Sachs: Government Push Needed to Spur Environmental, Anti-Poverty Technologies

Jeffrey Sachs, in an article for Project Syndicate (hat tip Mark Thoma), argues that private sector efforts alone won’t yield sufficient progress in achieving needed progress on the environmental and anti-poverty fronts. Part of this, of course, is the classic problem of externalities: carbon emissions are free to the perps, but impose costs on everyone. Thus, conversely, getting rid of carbon emissions is expensive to the producers, so they need incentives (and sometimes infrastructure) to take the right action for the community.

Many roll their eyes at the mention of government intervention or subsidies. Yet no one seems to mind that drug research is funded to a considerable degree by the US government.

The biggest obstacle to Sach’s idea is that it requires international cooperation, since as he notes, it is particularly important to deliver new, cleaner technology to India and China. It’s hard enough to get initiatives like this in place in one country, let alone across borders.

From Project Syndicate:

In early February, the United Sates National Academy of Engineering released a report on “Grand Challenges for Engineering in the 21st Century.” The goal is to focus attention on the potential of technology to help the world address poverty and environmental threats. The list includes potential breakthroughs such as low-cost solar power, safe disposal of carbon dioxide from power plants, nuclear fusion, new educational technologies, and the control of environmental side-effects from nitrogen fertilizers. The report, like the Gates Foundation’s similar list of “Grand Challenges” in global health, highlights a new global priority: promoting advanced technologies for sustainable development.

We are used to thinking about global cooperation in fields such as monetary policy, disease control, or nuclear weapons proliferation. We are less accustomed to thinking of global cooperation to promote new technologies, such as clean energy, a malaria vaccine, or drought-resistant crops to help poor African farmers. By and large, we regard new technologies as something to be developed by businesses for the marketplace, not as opportunities for global problem solving.

Yet, given the enormous global pressures that we face, including vastly unequal incomes and massive environmental damage, we must find new technological solutions to our problems. There is no way, for example, to continue expanding the global use of energy safely unless we drastically alter how we produce electricity, power automobiles, and heat and cool our buildings. Current reliance on coal, natural gas, and petroleum, without regard for carbon-dioxide emissions, is now simply too dangerous, because it is leading to climate changes that will spread diseases, destroy crops, produce more droughts and floods, and perhaps dramatically raise sea levels, thereby inundating coastal regions.

The National Academy of Engineering identified some possible answers. We can harness safe nuclear energy, lower the cost of solar power, or capture and safely store the carbon dioxide produced from burning fossil fuels. Yet the technologies are not yet ready, and we can’t simply wait for the market to deliver them, because they require complex changes in public policy to ensure that they are safe, reliable, and acceptable to the broad public. Moreover, there are no market incentives in place to induce private businesses to invest adequately in developing them.

Consider carbon capture and sequestration. The idea is that power plants and other large fossil-fuel users should capture the carbon dioxide and pump it into permanent underground storage sites, such as old oil fields. This will cost, say, $30 per ton of carbon dioxide that is stored, so businesses will need an incentive to do it. Moreover, public policies will have to promote the testing and improvement of this technology, especially when used at a large scale.

New kinds of power plants will have to be built to make carbon capture economical, new pipelines will have to be built to transport the carbon dioxide to storage sites, and new monitoring systems will have to be designed to control leaks. Likewise, new regulations will be needed to ensure compliance with safety procedures, and to assure public support. All of this will take time, costly investments, and lots of collaboration between scientists and engineers in universities, government laboratories, and private businesses.

Moreover, this kind of technology will be useful only if it is widely used, notably in China and India. This raises another challenge of technological innovation: We will need to support the transfer of proven technologies to poorer countries. If rich countries monopolize new technologies, the goal of worldwide use to solve worldwide problems will be defeated. Thus, technological developments should involve a collaborative international effort from the start.

All of this will require a new global approach to problem solving. We will need to embrace global goals and then establish scientific, engineering, and political processes to support their achievement. We will need to give new budgetary incentives to promote demonstration projects, and to support technology transfer. And we will have to engage major companies in a new way, giving them ample incentives and market rewards for success, without allowing them to hold a monopoly on successful technologies that should be widely adopted.

I believe that this new kind of global public-private partnership on technology development will be a major objective of international policy making in the coming years. Look for new global cooperative approaches to clean energy systems, medicines and vaccines, improved techniques for fish farming, drought-and-temperature resistant crop varieties, high-mileage automobiles, and low-cost irrigation techniques.

Rich countries should fund these efforts heavily, and they should be carried out in collaboration with poor countries and the private sector. Successful technological breakthroughs can provide stunning benefits for humanity. This will be an exciting time to be a scientist or engineer facing the challenges of sustainable development.

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  1. Francois

    “Many roll their eyes at the mention of government intervention or subsidies. Yet no one seems to mind that drug research is funded to a considerable degree by the US government.”

    It is worth remembering also the Apollo project. Entirely funded by Uncle Sam, yet, how many new technologies were developed to solve difficult problems? This knowledge was then captured, refined and used for profit by the private sector, which is the thing in which the private sector does best. If I recall correctly, each dollar invested in Apollo returned something like 150 USD over the next 20 years. Not a bad ROIC I daresay.

    Those who roll their eyes aren’t looking at all the new jobs and industries that could be created by an intense and sustained effort in R&D. When the finger point to the sky, the fool looks at the finger.

  2. RK

    A problem equally as large as the need for international cooperation is the fact that the technologies and systems, once developed, will require massive infrastructure changes which can
    only be funded by governments. The governments
    which would make the biggest difference represent
    huge and still poor populations.(at least on a per capita income basis).
    So in order to fund these changes, an enormous
    wealth transfer will have to take place. Selling this
    transfer to the citizens of the G7 will prove to be the hardest task.

  3. juanramon-54

    Sorry, people. We don’t have enough money to do any of this good stuff. We need to devote every spare dollar to enabling more people to achieve the American Dream of Homeownership.

    Seriously–our U.S. gov’t will have the money to devote to these kinds of initiatives only if we, the people, are willing to reward instead of punish leaders and would-be leaders who are willing to talk about raising taxes to pay for them. Like that’s gonna happen.

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