Policymakers can concoct many excuses not to invest in global aid
and development projects. Three weeks ago, I joined a group of five
Nobel laureates and three distinguished economists to undermine one of
those excuses, by providing information about where money can achieve
the most good.
For each issue examined, we focused on benefits relative to costs.
To guide our thinking, we asked ourselves: if we had, say, an extra $75
billion to spend, where could we achieve the most good? We put each
challenge on an equal footing. Massive media hype about some problems
was irrelevant.
At the bottom of our list were the least cost-effective investments
the world could make, with the best places to spend money at the top.
The lowest place (see list below) was given to dealing with climate change
through cuts in CO2 emissions. This finding was based in part on
research by a lead author for the Intergovernmental Panel on Climate
Change - the group that shared last year's Nobel Peace Prize - who
noted that spending $800 billion over 100 years solely on mitigating
emissions would reduce inevitable temperature rises by just 0.2 degrees
Celsius by the end of this century. Even taking into account some of
the key environmental damage from warming, we would lose money on the
investment, with returns of just $685 billion.
That does not mean that the planet should ignore climate change. A
better response would be to increase dramatically research and
development into low-carbon energy- an option that gained a respectable
mid-placed ranking on our list. It makes little sense for the world to
impoverish itself by embracing a poor solution to one problem when
there are more pressing challenges that can be resolved at smaller
expense.
Similarly, we gave a low ranking to solutions to the challenge of
outdoor air pollution. Many measures used in the developed world to
reduce vehicle-caused smog - including particulate filters and
"inspection and maintenance" schemes - are prohibitively expensive in
the developing world.
We could get slightly higher benefits by focusing on indoor air
pollution. One and a half million people die each year from the effects
of using solid fuel on poor stoves without ventilation. Getting
improved stoves to half the people affected would cost $2.3 billion.
Our top-ranked solutions were in areas that we don't hear much
about. Unglamorous interventions like de-worming would allow children
to be better nourished; lowering the cost of schooling would see
children and nations benefit.
We concluded that there would be high benefits from providing
micronutrients - particularly vitamin A and zinc - to undernourished
children in South Asia and Sub-Saharan Africa. These help prevent
neonatal death. The cost is tiny: reaching 80% of the world's 140
million or so undernourished children would require a commitment of
around $60 million annually, while the economic gains would eventually
clear $1 billion a year.
Providing iron and iodized salt is another top investment.
Fortifying products with iron costs as little as $0.12 per person, per
year. We know that iron deficiency leads to cognitive and developmental
problems. For $286 million we could get iodized salt and fortified
basic food items to 80% of those in the worst-affected areas, with
benefits estimated to be roughly nine times that sum.
A solution of a different sort is the removal of trade barriers.
Even accounting for the costs to short-term losers (say, particular
industries or workers with certain skills), the overall long-term
benefits can be large. Unless the economies of developing countries
grow, they will remain mired in poverty. By reducing trade barriers,
per capita income will grow, enabling poor countries to address other
problems by themselves.
This was the second Copenhagen Consensus. While our bottom-ranked
solutions remained more or less the same as four years ago, the
top-ranked item in 2004, prevention of HIV/AIDS, was rated lower this
time because of subsequent progress.
This project provides a sound basis on which to measure and compare
different uses of scarce resources. It might be fashionable to talk
about just a couple of the globe's challenges, but we could achieve a
lot more if we focused first on where our spending would be most
rational.
RANKING WORLD INVESTMENTS
1. Micronutrient supplements for children (vitamin A and zinc)
2. The Doha development agenda
3. Micronutrient fortification (iron and salt iodization)
4. Expanded immunization coverage for children
5. Improving agricultural technology
6. De-worming and other school-based nutrition programs
7. Lowering the price of schooling
8. Increasing and improving girls' education by paying mothers to send them to school
9. Community-based nutrition promotion
10. Support for women's reproductive role to reduce gender inequity
11. Low-cost heart attack drugs for developing countries
12. Malaria prevention and treatment
13. Tuberculosis identification and treatment
14. R&D in low-carbon energy technologies to combat global warming
15. Bio-sand filters for household water treatment
16. Pumps and wells to improve water coverage in rural areas
17. Conditional cash transfers to increase the number of children receiving education
18. Peace-keeping in post-conflict situations to reduce the risk of civil war
19. HIV "combination" prevention package
20. Total sanitation campaign to reduce the number of "open defecation" areas
21. Improving surgical capacity at district hospital level
22. Microfinance to women to reduce gender inequity
23. Improved stove intervention to reduce indoor air pollution
24. Large, multipurpose dam in Africa to improve water coverage
25. Inspection and maintenance of diesel vehicles to reduce outdoor air pollution
26. Low-sulfur diesel for urban road vehicles to reduce outdoor air pollution
27. Diesel vehicle particulate control technology to reduce outdoor air pollution
28. Tobacco tax to reduce heart disease and cancer
29. A package of R&D and mitigation to combat global warming
30. Mitigation of carbon emissions to reduce global warming
The author, awarded the Nobel Prize in Economics in 2004, is Chair in Economics at the University of California, Santa Barbara, and was a member of the Copenhagen Consensus 2008 Expert Panel.
The article was first published by Project Syndicate, which is an international association of 387 newspapers in 145 countries. It is republished here with the permission of the association.
Related materials from the Atlantic Community:
- Samuel Thernstrom: Resetting Earth's Thermostat
- Samantha Ferrell: Human Trafficking: A Global Malady
- Robert Zoellick: Multilateral Aid Programs Are on the Line
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August 15, 2008
Richard Wales, MEI Network, Silver Contributor (59)