapeutic Zinc supplements for under-2-year-olds would reach 80% of the infants in Sub-Saharan Africa and South Asia, with annual economic benefits (from lower mortality and improved health) of more than $1 billion. That means doing $17 worth of good for each dollar spent. Spending $1 billion on tuberculosis would avert an astonishing one million deaths, with annual benefits adding up to $30 billion. This gives $30 back on the dollar.
Heart disease represents more than a quarter of the death toll in poor countries. Developed nations treat acute heart attacks with inexpensive drugs. Spending $200 million getting these cheap drugs to poor countries would avert 300,000 deaths in a year.
A dollar spent on heart disease in a developing nation will achieve $25 worth of good. Contrast that to Operation Enduring Freedom, which Copenhagen Consensus research found in the two years after 2001 returned 9 cents for each dollar spent. Or with the 90 cents Copenhagen Consensus research shows is returned for every $1 spent on carbon mitigation policies.
Focusing first on costs and benefits means that we can reconsider the merits of policies that have gone out of fashion.
The unpopular war in Iraq has undermined rich nations' belief in the success of military intervention as a way of reducing conflict. But Copenhagen Consensus research reveals that a peacekeeping force is even more effective than aid in reducing the likelihood that a conflict-prone nation will relapse into violence.
Four new civil wars are expected to break out in the next decade in low-income nations. Compared with no deployment, spending $850 million on a peacekeeping initiative reduces the 10-year risk of conflict re-emerging to 7% from around 38%, according to Copenhagen Consensus research by Oxford University's Paul Collier.
Because of war's horrendous and lasting costs, each percentage point of risk reduction is worth around $2.5 billion to the world. Thus, spending $850 million each year to reduce the risk of conflict by a massive 30 percentage points means a 10-year gain of $75 billion compared to the overall cost of $8.5 billion, or $9 back on the dollar.
In other areas, too, sound economic analysis suggests solutions that we may at first find unpalatable.
Poor water or sanitation affects more than two billion people and will claim millions of lives this year. One targeted solution would be to build large, multipurpose dams in Africa.
Building new dams may not be politically correct, but there are massive differences between the U.S. and Europe – where there are sound environmental arguments to halt the construction of large dams and even to decommission some – and countries like Ethiopia which have no water storage facilities, great variability in rainfall, and where dams could be built with relatively few environmental side effects. A single reservoir located in the scarcely inhabited Blue Nile gorge in Ethiopia would cost a breathtaking $3.3 billion. But it would produce large amounts of desperately needed power for Ethiopia, Sudan and Egypt, combat the regional water shortage in times of drought, and expand irrigation. All these benefits would be at least two-and-a-half times as high as the costs.
In each of these areas – and in the areas of air pollution, education and trade barriers – the world's scarce resources could be used to achieve massive amounts of benefits.
Next week, some of the world's top economists, including five Nobel laureates, will consider new research outlining the costs and benefits of nearly 50 solutions to world problems – from building dams in Africa to providing micronutrient supplements to combating climate change. On May 30, the Copenhagen Consensus panel will produce a prioritized list showing the best and worst investments the world could make to tackle major challenges.
The research and the list will encourage greater transparency and a more informed debate.
Acknowledging that some investments shouldn't be our top priority isn't the same as saying that the challenges don't exist. It simply means working out how to do the most good with our limited resources. It will send a signal, too, to research communities about areas that need more study.
The global food crisis has sadly underlined the danger of continuing on our current path of fixating on poor solutions to high-profile problems instead of focusing on the best investments we could make to help the planet.
Mr. Lomborg, organizer of Copenhagen Consensus, is the author of "Cool It: The Skeptical Environmentalist's Guide to Global Warming" (Knopf, 2007).
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