A note from Bjorn Lomborg, author of The Skeptical Environmentalist and the director of the Copenhagen Consensus Project, which seeks to prioritize global policy decisions according to sound science and rational cost-benefit analysis rather than media-driven hysteria:
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.
The 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 elsewhere.
In a year, malnutrition in mothers and their young children will cause 3.5 million deaths. Conflict will wreak havoc and cause untold suffering. Malaria will take a million lives—most of them among children.
Yet famine, war, and disease are rated poorly when residents of the First World are asked to name the planetary challenges causing them the most concern. Along with climate change, the issue that creates the most anxiety is terrorism.
The Copenhagen Consensus 2008 project is designed to put fear to one side and highlight the best solutions among all of the world's biggest problems. The research on these pages reveals our stark spending choices in 10 areas.
Comparing costs and benefits is a transparent and practical way to show whether expenditure is futile or worthwhile. It gives us a means to step back and weigh competing options for the public purse or philanthropist's checkbook. It prompts us to take another look at our current priorities and ask: is this really the best that we can do?
Acknowledging that some investments shouldn't be our topmost 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, right now.
In the last week of May, top economists—including five Nobel Laureates—will gather in Copenhagen to weigh the costs and benefits of each policy option, and make a prioritized list showing the best and worst choices.
Have your say ahead of their decision. With limited resources, which challenge do you think global decision-makers should tackle first?—Bjorn Lomborg
What follows are short discussions about how to deal with 10 areas, ranging from air pollution to global warming to women and development. Each topic section includes two options to ameliorate the situation. Each solution has been assigned a benefit-to-cost ratio (BCR) by researchers commissioned by the Copenhagen Consensus Project 2008. For information about the researchers for each section, please go here.
reason online readers are invited to rank which areas of concern they think are most important and which solutions you prefer. You may submit your rankings here. The results will be tabulated and announced on the site next week.
1. Air Pollution
The Olympic Games has given China the motivation to get serious about the smog that chokes its capital city.
Major polluters have been shifted away from Beijing. Coal-burning boilers have been converted to cleaner fuels, and vehicle emission standards have been introduced. All this so that athletes—and the world's media—see clear skies. Sadly, few other cities in the developing world have similar motivation to clear the air. Air pollution—in the form of outdoor urban pollution and of ‘indoor' pollution caused by old-fashioned cooking methods—kills nearly 2.5 million people each year; 90 percent of the fatalities happen in developing nations.
Option One: Improved Stoves
There are simple, cheap solutions to the problem of indoor air pollution.
More than 3 billion people are exposed to household pollution. Women and young children are especially affected because they spend more time indoors, near cooking stoves using solid fuels like wood, charcoal, peat, and coal.
The answer is surprisingly simple: improved stoves with good venting of smoke and the use of alternative fuels.
For $2.3 billion in U.S. dollars, we could provide a rocket stove to half the people using unhealthy, old-fashioned stoves. A rocket stove is easy to construct, and uses low-cost materials, and cuts out the negative health effects caused by solid fuel use by a third.
The economic spin-offs from improved health would be 4.6 times higher than the costs.
Option Two: Diesel vehicle technology
In many developing countries, road vehicles are generally found to be the major source of outdoor polution, partly because of high levels of diesel use, badly maintained engine, and little or no emission control technology.
Particulate emissions from diesel vehicles can be reduced by a diesel particulate filter, a device designed to remove diesel particulate matter or soot from the exhaust gas of a diesel engine. A diesel-powered vehicle equipped with functioning filter will emit no visible smoke from its exhaust pipe. Another option is to use a chemical process to break down pollutants in the exhaust stream into less harmful components.
Diesel vehicle particulate control technology is, unfortunately, very expensive, so the benefits are very low compared to the costs.
Experience from several developing city studies shows that retrofitting older and newer diesel-fuelled buses and delivery trucks with particulate control devices has economic benefits worth only 50 cents for every $1.00 spent.
The food crisis is further increasing global political instability at a time when, according to research by Paul Collier, the risk of new civil wars is already rising. Many recently negotiated peace settlements have left nations fragile, while the commodity boom and the discovery of mineral resources in countries with weak governments have sown seeds for discord.
Since Iraq, the developed world has lost faith in using military force to reduce conflict. However, Iraq is a misleading guide to the effectiveness of intervention. Unlike the vast majority of conflicts, its civil war was sparked by an international war.
The far more typical scenario is a relapse of political violence within a small, low-income, low-growth nation already troubled by fighting. This is the real security challenge that developed nations must deal with this decade.
Option One: Aid
Post-conflict aid designed to stop violence recurring is much more politically acceptable than the use of force.
If it proves just as cost-effective—or more so—than military intervention, then it is clearly a more attractive option.
In a nation recovering from violence, each additional percentage point of national growth lowers the risk of conflict re-emerging by around 1.5 percentage points. In a typical case, achieving a one percentage point lift in national growth requires annual aid of $400 million: Aid is very expensive.
This investment doesn't just reduce the risk of civil war, but also boosts growth. The overall benefits are worth nearly three times more than the costs.
Post-conflict aid therefore looks to be a good use for aid money, but not so spectacular that it would trump most other calls on scarce international public resources.
Option Two: Military intervention
Four new civil wars are expected to break out in the next decade in low-income nations.
The real problem with most peacekeeping interventions is that they are too short—the risk of renewed civil war in post-conflict situations declines slowly with time.
The degree of risk reduction depends, not surprisingly, on the scale of deployment.
Compared with no deployment, spending $850 million on a peacekeeping initiative reduces the ten-year risk of conflict re-emerging from around 38 percent to 7 percent. A smaller military intervention would reduce the risk by a smaller amount.
Because of war's horrendous and lasting costs, each percentage point of risk reduction is worth around $2.5 billion to the world.
The economic benefits to the world from spending $1 billion each year to reduce the risk of conflict add up to $12.6 billion: Each dollar achieves $12.60 of good.
Life expectancy is decreasing in some parts of the world. Ten million children will die this year in poor nations; this figure would be just 1 million if rates were the same as in rich countries.
The hurdle is not just poverty—some poor nations have reasonably good health conditions—but getting cheap treatment and prevention methods to the Third World.
Some health problems receive a lot of publicity. But in areas that we hear less about, we could invest wisely to make a big difference. The two options here (out of seven being looked at by the Copenhagen Consensus's expert panel) are two where the benefits significantly outstrip the costs.
Option One: Tackling Malaria
In poor countries, malaria will claim more than 1 million lives this year—most of them among children under five.
Measures to reduce its transmission are simple. We need to expand the coverage of insecticide-treated bed nets. We need to get more preventive treatment to pregnant women so they don't transmit malaria to their children. And we need to ensure there is more indoor spraying with the much-maligned pesticide DDT.
Treating malaria is becoming harder than it was because of growing resistance of the malaria parasite to the cheapest, most common anti-malarial drugs. Some poor nations cannot afford the new ‘combination' treatments.
It makes sense to combine prevention options like bed-nets with subsidies on the new treatments for poor nations. Spending $500 million would save 500,000 lives a year—most of them children.
The economic benefits from ensuring people are healthier and more productive would be 20 times higher than the costs.
Option Two: Reducing Heart Disease
Third World heart disease seldom makes the news agenda in developed nations. Though not a "sexy" problem, the rewards for investment are high.
Heart disease represents more than a quarter of the death toll in poor countries. Developed nations treat acute heart attacks with inexpensive drugs that aren't available in the developing world.
Spending just $200 million getting these cheap drugs to poor countries would avert 300,000 deaths in a year.
Put into economic terms, the lower burden on the health system and other economic benefits mean that a dollar spent on heart disease in a developing nation will achieve $25 worth of good.
A fortune is spent in an effort to get more—and better—education to children in the developing world. A lot of this money could be better spent.
Building more schools isn't the smartest approach. Indonesia doubled its number of schools in six years, leading only to a 3 percent rise in the amount of time kids spent at school. In much of the world, schools already exist where most children live. New ones can just divert them from other schools.
Similarly, many attempts to increase the quality of education go wrong because there's still no agreement on what constitutes "quality."
A quarter of children in developing nations do not complete their first five years at school—but more than half of these kids did start. One cost-effective approach is to focus on eliminating grade school drop-outs in developing nations before we try to attract children who have never attended school.
Option One: Health and nutrition spending
Thirty percent of children in developing countries are moderately or severely undernourished, and nutritional supplements or treatments for intestinal parasites can be an inexpensive way to raise school attendance and increase physical and mental capacity.
Children who are better nourished in their first years of life stay in school longer and learn more each year they are there. In areas where malnutrition or worm infestations are common, nutritional supplements or treatments for intestinal parasites offer an inexpensive way to raise attendance and physical and mental capacity.
A Bolivian program providing support for day care, nutritional supplements, and preschool activities for low-income children resulted in permanent gains in cognitive development and motor skills. The cost per child is $1,300 to $1,400, while the monetary value of the increase in the children's future wages is between 2.5 and 3.6 times higher than the amount spent.
A school-based de-worming program in Kenya had even more remarkable results with benefits at least 450 times higher than the costs.
Most opportunities will not be as rewarding, but it is safe to assume the benefits are around 25 times higher than the costs in many cases.
Option Two: Conditional Cash Transfers
Another option proven to work is the provision of cash payments to poor households whose children attend school regularly. These are known as Conditional Cash Transfer Programs, and increase enrolment and attendance in program areas.
These programs can go wrong when they are not targeted at the right households. In a Brazilian program, self-selection allowed families whose children would have been in school anyway to receive the money. The most careful evaluation of the Brazilian program failed to show significant benefits.
Families in some rural communities of Honduras, Nicaragua, and Mexico get monthly hand-outs if their children attend 85 percent of school days. The Nicaraguan program increased school enrolment rates by about 23 percentage points. The benefits from increased future earnings are four times higher than the costs of around $3,000 per child.
5. Global Warming
There is unequivocal evidence that humans are changing the planet's climate.
We are already committed to average temperature increases of about 0.6°C, even without further rises in atmospheric carbon dioxide concentration.
The world has focused on mitigation—reducing carbon emissions—but when we take a close look at the costs and benefits, relying on mitigation alone is a very poor approach.
Option One: Continue to focus on mitigation
Even if mitigation—economic measures like taxes or trading systems—succeeded in capping emissions at 2010 levels, then the world would pump out 55 billion tons of carbon emissions in 2100, instead of 67 billion tons.
It's a difference of 18 percent; the benefits would remain smaller than 0.5 percent of the world's GDP for more than 200 years. These benefits simply aren't large enough to make the investment worthwhile.
Spending $800 billion over 100 years solely on mitigating emissions would lose money overall.
When you add up the benefits of that spending—from the slightly lower temperatures that would result—the returns are only $685 billion. For each dollar spent, we would get 90 cents of ‘good' back.
Mitigation alone will clearly not "solve" the climate problem.
Option Two: Combining mitigation with other policies
In addition to mitigation, policy-makers must ensure that we adapt to climate change. Adaptation can mean doing things like growing drought tolerant crops, spending more on irrigation, developing rainwater storage systems, or proactively preventing the health issues that climate change poses.
But to make a real difference, the world needs to increase its research and development into carbon saving and sequestering technology.
Instead of spending $800 billion (in total present-day terms) solely on mitigation, we could keep the investment the same size but direct a small amount to adaptation policies, and $50 billion each year to research into greener technology.
This research spend would add up to about 0.1 percent of global GDP.
As the gap between the cost of carbon-free and carbon-emitting technology decreases, any tax on emissions should become smaller. This allows the research and development to essentially pay for itself.
With research and development in the mix, the total benefits from this $800 billion investment would add up to more than $2,129 billion. That is a more respectable $2.70 return on each dollar spent.
The food crisis has reminded rich nations of the hunger and malnutrition that is a daily reality for many in South Asia and sub-Saharan Africa.
Malnutrition in mothers and their young children will claim 3.5 million lives this year. Global food stocks are at historic lows. Progress is distressingly slow on the United Nations goal of halving the proportion of hungry people by 2015.
Tragedy on an individual scale adds up to hardship on a national level. Shortened lives mean less economic output and income. Hunger leaves people more susceptible to disease so that more money has to be spent on health care.
Those who survive the effects of malnutrition are less productive; physical and mental impairment means children benefit less from education.
Option One: Micronutrient supplements
Improving the quality of developing nation diets is as important as improving the quantity of food.
More than a 100 million children are deficient in Vitamin A, which causes eyesight and immunity problems.
It is estimated that one-fifth of the world's population is at risk of zinc deficiency, which puts young children at risk of stunted growth.
Providing Vitamin A capsules to one person for a year costs just 20 cents; zinc supplements cost a dollar.
Reaching 80 percent of all children aged under-two in Sub-Saharan Africa and South Asia would require annual spending of just $2.4 million for Vitamin A and $58 million for zinc.
The economic benefits from improved future earnings and reduced health care spending would add up to $240 million each year. In other words, every $1.00 spent would generate economic benefits worth $17.
Option Two: Nutritional education
Another tack to consider is to encourage developing nation households to change their food practices, to create lasting dietary improvements.
Education would be more expensive than any of the shorter-term interventions like micronutrient supplements, but could create enduring improvements among the world's poorest billion people.
Pregnancy and post-pregnancy are an opportune time to provide nutritional education to mothers, and can lead to a reduction in the probability of underweight babies and an increase in growth-rates for infants.
Creating community-based, volunteer-managed education campaigns to cover 80 percent of South Asia and sub-Saharan Africa for one year would cost $798 million.
This would reach eight out of 10 children aged under two. The annual benefits from a reduced burden on the health care system and healthier population would equal $10 billion: The benefits are 12 times higher than the costs.
Harsh security measures at airports make us feel safer, but what we see as a visible reassurance is a display of billions of dollars poorly invested.
Trans-national terrorists take, on average, just 420 lives each year and cause relatively little economic damage.
An extra $70 billion has been spent annually on homeland security since 2001. Although there has been a 34 percent drop in trans-national terrorist attacks, there have been 67 more deaths, on average, each year. This is entirely predictable. Terrorists have responded rationally to the higher risks imposed by tougher security measures and shifted to fewer attacks that create more carnage.
Hardening targets is a poor way to save lives. Policymakers who want to reduce the terrorists' toll have stark options.
Option One: Greater international cooperation
While many terrorist groups share knowledge, governments jealously guard their autonomy over police and security matters.
If political obstacles could be overcome, nations could work together more coherently to clamp down on the charitable contributions, drug trafficking, counterfeit goods, and illicit activities that fund terrorist attacks.
This would be ineffectual at reducing small events such as "routine" bombings or political assassinations, but would significantly hamper spectacular attacks requiring a lot of planning and serious resources.
Doubling the Interpol budget and allocating one-tenth of the International Monetary Fund's yearly financial monitoring and capacity-building budget to tracing terrorist funds would cost about $128 million annually. Stopping one catastrophic terrorist event would save the world at least $1 billion. Under these assumptions, this would mean a return of around $9.00 on each dollar spent.
Option Two: Increased proactive response
Some argue that the United States and its allies should "take the war to the terrorists."
To see what extra money on proactive measures would achieve, we can look at the effects of Operation Enduring Freedom, an offensive campaign that included the United States-led invasion of Afghanistan.
In the two years after 2001 (when there was the greatest proactive anti-terrorism campaign, and before other countries started to pull out), Operation Enduring Freedom resulted in a 13 percent reduction in attacks—but 159 more annual deaths and 916 more injuries, on average, than in the 10 years before. The exercise shifted attacks around.
Policymakers undaunted by the extra bloodshed might pause when they consider the economics of the exercise. Converting the effects of that carnage into monetary terms, each dollar of the Operation's $35.5 billion cost over this time achieved only around ten cents worth of good.
8. Trade Barriers
Protectionist sentiment and fear of globalization are on the rise. When the Doha trade round was launched shortly after September 11, 2001, there was plenty of international goodwill. But disenchantment with globalization has since set in.
Free trade would lead to an overwhelming boost to welfare everywhere, especially in the developing world. Grasping these benefits is potentially one of this generation's greatest challenges.
Increased negative sentiment could have the worst possible result: not just Doha's failure, but also the raising of trade and immigration barriers.
Option One: Doha Development Agenda
The greatest hope is getting the Doha round back on track.
If developing countries cut their tariffs by the same proportion as high-income countries, and services and investment were also liberalized, the global annual gains could be as high as $120 billion, with $17 billion going to the world's poorest countries.
The long-term impact of free trade is huge. Recast after calculating the net present value of the stream of future benefits, a realistic Doha outcome could increase global income by more than $3,000 billion per year, $2,500 billion of which would go to today's developing countries.
In addition, the experiences of successful reformers like Korea, China, India, and Chile suggest that trade liberalization immediately boosts annual economic growth rates by several percentage points for many years.
There would, of course, be costs. In addition to social costs, firms and workers would need to adjust as reform forces some industries to downsize or close and allows others to expand. Yet the benefits of a successful Doha round are around a staggering 1,027 times higher than these costs.
Option Two: Freeing international labor movement
The benefits of liberalizing international labor flows is worth contemplating—not least because otherwise illegal migration is likely to increase. Historical experience shows that migration is the fastest way to bring about a convergence in living standards.
Migrants and host countries incur direct costs in making and processing applications, finding housing, etc. The costs to a migrant in the year of migration are estimated to be in the range of $7,000 to $21,000, and the costs to the host country (including social welfare benefits) are in the same range. After the first year, we assume migrants to be fiscally neutral for their host country.
Increasing the rate of migration sufficient to boost the labor force in high-income countries by a total of three percent over a 25-year period would lead to global gains at the end of the period of $674 billion annually, with all but $50 billion accruing to current citizens of developing countries, either as migrants or via their remittances.
Depending on the economic assumptions used, the benefits are estimated to be around 224 times higher than the costs. Citizens of today's developing countries (particularly the migrants) would be the major beneficiaries.
9. Sanitation and Water
At the turn of the 21st century, about 1.1 billion people lacked improved water supplies and more than 2.7 billion had no sanitation service.
The Millennium Development Goals includes the goal of halving the proportion of people without access to water or sanitation by 2015. This may be difficult to achieve, partly because the need to ensure the benefits of improved access are large enough to cover the costs of those who bear them is often overlooked.
The incremental benefit of improved water supply may simply not cover the large cost of providing it, since by definition everyone has some access to water in order to live, and the willingness to pay for an improvement may be low.
Rather than focusing on expensive piped network solutions, non-network interventions could prove helpful as intermediate solutions.
Option One: Rural water supply
Where deep groundwater is the best available water source, a borehole and communal hand pump is usually considered a low-cost and appropriate technology.
Following the failure of many rural water supply projects, a new and more successful planning model emerged in the 1990s. This is based on "demand-driven" community management where households are involved in decision-making and pay for all of the costs of providing and maintaining the service plus at least some of the capital cost.
The capital costs are $6,500 on average, and program overhead is $3,500; a total of typically $10,000. Adding the necessary costs for labor and maintenance, the total annual cost is $1,630, or about $135 per month. We assume 60 households will share the borehole, which gives a monthly cost of $2.26 per household.
Benefits come from time savings for water collection, increased use of higher quality supply and the monetary value of health improvements.
These benefits together add up to $7.19 for a typical rural household in a month, compared to a cost of $2.26, implying a benefit-cost ratio of about 3.2.
Option Two: Biosand filters
Biosand filters are a technology to remove contaminants in raw water supplies. There are now close to 100,000 biosand filters in use by households in developing countries. They use commonly available materials and are inexpensive, convenient and simple to use. A filter can easily produce hundreds of liters of clean water a day.
While only a partial solution to a wider problem, biosand filters do help to provide clean water from traditional sources. They do however have disadvantages. They must be cleaned periodically, and are quite large, so are more appropriate for rural areas than urban slums.
We assume a base case of $75 for the filter manufacture plus $25 for transport and delivery. There are no time savings for this intervention, but health benefits from a reduction in diarrhea incidence. Total household benefits are $3.86 a month, and costs $1.40.
10. Women and Development
Gender equity is not only an important goal in its own right, but also a factor in overall economic development. Gender issues have become increasingly prominent in the last 30 years, and gender equality is now included in the Millennium Development Goals. National constitutions affirm the principles of basic human rights, and even explicitly refer to non-discrimination by gender. However, in practice there are still multiple barriers to these goals.
Option One: Affirmative Action
Gender inequalities in political representation remain large. Some countries have mandated quotas for political representation at various levels, with some success.
Quotas must be matched with the launch and maintenance for at least 30 years of a nationwide, systematic public information or advocacy campaign. It is hard for women to win elections. Campaigns can be effective, but must be a long-term commitment.
There should also be an investment in leadership and management training for female politicians, since many who aspire to political office will have had little opportunity for previous involvement.
Evidence from an Indian reform at the village council level suggests that where leadership is reserved for women, the supply of safe drinking water is higher by 0.95 percent, children between one and five have a 2 percent higher chance of completing the immunization program, and are two percent more likely to attend a community child care center. The condition of rural roads is better, which could increase work opportunities and reduce barriers to schooling.
Because women, on average, have relatively less political experience and less political capital than male politicians, electing women may mean short- to medium-term productivity losses.
Taking into account these assumptions, the benefits are around 2.7 times higher than the costs.
Option Two: Microfinance
Microfinance institutions such as Bangladesh's Grameen Bank allow self-employed women to build successful businesses in the informal sector, lending to individuals, groups or villages. Women have better repayment records than men, and when they have greater bargaining power in the household, a larger share of the household's limited resources are devoted to children's human capital. Women's access to credit also tends to increase their labor force participation.
We assume that the number of loans would increase annually by 35 percent, which was the experience of the Grameen Bank in Bangladesh. The average annual number of members reached by the Grameen Bank in 1992 was 1.4 million, of whom 1.3 million were women, and 348,000 new borrowers. We assume that each year the program would lend only to new borrowers, as the evidence points to diminishing marginal returns to credit.
We assume $285 to be the average loan to each new borrower. Microfinance programs are costly and typically require extensive subsidies. Based on a number of studies, we assume that each dollar loaned per year will increase household expenditures by about 10 percent in the first year, and that benefits will continue to accrue annually by about 1 percent for an average 30 year lifespan of the borrower. Bringing together these assumptions, the benefit-cost ratio is around 3.2.
Read reason Science Correspondent Ronald Bailey's dispatches from the Copenhagen Consensus Conference 2008 here.
Help set the Copenhagen Consensus for 2008! Follow directions below to rank global problems and solutions. The results will be tabulated and announced next week at reason online.