What Is The Opportunity Cost Of Climate Policy
“We need to solve climate change, but we also need to make sure that the cure isn’t more painful than the disease” Bjørn Lomborg
Bjørn Lomborg is the founder of internationally recognised, independent think tank – Copenhagen Consensus (yes I agree, a soggy name indeed).
The Copenhagen Consensus tackles a varied quiver of issues. The purpose of the think tank is to prioritise solutions to the whatever issue at hand. They boast on their website a sort of three point mission statement.
- Providing facts on how to do the most good for the world
- Cutting out special interest groups and lobbyists
- Stimulating debate on solving the biggest problems
They have an interesting process which seemingly yields uncommonly actionable results. Which is good. When the Copenhagen Consensus tackles an issue it is presented by an expert in the field to a panel of economists who evaluate and rank the proposed solutions suggested by our expert in passing. An emphasis is placed on those solutions actionable through rational economic analysis according to the arbitrary constraints set by the think tank.
In other words (and hopefully in words more understandable), Copenhagen Consensus task themselves a grand problem to solve. They accord themselves a reasonable, actionable budget to abide by. And then seek out the smartest people in the world across an array of fields to come together and answer the question at hand. They then publish their results and allow the criticism to ensue. This last sentence is best exemplified through the lens of climate change politics and the reaction to ‘How To Spend $75 Billion To Make The World A Better Place’.
Before I get to the book – I want to first emphasise that these ‘experts’ are no slouches and certainly not empty gloves. They are among the most recognised and awarded intellectuals in the world according to what I am reading. For the aforementioned book, four of the five panel economists included in the project were Nobel laureates. Which wholly legitimises their findings as superior in a world where the loudest voices on climate change and major issues are politically stained and less informed. Copenhagen Consensus are an independent organisation with no (apparent) agenda. They objectively measure an issue, set feelings and politics aside and then rationalise a response. It’s refreshing to see that kind of purity in (sorry for saying it again) such a politically stained culture where so few things are not tainted by someone’s dishonest agenda.
How To Spend $75 Billion To Make The World A Better Place
The thesis of this book, surmised by the think thank themselves…
“If we can’t solve all the world’s problems today, what should we do first? How can aid spending most effectively improve the lives of the world’s poorest and most afflicted people?”
Quite simply, the book looks firmly through the unforgiving lens of cost/benefit analysis and asks; With $75 billion, over four years, what is the most efficient way to parse out those funds ensuring the maximum potential good?
It’s a hard question, and a bloody complicated one. Should all $75 billion be spent on priority number one? Whats the point of marginal gain where we start spending on priority two? Is saving human lives automatically the top priority? Does the threat of climate change supersede any immediate issue we face?… yeah, it’s really complicated.
None the less, they asked the question, and under the guise of some incredible minds, prioritised the solutions.
The 16 outcomes, prioritised in descending order
The solutions are prioritised via one metric. What yields the most benefit for the least cost…
- Bundles of micronutrients and medicines. Spend $3 billion over the next four years to reduce malnutrition and improve learning capacity for pre school aged children. They estimate that for every $1 spent on malnutrition the return is $63 worth of global good. (Which I understand sounds fluffy, but it’s serious. Read here)
- Expand Malaria subsidy.
- Expand childhood immunisation coverage.
- Deworming school children – thereby improving health and learning capacity.
- Expand treatment of Tuberculosis.
- Research and development into increasing crop yield. This is the first priority to specifically attribute combatting climate change. Specifically, by decreasing hunger and reducing biodiversity the destruction and damaging effects of inefficient yields on the environment lessen.
- Investing in early warning systems against natural disaster.
- Strengthening possibilities within surgery.
- Widespread hepatitis B immunisation.
- Access to low cost drugs for acute heart attacks in under developed nations.
- Awareness campaign to reduce salt intake.
- Research and development in solar technology. The second policy to specifically address climate change.
- Conditional cash transfers for school attendance. Which is to say programs that offer welfare conditional on attendance requirements.
- HIV research and development.
- Research and reports on the benefits from schooling.
- Prevalence for access to fresh water in underdeveloped nations through borehole and hand pump technology.
How is this a rational reaction to climate hysteria?
You might have read that list and said to yourself, “how is this addressing climate change?” And you’d be right for asking. I myself, posed that question as well since I had heard about Lomborg through the context of climate change. I was expecting at least a few points explicitly saying things along the lines of…
- Impose carbon tax on nations producing X amount of CO2.
- Invest in further research and development for renewable energies.
- Impose tariffs on nations producing above X amount of CO2.
- Subsidies the manufacturing of electric planes.
- And so on and so forth.
But having taken it all in and having come to an understanding of what exactly Lomborg is trying to say. Given the end of the world hysteria that is so common commentated on climate change, Lomborg’s work offers an elegant mirror.
How To Spend $75 Billion To Make The World A Better Place is saying to us; The world is full of tragedy and problems. We face today, head on, a plethora of issues that render billions worse off everyday. Climate change is real, man made, and threatens doom. However, having measured the cost of direct climate change action alongside the relative cost of other worldwide problems, we have determined that if we are to be efficient in offering solutions that can help the maximum of people for an appropriate amount of cost then there are other problems that take priority.
The opportunity cost of Climate Policy
Climate change is undoubtedly a global issue which requires immediate address, but as Lomborg puts it.
“We need to solve climate change, but we also need to make sure that the cure isn’t more painful than the disease”
Effective climate change solutions proposed in the mainstream are largely suggesting no matter the cost, we move from cost efficient energy to cost inefficient energy. We need to reduce the amount of CO2 in our atmosphere, this is without question. But what is the cost of this measure? Everything is being viewed through the prism of cost/benefit. Is the immediate removal of maximum CO2 from our atmosphere required at any cost? What are the effects to the world economy? And are they worth the cleaner atmosphere?
These tough questions are hard to answer. It seems like Lomborg has come to the conclusion that the prospective environment for innovation in green tech might already be doing enough to not warrant direct Copenhagen Consensus intervention. Lomborg specifically says, “the best thing we can do for combatting global warming is invest in green energy research and development and to immediately scrap fossil fuel subsidies”.
In conclusion, climate change is the dominant looming threat and potentially worse or less worse than our projections infer. If we had a cost efficient solution for climate change that wouldn’t completely stifle and worsen the myriad of contrary issues experienced the world over then perhaps the Copenhagen Consensus priorities would have looked different.
For example. The German government, plans to spend €40 billion over four years to cut the nation’s CO2 emissions, potentially reducing the global rise in temperature by 0.00018°C in a hundred years. Therefore to emphasise Lomgborg’s thesis, an immeasurably small gain for such a huge cost. By contrast, spending the same amount on preventing tuberculosis in developing countries could save more than ten million lives.
‘How To Spend $75 Billion To Make The World A Better Place’ set out to tackle the globes worst and most solvable problems, and despite political suggestions, it seems climate change does not make the cut.