Copenhagen, May 25—The opening press conference for the Copenhagen Consensus Center's 2008 conference took place in one of the gilt-edged ballrooms at the Moltkes Palace. The action unfolded beneath a bas-relief depicting heroic Danish burghers in top hats carrying a banner supplemented by bas-reliefs on pilasters portraying such everyday tools as hammers, pliers, squares, and drawing compasses. The PowerPoint question displayed on the screen behind the head table of notables was, "Where can we do the most good for the world?" Danish Prime Minister Anders Fogh Rasmussen began, "The Copenhagen Consensus is a simple but powerful idea. The world faces a number of serious challenges. We only have limited means to solve them, so where do we start?"
That's the question that the Copenhagen Consensus Center conference for 2008 (CC08) will try to answer this week. The Copenhagen Consensus Center is the brainchild of "skeptical environmentalist" Bjorn Lomborg. Headquartered at the Copenhagen Business School, the CC08 is convening leading economic experts with the aim of ranking 10 of the world's biggest problems. The expert panel is supposed to figure out which ones should receive priority and which should be bumped further down the queue. To make the exercise concrete, the experts are notionally deciding what challenges should be allocated an "extra" $75 billion in foreign aid over the next four years.
Among the experts are Nobel Prize winners in economics Vernon Smith, Thomas Schelling, Douglass North, Robert Mundell, and Finn Kydland. Other expert panelists include economists Nancy Stokey from the University of Chicago, Jagdish Bhagwati from Columbia University, and Francois Bourguignon from the University of Paris. The experts are considering detailed reports by prominent international researchers regarding ten challenges, including air pollution, armed conflicts, diseases, education, global warming, malnutrition and hunger, sanitation and access to clean water, subsidies and trade barriers, terrorism, and women and development. In each area, the researchers define the problem, suggest options for solving the problem[*], and assign a benefit-to-cost ratio (BCR) to each solution. The higher the BCR, the more cost-effective the solution is.
Prime Minister Rasmussen concretized the value of the CC08 exercise by referring to the earlier version in 2004. He noted that in 2004, CC04 participants put controlling the HIV/AIDS epidemic in developing countries at the top of the list. Consequently, the Danish government began to devote a higher proportion of its overseas development aid to combating that disease, doubling the aid from $100 to $200 million per year by 2010.
Rasmussen got ahead of the 2008 deliberations a bit when he turned to the subject of climate change. He argued that the case for action is strong, and that the world needed to cut its greenhouse gas emissions. To address the problem, Rasmussen called for "a new Green industrial revolution and a new Green world economy." Interestingly, the 2004 Copenhagen Consensus report ranked measures to address climate change at the very bottom, finding that proposals for carbon taxes and implementing the Kyoto Protocol would have costs that "were likely to exceed the benefits."
Of course, the prime minister is likely making politic noises as he gears up to host the 2009 United Nations Climate Change Conference. At that meeting in Copenhagen, governments are expected to adopt a comprehensive new global warming treaty on climate change. Lomborg opposes stringent limits on greenhouse gas emissions as not being cost effective when it comes to helping poor people. At the end of the week, we'll see what the experts say this time.
Lomborg followed the prime minister, claiming that the Copenhagen Consensus is not about doing what's fashionable, but instead focuses on doing what's rational. He pointed out that politicians and activists often argue that we should solve all problems. But the fact is that in a world of scarce resources, a couple of big issues will get the bulk of the available resources. Trade-offs have to be made. When Lomborg is speaking of resources, he is basically talking about foreign development aid. What the Copenhagen Consensus hopes to do is help donors, both public and private, to spend their money is ways that solve the most urgent problems.
To illustrate how issues might be ranked, Lomborg cited some findings from a paper dealing with the challenge of disease. Spending $1 billion on controlling tuberculosis would save 1 million lives and result in estimated benefits of $30 billion for a benefit-cost ratio of 30 to 1. Spending $200 million on treating heart disease in poor countries (which accounts for 25 percent of deaths in those countries) with an inexpensive "polypill" combining aspirin and statins would produce $5 billion benefits implying a 25 to 1 benefit-cost ratio. And a $1 billion spent on malaria produces a benefit-cost ratio of 20 to 1.
During the question and answer period, I noted that the CC08 process looks to shower money on problems, but does not address many of the institutional impediments for making sure that the money would actually be spent effectively. In fact, I suggested, the reason poor countries are poor is because they do not have effective governance and economic institutions. Lomborg responded that of course institutions are important, but the Copenhagen Consensus was focusing chiefly on "what can money do to help." He pointed out that the Copenhagen Consensus conference in 2004 considered corruption as an issue, but couldn't figure out how spending money would be able to help fix that problem. Earlier Prime Minister Rasmussen correctly observed, "No problem has ever been solved only by throwing money at it. We must prioritize." Unfortunately, as New York University development economist William Easterly has documented, the West has thrown $2.3 trillion dollars in aid to poor countries during the past five decades without much to show for it.
Lomborg further suggested that institutional analysis could be implicit in deciding how to prioritize the challenges. For example, if the experts decide that corruption or lack of private property rights would get in the way of effectively deploying money to solve a specific problem, they could give it a lower priority.
The deliberations of the expert panel are private, but all of the research papers and respondents to them will present their work to a forum of 80 young people drawn from 37 different countries during the week. These presentations are public and I will be reporting on their findings in daily dispatches from Copenhagen.
Ronald Bailey is reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.
Disclosure: Danish taxpayers are paying my travel expenses to attend CC08. There are no conditions placed upon my reporting.
For live webcasts from CC08, go here.
[*]: Corrected from an earlier version that, due to an editing error, implied only two options were suggested.