"The best thing you can do is make people rich"

For the best return on investment, some prestigious economists say, the world should focus on preventing AIDS, eradicating hunger and increasing free trade.

Published October 21, 2004 1:30PM (EDT)

Climate change, predicted by the U.N. to change the way most people live over the next 100 years, is the least important of the world's immediate problems, says a group of economists, including three Nobel Prize winners, who were asked to prioritize how money should be spent on helping the world's poor.

The team of six American and two other economists, brought together by controversial environmentalist Bjorn Lomborg, said it is not worth spending money on climate change because the effects are expected to be far in the future. They recommended that people become rich first and that money be spent on HIV/AIDS, water and free trade. But they were immediately castigated by international development and environmental groups, who accused them of "understanding nothing about the real world."

Lomborg, a Danish statistician whose bestseller "The Skeptical Environmentalist" created storms of protest when it was published two years ago by throwing doubt on climate change science, is hailed by free marketeers around the world but is reviled by many scientists. Yesterday he told a meeting of European right-wing think tanks how he had brought together what he called the "Real Madrid" team of "galactica" economists.

"A stellar cast came to Copenhagen [Denmark] to reach consensus about how to help the world's poor," he said. "We chose economists because they have long, valuable experience in prioritizing things, and they are unaligned and impartial. We said, 'If we had an extra $50 billion, how should it be spent to do the most good in the world?' We looked at the world's problems and came up with 32 challenges."

The economists then considered the potential costs and benefits of spending money on problems like hunger, climate change, communicable diseases, sanitation, water, money laundering and financial instability. Rejecting spending anything on education, slums, terrorism, arms proliferation, deforestation, lack of energy or corruption, they narrowed the list to 10 areas, which they then divided and ranked into a number of initiatives.

At the top of their wish list by a large margin was spending money on the control of HIV/AIDS. "We found that for $27 billion we could prevent 28 million cases of HIV by 2010," said Lomborg. "It was the best investment that humanity could do. The benefits would be 40 times as high as the costs."

The second best option was to spend the money on food and health, specifically by providing micronutrients for the diets of the 850 million chronically malnourished people, mainly in sub-Saharan African countries, who need iron and vitamin supplements. A $12 billion program could help them significantly, said Lomborg.

Controversially, the eight professors found that the third most cost-effective way to spend the money would be to promote free trade, something most of them had made their names doing. Three of the six Americans on the panel, Robert Fogel, Douglass North and Vernon Smith, are Nobel winners, and five others are odds-on to win similar honors.

Lomborg, who is head of the Danish Environmental Assessment Institute, conceded Wednesday that trade liberalization policies as promoted by the professors would hurt some people. "There are always winners and losers. We found that getting rid of subsidies and trade barriers had very low costs and high benefits. We reckoned that the benefits could be as much as $2.4 billion a year for rich and poor. "But there is no doubt that free trade is not only good, but the winners far outweigh the losers. I would say free trade is a huge boon to making a better world."

There was consensus, too, that providing mosquito nets in malarial areas would benefit millions for relatively little money. The team of economists calculated that $13 billion spent would halve the cost of treating malaria and give a 500 percent return on investment.

Right at the bottom of the economists' list of priorities for humankind was climate change, which Lomborg Wednesday said was a problem of the future. Initiatives like the Kyoto treaty, which is expected to be ratified next month and will force rich countries to cut their greenhouse gas emissions, were all but useless, he said.

"Let's not spend the money on problems we cannot do much about. Let's start with the ones where we can do the most good at the lowest cost now. It's a bad economic proposition to spend money here. Global warming will harm people in 100 years, when there will be far fewer poor people. The best thing you can do is make people rich." In an ideal world, he said, all these problems should be addressed. "But it is not ideal, so we must focus on how to do most good. This is only an economic ranking. There may be other issues like justice and equity. This is not a coup d'état. We're not trying to take away the politicians' rights to choose."

The dream team was immediately attacked by a coalition of 18 leading British development and environmental groups, meeting 100 yards away. "This simplistic and rather banal ranking of these problems should not be taken too seriously," said Stephen Tindale, the director of Greenpeace. "It is an example of intellectual illiteracy. All these problems are linked."

"They have come up with bizarre conclusions," said Andrew Simms, the policy director of the New Economics Foundation. "The simple point is that unless you act to prevent runaway climate change, all the other things which they prioritize -- which are generally no-brainer good things -- will be wrecked by global warming."

Lomborg, however, was unfazed. "The biggest problem is that we all die, yet no one is considering how to solve that. These economists are talking about how much good you can do."

By John Vidal

MORE FROM John Vidal

Related Topics ------------------------------------------