Economics and the Environment

In recent weeks, I 've come across two major thinker/actors who apply economic theory to create entirely different takes on environmental strategy. The first comes from economist Bjorn Lomborg whose Copenhagen Consensus prioritizes the world's biggest problems according to where money can have the greatest impact. His findings, articulated in less than 20 minutes at the TED Conference, place global warming at the bottom of the list and AIDS prevention at the top. (If you still haven't figured out the podcast thing, the whole menu of talks from the TED conference which convenes leading thinkers in technology, entertainment, and design is reason enough to do it!)

On the other hand is Hal Harvey who heads environmental grantmaking for the William and Flora Hewlett Foundation. While folks who give away money are very powerful among grantees who need it, the WSJ provides this rare example of a foundation staffer whose influence is much more widely felt. And according to the article, Harvey's investment decisions are guided strongly by economic analysis:

So, in doling out the dollars at his disposal, Mr. Harvey uses much the same strategy as the other venture capitalists in Silicon Valley. He invests where he thinks he'll get maximum return. In his parlance, he looks for the political "pinch points" likely to promote technologies that will deliver the most "tons of carbon avoided per philanthropic dollar invested." He and his colleagues try to compute that using spreadsheets.

'Two things matter: Coal and cars. Two countries matter: China and the U.S.,' he says, talking over dinner in his house in Mill Valley, north of San Francisco. "In that little matrix, there's only a handful of policies that are going to make any damn difference.'

It isn't surprising that two these two thinkers use economic analysis to guide their efforts, nor that they arrive at distinctly different conclusions. What is surprising is that passions for social change (expressed individually by donors and politicians or collectively by organizations,) are the predominant force behind how precious, limited philanthropic resources are spent.

While donors frequently are attracted to efforts where "no one else is doing the work," Harvey and Lomborg demonstrate why we might more appropriately be guided by where it can do the most good.

Hewlett Houndation, Copenhagen Consensus

Susan Herr