Suppose you were given $50 billion. You are to spend it on projects that would best foster global development and alleviate human suffering. How would you spend it?

Within the past year, two important conferences have convened on just this subject--i.e. to set global priorities for development money. The Copenhagen Consensus and the World Economic Forum both came up with lists of global problems and recommended corresponding solutions. And though there is overlap between each group's priorities, there are also marked differences. The most striking difference comes in how each group ranked the issue of climate change.

The World Economic Forum, a global community of business, political, and intellectual leaders, held its annual meeting in January 2005. The keynote speaker, British Prime Minister Tony Blair, highlighted climate change as a top priority for the coming year. As a means of abating climate change, Blair emphasized greenhouse gas reduction--promising that the G8 countries would "set a direction to travel" and then "develop a package of practical measures, largely focused on technology, to cut emissions."

But, prior to the World Economic Forum, another group of leading experts met to discuss a similar agenda; however, this group reached strikingly different conclusions. For the 2004 Copenhagen Consensus (sponsored by The Economist and The Environmental Assessment Institute) experts from all over the world - including three Nobel Laureates - convened to compile a list of ten global priorities and to offer suitable policy recommendations. For example, like the World Economic Forum the Copenhagen group chose international health issues, such as HIV/AIDS and malaria, as development priorities.

Unlike the Forum, however, the experts in Copenhagen viewed climate change as the least feasible and least cost-effective project on their list of ten challenges. While everyone seemed to agree that abating climate change is a laudable goal, the Copenhagen Consensus focused on the true costs and benefits of putting such a plan into action. The economists at Copenhagen, the crème de la crème in their respective fields, quantified the high costs of climate change abatement in the short-term and the environmental benefits in the long-term.

While the World Economic Forum places climate change at the top of their list, The Copehagen Consensus ranked it as the least feasible and least cost-effective project on their list of ten challenges.

The Copenhagen panel on climate change included William Cline of the Center for Global Development and the Institute for International Economics and competing positions of Robert Mendelssohn and Alan Manne. This panel examined possible economic affects of rising global temperatures and created an itemized list of estimated costs. The panel determined that the best method to abate climate change (at least to 1990 levels) would be the introduction of carbon taxes.

In its simplest form, a carbon tax is a tax levied on energy sources that emit carbon dioxide into the atmosphere, and is based on the level of emissions from a source. These taxes would rise incrementally over time at the same time officials attempted to lower carbon dioxide emissions by direct taxation. However, there are numerous problems with this system. Not only is it difficult actually to measure global warming, it is particularly cumbersome to gauge the concentration of economic damage associated with marginal emissions.

The Copenhagen panel found that in order to reduce emissions to 1990 levels, the necessary environmental programs would cost $220 billion and provide only $95 billion in benefits (both measured in 1990 dollars). Therefore, the best climate control plans created by the world's leading scholars were valued as the most costly and least effective of the world's top ten concerns.

Judging by these estimates, the Copenhagen group ranked climate change abatement as a low priority and moved forward to find more efficient solutions to other pertinent global problems. However, the World Economic Forum placed climate change, the least effective and most expensive program, at the top of their list. If the Forum were to allot $220 billion dollars for a program whose effects (and necessity) are still being debated, what other projects would be surpassed? (Bureaucrats often forget the opportunity costs of ineffective policies.)

According to the economists in Copenhagen, combating HIV/AIDS and malaria should be a global top priority.

According to the economists in Copenhagen, combating HIV/AIDS and malaria should be a global top priority. By their analysis, approximately 28 million HIV/AIDS cases could be prevented by 2010 at a cost of $27 billion. The panels concluded that the benefits of combating HIV/AIDS would be almost forty times the cost. For malaria, the costs would total approximately $13 billion with the net benefits valued at more than five times the outlay. In short, more human lives could be immediately saved under the Copenhagen Consensus proposal.

In his keynote address at the Forum, Tony Blair pointed out that 3,000 African children under the age of five die every day from malaria and 6,000 people die each day from AIDS. Juxtapose these heartbreaking facts with the Forum's decision to place climate change at the top of the priority list. It becomes difficult to understand why the World Economic Forum selected such an expensive and contentious policy before other proposals for human improvement. Thousands of lives could be saved in the next year, at a cost billions less than even the least expensive climate change program; but, first, world leaders will have to get their priorities straight.

Despite diverging priorities, it is a positive sign that these groups share a desire to alleviate world poverty, unnecessary human suffering, and environmental concerns. But, one could argue that the much anticipated 2005 World Economic Forum came to a disappointing close. The 2,500 world leaders and high-profile intellectuals, who gathered in Davos for the Forum, missed a chance to carve out a new direction for human development... And all they had to do was look north to Copenhagen.




Contributed by Courtney Knapp, a Program Associate for the Mercatus Center's Global Prosperity Initiative and Social Change Project. Reprinted with permission from aWorldConnected. Originally published on aWorldConnected.org in February 2005.

Links:

Center for Global Development

Copenhagen Consensus

The Economist

Environmental Assessment Institute

Institute for International Economics

World Economic Forum

To read another Global Envision article about The Copenhagen Consensus, see A United Nations Consensus.



Return to top