

Bjorn Lomborg: How to Get the Biggest Bang for 10 Billion Bucks - byrneseyeview
http://online.wsj.com/article/SB121720170185288445.html?mod=googlenews_wsj

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pg
Odd how in these situations no one ever thinks of simply funding companies
that would generate the most economic growth. And yet if you diff present
conditions against conditions 100 or 500 years ago-- even in the poorest
places-- I'd bet most of the improvement came not from explicitly benevolent
projects so much as ordinary economic growth.

Obviously the two are hard to disentangle, but even in a project like shipping
vaccines to poor countries, think about how much better it is to have things
like fridges, phones, aircraft, etc. To say nothing of all the infrastructure
in the labs that make the vaccines, etc, etc.

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mdemare
I agree that economic growth outweighs anything else.

But why would funding companies be the best way to generate the highest
economic growth? There are many obstacles that prevent economic growth,
especially in poor countries. Examples are high child mortality,
malnourishment, corruption, lack of any kind of (micro-)credit, lack of
education, tariffs, red tape, etc.

Taking away such obstacles can do very much for economic growth. The main
advantage of funding companies is that their profits are returned to the
investors.

E.g. the 1846 repeal of the Corn Laws had a much greater positive effect on
economic growth in Britain than any investment in specific companies.

~~~
pg
Really? Are you sure the repeal of the Corn Laws had more effect on economic
growth than Boulton's investment in Watt? I'd be reluctant to claim that.

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mdemare
Let me try to make the case:

The repeal of the Corn Laws led to a massive flow of people to the cities,
providing much needed labour to fuel the industries there. And by lowering the
price of food, the entire country people had more money to spend on other
goods. It also created a bigger market for the surplus of grain that the U.S.
was able to produce, which gave a huge boost to their economy, and allowed it
to continue to absorb enormous numbers of immigrants.

Also, the repeal of the Corn Laws became a landmark for the free trade
movement, leading to a more efficient division of labour between states that
gave a huge boost to economic growth that continued throughout the 19th
century.

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orib
The biggest question in my mind when reading this article is "how are the
relative costs and values actually being calculated?"

How can we say that $1.00 spent on clean energy will bring $11.00 in benefits,
when $1.00 on counter-terrorism will bring $0.30 in benefits? How much of it
is speculation?

In other words, what was the method for quantifying the amount of benefit that
we see from the investment?

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tom_rath
You'll be able to find the details (or the publications which contain them)
here: <http://www.copenhagenconsensus.com>

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mynameishere
Not one figure passed the smell test. If you can actually say "1 dollar here
or there provides x or y ROI" life would be pretty simple. It isn't simple.

For my part, I would put every penny on genetic engineering R&D. The ROI would
either be zero or infinite.

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d0mine
Lomborg on TED
[http://www.ted.com/index.php/talks/bjorn_lomborg_sets_global...](http://www.ted.com/index.php/talks/bjorn_lomborg_sets_global_priorities.html)
[video] 15 min.

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Alex3917
This article doesn't make any sense. Lomborg says that cap-and-trade returns
90 cents on the dollar, but investing in clean energy would return 11 dollars
on the dollar. But the whole case for cap-and-trade is that it's the most
economically efficient way to invest in clean energy.

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pchristensen
No, cap-and-trade is supposed to be the most cost-effective way to reduce
emissions. Investing in clean energy has many other benefits (improving
science and tech, creating new industries, job creation, lower cost of energy,
etc).

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Alex3917
I understand that not all of the money under a cap-and-trade system goes to
generating new clean energy. For example, in many cases using a kilowatt of
energy we already have more efficiently is less expensive than generating a
new kilowatt. However, the idea that we should design our energy policy around
maximizing new energy creation even when it's more cost effective to make our
current products more energy efficient makes no sense, assuming we take
economic benefit to mean wealth created per dollar spent. Unless Lomborg
simply means that investing all of our money in clean tech would create more
jobs, in which case that's just an example of the broken window fallacy.

(And I understand that many cap-and-trade schemes also have provisions for
things like paying South American countries to reduce their rate of
deforestation, which is neither a case of conservation of existing energy nor
production of new energy, but this amounts to only a few million dollars per
year.)

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anamax
> However, the idea that we should design our energy policy around maximizing
> new energy creation even when it's more cost effective to make our current
> products more energy efficient makes no sense, assuming we take economic
> benefit to mean wealth created per dollar spent.

Sure it does. Even if we made all of our current products us 0 energy, we
might want more energy for other things than the amount saved.

BTW - is it actually more cost-efficient or is that assumed because it's
convenient for some other argument?

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Alex3917
"Even if we made all of our current products us 0 energy, we might want more
energy for other things than the amount saved."

Let's say it costs 5 dollars to save one kilowatt of electricity. Let's also
say it costs 20 dollars to generate one new kilowatt of electricity. Both
ways, we get one new kilowatt of electricity, but one way is less expensive.
Of course at any given time we would be pursuing a mix of strategies that
involve both new generation and conservation. We should always pursue the mix
of strategies that is the least expensive, assuming the cost of carbon is
internalized.

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anamax
> Let's say it costs 5 dollars to save one kilowatt of electricity. Let's also
> say it costs 20 dollars to generate one new kilowatt of electricity. Both
> ways, we get one new kilowatt of electricity, but one way is less expensive.

Except that energy saving is capped. If we're using 5kw and we want 100kw,
saving that 5 is nice but only 5% of the goal.

And yes, we're going to need significantly energy than we have today. The
first of those "extra uses" are also known as India and China.

Also, while the assumption that energy savings costs 25% of new production
costs is convenient for an argument, it isn't all that common. People don't
spend more money than they have to. As energy costs have gone up, the low-
hanging fruit has been picked.

Of course, some folks cheat by including "savings" that requires changing
behavior/reducing value and assuming that that's cost free. That's wrong
because minimum energy use isn't the goal - the goal is to maximize value for
cost. Just because you don't see the value of something that uses energy
doesn't mean that everyone else agrees.

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Alex3917
"Except that energy saving is capped. If we're using 5kw and we want 100kw,
saving that 5 is nice but only 5% of the goal."

Your argument is flawed because you are assuming that you either have to
create new electricity or conserve electricity and you can't do both. The
least expensive way to get X units of new energy is always going to be some
mix of conservation and creation, and the free market lets us find the most
efficient point along the spectrum.

"People don't spend more money than they have to. As energy costs have gone
up, the low-hanging fruit has been picked."

[http://www.salon.com/news/feature/2008/07/28/energy_efficien...](http://www.salon.com/news/feature/2008/07/28/energy_efficiency/?source=newsletter)

~~~
anamax
>> "Except that energy saving is capped. If we're using 5kw and we want 100kw,
saving that 5 is nice but only 5% of the goal."

>Your argument is flawed because you are assuming that you either have to
create new electricity or conserve electricity and you can't do both.

Huh? In my example, I did both.

I should have written that the low-hanging fruit is being picked.

The fact remains that expected energy demand exceeds current capacity. That
means that savings can't get us out of the problem.

Also, if you care about CO2, you want to replace existing sources even if the
existing sources provide enough energy.

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MaysonL
The technology _used_ to save can: what we want is new _useful_ energy, not
new energy per se. If a new use, using current technology, would require 100
W, but using energy-saving technology [developed to save on current use] would
only require 50 W, then investment in current savings will produce future
savings. Compare the trends in electricity use in California and the rest of
the US since the '70s: California's per capita use has been nearly flat, while
the rest of the country's has grown substantially.

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Tichy
"Providing Vitamins for undernourished children"

A "solution" proposal like that doesn't make me trust the whole approach very
much. There are many underlying issues besides buying a heap of vitamins for x
dollars. I think most children would not benefit so much from the vitamins if
the situation that made them malnourished stays the same. Perhaps they would
be slightly more efficient soldiers, though.

Changing the political situation surely is more complicated than simply
throwing money at it.

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mattmaroon
"Spending an extra dollar cutting C02 to combat climate change generates less
than one dollar of good, even when we add up all the economic and
environmental benefits."

I don't think there's any sort of consensus on that. I've seen varying figures
proposed by economists. An accurate cost benefit analysis would seem to
require too many facts we just don't know yet.

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shard
Of course, some of these goals counteract each other. If we treat disease, we
increase population and thus hunger and climate change. I wonder what kind of
ROI we get on investing in population control.

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lacker
How do they have any idea of the return on R&D? It's like trying to predict
the odds of fusion power becoming possible if we spend a billion dollars
researching it. Who knows?

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stcredzero
One of the first things to tackle would be access to clean water.

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dfsdfsdsfdsf
Lomborg is a menace:

[http://climateprogress.org/2007/09/17/debunking-bjorn-
lombor...](http://climateprogress.org/2007/09/17/debunking-bjorn-lomborg-cool-
it-water-heat-waves-global-warming/)

