Doing Good Efficiently

If the world had, say, an extra $75 billion to spend, where could we achieve the most good? The Second Copenhagen Consensus recently put that question to a group of five Nobel laureates and three distinguished economists, and the answers are surprising.

COPENHAGEN – Policymakers can concoct many excuses not to invest in global aid and development projects. Three weeks ago, I joined a group of five Nobel laureates and three distinguished economists to undermine one of those excuses, by providing information about where money can achieve the most good.

For each issue examined, we focused on benefits relative to costs. To guide our thinking, we asked ourselves: if we had, say, an extra $75 billion to spend, where could we achieve the most good? We put each challenge on an equal footing. Massive media hype about some problems was irrelevant. 

At the bottom of our list were the least cost-effective investments the world could make, with the best places to spend money at the top. The lowest place (see list) was given to dealing with climate change through cuts in CO2 emissions. This finding was based in part on research by a lead author for the Intergovernmental Panel on Climate Change – the group that shared last year’s Nobel Peace Prize – who noted that spending $800 billion 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 warming, we would lose money on the investment, with returns of just $685 billion.

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