Why Solving Global Warming May Not Pay Off

Commentary, Environment, Frontier Centre

OTTAWA — You have $75-billion (U.S.) to give away in the next five years. You are tempted to direct all of it to solar power research – to help avert the end of human existence – but you know that it would be prudent to do some cost-benefit analysis first. (You recall that, only a year ago, you would have been tempted to direct all of it to corn-based ethanol research.) You compile a master list of 30 humanitarian causes. You engage 50 top-notch scientists to prepare preliminary reports. You persuade eight illustrious economists, five of them Nobel laureates, to assess these reports, to calculate the economic return on investment in each of the causes and to prioritize them as best they can. You lock up the eminent economists in a conference room in Copenhagen for four days, letting them out only when they have reached a consensus.

This is the Copenhagen Consensus, the highly instructive project of Bjorn Lomborg, the controversial Danish statistician who drives many conventional environmentalists nuts with his ruthlessly rational search for the correct answer to the apparently simple but devilishly tough question: If you had $75-billion to do good in the world, what would you do with it and, more specifically, what would you do first, second, third, et cetera?

Author of The Skeptical Environmentalist, published in 2001, and Cool It: The Skeptical Environmentalist’s Guide to Global Warming, published last year, Mr. Lomborg organized the Copenhagen Consensus conferences in 2004, 2006 and 2008. In the 2004 conference, the economists named the control of HIV/AIDS as the highest priority. In the 2006 conference, they chose scaled-up basic health services to control communicable diseases. Now, in the 2008 round, they name micronutrient supplements for children in Third World countries. In all three of these Consensus exercises, they named current solutions to global warming (such as carbon taxation) as the worst return on investment.

Notwithstanding his detractors’ gnashing of teeth, Mr. Lomborg appears to have retained his environmental respectability. The Guardian, the centre-left British newspaper, named him earlier this year as one of 50 people "who could save the planet." But he doesn’t personally select the Consensus priorities anyway – though he does freely express his own opinions. (The problem with ethanol, he said the other day in The Wall Street Journal, is that people give a higher priority to feeding cars than to feeding people.)

In the current Consensus, Mr. Lomborg identified Susan Horton, economics professor at Wilfrid Laurier University in Waterloo, Ont., as the champion of investment in micronutrients for Third World children. Harvard-educated, an international consultant (20 countries) in health and nutrition, Prof. Horton persuaded the panel of Nobel adjudicators that an investment in vitamin A capsules and zinc supplements for malnourished children would return $17 in economic gain for every dollar invested.

Her research showed that 140 million malnourished children live in sub-Saharan Africa and South Asia. Eighty per cent of these children could be provided with essential vitamins and minerals for a mere $60-million a year, $300-million for five years. (Malnourished children under two years of age require vitamin A; malnourished infants under six months of age require therapeutic zinc.) On an annual basis, these simple nutrients would return benefits (fewer deaths, better health, higher future incomes) of more than $1-billion.

The Consensus adjudicators named the Doha round of trade negotiations as the second-best investment that the world – or anyone in it – could make. In their final report, released weeks before the Doha round negotiations collapsed, they calculated that "a realistic Doha agreement" could increase global income by $3-trillion a year, $2.5-trillion of which would go to the developing world. For minimal adjustment costs, they said, the world would reap "exceptionally large benefits."

The Consensus judges returned to investment on nutrition – for adults in Africa, Asia and Europe this time – in determining the third-best investment. More than two billion people suffer from iron deficiency. Iodized salt would protect all of these people against goiter. The cost: $19-million a year, $95-million for five years. The return on investment: $9 in benefits for every dollar invested. Investment in tuberculosis treatment would save a million lives and return $30 for every dollar. Investment in heart disease treatment would avert 300,000 deaths and return $25 in benefits for every dollar.

Investment in global warming, on the other hand, would return only 90 cents in benefits for every dollar. The judges concluded that it would be much less productive than deworming children, expanding DDT spraying in parts of the world cursed by malaria and building and staffing more schools – especially, from a cost-benefit perspective, schools for girls.

Cost-benefit analysis requires tough-minded decisions. It compels you (for example) to invest in children, with full lifetimes ahead of them, rather than in old people. It isn’t necessarily a discipline that works in all situations. Yet the Copenhagen Consensus makes two important points: You can get a very high economic return by reducing human suffering in simple, humble ways; and you can get the highest economic return of all – considering the minimal adjustment costs – by reducing global barriers to trade.