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Poverty & SDGs

Getting Bang for the Buck on New Development Goals

Dr. Bjørn Lomborg, an adjunct professor at the Copenhagen Business School, directs the Copenhagen Consensus Center, ranking the smartest solutions to the world’s biggest problems by cost-benefit.

Worker on a farm in Felicity, Chaguanas, Trinidad, harvesting sweet potatoes. Climate change has brought drastic changes in the weather of this twin-island Caribbean nation. Credit: Jewel Fraser/IPS

COPENHAGEN, Feb 13 2015 (IPS) - Right now, the United Nations is negotiating one of the world’s potentially most powerful policy documents. It can influence trillions of dollars, pull hundreds of millions out of poverty and hunger, reduce violence and improve education — essentially make the world a better place. But much depends on this being done well.

In the year 2000, the U.N. laid the foundation for the Millennium Development Goals, which comprised 21 mostly sharp and achievable targets in eight areas, including poverty and hunger, gender equality, education, and child and maternal health.

Imagine sitting in a high-end restaurant with a menu lacking prices or sizes. You do not know whether the pizza costs two dollars or 2,000 dollars, or whether it will feed just you or your entire party.

These goals have been hugely successful, not only in driving more development funding but also in making the world better. For instance, the world promised to halve the proportion of people hungry counting from 1990. And the progress has been remarkable.

In 1990, almost 24 percent of all people in the developing world were starving. In 2012, ‘only’ 14.5 percent were starving, and if current trends continue, the world will reach 12.2 percent in 2015, just shy of the halving at 11.9 percent.

Likewise, we promised to cut by half the proportion of poor. In 1990, 43 percent of the developing world lived below a dollar a day. In 2010, the proportion had already been more than halved at 20.6 percent – on current trends the proportion will drop below 15 percent by 2015, showing spectacular progress.

With the MDGs ending this year, we have to ask what’s next. The U.N. has started an inclusive process from the 2012 Rio Earth summit to define so-called Sustainable Development Goals (SDGs) for 2016-2030.

So, over the coming months, countries, missions, U.N. organisations and NGOs will perform a complex dance to determine – and hopefully whittle down – the next set of targets. But that’s easier said than done. Last summer, 70 U.N. ambassadors in the open working group proposed a vertiginous 169 targets. Clearly we need priorities.

The SDGs will determine a large part of the 2.5 trillion dollars in development aid the world will spend until 2030. In order to spend the money most effectively and help as many people as possible, negotiators now need to zero in on the targets that promise the biggest benefit for the investment.

My think-tank, the Copenhagen Consensus, has asked 60 teams of top economists, including several Nobel laureates, to identify which targets will do the most good for each dollar spent. Imagine sitting in a high-end restaurant with a menu lacking prices or sizes. You do not know whether the pizza costs two dollars or 2,000 dollars, or whether it will feed just you or your entire party.

This is where the U.N. is today – lots of well-intentioned targets with no prices or sizes. Our economists have taken the 169 targets and evaluated the social costs and benefits of each.

The best ones – the targets that have economic, social and environmental benefits 15 times or higher their costs – are painted bright green. Less good ones are light green, mediocre ones yellow and the poor targets – the ones that cost more than the good they do – red. Backed by thousands of pages of peer reviewed economic research, such a simple colour scheme will hopefully help the world’s busy decision makers focus on picking the most effective targets.

Reducing malaria and tuberculosis, for example, is a phenomenal target. Its costs are small because solutions are simple, cheap and well-documented. Its benefits are large, not only because it avoids death and prolonged, agonizing sickness, but also improves societal productivity and initiates a virtuous circle.

Similarly, we should focus on at least halving malnutrition, because there is robust evidence that proper nutrition for young children leads to a lifetime of large benefits – better brain development, improved academic performance, and ultimately higher productivity as adults. For every dollar spent, future generations will receive at least 45 dollars in benefits.

But at what point do goals simply become aspirations? While many ambitious goals are commendable, they may be unrealistic in practice – and could hinder instead of help progress.

For example, setting an absolute goal of ending global malnutrition, warn the economists, may sound alluring, but is implausibly optimistic and inefficient. We cannot achieve it, and even if we could, the resources to help the last hungry person would be better spent elsewhere.

At the other end of the scale, some proposed targets are ineffective. The doubling of the renewable energy share by 2030, for example, sounds great in theory but practically is an expensive way to cut just a little CO₂. Instead, the focus should be on providing more energy to poor people, a proven way of inclusive growth and poverty alleviation.

And in order to reduce carbon emissions, removing fossil fuel subsidies in third world countries promises much higher benefits. Reducing these subsidies in countries where gasoline is sometimes sold for a few cents per liter would stop wasting resources, send the right price signals, and reduce the strain on government budgets, while also cutting emissions.

Of course, the ultimate decision for the Sustainable Development Goals is a political one. No doubt, economics is not the only measure of what the global society should ultimately choose as its development priorities, but costs and benefits do play an important role.

But if well-documented economic arguments can help even just to swap a few poor targets for a few phenomenal ones, leveraging trillions of dollars in development aid and government budgets in the right direction, even small adjustments can make a world of difference.

Edited by Kitty Stapp

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