3/6/13 Bjorn Lomborg, The Australian
Bill Gates has just encouraged Australia to increase its development aid and spend more on agri-culture, polio and malaria.
But if Australia is going to spend $4 billion-plus annually, why not do the smartest things? In a new book, some of the world’s top economists summarise humanity’s smartest ideas and best investments. Given limited funds, they generated ideas and then ranked the best ways to spend $75bn more over the next four years to help hundreds of millions of the world’s poorest people.
The world spends some $125bn annually on development aid from USAID and others.
Beyond that we spend tens of billions on global efforts like peacekeeping forces, climate change policies, conservation and research on vaccines and more resilient crops.
Yet, as Gates pointed out, more is needed. A billion people still live in abject poverty, 2.3 billion don’t have access to modem energy, the world is still not at peace, we’re not tackling global warming or biodiversity, and about a billion people go to bed hungry.
More often than not, priorities in spending are dictated by the loudest groups with the best PR.
Campaigners of all stripes use powerful images and stories to capture our attention and influ¬ence aid budgets from toppled buildings in Bangladesh, to famines in far-flung places.
We need to ask the hard-headed question: where can we get the biggest bang for our buck?
With the Copenhagen Consensus think tank, I asked 50 of the world’s top economists where we could do the most good. They researched 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 in their area.
They presented their efforts to a panel of five top economists, including four Nobel laureates. The panel members were chosen for their expertise in prioritization and their ability to use economic principles to compare policy choices.
The panel indicated that if spent smartly, $75bn could solve many challenges.
The single most important investment, according to the panel, would be to step up the fight against malnutrition.
New research for the project by John Hoddinott of the International Food Policy Research Insti-tute and Peter Orazem of Iowa State University focuses on an would purchase interventions, in-cluding micronutrient provision, complementary foods, treatment for worms and diarrheal diseases and behavior-change programs, all of which could reduce chronic under-nutrition by 36 per cent in developing countries.
This matters not just because more than 100 million children could start their lives without stunted growth or malnourishment, but because new, long-term research shows that the benefits of such programs would stay with them for life: their bodies and muscles would grow faster, their cognitive abilities would improve, and they would pay more atten¬tion in school (and stay there longer).
Studies show that, decades later, these children would be about three times more pro¬ductive, make more money, have smaller families, and begin a virtuous circle of development.
Ultimately, translated into economic terms, every dollar spent on malnutrition is likely to
do $59 worth of global good. So while micronutrient provision is rarely celebrated, it could make a world of difference.
The panel also found that just $300 million would prevent 300,000 child deaths from malaria. In economic terms, the benefits turn out to be 35 times higher than the costs. Similarly there are amazing investments to be made for tuberculosis treat¬ment, childhood immunization and an HIV/AIDS vaccine.
As people in the developing world live longer, half of all deaths this year will be from chronic dis¬eases in Third World countries.
Getting low-cost drugs for acute heart attacks to developing countries would cost $200m and prevent 300,000 deaths, doing $25 worth of good per dollar spent.
Spending $2bn annually in research and development to increase agricultural output would reduce hunger by increasing food production and lowering food prices. It would also protect bio-diversity, because higher crop productivity would mean less deforestation. That would help in the fight against climate change, because forests store carbon.
These ideas may not be “rocket science”, but they can make a huge difference for people today and in the future. More important, we need to get everyone, from high school pupils to UN ambassadors to Australian politicians to start thinking about how to get the most bang for our buck.
It’s a simple principle and will help build a better tomorrow.
Bjorn Lomborg’s new book, How to Spend $75 Billion to Make the World a Better Place, was
published on June 1.