How to Spend $50 Billion to Make the World a Better Place
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GDP (%)
Source: World Bank and own calculations
China. China sent 580,000 students overseas between 1979
and 1999, of which 25% had returned by 2002.
Policies that encourage migration for development pur-
poses (and, in the longer term, reduce international labor movements) will inevitably cause a short-term increase in
migration. This can lead to resistance in receiving coun-
tries, slowing the economic integration needed to accelerate development, so careful management is necessary.
Development can also be fostered by trade liberaliz-
ation. For instance, countries that wish to reduce migra-
tion pressures could do so by no longer protecting their
uncompetitive agricultural industries. Currently, industrial countries spend over $300 billion annually in farming
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124 How to Spend $50 Billion to Make the World a Better Place subsidies (six times the amount spent on ODA). Unre-stricted access to world markets for agricultural commodi-
ties would raise developing country GDPs by 5%, compared
to the average 1% gain from remittances.
Conclusions
Global GDP is increased by the higher incomes received
by most migrant workers. Receiving countries also receive
a small net benefit to their economies. Countries of origin benefit significantly from remittances and, in some cases, the return of migrants to their native land.
The benefits of migration (higher incomes) are immedi-
ate and easy to see; the costs are delayed and very difficult to estimate. However, many people in host countries perceive
the cost to be high. Tackling this perception through the proposed opportunities for better management of migration
would allow the realization of greater benefits of migra-
tion to the global economy, the receiving countries, and
countries of origin. In the longer term, properly managed
migration would be an important tool to reduce inequalities between countries. Lowering barriers to migration should
rank very high on the global list of challenges.
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POPULATION: MIGRATION
OPPONENTS’ VIEWS
Contrasting views of Philip Martin’s challenge paper are
given in these two opposition papers. Roger B öhning is in broad agreement with the analysis and recommendations,
differing mainly on the roles the State must play if the proposals are to work and in believing that a World Migration Organization could play a useful role. Mark Rosenzweig,
on the other hand, is quite critical of Martin’s analysis.
Together, these critiques provide interesting new insights into the challenge presented by migration.
B öhning considers what must be done by the State to
make what Martin describes as the “transition from the
current widespread employment of irregular workers to a
world of legal migrants.” His first point is that labor inspection regimes are at their weakest (essentially non-existent) in the “informal” employment sector, where illegal employment is common. Secondly, he sees a link between illegal
migration and corruption, in both the home and receiv-
ing countries. Thirdly, since State recruitment of migrants has effectively stopped in most countries, the vacuum
has largely been filled by intermediaries supplying illegal 125
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126 How to Spend $50 Billion to Make the World a Better Place workers. All three factors require attention if migration is to be managed properly.
Turning to Martin’s proposal to attract skilled workers
while compensating the home countries for the brain drain, B öhning sees a good case for selection by educational qualification to be put on European policy agendas, and sees
this as far preferable to promoting immigration as a demo-
graphic quick fix to the problems presented by an ageing
population. This encouragement of selective immigration,
together with capping numbers of refugees accepted, is
unlikely to be politically acceptable in many countries for the foreseeable future. The other aspect of this proposal –
compensation of home countries – he sees as unrealistic in practice. Promoting it as a possibility is therefore unfair.
The point where B öhning takes issue with Martin is
his second opportunity: encouragement of temporary guest
workers. He believes that this would ultimately create a
larger problem of illegal migration, and it is better to consider all migrant workers as being in the receiving coun-
try on a permanent basis. To make the policy work, labor
inspections would be needed in the informal sector to
remove illegal immigrants, and the practice of regularizing the status of illegals after a certain length of time (responsible for a high proportion of legal immigration admissions) would need to be stopped in all but exceptional cases.
B öhning accepts the point that managed migration –
including regular remittances and a proportion of retur-
nees – can help with economic development. This process
could be helped by the proposed establishment of a World
Migration Organisation (WMO), but setting objectives that
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Population: Migration
127
are acceptable to all parties would be a challenge. In general, receiving countries would object to the promotion of greater levels of migration, which might be favored by some sending countries. However, fighting unlawful migration,
encouraging cross-border cooperation to manage flows, and
devising an equitable system for sharing migrant workers’
taxes between sending and receiving countries would form
a worthwhile basis for the constitution of a WMO.
Rosenzweig takes a more critical view of the challenge
paper. His first objection is to the way the global benefits of migration have been calculated. Martin makes low assumptions about the wages of migrants in their home countries, so exaggerating the increased income they receive in the
host countries. Even for the group with the lowest skills, home country wages have been understated by about a half.
His use of average figures also hides the fact that higher-skilled immigrants each make a larger gross contribution
to the global economy than the lower-skilled. This is an
argument for greater migration of skilled workers, but not for increased migration across the board. The revised calculations suggest that increasing migration by one million low-skilled workers would contribute $8 billion to the world economy; for the same number of college graduates, the
contribution would be $17 billion.
On the question of remittances and their contribu-
tion to developing country economies, Rosenzweig believes
Martin’s figures to be overstated. Research shows that remittances average only 4% of earnings of US immigrants. How-
ever, these amounts are s
till significant for the home country, increasing country income by 7–11%.
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128 How to Spend $50 Billion to Make the World a Better Place Return of some emigrants to their home countries represents a real gain to these countries, and appears to be
happening in significant numbers. A survey conducted in
the USA in 2003, for example, showed that 21% of male
immigrants with employment visas expected not to live in
America in the long term.
Rosenzweig is sceptical about the value of education-
based selection systems. Supportive family networks seem
effective in migration success, and most legal immigration in the US is sponsored by American citizens. Finally, he sees no merit in encouraging temporary migration. This would
expand the population of unassimilated migrants with lit-
tle incentive to learn the host country language. Such an
approach offers no advantages over the encouragement of
all legal migration to be permanent in principle. This gives immigrants incentives to settle and integrate, but in practice a proportion will also return to heir home country, taking useful skills with them.
Both opponents agree on the desirability of managing
migration properly. In particular, they believe all immigration should be on the same basis: permanent in principle.
However, neither makes a strong case for this particular
challenge to be considered a high priority by the Copen-
hagen Consensus conference.
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FRANK RIJSBERMAN1
8
The Water Challenge
Characteristics of the water challenge
Despite the massive investment in water resource develop-
ment during the twentieth century – in recent decades also reaching the developing world – there is still what many see as a “water crisis.” This has two key facets:
r Lack of access to safe and affordable domestic water
supply (for over a billion people) and sanitation (for
nearly half the world’s population).
r Lack of access to water for productive purposes for the
rural poor.
There is clearly sufficient water available in the world for all mankind’s needs: domestic, industrial, and agricultural, although it is distributed very unevenly. The problem is not lack of water, but that the unserved do not have access to capital (financial or political) to make it available to them.
1 Director General, International Water Management Institute, Colombo, Sri Lanka.
129
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130 How to Spend $50 Billion to Make the World a Better Place The challenge addressed here is, therefore, providing access for poor people to safe water for domestic and productive
purposes.
Domestic water needs are relatively small; only 20–50
litres per head each day in developing countries (although up to ten times this in the USA and Europe). In contrast,
each person needs thousands of litres a day to produce
their food. About 1,000 litres (one cubic metre) of water
are needed to produce one kilogram of cereal grain, and
meat production requires considerably higher quantities.
On average, each person needs seventy times as much water
to feed them as for all domestic purposes.
Water resources are subject to competition for different
uses, particularly agriculture and the environment. Large
development projects have, in the worst cases, led to rivers running dry and to enormous depletion of aquifers. This
challenge therefore has two crucial dimensions: service
delivery to those people without adequate water supplies
and sustainable resource management.
The case for government involvement in water
In both historical and modern times, water service provi-
sion has generally been seen as a government responsibility.
This is largely because water is regarded as a public good and its availability as a basic human right, best administered by the public sector. However, the cost of service provision has to be borne somewhere, and an emotional argu-
ment continues as to whether individual citizens should pay
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The Water Challenge
131
at least part of the cost of providing the water they consume, whether to public or private providers.
The experience of poor returns from centralized water
infrastructure projects has shown that these are best man-
aged at local government or community level. This leads
to greater involvement of the users and better accountability. There is now a general trend toward decentralization of service provision and introduction of water charges.
There are also arguments that governments are not the
best providers of services such as water supply. Experience in France and the UK, for example, shows that private companies can also successfully carry out this role within a government regulatory framework. Nevertheless, there is still a strong case for public investment if it can be better targeted at poor communities to reduce poverty and hunger
and improve public health rather than just being a narrow, technology-based approach to water provision.
The costs of managing water badly
What costs does the current water crisis impose on society?
The 2003 report from the United Nations (UN) Task Force
on Water and Sanitation gives some sense of the scale of the problem, for example:
r Nearly half the population of the developing world is
suffering at any given time from diseases related to poor
access to clean water and sanitation, ranging from diar-
rhoea to a number of parasitic illnesses.
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132 How to Spend $50 Billion to Make the World a Better Place r Over two billion people are infected with water- or soil-borne parasitic diseases (bilharzias and helminthes),
with 300 million suffering serious illness.
r Well-designed water and sanitation infrastructure
reduces the incidence of bilharzias by more than three-
quarters.
r A range of pollutants also affects health; high arsenic
levels in water from deep wells affects 50 million people
in Asia.
Diarrhoeal diseases are the greatest health problem, with
more than four billion cases and between one and two mil-
lion deaths each year. The total burden of diseases asso-
ciated with poor quality water, sanitation and hygiene has been assessed as 82 million Disability Adjusted Life Years (DALYs) annually. Taking a low valuation of $500 per DALY, the economic cost amounts to $40 billion (considerably
more if the higher DALY valuations used by authors of other challenge papers are used).
Moving on to water for agricultural use, it is fo
und that
there is a strong correlation between rural poverty and low levels of irrigated land. Irrigation is clearly an important tool for poverty reduction. But, where land distribution
is inequitable, the benefits of irrigation are also delivered unequally.
In India, irrigation has become more widely available to
marginal farmers via privately pumped groundwater, made
available cheaply because of current electricity subsidies.
However, the lack of control of groundwater exploitation
has led to severe depletion of major aquifers.
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The Water Challenge
133
Further development of small-scale irrigation technol-
ogy – drip and micro-sprinkler systems, for example – can
repay a small farmer’s investment very quickly. This enables water resources to be used more productively.
Appropriate provision of water can be a key opportu-
nity for reduction of rural poverty. The provision has to
be done with due regard to environmental factors to avoid
potential large remedial costs in the longer term. Irrigated land is prone to water-logging and salinization, leading to reduced productivity. It is estimated that 30% of irrigated land already suffers from reduced productivity, but no remediation opportunities have been identified yielding benefits on the scale comparable to those reviewed in this chapter.
The economic literature on the benefits of improved
water management is rather sparse, with many projects in
the sector based primarily on a human rights approach.
Nevertheless, this chapter examines the challenge from an
economic perspective.
Water opportunities
Two key opportunities to meet the challenge are discussed
more fully below, but there are several others which should also be noted:
r Re-using waste water for peri-urban agriculture. Installation of low-cost sewerage in medium to large cities
in developing countries could provide biologically safe
irrigation water for poor farmers living in the slums and
shanty towns at the city’s margins. This would not only
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134 How to Spend $50 Billion to Make the World a Better Place have a direct benefit for the farmers, but also prevent