How much is the world spending on development-relevant global public goods?
Despite the growing prominence of global challenges, such as climate change, cross-border health threats, security risks, and financial crises, most development-oriented funds are spent on individual programs in single countries. Development-relevant global public goods (or DRGPGs, transfers to finance activities in developing countries that provide global public goods, i.e., shared benefits to large groups of people across geographies) are severely underfunded. In our first rough and preliminary attempt to compile global contributions to DRGPGs, we estimate that as of 2012 they represented only a little over 10 percent of ODA, adding up to about $14 billion a year. And the data on development-relevant GPGs seem to be as scarce as funding. Thus, our compilation is necessarily selective and in need of continuous improvement. We hope to regularly update the list of funds committed on the basis of your suggestions and complaints and as more data are made publicly available.
Given the non-excludable nature of public goods (benefits are conferred to all, regardless of contribution), their low levels of funding are not surprising. Universal benefits mean fewer political and diplomatic returns on aid “investments” and encourage freeriding. Perhaps this is why funding for even relatively high-profile global common problems, such as climate change, is scarce: the Green Climate Fund, set up in 2010 and meant to channel $100 billion from developed to developing countries for climate adaptation and mitigation every year from 2020, has to date received only $10.2 billion in pledges and only $4 billion in signed contributions to be spent over three years.
Not that there would be a shortage of impactful investment opportunities in development-relevant GPGs. Early warning systems in developing countries could yield benefits of between $4 billion and $36 billion a year from reduced losses from natural disasters by one estimate, with less than $1 billion invested. In global health, devoting an additional $100 million to HIV vaccine R&D is valued to generate returns six times as high.
What next? Define, identify, publish, invest
The number of challenges requiring collective action and international coordination is on the rise. From where will come an initiative that brings together major funders of DRGPGs to agree on a common definition of development-relevant global public goods and on standards for reporting on those transfers? Could the Global Partnership for Effective Development Cooperation spearhead the appeal on better reporting? Or should it perhaps be the World Bank, which has issued several staff reports on its engagement with GPGs and noted “the urgent need for collective action worldwide”? Counting current contributions can be a first step toward an agreed standard for updating spending on development-relevant GPGs that contribute to growth and help protect the most vulnerable in developing countries. Improved reporting would also encourage the assessment of gaps in the provision of GPGs and highlight the areas where returns to public (and private) investment would be greatest.