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Copenhagen review

January 21st, 2005

Today’s Fin ReView section (subscription only) runs my review of Bjorn Lomborg’s new book. Regular readers won’t be surprised to find a lot of criticisms of the Copenhagen Consensus project that produced the book. But I found a fair bit to praise as well. The review, pretty lengthy, is over the fold. Comments appreciated.

This version: Dec 29 2004

On my bookshelves, I have many works that make a substantial contribution to our understanding of important issues facing the world, and quite a few exercises in political propaganda. Much rarer are books that fall into both categories. The Copenhagen Consensus, a joint initative of The Economist and Bjorn Lomborg’s Environmental Assessment Institute, has produced just such a book.

Lomborg first came to worldwide attention with The Sceptical Environmentalist, a book that claimed to refute a ‘litany’ of environmental woes. In most cases, Lomborg argued that the severity of problems had been overstated or that progress in mitigation had been ignored.

When it came to global warming, however, neither of these claims seemed plausible, and Lomborg adopted a different tack. Rather than disputing the scientific evidence of global warming, he argued that the cost of addressing the problem through the Kyoto protocol would be better spent dealing with more urgent issues, such as the provision of clean drinking water in the Third World.

There are a variety of problems with this argument, one of the most notable being that the most cost-effective approach to mitigating global warming would be a global emissions trading scheme that would require rich countries to buy emissions rights from poor countries, providing funds that could be used for initiatives of the kind Lomborg proposes. Rather contradictorily, Lomborg went on to argue that, precisely because of the large transfers from rich to poor countries they would require, emissions trading schemes would not be politically feasible.

His criticism of the environment lobby led the right-wing Danish government of Anders Rasmussen to establish the Environmental Assessment Institute and instal Lomborg as its director. Ironically, the same government made repeated cuts in Denmark’s foreign aid program.

It was against this background that, in 2003, Lomborg announced the Copenhagen Consensus project. The idea was that a group of eminent economists would look at priorities for assisting poor countries and try to rank them in terms of costs and benefits. The planned procedure was that an advocate would present a case for each of a number of possible global projects. Two ‘opponents’ would then provide a critique. The panel of eminent economists would then distil the arguments and rank the possible projects.

There was an immediate reaction to this announcement. Three of the seven members of the board of Lomborg’s insitute resigned in protest at a project which seemed unrelated to the purposes for which the institute had been established.

At the same time critics (including this reviewer) voiced suspicions of a setup. Criticism began with the composition of the panel. With four Nobel prize winners, it was certainly an eminent body. But the members weren’t notable for a focus on the problems of Third World economic development. They included experimentalist Vernon Smith, econometrician James Heckman (who later withdrew), and economic historians Robert Fogel and Douglass North.

Fogel has done important research on population and nutrition, but the other Nobel prizewinners, and most other members of the panel, were not experts in the main fields under discussion. As Jeffrey Sachs (who headed of the Commission on Macroeconomics and Health) observed, the timeline was far too short for the panel to gain requisite expertise, lasting only a few months in total; the background papers circulated for a few weeks, and in the final discussions, the panel had 5 days to review 32 proposals.

The point can be sharpened by looking at some of the Nobel prizewinners who would have seemed like obvious choices for such a panel, including Kenneth Arrow, Joseph Stiglitz, Robert Solow and Amartya Sen, all of whom have made extensive contributions to the debate on economic growth and development.

Comparing the two lists, the omissions are, broadly speaking, towards the left of the economics profession and those who have commented on climate change have supported policy initiatives such as Kyoto. Conversely, the members of the Copenhagen panel were generally towards the right and, to the extent that they had stated views, to be opponents of Kyoto. Indeed, Lomborg’s argument that spending to mitigate climate change would be better directed to aid projects was first put forward by Thomas Schelling, one of the Copenhagen panellists.

The same lack of balance was evident in the selection of ‘opponents’. For Robert Cline’s paper on climate change, Lomborg picked vigorous opponents of Kyoto, Robert Mendelsohn and Alan Manne, and the result was an acrimonious debate. But for most of the other issues under consideration, the differences between the parties to the discussion were matters of emphasis and nuance, to the extent that the ‘opponents‘ were eventually redescribed as providing ‘alternative perspectives’.

It is clear from reading the papers and the discussion reports that the panellists approached the task in a serious and fairminded way. But, inevitably, the narrowness of the selection meant that many important issues were prejudged or not discussed. Undoubtedly the likemindedness of the panel members assisted in the stated objective of achieving consensus. It is not clear, however, that a consensus confined to a narrow ideological subset of the economics profession is going to be of much help in achieving broad agreement on solutions to global problems.

The real problems, though, were not with the choice of panel members but with the assessment procedure, which was clearly designed to fit Lomborg’s original example of a choice between spending on climate change and on clean drinking water.

The approach adopted was to assume a budget of $50 billion, and then seek to allocate it to those projects which would yield the largest benefit for a given cost. As Jeffrey Sachs points out, this approach is fine for evaluating discrete, project-based interventions, such as improvements in drinking water quality. But with a small budget and an insistence on easily quantified costs and benefits, it is naturally biased against bolder initiatives such as broad-based improvements in health and education.

The problems are even more severe in relation to issues like civil conflict. Stability and peace aren’t alternatives to development programs, they are preconditions. Trying to rank such disparate issues makes no sense. In this and some other instances, the Copenhagen panel wisely chose not to make a ranking.

The selection of projects is another fundamental problem. Even if, say, improvements in basic health services rank poorly when compared to action against AIDS, they might rank well by comparison with military spending, or advertising, or cosmetic surgery. Lomborg dismisses these from consideration as being ‘not motivated by doing good outside the country concerned’.

But much the same point applies to proposals to mitigate climate change. Adverse impacts species extinction and loss of biodiversity are mostly of concern to people developed countries, and other impacts such as loss of coastal land affect rich and poor countries alike. Similarly the costs of mitigation will be spread across the economy, not funded from a specific government budget item that could be reallocated to foreign aid. Treating climate change as a foreign aid project fits Lomborg’s own framing of the issues, but it is not an accurate representation of the actual problem.

Not surprisingly, the Copenhagen panel concluded that implementing the Kyoto protocol was not a good a use of scarce funds. All of the doubts raised about the Copenhagen Consensus project have been confirmed by the use Lomborg has made of the results. He has said almost nothing about the positive merits of the options favored by the panel. When it emerged, in December 2004, that none of the money promised by the Bush Administration for the fight against AIDS had actually been spent[1], he was silent.

By contrast, Lomborg has repeatedly stressed the panel’s negative findings about climate change. A typical example is an article in The Australian, reprinted from The Telegraph. More than half the article was devoted to the importance of not allocating significant resources to fighting climate change. None of the priority issues identified by the panel got more than a few sentences.

In summary, the Copenhagen Consensus project was created as a political stunt. It was designed, in every detail, to produce a predetermined outcome. Having got the desired outcome, the organiser has shown little or no interest in pursuing any of the other issues raised by the project.

With all of these criticisms, it would be easy to conclude that the entire exercise was a waste of time. In fact, however, the project has made a valuable contribution. If we disregard the ranking exercise, and set the debate over Kyoto and climate change to one side, what remains is a set of well-informed papers, and thoughtful comments, dealing with some of the most serious problems facing the world, and assessing some possible responses.

The participants were nearly all economists, and this is reflected in fairly tight adherence to a standardised cost-benefit framework. The lack of alternative perspectives from natural scientists and public health specialists is a major weakness of the Copenhagen Consensus considered as a policy initiative. On the other hand, it gives the resulting publication a degree of consistency that would otherwise be hard to achieve in a single volume.

The chapters on specific initiatives to prevent disease fit most neatly with the constraints imposed by the ranking procedures. Anne Mills and Sam Shilcutt give an excellent overview of the problems of communicable diseases, focusing on the big killers, HIV/AIDS and childhood diseases, and on malaria, which not only kills millions each year but is a huge source of chronic morbidity.

In comparing fatalities with chronic illness, the standard economists approach is to measure impacts in terms of disability adjusted life years (DALYs), which may then be converted into dollar terms in various ways. However a monetary valuation is done, the invariable answer is that a life in a poor country is worth less than a life in a rich one. Rich country governments, and the voters who elect them, implicitly make this judgement every time they point tax cuts or domestic health services ahead of foreign aid. Nevertheless, it is jarring to see the same judgement made explicitly. Mills and Shilcutt address some of the difficulties, and they are taken up further in the discussion by David Evans.

The chapters on water and sanitation and on malnutrition and hunger follow a similar pattern. They provide an excellent overview of the limited progress that has been made towards providing people with their basic needs for adequate food and clean water (as an aside, the tone is considerably more sombre than the upbeat treatment of the same issues in The Sceptical Environmentalist). As discussant Peter Swedberg observes, the main cause of malnutrition and hunger is poverty. Only reductions in global poverty are likely to produce large-scale reductions in hunger, though some specific micronutrient deficiencies may be addressed . The same is largely true in relation to water supply, though again there is some scope for local initiatives.

The discussion of education is rather disappointing. In both developed and developing countries there has been vigorous debate about the impacts of increased inputs to education, and particularly reductions in class sizes, on educational outcomes. Experimental and macroeconomic studies have generally produced favorable results, while microeconometric analyses using test scores as a proxy for performance have shown little or no impact. But the debate is not joined here, since both the challenge paper author, Lant Pritchett, and the discussants, are supporters of the microeconometric approach, which suggests that there is little that can be done in this field, beyond a nod to such free-market nostrums as charter schools and vouchers. Even these limited recommendations look fragile since more recent US research, using the test score approach, has found that charter schools don’t do much better than ordinary public schools and may even do worse. If progress is going to be made on this topic, it will probably be necessary to look beyond test scores as a measure of achievement.

The remaining chapters are on topics that don’t fit well into the project-based approach of the Copenhagen Consensus, but are essential to an understanding of the problems facing the world, particularly with respect to relationships between more and less developed countries. These issues include trade, migration, international financial flows, governance and corruption and civil conflict. They cannot be addressed simply by allocating a line item in a budget, and they raise important questions of sovereignty.

Understanding these issues, and the interactions between them, is crucial to any assessment of the way forward in resolving the global problems associated with poverty and deprivation. The contributors, notably including Kym Anderson, Barry Eichengreen and Susan Rose-Ackerman, make an importatn contribution to our understanding of these issues.

In summary, this is a book that belongs on the shelf of anyone concerned with the crises facing the world. But, because of the dubious process by which it was generated and the dishonest uses to which that process has been put, it ought to be sold with a warning label, something like ‘It Ain’t Necessarily So’.

fn1. There is an error here. As reported here it is funds promised for the Millennium Declaration Account that have not been spent. Money for AIDS was promised separately and some money has been spent, though there is a lot of smoke and mirrors

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  1. January 21st, 2005 at 22:13 | #1

    Even though you’ve filed this piece under “Environment” (as well as “books and culture”), it seems to me to have a lot more to do with poverty, inequality, foreign aid, etc. This post-tsunami era may be the ideal time to try to build a consensus that (a) much more aid is a good and essential thing and (b) aid alone will never be sufficient to remove poverty and more effort is needed at do whatever else is needed.
    For that reason, I’d be interested in more detail or discussion on the areas to do with “trade, migration, and international financial flows” (without suggesting I’m too lazy to read the book myself). I think we could do with much more consideration of the very different approaches that are taken to the movement of people, capital, goods and services across national boundaries and regions. These approaches often differ wildly, with contradictory rationales across and within ideological boundaries. I can’t help thinking that addressing this more effectively and fairly (and considering how future notions of sovereignty will fit in all that) would go a long way towards eliminating poverty.
    In highlighting those areas, I am assuming that the need for democratic freedoms and an absence of corruption and civil conflicts are a given (whilst acknowledging that achieving these things is easier said than done too)

  2. January 22nd, 2005 at 00:41 | #2

    I enjoyed reading the review today in the Fin, John – along with the complementary article about environmental sustainability NY style. It seemed to me that you demolished the stunt like nature of the project very well. I agree with Andrew that it naturally leads to some broader reflections on aid and development. I’d love to read what you have to say on those questions – I think you mentioned a while back you were planning a post.

  3. January 22nd, 2005 at 06:22 | #3

    “Comparing the two lists, the omissions are, broadly speaking, towards the left of the economics profession”

    For this observation to have any logical implication you also need to know whehter the economics professions centre is towards the left or right. Is it? Or does it just think it is?

  4. John Quiggin
    January 22nd, 2005 at 11:29 | #4

    It’s all relative, but in most countries, and on economic issues, the centre of the economics profession is to the right of the centre of public opinion.

    At least this was true under the old rules, where right-wingers could be counted on to oppose big government and budget deficits. With Bush, the labels get a bit confused.

  5. Frankis
    January 22nd, 2005 at 14:44 | #5

    That’s such a quality review that I think I’ll settle for it, thanks, instead of reading Lomborg’s latest. It’s also much fairer to Lomborg than he is to the people whose research he abuses. Your comment “In summary, the Copenhagen Consensus project was created as a political stunt. It was designed, in every detail, to produce a predetermined outcome.” sums up the Lomborg phenomenon perfectly well.
    Happy New Year!

  6. January 23rd, 2005 at 09:42 | #6

    “the centre of the economics profession is to the right of the centre of public opinion.”

    Well the statistics have shown that this is not the case in the US there’s a 3:1 ratio of Dems to Reps. I’m not sure whether any surveys have been done elsewhere.

    Still as you say its increasingly hard to define peoples politics by their economics – and this predates Bush since Clinton and Hawke started the mix and matching approarch to political economy.

  7. Johng
    January 23rd, 2005 at 15:57 | #7

    1. You seem determined to read Lomborg in a particular light. The telegraph article had 4 paragraphs on the importance of allocating resources to to HIV/Aids, hunger, free trade, malaria etc, yet you say ‘None of the priority issues identified by the panel got more than a few sentences’. Your statement is strictly correct, because no one particular priority issue got more than a few sentences, but it misleads.

    2. Also you say that Lomborg has repeatedly stressed the panel’s negative findings about climate change. What I can find on the net doesn’t confirm this. In the introduction to the book (which is the only bit he wrote) he doesn’t do that. What is your evidence? He does keep saying that for half the annual cost of Kyoto ($150 billion) we could give all third world inhabitants access to the basics like health, education and sanitation. But I don’t feel there is too much stress on climate change in what he says eg see the Counterpoint interview on the ABC http://www.abc.net.au/rn/talks/counterpoint/stories/s1208840.htm

    3. By the way Arrow was asked to join the panel. Lomborg says.
    “When I asked Stanford economist Kenneth Arrow to join, he said he thought we’d be too preoccupied with things that are big problems right now and miss the real issues. He may be right”. http://www.wired.com/wired/archive/12.06/lomborg.html

    4. I don’t agree with Lomborg that we should do nothing about greenhouse. But I do agree that the projects the Copenhagen group gave a tick to are higher priority. And it is important for all of us to attempt prioritisation. It affects how we vote to start with. My value judgement is that for the Australian Government budget, extra development aid is more cost effective than extra green house abatement measures which is more cost effective than extra government support of the arts. So I will support parties which have that sort of prioritisation. That doesn’t mean I disagree with more money for greenhouse (or for the arts for that matter), but I do know which areas I think should get greater shares of increases in revenue.

  8. John Quiggin
    January 23rd, 2005 at 17:27 | #8

    If Lomborg doesn’t intend discussion of the Copenhagen exercise to focus on Kyoto, he’s doing a lousy job getting his message across. Here’s a BBC report quoting him on this score and there are plenty of others.

    On the question of balance, if you are talking about ten issues, and allocate half the article to one of them, treating the others only in relation to that issue, as Lomborg does, I’d say the priorities are pretty clear.

  9. Johng
    January 23rd, 2005 at 19:58 | #9

    John
    The BBC report you quote is on a UN conference on climate change. Of course a report of that conference will focus on what the Copenhagen Consensus & Lomborg says on climate change mitigation. It doesn’t support your argument that Lomborg has little or no interest in pursuing the non-climate change issues.
    You are making strong accusations against Lomborg. Effectively you are saying he fixed a process to get the outcome he wanted. Such strong accusations against a fellow academic should have strong evidence backing them.
    I think we can deduce that Lomborg was pleased by the views of the Copenhagen panel on climate change. And it would not be surprising if he acted in certain ways to encourage a low ranking for climate change. But I do not think the evidence is there to say as John did that
    ‘In summary, the Copenhagen Consensus project was created as a political stunt. It was designed, in every detail, to produce a predetermined outcome. Having got the desired outcome, the organiser has shown little or no interest in pursuing any of the other issues raised by the project’.

    I am in a dilemma here, because I suspect John is in the main correct, but I don’t see there is sufficient evidence to justify the public utterance of such a dogmatic statement.

  10. John Quiggin
    January 23rd, 2005 at 20:30 | #10

    My views of Lomborg have been formed by reading his work over some time, not just the recent exercise. I stand by those views.

    Why don’t you do a more detailed search and see how many instances you can find of Lomborg advocating more funding for any of his priorities, without any mention of cuts in environmental or similar spending?

    Or, how about looking at instances where he mentions relative rankings and chooses a non-environmental example as the low priority. As I mention, the Copenhagen exercise was relatively pessimistic about education spending compared to health. This is an important issue, but I haven’t seen Lomborg discuss it. Maybe you could find some instances where he does so.

  11. January 24th, 2005 at 01:17 | #11

    Lomborg produced a ranking of priorities, with Climate Change at (I cant remember) 10th place. If acutal policy is to place Climate Change in 1st place, then Lomborg is being consistent if he attacks Climate Change; with a ranking system you can move up a item that you value by pushing down an item that is over ranked. So by arguing for de prioritising climate change, lomborg, within the framework he created is implicitly advocating health etc.

  12. Kristjan Wager
    January 24th, 2005 at 04:43 | #12

    Such strong accusations against a fellow academic should have strong evidence backing them.

    Lomborg lead the Copenhagen Concensus in his role as the leader of the Environmental Assessment Institute, not as an academic.
    During his leadership of the institute, there were a number of problems with reports written by it – often they were based on flawed data, even when the proper data was readily available. Most know was the case of assessing the inpact of allowing the use of cans for beer and soft drinks in Denmark, where the institute had assumed that the cans could be used for fuel for the power plants, even though it was clearly stated in the material they based their assesment on that this was not a possibility.

  13. John Quiggin
    January 24th, 2005 at 05:12 | #13

    “If acutal policy is to place Climate Change in 1st place, ”

    As I pointed out already, this isn’t true. Neither climate change nor foreign aid accounts for more than a tiny fraction of GDP (1 per cent) or of public expenditure and there’s no sense in which they come from the same subset of the policy basket. The main measure proposed against climate change, tradeable emissions, would actually benefit poor countries.

  14. January 24th, 2005 at 07:47 | #14

    All the factors on the list currently account for a small fraction of GDP but its their rankings that matter; the question simply is whether Climate change is over ranked (I wrote “if” as in “if its 1st Lomborg will definitely disagree if 9th maybe not).

    Is climate change comparable to say aid –possibly if fuel tax rises, subsidies for alternative energies and so forth can be wholly or partially attributed to Kyoto. But what seems certain is that it will impose a large cost if imposed in the future.

    “The main measure proposed against climate change, tradable emissions, would actually benefit poor countries.�

    Doesn’t this imply that they do come from the same policy basket? Anyway the question then is, is it more efficient to deliver aid by making no strings attached tradable emissions payments (presumably these would go to land and factory owners) or to dedicate the same sum of money towards building fresh water supplies?

  15. Paul
    January 24th, 2005 at 16:03 | #15

    Even leaving aside the error John, this is an odd and frankly pretty Daily Telegraphesque attack:

    “When it emerged, in December 2004, that none of the money promised by the Bush Administration for the fight against AIDS had actually been spent, he was silent.”

    Am I misunderstanding your point, or has Lomberg made some kind of generalised commitment to monitor the world’s delivery of its foreign aid promises?

    The comment on the Danish government decreasing it’s aid budget at the same time as Lomberg happened to be employed by the Danish government also strikes me as both a cheap shot and a pretty casual glosing-over of Denmark’s concerns regarding aid to corrupt regimes. Did you denounce it at the time?

  16. Geoff Robinson
    January 24th, 2005 at 16:15 | #16

    Are you typecasting Fogel and North as being on the ‘right’? That’s not my reading of their work, nor does it match their political histories (see their biographies at http://nobelprize.org/economics/laureates)

  17. January 24th, 2005 at 19:53 | #17

    On the topic of Third World development and the role of foreign aid, what is the profile of the recently deceased Peter Bauer these days? Are his free market views still marginal or have they become mainstream?

  18. John Quiggin
    January 24th, 2005 at 22:32 | #18

    “Am I misunderstanding your point, or has Lomberg made some kind of generalised commitment to monitor the world’s delivery of its foreign aid promises?”

    Lomborg has presented himself as someone vitally concerned with foreign aid issues. Yet, as far as I can determine, he never mentions foreign aid except as an alternative to environmental spending of various kinds.

    Geoff, insofar as these labels have any meaning, I think North l can be classed as being on the right. For example, he is a senior fellow at the Hoover Institution. Fogel is generally classed as a member of the Chicago school but I think the right-wing tag is an oversimplification in his case.

  19. jq
    January 24th, 2005 at 22:43 | #19

    It’s fascinating that so much discussion is devoted to the motivation behind Lomborg’s argument as opposed to debating the argument itself. I’m still searching for a refutation of Blomberg’s argument that implementing the Kyoto protocol would deliver a negative return.

  20. James Farrell
    January 24th, 2005 at 23:31 | #20

    My warmest congratations to you and all the other Safari users. And I suppose it’s only on the excrable IE that the Ned Kelly picture still looks like a postage stamp.

  21. James Farrell
    January 24th, 2005 at 23:42 | #21

    That, of course, was meant to be a rejoinder to message 32 on the ‘New Layout’ thread. But halfway through I hit some secret speed key that returned me to the home page, and we all know what that means, don’t we? In my haste to rewrite the comment, I selected the wrong thread. But never mind, it’s only the third time I’ve had to rewrite a comment today. It’ll take at least one more time before I become Herbert Lom in the Pink Panther movies.

  22. James Farrell
    January 24th, 2005 at 23:43 | #22

    I mean message 35.

  23. John Quiggin
    January 25th, 2005 at 05:31 | #23

    James, I’ve replied to you in the layout thread.

  24. John Quiggin
    January 25th, 2005 at 05:34 | #24

    jq, I’ve pointed out many times that Lomborg uses unreasonably high estimates of the cost of Kyoto, based on the assumption that there will be no emissions trading. And his estimates of the costs of global warming, taken from Nordhaus, place almost no value on species extinction. However, I’ll do a longer post pulling all this together when I get time..

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