Copenhagen Consensus

Copenhagen Consensus is a project that seeks to establish priorities for advancing global welfare using methodologies based on the theory of welfare economics. It was conceived^[1] and organized by Bjørn Lomborg, the author of The Skeptical Environmentalist and the then director of the Danish government's Environmental Assessment Institute. It is now run by The Copenhagen Consensus Center^[2] under Lomborg's directorship at the Copenhagen Business School. The project considers possible solutions to a wide range of problems, presented by experts in each field. These are evaluated and ranked by a panel of leading economists. The emphasis is on rational prioritization by economic analysis, 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 often far from optimal.

The project has held conferences in 2004, 2008 and 2009. The 2008 report identified supplementing vitamins for undernourished children as the world’s best investment.^[3] The 2009 conference, dealing specifically with climate change, proposed research into marine cloud whitening (ships spraying seawater into clouds to make them reflect more sunlight and thereby reduce temperature) as the top climate change priority, though climate change itself is ranked well below other world problems.

The initial project was co-sponsored by the Danish government and The Economist. A book summarizing the Copenhagen Consensus 2004 conclusions, Global Crises, Global Solutions, edited by Lomborg, was published in October 2004 by Cambridge University Press. A book summarizing the 2008 conclusions is in the process of publication.

Copenhagen Consensus 2004

Process

Eight leading economists met May 24–28, 2004 at a roundtable in Copenhagen. A series of background papers had been prepared in advance to summarize the current knowledge about the welfare economics of 32 proposals ("opportunities") from 10 categories ("challenges"). For each category, one assessment article and two critiques were produced. After a closed-door review of the background papers, each of the participants gave economic priority rankings to 17 of the proposals (the rest were deemed inconclusive).

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

Below is a list of the 10 challenge areas and the author of the paper on each. Within each challenge, 3-4 opportunities (proposals) were analyzed:

Preventing spread of HIV

• Global Warming sometimes also called 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)

Results

The experts agreed to rate seventeen of the thirty-two opportunities within seven of the ten challenges. The rated opportunities were further classified into four 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.

Control malaria

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.^[4]

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.

Global warming

The panel found that all three climate policies have "costs that were likely to exceed the benefits". It further stated "global warming must be addressed, but agreed that approaches based on too abrupt a shift toward lower emissions of carbon are needlessly expensive." ^[5]

In regard to the science of global warming, the paper presented by Cline relied primarily on the framework set by Intergovernmental Panel on Climate Change, and accepted the consensus view on global warming that greenhouse gas emissions from human activities are the primary cause of the global warming. Cline relies on various research studies published in the field of economics and attempted to compare the estimated cost of mitigation policies against the expected reduction in the damage of the global warming.

Cline used a discount rate of 1.5%. (Cline's summary is on the project webpage ^[6]) He justified his choice of discount rate on the ground of "utility-based discounting", that is there is zero bias in terms of preference between the present and the future generation (see time preference). Moreover, Cline extended the time frame of the analysis to three hundred years in the future. Because the expected net damage of the global warming becomes more apparent beyond the present generation(s), this choice had the effect of increasing the present-value cost of the damage of global warming as well as the benefit of abatement policies.

Members of the panel including Thomas Schelling and one of the two perspective paper writers Robert O. Mendelsohn (both opponents of the Kyoto protocol) criticised Cline, mainly on the issue of discount rates. (See "The opponent notes to the paper on Climate Change" ^[6]) Mendelsohn, in particular, characterizing Cline's position, said that "[i]f we use a large discount rate, they will be judged to be small effects" and called it "circular reasoning, not a justification". Cline responded to this by arguing that there is no obvious reason to use a large discount rate just because this is what is usually done in economic analysis. In other words climate change ought to be treated differently than other, more imminent problems. The Economist quoted Mendelsohn as worrying that "climate change was set up to fail".^[7]

Moreover, Mendelsohn argued that Cline's damage estimates were excessive. Citing various recent articles, including some of his own, he stated that "[a] series of studies on the impacts of climate change have systematically shown that the older literature overestimated climate damages by failing to allow for adaptation and for climate benefits."

After the results were published, members of the panel, including Schelling, criticised the way this issue was handled in the Consensus project.^{[citation needed]}

Copenhagen Consensus 2008

Experts

"Nobel Prize" winners marked with (¤)

• Jagdish Bhagwati
• Francois Bourguignon
• Finn E. Kydland (¤)
• Robert Mundell (¤)
• Douglass North (¤)
• Vernon L. Smith (¤)
• Thomas Schelling (¤)
• Nancy Stokey

Results

In the Copenhagen Consensus 2008, the solutions for global problems have been ranked in the following order:^[8]

1. Micronutrient supplements for children (vitamin A and zinc)
2. The Doha development agenda
3. Micronutrient fortification (iron and salt iodization)
4. Expanded immunization coverage for children
5. Biofortification
6. Deworming and other nutrition programs at school
7. Lowering the price of schooling
8. Increase and improve girls’ schooling
9. Community-based nutrition promotion
10. Provide support for women’s reproductive role
11. Heart attack acute management
12. Malaria prevention and treatment
13. Tuberculosis case finding and treatment
14. R&D in low-carbon energy technologies
15. Bio-sand filters for household water treatment
16. Rural water supply
17. Conditional cash transfer
18. Peace-keeping in post-conflict situations
19. HIV combination prevention
20. Total sanitation campaign
21. Improving surgical capacity at district hospital level
22. Microfinance
23. Improved stove intervention to combat Air Pollution
24. Large, multipurpose dam in Africa
25. Inspection and maintenance of diesel vehicles
26. Low sulfur diesel for urban road vehicles
27. Diesel vehicle particulate control technology
28. Tobacco tax
29. R&D and carbon dioxide emissions reduction
30. Carbon dioxide emissions reduction

Unlike the 2004 results, these were not grouped into qualitative bands such as Good, Poor, etc.

As with the 2004 project, Lomborg's ranking scheme placed efforts to cut carbon dioxide emissions last. Gary Yohe, one of the authors of the global warming paper, subsequently accused Lomborg of "deliberate distortion of our conclusions",^[9] adding that "as one of the authors of the Copenhagen Consensus Project's principal climate paper, I can say with certainty that Lomborg is misrepresenting our findings thanks to a highly selective memory". Kåre Fog further pointed out that the future benefits of emissions reduction were discounted at a higher rate than for any of the other 27 proposals,^[10] stating "so there is an obvious reason why the climate issue always is ranked last" in Lomborg's environmental studies.

In a subsequent joint statement settling their differences, Lomborg and Yohe agreed that the "failure" of Lomborg's emissions reduction plan "could be traced to faulty design".^[11]

Climate Change Project

In 2009, the Copenhagen Consensus established a Climate Change Project specifically to examine solutions to climate change. The process was similar to the 2004 and 2008 Copenhagen Consensus, involving papers by specialists considered by an expert panel of economists. The panel ranked 15 solutions, of which the top 5 were:

1. Research into marine cloud whitening (involving ships spraying sea-water into clouds so as to reflect more sunlight and thereby reduce temperatures)
2. Technology-led policy response
3. Research into stratospheric aerosol injection (involving injected ?sulphur dioxide into the upper atmosphere to reduce sunlight)
4. Research into carbon storage
5. Planning for adaptation

The benefits of the number 1 solution are that if the research proved successful this solution could be deployed relatively cheaply and quickly. Potential problems include environmental impacts e.g. from changing rainfall patterns.

Measures to cut carbon and methane emissions, such as carbon taxes, came bottom of the results list, partly because they would take a long time to have much effect on temperatures.

Criticism

The 2004 Copenhagen Consensus attracted various criticisms.

Approach and alleged bias

The 2004 report, especially its conclusion regarding climate change was subsequently criticised from a variety of perspectives. The general approach adopted to set priorities was criticised by Jeffrey Sachs, an American economist and advocate of both the Kyoto protocol ^[12] and increased development aid, who argued that the analytical framework was inappropriate and biased and that the project "failed to mobilize an expert group that could credibly identify and communicate a true consensus of expert knowledge on the range of issues under consideration.".^[13]

Tom Burke, a former director of Friends of the Earth, repudiated the entire approach of the project, arguing that applying cost-benefit analysis in the way the Copenhagen panel did was "junk economics".^[14]

John Quiggin, an Australian economics professor, commented that the project is a mix of "a substantial contribution to our understanding of important issues facing the world" and an "exercises in political propaganda" and argued that the selection of the panel members was slanted towards the conclusions previously supported by Lomborg.^[15] Quiggin observed that 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.

Under the heading "Wrong Question", Sachs further argued that: "The panel that drew up the Copenhagen Consensus was asked to allocate an additional US$50 billion in spending by wealthy countries, distributed over five years, to address the world’s biggest problems. This was a poor basis for decision-making and for informing the public. By choosing such a low sum — a tiny fraction of global income — the project inherently favoured specific low-cost schemes over bolder, larger projects. It is therefore no surprise that the huge and complex challenge of long-term climate change was ranked last, and that scaling up health services in poor countries was ranked lower than interventions against specific diseases, despite warnings in the background papers that such interventions require broader improvements in health services."

From a purely mathematical point, if economic growth is projected far enough into the future, it will always be better to postpone difficult and expensive problems (like climate change) until an unspecified point in the future when we are much richer than today and have more abundant resources available to solve the problem in question. Projecting a paltry 1.5% rate of economic growth one hundred years into the future implies that the global economy will more than fourfold in size and that any large and expensive project should be handled at that time or later. On the other hand, the use of a smaller 1.5% discount rate, rather than a larger discount rate, ironically actually increases the present costs of global warming that occur to future generations, so choosing a larger discount rate would actually make the problem of global warming smaller today, since it is generally understood that the majority of costs of global warming will result in the future, not the present. So it is not entirely clear that Cline was wrong to choose a smaller discount rate of 1.5%. If climate change is posited to have dire economic consequences and negative implications for economic growth long before that point in time, it might have been judged to be a more immediate problem by the Copenhagen Consensus. By not including any negative feedback loops on the world economy from not solving the issue of climate change, the Copenhagen Consensus implicitly states that it does not matter - from an economic point of view - if we solve climate change or not.

In response Lomborg argued that $50 billion was "an optimistic but realistic example of actual spending." "Experience shows that pledges and actual spending are two different things. In 1970 the UN set itself the task of doubling development assistance. Since then the percentage has actually been dropping". "But even if Sachs or others could gather much more than $50 billion over the next 4 years, the Copenhagen Consensus priority list would still show us where it should be invested first." ^[16]

One of the Copenhagen Consensus panel experts later distanced himself from the way in which the Consensus results have been interpreted in the wider debate. Thomas Schelling now thinks that it was misleading to put climate change at the bottom of the priority list. The Consensus panel members were presented with a dramatic proposal for handling climate change. If given the opportunity, Schelling would have put a more modest proposal higher on the list. The Yale economist Robert O. Mendelsohn was the official critic of the proposal for climate change during the Consensus. He thought the proposal was way out of the mainstream and could only be rejected. Mendelsohn worries that climate change was set up to fail. ^[17]

Michael Grubb, an economist and lead author for several IPCC reports, commented on the Copenhagen Consensus, writing:^[18]

To try and define climate policy as a trade-off against foreign aid is thus a forced choice that bears no relationship to reality. No government is proposing that the marginal costs associated with, for example, an emissions trading system, should be deducted from its foreign aid budget. This way of posing the question is both morally inappropriate and irrelevant to the determination of real climate mitigation policy.

Panel membership

Quiggin argued that the members of the 2004 panel, selected by Lomborg, were, "generally towards the right and, to the extent that they had stated views, to be opponents of Kyoto.".^[15] Sachs also noted that the panel members had not previously been much involved in issues of development economics, and were unlikely to reach useful conclusions in the time available to them.^[13] Commenting on the 2004 Copenhagen Consensus, climatologist and IPCC author Stephen Schneider criticised Lomborg for only inviting economists to participate:^[19]

In order to achieve a true consensus, I think Lomborg would've had to invite ecologists, social scientists concerned with justice and how climate change impacts and policies are often inequitably distributed, philosophers who could challenge the economic paradigm of "one dollar, one vote" implicit in cost-benefit analyses promoted by economists, and climate scientists who could easily show that Lomborg's claim that climate change will have only minimal effects is not sound science.

Lomborg countered criticism of the panel membership by stating that "Sachs disparaged the Consensus ‘dream team’ because it only consisted of economists. But that was the very point of the project. Economists have expertise in economic prioritization. It is they and not climatologists or malaria experts who can prioritize between battling global warming or communicable disease," ^[16]

See also

• UN Economic and Social Council
• UN Human Development Index
• Measuring well-being
• Canada Well-Being Measurement Bill
• Physical quality-of-life index
• Environmental Economics

References

1. ^ Copenhagen Consensus 2004 – addresses 10 major challenges in the world. - The Basic Idea
2. ^ http://www.copenhagenconsensus.com Copenhagen Consensus Center - CCC Home Page
3. ^ Copenhagen Consensus 2008 - The world’s best investment: Vitamins for undernourished children
4. ^ Search - International Herald Tribune
5. ^ http://www.copenhagenconsensus.com/Admin/Public/DWSDownload.aspx?File=Files%2fFiler%2fCC%2fPress%2fUK%2fcopenhagen_consensus_result_FINAL.pdf
6. ^ ^{a b} Copenhagen Consensus 2004 – addresses 10 major challenges in the world. - Climate Change
7. ^ "Hotting up". The Economist. 2005-02-04. http://www.economist.com/agenda/displayStory.cfm?story_id=3630425. 
8. ^ Copenhagen Consensus 2008
9. ^ Yohe, Gary (2008-08-22). "Climate change is real, compelling and urgent". The Guardian (London). http://www.guardian.co.uk/commentisfree/2008/aug/22/climatechange.carbonemissions. Retrieved 2010-04-30. 
10. ^ http://www.lomborg-errors.dk/CopCons2008.htm
11. ^ Lomborg, Björn (2008-09-01). "It's not about us". The Guardian (London). http://www.guardian.co.uk/commentisfree/2008/sep/01/climatechange.scienceofclimatechange1. Retrieved 2010-04-30. 
12. ^ Project Syndicate
13. ^ ^{a b} Citation Results : Nature
14. ^ Burke, Tom (2004-10-23). "This is neither scepticism nor science - just nonsense". The Guardian (London). http://www.guardian.co.uk/comment/story/0,3604,1334209,00.html. Retrieved 2010-04-30. 
15. ^ ^{a b} Copenhagen review at John Quiggin
16. ^ ^{a b} Copenhagen Consensus 2004 – addresses 10 major challenges in the world. - Press releases
17. ^ "Hotting up". The Economist. 2005-02-03. http://www.economist.com/science/displaystory.cfm?story_id=E1_PGNPNNV. 
18. ^ Grubb, M. (9 March 2005). "House of Lords Select Committee on Economic Affairs Minutes of Evidence. Memorandum by Professor Michael Grubb, Cambridge University, Imperial College, and the Carbon Trust.". UK Parliament website. http://www.publications.parliament.uk/pa/ld200506/ldselect/ldeconaf/12/5031503.htm#n3. Retrieved 2009-02-07. 
19. ^ Schneider, S. (no date). "Climate Science: Contrarians.". Stephen Schneider's website. http://stephenschneider.stanford.edu/Climate/Climate_Science/CliSciFrameset.html. Retrieved 2009-02-07. 

Further reading

• Lomborg, Bjørn (ed.), How to Spend $50 Billion to Make the World a Better Place, Cambridge University Press, 2006. ISBN 978-0521-68571-9
• Lomborg, Bjørn (ed.), Solutions for the World's Biggest Problems - Costs and Benefits, Cambridge University Press, 2007. ISBN 978-0521-71597-3
• Lomborg, Bjørn (ed.), Global Crises, Global Solutions, Cambridge University Press, 2009. ISBN 0-521-74122-X
• Sachs, Jeffrey D. (12 August 2004). Seeking a global solution. Nature 430:725–726
• Lind, Robert C. (1982) (ed.): Discounting for time and risk in energy policy. 468 pp. Published by Resources for the Future. inc., Washington D.C.

External links

• The Copenhagen Consensus website
• The Copenhagen Consensus Climate Change Project ('Fix the climate') website
• The Economist's home page for the project
• SourceWatch entry on Copenhagen Consensus
• Global Crises, Global Solutions Transcript of Lomborg's talk at the Carnegie Council.
• Can Development Priorities Be Prioritized?. A presentation by Bjorn Lomborg explaining the Copenhagen Consensus process to World Bank staff on October 12, 2004. Discussants include Robert Watson, Chief Scientist and Senior Advisor at the World Bank’s Environmentally and Socially Sustainable Development unit, and Shahid Yusuf, Economic Advisor, DEC Research Group.
• Criticism: Tom Burke: This is neither scepticism nor science – just nonsense: Why is Bjorn Lomborg's work on climate change taken seriously? The Guardian, 23 October 2004: ("Cost-benefit analysis can help you choose different routes to a goal you have agreed, but it cannot help you choose goals. For that we have politics.")
• What is wrong about Copenhagen Consensus? on the Lomborg-errors web site.