Thursday, November 27, 2014

The Smartest Ways to Save the World

COPENHAGEN – If you had $75 billion to spend over the next four years and your goal was to advance human welfare, especially in the developing world, how could you get the most value for your money?

That is the question that I posed to a panel of five top economists, including four Nobel laureates, in the Copenhagen Consensus 2012 project. The panel members were chosen for their expertise in prioritization and their ability to use economic principles to compare policy choices.

Over the past year, more than 50 economists prepared research on nearly 40 investment proposals in areas ranging from armed conflicts and natural disasters to hunger, education, and global warming. The teams that drafted each paper identified the costs and benefits of the smartest ways to spend money within their area. In early May, many of them traveled to Denmark to convince the expert panel of the power of their investment proposals.

The panel’s findings reveal that, if spent smartly, $75 billion – just a 15% increase in current aid spending – could go a long way to solving many of the world’s challenges.

The single most important investment, according to the panel, would step up the fight against malnutrition. New research for the project by John Hoddinott of the International Food Policy Research Institute and Peter Orazem of Iowa State University focuses on an investment of $3 billion annually. This would purchase a bundle of interventions, including micronutrient provision, complementary foods, treatment for worms and diarrheal diseases, and behavior-change programs, all of which could reduce chronic under-nutrition by 36% in developing countries.

In total, such an investment would help more than 100 million children to start their lives without stunted growth or malnourishment. And comprehensive research now shows that such interventions would stay with them for life: their bodies and muscles would grow faster, their cognitive abilities would improve, and they would pay more attention in school (and stay there longer). Studies show that, decades down the line, these children would be more productive, make more money, have fewer kids, and begin a virtuous circle of dramatic development.

Such opportunities come sharply into focus when you ask some of the world’s best minds to find the biggest bang for the buck. Micronutrient provision is rarely celebrated, but it makes a world of difference.

Likewise, just $300 million would prevent 300,000 child deaths if it were used to strengthen the Global Fund’s Affordable Medicines Facility-malaria financing mechanism, which makes combination therapies cheaper for poor countries. Put in economic terms, the benefits are 35 times higher than the costs – even without taking into account that it safeguards our most effective malaria drug from future drug resistance. Later this year, donors will decide whether to renew this facility. The panel’s findings should help to persuade them to do so.

For a similar amount, 300 million children could be dewormed in schools. By not sharing their food with intestinal parasites, they, too, would become more alert, stay longer in school, and grow up to be more productive adults – another cause that needs much more public attention.

Expanding tuberculosis treatment and childhood immunization coverage are two other health investments that the expert panel endorses. Likewise, a $100 million annual increase in spending to develop a vaccine against HIV/AIDS would generate substantial benefits in the future.

As people in the developing world live longer, they are increasingly experiencing chronic disease; indeed, half of all deaths this year will be from chronic diseases in Third World countries. Here, the panel finds that spending just $122 million could achieve complete Hepatitis B vaccine coverage and avert about 150,000 annual deaths from the disease. Getting low-cost drugs for acute heart attacks to developing countries would cost just $200 million, and prevent 300,000 deaths.

The expert panel’s findings point to a compelling need to invest roughly $2 billion annually in research and development to increase agricultural output. Not only would this reduce hunger by increasing food production and lowering food prices; it would also protect biodiversity, because higher crop productivity would mean less deforestation. That, in turn, would help in the fight against climate change, because forests store carbon.

When it comes to climate change, the experts recommend spending a small amount – roughly $1 billion – to investigate the feasibility of cooling the planet through geo-engineering options. This would allow us to understand better the technology’s risks, costs, and benefits. Moreover, the research could potentially give us low-cost, effective insurance against global warming.

Another priority for investment is the establishment of effective early-warning systems for natural disasters in developing countries. For less than $1 billion a year, this would alleviate both direct and long-term economic damage, possibly securing some $35 billion in benefits.

The $75 billion budget chosen for the Copenhagen Consensus project is large enough to make a real difference, but small enough that we must choose – as in the real world – the projects that can achieve the most good. The expert panel’s list shows us that there are many smart solutions waiting to be implemented.

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    1. CommentedKaare Fog

      In the Copenhagen Consensus 2012, 30 projects were ranked, of which 16 were accepted within the budget, whereas the remaining ones got too low priority.
      Rank no. 16 - the last one accepted - was given to a project of installing water pumps with a benefit-cost-ratio (BCR) of less than 3.4
      Rank no. 17 - the topmost project not accepted - was `increased funding for green energy research and development´. This had a BCR of about 10. Rank no. 18 was improved family planning to reduce population growth. This had a BCR of 90-150.
      So, the ranking does NOT follow BCRs. Especially remarkable is the low rank given to family planning. No sensible explanation is given for this. It seems the expert panel just does not like family planning.
      See more on

    2. CommentedNatalia Ciausova

      The author repeats all the same mistakes that caused huge ineffectiveness of the international aid. Stop sending food to the developing countries! It kills their own ability to sustain themselves. Instead, offer education, new technologies and employment opportunities.

      High death rates are inevitable in countries with high birth rates. Focus on birth control through education! Teach them financial management instead of handing out donations.

      Who helped Europe to survive the epidemics of plague and cholera? They had to take matters in their own hands and act responsibly. If aid continues in its current form, the epidemics in Africa will never stop, nor will the poverty! Acting responsibly is a key. Free aid is killing it. Local businesses have no chance to develop and prosper when billions of $$ in grants are being pumped into the countries.

      What is given free will never be valued, and people will never learn anything other than beg for more. The problem is that too many corrupt structures in the donor countries are feeding from the international aid and that keeps evil going.

    3. CommentedZsolt Hermann

      I agree that the first step should be elevating all human beings above the poverty line, to enable them to care for their own necessities.
      But beyond the necessities the next crucial step is global, integral education.
      Not education in the form we envisage it today or how we use the word "education".
      But a complex human education program that from the point of teaching people how to cater for their own every day necessities, also teaches them how to live life as a human being.
      Human life means a social, interconnected life, especially in our global, integral system today when each and every one of us is connected to everybody else on multiple levels, and we all depend on each other.
      Such a global, integral education would explain people the nature and conditions of this vast, natural, interconnected network we live in, how humans can fulfill a role in this network to promote the overall balance and harmony of the system, and based on such information we can all mutually build and sustain a better and more equal human system, which would also be closer to our necessities and resources than our present excessive, exploitative system which has no become unsustainable and self destructive.
      This education program naturally would not only concern the "developing world" but all of us.

    4. CommentedJ St. Clair

      "a $100 million annual increase in spending to develop a vaccine against HIV/AIDS"....which companies are benefiting from this and their tax returns....."for acute heart attacks to developing countries would cost just $200 million, and prevent 300,000 deaths."....same question...."to invest roughly $2 billion annually in research and development to increase agricultural output."..again...same question.....the way i see this is benefiting the same corporations/govt's/foundations/non-profits....and their respective tax return filings....all which include banking/financial access.....etc....personally...what i think are priorities....wherever these people are...they need to be allowed to grow their own food in their own area for themselves or their community....they need to build huts in the same area so that the young adults can move into their own the same area...huts should fit 2/3 adults and 2 children..and enough land to grow outward as each family has their own families,etc......of course there needs to be a clubhouse/stage for community gatherings (no churches..keep religion in own home)...they need their own mini factories to make their own clothes, furniture, (aka household items), a clinic for health emergencies, musical instruments, educational toys for entertainment...self/community sufficient is best...after all there are only 16 hours a day to do something with....

    5. CommentedA. T.

      Our current approach to aid tends to prefer to target the bottom – how to lift those who need help to a point at which they no longer need help (and starting from those who need to be raised the furthest). That point, however, is arbitrary – it's relative to how well everyone else is doing. What if instead we focused on helping people reach a point at which they too can help others (starting from the people closest to reaching that point). The latter would snowball our ability to help in a way that the former would not.

      While meaning well, the 'un-smartness' of aid is mostly rooted in its focus on the relief of the greatest immediate suffering. But this is like the boy with his fingers in a dyke.