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  • What I'd like to talk about is really the biggest problems in the world.

  • I'm not going to talk about "The Skeptical Environmentalist" --

  • probably that's also a good choice.

  • (Laughter)

  • But I am going talk about: what are the big problems in the world?

  • And I must say, before I go on, I should ask every one of you

  • to try and get out pen and paper

  • because I'm actually going to ask you to help me to look at how we do that.

  • So get out your pen and paper.

  • Bottom line is, there is a lot of problems out there in the world.

  • I'm just going to list some of them.

  • There are 800 million people starving.

  • There's a billion people without clean drinking water.

  • Two billion people without sanitation.

  • There are several million people dying of HIV and AIDS.

  • The lists go on and on.

  • There's two billions of people who will be severely affected by climate change -- so on.

  • There are many, many problems out there.

  • In an ideal world, we would solve them all, but we don't.

  • We don't actually solve all problems.

  • And if we do not, the question I think we need to ask ourselves --

  • and that's why it's on the economy session -- is to say,

  • if we don't do all things, we really have to start asking ourselves,

  • which ones should we solve first?

  • And that's the question I'd like to ask you.

  • If we had say, 50 billion dollars over the next four years to spend

  • to do good in this world, where should we spend it?

  • We identified 10 of the biggest challenges in the world,

  • and I will just briefly read them:

  • climate change, communicable diseases, conflicts, education,

  • financial instability, governance and corruption,

  • malnutrition and hunger, population migration,

  • sanitation and water, and subsidies and trade barriers.

  • We believe that these in many ways

  • encompass the biggest problems in the world.

  • The obvious question would be to ask,

  • what do you think are the biggest things?

  • Where should we start on solving these problems?

  • But that's a wrong problem to ask.

  • That was actually the problem that was asked in Davos in January.

  • But of course, there's a problem in asking people to focus on problems.

  • Because we can't solve problems.

  • Surely the biggest problem we have in the world is that we all die.

  • But we don't have a technology to solve that, right?

  • So the point is not to prioritize problems,

  • but the point is to prioritize solutions to problems.

  • And that would be -- of course that gets a little more complicated.

  • To climate change that would be like Kyoto.

  • To communicable diseases, it might be health clinics or mosquito nets.

  • To conflicts, it would be U.N.'s peacekeeping forces, and so on.

  • The point that I would like to ask you to try to do,

  • is just in 30 seconds -- and I know this is in a sense

  • an impossible task -- write down what you think

  • is probably some of the top priorities.

  • And also -- and that's, of course, where economics gets evil --

  • to put down what are the things we should not do, first.

  • What should be at the bottom of the list?

  • Please, just take 30 seconds, perhaps talk to your neighbor,

  • and just figure out what should be the top priorities

  • and the bottom priorities of the solutions that we have

  • to the world's biggest issues.

  • The amazing part of this process -- and of course, I mean,

  • I would love to -- I only have 18 minutes,

  • I've already given you quite a substantial amount of my time, right?

  • I'd love to go into, and get you to think about this process,

  • and that's actually what we did.

  • And I also strongly encourage you,

  • and I'm sure we'll also have these discussions afterwards,

  • to think about, how do we actually prioritize?

  • Of course, you have to ask yourself,

  • why on Earth was such a list never done before?

  • And one reason is that prioritization is incredibly uncomfortable.

  • Nobody wants to do this.

  • Of course, every organization would love to be on the top of such a list.

  • But every organization would also hate to be not on the top of the list.

  • And since there are many more not-number-one spots on the list

  • than there is number ones, it makes perfect sense

  • not to want to do such a list.

  • We've had the U.N. for almost 60 years,

  • yet we've never actually made a fundamental list

  • of all the big things that we can do in the world,

  • and said, which of them should we do first?

  • So it doesn't mean that we are not prioritizing --

  • any decision is a prioritization, so of course we are still prioritizing,

  • if only implicitly -- and that's unlikely to be as good

  • as if we actually did the prioritization,

  • and went in and talked about it.

  • So what I'm proposing is really to say that we have,

  • for a very long time, had a situation when we've had a menu of choices.

  • There are many, many things we can do out there,

  • but we've not had the prices, nor the sizes.

  • We have not had an idea.

  • Imagine going into a restaurant and getting this big menu card,

  • but you have no idea what the price is.

  • You know, you have a pizza; you've no idea what the price is.

  • It could be at one dollar; it could be 1,000 dollars.

  • It could be a family-size pizza;

  • it could be a very individual-size pizza, right?

  • We'd like to know these things.

  • And that is what the Copenhagen Consensus is really trying to do --

  • to try to put prices on these issues.

  • And so basically, this has been the Copenhagen Consensus' process.

  • We got 30 of the world's best economists, three in each area.

  • So we have three of world's top economists write about climate change.

  • What can we do? What will be the cost

  • and what will be the benefit of that?

  • Likewise in communicable diseases.

  • Three of the world's top experts saying, what can we do?

  • What would be the price?

  • What should we do about it, and what will be the outcome?

  • And so on.

  • Then we had some of the world's top economists,

  • eight of the world's top economists, including three Nobel Laureates,

  • meet in Copenhagen in May 2004.

  • We called them the "dream team."

  • The Cambridge University prefects decided to call them

  • the Real Madrid of economics.

  • That works very well in Europe, but it doesn't really work over here.

  • And what they basically did was come out with a prioritized list.

  • And then you ask, why economists?

  • And of course, I'm very happy you asked that question -- (Laughter) --

  • because that's a very good question.

  • The point is, of course, if you want to know about malaria,

  • you ask a malaria expert.

  • If you want to know about climate, you ask a climatologist.

  • But if you want to know which of the two you should deal with first,

  • you can't ask either of them, because that's not what they do.

  • That is what economists do.

  • They prioritize.

  • They make that in some ways disgusting task of saying, which one should we do first,

  • and which one should we do afterwards?

  • So this is the list, and this is the one I'd like to share with you.

  • Of course, you can also see it on the website,

  • and we'll also talk about it more, I'm sure, as the day goes on.

  • They basically came up with a list where they said

  • there were bad projects -- basically, projects

  • where if you invest a dollar, you get less than a dollar back.

  • Then there's fair projects, good projects and very good projects.

  • And of course, it's the very good projects we should start doing.

  • I'm going to go from backwards

  • so that we end up with the best projects.

  • These were the bad projects.

  • As you might see the bottom of the list was climate change.

  • This offends a lot of people, and that's probably one of the things

  • where people will say I shouldn't come back, either.

  • And I'd like to talk about that, because that's really curious.

  • Why is it it came up?

  • And I'll actually also try to get back to this

  • because it's probably one of the things

  • that we'll disagree with on the list that you wrote down.

  • The reason why they came up with saying that Kyoto --

  • or doing something more than Kyoto -- is a bad deal

  • is simply because it's very inefficient.

  • It's not saying that global warming is not happening.

  • It's not saying that it's not a big problem.

  • But it's saying that what we can do about it

  • is very little, at a very high cost.

  • What they basically show us, the average of all macroeconomic models,

  • is that Kyoto, if everyone agreed, would cost about 150 billion dollars a year.

  • That's a substantial amount of money.

  • That's two to three times the global development aid

  • that we give the Third World every year.

  • Yet it would do very little good.

  • All models show it will postpone warming for about six years in 2100.

  • So the guy in Bangladesh who gets a flood in 2100 can wait until 2106.

  • Which is a little good, but not very much good.

  • So the idea here really is to say, well, we've spent a lot of money doing a little good.

  • And just to give you a sense of reference,

  • the U.N. actually estimate that for half that amount,

  • for about 75 billion dollars a year,

  • we could solve all major basic problems in the world.

  • We could give clean drinking water, sanitation, basic healthcare

  • and education to every single human being on the planet.

  • So we have to ask ourselves, do we want to spend twice the amount

  • on doing very little good?

  • Or half the amount on doing an amazing amount of good?

  • And that is really why it becomes a bad project.

  • It's not to say that if we had all the money in the world, we wouldn't want to do it.

  • But it's to say, when we don't, it's just simply not our first priority.

  • The fair projects -- notice I'm not going to comment on all these --

  • but communicable diseases, scale of basic health services -- just made it,

  • simply because, yes, scale of basic health services is a great thing.

  • It would do a lot of good, but it's also very, very costly.

  • Again, what it tells us is suddenly

  • we start thinking about both sides of the equation.

  • If you look at the good projects, a lot of sanitation and water projects came in.

  • Again, sanitation and water is incredibly important,

  • but it also costs a lot of infrastructure.

  • So I'd like to show you the top four priorities

  • which should be at least the first ones that we deal with

  • when we talk about how we should deal with the problems in the world.

  • The fourth best problem is malaria -- dealing with malaria.

  • The incidence of malaria is about a couple of [million] people get infected every year.

  • It might even cost up towards a percentage point of GDP

  • every year for affected nations.

  • If we invested about 13 billion dollars over the next four years,

  • we could bring that incidence down to half.

  • We could avoid about 500,000 people dying,

  • but perhaps more importantly, we could avoid about a [million] people

  • getting infected every year.

  • We would significantly increase their ability

  • to deal with many of the other problems that they have to deal with --

  • of course, in the long run, also to deal with global warming.

  • This third best one was free trade.

  • Basically, the model showed that if we could get free trade,

  • and especially cut subsidies in the U.S. and Europe,

  • we could basically enliven the global economy

  • to an astounding number of about 2,400 billion dollars a year,

  • half of which would accrue to the Third World.

  • Again, the point is to say that we could actually pull

  • two to three hundred million people out of poverty,

  • very radically fast, in about two to five years.

  • That would be the third best thing we could do.

  • The second best thing would be to focus on malnutrition.

  • Not just malnutrition in general, but there's a very cheap way

  • of dealing with malnutrition, namely, the lack of micronutrients.

  • Basically, about half of the world's population is lacking in

  • iron, zinc, iodine and vitamin A.

  • If we invest about 12 billion dollars,

  • we could make a severe inroad into that problem.

  • That would be the second best investment that we could do.

  • And the very best project would be to focus on HIV/AIDS.

  • Basically, if we invest 27 billion dollars over the next eight years,

  • we could avoid 28 new million cases of HIV/AIDS.

  • Again, what this does and what it focuses on is saying

  • there are two very different ways that we can deal with HIV/AIDS.

  • One is treatment; the other one is prevention.

  • And again, in an ideal world, we would do both.

  • But in a world where we don't do either, or don't do it very well,

  • we have to at least ask ourselves where should we invest first.

  • And treatment is much, much more expensive than prevention.

  • So basically, what this focuses on is saying, we can do a lot more

  • by investing in prevention.

  • Basically for the amount of money that we spend,

  • we can do X amount of good in treatment,

  • and 10 times as much good in prevention.

  • So again, what we focus on is prevention rather than treatment,

  • at first rate.

  • What this really does is that it makes us think about our priorities.

  • I'd like to have you look at your priority list and say,

  • did you get it right?

  • Or did you get close to what we came up with here?

  • Well, of course, one of the things is climate change again.

  • I find a lot of people find it very, very unlikely that we should do that.