The World Bank is passing up some of its most economically impactful opportunities to meet sustainable development goals to pursue costly, yet low-yielding, climate change projects, argues Hoover visiting fellow Bjorn Lomborg.

As climate change becomes more of a priority for Western governments, international financial institutions such as the World Bank move in lockstep, Lomborg maintains.

Between 1992 and 2018, the share of World Bank spending budgeted toward emissions reduction projects went from zero to 15 percent. It could rise to as much as 45 percent of all World Bank spending by 2025.

At the US Agency for International Development (USAID), climate change spending represented nearly a third of all aid by 2021‒22.

Lomborg contends that the world could be providing greater net economic benefits and saving far more lives annually by changing development spending priorities in the Global South away from emissions reduction and toward more general human welfare needs.

Lomborg spoke to Hoover Institution fellows on April 1, 2024, about his ongoing effort to accurately portray the costs of climate change and dispute the cataclysmic nature of most of today’s discussions of the issue.

“What we need to do really is let’s do the most efficient things first, whether they have to do with climate or not,” he said.

Fundamental to Lomborg’s long-standing argument is that while climate change is real and poses a challenge to people in the twenty-first century, it is not the most pressing problem. Treating it as an existential threat is diverting resources away from other global needs that could generate larger benefits to society, sooner, if they were addressed with the same vigor.

Using forecasts generated by major institutions such as the United Nations, he projected that climate change will reduce real global income growth in the twenty-first century from 450 percent down to 434 percent.

Child mortality due to hunger will still decline, albeit more slowly than without the advent of climate change, all through the twenty-first century.

Together with several economists around the world, he identified a dozen of the United Nations' 169 stated Sustainable Development Goals (SDG) that had potential returns of at least US $15 for each dollar invested.

None of the twelve have anything to do with climate. They include eliminating tuberculosis, increasing maternal and newborn health, student nutrition programs for children, advanced agricultural research, elimination of malaria, improving elementary education, and childhood immunization programs, among others.

Lomborg calculates that making headway on all twelve of them would cost the World Bank $35 billion per year but could save 4.2 million lives annually and generate more than $1.1 trillion per year in economic benefit.

“For $35 billion per year we save 4.2 million lives each and every year, and we can make (the Global South) $1.1 trillion richer each and every year,” Lomborg told attendees.

Lomborg said the industrialized nations of the world should continue to invest in climate change efforts and decarbonization, but that it is a poor option for the Global South. He calculates that every dollar spent on decarbonization in the Global South generates 17 cents of economic benefit.

It’s also not what leaders in the Global South are asking for when it comes to development assistance.

According to a poll of 6,800 elected officials and civil servants in Global South countries, climate change and decarbonization was on average their tenth priority, with growing employment, improving the education system, and enforcing peace and justice coming in at the top of the list.

Diving deeper into the SDGs he picked as most impactful, Lomborg spoke about elementary education. According to the United Nations, education spending in the Global South has doubled in recent years, but up to 300 million pupils around the world are functionally illiterate, unable to answer basic comprehension questions about reading texts assigned to them.

The solution? Lomborg says economists have found that reading instruction using software on tablets, offered one hour per day, could ameliorate this gap, improving reading quality up to three grade levels in only one year.

And it’s cheap. He estimates deploying this to 90 per cent of all  youth facing functional illiteracy in the Global South would cost between $20 and $31 per year, per child, and generate between $931 and $1,331 in economic benefits per pupil annually.

“So we’ve just managed to make the school three times as effective. And at very, very low cost. We’re talking about less than 10 percent of the total cost of running the school for one year,” Lomborg said.

But this and many other efforts remain sidelined, Lomborg says, because costly decarbonization efforts with indeterminate payback periods crowd them out.

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