Copenhagen Consensus
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Copenhagen Consensus is a Danish project which seeks to establish priorities for advancing global welfare using methodologies based on the theory of welfare economics. It was conceived [1] (http://www.copenhagenconsensus.com/Default.asp?ID=161) and organized by Bjørn Lomborg and the Institute for Environmental Assessment, funded largely by the Danish government, and co-sponsored by The Economist. A book summarizing the conclusions, Global Crises, Global Solutions, edited by Lomborg, was published in October 2004 by Cambridge University Press.
The participants are all economists, with the focus of the project being a rational prioritization based on economic analysis. The project is based on the contention that, in spite of the billions of dollars spent on global challenges by the United Nations, the governments of wealthy nations, foundations, charities, and non-governmental organizations, the money spent on problems such as malnutrition and climate change is not sufficient to meet many internationally-agreed targets. This argument is supported by evidence from the World Bank, which estimates that the UN's Millennium Development Goals would cost an additional annual $40-$70 billion on top of the $57 billion already spent as of 2004 [2] (http://www.fortune.com/fortune/brainstorm/0,15704,632592-1,00.html); this increased expenditure would have to continue each year until 2015 in order to achieve the Millennium Development Goals.
The emphasis on "rational priorization" is justified as a corrective to standard practice in international development, where, it is alleged, media attention and the "court of public opinion" results in priorities that are sometimes arbitrary and/or sentimental.
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Process
The process used by the project depends heavily on the expertise of reputable economists to evaluate the costs and benefits of addressing the ten major global challenges initially chosen by the project. Eight economists, including three Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel winners, met May 24 - May 28, 2004 at a roundtable in Copenhagen. Ten stimulus articles were prepared by other economic experts, one on each of the challenges. Each article summarizes some current knowledge about one of the challenges, identifies from three to five opportunities to solve or ameliorate the problem, and contains cost and benefits estimates, calculated on particular assumptions with varying levels of uncertainty, related to the challenge. For each article, two critiques were written by other reputable economists, in an attempt to achieve a balanced perspective. At closed-door sessions the experts reviewed the articles and the critiques, and produced a ranking based on applied welfare economics of the 30-50 identified opportunities.
Experts
"Nobel Prize" winners marked with (¤)
- Jagdish Bhagwati
- Robert Fogel (¤)
- Bruno Frey
- Justin Yifu Lin
- Douglass North (¤)
- Thomas Schelling
- Vernon L. Smith (¤)
- Nancy Stokey
Challenges
The author of the primary article about each challenge is also listed
The experts started with ten challenges and several "opportunities" within each:
- Climate change (William R. Cline)
- Communicable diseases (Anne Mills)
- Conflicts (Paul Collier)
- Education (Lant Pritchett)
- Financial instability (Barry Eichengreen)
- Government and corruption (Susan Rose-Ackerman)
- Malnutrition and hunger (Jere Behrman)
- Population: migration (Phillip L. Martin)
- Sanitation and water (Frank Rijsberman)
- Subsidies and trade barriers (Kym Anderson)
The experts agreed to rate seventeen of the opportunities within seven of the ten challenges. Projects were rated in 4 groups: Very Good, Good, Fair and Bad
Very Good The highest priority was assigned to implementing certain new measures to prevent the spread of HIV and AIDS. The economists estimated that an investment of $27 billion could avert nearly 30 million new infections by 2010.
Policies to reduce malnutrition and hunger were chosen as the second priority. Increasing the availability of micronutrients, particularly reducing iron deficiency anemia through dietary supplements, was judged to have an exceptionally high ratio of benefits to costs, which were estimated at $12 billion.
Third on the list was trade liberalization; the experts agreed that modest costs could yield large benefits for the world as a whole and for developing nations.
The fourth priority identified was controlling and treating malaria; $13 billion costs were judged to produce very good benefits, particularly if applied toward chemically-treated mosquito netting for beds. [3] (http://www.iht.com/articles/110312.html)
Good The fifth priority identified was increased spending on research into new agricultural technologies appropriate for developing nations. Three proposals for improving sanitation and water quality for a billion of the world’s poorest followed in priority (ranked sixth to eighth: small-scale water technology for livelihoods, community-managed water supply and sanitation, and research on water productivity in food production). Completing this group was the 'government' project concerned with lowering the cost of starting new businesses.
Fair Ranked tenth was the project on lowering barriers to migration for skilled workers. Eleventh and twelfth on the list were malnutrition projects - improving infant and child nutrition and reducing the prevalence of low birth weight. Ranked thirteenth was the plan for scaled-up basic health services to fight diseases.
Poor Ranked fourteenth to seventeenth were: a migration project (guest-worker programmes for the unskilled), which was deemed to discourage integration; and three projects addressing climate change (optimal carbon tax, the Kyoto protocol and value-at-risk carbon tax), which the panel judged to be least cost-efficient of the proposals.
Criticisms
The Copenhagen Consensus project has been widely criticised. Some critics, including economists (Sachs, 2004) have questioned the validity of its cost-benefit approach to extremely complex and scientifically uncertain situations, its use of particular discount rates to generate current and future values, its assumptions about the availability of aid and, more broadly, the competence of a panel consisting exclusively of professional economists to make assessments across such a wide range of subject matter. Other critics may be sceptical of the project because of its association with Bjørn Lomborg. Lomborg had argued in his controversial book, The Skeptical Environmentalist, that resources allocated to mitigating global warming would be better spent on improving water quality and sanitation, and was therefore seen as having prejudged the issues. In addition, the members of the panel, selected by Lomborg, were seen as a likeminded group of free-market economists, not likely to be supportive of government intervention to protect the environment. To deflect this likely criticism, the organizers convened a parallel panel of young people to hear the arguments presented in the challenge papers and by the discussants, and to give their own list of recommendations (which was largely aligned with the experts' ranking).
The release of the report provoked fresh controversy, although the first two priorities identified (combating AIDS and malnutrition) were widely agreed to be of critical importance. Particularly controversial within the final ranking were trade liberalization's high placing (many anti-globalists would reject it, seeing it even as actively harmful), and the low ranking of the options addressing climate change.
The most controversial, and widely publicised finding of the Copenhagen Consensus was the rating of all three projects addressing climate change as "poor". Subsequently, members of the panel including Thomas Schelling and Robert Mendelsohn (both opponents of the Kyoto protocol) criticised the way this issue was handled in the Consensus project. The Economist quoted Mendelsohn as worrying that "climate change was set up to fail".[4] (http://www.economist.com/agenda/displayStory.cfm?story_id=3630425)
Not considered
The Copenhagen Consensus did not consider some highly topical issues, such as a cost-benefit analysis of the war on terrorism. The direct financial spending on this issue dwarfs the money that the panel were notionally allocated. It is not clear if this is because the issue was considered too controversial, or if the authors implicitly assume that some issues are to be considered beyond cost-benefit calculations.
References
- Sachs, Jeffery D. (Aug. 12, 2004). Seeking a global solution. Nature, vol 430, p725-726.
See also
- UN Economic and Social Council
- UN Human Development Index
- Measuring well-being
- Canada Well-Being Measurement Act
- Physical quality-of-life index
External links
- The project's website (http://www.copenhagenconsensus.com/)
- The Economist's home page for the project (http://www.economist.com/finance/displaystory.cfm?story_id=2592716)
- Disinfopedia entry on Copenhagen Consensus (http://www.disinfopedia.org/wiki.phtml?title=Copenhagen_Consensus)de:Copenhagen Consensus