The optimal solution to the greenhouse gas problem minimizes the sum of the climate damage and the cost of mitigation over the long run, but the current UN initiative is not even close to achieving this. There are three key insights that emerge. First, mitigation cost should be balanced against climate damage; second, as marginal damage increases with higher concentrations of greenhouse gases, so marginal cost should also rise; and third, the marginal cost of mitigation should be equated across all emitters.

However, there are serious political difficulties, as the objective for each country is not necessarily what is best for the world overall. Thus, without international cooperation, individual countries have very little incentive to reduce emissions. Damages and costs are very difficult to estimate, and lowest cost strategies call for long-term commitments, which are alien to most politicians and voters. The long delay between action and damage also raises questions about discounting.

Developed and emerging economies are each responsible for about 45 percent of emissions and must do most of the mitigation. But there is no silver bullet, and a portfolio of technologies is needed. Energy conservation, a move from coal to gas, renewable energy sources, bioenergy, and nuclear power can all make contributions. Carbon capture and storage is also an important part of the solution, but the feasibility of the technology on a large scale must still be assessed. Finally, using forests for sequestration is cost effective, but using woody biomass as part of a BECCS solution is expensive.

The most important insight from economics is that the cost of mitigation rises rapidly the more stringent the target. The cost of meeting a target of a maximum 5°C rise is about $10 trillion. Reducing this to 4° adds a further $10 trillion, but going down to 3°C would cost $40 trillion, and to 2°, $100 trillion. The world is not yet ready for a largescale cost-effective mitigation program, and the more aggressive targets do not allow for such delays.

In practice, a large fraction of the potential damage from climate change can be avoided by adaptation. Indeed, this is hard to prevent because all sections of society have an incentive to do so.

The Sustainable Development Goals (SDGs) provide an extraordinary vision of what global development should look like between now and 2030. Starting with the concept of sustainability, the SDGs go far beyond the Millennium Development Goals (MDGs) to incorporate a set of environmental and social-justice priorities that require national action at all levels of income. As agreed by 193 signatory nations at the September 2015 United Nations General Assembly, the 2030 Agenda for Sustainable Development (https://sustainabledevelopment.un.org/post2015/ transformingourworld) is meant to be universal, indivisible, and interlinked. In conventional development arenas like extreme poverty and hunger the SDGs also inspire, doubling down on the MDGs by defining success in absolute rather than relative terms. Global partners target an end to poverty in all its forms, for example, rather than a 50 percent reduction in extreme-poverty headcount ratios.

The UN's drive for universal norms and targets involved widespread public debate and painstaking negotiations and compromises between national governments. The process was simultaneously more transparent and much more difficult and convoluted than when the MDGs emerged from behind closed doors a decade and a half ago. Some widening in the scope of commitments was inevitable and also desirable, to accommodate sustainability goals and build a truly global coalition. But there was also widespread awareness as negotiations proceeded that fewer goals might allow for greater success. By the latter standard, the 2030 Agenda is daunting. With 17 global goals and 169 highly ambitious targets, the Agenda seems in danger of departing not just in scope but also in coherence from the elegant eight goals and 17 targets of the MDGs.

In practice, therefore, a great deal remains on the table in terms of shaping global action. This is true not just in the conventional sense of identifying costeffective approaches to individual targets but also in the deeper sense of operationalizing – and unavoidably, prioritizing – targets at the national and global levels. This book makes a vital contribution to what should be a collective effort to prioritize.

Opportunities to Lower Trade Barriers

Lowering trade barriers would contribute to all four of the likely main goals of the United Nations’ post-2015 development agenda: poverty alleviation, ending hunger, reducing income inequalities, and strengthening global partnerships for sustainable development (United Nations, 2014).

Stronger global partnerships for sustainable development would result from promoting a more open, rules-based, nondiscriminatory and equitable multilateral trading system by successfully completing the Doha Development Agenda (DDA) negotiations at the World Trade Organization (WTO). Remaining barriers to trade harm most the economies imposing them, but the worst of the merchandise barriers (in agriculture and textiles) are particularly harmful to the world's poorest producers. Reforming those policies would thus alleviate poverty, reduce income inequality within and between nations, reduce malnutrition and hunger globally, and boost employment and economic growth sustainably, particularly in rural areas of developing countries, where three-quarters of the world's poor reside (World Bank, 2007).

It is within the power of national governments to lower their own barriers to trade unilaterally, of course, but often that is difficult to achieve politically. Lowering them is politically easier when other countries do so at the same time, as with a multilateral or regional trade and integration agreement. For developing countries that is especially so if that agreement includes an aid-fortrade package.

Among the possible strategies to reduce remaining price- and trade-distorting measures, five current opportunities stand out. The most beneficial involves multilaterally completing the stalled Doha Development Agenda (DDA) of the World Trade Organization (WTO). If that continues to prove to be too difficult politically to bring to a conclusion in the near future, three other opportunities considered here are the proposed Trans-Pacific Partnership (TPP), extending the free-trade area among the ten-member Association of South East Asian Nations to include China, Japan, and South Korea (ASEAN+3), and freeing up trade among all APEC countries (a free trade area of the Asia-Pacific, FTAAP). One more potential opportunity involves bringing disciplines to export restrictions to match those for import restrictions, especially for farm products.

Introduction

The first Sustainable Development Goal (SDG) is to “end poverty in all its forms everywhere,” and the first target under this goal is that by 2030 the world should have eradicated extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day. In contrast to the Millennium Development Goals (MDGs), this adoption of zero targets is a common theme within the SDGs (for example, the zero hunger target). However, such targets are both highly unlikely to be met and an inefficient use of global resources.

In this chapter I discuss two sets of reasons why there is unlikely to be zero poverty, or zero hunger, by 2030. The first reasons relate to measurement problems with zero targets; despite being attractive rallying cries for activists, they create difficulty for the statistical measurement of human progress. The targets relate to the lower tail of distributions so statistics on living standards have to reliably measure not just means and totals but also variances. The main source of empirical data for monitoring progress is household surveys, which developed primarily to provide mean weights for consumer price indexes and later to aid in calculation of national accounts. Common designs used for those tasks overstate variances and mix together chronic and transient welfare components. Consequently, it will be difficult to detect the achievement of zero poverty or zero hunger with the existing approach to surveys. Moreover, as countries escape from mass poverty, the remaining poverty becomes more sensitive to inequality, and the design of household surveys is increasingly ill-suited to measuring inequality in a more affluent and more urban world.

The second set of reasons relates to qualitative differences between past and future problems. The role of one-off institutional reforms in East Asia whose effects are unlikely to be replicated elsewhere; the characteristics of rice as an ideal food for the poor, which gives East Asia another advantage in poverty reduction makes poverty reduction elsewhere more challenging, and the fact that as countries escape from mass poverty the nature of poverty changes, with the poor becoming less like the majority in terms of location, ethnicity, caste, or religion. Each of these factors is likely to make poverty reduction going forward much harder than it was for the two decades from 1990.

Summary

In all facets of life, people must make decisions about how to allocate scarce resources. Potential parents must decide how many children to have and how much to invest in the future of each child. This decision is known as the “quantity-quality” trade-off. At the most fundamental level, when individuals invest more in the human capital of each child and have fewer children, they raise the future per capita earnings power of the next generation. Developing countries have high rates of fertility, which place a great burden on governments and aid agencies hoping to alleviate poverty and deprivation. In these settings, policies inducing parents to have fewer children and invest more in the education of each child will have positive effects beyond those captured by short-term costbenefit analysis.

Rich countries face the opposite problem, of falling fertility and rising numbers of older dependents. Countries can make up the shortfall in public revenue by encouraging high skill immigration, which has positive effects also on sending countries by raising the return to human capital accumulation.

For much of human history, differences in per capita income across the globe were negligible because increases in productivity were used to support larger populations. This negative feedback loop between productivity and population, as described by Malthus, began to unravel at the turn of the nineteenth century in parts of Western Europe. Fertility began to lag behind increases in productivity, leading to higher living standards. Eventually, fertility rates began to fall as incomes continued to rise. This process led to a rapid increase in the living standards of Western Europe and its offshoots as well as a corresponding rise in the degree of global inequality. Understanding this demographic transition is essential for devising policies to help spur economic and demographic change in developing countries.

Having fewer children but investing more in their education produces a more educated workforce, drives up living standards, and increases technological progress. Meanwhile, increased technological progress raises the return to human capital investment, inducing parents to substitute toward child quality. This relationship between fertility and economic growth is the basis of Unified Growth Theory. The rising importance of human capital also lowers the return to child labor and increases the earning power of women, reinforcing this pattern. Understanding these links, therefore, provides important insights into the most effective ways to influence fertility and growth through public policies.

Summary

Overall, Anderson's chapter provides an excellent and comprehensive analytical review of contemporary trade policy issues in manufacturing and agriculture, and of the case for policy reform. However, it pays limited attention to services, when it is becoming increasingly apparent that their contribution to the economy has been underestimated for a long time.

Services make up a dominant share of income in most economies and account for about 70 percent of global GDP. On average, the lower a country's income as measured by GDP, the less will services represent national economic activity. Unsurprisingly, the prominence of services as a source of income translates into jobs. Despite this importance to the economy, services have received relatively little attention from economists and policy makers. One reason for this is the long shadow cast by classical economic thought, starting with Adam Smith, who regarded services as having zero value because they did not result in something physical and storable. More recently, Baumol's Cost Disease hypothesized a continual rise in the unit costs in service industries because productivity could not be improved.

In fact, changes to technology, particularly advances in ICT, allow storability and the delivery of many services at a distance. Moreover, services are frequently packaged with goods in production and consumption. The only distinguishing feature of services is their intangibility. Meanwhile, services are becoming increasingly dominant in the world economy and integrated into global value chains. Notwithstanding methodological challenges, the use of total factor productivity rather than output for a given unit of labor shows that services can themselves contribute to productivity growth.

Because up to two-thirds of trade is in intermediate goods, which may be imported and then reexported after further processing, there is a strong argument for measuring trade in value-added terms and banishing the double-counting implicit in gross trade flow data. Several important consequences flow from this. First, bilateral trade balances can look quite different. Second, the technology content of particular trade flows may also vary significantly from what the gross trade values might suggest. Third, the value-added numbers provide a much more accurate picture of the nature of trade dependency among countries. For example, studies on Apple products show that a high-tech export from China, such as an iPhone, contains a small fraction of China-generated value, with the rest coming from other countries.

Summary

In this perspective I identify and discuss the chapter's methodological problems and evidentiary gaps with the intent of improving its evaluative power. Methodologically, I use a gender-aware analysis to identify the challenges of conducting benefit-cost analysis based on microexperimental evidence. I then argue the case for including macroeconomic perspectives and evidence, drawing from the research on gender equality and growth.

Beginning with methodological issues, as the author points out, the key strength of randomized controlled trials is their ability to test policy changes very specifically and directly. But the reliability of BCRs from such trials must be evaluated with an awareness of their weaknesses as well as strengths.

Many assumptions have to be made about prices. From a gender equality perspective, the question of price is particularly confounding because using market prices and incomes to estimate benefits and costs incorporates value into project evaluation in ways that can disadvantage women. Using just market prices to estimate the cost of gender discrimination biases BCRs downward.

A related issue is the invisibility of nonmarket work, much of it unpaid care work performed by women and girls. However, this is also a productive activity and has been valued as a substantial contributor to overall GDP. Also, attributing women's lack of lack of economic participation to insufficient training or information ignores socially determined constraints, especially the traditional sexual division of labor. Other policy routes may therefore be needed, for example, rural electrification, which can allow women to reallocate their household work in transformative ways.

A weakness of relying on controlled trials is that public externalities are missed because of the small scale. Ultimately, if we want to grapple with development's big questions, we have to venture into the seemingly less well-defined world of macroeconomics. Macroeconomic approaches afford insights into lots of important dynamics that are simply inaccessible using randomized trials. There is also the practical argument about engaging with the widely cited instrumental case for gender equality: that gender equality is good for economic growth.

My purpose in this perspective is to estimate benefit-cost ratios for the various targets proposed by Fearon and Hoeffler. I estimate most of the targets to be in the Fair to Good range. The authors have done a remarkable job in cataloging various forms of violence, their costs, and the benefits of existing programs. However, one notable weakness is the inability to provide systematic BCRs.

If I could obtain estimates of the benefits of reduced violence, the cost of aid, and the elasticity of aid effectiveness on violence, I could estimate the various BCRs, but this is not a simple task. The authors’ reluctance to follow this route is understandable because such an exercise may be highly speculative.

Fearon and Hoeffler's estimates of the benefits of a world without violence – 11.9 percent of GDP for low- and middle-income countries – are consistent with what one might expect. I assume that the elasticity of aid effectiveness is similar to that for other areas, reducing poverty and encouraging growth and development, for example. The typical estimate of elasticity is 0.01, but I use both this and a more recent, but still small, estimate of 0.03.

The costs of violence differ dramatically with its type and the region. The welfare costs are largest for child abuse and female violence by intimate partners. Latin America and the Caribbean, the Middle East and North Africa, and sub-Saharan Africa are the areas with the greatest potential for benefits.

The ratio of the cost of aid to the potential benefits is significantly large. Using the authors’ measures, the ratio is greater than 30 on average and is as large as 110 in Europe and Central Asia. It is smaller in sub-Saharan Africa and other regions because there is such a significant commitment to aid in these regions. Using the elasticities from the literature, the BCRs fall below 1 for measures to curb violence on a global basis. However, individual regions fare better, particularly Europe and Central Asia and the Middle East and North Africa, where the estimates are between 1 and 3 (Fair).

Introduction

The UN High-Level Panel (HLP) has called for a data revolution. The world's population should be counted, measured, weighed, and evaluated. This information should be collected, compiled, aggregated, and presented in such a form that it can usefully inform policy makers and citizens in aggregated forms and disaggregated according to region, village, gender, and population group.

There is no automatic connection between having correct information and making the right policy choice. It is tempting to conclude that we have been making wrong decisions because we have not had the right information, but it contains an unstated assumption that the chief constraint in policy making has been a lack of information. That may be a wrong assumption to make, but we will ignore that for a second, as this chapter's primary focus is on the cost of data revolution, rather than the benefits of a data revolution.

The simple starting point taken here is that data do have a cost. So, what are the proportions we are talking about? For a start, let us say it costs roughly 1 dollar per capita to conduct a population census. Without a population census there is no baseline estimate, and the statistical office does not have a sampling frame to conduct all other needed surveys and queries. Should we conduct a worldwide population census in 2015 that would cost about $7 billion? If the census were covered entirely by ODA, it would take a quarter of the USAID budget and eat up the combined budgets of Norway and Denmark.

But that may be a conservative estimate. The cost of censuses obviously varies – from 0.40 dollar per capita in India, and 1 dollar per capita in China to the United States’ last census that cost $13 billion, or about $42 per head (The Economist, 2011). These censuses form the baseline for most kinds of sampled based surveys to measure per capita trends in social and economic development.

The data revolution will have a considerable cost – yet the cost of data has so far gone missing in the MDG debates. There is a financial cost of monitoring, but there is also opportunity cost in terms of the competing demands placed on survey capacity.

Introduction

We discuss the role of noncommunicable diseases (NCDs) in the development goal discourse, especially how NCDs fit into the overall health goal and why it is essential to have an NCD target to meet Goal 3 of the proposed SDGs: Ensure healthy lives and promote well-being for all at all ages. The interventions presented and analyzed here will reduce mortality by 28.5 percent in 2030, primarily from cardiovascular and respiratory diseases, as well as some cancers.

Rationale for Addressing NCDs in Development

NCDs are the largest cause of mortality both globally and in the majority of low- and middle-income countries (LMICs). NCD mortality exceeds that of communicable, maternal, perinatal, and nutritional conditions combined (Commission, 2013). NCDs account for 65 percent of global deaths (Murray and Lopez, 2013), accounting for a majority of deaths in all regions except Africa. Eighty percent of NCD deaths (28 million people) occur in LMICs, making NCDs a major cause of poverty and an urgent development issue. Bloom et al. (2011) estimated that $47 trillion in economic output would be lost due to NCDs by 2030, concluding that “inaction would likely be far more costly [than interventions for NCDs].”

NCDs are wrongly perceived as diseases only of the rich. There has been a dramatic transition from infectious disease to NCD burden – in Mexico, for example, NCD was the cause of death in 45.4 percent of cases in 1980, but this increased to 74.4 percent by 2009. The reach of NCD risk factors is striking: a study in Argentina, Chile, and Uruguay found that 43.4 percent of the population has high blood pressure, 11.9 percent has diabetes and 35.5 percent are obese. Nineteen percent of Kenyan HIV patients are obese and 8.2 percent have high blood pressure. Ninety percent of NCD deaths before age 60 are in LMICs, resulting in loss of household heads, wasted education investments, and huge out-of-pocket costs to families. Most of these deaths are from preventable causes, and lack of access to affordable medicines and health care services are also major contributors.

Summary

The chapter covers a wide range of issues, and there is a lack of detail in some of the arguments. We have to think of priorities across as well as within issues, and this chapter puts forward five thematic priorities.

There is a fundamental issue of applying benefitcost analysis to reducing fertility because this takes no account of the well-being of those potentially born. This is probably an insoluble philosophical problem, but we also have the more mundane issue that people like to have children, and this benefit is not included in the analysis. People value children, and the proper place for decision making should be at the household level. I would prefer to see targets based on access to family planning rather than contraceptive use. On the benefit of maternal and child health, much of the benefit of family planning comes from better birth spacing and timing, rather than number of births. Births before the mother is 18 or less than 36 months after the previous birth are very high risk to both mother and child.

The largest impact of family planning appears to be through rising per capita income, which I do not see as a measure of welfare. National income accounting does not, for example, include leisure time. Similarly, the value to parents of having children does not appear in the national income accounts.

When families make decisions, there is a strong case for giving more power to women, particularly in male-dominated societies, as husbands almost always want more children than their wives, but it is the wives who bear the costs of higher fertility.

Improvement in healthy life span has contributed as much as economic growth to improvements in human welfare since 1960. The problem of an aging population is that it can lead to a rise in the old age dependency ratio. But this does not have to be so. If the old save for their retirement needs, including healthcare, they are not dependent. A simple way to achieve this is to force savings out of earnings into private accounts to meet retirement needs, supplemented by a basic pension to avoid poverty. In this way, there are only minimal transfers between generations, which means the age dependency issue is not really a problem. Population aging is incompatible with the current institutions and work and pension arrangements in many countries.