Priorities and goals for aid

My recent essay in the Wall Street Journal
discusses how to prioritise development aid:

 

In September next year, the United Nations plans to choose a
list of development goals for the world to meet by the year 2030.
What aspirations should it set for this global campaign to improve
the lot of the poor, and how should it choose them?

In answering that question, U.N. Secretary-General Ban Ki-moon
and his advisers are confronted with a task that they often avoid:
setting priorities. It is no good saying that we would like peace
and prosperity to reach every corner of the world. And it is no
good listing hundreds of targets. Money for foreign aid, though
munificent, is limited. What are the things that matter most, and
what would be nice to achieve but matter less?

The origin of this quest for global priorities goes back to
2000, when Mr. Ban's predecessor, Kofi Annan, picked a set of
"Millennium Development Goals," eight challenges to be met by 2015,
which were adopted by world leaders. Although some of these goals
were woolly, the very brevity of the list and the deadline itself
meant that they really did catch the world's imagination and force
the aid industry to be more selective.

Most of the original Millennium Development Goals will have been
met or nearly so by 2015. Since 2000, for example, the number of
people living in extreme poverty and hunger around the world will
have been cut in half—an astonishing achievement. Other goals
included universal primary education, gender equality, reductions
in child mortality, improvements in maternal health, progress
against HIV and malaria, environmental sustainability and (most
vaguely) a "global partnership for development."

The lesson, surely, from this first round of setting development
goals is the need to be even more ruthlessly selective next time. A
list of eight goals is too long for most outsiders to remember.
When I asked several of my colleagues in the British Parliament,
they remembered only three to five. Several development experts I
spoke to say that the new list should have just five discrete,
quantitative, achievable goals.

Only Mr. Ban can make that happen, says Charles Kenny, a senior
fellow at the Center for Global Development in Washington, D.C.,
who observes that you should "never ask a committee to write
poetry." Mr. Kenny told me: "There is one person who can bring the
poetry. The U.N. secretary-general has to edit down with an ax, not
a scalpel. Without strong intervention from Ban Ki-moon, there is
extremely limited prospect for simplification."

Goal: Boost preprimary education,
which costs little and has lifelong benefits by getting children
started on learning. European Pressphoto Agency

So far, however, the process of deciding on the 2030 goals is
short on poetry. There is not just one committee on the job but
several—the most prominent of which is called the Open Working
Group, or OWG, which has already been meeting off and on for more
than two years. The OWG "stream"—and keep in mind that other U.N.
groups are also producing streams of their own—has so far managed
to whittle its list of possible targets down to 169. It is an
absurdly long list, and each time the results of its deliberations
are published, every pressure group checks to make sure its
favorite goal is still in there and makes a fuss if it is not.

What Mr. Ban needs is an objective way of paring down the list.
In doing so, I would recommend to him an unlikely ally: Bjorn
Lomborg, a T-shirt-wearing, vegetarian, Danish political scientist
who shot to fame in 2001 with a book called "The Skeptical
Environmentalist," which infuriated those who support environmental
protection at all costs, including the welfare of the poor.

Mr. Lomborg is the founder of an international think tank called
the Copenhagen Consensus Center. He has invented a useful method
for dispassionately but expertly deciding how to spend limited
funds on different priorities. Every four years since 2004, he has
assembled a group of leading economists to assess the best way to
spend money on global development. On the most recent occasion, in
2012, the group—which included four Nobel laureates—debated 40
proposals for how best to spend aid money.

The goal was simple: to create a cost-benefit analysis for each
policy and to rank them by their likely effectiveness. For every
dollar spent, how much good would be done in the world?

The Copenhagen Consensus Center process has won world-wide
respect for its scrupulously fair methods and startling
conclusions. Its 2012 report, published in book form as "How to
Spend $75 Billion to Make the World a Better Place," came to the
conclusion that the top five priorities should be nutritional
supplements to combat malnutrition, expanded immunization for
children, and redoubled efforts against malaria, intestinal worms
and tuberculosis.

Their point wasn't that these are the world's biggest problems,
but that these are the problems for which each dollar spent on aid
generates the most benefit. Enabling a sick child to regain her
health and contribute to the world economy is in the child's
interest—and the world's.

The numbers produced by this exercise are eye-catching. Every
dollar spent to alleviate malnutrition can do $59 of good; on
malaria, $35; on HIV, $11. As for fashionable goals such as
programs intended to limit global warming to less than two degrees
Celsius in the foreseeable future: just 2 cents of benefit for each
dollar spent.

Nor is this just about the cold tabulation of dollars and cents.
The calculus used by the Copenhagen Consensus also includes such
benefits as avoided deaths and sickness and potential environmental
benefits, including forestalling climate change.

The Copenhagen experts use strips of paper on which are written
different priorities along with cost-benefit ratios, and they are
invited to move them up and down as they debate the academic
evidence. In setting priorities, they also take into account the
feasibility of scaling up interventions and the risk of
corruption.

Of course, when the U.N. is contemplating its choices for the
next set of global development goals, cost-benefit isn't the only
criterion. In South Africa, for instance, HIV is a much bigger
problem than malaria, so different regions will have different
concerns. But ranking the interventions does concentrate the
mind.

Surprising as it may seem, the global-aid industry has rarely
done such cost-benefit analysis. People in this line of work
generally recoil from such rankings as a heartless exercise
implying discrimination against still-worthy global goals. The aid
industry often seems implicitly to take the view that funds are
unlimited and that spending on one priority doesn't crowd out
spending on another. But this is patently not the case: The
problems are far bigger than the available budget and will remain
so even if the world's rich countries ever meet their 35-year-old
goal of spending 0.7% of their GNP on development aid.

In December last year, Mr. Lomborg came to New York to address
the U.N. Open Working Group's ambassadors directly. He handed them
his strips of paper and asked them to put them down in preferred
order. It was an eye-opening exercise in a place where people are
accustomed to saying, in diplomatic earnest, "Everything is
important."

Then, over eight days in June, Mr. Lomborg got a group of 60
leading economists to work through all the OWG's putative
development targets for 2030 (there were more than 200 of them at
the time), making a quick assessment of which were good value for
money. The result, now available online, is a
document that assigns a color code to each target: green
(phenomenal value for money), pale green (good), yellow (fair),
gray (not enough known) and red (poor).

[Here are some of the Copenhagen
Consensus Center group's rankings.]

At the conclusion of this process, the group had 27 "phenomenal"
green values and 23 "poor" red values, with all the rest in
between.

Champions of aid aren't used to having their homework marked in
this stark fashion, and some didn't like it at first. As Ambassador
Elizabeth M. Cousens, the U.S. representative to the U.N. Economic
and Social Council, told Mr. Lomborg, "I really don't like you
putting one of my favorite targets in red." But she added, "I'm
glad you're saying it, because we all need to hear economic
evidence that challenges us."

Having gone through this useful document myself, I found myself
in full sympathy with those forced to choose among them. But at
least this sort of analysis provides some rigor and direction.

What would my own list of five 2030 goals look like, based on
the work of the Copenhagen Consensus group?

 

1. Reduce malnutrition. When children get better food, they
develop their brains, stay in school longer and end up becoming far
more productive members of society. Every dollar spent to alleviate
malnutrition brings $59 of benefits.

 

2. Tackle malaria and tuberculosis. These two diseases
debilitate huge populations in poor countries, but they are largely
preventable and curable. In the most harshly affected countries,
two people often do one person's work because one of them is sick.
Benefit to cost ratio: 35 to 1.

 

3. Boost preprimary education, which costs little and has
lifelong benefits by getting children started on learning. 30 to
1.

 

4. Provide universal access to sexual and reproductive health,
which would save the lives of mothers and infants while enabling
women to be more economically productive. It would also lower
birthrates (when fewer children die, people have fewer children).
Benefits could be as high as 150.

 

5. Expand free trade. This isn't considered sexy in the
development industry, and it may seem remote from humanitarian
issues, but free trade often delivers phenomenal improvements to
the welfare of the poor in surprisingly quick time, as the example
of China has demonstrated in recent years. One of the discoveries
of the Copenhagen Consensus process is that incremental goals such
as expanding free trade are often better than supposedly
"transformational" goals. A successful Doha Round of the World
Trade Organization could deliver annual benefits of $3 trillion for
the developing world by 2020, rising to $100 trillion by the end of
the century.

 

The development goals of least value, according to the
Copenhagen process, include the self-contradictory call for higher
agricultural productivity with less environmental impact. Other bad
investments are less obvious but would actually hurt the poor. For
example, equal access to affordable tertiary education may sound
good in principle, but in many developing countries, it amounts to
a policy of having the mass of poor people pay for the college
education of the rich. Other goals—such as "sustainable
tourism"—are simply too narrow and ill-defined to merit
consideration on a list of urgent priorities.

One much-favored goal in the list generated by the U.N.'s Open
Working Group comes out especially badly: the idea of providing
gender-disaggregated data to help women. Not only do we have much
of the data (and it is very costly to gather more), but how, say
the Copenhagen experts, would you define the gender-disaggregated
value of a cow owned by a family of five?

Those who fear that the rankings might reflect Mr. Lomborg's own
prejudices will be relieved. He convened the economists, to be
sure, but they are the ones who did the color coding.

Mr. Lomborg accepts the basic conclusions of today's climate
science, but he is known to be skeptical about many current
policies to avert climate change. Still, the experts he brought
together conclude that phasing out fossil-fuel subsidies is a
"phenomenal" value. They also find excellent value in programs
meant to develop resilience and adaptive capacity in response to
climate-induced hazards.

But they judge it poor value, for the world's poor, to attempt
either to double the share of renewable energy in the global energy
mix or to hold the increase in global average temperature below a
certain level in accordance with international agreements. This is
because the experts think that allowing emissions to rise initially
while investing in rapid advances in energy technology is a much
better idea than trying to limit emissions now with today's
expensive renewables.

Indeed, one of the world's most pressing health problems, and
the one most conspicuously missing from Mr. Annan's original
development goals in 2000, is the annual death toll of more than
four million people due to indoor air pollution. This enormous,
abiding problem is attributable to the fact that so many of the
world's poor lack access to affordable (that is,
fossil-fuel-generated) electricity and therefore cook over burning
wood or dung.

This most recent exercise by the Copenhagen Consensus was, Mr.
Lomborg admits, "quick and dirty," intended to catch the attention
of the Open Working Group before it wraps up its work for the
summer. But in the coming months, Mr. Lomborg's group will publish
thousands of peer-reviewed pages, describing costs and benefits for
all the most important U.N. targets. With the help of three Nobel
Laureates, the group will produce a definitive report with ranked
priorities and deliver it to the U.N.

Figuring out the best way to help the world's poor isn't like
solving a math problem. There are not right and wrong answers. But
there are better and worse answers, and the only way to assign
those priorities is to set aside our sentimental commitments and do
the hard work of assessing costs and benefits.