[tt] WSJ: Bjorn Lomborg: How to Get the Biggest Bang for 10 Billion Bucks

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Bjorn Lomborg: How to Get the Biggest Bang for 10 Billion Bucks
http://online.wsj.com/article/SB121720170185288445.html

July 28, 2008; Page A15

If you had a spare $10 billion over the next four years, how would
you spend it to achieve the most for humanity?

This is a small amount compared to rich-government budgets. But if
we could set aside an extra $10 billion, we could achieve an awful
lot.
[How to Get the Biggest Bang for 10 Billion Bucks]
David Klein

Would you spend your money tackling diseases like malaria, HIV and
tuberculosis, which claim millions of lives each year? Would you
battle hunger and malnutrition? What about climate change, which
many believe is the biggest challenge facing the planet?

To get the most bang for your buck -- and ensure that your
generosity does the greatest good for the largest number of people
-- you will need to prioritize, weighing up the costs and benefits
of different options. Unfortunately, we too often focus on the most
fashionable spending options, rather than the most rational.
Spending an extra dollar cutting C02 to combat climate change
generates less than one dollar of good, even when we add up all the
economic and environmental benefits. In contrast, a dollar spent on
research and development into cleaner energy technology generates
$11 of economic good. If that dollar was spent combating heart
disease in the third world, it would achieve more than twice that
again.

Copenhagen Consensus commissioned eight of the world's top
economists to identify the global challenges that can be solved most
cost-effectively. Over the coming weeks, we will be challenging
decision makers and opinion leaders to weigh in on this debate. We
also encourage you to go to OpinionJournal.com and respond to this
article with your own priorities.

But first, our economists describe how much your extra dollar can
achieve in a few areas:

Terrorism has become one of the biggest fears. Yet transnational
terrorists take, on average, 420 lives each year and cause
relatively little economic damage.

An extra $70 billion world-wide has been spent annually on homeland
security since 2001. Although there has been a 34% drop in
transnational terrorist attacks, there have been 67 more deaths, on
average, each year.

This hike in the death toll 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.

Increased counterterrorism measures often simply transfer
terrorists' attention elsewhere. Installing metal detectors in
airports in 1973 decreased skyjackings but increased kidnappings.
Fortifying American embassies reduced the number of embassy attacks,
but increased the number of assassinations of diplomatic officials.
Since counterterrorism measures were increased in Europe, the U.S.
and Canada, there has been a clear shift in attacks against U.S.
interests to the Middle East and Asia.

Politicians who choose to make counterterrorism a priority have
stark options. Spending ever more money making targets "harder" is
an easy choice for politicians -- although it will do little to
genuinely reduce the terrorist threat.

Increasing defensive measures world-wide by 25% would cost at least
$75 billion over five years. In the extremely unlikely scenario that
attacks dropped by 25%, the world would save about $21 billion. That
figure is reached by adding up the economic damage caused by
terrorists, and by putting a high economic value on the lives lost.

But even in this best-case scenario, the costs will be at least
three times higher than the benefits. Put another way, each extra
dollar spent increasing defensive measures will generate -- at most
-- about 30 cents of return.

We could save about 105 lives a year, globally. There are few areas
where we would consider spending so much to do so little. To put
this into context, 30,000 lives are lost annually on U.S. highways.

Fostering greater international cooperation to cut off terrorists'
financing would be relatively cheap and quite effective. This would
involve greater extradition of terrorists and clamping down on the
charitable contributions, drug trafficking, counterfeit goods,
commodity trading, and illicit activities that allow them to carry
out their activities.

While this approach would do little to reduce the number of small
events, such as "routine" bombings or political assassinations, it
could significantly impede the spectacular attacks that involve a
large amount of planning and resources. But this would be difficult
to achieve, because nations jealously guard their autonomy over
police and security matters. A single noncooperating nation could
undo much of others' efforts.

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 about $9 on each dollar spent.

(Figures based on research by Todd Sandler, University of Texas.)

CLIMATE CHANGE

There is unequivocal evidence that humans are changing the planet's
climate. We are already committed to average temperature increases
of about 1.1 degrees Fahrenheit, even without further rises in
atmospheric carbon dioxide concentration.

The world has focused on mitigation -- reducing carbon emissions --
as its response to this challenge. The Kyoto Protocol was an
international attempt to cut back on these emissions, and at the end
of 2009 politicians will gather in Copenhagen to discuss Kyoto's
successor. Although we don't focus on other possible solutions to
this challenge, they do exist.

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.

(Figures based on research by Gary Yohe, Wesleyan University, and
Christopher Green, McGill University.)

DISEASES

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 one million if child mortality 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. There are many ways that we could spend
a little money very wisely to make a big difference.

Some health problems receive a lot of publicity. Investment in other
areas we hear less about could make a big difference -- such as
heart disease in developing nations. Cheap drugs, widely available
in rich countries, can manage two major components of cardiovascular
risk: hypertension and high cholesterol levels. Simple drugs can
also be highly effective in reducing mortality among the millions of
adults world-wide who already have some form of vascular disease or
diabetes.

In poor countries, where heart disease represents more than a
quarter of the death toll, these cheap drugs are often unavailable.
Spending just $200 million getting them to poor countries would
avert 300,000 deaths each year. The lower burden on health systems,
and the economic benefits, mean that an extra dollar spent on heart
disease in a developing nation would achieve $25 worth of good.

Much more could be done to reduce the scourge of communicable
diseases. In poor countries, malaria will claim more than one
million lives this year -- most of them among children under five.
Measures to reduce its transmission are simple: more bed nets,
preventive treatment for pregnant women, and more indoor spraying
with DDT.

Treating malaria is becoming harder because of growing resistance of
the malaria parasite to the cheapest, most common antimalarial
drugs. Some poor nations cannot afford the new artimisinin
combination therapies that work best, and need financial support.

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.

Each dollar spent on ensuring people are healthier and more
productive would generate $20 in benefits.

(Figures based on research by Dean Jamison, U.S. National Institutes
of Health.)

HUNGER

The food crisis has reminded us that hunger and malnutrition 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.
Food riots have erupted in West Africa and South Asia. Progress is
distressingly slow on the United Nations' goal of halving the number
of hungry people by 2015.

Individual tragedy and national hardship go hand in hand. Shortened
lives mean less economic output and income. Hunger leaves people
more susceptible to disease, requiring more health-care spending.
Those who survive the effects of malnutrition are less productive;
physical and mental impairment means children benefit less from
education.

There is an obvious focus in improving the quantity of food consumed
in developing countries. But it is also vital to improve the quality
of diets, especially for children. Eighty percent of the world's
undernourished children are in South Asia and sub-Saharan Africa.
There are massive benefits from increasing the micronutrients that
are lacking in poor communities' diets.

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.

Investing in research to make technological improvements to
developing-country agriculture provides the opportunity to improve
access to micronutrients. It also reduces the cost of food by
increasing the incomes of landless laborers. Biofortification can be
achieved through genetic modification, or through other methods.
Spending $60 million a year would be enough to develop two staple
crops such as rice and wheat fortified with micronutrients for about
40 countries across South Asia and sub-Saharan Africa.

The improved nutrition would lead to higher productivity and fewer
health problems. Each extra dollar spent would generate economic
benefits worth $16.

(Figures based on research by Susan Horton, Wilfrid Laurier
University.)

Finding the most cost-effective ways to tackle the world's problems
is no simple challenge and should not be left to professional
economists alone. Please go to OpinionJournal.com to add your voices
to this important debate about prioritization.

Mr. Lomborg is the director of the Copenhagen Consensus. For more
information please visit www.copenhagenconsensus.com.