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Global Crises, Global SolutionsSecond edition

The fi rst edition of Global Crises, Global Solutions was nominated as one of the books of the year by The Economist in 2004. This new edition is entirely revised and updated but retains the format that made the fi rst edition a bestseller and one of the most widely discussed policy books of recent times.

If we had more money to spend to help the worlds poorest people, where could we spend it most eff ectively? Using a common framework of cost-benefi t analysis, a team of leading economists, including fi ve Nobel Prize winners, assess the attractiveness of a wide range of policy options for combating ten of the worlds biggest problems: air pollution, confl icts, diseases, education, global warming, malnutrition and hunger, sanitation and clean water, subsidies and trade barriers, terrorism, women and development. The arguments are clearly presented and fully referenced so that readers are encouraged to make their own evaluation of the menu of policy options on off er. Whether you agree or disagree with the economists conclusions, there is a wealth of data and ideas to discuss and debate!

BJRN LOMBORG is Director of the Copenhagen Consensus Center and Adjunct Professor in the Department of Management, Politics and Philosophy at Copenhagen Business School. He is the author of the controversial bestseller, The Skeptical Environmentalist (Cambridge, 2001), and was named as one of the most globally infl uential people by Time magazine in 2004.

Global Crises, Global Solutionssecond edition

Edited by

BJRN LOMBORG

cambridge university pressCambridge, New York, Melbourne, Madrid, Cape Town, Singapore, So Paulo, Delhi

Cambridge University PressThe Edinburgh Building, Cambridge CB2 8RU, UK

Published in the United States of America by Cambridge University Press, New York

www.cambridge.orgInformation on this title: www.cambridge.org/9780521741224 Cambridge University Press 2009

This publication is in copyright. Subject to statutory exceptionand to the provisions of relevant collective licensing agreements,no reproduction of any part may take place without the writtenpermission of Cambridge University Press.

First published 2009Reprinted 2010

Printed in the United Kingdom at the University Press, Cambridge

A catalogue record for this publication is available from the British Library

ISBN 978-0-521-57121-8 hardbackISBN 978-0-52174122-4 paperback

Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party Internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. Information regarding prices, travel timetables and other factual information given in this work are correct at the time of fi rst printing but Cambridge University Press does not guarantee the accuracy of such information thereafter.

Delhi, Dubai, Tokyo

v

List of fi gures viiList of tables xList of contributors xvAcknowledgements xxivList of abbreviations and acronyms xxv

Introduction 1Bjrn Lomborg

P A R T I T H E C H A L L E N G E S

1 Air pollution 7 Bjrn Larsen, with Guy Hutton and Neha

Khanna alternative perspectives 1.1 Jitendra Shah 50

2 The security challenge in confl ict-prone countries 58

Paul Collier, Lisa Chauvet, and Hvard Hegre alternative perspectives 2.1 Ibrahim A. Elbadawi 104 2.2 Andrew Mack 115

3 Disease control 126 Dean T. Jamison, Prabhat Jha, and David E.

Bloom alternative perspectives 3.1 David Canning 164 3.2 Ramanan Laxminarayan 172

4 The benefi ts and costs of alternative strategies to improve educational outcomes 180

Peter F. Orazem, Paul Glewwe, and Harry Patrinos

alternative perspectives 4.1 Victor Lavy 215 4.2 Lant Pritchett 227

Contents

vi Contents

5 Climate change 236 Gary W. Yohe, Richard S.J. Tol, Richard G. Richels, and

Geoff rey J. Blanford alternative perspectives 5.1 Chris Green 281 5.2 Anil Markandya 298

6 Hunger and malnutrition 305 Sue Horton, Harold Alderman, and Juan A. Rivera alternative perspectives 6.1 Reynaldo Martorell 334 6.2 Anil B. Deolalikar 347

7 Water and sanitation 355 Dale Whittington, W. Michael Hanemann, Claudia Sadoff ,

and Marc Jeuland alternative perspectives 7.1 Jennifer Davis 430 7.2 Frank R. Rijsberman and Alix Peterson Zwane 440

8 The challenge of reducing international trade and migration barriers 451

Kym Anderson and L. Alan Winters alternative perspectives 8.1 Alan V. Deardorff 504 8.2 Anthony J. Venables 511

9 Transnational terrorism 516 Todd Sandler, Daniel G. Arce and Walter Enders alternative perspectives 9.1 S. Brock Blomberg 563 9.2 Michael D. Intriligator 577

10 Women and development 585 Elizabeth M. King, Stephan Klasen, and Maria Porter alternative perspectives 10.1 Lawrence Haddad 638 10.2 Aysit Tansel 642

P A R T I I R A N K I N G T H E O P P O R T U N I T I E S

Expert panel ranking 657 Jagdish Bhagwati, Francois Bourgignon, Finn E. Kydland,

Robert Mundell, Douglass C. North, Thomas C. Schelling, Vernon L. Smith and Nancy L. Stokey

Conclusion 680 Bjrn Lomborg

vii

1.1 Annual deaths from household SFU air pollution, 2002 9

1.2 Household SFU prevalence rates and GNI per capita 10

1.3 Deaths from SFU in relation to child mortality rates and life expectancy 11

1.4 Demographic projections, 200555 121.5 Population weighted exposure to

indoor particulates (PM 10) 141.6 Stove effi ciency and capital costs 161.7 Household use of fuel wood, by

childrens underweight status 231.8 B/C ratio of fuel substitution,

relative to ignoring nutritional status 241.9 Estimated deaths from urban PM,

2002 261.1.1 PM 10 levels in selected cities in

Asia, 2005 and 2006 511.1.2 Ranking of measures to reduce

traffi c emissions in Mexico City 552.1 Armed confl icts by intensity,

19462006 612.2 Armed confl icts, by region,

19462006 622.3 Number of confl icts and of new

confl icts, 19502006 622.2.1 Average number of coups per year

in SSA, 19462006 1243.1 Age distribution of deaths of

children under fi ve in low- and middle-income countries, 2001 132

3.2 Changes in GDP and full income per capita in Kenya, 19602000 135

3.3 Intervention costs and eff ects: a more general view 137

3.4 Under-fi ve deaths from HIV/AIDs, malaria, and other causes, 1990 and 2001, SSA 140

3.5 Increase in tobacco-related deaths as populations age 149

3.2.1 PHC infrastructure 1733.2.2 PHC staffi ng 1734.1 Returns to schooling, by high

and low values of the Heritage Economic Freedom Index, 19902004 183

4.2 Distribution of self-reported literacy by grade attainment for youth aged 1524, various countries 184

4.3A Proportion of male and female urban population completing grades 1, 5, and 9 in seventy-two developing countries 188

4.3B Proportion of male and female rural population completing grades 1, 5, and 9 in seventy-two developing countries 189

4.4A Proportion of male urban and rural population completing grades 1, 5, and 9 in seventy-two developing countries 190

4.4B Proportion of female urban and rural population completing grades 1, 5, and 9 in seventy-two developing countries 190

5.1 Identifying the signal of anthropogenic warming on continental scales 238

5.2A Emissions distributions over time across the four SRES storylines of economic development 242

5.2B Projections of surface temperatures for the 2020s and 2090s 243

5.3 Potential changes in cereal yields, 2080s 247

5.4A Geographical distribution of vulnerability, 2050 249

Figures

viii List of fi gures

5.4B Geographical distribution of vulnerability, 2100 249

5.5A Geographical distribution across India of stress from climate change and globalization 250

5.5B Climate change can be its own source of multiple stress 251

5.6 Emissions for alternative policies, 20002140 254

5.7 Increases in global mean temperature for alternative policies, 20002140 255

5.8 Trajectories of global damages for the fi ve alternatives, 20002300 257

5.9 Trajectories of global benefi ts for the fi ve intervention policies, 20002300 257

5.10 Trajectories of global benefi ts for the alternative approaches, 20002300 259

5.11 Trajectories of estimated market damages, 20002300 260

5.12 Trajectories of estimated non-market damages, 20002300 261

5.13 Trajectories of global benefi ts for the four intervention policies, 20002100 262

5.14 Cumulative distribution of MPV of mitigation only for the when fl exibility benchmark 264

5.15 Cumulative distributions of benefi ts of mitigation only for the when fl exibility benchmark, 20502300 264

5.1.1 Impact of technology on global carbon emissions, 20002100 284

5.2.1 Range of damage estimates in diff erent studies 299

5.2.2 Range of studies on climate impacts 300

6.1.1 Prevalence of stunting, underweight, wasting, and obesity in children

List of fi gures ix

(90% confi dence intervals, holding other parameters at base case values) 395

7.9 Community-led total sanitation program: distribution of BCR outcomes from Monte Carlo simulation (10,000 draws) with uniform parameter distributions 401

7.10 CLTS sensitivity analyses: eff ect of selected parameters on BCR (90% confi dence intervals, holding other parameters at base case values) 402

7.11 Biosand fi lters sensitivity analyses: eff ect of selected parameters on BCR (90% confi dence intervals, holding other parameters at base case values) 407

7.12 Biosand fi lters: distribution of BCR outcomes from Monte Carlo simulation (10,000 draws) with uniform parameter distributions 407

7.13 Water storage per person in diff erent countries 410

7.14 Large dam project: distribution of costs and benefi ts in time (h function from Table 7.28) 414

7.15 Large dam project sensitivity analyses: eff ect of selected parameters on BCR (90% confi dence intervals, holding other parameters at base case values) 416

7.16 Large dam project: distribution of BCR outcomes from Monte Carlo simulation (10,000 draws) with uniform parameter distributions 416

7.17 Components of the benefi ts of the three water and sanitation interventions: base case parameter values 420

7.18 Components of the costs of

the three water and sanitation interventions: base case parameter values 420

7.19 a) Frequency and b) cumulative frequency distributions of the BCRs for the three non-network water and sanitation interventions 422

7.1.1 Incidence of mortality from diarrheal disease 433

8.1 Undiscounted increments through to 2100 of world and developing country incomes without reform, with a Doha trade policy reform (without extra migration) and with extra migration (without Doha) 480

8.2 Net present value of discounted annual increments to world and developing country incomes to 2100 from migration reform and from trade policy reform (with and without dynamic gains) 481

8.1.1 Economic eff ects of a tariff 5069.1 Domestic and transnational

incidents 5209.2 All incidents and bombings 5269.3 Proportion of casualty incidents 5279.4 Incidents by region 53310.1 Gender and urbanrural diff erences

in years of schooling, selected countries 588

10.2 Option 2 fl owchart of benefi ts from improved womens reproductive choices 606

10.3 Option 3 fl owchart of benefi ts from microfi nance program 613

10.4 Option 4 pathways of benefi ts of greater political participation of women 623

x

1.1 Profi le of thirteen countries with the highest mortality from SFU 9

1.2 Projections of COPD deaths from SFU 12

1.3 Indoor particulate (PM) concentrations from cooking stoves 13

1.4 WHO air quality guidelines 131.5 PM 4 concentrations in rural

households in China 151.6 Relative risk ratios from a meta-

analysis of research literature 171.7 Relative risk ratios from studies

of indoor air pollution in China 171.8 Odds ratios of ARI from SFU air

pollution exposure 181.9 B/C ratios of indoor air pollution

control, by WHO regions, 2004 study 19

1.10 B/C ratios of indoor air pollution control, by WHO regions, 2006 study 19

1.11 Benefi ts and costs of indoor air pollution control 20

1.12 Valuation of mortality 201.13 B/C ratios of indoor air pollution

control interventions in rural Colombia 21

1.14 B/C ratios of indoor air pollution control interventions in rural Peru 21

1.15 B/C ratios of indoor air pollution control in rural Colombia and Peru 22

1.16 Relative risk of ALRI mortality, by child nutritional status 23

1.17 SFU in relation to childrens nutritional status in a typical SSA country 24

1.18 Summary of B/C ratios of indoor air pollution control 25

1.19 Estimated deaths from urban PM in world cities, 2002 27

1.20 Annual average PM 10 concentrations in mega-cities in the developing world 28

1.21 Annual population growth in cities with population over 100,000 in select large developing countries 29

1.22 PM 2.5 source apportionment studies from Beijing 30

1.23 PM 2.5 source apportionment studies in three major cities in India 31

1.24 PM 2.5 emission inventory estimate for urban Pune, India 31

1.25 PM emissions for vehicles in Pune, India 31

1.26 Source contribution to ambient PM 2.5 in Dakar, Senegal 31

1.27 Source contribution to ambient PM 2.5 in Bogot, Colombia 32

1.28 On-road vehicle distribution in six cities, worldwide 33

1.29 Diesel fuel share in transportation, 2005 33

1.30 EU diesel vehicle emission standards for PM 34

1.31 EU heavy-duty diesel engines emission standards for PM 34

1.32 Maximum EU allowable sulfur content in vehicle gasoline and diesel fuel 34

1.33 Median B/C ratios for diesel vehicle PM control retrofi t in Mexico City 36

1.34 Benefi ts and costs of vehicle emission control in China 37

1.35 Valuation of health benefi ts in China study 37

Tables

List of tables xi

1.36 B/C ratios of reducing sulfur in vehicle diesel fuel in Dakar, Senegal 38

1.37 B/C ratios for in-use diesel vehicle retrofi t PM control in Dakar, Senegal 39

1.38 B/C ratios for low-sulfur diesel and PM control technology in Bogot, Colombia 40

1.39 B/C ratios for vehicle PM emission controls in Lima, Peru 40

1.40 Summary of B/C ratios for vehicle PM emission control 42

1.41 Examples of B/C studies of outdoor air pollution control in low- and middle-income countries 42

1.42 Examples of B/C studies of outdoor air pollution control in high-income countries 43

1.43 Summary of intervention B/C ratios 44

1.1.1 Examples of no-regret actions for air pollution control in cities 54

2.1 A summary of costs and benefi ts 1002.2.1 How wars end, 19462005 1163.1 Levels and changes in life

expectancy, 19602005, by World Bank region 128

3.2 Examples of science contribution to declines in infectious disease mortality in the twentieth century 129

3.3 Causes of under-fi ve mortality, worldwide, 2005 131

3.4 Causes of death in low- and middle-income countries, age fi ve and older 132

3.5 Discounted YLL at diff erent ages of death for several DALY formulations 138

3.6 Disease control: key investment priorities 151

3A.1 Neglected low-cost opportunities and high-cost interventions in South Asia and SSA 154

3B.1 Sensitivity analysis 1563.2.1 Provider absence rates, by

country and sector 1743.2.2 Estimated B/C ratios of some

other programs evaluated by the World Bank 177

4.1 Sample statistics of estimated returns per year of schooling in developing countries 180

4.2 Percentage of youth 1519 years old not completing grade 5 and of 14 years old never starting school, by world region 192

4.3 Reasons for not attending school in urban and rural populations, by world region 198

4.4 Percentage of developing countries charging primary school fees, by world region, 2005 198

4.5 Overview table of B/C ratios from various eff orts to reduce illiteracy 205

4.2.1 What rate of excess social over private rate of return to schooling would rationalize full subsidization of instructional costs? 230

5.1 Observed past and present trends in climate and climate variability 239

5.2 Observed changes in extreme events and severe climate anomalies 241

5.3 Examples of projected impacts, by sector 244

5.4 Examples of projected impacts, by region 246

5.5 Global-scale climate impacts by 2080 248

5.6 Regional-scale climate impacts by 2080 248

5.7 MERGE emissions scenarios 2535.8 Policies, costs, benefi ts, and B/C

ratios 2565.9 Costs, benefi ts, and B/C ratios for

dynamically fl exible mitigation 2595A.1 Electric generation technology

assumptions 2715A.2 Non-electric energy technology

assumptions 2725.1.1 Emission-reduction wedges

required to follow diff erent WRE CO2 concentration stabilization paths out to 2055 285

xii List of tables

5.2.1 An example of the benefi ts of early action 302

6.1 Summary of CE and B/C estimates from the literature 322

6.2 Sensitivity analysis: B/C ratios for nutrition interventions 325

6.3 Ballpark estimates of annual costs and benefi ts of scaling-up interventions 326

6.1.1 Eff ects of iron supplementation during pregnancy on birthweight 339

6.1.2 Eff ects of multiple micronutrient supplementation vs. iron and folic acid on birthweight 340

7.1 Cost estimates: improved water and sanitation services (assuming 6% discount rate) 361

7.2 Cost estimates: improved water and sanitation services for low-cost option for private water and sewer connections (assuming 6% discount rate) 362

7.3 Range of estimates of monthly water use (in-house, private connection) 363

7.4 Range of estimates of the full economic cost of providing improved water and sanitation services (in-house, private water connection; piped sewer) 363

7.5 Comparison of costs of rebar, cement, and industrial facility construction in 11 cities 364

7.6 Examples of prices charged by water vendors selected countries 365

7.7 Median monthly household expenditures on water (1998 US$) 365

7.8 Average monthly household coping costs of acquiring improved water, Kathmandu, Nepal (US$ per month) 366

7.9 Average per capita ex-ante coi for typhoid fever, New Delhi slum (US$ per month) 367

7.10 Average household willingness to pay (WTP) for water services: a summary of eight contingent valuation studies 369

7.11 Comparing monthly household costs and benefi ts of improved water and sanitation services: an example from Kathmandu, Nepal 370

7.12 Equations for costbenefi t analysis of network water and sanitation services 378

7.13 Parameters used in costbenefi t analysis of network water and sanitation services 379

7.14 Base case results for network water and sanitation services 381

7.15 Equations for costbenefi t analysis of rural water supply project 388

7.16 Parameters used in costbenefi t analysis of water supply project 389

7.17 Base case results for borehole and public hand pump 392

7.18 Typology of sites for deep borehole with public handpump: categorized by benefi tcost ratio (BCR) 393

7.19 Equations for costbenefi t analysis of community-led total sanitation (CLTS) project 397

7.20 Parameters used in costbenefi t analysis of CLTS project 398

7.21 Base case results for CLTS program 400

7.22 Typology of community-led total sanitation program sites categorized by benefi tcost ratio 401

7.23 Equations for costbenefi t analysis of biosand fi lter 404

7.24 Parameters used in costbenefi t analysis of biosand fi lter 405

7.25 Base case results for biosand fi lters 406

7.26 Typology of biosand fi lter project sites categorized by benefi tcost ratio 408

7.27 Benefi ts and costs of large dam projects 409

7.28 Equations for costbenefi t analysis of large dam 412

7.29 Parameters used in costbenefi t analysis of large dam project 413

List of tables xiii

7.30 Base case results for a large dam in Africa 415

7.31 Typology of dam project outcomes categorized by benefi tcost ratio 417

7.32 Parameters with the same values in each of the three non-network water and sanitation interventions and base case assumptions 419

7.33 Parameters with the greatest eff ects on the benefi tcost ratios: comparison of assumed values (with ranges) across the three community water and sanitation interventions 419

7.34 Comparison of the components of the benefi ts and costs of the four water and sanitation interventions (US$/hh-month) 420

8.1 Comparative static estimates of economic welfare gains from full global liberalization of goods and services trade 460

8.2 Import-weighted average applied tariff s, by sector and country, 2005 463

8.3 Impacts on real income from full liberalization of global merchandise trade, by country/region, 2015 464

8.4 Regional and sectoral source of gains from full liberalization of global merchandise trade, developing and high-income countries, 2015 465

8.5 Impact of full liberalization of high-income countries food and agriculture import barriers and subsidies on indexes of reala export and import prices, Sub-Saharan Africa, 2015 465

8.6 Terms of trades contribution to real income changes from full liberalization of high-income countries food and agriculture import barriers and subsidies, Sub-Saharan Africa, 2015 466

8.7 Comparative static estimates

of economic welfare gains from partial trade and subsidy reform under the Doha Development Agenda, 2015 468

8.8 Comparative static estimates of economic welfare gains from an FTAA compared with global liberalization of goods and services trade 470

8.9 Global labor force structure, 2001 and projected to 2025 without and with assumed extra migration 474

8.10 Comparative static estimates of economic welfare eff ects of a boost to international worker migration, 2025 475

8.11 Net present value of benefi ts and costs to 2100, and benefi tcost ratios, from liberalizing subsidies and trade barriers globally under the WTOs Doha Development Agenda, and liberalizing migration 482

9.1 Leftist terrorists versus fundamentalist terrorists 522

9.2 Transnational terrorist incidents: casualties 20061968 524

9.3 Domestic terrorist incidents: casualties 20061998 524

9.4 Select spectacular transnational terrorist attacks 525

9.5 Select terrorist groups sizes (April 2003) 528

9.6 Asymmetry of damages versus costs of terrorist operations 529

9.7 Asymmetries between targeted governments and terrorists 530

9.8 Terrorism DALYs: base year 2005 (5% discount rate) 536

9.9 Terrorism DALYs: using average yearly deaths and wounds 19682006 (5% discount rate) 537

9.10 Relative values of terrorism DALYs compared with other challenges 538

9.11 Worldwide homeland security estimates under nine alternative methods (in $ billions) 539

xiv List of tables

9.12 Lost GDP due to transnational terrorism attacks 544

9.13 Solutions: benefi ts, costs, and benefi tcost ratios based on 5% discount rate 552

9.14 Types of chemical, biological, radiological, and nuclear attacks 553

9A.1 Worldwide homeland security estimates under nine alternative methods 555

9A.2 Lost GDP due to transnational terrorism attacks (3% discount rate) 557

9A.3 Solutions: benefi ts, costs, and benefi tcost ratios based on 3% discount rate 559

9.1.1 Estimates of homeland security 5689.1.2 Activity recorded for the Taliban

and al-Qaida 5709.1.3 The seven impact countries over

the fi ve-year post-sample period 5719.1.4 Economic cost of international

cooperation 5729.1.5 The thirty-nine impact low-

income countries 5739.1.6 Solutions: benefi ts, costs, and

benefi tcost ratios 57510.1 Causes of maternal mortality and

morbidity (%) 58910.2 Fertility rates, teenage pregnancy

and family planning 59010.3 Womens participation in the

informal sector 59110.4 Percent share of women in

parliament, January 1997 and January 2007 593

10.5 Option 1 assumptions used for estimating benefi tcost ratios 601

10.6 Option 1 estimates of benefi ts and benefi tcost ratios for conditional cash transfer (cct) program to promote female education per $ billion spent 602

10.7 Option 2 assumptions used for estimating benefi tcost ratios 607

10.8 Option 3 estimates of benefi ts and costs for support for womens reproductive role 609

10.9 Option 3 assumptions used for estimating benefi tcost ratios 612

10.10 Option 3 estimates of benefi ts and costs for microfi nance (US$ million) 615

10.11 Participation rate of men and women in organizations (%) 619

10.12 Mass media exposure, by gender 62110.13 Option 4 assumptions used for

estimates of benefi tcost ratios 62510.14 Option 4 estimates of benefi ts

and costs for political affi rmative action 627

10.15 Summary of benefi tcost ratios for four options and selected scenarios 629

10.1.1 Option 3: Calculation of DALYs averted per dollar loaned to women (Upper Bound) 640

10.1.2 Option 3: Calculation of DALYs averted per dollar loaned to women (Lower Bound) 641

xv

Chapter authors

Harold Alderman is Lead Human Development Economist for the Africa Region at the World Bank. His main research interests are food policy and nutrition as well as the economics of education and of targeted poverty programs. His articles have appeared in journals such as World Development, Journal of Nutrition, Economic Review, British Medical Journal, and Food Policy.

Kym Anderson is Lead Economist in Trade Policy at the World Bank and Professor of Economics at the University of Adelaide. His research interests and publications are in the areas of international trade and development, agricultural economics, and environmental and resource economics. He has published more than 20 books and 200 journal articles and chap-ters in other books. He has been a consultant to numerous national and international bureauc-racies, business organizations and corporations. His publications include Agricultural Trade Liberalization: Implications for Indian Ocean Rim Countries (Department of Foreign Aff airs and Trade, 2002), Reforming Trade Policy in Papua New Guinea and the Pacifi c Islands: What Roles for WTO and APEC? (Institute for National Aff airs, 2000), and Lao Economic Reform and WTO Accession (Institute of Southeast Asian Studies, 1999).

Daniel G. Arce is The Bidgood Chair of Economics and Finance at the University of Texas. His primary areas of research interest are in game theory, business ethics, collective action, confl ict, corporate governance, global public goods, leadership, and (counter)terrorism.

His articles have appeared in journals such as Economic Inquiry, British Journal of Political Science, Journal of International Development, Managerial and Decision Economics, and Journal of Confl ict Resolution.

Geoff rey J. Blanford is Program Manager for research on Global Climate Change Policy Costs and Benefi ts at the Electric Power Research Institute, California. The program conducts analysis of the economic and environmental implications of domestic and international cli-mate policy proposals, with emphasis on the principles of effi cient policy design, the role of technology, and the value of R&D. His areas of interest include development of the MERGE model for integrated assessment and its appli-cation to issues such as technology policy and international climate agreements.

David Bloom is Clarence James Gamble Professor of Economics and Demography at Harvard University. His research interests include labor economics, health, demography, and the envi-ronment. He has served as a consultant to the UNDP, the World Bank and WHO. His articles have been published in journals such as the Journal of Monetary Economics, World Economics, and World Development. He contrib-uted to Solving the Riddle of Globalization and Development (with M. Agosin et al., Routledge, 2007).

Lisa Chauvet is Research Fellow at IRD-DIAL (Institut de Recherche pour le Dveloppement Dveloppement Institutions et Analyses de Long Terme). Her research interests are interna-tional aid and foreign direct investment, devel-opment macroeconomics, empirical analysis of

Contributors

xvi List of contributors

inequality in developing countries, and applied econometrics. Besides teaching he has worked for the World Bank. His recent articles have appeared in the Handbook of the Economics of Education, Economic Development and Cultural Change, Journal of Development Economics, Journal of Economic Literature, and World Bank Economic Review. He has contributed to books including Economic Growth, Poverty, and Household Welfare in Vietnam (with N. Agrawal et al., World Bank, 2004).

W. Michael Hanemann is Chancellors Professor, Department of Agricultural and Resource Economics at the University of California. His area of research is in non-market valuation, envi-ronmental economics and policy, demand mod-elling for market research, and policy design. His articles have been published in Natural Resources Journal, American Economics Review, and Journal of Law and Economics.

Hvard Hegre is Associate Professor, Depart-ment of Political Science at the University of Oslo. His research interests are the dynamics of institutional change and confl ict, environmental factors of civil war, human rights, governance, and confl ict. His contributions include Global Trends in Armed Confl ict (with H. Buhaug et al., Norwegian Ministry of Foreign Aff airs, 2007), and Breaking the Confl ict Trap: Civil War and Development Policy (with P. Collier et al., World Bank/Oxford University Press, 2003).

Sue Horton is Professor of Economics at Wilfrid Laurier University. Her areas of research are human resources, economics of health, nutri-tion, household time use, labor markets, and poverty in developing countries. She has worked in over 20 developing countries and has consulted for the World Bank, the Asian Development Bank, several UN agencies, and the International Development Research Centre. Her recent contributions include Economics of nutritional investment in Nutrition and Health in Developing Countries (R.D. Semba and M. Bloem, Humana Press, 2008) and The Economics of Addressing Nutritional Anemia (with H. Alderman) in Nutritional Anemia

economic growth, and political economy of civil wars.

Paul Collier is Professor and Director of the Centre for the Study of African Economies at Oxford University. His research interests are within the fi elds of governance in low-income countries, especially the political economy of democracy, economic growth in Africa, glo-balization and poverty, and the economics of civil war. His recent publications include Trade and Economic Performance: Does Africas Fragmentation Matter? (Working Paper, 2008), Climate Change and Africa (with G. Conway and A. Venables, Working Paper, 2008), and Post Confl ict Monetary Reconstruction (with C. Adams and V. Davies, World Bank Economic Review, 2008).

Jennifer Davis is Assistant Professor, Department of Civil and Environmental Engineering at Stanford University. Her areas of research are within sustainability, private-sector participa-tion, institutional and organizational analysis, water, sanitation, and health. Her research has been published in journals such as Environment and Resources, Water Policy, World Development, and International Development Planning Review, and in In Search of Good Governance: Experi-ments from South Asias Water and Sanitation Sector (with S. Tankha et al., New Delhi: Water and Sanitation Program, 2002).

Walter Enders is Professor and Lee Bidgood Chair of Economics and Finance, University of Alabama. His areas of expertise are open-economy macroeconomics, time-series econo-metrics, and transnational terrorism. He has published numerous research articles in journals such as the Review of Economics and Statistics, Quarterly Journal of Economics, and the Journal of International Economics. He has also pub-lished articles in the American Economic Review, Journal of Business and Economic Statistics, and the American Political Science Review.

Paul Glewwe is Professor of Economics at the University of Minnesota. His research inter-ests are economics of education, poverty and

List of contributors xvii

published articles in Science and the National Medical Journal of India. He also contributed to Governments and the Economics of Tobacco Control (World Bank, 1999).

Neha Khanna is Associate Professor at Binghamton University (State University of New York), where she holds joint appoint-ments in the Economics Department and on the Environmental Studies Program. She has researched the world oil market and its implica-tions for international security, the relationship between economic growth and environmental quality, climate change, and the effi cacy of voluntary pollution-prevention programs. In addition, she is working on the impact of public policy measures on human health and on the sustainable extraction of ground water. She has recently written for journals such as Economic Inquiry, Econometric Reviews, and the Journal of Environmental Economics and Management.

Elizabeth King is Research Manager for Public Services of the Development Research Group at the World Bank. Her research interests are human capital, poverty, economic development, education reforms in developing countries, and gender inequality. Her articles have featured in journals such as the Journal of Development Studies, Economic Development and Cultural Change, and American Economic Review. She is also the author of Promoting Gender Equality and Womens Empowerment in Confronting the Challenges of Gender Equality and Fragile State (World Bank, 2007).

Stephan Klasen is Professor of Economics at Georg-August University in Gttingen. His research focuses on issues of poverty and in equality in developing countries. In addition, he has worked extensively on causes, measure-ment, and consequences of gender bias in mor-tality, education, and employment in developing countries. His recent works have been featured in journals such as World Development and Journal of Economic Inequality.

Bjrn Larsen is a freelance consultant to inter-national and bilateral development agencies,

(K. Kraemer and M. Zimmerman, Basel: Sight and Life Organization, 2007).

Guy Hutton is an economist focusing on the fi elds of health, air pollution, and water and sanitation. He has published widely on economic evaluation and fi nancing of development interventions. He works for the World Bank Water and Sanitation Program in East Asia and the Pacifi c region. He has previously held posts at the Swiss Tropical Institute, London School of Hygiene and Tropical Medicine, and Oxford University.

Dean T. Jamison is Senior Fellow at the Fogarty International Center of the National Institutes of Health. He has worked for the World Bank as Senior Economist and Division Chief and for the WHO. His research interests are economy, management, eff ect of education on productivity in agriculture, and cost-eff ectiveness of interven-tions in education and health. His articles have featured in journals such as the Journal of Health Economics and The Lancet, and he contributed to Priorities in Health (World Bank, 2006).

Marc Jeuland is a PhD candidate in Environmental Management and Policy at the University of North Carolina Chapel Hill. His research interests are in non-market valu-ation techniques, water resources planning and management, and the economic analysis of investments in the water and sanitation sector. His recent co-authored publications include Private Demand for Cholera Vaccines in Beira, Mozambique (in Vaccine, 25, 2007), Re-visiting Socially Optimal Vaccine Subsidies: An Empirical Application in Kolkata, India (Journal of Policy Analysis and Management, 2008), and Sustaining the Benefi ts of Rural Water Supply Investments: Experience from Cochabamba and Chuquisaca, Bolivia (Water Resources Research, 2008).

Prabhat Jha is Professor of Epistemology at the University of Toronto. His research inter-ests include large-scale epidemiology studies of the major causes of death in developing coun-tries, control of HIV transmission in develop-ing countries, and tobacco control policy in developed and developing countries. He has

xviii List of contributors

research is within water resource management. His articles have appeared in journals such as Agricultural Water Management, Issues, Water Policy, Water Science and Technology, and Paddy and Water Environment.

Juan Rivera is Professor of Nutrition at the School of Public Health in Mexico. His main areas of research focus on undernutrition, mal-nutrition, and obesity. He also researches the development and evaluation of programs and policies that raise the level of nutrition in the general population. He has published more than 130 scientifi c articles and chapters in books.

Claudia Sadoff is a Lead Economist with the World Bank, based in the Kathmandu Resident Mission. Her expertise is in water resources poli-cies and institutions, cooperation and benefi t sharing in international rivers, and the dynamics of water, wealth, and poverty. She is a member of the Global Water Partnerships Technical Committee and the World Economic Forums Global Agenda Council on Water Security. Her recent publications include Water Security an Adaptation Imperative (with D. Grey) in Environment Matters (The World Bank, 2008).

Todd Sandler is the Vibhooti Shukla Professor of Economics and Political Economy at the University of Texas. His research areas are international political economy, defense eco-nomics, terrorism, global and regional public goods, and environmental economics. He applies theoretical and empirical models of economics to the study of international political economy, defense, environmental issues, and public fi nance. He is particularly interested in the application of game theory (non- cooperative and cooperative) and microeconomics to issues in international relations. His publications include Global Collective Action (Cambridge University Press, 2004), Regional Public Goods: Typologies, Provision, Financing, and Development Assistance (Almqvist & Wicksell International, 2002), and Economic Concepts for the Social Sciences (Cambridge University Press, 2001).

research institutions, and consulting fi rms. His fi elds of interest include air pollution, water supply, sanitation and hygiene in developing countries, and environmental health risk linkages to child malnutrition and poverty. His recent publications include Does urban air pollution control pay off in low-income countries?: A costbenefi t analysis in Greater Dakar, Senegal (pre-pared for ECON/Roche/World Bank, 2007).

Peter F. Orazem is Professor of Economics at Iowa State University. His research interests are labor economics, transition and developing econ-omies, and the economics of education. He has contributed to the Southern Economic Journal, Economic Development and Cultural Change, and World Bank Economic Review. His most recent contribution was Schooling in Developing Countries: The Roles of Supply, Demand and Government Policy (with Elizabeth King, in Handbook of Development Economics, Iowa State University, Department of Economics, Staff General Research Papers, 2008).

Harry Patrinos is Lead Education Economist at the World Bank. His research interests are school-based management, demand-side fi nanc-ing, and publicprivate partnerships. His recent publications are Quality of Schooling, Returns to Schooling and the 1981 Vouchers Reform in Chile (Working Paper, World Bank, 2008) and Empowering parents to improve education: evidence from rural Mexico (Working Paper, World Bank, 2008).

Maria Porter is Post-doctoral Fellow, Center for Demography and Economics of Aging at the University of Chicago. Her primary research interests are in the fi elds of development, popu-lation and household economics, and aging.

Richard G. Richels is Director of Global Climate Change Research at the Electric Power Research Institute in Palo Alto, California. His main area of research is economics of climate change.

Frank Rijsberman is Director of the Water and Sanitation Services at Google.org. His area of

List of contributors xix

Alix Peterson Zwane serves as the Program Manager leading eff orts to develop the health and water sub-program within the Inform and Empower Initiative at Google.org. Before that she was a member of the faculty in the Department of Agricultural and Resource Economics at UC Berkeley. She spent fi ve years there where her research included topics such as the links between poverty and tropical defor-estation, methods for creating incentives for private R&D on challenges unique to the trop-ics, and cost-eff ective and sustainable solutions to diarrheal diseases, with extensive fi eld work in East Africa and Latin America. Her work has been published in technical and policy journals including the Journal of Development Economics and the Journal of Environmental Economics and Management.

Perspective paper authors

S. Brock Blomberg is Professor of Economics at Claremont Mckenna College. His research interests are macroeconomics, political econ-omy, and international economics. His works include A Gravity Model of Globalization, Democracy and Transnational Terrorism in Guns and Butter (with P. Rosendorff and G. Hess (eds.)), and he has been published in journals such as World Economy, Review of Economics and Statistics, Journal of Monetary Economics, Journal of Public Economy, and Journal of Confl ict Resolution.

David Canning is Professor of Economics and International Health at the Harvard School of Public Health. His fi elds of interest are economic growth, demographic changes, and health. He has contributed to journals such as The Manchester School, Population and Development Review, Public Policy and Aging Report, Science, and the International Journal of Forecasting.

Alan Deardorff is Professor of Economics and Public Policy at the Gerald R. Ford School of Public Policy. His primary area of interest is international trade and he has worked on

Richard S.J. Tol is Professor of Economics of Climate Change at Vrije University in The Netherlands and Research Professor at the Economic and Social Research Institute in Dublin, Ireland. His main research interests are the application of economic, mathematical, and statistical techniques such as time-series analy-sis, valuation, decision analysis, and game theory and environmental problems, in particular climate change, natural disasters, and river basin management. His recent publications include Economic Analysis of Land Use in Global Climate Change (Routledge, 2008) and Environmental Crisis: Science and Policy (Springer, 2007).

Dale Whittington is Professor of Environmental Sciences and Engineering at the University of North Carolina. His research interests are costbenefi t analysis, environmental econom-ics, and water resources policy. His research has appeared in journals such as Environmental and Resource Economics and Water Policy. He also wrote Guidelines for Designing Energy Modules in Living Standard Measurement Surveys: Report to the World Bank (2004).

L. Alan Winters is Professor of Economics at the University of Sussex. He has published more than 200 articles and 30 books in areas such as regional trading arrangements, non-tariff barriers, European Integration, transition economies trade, international labor mobility, agricultural protection, trade and poverty, and the world trading system. His recent books include The Temporary Movement of Workers to Provide Services in A Handbook of International Trade in Services (ed. A. Mattoo, R.M. Stern, and G. Zanini, Oxford University Press, 2007) and his articles have appeared in journals such as The World Economy, Journal of Economic Integration, and Social Science & Medicine.

Gary W. Yohe is Woodhouse/Sysco Professor of Economics at Wesleyan University. His main research area is global climate change and risk management. His articles have featured in jour-nals such as Global Environmental Change and Environment and Development Economics.

analyses of anti-dumping laws, the safeguards clause of the GATT, and arguments for and against extending intellectual property protec-tion to developing countries. His publications include Terms of Trade: Glossary of International Economics (World Scientifi c Publishers, 2006) and Measurement of Nontariff Barriers (with R. Stern, The University of Michigan Press, 1998).

Anil Deolalikar is Professor of Economics, University of California, Riverside. His areas of research are economic development, public policy, economic demography, and human capital in development. His recent publica-tions are Attaining the Millennium Development Goals in India: Reducing Infant Mortality, Child Malnutrition, Gender Disparities and Hunger-Poverty and Increasing School Enrollment and Completion? (Oxford University Press, 2005), Health Care and Family in Vietnam in Reconfi guring Families in Vietnam (Stanford University Press, forthcoming), and Human Development in India: Past Trends and Future Challenges in The Indian Economy at 60: Performance and Prospects (R. Jha, Palgrave Macmillan, forthcoming).

Ibrahim A. Elbadawi is Lead Economist, Development Economic Research Group of the World Bank. His research interests include exchange rate economics, growth, aid eff ective-ness, democracy and development, and eco-nomics of civil wars. His research and policy experiences cover Africa and the Middle East. His recent publications are Political Violence and Economic Growth (with C. Bodea, World Bank, 2008), Referendum, Response, and Consequences for Sudan: The Game Between Juba and Khartoum (World Bank, 2008), and Riots, Coups and Civil War: Revisiting the Greed and Grievance Debate (with C. Bodea, World Bank, 2007).

Christopher Green is Professor of Economics at McGill University. His areas of specialization include industrial organization, public policies toward business, and environmental economics, in particular the economics of climate change. His articles have appeared in journals such

as Nature, Energy Policy, Policy Options, and Energy Policy.

Lawrence Haddad is Director of Institute of Development Studies at the University of Sussex. His main research interests are the intersection of poverty, food insecurity and malnutrition including poverty dynamics, social capital, HIV/AIDS, social protection, agriculture and poverty, and womens empowerment. His pub-lications include Food and Nutrition Policies and Interventions in Human Nutrition (ed. C.A. Geissler and H.J. Powers, Elsevier, 2005).

Michael D. Intriligator is Professor of Economics at UCLA. He is the author of more than 200 journal articles and other publications in the areas of economic theory and mathematical economics, econometrics, health economics, reform of the Russian economy, and strat-egy and arms control, which are his principal research fi elds. His articles have appeared in journals such as American Behavioral Scientist, Business World and Confl ict Management, and Peace Science.

Victor Lavy is William Haber Chaired Professor of Economics at the Hebrew University of Jerusalem. His research interests are economic development, economics of education and human resources, evaluation of social programs and intervention. His articles have featured in journals such as American Economic Review, Economic Journal, Journal of Public Economics and Scandinavian Journal of Economics.

Ramanan Laxminarayan is Senior Fellow, Resources for the Future and consultant to the World Bank and WHO. His research deals with the integration of epidemiological models of infectious disease transmission and economic analysis of public health problems. His articles have featured in Environment and Development Economics, The Lancet, and Health Aff airs. His recent publications include Extending the Cure: Policy Responses to the Growing Threat of Antibiotic Resistance (with A. Malani, Resources for the Future, Washington D.C., 2007).

xx List of contributors

Andrew Mack is Director of the Human Security Report Project at Simon Fraser University in Vancouver, Canada. His research interests are the political economy, civil war, and global security, and his articles have appeared in jour-nals such as World Politics, The Washington Quarterly, British Journal of International Studies, World Policy, Foreign Policy, and Comparative Politics. In addition he has con-tributed to a wide range of books.

Anil Markandya is Professor of Economics at the University of Bath. He specializes in environmental and resource economics. He has worked on valuation of the environment, external costs of fuels, green accounting, economy-wide policies and the environment, climate change, ozone layer protection, and development of economic instruments for envi-ronmental protection. His recent publications include Water Quality Issues in Developing Countries (Columbia University Press, 2006), Policy Failures as a Cause of Environmental Degradation in The Handbook of Environmental Economics (Elsevier Science, 2005), and Gains of Regional Cooperation: Environmental Problems and Solutions in Energy Resources, Governance and Welfare in the Caspian Sea Basin (University of Seattle Press, 2005).

Reynaldo Martorell is Robert W. Woodruff Professor of International Nutrition at the Rollins School of Public Health, Atlanta, Georgia. His area of research is within the fi elds of maternal and child nutrition, child growth and development, emergence of obesity, and chronic diseases in developing countries. His articles have appeared in journals such as the Journal of Nutrition, The Lancet, International Journal of Paediatrics, Food and Nutrition Bulletin, and Prevention and Chronic Disease.

Lant Pritchett is Lead Socio-Economist at the World Bank. His research interests are within the fi elds of economic growth, education, gov-ernance/democracy, inequality, migration, and population. His publications include Economic Growth in the 1990s: Learning from a Decade of

Reforms (World Bank, 2005), Making Services Work for Poor People (World Development Report, 2004), Assessing Aid: What Works, What Doesnt and Why (with D. Dollar, World Bank, 1998), and Infrastructure for Development (World Development Report, 1994).

Jitendra (Jitu) Shah is a Country Sector Coordinator for the Environment, Rural, and Social Sectors for Lao, Cambodia, Thailand, and Malaysia in the South East Asia Unit of the World Bank, based in Bangkok. His work at the World Bank has spanned environmental management of projects and programs on local, regional, and global scales. His recent publica-tions include Energy Futures and Urban Air Pollution: Challenges for China and the United States (The National Academy Press, 2008) and he has written for publications such as the Journal of Air Waste Management Association.

Aysit Tansel is Professor of Economics at Middle East Technical University, Ankara. Her main areas of interest are labor economics with a focus on economics of education, empirical models of economic growth with emphasis on health and education, and educational inequali-ties and gender gap in education and economic growth, returns to education, private tutoring, economics of gender, labor force participation, and unemployment. Her publications include Brain-Drain from Turkey: Survey Evidence of Student Non-Return (with N.D. Gngr, Career Development International, 2003) and her arti-cles have appeared in journals such as Economics of Education Review, Journal of Development Economics, and Applied Economics.

Anthony Venables is BP Professor of Economics at Oxford University. His area of research is inter-national, spatial, development, and resource eco-nomics. His works include Multinational Firms in the World Economy (Princeton University Press, 2004) and his articles have been published in the Journal of International Economics, World Economy, Journal of Transport Economics and Policy, Journal of Urban Economics, and Journal of Economic Geography.

List of contributors xxi

The Experts

Jagdish Bhagwati is University Professor at Columbia University and Senior Fellow in International Economics at the Council on Foreign Relations. He has been Economic Policy Adviser to Arthur Dunkel, Director General of GATT (19913), Special Adviser to the UN on Globalization, and External Adviser to the WTO. He has served on the Expert Group appointed by the Director General of the WTO on the Future of the WTO and the Advisory Committee to Secretary General Kofi Annan on the NEPAD process in Africa, and was also a member of the Eminent Persons Group under the chairmanship of President Fernando Henrique Cardoso on the future of UNCTAD. Five volumes of his scientifi c writings and two of his public policy essays have been published by MIT Press. The recipient of six Festschrifts in his honour, he has also received several prizes and honorary degrees, including awards from the governments of India (Padma Vibhushan) and Japan (Order of the Rising Sun, Gold and Silver Star). Professor Bhagwatis latest book, In Defense of Globalization, was published by Oxford University Press in 2004 to worldwide acclaim.

Franois Bourguignon is Director of the Paris School of Economics and the former Chief Economist of the World Bank. Bourguignon is a specialist in the economics of develop-ment, public policy, economic growth, income distribution and redistribution, inequality and poverty measurements, and has published more than 200 articles and several volumes. He has played a vital role in placing economic growth and its relationship with inequality and income distribution and poverty at the center of the World Banks agenda. Bourguignon has founded and directed the Dpartement et Laboratoire dEconomie Thorique et Applique (DELTA), a research unit in theoretical and applied econom-ics. He is a Fellow of the Econometric Society, and was president of the European Economic Association for Population Economics. He received the silver medal for academic achieve-

ments from the French National Centre of Scientifi c Research in 1999.

Finn E. Kydland is Henley Professor of Economics and Director of the Laboratory for Aggregate Economics and Finance at the University of California, Santa Barbara. Kydland has authored many publications on macroeconomics, economic growth, monetary economics and international economics. In 2004, Kydland shared the Nobel Memorial Prize in Economics with Edward C. Prescott for their research on business cycles and macroeconomic policy specifi cally, the driving forces behind business cycles and the time consistency of eco-nomic policy. He is a Research Associate for the Federal Reserve Banks of Dallas, Cleveland and St. Louis, and a Senior Research Fellow at the IC2 Institute at the University of Texas at Austin. He is an Adjunct Professor at the Norwegian School of Economics and Business Administration, and has held visiting scholar and professor positions at, among other places, the Hoover Institution and the Universidad Torcuato di Tella in Buenos Aires, Argentina. He was elected a Fellow of the Econometric Society in 1992.

Robert Mundell is University Professor at Columbia University in New York. He has been an adviser to a number of international agencies and organizations including the United Nations, the IMF, the World Bank, the Government of Canada, governments in Latin America and Europe, the Federal Reserve Board and the US Treasury. The author of numerous works and articles on economic theory of international eco-nomics, he is known as the father of the theory of optimum currency areas; he formulated what became a standard international macroeconom-ics model; he was a pioneer of the theory of the monetary and fi scal policy mix; he reformulated the theory of infl ation and interest; he was a co-developer of the monetary approach to the balance of payments; and he was an originator of supply-side economics. In 1999, he received the Nobel Memorial Prize in Economic Science. In 2001 he was appointed Companion of the

xxii List of contributors

ised crime, foreign aid and international trade, confl ict and bargaining theory, racial segrega-tion and integration, the military draft, health policy, tobacco and drugs policy, and ethical issues in public policy and in business.

Vernon L. Smith is Professor of Economics and Law at George Mason University, a research scholar in the Interdisciplinary Center for Economic Science, and a Fellow of the Mercatus Center all in Arlington, Virginia. In 2002, he shared the Nobel Memorial Prize in Economics with Daniel Kahneman. He serves or has served on the board of editors of the American Economic Review, The Cato Journal, Journal of Economic Behavior and Organization, the Journal of Risk and Uncertainty, Science, Economic Theory, Economic Design, Games and Economic Behavior, and the Journal of Economic Methodology. He has laid the foundation for the fi eld of experimental economics, developing an array of experimental methods, setting stand-ards for what constitutes a reliable laboratory experiment in economics. His work has been instrumental in establishing experiments as an essential tool in empirical economic analysis.

Nancy L. Stokey is Frederick Henry Prince Professor at University of Chicago. She serves or has served as vice-president of the American Economic Association, co-editor of Econometrica, associate editor of the Journal of Economic Growth and has served as associate editor of Games and Economic Behavior and of the Journal of Economic Theory. An expert on economic theory and economic development, she examines the impact education and job training have had on the development of national econo-mies. She has shown that economies continue to expand when workforces adopt more complex skills moving, for instance, from manufactur-ing into high technology. She is a member of the National Academy of Sciences, a fellow of the American Academy of Arts and Sciences, and a fellow of the Econometric Society.

Order of Canada. In 2005 he received the Global Economics Award of the Kiel World Economics Institute, Germany and was appointed Knight Grand Cross of the Royal Order of Merit. He has received honorary degrees and professor-ships in several universities in North America, Europe and Asia.

Douglass C. North is Spencer T. Olin Professor in Arts and Sciences, Washington University in St. Louis. In 1992 he became the fi rst eco-nomic historian ever to win one of the econom-ics professions most prestigious honours, the John R. Commons Award. He is a founder of Washington Universitys Center for New Institutional Social Sciences. In 1993, he shared the Nobel Memorial Prize in Economics with Robert Fogel. His research has focused on the formation of political and economic institutions and the consequences of these institutions on the performance of economies through time, including such areas as property rights, trans-action costs, and the free-rider problem. He is recognised as one of the founders of the new institutional economics, and has done impor-tant work on the connection of the cognitive sciences to economic theory.

Thomas C. Schelling is Distinguished University Professor, University of Maryland. He was the recipient of the Frank E. Seidman Distinguished Award in Political Economy and the National Academy of Sciences award for Behavioural Research Relevant to the Prevention of Nuclear War. In 2005, he shared the Nobel Memorial Prize in Economics with Robert Aumann. He served in the Economic Cooperation Administration in Europe, and has held positions in the White House and Executive Offi ce of the President, Yale University, the RAND Corporation, and the Department of Economics and Center for International Aff airs at Harvard University. He has published on military strategy and arms con-trol, energy and environmental policy, climate change, nuclear proliferation, terrorism, organ-

List of contributors xxiii

xxiv

Jesper Risom, and David Young for their dedi-cation and hard work. I am particularly grate-ful to the authors and experts who came to Denmark for Copenhagen Consensus 2008 and whose work forms these pages. As always, I am overwhelmed by their enthusiasm and excellent, diligent research.

This book and the Copenhagen Consensus 2008 project are only possible because of the eff orts of many people. I would like to thank the Copenhagen Business School and Denmarks Foreign Ministry for their support. I am grate-ful to Henrik Meyer, Tommy Petersen, Maria Jakobsen, Lotta Salling, Tobias Bang, Anita Overholt Nielsen, Ask Nielsen, Sara Tornqvist,

Acknowledgements

xxv

COI cost-of-illnessCoW Correlates of WarCOPD chronic obstructive pulmonary

diseaseCR capital recoveryCRS constant returns to scaleCV contingent valuationCVD cardiovascular diseaseDALY disability-adjusted life yearDCPP Disease Control Priorities ProjectDDA Doha Development AgendaDHS demographic and health surveysDOC diesel oxidation catalystsDOTS drugs with direct observation

(TB)DPF diesel particulate fi ltersDPKO Department of Peacekeeping

OperationsDRC Democratic Republic of CongoEDUCO Educacion con Participacion de

la Comunidad (community managed schools)

EITI Extractive Industries Transparency Initiative

EPA Environmental Protection AgencyEPI Expanded Program on

ImmunizationEPRI Electric Power Research InstituteEV equivalent variationFAO Food and Agriculture

OrganizationFARC Fuerza Armadas Revolucionarias

de ColombiaFDI foreign direct investmentFTAA Free Trade Area of the AmericasGAIN Global Alliance for Improved

NutritionGATT General Agreement on Tariff s

and Trade

ACP Africa, Caribbean and Pacifi cACT artemisinin combination

therapyAETG advanced energy technology gapALP acquisition of life potentialALRI acute lower respiratory infectionsAMFm Aff ordable Medicines Facility-

malariaAR4 Fourth Assessment Report

(IPPC)ARI acute respiratory infectionARV antiretroviralsATP accelerated technology pathAU African UnionBASICS Basic Support for

Institutionalizing Child Survival

BAU business as usualB/C benefi t/costBCR benefi tcost ratioCAR Central African RepublicC/B cost-benefi tCBA cost-benefi t analysisCBRN chemical, biological, radiological,

or nuclearCCS carbon capture and storageCCT conditional cash transferCDC Centers for Disease Control and

PreventionCE cost-eff ectivenessCFR case fatality rateCGE computable general equilibriumCIS Commonwealth of Independent

StatesCLTS community-led total sanitationCMB chemical mass balanceCMH Commission on Macroeconomics

and HealthCNG compressed natural gas

Abbreviations and Acronyms

xxvi List of abbreviations and acronyms

OPEC Organization of Petroleum Exporting Countries

ORS oral rehydration saltsOTH over-the-horizonPACES Plan de Amplicacin de

Cobertura de la Educacin Secundaria

PC perfect competitionPEM protein-energy malnutritionPFLP Popular Front for the Liberation

of PalestinePHC primary health centerPIDI Proyecto Integral de Desarrollo

InfantilPM particulate matterPKO peacekeeping operationPOU point of useppm parts per millionppmv parts per million by volumePPP polluter pays principlePPP purchasing power parityPRIO International Peace Research

InstitutePV present valuePWE population weighted exposureQALY quality of lifeR&D research and developmentRR relative risk rationSD standard deviationSDT special and diff erential treatmentSES higher socioeconomic statusSFU solid fuel useSRES Special Report on Emissions

ScenariosSSA sub-Saharan AfricaSTD sexually transmitted diseaseSTI sexually transmitted infectionSUZY scaling up zinc for young childrenTAU technology as usualUCDP Uppsala Confl ict Data ProgramUN United NationsUNFCCC UN Framework Convention on

Climate ChangeUNICEF UN Childrens FundUPE universal primary educationURI upper respiratory infectionsUSEPA US Environmental Protection

Agency

GAVI Global Alliance for Vaccines and Immunization

GCM global climate modelGDP gross domestic productGHG greenhouse gasGM genetically modifi edGNEP Global Nuclear Energy

PartnershipGNI gross national incomeGWP gross world productHAART highly active antiretroviral

therapyHCV human capital valueI&M inspection and maintenanceICRG International Country Risk

GuideICT information and communication

technologyIEG International Energy GroupIFF International Finance FacilityIMF International Monetary FundIMR infant mortality rateINACG International Nutritional Anemia

Consultative GroupIPCC Intergovernmental Panel on

Climate ChangeITERATE International Terrorism:

Attributes of Terrorist EventITO International Trade OrganizationIVACG Vitamin A Consultative GroupIZINCG International Zinc Nutrient

Consultative GroupLDC less developed countryLPG liquefi ed petroleum gasMDG Millennium Development GoalMIPT Memorial Institute for the

Prevention of TerrorismMNE multinational organisationMNF multinational forcesNATO North American Treaty

OrganizationNCD non-communicable diseaseNGO non-governmental organisationNPV net present valueOAU Organisation for African UnityOECD Organisation for Economic

Cooperation and DevelopmentOLS ordinary least squares

List of abbreviations and acronyms xxvii

WTO World Trade OrganizationWTP willingness-to-payYLD years lived with a disabilityYLL years of life lost

VSL value of a statistical lifeVSLY value of a statistical life yearVOC volatile organic compoundWA weight-for-ageWHO World Health Organization

1

IntroductionBJRN LOMBORG

This book is about doing what is rational instead of what is fashionable.

It is fashionable to declare that we want to tackle every major world problem. It is also a great thing to say. Unfortunately, it is not rational. We have limited resources. A dollar spent in one place cannot be spent elsewhere. But it is worse than that. When we say that we want to do everything, we are deceiving our-selves. A few big issues get the most air time, attention and money.

During this decade, there has been an incred-ibly intense focus on terrorism and global warm-ing. Some surveys show these two threats scare people in rich countries more than any other problems that the world faces. Terrorism and global warming have not only dominated some sections of the media, but have attracted billions of dollars and used vast amounts of political capital.

Terrorism and climate change are both seri-ous problems that deserve attention. But, as this book will show, there are many other threats that we hear less about, that also deserve our attention.

The Copenhagen Consensus exercise started as a simple but untested idea of applying eco-nomic principles to prioritize global opportuni-ties. In 2004, the process was carried out for the very fi rst time. The result was a prioritized list of opportunities to solve or ameliorate some of the worlds greatest problems, compiled by some of the worlds top economists. This attracted atten-tion from all over the world. Denmarks govern-ment spent millions more on HIV/AIDS projects, which topped the economists to do list.

Since 2004, the Copenhagen Consensus Center has carried out several similar priori-tizations. We are drawing on the experience of

the Copenhagen Consensus prioritization with United Nations ambassadors in the USA in 2006, and on the Consulta de San Jos last year, where we did a Copenhagen Consensus priori-tization for Latin America and the Caribbean. Basic principles of economics can be used to help any nation or organization to spend its money to achieve the most good possible.

Since 2004, of course, knowledge about the worlds many problems has increased. New and smarter solutions have been proposed. That is why Copenhagen Consensus was always designed as a global project that would be updated every four years. This ensures that new, important challenges and solutions are included in the process and that research is updated.

We have learned from all of our past experi-ences that an informed ranking of solutions to the worlds big problems is possible. We have learned that cost-benefi t analyses (CBAs) do not lead to short-sighted solutions or a fi xation on money. They lead to a focus on the best ways to approach the real problems of the worlds poor-est, most affl icted people. Time and again, the new research presented in this book shows we have the knowledge to do tremendous amounts of good in each of the biggest world challenges. The hurdle is often getting the right resources to the right place.

This book can give philanthropists or policy-makers an assurance that the check they write out is going to achieve the most good possible. I hope it will help draw attention to solutions to the problems that we do not talk about.

Copenhagen Consensus 2008 started with one big question: If we had an extra $75 billion to put to good use, which problems would we solve fi rst? To answer that question, we commissioned the research that is presented here.

2 Bjrn Lomborg

Experts look at ten of the biggest issues facing the planet: Air pollution, confl ict, dis-eases, education, global warming, malnutrition and hunger, sanitation and water, subsidies and trade barriers, terrorism, women and develop-ment.

Each challenge is signifi cant:

Air pollution : Air pollution causes 2.5 million deaths each year, the vast majority in the developing world.Confl ict : Civil wars in small, poor countries cause untold suff ering a single confl ict can cost $250 billion or more, takes many years to recover from and can block all other humani-tarian interventions.Disease : Under the heading of disease, the experts looked particularly at the plight of developing countries they not only suff er much more than the industrialized world from diseases such as malaria, TB and HIV/AIDS, but also have to face an increasing burden of heart disease, cancer and other non-communicable diseases.Education : A lack of education commits many children to an impoverished future. Nearly a quarter of children in developing countries do not complete the fi fth grade and, of these, 55 percent started school but dropped out: 26 million of todays four-year-olds will not complete fi ve grades of schooling.Global warming : Global warming is by defi -nition a global challenge, which could have a large number of important consequences such as increasing food and water insecurity, threatening ecosystem health and low-lying coastal populations while damaging the world economy.Malnutrition and hunger : Despite signifi cant reductions in income poverty in recent years, under-nutrition remains widespread. One in four children under fi ve or 146 million chil-dren in the developing world is underweight for his or her age; each year, under-nutrition contributes to the deaths of about 5.6 million children under the age of fi ve.Sanitation and water: An astonishing 1.1 bil-lion people lack good, clean water supplies,

and 2.7 billion have no access to proper sani-tation.Subsidies and trade barriers : Barriers to trade and migration have negative impacts that par-ticularly aff ect the worlds poorest people.Terrorism : this is a terrifying problem because it has no eff ective solution. Terrorist attacks are a cost-eff ective tactic of the weak against a more formidable opponent. Very cheap ter-rorist attacks can create signifi cant anxiety and carnage.Women and development: Despite large strides in many countries, too many women continue to suff er discrimination, with negative impacts on the health and wellbeing of themselves and their children, as well as the broader economy.

We know that we could achieve good in any of the ten challenge areas. But with limited resources: Where can we do the most and least good? To answer that question, we need to focus on solutions, not problems.

This book presents some of the recommended solutions by specialist experts in each fi eld. There is a range of fresh thinking and new approaches: You will fi nd the fi rst CBA of peacekeeping troops, by Paul Collier, for example (chapter 2). However, it is essential that we test and debate the experts recommendations. That is why a second set of experts has carefully reviewed the research papers, and suggested other ways of viewing the problem.

The work presented in this book helps to undermine one of the many excuses that policy-makers have used for not investing more in global aid and development projects. It provides sorely needed information about where money can achieve the most good.

As in previous Copenhagen Consensus ex er-cises, in the Copenhagen Consensus 2008 project, an Expert Panel of eight economists including fi ve Nobel laureates examined all of the research presented here. They engaged with all of the experts and came to their own conclusions about the merits of each suggested solution to each challenge. Seldom does such a high- powered group of world-class economists deal with such weighty issues.

Introduction 3

up each solution that you will fi nd in this book, and compared it to the other options.

To provide another perspective on these prob-lems and introduce fresh voices to the debate about prioritization, eighty students from twenty countries were invited to Denmark to analyze the research and come up with their own conclusions. The Copenhagen Consensus 2008 Youth Forum was a parallel meeting to the Expert Panel discussions, and the decision-makers of tomorrow enthusiastically embraced the diffi cult task of prioritizing between diff erent solutions. The Youth Forum event was open to the general public and to journalists, to open up the decision-making process of the project. The Youth Forum and the Expert Panel produced their own prioritized lists, ranking solutions across all of the challenges. This highlights their view of the most (and least) cost-eff ective solu-tions.

It is vital, however, that these important issues are not just left to economists. That is why this book exists: I invite you to use this research to produce your own prioritized list of best and worst investments that the planet could make.

The easy thing the fashionable thing would be to say, lets do everything. That is unre-alistic. I hope that the quality of the research presented here will help you to form your own opinion on the best investments that all of us could make to help improve the planet.

I am often asked: Why economists? Many environmentalist campaigners would tell you that any extra money should be dedicated to battling climate change. Thats certainly the global challenge we hear the most about. But an expert in air pollution will tell you that clearing the skies of killer smog should be a top priority. Someone who has spent his life studying confl ict will tell you of the potential benefi ts from reduc-ing the risks of civil war.

When it comes to setting economic priori-ties, the best people to turn to are economists: Experts in prioritization, they are the obvious people to provide a global overview. They put each challenge on an equal footing. The massive media hype about some problems is irrelevant to them. They focus on where limited funds could achieve the most good.

In choosing the best solutions to the worlds biggest problems, the expert panel focused largely on the costs and benefi ts of diff erent options. This is a transparent and practical way to show whether spending is worthwhile or not. It lets us avoid the fear and media hype that often dictate the way we see the world. Carefully examining where an investment would have the biggest rewards provides a principled basis upon which important decisions can be made. The Expert Panel discussed and debated all of the solutions to all of the challenges, in closed-door sessions designed to promote free debate. They weighed

PART I

The challenges

7

Air PollutionBJRN LARSEN, WITH GUY HUTTON AND NEHA KHANNA

CHAPTER

1

Introduction

Air pollution in its broadest sense refers to suspended particulate matter (PM: dust, fumes, mist, and smoke), gaseous pollutants, and odors (Kjellstrom et al. 2006). To this may be added heavy metals, chemicals and hazardous sub-stances. A large proportion of air pollution worldwide is due to human activity, from com-bustion of fuels for transportation and industry, electric power generation, resource extraction and processing industries, and domestic cook-ing and heating, among others. Air pollution has many impacts, most importantly aff ecting human and animal health, buildings and materi-als, crops, and visibility.

In addressing the multiple burdens of air pol-lution, its related causes, and possible solutions, a broad distinction is necessary between indoor and outdoor air pollution:

Human-induced indoor air pollution is to a large extent caused by household solid fuel use (SFU) for cooking and heating, usually involving open fi res or traditional stoves in conditions of low combustion effi ciency and poor ventilation. Indoor air pollution also originates from other modern indoor air pollutants associated with industrialization, with a variety of suspected health eff ects such as sick-building syndrome. However, from a global burden of disease point of view, these modern indoor air pollutants are relatively minor; this study therefore focuses on air pol-lution from SFU. Due to the close proximity and low or zero cost of solid fuels such as biomass in most rural areas, indoor air pollu-tion is more of an issue in rural than in urban areas, although in many urban areas coal

and charcoal are common household energy sources. Indoor air pollution from SFU is particularly hazardous given that pollution concentrations often exceed WHO guidelines by a factor of 1050. Indoor air pollution is also related to environmental tobacco smoke (passive smoking) and exposure to chemi-cals and gases in indoor workplaces.Human-induced outdoor air pollution occurs mainly in or around cities and in industrial areas, and is caused by the combustion of petroleum products or coal by motor vehi-cles, industry, and power generation, and by industrial processes. Outdoor air pollution is fundamentally a problem of economic devel-opment, but also implies a corresponding under- development in terms of aff ording tech-nological solutions that reduce pollution, avail-ability of more energy-effi cient public transport schemes, and enforcing regulations governing energy use and industrial emissions.

Rates of exposure to these two types of air pol-lution therefore vary greatly between rural and urban areas, and between developing regions, given variations in vehicle ownership and use, extent and location of industrial areas and power generation facilities, fuel availability, purchas-ing power, climate, and topology, among other things. Indoor sources also contribute to out-door air pollution, particularly in developing countries; conversely, outdoor air pollution may contribute to pollution exposure in the indoor environment (Kjellstrom et al. 2006).

Over 3 billion people are exposed to house-hold air pollution from solid fuels used for cooking and heating, and over 2 billion people are globally exposed to urban air pollution in more than 3,000 cities with a population

8 Bjrn Larsen, with Guy Hutton and Neha Khanna

SFU, mainly for cooking as well as winter heating. The total disease burden, including morbidity, is estimated at 36 million DALYs (WHO 2007).3 These deaths and DALYs arise mainly from acute lower respiratory infections (ALRI) in young children and chronic obstruc-tive pulmonary disease (COPD) in adults and, to a lesser extent, lung cancer. There is also moderate evidence of increased risk of asthma, cataracts, and tuberculosis (Desai et al. 2004; Smith et al. 2004). While urban air pollution is strongly associated with elevated risk of heart disease and mortality (Pope et al. 2002), no cred-ible studies of such a link are available for SFU because of the longitudinal data requirements. It is however plausible that SFU is a contributor to heart disease and mortality and, if so, the health eff ects of SFU might currently be signifi cantly underestimated.

By WHO region of the world, use of improved domestic fuels (e.g. LPG, kerosene) in rural areas varies from under 15 percent in Sub-Saharan Africa and South East Asia, to 33 percent in the Western Pacifi c developing region, and closer to 50 percent in Eastern Mediterranean and Latin American countries. The main types of unimproved fuels used in rural areas are fi re-wood, dung, and other agricultural residues, followed by charcoal and coal/lignite (Rehfuess et al. 2006). Indoor air pollution from SFU is generalized throughout the developing world. However, the health eff ects depend on many factors, including type of solid fuel and stove, household member exposure to solid fuel smoke (e.g. household member activity patterns, indoor versus outdoor burning of fuels, cook-ing practices and proximity to stove, and smoke venting factors such as dwelling room size and height, windows and doors, construction mate-rial, chimney), and household member age and baseline health status and treatment of illness.

About 1.2 million or 80 percent of global deaths from SFU occur in thirteen countries. Eight of these countries are in Sub-Saharan Africa and fi ve are in Asia. India and China alone account for over 50 percent of global deaths from SFU (fi gure 1.1).

Average prevalence of household SFU is over

over 100,000 inhabitants.1 Epidemiologically, household SFU and urban air pollution diff er in important respects. SFU disproportionately aff ects young children and adult females, while urban air pollution, according to current evi-dence and assessment methods, predominantly aff ects adults and especially the older population groups. There are also important diff erences in terms of solutions. Air pollution from SFU can be substantially reduced or practically elimi-nated by a few interventions such as installation of improved stoves with a chimney or a substitu-tion of clean fuels such as liquefi ed petroleum gas (LPG), natural gas, or, potentially, biomass gasifi er stoves. However, broad packages of interventions are often required to achieve any signifi cant improvement in urban air quality.2 Given these diff erences, this chapter discusses SFU and urban air pollution separately.

While there are many air pollutants, current assessment methods identify fi ne particulates (PM 2.5) as the pollutant with the largest global health eff ects. The focus of this chapter is there-fore on particulates. Particulates are caused directly by combustion of fossil fuels and bio-mass, industrial processes, forest fi res, burning of agricultural residues and waste, construction activities, and dust from roads, but also arise naturally from marine and land-based sources (e.g. dust from deserts). Particulates, or so-called secondary particulates, are also formed from gaseous emissions such as nitrogen oxides and sulfur dioxide.

Household Air Pollution from Solid Fuels

The Challenge

An estimated 1.5 million deaths occur annu-ally as a result of household air pollution from

1 The World Bank provides air quality modeling results for these cities. They are therefore used here as an indica-tor of global population exposed to urban air pollution.2 An exception is elimination of lead (Pb) from gasoline, or control of localized pollution from industrial plant(s) or thermal power plant(s).3 Estimated using baseline health data for 2002 and most recent available data on prevalence of household SFU.

Air Pollution 9

Larsen (2007a) provides an estimate of mor-tality from indoor air pollution from household solid fuels in rural China. The central estimate of annual mortality is 460,000, assuming 50 percent of solid fuel stoves have a chimney and 355,000 if 100 percent of solid fuel stoves have a chimney, suggesting that mortality from SFU in China may be somewhat higher than presented in fi gure 1.1. The estimates are based on the

90 percent in these thirteen countries, rang-ing from 67 percent in Nigeria, 70 percent in Pakistan, some 8082 percent in China and India, 89 percent in Bangladesh, and over 95 percent in eight of the other countries. With the exception of China, these countries are characterized by relatively high under-fi ve child mortality rates, high malnutrition rates, and low national income levels (table 1.1).

50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000India

ChinaNigeria

PakistanEthiopia

Congo DRBangladesh

TanzaniaAfghanistan

AngolaBurkina Faso

UgandaMali

Figure 1.1 Annual deaths from household SFU air pollution, 2002Source: Produced by the author from national estimates by WHO (2007). Mortality estimates are adjusted by the author for Pakistan to refl ect the most recent data in the prevalence of SFU.

Table 1.1. Profi le of thirteen countries with the highest mortality from SFU

India China

Other countries(11 with highest mortality from SFU)

Average SFU prevalence (most recent available) 82% 80% > 90%

Deaths from SFU in 2002 407100 380700 421600

ALRI (% of deaths from SFU) 62% 5% 86%

COPD (% of deaths from SFU) 38% 90% 14%

LC (% of deaths from SFU) 0.1% 5% 0.01%

U5 child mortality rate in 2005 74 27 148

U5 child malnutrition (moderate and severe underweight)*

47% 8% 33%

GNI per capita in 2005 730 1740 480

Note: * Most recent data available from Unicef Global Database on Undernutrition.Source: Author.

10 Bjrn Larsen, with Guy Hutton and Neha Khanna

increase of US $1,000 in gross national income (GNI) per capita is associated with a 20 per-centage point decline in SFU prevalence. Let us assume that this cross-country relationship holds intertemporally for the thirteen countries that account for 80 percent of SFU mortality. In the eleven countries other than China and India in fi gure 1.1, it would take about fi fty-fi ve years to reduce SFU prevalence to 5055 percent and seventy-fi ve years to reduce SFU prevalence to 10 percent, at a per capita income growth of 3 percent per year. In China and India it would take tentwenty years and twentythirty years, respectively, at current economic growth rates. However, SFU prevalence in China has not declined at a rate anywhere close to the rate sug-gested by the cross-country regression results, although a substantial substitution from fuel wood to coal has been observed in the last two decades. Fuel substitution has also been quite slow in India despite rapid economic growth in the last decade.

In most countries, a majority of deaths from SFU is from ALRI in children under fi ve. There is a strong correlation between SFU deaths per population and under-fi ve child mortality rates. COPD mortality is to some extent correlated with life expectancy and an aging population (fi gure 1.3).

ALRI mortality from SFU