The Copenhagen Consensus

The panel was asked to address the ten challenge areas and to answer the question, "What would be the best ways of advancing global welfare [...] supposing that an additional $50 billion of resources were at governments' disposal?" -- Quote taken from: http://tinyurl.com/dd2dr (PDF file)

Every four years, a small group of distinguished economists meet in Copenhagen to do a Cost/benefit analysis of global problems. The problems are then ranked according to the "bang for the buck" to be had by addressing them. The "costs" considered include monetary costs, but also intangible costs, such as the cost of not acting immediately. Urgent matters, such as preventing starvation or curtailing the spread of disease, were given higher priority (An ounce of prevention is worth a pound of cure). Political barriers were not considered, as these rankings are intended to educate and encourage governments to act, not to quantify the likelihood of implementation. Problems for which a consensus on costs could not be reached were not ranked.

There were 8 economists participating in the 2004 Copenhagen Consensus, as follows:

• Jagdish Bhagwati
• Robert W. Fogel (Nobel Prize in Economics, 1993)
• Bruno Frey
• Justin Yifi
• Douglass C. North (Nobel Prize in Economics, 1993)
• Thomas Schelling
• Vernon Smith (Nobel Prize in Economics, 2002)
• Nancy Stokey

The 10 "challenge areas" were as follows:

• Civil conflicts
• Climate change
• Communicable diseases
• Education
• Financial stability
• Governance
• Hunger and malnutrition
• Migration
• Trade reform
• Water and sanitation

At the 2004 meeting, 17 global solutions were ranked. The first on the list below is considered the "least costly" to implement with needed urgency. The last is considered important but with lower priority if we are to be pragmatic. All dollar values below are in U.S. dollars.

• Control of HIV/AIDS The panel estimated that and outlay of $27,000,000,000 in 2004 could prevent 30,000,000 new infections between 2004 and 2010 and prevent societal collapse in several African nations.
  
  
• Providing Micro nutrients One of the nutrients the panel proposed $12,000,000,000 in spending on was iron, to prevent iron-deficiency anaemia. (Yes, I did mean to spell it that way.)
  
  
• Free Trade
  
  
• Control of malaria The panel recommended $13,000,000,000 in spending on malaria prevention and treatment, with an emphasis on providing chemically-treated bednets.
  
  
• Development of new agricultural techniques
  
  
• Small-scale water technology The panel recommended this and the next two solutions in light of the statistics that estimate half of the people in developing nations are, at any moment, suffering from one or more water bourne diseases (i.e. bacterial diarrhea, Hepatitis A, Hepatitis E, typhoid fever).
  
  
• Community-managed water supply and sanitation
  
  
• Increases in water productivity in food production
  
  
• Lowering the costs of starting a business
  
  
• Lowering barriers to migration for skilled workers
  
  
• Infant and child nutrition
  
  
• Increasing infant birth weights
  
  
• Improved basic health services
  
  
• Work visas for unskilled workers
  
  
• Optimal carbon tax
  
  
• The Kyoto Protocol
  
  
• Value-at-risk carbon tax

The panel did not come to a consensus for any rankings in the areas of civil conflicts, education, or financial stability. They noted that a raise in median income tends to lower the incidence of civil war. They also noted that the potential return for educational spending is high, but not guaranteed:

Experience suggests that it is easy to waste large sums on education initiatives. Given this variety of circumstances and constraints, the panel chose not to rank any proposals in this area. However, the experts did endorse the view that externally supervised examinations improve accountability of schools and should be promoted. -- ibid

The 2004 sponsors of the Copenhagen Consensus were:

• The Tuborg Foundation (they don't just make beer)
• The Carlsberg Bequest in Memory of Brewer I.C. Jacobsen
• The Ministry of the Environment (Denmark)
• The Sasakawa Peace Foundation
• The Economist

The next Copenhagen Consensus will be held in 2008.

The full results of the 2004 Copenhagen Consensus can be read at:
http://www.copenhagenconsensus.com/Files/Filer/CC/Press/UK/copenhagen_consensus_result_FINAL.pdf

The Copenhagen Consensus was a project organized by Denmark's Environmental Assesment Institute, meant to identify areas where relatively modest sums could lead to large improvements in human welfare. Unsurprisingly, most of the initiatives most strongly endorsed involved things like improving basic health and nutrition, as well as the control of infectious diseases. Almost without a doubt, these are the things that can produce the biggest gains in human welfare for the lowest cost. They should all be funded, using any available mechanisms for doing so.

At the bottom of their cost-benefit ranking come schemes to tackle climate change. This is a methodology that I feel inclined to challenge on a couple of grounds. Firstly, it's fallacious to say that we have a simple choice between providing clean water in impoverished areas and developing less carbon intensive forms of electrical generation. There isn't a set lump of spending to be allocated to one activity or another. When a government spends money to deploy aid supplies and sandbags to a flooded area, it should do so by dipping into funds for long-term environmental management.

Secondly, it may well be that things exist that are both exceptionally expensive and still necessary. When it comes to climate change, we are talking about the long-term habitability and character of the planet. This isn't something that can be reasonably thought about in standard cost terms, because the value of it does not discount as we look farther into the future.

What is necessary to complete the Copenhagen Consensus project is an awareness of politics. It's wonderful to know which areas can profit most handsomely from modest investment, but we must be mindful of the decision making processes that go into the allocation of such funding. We must take the sensible and identify the plausible within it. On the issue of climate change, that probably means continued efforts to learn just what the changes will entail, in terms of human beings and the planet's biological and climatological systems. It also means developing means for mitigating the problems that are already certain to arise: especially for those who lack extensive means of their own to either deal with the problem of climate change or its consequences.