Reason Magazine - Topics > Global Warming

Schwarzenegger for Cabinet (and President?)

kmw@reason.com (Katherine Mangu-Ward) — Mon, 14 Jul 2008 14:47:00 EDT

Amid murmurs that he might consider a position as energy czar—from McCain or Obama—Schwarzenegger puts in a good word for the virtues of the flip flop:

"Flip-flopping is getting a bad rap, because I think it is great," Schwarzenegger told ABC's "This Week" in an interview broadcast Sunday.
"Someone has made a mistake. I mean, someone has, for 20 or 30 years, been in the wrong place with his idea and with his ideology and says, 'You know something? I changed my mind. I am now for this.' As long as he's honest or she's honest, I think that is a wonderful thing. You can change your mind," he said. "I have changed my mind on things and there is nothing wrong with it."

This is why I love Arnold. This is why America loves Arnold. This is why Arnold is a mere constitutional amendment away from the presidency.

Take a peek back at my coverage of the Arnold-dominated 2008 Governors' Declaration on Climate Change, where everyone agreed that no matter who won the election, he'd be "better on global warming" than Bush. Maybe that's because no matter who wins we're going to wind up with Schwarzenegger in the cabinet.

Query for constitutional scholars: What happens if Arnold is the only cabinet member to survive some kind of horrible attack. Does he finally get to be president, lack of native-born status notwithstanding?

Starving Indians Not Impressed by Global Warming Plan

kmw@reason.com (Katherine Mangu-Ward) — Wed, 09 Jul 2008 18:55:00 EDT

How do you say "screw you" in Hindi?

The plan's authors, the Prime Minister's Council on Climate Change, said India would rather save its people from poverty than global warming, and would not cut growth to cut gases.
"It is obvious that India needs to substantially increase its per capita energy consumption to provide a minimally acceptable level of wellbeing to its people."
The plan's only real promise was in fact a threat: "India is determined that its per capita greenhouse gas emissions will at no point exceed that of developed countries."

More global warming fun here.

Four Ways of Looking at Global Warming Policy*

rbailey@reason.com (Ronald Bailey) — Tue, 01 Jul 2008 15:30:00 EDT

Assume man-made global warming is a big problem. What should we do about it? The four general policies currently in play are (1) cap-and-trade; (2) carbon taxes; (3) encourage economic growth and allow richer future generations to deal with any problems; and (4) massive government-funded low carbon energy research. Of course, these policies can be mixed and matched in various ways, but all involve the invention and deployment of new low-carbon energy technologies. The first two proposals do it by raising the price of carbon-based energy relative to low-carbon energy technologies. The third one implicitly melds the two-century-long trend toward progressive decarbonization of our energy supplies with a strategy of adaptation. The fourth one aims to accelerate technological innovation by stimulating the research and engineering pipeline.

These policy alternatives came into better focus for me this past week after I participated in the Exploring Breakthroughs in Entrepreneurship and Public Policy conference sponsored by the Foundation for Research on Economics and the Environment (FREE) in Bozeman, Montana. The FREE conference concentrated chiefly on the ideas proposed in the book Break Through: From the Death of Environmentalism to the Politics of Possibility (2007) by self-described progressives Ted Nordhaus and Michael Shellenberger. The FREE conferees included Democratic Party activists, libertarian and conservative think tankers, and academicians spanning the ideological spectrum from right to left. In general, Shellenberger and Nordhaus are proponents of a crash program of government-funded low carbon energy technology research as the chief way to respond to the challenges of man-made global warming.

In June, Americans were treated to the spectacle of Congress trying to pass the Lieberman-Warner Climate Security Act, which would have established a cap-and-trade program to limit the emissions of greenhouse gases. Under a cap-and-trade scheme, the government sets an overall limit to the amount of greenhouse gases—chiefly carbon dioxide released from burning fossil fuels—that can be emitted. Under the Lieberman-Warner proposal the emissions cap would decline 70 percent by 2050. Emissions permits would be divvied up among emitters and those that can more easily reduce their emissions would have leftover permits that they can sell to companies that find it more difficult to cut. The idea is that this "market" in emissions would set a price for carbon dioxide that would encourage entrepreneurs and inventors to develop new low-carbon energy technologies.

When climate push comes to shove, politicians prefer cap-and-trade schemes. Why? Because they don't have to explicitly tell voters the bad news that they are raising the prices of electricity, natural gas, and gasoline. Senators and representatives instead cloak this mandated energy price increase in the virtuous language of the market, disguising the fact that cap-and-trade is really a hidden tax.

Issuing emissions permits is like coining money. If the denizens of Capitol Hill decide to auction the permits,it will provide a vast new revenue stream with which members of Congress can play. On the other hand, if Congress decides to give away emissions permits, members can reward favored corporate constituencies, producing all of the usual problems associated with campaign-financing and post-government service rewards. In other words, carbon cap-and-trade proposals are a magnet for rent-seekers, groups lobbying government for taxing, spending, and regulatory policies that provide financial benefits at the expense of taxpayers and consumers. Some savvy corporations are already jockeying for Congressional cap-and-trade favors.

What about carbon taxes? Many economists regard this option as the most transparent and effective policy. The idea is that such a tax would be ramped up in a predictable way over time to achieve the desired emissions reductions. Ideally, the money raised by the new carbon tax would be used to cut other taxes so as not to increase the overall tax burden. I have generally been in favor of a carbon tax because of its transparency and the possibility of reducing taxes on productive activities. However, during the FREE conference, Shellenberger and Nordhaus very persuasively argued that the very transparency of a carbon tax makes it a political non-starter. It is hard to imagine an American politician telling voters he is going to double the amount they pay for electricity, natural gas, and gasoline.

On to the third policy: encourage economic growth and future adaptation to whatever climate change happens. People have been moving from fuels with higher carbon content (wood and coal) to fuels with lower or no carbon content (natural gas or nuclear power) for the past two centuries. However, the pace of decarbonization is not moving fast enough to have much effect on whatever trajectory man-made global warming will take. The International Energy Agency projects that by 2030 overall energy demand will rise by 55 percent and 84 percent of that increase will be supplied by fossil fuels. Greenhouse gas emissions will grow by 57 percent by 2030.

How much wealth will people in 2050 have at their disposal for adapting to whatever climate change may happen? A crude estimate derived by calculating a compounded average economic growth rate of 3 percent per year from now until 2050 projects that the world's $47 trillion economy will grow to $163 trillion. Today, the global average income per capita is $7,200. In 2050, assuming 10 billion inhabitants, average income will more than double to $16,300. If efforts to slow global warming reduce economic growth rates by half of a percent, total world product would drop to $133 trillion and average incomes would be $3,000 less. One stab at determining whether or not it is worth slowing down economic growth to prevent climate change is to ask if global warming is expected cause more than $30 trillion in economic damage each year by 2050.

Finally, what about fostering an energy technology revolution? Shellenberger and Nordhaus assert that the old "pollution paradigm" of environmentalism is played out because it frames the climate change and energy challenges "as a forced choice between poverty and environmental ruin." What we need now, they argue, is an explicitly pro-growth, pro-prosperity politics for the 21^st Century. So they are advocating a ten-year $300 billion energy research program as the way to address climate change. "The goal of the program," they claim, "is to bring the price of clean energy down to the price of coal and natural gas as quickly as possible." Another advantage is that emissions from rapidly developing economies like China and India could be cut if low carbon energy can be made as cheap as fossil fuels.

As models, Shellenberger and Nordhaus pointed to government programs that funded the first transcontinental railroad, the Manhattan Project, the Interstate Highways, massive Defense Department purchases of microchips, and the Apollo moon shot. Shellenberger and Nordhaus favor a modest carbon tax which would both fund the research and encourage companies to adopt the new low carbon energy technologies. Shellenberger and Nordhaus are not alone in pushing this idea. Skeptical environmentalist and head of the Copenhagen Consensus Center Bjorn Lomborg also favors a massive government-funded energy R&D program.

At the FREE conference my role was to be the skunk at their energy research garden party by pointing out the poor record of Congress and federal bureaucrats in picking research winners and losers, e.g., the ignominious end of the Synfuels Corporation, various automobile technology fiascos, the bankruptcies of the subsidized transcontinental railroads, and so forth. In addition, I and other conference participants argued that members of Congress would be happy to fritter away $30 billion annually by earmarking it for projects in their states and districts regardless of scientific and commercial merit. Shellenberger and Nordhaus countered that I was discounting the learning that entrepreneurs gained from government-subsidized failures which led to more productive research paths later. Perhaps.

Cap-and-trade is a rent-seeking disaster, carbon taxes are a political pipe dream, and furthering economic growth and adaptation doesn't require any specific global warming policy. Is there a way to make government-funded energy research less prone to rent-seeking? American Enterprise Institute fellow Steven Hayward suggested that the bipartisan Base Realignment and Closure Commissions (BRACs) might serve as a model for insulating an energy research program from Congressional and bureaucratic meddling.

BRACs were created because whenever the Defense Department wanted to close a military base, the locals would petition their representatives and senators to prevent it. In the 1980s and 1990s, these commissions made recommendations to close nearly 100 military bases as a package on which Congress could vote only yes or no. Similarly, an energy research commission could be set up to devise a package of $30 billion annually in energy research grants for which the Congress could only vote to approve or disapprove as a whole. Would this work? The example of the National Institutes of Health (NIH)—which is supposedly insulated from political meddling—suggests caution. The NIH peer review system which annually distributes $15 billion in research grants suffers chiefly from a lack of bureaucratic imagination.

Shellenberger and Nordhaus want to dedicate the revenues from a modest carbon tax to funding their low carbon energy research scheme. As an alternative, National Center for Policy Analysis senior fellow Sterling Burnett proposed a twofer—would they support oil drilling on the outer continental shelves? Drilling could supply energy in the short to medium term while leasehold monies and royalties could be committed to low carbon energy research. Let's just say that they took Burnett's proposal under advisement.

During one of the breaks, I suggested to Nordhaus that a Machiavellian chief executive might cynically come out in favor of their proposals as a way to derail, at least temporarily, much more expensive cap-and-trade and carbon tax schemes. Which of the four policies is likely to be adopted? Given that both John McCain and Barack Obama favor cap-and-trade, get ready for an orgy of rent-seeking on Capitol Hill in '09.

*Apologies to Wallace Stevens.

Ronald Bailey is reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

An Emergency Cooling System for the Planet

rbailey@reason.com (Ronald Bailey) — Tue, 10 Jun 2008 16:30:00 EDT

Last week, the American Enterprise Institute (AEI) held a conference that asked if geoengineering was a feasible solution to lower our planet's temperature, at least temporarily. The question is what to do if man-made global warming turns out to be a serious problem? At AEI, climatologist Tom Wigley from the National Center for Atmospheric Research in Colorado defined geoengineering as the deliberate modification of the earth's short wave radiation budget in order to reduce the magnitude of climate change. In his presentation, Wigley looked mostly at two possible approaches to geoengineering: injecting sulfate or other aerosols into the stratosphere, and changing the reflectivity of clouds.

Why consider geoengineering in the first place? As Columbia University economist Jeffrey Sachs wrote in Scientific American in April: "[O]ur current technologies cannot support both a decline in carbon dioxide emissions and an expanding global economy. If we try to restrain emissions without a fundamentally new set of technologies, we will end up stifling economic growth, including the development prospects for billions of people."

So if we don't want to perpetuate poverty in the name of preventing climate change, geoengineering may be our way out. Why? Because geoengineering would provide more time for the world's economy to grow while inventors and entrepreneurs develop and deploy new carbon neutral energy sources to replace fossil fuels. Wigley also noted that cutting greenhouse gas emissions is a tremendous global collective action problem. It seems unlikely that fast-growing poor countries like India and China will agree cut back on their use of fossil fuels any time soon. If that's the case, then emissions reductions in rich countries would have almost no effect on future temperature trends. Geoengineering could give humanity more time to resolve this collective action problem, too.

So let's take Wigley's second proposal first—changing the reflectivity of clouds. Researchers know that this can be done because it already happens with ship tracks. Ship exhaust over the oceans injects particles into the atmosphere that serve as cloud condensation nuclei, creating clouds in the wakes of ships. Ship exhaust produces and brightens clouds so that they cool the planet by reflecting sunlight back into space, but only by a little bit. However, recent modeling research by University of Edinburgh engineer Stephen Salter and his colleagues calculates that doubling the number of cloud condensation nuclei would more than compensate for any warming associated with a doubling of carbon dioxide in the atmosphere. This could be accomplished by having ships deliberately inject seawater into the atmosphere where salt particles would serve as extra cloud condensation nuclei.

In 2006, Chemistry Nobelist Paul Crutzen proposed injecting sulfate particles into the stratosphere to reflect some sunlight back into space (an idea discussed by reason contributor Gregory Benford more than ten years ago). This might be done with giant cannons. Crutzen argues that it would cost between $25 and $50 billion per year to shoot enough sulfate particles into the stratosphere to reduce incoming sunlight by 1.8 percent. This would be enough to counter the predicted warming produced by doubling atmospheric carbon dioxide. An earlier study by Yale University economist William Nordhaus estimated that the sulfate injection proposal would cost about $8 billion per year. This compares nicely with the $125 billion per year Nordhaus calculated it would have cost the U.S. to implement the Kyoto Protocol.

Wigley spent most of his time at AEI discussing the possible risks involved with the sulfate injection proposal. Wigley argued that sulfates injected into the stratosphere would be equal to only about 10 percent of those humanity already injects into the lower atmosphere, so this wouldn't greatly boost acid rain. In April, a study by some of Wigley's National Center for Atmospheric Research colleagues found that injecting sulfates would further deplete the ozone layer that shields the earth's surface from damaging ultraviolet light. Wigley simply noted in passing that even more recent research suggests that the damage to the ozone layer will be less than the April study estimated.

Stratospheric sulfate injection might also change rainfall patterns, perhaps reducing precipitation from the monsoons on which millions of Asian farmers are dependent. In response to these worries, Wigley noted that stratospheric sulfates might reduce the intensity of monsoons by two to three percent which contrasts with a current monsoon variability of 30 percent.

But one big problem that sulfate injection would not solve is the continuing acidification of the ocean that is occurring as extra carbon dioxide from the atmosphere dissolves into the seas. This acidification could eventually pose problems for creatures such as mollusks and corals that use calcium carbonate to grow their shells and skeletons.

What is the safe level at which to stabilize carbon dioxide? The current greenhouse gas concentrations are equivalent to 385 parts per million (ppm) of carbon dioxide, up 100 ppm over pre-industrial levels. In the past some researchers suggested that stabilizing concentrations at 550 ppm would avoid the most serious effects of global warming. Now other researchers are arguing that we have to get back to 350 ppm. Wigley sees no signs that humanity is on a track to stabilize carbon dioxide concentrations at 550 ppm. Consequently, he believes that we will have to resort to geoengineering as a way to buy the time humanity needs to figure out how to cut carbon dioxide emissions. He foresees an effort to ramp up stratospheric sulfate injection over 75 years to counter the climatic effects of rising carbon dioxide concentrations.

Stabilization can only be achieved by cutting current carbon dioxide emissions by 80 percent. This means implementing highly unpopular policies of carbon rationing and higher energy prices. So some climate change researchers and environmental activists worry that the public and policymakers will see geoengineering as way to avoid making hard decisions. "If humans perceive an easy technological fix to global warming that allows for 'business as usual,' gathering the national (particularly in the United States and China) and international will to change consumption patterns and energy infrastructure will be even more difficult," writes Rutgers University environmental scientist Alan Robock.

Perhaps. But that is not an argument against pushing ahead with a vigorous research program on geoengineering responses to climate change. Insisting on cuts in carbon dioxide emissions is like trying to require a healthy diet and exercise regimen to prevent heart disease. But when you have a heart attack, you are happy to have a bypass surgeon handy.

Ronald Bailey is reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

Carbon: Tax, Trade, or Deregulate?

Mon, 09 Jun 2008 12:00:00 EDT

On August 11, 2005, Ronald Bailey, reason’s science correspondent and the author of such enviro-skeptic books as Eco-Scam: The False Prophets of Environmental Apocalypse, wrote the following words at reason online: “Anyone still holding onto the idea that there is no global warming ought to hang it up. All data sets—satellite, surface, and balloon—have been pointing to rising global temperatures. In fact, they all have had upward-pointing arrows for nearly a decade.”

Although there are still plenty of free market thinkers who aren’t yet ready to “hang it up,” the center of the debate has shifted in recent years from contested science to proposed policy. And with the prospect of an anti–global warming crusader—either Barack Obama or John McCain—joining forces with a Democratic Congress carrying years of pent-up environmentalist frustration, significant new global warming regulation isn’t a matter of “if” but “how much.”

Assuming that humanity is contributing to the carbon-fueled warming of the planet, what, if anything should governments do? That question, it turns out, is just as contested among skeptics of environmental hysteria as the famous “hockey stick” graphs in Al Gore’s movie An Inconvenient Truth. So we discovered last October, when we matched Bailey on a climate change panel with Lynne Kiesling, a senior economics lecturer at Northwestern University (and former director of economic policy at the Reason Foundation) and Fred L. Smith, president and founder of the pro-market Competitive Enterprise Institute, which in 2002 published a Bailey-edited book entitled Global Warming and Other Eco-Myths.

Bailey painfully concluded that climate change “is a real problem” and reluctantly favored a tax on carbon. Kiesling pointed to the difficulty of assigning property rights to the atmosphere and tentatively came out for a “cap and trade” system of creating a market for pollution credits above a government-imposed ceiling. Smith robustly rejected both ideas in favor of private innovation. The debate, held at a reason-sponsored conference in Washington, D.C., was moderated by Matt Welch.

Click here to watch Lynne Kiesling, Ronald Bailey and Fred L. Smith debate climate change at the at the Reason in DC conference.

Lynne Kiesling: From an economic perspective, the problem of climate change is twofold. First, there are incomplete and uncertain property rights in the air. It’s ludicrous to imagine us each walking around with a bubble over our heads so that we can only breathe and use the privatized air sphere around us. Second, there’s a large number of affected parties. In the limit, some would argue the entire planet is affected.

When a common-pool resource is shared by millions of diverse individuals, defining the use rights over that resource is really hard and costly. This is the kind of situation in which decentralized market processes have trouble even emerging. In this imperfect world, we’re considering two imperfect alternative policies: a carbon tax and cap and trade.

Our experience with common-pool resources, ranging from agreements to share the team of oxen in the medieval village to the development of the sulfur dioxide acid rain program in the 1990s, tells us that effective policy focuses on reducing transaction costs and better defining property rights so that private parties can engage in mutually beneficial exchange. That’s the logic behind the carbon cap-and-trade policy.

Like all policies in such a complex area, it’s got problems itself. How do you allocate carbon permits? There’s the knowledge problem: How do we know how many carbon permits is the right number? Also, as a policy instrument, it’s prone to political manipulation. Electric utilities are already seriously jockeying to make sure they’re playing a part in getting the rules written and that they’re involved in determining the allocation mechanisms if such a policy comes into place.

Another problem is that unlike with sulfur dioxide, the likely participants are really heterogeneous. When we were dealing with sulfur dioxide, it was mostly large-scale central-generation power plants, a pretty homogeneous bunch.

A carbon tax is also prone to some of these problems, particularly the knowledge problem and the political manipulation problem. The benefits to a permit market that have been shown in other situations are that defining property rights and reducing transaction costs does a better job of taking advantage of diffuse private knowledge. It’s also more likely to induce the process that’s at the foundation of economic growth, which is innovation. So I tend to come down on the side of cap and trade, although it’s not a ringing endorsement.

People are already doing this voluntarily. I encourage you to look up a group called the Chicago Climate Exchange, or CCX. CCX is a global carbon permit financial market, and it’s got a nice portfolio of instruments. They’ve got spot permit markets. They’ve starting to do futures now. The entrepreneur behind this, Richard Sandor, has also talked about doing funky derivatives. The participants got together voluntarily and negotiated to determine the number of permits that they were going to have. There were participants on both sides—carbon producers and carbon sinks—so you had this multilateral stakeholder negotiation to determine the number of permits in the market.

Finally, I think most people fail to realize that the abysmal job we do of pricing electricity contributes substantially to our energy use. The only resources that are priced as badly as electricity in our economy are highways and water.

Retail competition and choice for consumers would increase the offering of time-differentiated dynamic pricing, which shifts resource and electricity use across time. Research shows that this promotes conservation and more efficient use of electricity, increases offerings of green power to consumers who want to choose a green power option, and increases the incentives to develop and adopt technologies, such as price-responsive appliances, that enable private individuals to control their own energy use.

So the message from me is this: It’s a complicated, imperfect world, and the policies we can adopt that induce innovation and harness diffuse private knowledge will be the most effective for this long-term problem.

Ronald Bailey: Before we began this session, Fred Smith asked me would it be all right if he referred to me as a commie symp. I think that might be a little harsh. I hope I can persuade you of that.

I stand before you as somebody who’s been reporting and writing on environmental issues for over 20 years. To the extent that I’m known at all, I’ve been known as someone very skeptical of all kinds of environmentalist dooms. My first book was called Ecoscam: The False Prophets of Ecological Apocalypse. It pains me to have concluded, following the scientific data, that one of the dooms is a real problem.

As Lynne very ably pointed out, one of the problems with global warming is that it exists in a commons—that means the atmosphere is very hard to divide up and make into private property.

When you have an environmental commons, we typically have two ways of handling that problem. One is that we privatize it. In many environmental issues, we’re moving in that direction. Fisheries, for example, are being privatized. Forests are being privatized. Water resources can be privatized as well.

The problem with air pollution—and global warming is a form of air pollution—is that I don’t see a good, easy way to privatize it. The transaction costs are too large. And if you can’t privatize it, you have to regulate it. So now the question is: What’s the least bad way to regulate? And that is why I’ve come out in favor of a carbon tax.

As a good libertarian, I thought I would like cap and trade. The problem is I’ve been watching the European attempt to do this, and it’s a complete disaster. The governments, not surprisingly, cheat constantly. Their carbon market collapsed a year ago because the governments allocated more permits for carbon emissions than were necessary to cover what was being emitted, so naturally the price went to zero. And if the Europeans can’t pull this off, how could you expect the world to pull this off?

I understand the diffuse knowledge problem—how markets can and, in fact, do marshal that kind of information in very good ways. The problem is that there’s no baseline for the rest of the world.
Idiotically, the Kyoto Protocol set it at 7 percent below what was emitted in 1990 for the 36 countries that signed the treaty. Well, how are you going to do that for China and India? We don’t know what they’re going to be emitting in 30 years. So I come out in favor of the tax because you have a baseline. You have a way of internationally monitoring that. The baseline is a zero tax and from that, you can build up. You could start the tax low and, as you gain more information about what the atmosphere is likely to do, you could adjust the tax over that time.

For consumers, for inventors, for innovators, a tax offers price stability in a way that the cap-and-trade markets don’t. For example, in the sulfur dioxide market, sulfur permits have ranged in price from $50 a ton to over $1,000 a ton. And for sulfur dioxide, it’s a smaller market. A carbon market would encompass the world.

Fred L. Smith: What’s the best way of addressing whatever risks there are in global warming? Should the risk of catastrophic global warming justify abandoning our general preference for freedom over coercion? Should we free market advocates champion carbon taxes or carbon rationing, some form of suppressing energy use, or should we favor economic liberalization?

We’ve been working on that issue for two decades now. In that early period, I noticed that the catastrophists, the global warming alarmists, had to have answers to three questions positively.

First: Does the science indicate significant evidence of imminent catastrophe? That is, is the earth warming significantly in a human-relevant way? Is the 0.7 degree centigrade increase over the last century offset or not by the 1,800 percent increase in wealth over that same period?

Second: Is the warming impact negative or positive overall? I note in passing that more people seem to retire to Florida and Arizona than Lake Woebegone.

Third: Can the political tools now available realistically restrict carbon use? We may endorse economic suicide. Europe may join us, but should we expect India and China to go back to the Stone Age just because of our political elites?

Over the last decade, I think the evidence for all those questions has moved against the global warming catastrophists. There is evidence that there has been some warming, moderate amounts, but the idea that we’re facing imminent catastrophe has weakened. Our ability to do anything about CO2 increases for the next half-century is now obviously nonexistent. And the tensions we could create by pushing the world into some form of energy rationing, I think, are underestimated. Recall that in World War II, one of the incidents that pushed the war party into power in Japan was an energy boycott on that Asian nation. We are going to do that again with China. It doesn’t make a lot of sense to me.

Shouldn’t we be asking whether the risks of global warming are more or less than the risk of global warming policies?

The costs of energy rationing are not trivial. Energy is what makes it possible to have mobility, to have labor-saving technology, to have lives that are comfortable, to have hope for the future. Energy rationing would lead to slower economic and technological growth, a darker, less human-friendly world. The trillions we’re talking about spending over the next generations on global warming could go to much better causes, could save lives and inspire hopes today.

But we’ve been told—we’ve heard it from Ron, at least—that we must do something. Perhaps. But why must that something be the expansion of state power over our lives? Why do we limit ourselves to taxes or rationing? There are other alternatives out there.

We could do some more R&D. We could mitigate. What about mirrors in space? What about fertilizing the oceans? Those of us who have looked at NASA and so forth are not overly enamored with government’s ability to underwrite those kind of policies, but we should be equally optimistic about government’s attempt to tax in this academic-blackboard economic way.

Resiliency is what we should be talking about. Not whether taxes or quotas are the better way to suppress freedom, but how we can use the global warming concerns to advance an agenda of freedom. How do we find ways of accelerating economic and technological progress? How do we liberalize the economies of the world? How do we expand the institutions of liberty even into the air sheds?

We can free biotechnology. I’m sure Ron and I both agree with that. If the world is hotter, colder, wetter, drier, we’re going to need the ability to modify our crops much more than we have today. Freeing biotechnology from the regulatory straitjacket it’s in today would be a way of doing that.

As Lynne said, we could complete the job of freeing our electricity system, not just for pricing electricity but also for incentivizing the grid to be smarter and more robust so we can free the trapped electricity that sits idle throughout America. Move fire, storm, and other insurance out of the government subsidy range and put it back into the private sector so we can guide people away from living in high-risk areas.

Unilateral free trade. Extend property rights to water. Liberalize energy exploration. Cuba can drill off the coast of Florida; why can’t America? Where is nuclear power? Certainly Al Gore hasn’t mentioned it. Eliminate the corporate income tax. Accelerate the turnover of capital goods and equipment. That would mean a much more efficient world to live in.

Our agenda is the agenda of freedom, not the agenda of some form of a rational economic suicide pact.

It is understandable that many people grow weary. I know people very close to me who have grown weary in this fight. We get a bit depressed when we realize that logic is for losers in the political process. It’s hard to be the dissident at the cocktail parties. Any of you who have had the situation where your friends look at you and shake their heads sadly and walk away know how hard it is, but our challenge remains to speak truth to power, to find ways to make good policy good politics.

I chaired a global warming panel in Bucharest earlier this year. There are some European think tanks that have withdrawn from this battle also. It’s too costly, they say. It’s too difficult to resist the consensus. We have to give up a little bit. To them, I’ll argue as I do to you today, that we must fight; we must continue to risk. The loss of freedom in the global warming debate is far too great. That is our duty. That is our challenge.

For events of this type have happened before. In August 1914, European nations found themselves trapped in a consensus, a set of entangling treaties that forced them to move in an inexorable way towards disaster, towards World War I. Edward Grey, the British foreign minister, noted, “The lamps are going out all across Europe. We shall not see them lit again in our lifetime.”

Today, fears about global warming are pushing the world towards disaster. This time the threat is not just to the lamps of Europe but to the lamps of the world. Energy suppression, if it happens, might last for many lifetimes.

Statist intellectuals still dominate the global warming debate. We economic liberals are few, but we few are the thin line resisting those who would return us to the Dark Ages. This is not any time to go wobbly.

Matt Welch: Lynne, could you speak to Ron’s critique of cap and trade? Is it basically a great idea in theory that you’re wishing might work someday 20 years in the future? Is Europe really a catastrophe, and what’s keeping it from working?

Kiesling: Just because Europe can’t implement this doesn’t mean the idea is bad. The E.U. carbon scheme is a poster child for what can happen when you have too centralized and too politically motivated a process for allocating the permits. The E.U. decided how many permits each country would have, then each country then got to allocate them among their industries as they saw fit. This was the most politicized process imaginable. With a good market design and good testing and good analysis, we could do better.

It does highlight the important fact that political manipulation is going to happen in whatever policy we choose. But I wouldn’t throw the idea out just because the E.U. can’t do it. There’s a lot of stuff the E.U. does really badly.

Smith: I have one strong procedural difference with both Ron and Lynne on this. The argument is that when you have a common property resource, your choices are either to privatize that resource, move towards institutions of liberty, or politicize it in some enlightened way as Lynne and Ron have talked about. But Ronald Coase said there’s always a third option, that the costs of transaction in that area are much higher than the failure to have transaction in that area and therefore we should allow evolution to proceed and see what creative solutions emerge. That is basically what we should be doing in the global warming area.

European taxes are just as bad as European cap and trade, and American taxes aren’t anything to write home about either. The idea that a tax policy will emerge through the political process unsullied is unlikely. Energy taxes in Europe and the United States are already a mess. If we raise them, they’ll be a bigger mess.

Bailey: One of the problems is that the new energy technologies are very unlikely, in my judgment, to arise merely because we ignore carbon dioxide. If it were already easy to create low-carbon energy, inventors would have done it. It would be here now.

If you look at the projections from the International Energy Agency, the amount of energy the world will be using in the next 30 years or so is going to get much vaster. China is building one coal-fired plant a week, and they’re probably going to ramp it up to two a week. Those plants are going to be there for 50 years. If you think that carbon dioxide is a problem now—

Smith: And if you think energy rationing—

Bailey: Fred, when we privatize a forest, is that lumber rationing? When we privatize the fisheries, is that fish rationing? We have people pay for what it is that they use.

If you could persuade me, which you have failed to do with your rhetoric, that we can in fact repair to markets to get this done, I would be more than happy to do that. I don’t want the lights of the world going out. But I also wonder, by the way—this is a question you’ve never answered when I’ve asked you several times—what temperature rise over the next century would in fact cause you to worry about humanity’s ability to adapt?

Smith: Over 20 degrees, certainly.

Bailey: How about—

Smith: Not 0.7.

Bailey: Not 0.7, but 6.

Welch: Ron, you mentioned at the beginning, sort of in jest, that it pains you to come to the conclusion that global warming is a problem. Is that a scientific approach, to be pained by the results? Has there been a mind-set to debunk when looking at this issue, and has that caused conclusions that were wrong?

Bailey: Yes, in some cases. I did not want this information to go in that direction. And I had good reason, given my career, to expect that it wouldn’t. The environmentalists have been wrong about the population problem. They were wrong about trace exposures to synthetic chemicals causing cancer. They were wrong about running out of natural resources. I’ve happily and joyfully reported this for years and annoyed a lot of people.

I, against my values, have decided that this is a problem. I would really like to be persuaded that classical liberalism and markets and so forth have a way of solving this problem. I’m still waiting for Fred’s proposal. I don’t think it can be done voluntarily around the world. The voluntary carbon markets are tiny—

Kiesling: It’s very unscaled.

Bailey: Right. And if you don’t have an economic incentive to participate in those carbon markets, like a tax or like a cap-and-trade permit, most people aren’t going to do it. Why would they? Why would they spend money that they don’t have to spend?

Kiesling: In this case of Chicago Climate Exchange, the biggest participants are Ford Motor and American Electric Power—the largest coal-fired generation owners in the country. So for them, it’s a strategic action. They’re hoping to forestall regulation but also it’s a P.R. and reputation capital building exercise.

Smith: I think one of the problems our movement has is we’re a think tank movement. We believe that if we just go out and talk to everybody for a few hours they’ll become libertarians. That’s not a wisely thought-through process, and it misses the whole point. Most people are—have to be—rationally ignorant. Our challenge is to make them understand that for their values, freedom is better than coercion. It’s why I think we have to recognize that where there are risks of global warming, there are also risks of global warming policies. I see nothing in Ron that represents any understanding of that balancing.

Welch: Following up on that, Fred, do you see some kind of political market value therefore in, for lack of a better word, Al Gore jokes? Is that a way to get the message across because at some point you realize you just want people to feel that they’re all part of the anti–Al Gore team more than being persuaded by your logic?

Smith: Ridicule is a very important tool. It’s one that has to be wielded very carefully. The difference between ridicule and being mean is very close, and I think sometimes libertarians are far too easily led into being mean. We win the debate and we lose the audience. I think ridicule by other people is damn useful. Every time liberals make fun of Gore, I love it. When we make fun of Al Gore, I get very nervous.

Bailey: And then you make fun of Al Gore.

Audience question: Ron, what entity would collect the carbon tax? Local government? Federal? The United Nations? And what would that money be spent on and how would it reduce actual CO2 usage?

Bailey: No, it would not be a U.N. tax. I’m channeling William Nordhouse, the Yale economist who does a lot of work in this area. Basically it would be a globally harmonized tax, but the money would be collected by each country and spent by the governments in each country.

In the ideal world, you would recycle that money by reducing other taxes, so the overall tax level in the country would not increase. What you would be doing is incentivizing people to conserve energy but also incentivizing people to innovate, to find new ways to produce energy that people would want using low-carbon technologies or carbon-sequestering technologies.

It’s a deep, dark secret, but back in the 1970s, during the glorious era of the Jimmy Carter administration, I was a regulator for three years.

Kiesling: You’ve seen the dark side.

Bailey: I’ve seen the dark side. I worked for the world’s most boring regulatory agency, the Federal Energy Regulatory Commission.

Kiesling: I knew he was going to say FERC when he said “boring.”

Bailey: And I think I understand some of the problems that go with regulation. My intellectual disdain for government was honed into a white-hot hatred after that experience. One of the things I got to regulate was the synfuels plant that you may all remember was being built in North Dakota. At the time, it was the world’s largest construction project. It cost $2.1 billion to build. It never produced any natural gas of any sort. That money, by the way, would have grown at 5 percent interest to $6.5 billion had it not been wasted.

Government does not innovate. So by creating a carbon tax you would encourage private people to marshal the information in response. So carbon tax is a price, to figure out better ways to make energy, low-carbon energy. I don’t know what those energies will be. I’m sure the government doesn’t know either, and I don’t want them wasting the money doing it.

Smith: I should point out that we have that experiment going on today. Europe—500 million people—experiences gasoline taxes in England of $8 a gallon. We experiment with $2.50, $3 a gallon. Yet one doesn’t find these new technologies rushing out of Europe. How high does—

Kiesling: Actually, that’s incorrect. All of the new diesel engines—

Smith: Oh, no. Diesel has nothing to do with the economics. Diesel has to do with the low tax of diesel and the fact that the air pollution laws don’t ban diesel in Europe. It’s not the energy taxes. It’s regulatory policy.

Bailey: So, Fred, are you saying that human beings are not clever enough to come up with low-carbon energy?

Smith: I’m saying that technocratic social engineering projects aren’t the best way to free the creative energies of mankind.

Bailey: Unfortunately, Fred, you haven’t shown a path for evolution to this. I’m sorry. I realize that you believe that somehow the invisible hand will take care of a commons problem always, but commons problems are solved by creating property.

Smith: Government.

Bailey: And the government helps create property, defends property. It’s an institution.
It’s not a great institution. Right now all the big emitters are coming to Washington and begging for free permits so they can get tons of money, basically, and extract it from our pockets—which is another reason I don’t like cap-and-trade systems. They want the government to create an asset for them worth hundreds of billions of dollars.

Welch: I have to impose my liberty here. The panel will be in the back alley after this, but the rest of us have to go to lunch now, which is next door.

Energy Wedgists versus Technology Breakthroughists

rbailey@reason.com (Ronald Bailey) — Tue, 03 Jun 2008 15:00:00 EDT

This week the U.S. Senate is debating the Climate Security Act, a piece of legislation which would require the country to cut its greenhouse gas emissions by 4 percent in 2012, 19 percent in 2020, and 71 percent in 2050 below what they were in 2005. The act rations the emission of greenhouse gases produced by burning fossil fuels by issuing an ever declining supply of emissions allowances. Emitters such as electric power generators, coal, oil and natural gas companies, and energy intensive industries like steel and cement manufacturers will be able to buy and sell the government-issued permits. This trading puts a price on greenhouse gases. The idea is that as energy produced from climate-damaging fossil fuels becomes increasingly expensive, industries, researchers and entrepreneurs will be encouraged to develop new climate-friendly, low-carbon and no-carbon energy technologies. But will this happen?

First, let's consider just how big a technological challenge it will be to cut greenhouse gases by 70 percent. Former General Electric executive Don Dears provides some sense of the size of the challenge when he points out that an 80 percent cut means reducing U.S. carbon dioxide emissions from about 6 gigatons (1 gigaton = 1 billion tons) today to 1 gigaton by 2050. One gigaton is the amount the U.S. emitted around 1920, when there were just 100 million Americans.

Now let's widen the focus to include cuts that the whole world will need to make in order to stabilize concentrations of greenhouse gases in the atmosphere. Currently, the world emits about 26 gigatons of carbon dioxide. In 2007, the International Energy Agency (IEA) projected that by 2030 carbon dioxide emissions will rise by 57 percent to 42 gigatons per year. Climate researchers estimate that in order to stabilize atmospheric concentrations of carbon dioxide at 450 parts per million (ppm) (where there's a good chance that average temperatures would increase by less than 2 degrees Celsius) emissions must be cut by 80 percent from current levels by 2050. This means that the world will have to produce considerably more energy while emitting only 5 gigatons of carbon dioxide annually. If IEA estimates of future energy demand are accurate, this implies that the world would have to find the equivalent of 37 gigatons of carbon-free energy by 2030.

So just how big is a gigaton? Cutting a gigaton of carbon dioxide is equivalent to replacing 1,000 conventional 500-megawatt coal-fired electric generation plants with zero-emission plants. Zero-emission might mean coal-fired plants using carbon capture and sequestration (CCS) technologies, perhaps costing as much as $80 per ton. By some estimates, CCS would increase the cost of producing electricity by 25 to 40 percent. Cutting another gigaton would be equal to building 500 one-gigawatt nuclear power plants. The world currently has 439 nuclear plants in operation. One gigaton more would require increasing the number of windmills operating in the U.S. by 150-fold, or increasing solar photovoltaics by 10,000-fold. It would take farming an area 15-times the size of Iowa to produce the biomass to replace 1 gigaton of carbon dioxide emissions.

The energy technology debate among those who are concerned about the dangers of man-made global warming divides into two camps—wedgists and breakthroughists. Wedgists are deploying the concept of "stabilization wedges" devised by Princeton University researchers Stephen Pacala and Robert Socolow. They define a stabilization wedge as the reduction of carbon dioxide emissions by 1 billion tons of carbon per year by mid-century (1 billion tons of carbon is equivalent to 3.7 billion tons of carbon dioxide). In their analysis, each wedge of reductions is achieved using already commercialized technology, generally at much larger scale than today. The goal is for the world to emit no more greenhouse gases than we do today by mid-century and then steeply cut emissions to near zero in the last half of the 21st century.

Some proposed stabilization wedges include increasing the fuel economy for 2 billion cars from 30 to 60 miles per gallon (mpg); decreasing car travel for 2 billion 30-mpg cars from 10,000 to 5000 miles per year; deploying 2 million one-megawatt windmills occupying 74 million acres; building 700 one-gigawatt nuclear power plants; installing 2000 gigawatts of photovoltaic power on 5 million acres; and planting more than 600 million acres with biofuel crops.

Breakthroughists argue that the wedgist approach is a technical and political non-starter. In 2002, a number of leading energy researchers argued in Science that current on-the-shelf technologies cannot supply low-carbon energy at an acceptable cost. One of the co-authors, MIT engineer Howard Herzog, declared, "To reduce greenhouse gas emissions from our energy systems while maintaining energy prices at comparable levels to today will take revolutionary change as opposed to evolutionary change."

More recently, passionate breakthroughists like Ted Nordhaus and Michael Shellenberger claim that studies show that carbon dioxide emissions would have to be priced at around $100 per ton between 2010 and 2030, rising to $160-200 per ton between 2030 and 2050, to achieve deep cuts in U.S. greenhouse gas emissions by 2050. Thus they argue that the wedgists are framing the energy challenge "as a forced choice between poverty and environmental ruin. With a choice like that, it is no surprise that the world has failed to make real strides towards a cleaner energy future." They add, "If policymakers limit greenhouse gases too quickly, the price of electricity and gasoline will rise abruptly, triggering a political backlash from both consumers and industry."

Breakthroughists point out that polls regularly find that people around the world are unwilling to pay much more for green energy. In addition, higher energy prices would mean that more than a billion poor people in developing countries will have to wait even longer to gain access to modern fuels.

So breakthroughists Nordhaus and Shellenberger are proposing "a ten-year, $300 billion public investment into accelerating the transition to a clean energy economy. The goal of the program is to bring the price of clean energy down to the price of coal and natural gas as quickly as possible." Even breakthroughists agree that the price of energy produced using fossil fuels must increase at least somewhat in order to encourage energy suppliers to switch to whatever new breakthrough technologies are developed. Wedgists like Climate Progress editor Joseph Romm dismiss such breakhthroughist proposals as wishful thinking. Romm asserts that ramping up energy supply breakthroughs would take decades and that the climate change problem is too urgent to wait for such breakthroughs to emerge.

Although the Climate Security Act does direct some spending towards low-carbon energy research, it is basically a wedgist scheme. If something like it is adopted by the next presidential administration, we will find out which side is right. If the wedgists are correct, cutting carbon dioxide emissions will produce a modest increase in energy prices resulting in the deployment of a wide variety of readily available low-carbon energy sources over the coming decades. If the breakthroughists are right, energy prices will soar provoking a political backlash. In which case, perhaps one need only peer across the Atlantic to the spreading protests against higher fuel prices in Europe to see the future.

Ronald Bailey is reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

Al Gore: The Opera

jwalker@reason.com (Jesse Walker) — Fri, 30 May 2008 20:45:00 EDT

I think I'll wait for the Bugs Bunny version:

The legendary La Scala opera house in Milan has commissioned a full-length work to be based on [Al Gore's] book, An Inconvenient Truth, and the Oscar-winning documentary of the same title.

La Scala's artistic director, Stephane Lissner, told a press conference the new opera had been commissioned from an Italian composer, Giorgio Battistelli. He said it would be staged in 2011.

More Fun than Watching Grass Grow

kmw@reason.com (Katherine Mangu-Ward) — Fri, 30 May 2008 15:22:00 EDT

"Reduce emissions to 1990 levels," is a phrase you hear a lot among global warming go-getters of various stripes. It's the goal set by the Kyoto Protocol, but it has a life of its own as a handy carbon emissions benchmark. But the truly hardcore seem to be going with something more like 1890 levels:

When my fella and I bought our house last year, we tried to make thoughtful decisions as we accessorized our new lives... So we bought a reel mower -- completely manual, no gas, no cord, just a few blades and some sweat.

Anyone who has even used a push mower knows where this is headed:

And I'm here to report: Our mower sucks. It rattles. It doesn't cut all that well. It completely misses the tall, thin weeds that have populated our lawn this spring, so that even after a fresh cut it looks like we haven't touched the thing for weeks.

And people wonder why the environmental movement has a hard time getting people to change their habits. Instead of sweating and swearing in an attempt at perfect green purity, why not support innovation by mowing your lawn this weekend with relatively clean and increasingly efficient electric model, a revamped gas mower, or toss out some big bucks for a Roomba-style solar-powered lawnmower?

Help Set "The Copenhagen Consensus"!

info@reason.com (Bjorn Lomborg) — Wed, 28 May 2008 16:30:00 EDT

A note from Bjorn Lomborg, author of The Skeptical Environmentalist and the director of the Copenhagen Consensus Project, which seeks to prioritize global policy decisions according to sound science and rational cost-benefit analysis rather than media-driven hysteria:

The pain caused by the global food crisis has led many people to belatedly realize that we have prioritized growing crops to feed cars instead of people. That is only a small part of the real problem.
The crisis demonstrates what happens when we focus doggedly on one specific—and inefficient—solution to one particular global challenge. A reduction in carbon emissions has become an end in itself. The fortune spent on this exercise could achieve an astounding amount of good elsewhere.
In a year, malnutrition in mothers and their young children will cause 3.5 million deaths. Conflict will wreak havoc and cause untold suffering. Malaria will take a million lives—most of them among children.
Yet famine, war, and disease are rated poorly when residents of the First World are asked to name the planetary challenges causing them the most concern. Along with climate change, the issue that creates the most anxiety is terrorism.
The Copenhagen Consensus 2008 project is designed to put fear to one side and highlight the best solutions among all of the world's biggest problems. The research on these pages reveals our stark spending choices in 10 areas.
Comparing costs and benefits is a transparent and practical way to show whether expenditure is futile or worthwhile. It gives us a means to step back and weigh competing options for the public purse or philanthropist's checkbook. It prompts us to take another look at our current priorities and ask: is this really the best that we can do?
Acknowledging that some investments shouldn't be our topmost priority isn't the same as saying that the challenges don't exist. It simply means working out how to do the most good with our limited resources, right now.
In the last week of May, top economists—including five Nobel Laureates—will gather in Copenhagen to weigh the costs and benefits of each policy option, and make a prioritized list showing the best and worst choices.
Have your say ahead of their decision. With limited resources, which challenge do you think global decision-makers should tackle first?—Bjorn Lomborg

What follows are short discussions about how to deal with 10 areas, ranging from air pollution to global warming to women and development. Each topic section includes two options to ameliorate the situation. Each solution has been assigned a benefit-to-cost ratio (BCR) by researchers commissioned by the Copenhagen Consensus Project 2008. For information about the researchers for each section, please go here.

reason online readers are invited to rank which areas of concern they think are most important and which solutions you prefer. You may submit your rankings here. The results will be tabulated and announced on the site next week.

1. Air Pollution

The Olympic Games has given China the motivation to get serious about the smog that chokes its capital city.

Major polluters have been shifted away from Beijing. Coal-burning boilers have been converted to cleaner fuels, and vehicle emission standards have been introduced. All this so that athletes—and the world's media—see clear skies. Sadly, few other cities in the developing world have similar motivation to clear the air. Air pollution—in the form of outdoor urban pollution and of ‘indoor' pollution caused by old-fashioned cooking methods—kills nearly 2.5 million people each year; 90 percent of the fatalities happen in developing nations.

Option One: Improved Stoves

There are simple, cheap solutions to the problem of indoor air pollution.

More than 3 billion people are exposed to household pollution. Women and young children are especially affected because they spend more time indoors, near cooking stoves using solid fuels like wood, charcoal, peat, and coal.

The answer is surprisingly simple: improved stoves with good venting of smoke and the use of alternative fuels.

For $2.3 billion in U.S. dollars, we could provide a rocket stove to half the people using unhealthy, old-fashioned stoves. A rocket stove is easy to construct, and uses low-cost materials, and cuts out the negative health effects caused by solid fuel use by a third.

The economic spin-offs from improved health would be 4.6 times higher than the costs.

Option Two: Diesel vehicle technology

In many developing countries, road vehicles are generally found to be the major source of outdoor polution, partly because of high levels of diesel use, badly maintained engine, and little or no emission control technology.

Particulate emissions from diesel vehicles can be reduced by a diesel particulate filter, a device designed to remove diesel particulate matter or soot from the exhaust gas of a diesel engine. A diesel-powered vehicle equipped with functioning filter will emit no visible smoke from its exhaust pipe. Another option is to use a chemical process to break down pollutants in the exhaust stream into less harmful components.

Diesel vehicle particulate control technology is, unfortunately, very expensive, so the benefits are very low compared to the costs.

Experience from several developing city studies shows that retrofitting older and newer diesel-fuelled buses and delivery trucks with particulate control devices has economic benefits worth only 50 cents for every $1.00 spent.

2. Conflict

The food crisis is further increasing global political instability at a time when, according to research by Paul Collier, the risk of new civil wars is already rising. Many recently negotiated peace settlements have left nations fragile, while the commodity boom and the discovery of mineral resources in countries with weak governments have sown seeds for discord.

Since Iraq, the developed world has lost faith in using military force to reduce conflict. However, Iraq is a misleading guide to the effectiveness of intervention. Unlike the vast majority of conflicts, its civil war was sparked by an international war.

The far more typical scenario is a relapse of political violence within a small, low-income, low-growth nation already troubled by fighting. This is the real security challenge that developed nations must deal with this decade.

Option One: Aid

Post-conflict aid designed to stop violence recurring is much more politically acceptable than the use of force.

If it proves just as cost-effective—or more so—than military intervention, then it is clearly a more attractive option.

In a nation recovering from violence, each additional percentage point of national growth lowers the risk of conflict re-emerging by around 1.5 percentage points. In a typical case, achieving a one percentage point lift in national growth requires annual aid of $400 million: Aid is very expensive.

This investment doesn't just reduce the risk of civil war, but also boosts growth. The overall benefits are worth nearly three times more than the costs.

Post-conflict aid therefore looks to be a good use for aid money, but not so spectacular that it would trump most other calls on scarce international public resources.

Option Two: Military intervention

Four new civil wars are expected to break out in the next decade in low-income nations.

The real problem with most peacekeeping interventions is that they are too short—the risk of renewed civil war in post-conflict situations declines slowly with time.

The degree of risk reduction depends, not surprisingly, on the scale of deployment.

Compared with no deployment, spending $850 million on a peacekeeping initiative reduces the ten-year risk of conflict re-emerging from around 38 percent to 7 percent. A smaller military intervention would reduce the risk by a smaller amount.

Because of war's horrendous and lasting costs, each percentage point of risk reduction is worth around $2.5 billion to the world.

The economic benefits to the world from spending $1 billion each year to reduce the risk of conflict add up to $12.6 billion: Each dollar achieves $12.60 of good.

3. Disease

Life expectancy is decreasing in some parts of the world. Ten million children will die this year in poor nations; this figure would be just 1 million if rates were the same as in rich countries.

The hurdle is not just poverty—some poor nations have reasonably good health conditions—but getting cheap treatment and prevention methods to the Third World.

Some health problems receive a lot of publicity. But in areas that we hear less about, we could invest wisely to make a big difference. The two options here (out of seven being looked at by the Copenhagen Consensus's expert panel) are two where the benefits significantly outstrip the costs.

Option One: Tackling Malaria

In poor countries, malaria will claim more than 1 million lives this year—most of them among children under five.

Measures to reduce its transmission are simple. We need to expand the coverage of insecticide-treated bed nets. We need to get more preventive treatment to pregnant women so they don't transmit malaria to their children. And we need to ensure there is more indoor spraying with the much-maligned pesticide DDT.

Treating malaria is becoming harder than it was because of growing resistance of the malaria parasite to the cheapest, most common anti-malarial drugs. Some poor nations cannot afford the new ‘combination' treatments.

It makes sense to combine prevention options like bed-nets with subsidies on the new treatments for poor nations. Spending $500 million would save 500,000 lives a year—most of them children.

The economic benefits from ensuring people are healthier and more productive would be 20 times higher than the costs.

Option Two: Reducing Heart Disease

Third World heart disease seldom makes the news agenda in developed nations. Though not a "sexy" problem, the rewards for investment are high.

Heart disease represents more than a quarter of the death toll in poor countries. Developed nations treat acute heart attacks with inexpensive drugs that aren't available in the developing world.

Spending just $200 million getting these cheap drugs to poor countries would avert 300,000 deaths in a year.

Put into economic terms, the lower burden on the health system and other economic benefits mean that a dollar spent on heart disease in a developing nation will achieve $25 worth of good.

4. Education

A fortune is spent in an effort to get more—and better—education to children in the developing world. A lot of this money could be better spent.

Building more schools isn't the smartest approach. Indonesia doubled its number of schools in six years, leading only to a 3 percent rise in the amount of time kids spent at school. In much of the world, schools already exist where most children live. New ones can just divert them from other schools.

Similarly, many attempts to increase the quality of education go wrong because there's still no agreement on what constitutes "quality."

A quarter of children in developing nations do not complete their first five years at school—but more than half of these kids did start. One cost-effective approach is to focus on eliminating grade school drop-outs in developing nations before we try to attract children who have never attended school.

Option One: Health and nutrition spending

Thirty percent of children in developing countries are moderately or severely undernourished, and nutritional supplements or treatments for intestinal parasites can be an inexpensive way to raise school attendance and increase physical and mental capacity.

Children who are better nourished in their first years of life stay in school longer and learn more each year they are there. In areas where malnutrition or worm infestations are common, nutritional supplements or treatments for intestinal parasites offer an inexpensive way to raise attendance and physical and mental capacity.

A Bolivian program providing support for day care, nutritional supplements, and preschool activities for low-income children resulted in permanent gains in cognitive development and motor skills. The cost per child is $1,300 to $1,400, while the monetary value of the increase in the children's future wages is between 2.5 and 3.6 times higher than the amount spent.

A school-based de-worming program in Kenya had even more remarkable results with benefits at least 450 times higher than the costs.

Most opportunities will not be as rewarding, but it is safe to assume the benefits are around 25 times higher than the costs in many cases.

Option Two: Conditional Cash Transfers

Another option proven to work is the provision of cash payments to poor households whose children attend school regularly. These are known as Conditional Cash Transfer Programs, and increase enrolment and attendance in program areas.

These programs can go wrong when they are not targeted at the right households. In a Brazilian program, self-selection allowed families whose children would have been in school anyway to receive the money. The most careful evaluation of the Brazilian program failed to show significant benefits.

Families in some rural communities of Honduras, Nicaragua, and Mexico get monthly hand-outs if their children attend 85 percent of school days. The Nicaraguan program increased school enrolment rates by about 23 percentage points. The benefits from increased future earnings are four times higher than the costs of around $3,000 per child.

5. Global Warming

There is unequivocal evidence that humans are changing the planet's climate.

We are already committed to average temperature increases of about 0.6°C, even without further rises in atmospheric carbon dioxide concentration.

The world has focused on mitigation—reducing carbon emissions—but when we take a close look at the costs and benefits, relying on mitigation alone is a very poor approach.

Option One: Continue to focus on mitigation

Even if mitigation—economic measures like taxes or trading systems—succeeded in capping emissions at 2010 levels, then the world would pump out 55 billion tons of carbon emissions in 2100, instead of 67 billion tons.

It's a difference of 18 percent; the benefits would remain smaller than 0.5 percent of the world's GDP for more than 200 years. These benefits simply aren't large enough to make the investment worthwhile.

Spending $800 billion over 100 years solely on mitigating emissions would lose money overall.

When you add up the benefits of that spending—from the slightly lower temperatures that would result—the returns are only $685 billion. For each dollar spent, we would get 90 cents of ‘good' back.

Mitigation alone will clearly not "solve" the climate problem.

Option Two: Combining mitigation with other policies

In addition to mitigation, policy-makers must ensure that we adapt to climate change. Adaptation can mean doing things like growing drought tolerant crops, spending more on irrigation, developing rainwater storage systems, or proactively preventing the health issues that climate change poses.

But to make a real difference, the world needs to increase its research and development into carbon saving and sequestering technology.

Instead of spending $800 billion (in total present-day terms) solely on mitigation, we could keep the investment the same size but direct a small amount to adaptation policies, and $50 billion each year to research into greener technology.

This research spend would add up to about 0.1 percent of global GDP.

As the gap between the cost of carbon-free and carbon-emitting technology decreases, any tax on emissions should become smaller. This allows the research and development to essentially pay for itself.

With research and development in the mix, the total benefits from this $800 billion investment would add up to more than $2,129 billion. That is a more respectable $2.70 return on each dollar spent.

6. Hunger

The food crisis has reminded rich nations of the hunger and malnutrition that is a daily reality for many in South Asia and sub-Saharan Africa.

Malnutrition in mothers and their young children will claim 3.5 million lives this year. Global food stocks are at historic lows. Progress is distressingly slow on the United Nations goal of halving the proportion of hungry people by 2015.

Tragedy on an individual scale adds up to hardship on a national level. Shortened lives mean less economic output and income. Hunger leaves people more susceptible to disease so that more money has to be spent on health care.

Those who survive the effects of malnutrition are less productive; physical and mental impairment means children benefit less from education.

Option One: Micronutrient supplements

Improving the quality of developing nation diets is as important as improving the quantity of food.

More than a 100 million children are deficient in Vitamin A, which causes eyesight and immunity problems.

It is estimated that one-fifth of the world's population is at risk of zinc deficiency, which puts young children at risk of stunted growth.

Providing Vitamin A capsules to one person for a year costs just 20 cents; zinc supplements cost a dollar.

Reaching 80 percent of all children aged under-two in Sub-Saharan Africa and South Asia would require annual spending of just $2.4 million for Vitamin A and $58 million for zinc.

The economic benefits from improved future earnings and reduced health care spending would add up to $240 million each year. In other words, every $1.00 spent would generate economic benefits worth $17.

Option Two: Nutritional education

Another tack to consider is to encourage developing nation households to change their food practices, to create lasting dietary improvements.

Education would be more expensive than any of the shorter-term interventions like micronutrient supplements, but could create enduring improvements among the world's poorest billion people.

Pregnancy and post-pregnancy are an opportune time to provide nutritional education to mothers, and can lead to a reduction in the probability of underweight babies and an increase in growth-rates for infants.

Creating community-based, volunteer-managed education campaigns to cover 80 percent of South Asia and sub-Saharan Africa for one year would cost $798 million.

This would reach eight out of 10 children aged under two. The annual benefits from a reduced burden on the health care system and healthier population would equal $10 billion: The benefits are 12 times higher than the costs.

7. Terrorism

Harsh security measures at airports make us feel safer, but what we see as a visible reassurance is a display of billions of dollars poorly invested.

Trans-national terrorists take, on average, just 420 lives each year and cause relatively little economic damage.

An extra $70 billion has been spent annually on homeland security since 2001. Although there has been a 34 percent drop in trans-national terrorist attacks, there have been 67 more deaths, on average, each year. This is entirely predictable. Terrorists have responded rationally to the higher risks imposed by tougher security measures and shifted to fewer attacks that create more carnage.

Hardening targets is a poor way to save lives. Policymakers who want to reduce the terrorists' toll have stark options.

Option One: Greater international cooperation

While many terrorist groups share knowledge, governments jealously guard their autonomy over police and security matters.

If political obstacles could be overcome, nations could work together more coherently to clamp down on the charitable contributions, drug trafficking, counterfeit goods, and illicit activities that fund terrorist attacks.

This would be ineffectual at reducing small events such as "routine" bombings or political assassinations, but would significantly hamper spectacular attacks requiring a lot of planning and serious resources.

Doubling the Interpol budget and allocating one-tenth of the International Monetary Fund's yearly financial monitoring and capacity-building budget to tracing terrorist funds would cost about $128 million annually. Stopping one catastrophic terrorist event would save the world at least $1 billion. Under these assumptions, this would mean a return of around $9.00 on each dollar spent.

Option Two: Increased proactive response

Some argue that the United States and its allies should "take the war to the terrorists."

To see what extra money on proactive measures would achieve, we can look at the effects of Operation Enduring Freedom, an offensive campaign that included the United States-led invasion of Afghanistan.

In the two years after 2001 (when there was the greatest proactive anti-terrorism campaign, and before other countries started to pull out), Operation Enduring Freedom resulted in a 13 percent reduction in attacks—but 159 more annual deaths and 916 more injuries, on average, than in the 10 years before. The exercise shifted attacks around.

Policymakers undaunted by the extra bloodshed might pause when they consider the economics of the exercise. Converting the effects of that carnage into monetary terms, each dollar of the Operation's $35.5 billion cost over this time achieved only around ten cents worth of good.

8. Trade Barriers

Protectionist sentiment and fear of globalization are on the rise. When the Doha trade round was launched shortly after September 11, 2001, there was plenty of international goodwill. But disenchantment with globalization has since set in.

Free trade would lead to an overwhelming boost to welfare everywhere, especially in the developing world. Grasping these benefits is potentially one of this generation's greatest challenges.

Increased negative sentiment could have the worst possible result: not just Doha's failure, but also the raising of trade and immigration barriers.

Option One: Doha Development Agenda

The greatest hope is getting the Doha round back on track.

If developing countries cut their tariffs by the same proportion as high-income countries, and services and investment were also liberalized, the global annual gains could be as high as $120 billion, with $17 billion going to the world's poorest countries.

The long-term impact of free trade is huge. Recast after calculating the net present value of the stream of future benefits, a realistic Doha outcome could increase global income by more than $3,000 billion per year, $2,500 billion of which would go to today's developing countries.

In addition, the experiences of successful reformers like Korea, China, India, and Chile suggest that trade liberalization immediately boosts annual economic growth rates by several percentage points for many years.

There would, of course, be costs. In addition to social costs, firms and workers would need to adjust as reform forces some industries to downsize or close and allows others to expand. Yet the benefits of a successful Doha round are around a staggering 1,027 times higher than these costs.

Option Two: Freeing international labor movement

The benefits of liberalizing international labor flows is worth contemplating—not least because otherwise illegal migration is likely to increase. Historical experience shows that migration is the fastest way to bring about a convergence in living standards.

Migrants and host countries incur direct costs in making and processing applications, finding housing, etc. The costs to a migrant in the year of migration are estimated to be in the range of $7,000 to $21,000, and the costs to the host country (including social welfare benefits) are in the same range. After the first year, we assume migrants to be fiscally neutral for their host country.

Increasing the rate of migration sufficient to boost the labor force in high-income countries by a total of three percent over a 25-year period would lead to global gains at the end of the period of $674 billion annually, with all but $50 billion accruing to current citizens of developing countries, either as migrants or via their remittances.

Depending on the economic assumptions used, the benefits are estimated to be around 224 times higher than the costs. Citizens of today's developing countries (particularly the migrants) would be the major beneficiaries.

9. Sanitation and Water

At the turn of the 21^st century, about 1.1 billion people lacked improved water supplies and more than 2.7 billion had no sanitation service.

The Millennium Development Goals includes the goal of halving the proportion of people without access to water or sanitation by 2015. This may be difficult to achieve, partly because the need to ensure the benefits of improved access are large enough to cover the costs of those who bear them is often overlooked.

The incremental benefit of improved water supply may simply not cover the large cost of providing it, since by definition everyone has some access to water in order to live, and the willingness to pay for an improvement may be low.

Rather than focusing on expensive piped network solutions, non-network interventions could prove helpful as intermediate solutions.

Option One: Rural water supply

Where deep groundwater is the best available water source, a borehole and communal hand pump is usually considered a low-cost and appropriate technology.

Following the failure of many rural water supply projects, a new and more successful planning model emerged in the 1990s. This is based on "demand-driven" community management where households are involved in decision-making and pay for all of the costs of providing and maintaining the service plus at least some of the capital cost.

The capital costs are $6,500 on average, and program overhead is $3,500; a total of typically $10,000. Adding the necessary costs for labor and maintenance, the total annual cost is $1,630, or about $135 per month. We assume 60 households will share the borehole, which gives a monthly cost of $2.26 per household.

Benefits come from time savings for water collection, increased use of higher quality supply and the monetary value of health improvements.

These benefits together add up to $7.19 for a typical rural household in a month, compared to a cost of $2.26, implying a benefit-cost ratio of about 3.2.

Option Two: Biosand filters

Biosand filters are a technology to remove contaminants in raw water supplies. There are now close to 100,000 biosand filters in use by households in developing countries. They use commonly available materials and are inexpensive, convenient and simple to use. A filter can easily produce hundreds of liters of clean water a day.

While only a partial solution to a wider problem, biosand filters do help to provide clean water from traditional sources. They do however have disadvantages. They must be cleaned periodically, and are quite large, so are more appropriate for rural areas than urban slums.

We assume a base case of $75 for the filter manufacture plus $25 for transport and delivery. There are no time savings for this intervention, but health benefits from a reduction in diarrhea incidence. Total household benefits are $3.86 a month, and costs $1.40.

10. Women and Development

Gender equity is not only an important goal in its own right, but also a factor in overall economic development. Gender issues have become increasingly prominent in the last 30 years, and gender equality is now included in the Millennium Development Goals. National constitutions affirm the principles of basic human rights, and even explicitly refer to non-discrimination by gender. However, in practice there are still multiple barriers to these goals.

Option One: Affirmative Action

Gender inequalities in political representation remain large. Some countries have mandated quotas for political representation at various levels, with some success.

Quotas must be matched with the launch and maintenance for at least 30 years of a nationwide, systematic public information or advocacy campaign. It is hard for women to win elections. Campaigns can be effective, but must be a long-term commitment.

There should also be an investment in leadership and management training for female politicians, since many who aspire to political office will have had little opportunity for previous involvement.

Evidence from an Indian reform at the village council level suggests that where leadership is reserved for women, the supply of safe drinking water is higher by 0.95 percent, children between one and five have a 2 percent higher chance of completing the immunization program, and are two percent more likely to attend a community child care center. The condition of rural roads is better, which could increase work opportunities and reduce barriers to schooling.

Because women, on average, have relatively less political experience and less political capital than male politicians, electing women may mean short- to medium-term productivity losses.

Taking into account these assumptions, the benefits are around 2.7 times higher than the costs.

Option Two: Microfinance

Microfinance institutions such as Bangladesh's Grameen Bank allow self-employed women to build successful businesses in the informal sector, lending to individuals, groups or villages. Women have better repayment records than men, and when they have greater bargaining power in the household, a larger share of the household's limited resources are devoted to children's human capital. Women's access to credit also tends to increase their labor force participation.

We assume that the number of loans would increase annually by 35 percent, which was the experience of the Grameen Bank in Bangladesh. The average annual number of members reached by the Grameen Bank in 1992 was 1.4 million, of whom 1.3 million were women, and 348,000 new borrowers. We assume that each year the program would lend only to new borrowers, as the evidence points to diminishing marginal returns to credit.

We assume $285 to be the average loan to each new borrower. Microfinance programs are costly and typically require extensive subsidies. Based on a number of studies, we assume that each dollar loaned per year will increase household expenditures by about 10 percent in the first year, and that benefits will continue to accrue annually by about 1 percent for an average 30 year lifespan of the borrower. Bringing together these assumptions, the benefit-cost ratio is around 3.2.

Read reason Science Correspondent Ronald Bailey's dispatches from the Copenhagen Consensus Conference 2008 here.

Help set the Copenhagen Consensus for 2008! Follow directions below to rank global problems and solutions. The results will be tabulated and announced next week at reason online.

Does Fashionable Beat Rational When It Comes to Solving the World's Biggest Problems?

rbailey@reason.com (Ronald Bailey) — Wed, 28 May 2008 15:15:00 EDT

Copenhagen, May 27—Ranking proposed solutions to global warming, air pollution, disease control, and clean water were on the agenda today at the Copenhagen Consensus 2008 (CC08) conference. Leading public policy researchers proposed to a panel of experts, including five Nobel Prize-winning economics, what they would do with an "extra" $75 billion over five years to solve ten of the world's biggest challenges. The mantra of CC08 is "where in the world can we do the most good?"

Another maxim often heard at the conference is that the Copenhagen Consensus process "is not about doing what's fashionable, but doing what's rational." And what could be more fashionable than the problem of man-made global warming? The question to presenter and Economic and Social Research Institute economist Richard Tol was whether or not spending $75 billion over five years trying to fix man-made global warming would be rational?

Tol opened with a standard recitation from the Intergovernmental Panel on Climate Change (IPCC) detailing the evidence for man-made global warming and climate model projections of future warming. Then Tol declared that spending $75 billion dollars over so short a period of time would do nothing to ameliorate any effects from global warming. Thus he and his colleagues decided to reinterpret the Copenhagen Consensus challenge by looking at spending the net present value of $15 billion dollars annually (roughly 0.05 percent of global GDP) addressing global warming for the next 100 years. That sum comes to around $800 billion. They ran this through some climate and econometric models (see their analysis here) in three different scenarios.

Spending $800 billion on just cutting (mitigating) greenhouse gas emissions would provide just $685 billion in benefits by 2100. Not very good. Their next scenario looked at devoting all the money toward low-carbon energy supply research and development. In this case spending $800 billion would result in $1717 billion in benefits by 2100. Their third scenario included a mix of energy R&D, a carbon tax of $20 per ton, and direct spending on efforts to control malaria and diarrhea which are projected to get worse as the world warms. The analysis places a tax on carbon as a way to motivate energy suppliers and users to adopt the new low-carbon technologies turned up by R&D. This portfolio approach would boost benefits to $2129 billion by 2100.

According to their calculations, this third scenario does not "solve the climate problem" since it only lowers future warming from 3.5 degrees Celsius in 2100 to about 3 degrees Celsius. At the end of his presentation, Tol told the Youth Forum that if he had to choose whether to spend $100 on global warming or malaria, he'd spend it on malaria. If he could allocate between malaria and global warming, he'd spend $90 on malaria and $10 on energy research.

McGill University economist Chris Green then offered a sobering perspective paper strongly dissenting from what he regards as the IPCC Working Group III's happy talk that the technologies needed to stabilize emissions are currently available or under development. In April, Green and his colleagues argued in a Nature article entitled, "Dangerous Assumptions," that IPCC future greenhouse gas emissions scenarios presuppose the development of low-carbon energy technologies, but those technologies don't exist. That means that cutting greenhouse gases is likely to be much harder to cut than many policymakers think.

Green noted that "on-the-shelf technologies" such as wind and solar power can be deployed now, but the problem is that they suffer from intermittency—the wind doesn't always blow and the sun doesn't always shine. To compensate for this failing, researchers need to develop some baseload utility-scale ways of storing electricity to tide us over when those renewable sources are offline. There are some ideas for technologies to do this, but none even close to being proven. In addition, carbon capture and sequestration technologies that would allow humanity to continue to burn coal while storing emissions safely underground are nowhere near commercialization. Furthermore, the U.S. has no capability for safely reprocessing and reusing spent nuclear fuel.

"My view is that economists should spend a lot less time talking about carbon taxes and much more time thinking about what an incentive compatible energy technology race would look like," declared Green. He added, "People in developing countries want to live the good life and it's going to take a large amount of energy for them to do that. There are not enough low carbon sources of energy to achieve that."

Tol later suggested that the world will get real results from energy technology R&D only if climate policy is perceived as being solid and credible in the long term. But how to achieve that? Before he stepped down, British Prime Minister Tony Blair established an escalating petrol tax as a climate change measure. This week British truckers, pinched by higher oil prices, are demanding that petrol taxes be cut or they'll block the country's refineries. The betting is that current Prime Minister Gordon Brown will blink. So much for credible long term climate policy.

Turning to less fashionable topics, let's briefly look at the costs and benefits of some of the proposed solutions to the global challenges of air pollution, disease control, and clean water. International development aid consultant Bjorn Larsen dealt with the challenges of indoor and outdoor air pollution. Larsen cited figures showing that more than 3 billion people are exposed to indoor air pollution from indoor fires using wood and coal for cooking and heating. Outdoor air pollution affects over 2 billion people living in cities. This air pollution causes 2.5 million deaths per year and is responsible for countless cases of respiratory disease. Over 90 percent of these deaths and illness occur in developing countries.

What to do? Replacing traditional open hearths with inexpensive rocket stoves could reduce indoor air pollution by 80 percent and perhaps cut fuel use by 50 percent. Providing these new stoves could save up to 700,000 lives annually. Solutions to outdoor air pollution, e.g., requiring the use of ultra-low sulfur diesel and diesel particulate control technologies on vehicles, are much more costly. Larsen calculated that for many poor people in developing countries their benefits do not outweigh the costs.

As an aside, a Youth Forum representative from China claimed that many electric power plants in her country are now required to have pollution control equipment. The problem is that pollution control uses up to 30 percent of the plant's output, so managers generally turn off pollution controls in order to supply more electricity. They turn the controls on when inspectors are about to show up.

Controlling diseases was the next global challenge considered. Dean Jamison, a public health professor from Harvard University, was the lead author of the Copenhagen Consensus challenge presentation on the topic. He began by noting the enormous progress made in improving human health globally in the past 50 years. To illustrate this, Jamison pointed out that in India the average life expectancy in 1950 was only 44 years. By 2005, this had risen to 64 years implying a rate of improvement of 4.4 years per decade. Jamison suggested that income and economic growth are not closely correlated with improvements in health arguing that "science has given us powerful, yet inexpensive tools for improving health." While infectious diseases remain the biggest killers in poor countries, Jamison did note that 29 percent of death in developing countries are caused by cardiovascular illnesses which is more than the total number of deaths caused by tuberculosis, HIV/AIDS, and malaria combined.

Jamison listed seven health interventions with benefit-cost ratios ranging from 30-to-1 to 12-to-1. These interventions are: (1) expanded tuberculosis treatments; (2) low cost "polypill" heart attack treatments; (3) malaria prevention and treatment; (4) expanded immunization against childhood diseases; (5) tobacco taxation; (6) combination strategies to prevent HIV transmission; and (7) increased surgical capacity at district level hospitals.

In his perspective presentation, Harvard public health economist David Canning asked if the benefit-cost ratios where so high for these interventions why then aren't people paying for them themselves? Perhaps they have other higher priorities. Or perhaps there is some kind of "market failures," so might it not be more effective to attack the market failures directly in order enable people to get access to these treatments? This might include policies to encourage insurance and micro-financing.

The last major challenge considered was the provision of clean water and sanitation presented by University of North Carolina public health professor Dale Whittington. He noted that about 1.1 billion people lacked improved water supplies, and more than 2.7 billion had no sanitation service. Whittington immediately disabused the audience of the notion that networks of piped water and sanitation were cost effective for many poor people in the world. He pointed out that "the incremental benefit of improved water supply may simply not cover the large cost of providing it, since by definition everyone has some access to water in order to live, and the willingness to pay for an improvement may be low." The full economic costs of such systems range between $40 and $80 per month which is vastly more than many people's monthly incomes. Networked sewage systems cost even more.

Whittington did offer some cost-effective solutions, including deep borehole wells combined with hand pumps. Such wells could supply water to 60 households. Until recently, even this was not considered economically feasible, but Whittington claimed that the costs of boreholes in Africa have now been halved to about $6,000 because of recently increased competition, especially from Chinese contractors active in the region. Adding up the capital costs implies a monthly cost of $2.26 per household.

With regard to sanitation, Whittington recommended financing Community-Led Total Sanitation (CTLS) campaigns. CLTS programs aim to ban open defecation by explaining disease transmission routes and mobilizing social pressure to encourage community members to use low-cost latrines. Whittington estimated that the overall monthly cost of CLTS per household is 32 cents.

The final three big global challenges—women and development, subsidies and trade barriers, and education—will be presented on Wednesday. The Youth Forum will announce its ranking of solutions on Thursday and the 2008 Copenhagen Consensus panel of experts will announce its rankings on Friday.

Ronald Bailey is reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

Disclosure: Danish taxpayers are paying my travel expenses to attend CC08. There are no conditions placed upon my reporting.