One impact of the credit crunch is that there is less money available for social causes. However, a panel of economic experts has been assembled to advise governments, businesses and NGOs on which causes should be prioritised.
The global financial crisis has sadly reduced donations made by many corporations as part of their corporate social responsibility agenda. For organisations that continue to invest in global aid and development projects, eight of the world’s top economists, including five Nobel laureates, have performed a service by providing sorely needed information about where money can achieve the most good.
As part of Copenhagen Consensus 2008, this expert panel examined research papers produced over two years especially for the project on the best ways to tackle 10 global challenges.
Consulting specialists
The panel engaged with scholars of diseases about how money could be best invested to battle malaria, tuberculosis or Third World heart disease. They talked with specialists in water and sanitation projects who highlighted different spending options – from intermediate solutions such as wells and pumps to longer-term investments such as infrastructure development.
On it went, with researchers telling the expert panel of the best ways to battle the problems of air pollution, conflict, disease, global warming, hunger and malnutrition, a lack of education, gender inequity, terrorism, trade barriers and a lack of water and sanitation.
The panel of experts focused, above all else, on the costs and benefits of each approach. To guide their thinking, they asked themselves: if we had, say, an extra $75bn to spend, where could we achieve the most good?
In an ideal world, we would have the resources and ability to fix all of the world’s biggest challenges at once. Unfortunately, we do not live in that world. Therefore, we need to ask ourselves the hard question: what should we do first?
Prioritisation might sound harsh or unfair. But do we think it is harsh or unfair when doctors in an overcrowded emergency room perform triage? The harsh, unfair thing is to pretend that we have the resources and the capacity to solve everything here and now. Because that means that instead of solving any single problem, we end up doing very little anywhere.
Many environmental campaigners would tell you that any extra money should be dedicated to battling climate change. That is certainly the global challenge we hear the most about; it attracts extraordinary amounts of publicity and celebrity firepower. But an expert in air pollution will tell you that clearing the skies of killer smog should be a top priority. Someone who has spent his life studying conflict will tell you of the potential lasting benefits of reducing the risks of civil war in hot-spots.
Economists, who are experts in prioritisation, are the obvious people to provide a global overview. They put each challenge on an equal footing. The media hype about some problems is irrelevant to them – they focus on where limited funds could achieve the most good.
In Copenhagen, the expert team took the menu given to them by researchers and turned it into a list of priorities. At the bottom: the least cost-effective investment they believe that the world could make to respond to any of these problems. At the top: the very best place that money could be spent.
Debunking myths
The research and findings of Copenhagen Consensus 2008 undermined some myths that have grown around some of the ‘hottest’ issues facing the planet.
The expert panel gave the lowest place on its ‘to-do’ list to spending devoted to mitigating climate change through carbon cuts. This finding was based partly on research by a lead author for the Intergovernmental Panel on Climate Change (IPCC), the group that shared last year’s Nobel Peace Prize with former US vice-president Al Gore. They noted that spending $800bn 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 global warming, we would lose money on the investment, with returns of just $685bn for our $800bn investment.
That does not mean that the planet should ignore climate change. The expert economists concluded that a better response than mitigation would be to dramatically increase research and development into low-carbon energy. This option was given a respectable mid-placed ranking on their list.
The economists’ underlying message was not that we should ignore climate change. It was that it makes little sense for the world to impoverish itself by embracing a poor solution to one problem, when there are more pressing humanitarian challenges that can be resolved at smaller expense, right now.
Indoor pollution
Similarly, the expert panel 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. That does not mean we should ignore the problem forever.
We could get slightly higher benefits if we focused on the problem of indoor air pollution. One and a half million people die needlessly each year because of the effects of using solid fuel on poor stoves without ventilation. Getting improved stoves to half the people affected would cost $2.3bn.
The economists’ top-ranked solutions were in areas that we do not hear a lot about. Unglamorous interventions such as de-worming would achieve a great deal, while lowering the price of schooling would see children and nations benefit. The expert panel also concluded there would be extraordinarily high benefits from providing micronutrients – particularly vitamin A and zinc – to undernourished children in South Asia and sub-Saharan Africa. These help prevent neo-natal death. And the cost is tiny: reaching 80% of the 140 million or so undernourished children in the world would require a commitment of about $60m annually, and the economic gains would eventually clear $1 bn a year.
Providing iron and iodised salt was another top recommendation. Fortifying products with iron costs as little as 12 cents per person per year. We know that iron deficiency leads to stunting and cognitive and developmental problems. For $286m we could get iodised salt and fortified basic food items to 80% of those in the worst-affected areas. The benefits are estimated to be somewhere around nine times higher than the costs. A ‘best practice’ paper tells corporations, non-governmental organisations and governments how to best spend money in this area.
Changing priorities
This was the second Copenhagen Consensus exercise; the economists meet every four years. While the panel’s bottom-ranked solutions remained the same, their top-ranked item in 2004 was prevention of HIV/Aids. It was rated lower this time because of the progress that has been made since then.
Hopefully, much progress will be made on under-nutrition in the next four years, so that research for the next Copenhagen Consensus will identify new areas for the world to focus on.
In the meantime, this project has provided a sound basis on which to measure and compare different uses of scarce resources. It makes no claims to being the last word in spending priorities, but the research alone provides corporations, governments and other organisations with a wealth of knowledge about how much good each dollar really achieves. Particularly in times of financial uncertainty, this research highlights some impressive investment opportunities that would make a real difference for the planet.
Bjørn Lomborg is the organiser of Copenhagen Consensus, adjunct professor at the Copenhagen Business School, and author of Cool It and The Skeptical Environmentalist.
