Saturday, August 16, 2008

priorities for helping humanity

Bjorn Lormborg isn't against reducing man's carbon footprint, but -- like me -- he just thinks that the proposals bandied about cost too much given other available choices for helping the world's worst off. The Copenhagen Consensus ranked a list of solutions to the world's problems based on their cost and estimated benefits. The Copenhagen Consensus was originally sponsored by the Danish government and The Economist to assess proposals to advance global welfare under the stewardship of Lormborg, a Danish economist. There have been two rounds of discussion by the group -- which invites the world's top economists to participate (five Nobel laureates this year) -- the most recent in the spring of 2008.

Lormborg recently penned an opinion piece for the WSJ answering the Copenhagen Consensus' question, "How to get the biggest bang for 10 billion bucks." You can also watch his past Ted talk below for an introduction to his work, and read more (link also appears below the video) for a few select factoids from his work. Lormborg is something of a controversial figure, because of his skepticism regarding the global warming movement, but if you watch the Ted talk and read what he has to say, I think you'll agree that he is very intelligent and very reasonable.

Of Lormborg's top five priorities to improve global welfare, three address malnutrition, one disease, and one trade. At the bottom of Lormborg's list (of 30 priorities), two fall under global warming, two under pollution, and one under disease.

What's number one?

"Providing micronutrients -- particularly vitamin A and zinc -- to 80% of the 140 million or so undernourished children in the world would require a commitment of just $60 million annually, a small fraction of the billions spent each year battling terrorism or combating climate change. The economic gains from improved productivity and a lower burden on the health system would eventually clear $1 billion a year. Every dollar spent, therefore, would generate economic benefits worth $17."

I'll leave you with Lormborg's take on the current environmental proposals, which I largely agree with:

"If mitigation -- economic measures like taxes or trading systems -- succeeded in capping industrialized emissions at 2010 levels, then the world would pump out 55 billion tons of carbon emissions in 2100, instead of 67 billion tons.

This is a difference of 18%; but the benefits would remain smaller than 0.5% of the world's GDP for more than 200 years. These benefits simply are not large enough to make the investment worthwhile.

Spending $800 billion (in total present-day terms) over 100 years solely on mitigating emissions would reduce temperature increases by just 0.4 degrees Fahrenheit by the end of this century.

When you add up the benefits of that spending -- from the slightly lower temperatures -- the returns are only $685 billion. For each extra dollar spent, we would get 90 cents of benefits -- and this is even when things like environmental damage are taken into account.

A continued narrow focus on mitigation alone will clearly not solve the climate problem. One problem right now: Although politicians base their decisions on the assumption that low-carbon energy technology is being rapidly developed, that is not the case. These technologies just do not exist. Wind and solar power are available -- at a high expense -- but suffer from intermittency. Researchers need to develop better ways to store electricity when those renewable sources are offline.

If we took that $800 billion and spent it on research and development into clean energy, the results would be remarkably better. In comparison with the 90-cent return from investing solely in mitigation, each dollar spent on research and development would generate $11 of benefits."

As Lormborg emphasizes in the Ted talk above, it's time to stop conflating goals and proposed solutions. You can believe that it's important to save the environment and still think the Kyoto Protocol is a waste of resources. Pumping funds into R&D will be a lot less visible and might give us a less fuzzy feeling than taking Hummers off the road, but that doesn't make it the wrong choice.

Returning to Lormborg's number one priority, if anyone has information on well-run programs to distribute micronutrients (e.g., vitamin A) I would love to check it out.


Lloyd said...

I probably should've read the main article. I think most people agree money spent fighting terrorism can probably be better deployed. I'd like to see how this guy came up with the $17 dollar benefit from micro-nutrients.

Interesting analysis though. But I think we'd see total privatization of the student loan market before people redeploy assets for micro-nutrients... which is probably never.

Publius said...

That is likely true. Perhaps after we pour tens of billions into the proposals at the BOTTOM of the list and see little to no pay off, THEN we'll figure it out...

I'd like to take another look at how he computes his numbers as well.

The sad thing is that the arguments on the "other" side of the global priorities debate are so anemic when it comes to numbers it's hard to tell where and to what extent Copenhagen Consensus err.

All that said, the numbers and the logic put forth make sense to me.

It also makes sense when I consider what proposals are most likely to have a lot more support than warranted given what I've learned about cognitive biases -- they are cookie cutter examples (e.g., most environmental proposals).

Meanwhile, the proposals that Bjorn isolates as optimal are the ones that would be systematically UNDERestimated given our cognitive biases.