Prioritizing spending alternatives is difficult in every country. But it is especially challenging in Haiti, where, following years of fractious politics, a newly elected government is striving to expand the economy and improve wellbeing while confronting the lingering consequences of the massive 2010 earthquake.
Every government has limited funds, but Haiti has an annual budget of just $2 billion, with foreign donors allocating another $1 billion. To put that number into context, the annual budgets of two countries with similar-size populations, the Czech Republic and Sweden, are $74 billion and $250 billion, respectively.
The most common narrative we hear about Haiti is one of great need — the “poorest country in the Western hemisphere,” with weak infrastructure and health problems that include the region’s highest rates of infant, under-five and maternal mortality.
Focusing on the problems, though, tells us little about where donors or Haiti’s government could make the biggest difference. A new research project, Haiti Priorize, funded by the Canadian government and led by my think tank, the Copenhagen Consensus, does just that, by generating data about the most powerful opportunities to boost prosperity and health for generations.
Haiti Priorize commissioned 45 cost-benefit research papers from economists (one-third of them Haitian public servants). Each set of researchers adopted a standardized approach and studied proposals as diverse as linking farmers to the international carbon market, improving rice production, setting up flood warning systems, creating paid paternity leave to get more women into the formal workforce, and teaching young children in their native language of Creole instead of French.
An eminent panel of three renowned Haitian economists and a US Nobel laureate economist considered all 85 specific proposals, and interviewed the research authors before issuing a prioritized list, which they presented to President Jovenel Moise. In their Top 10 list are six proposals that would take advantage of the short window before and after birth when the largest difference to a child’s life can be made.
Access to educational stimulation at a very young age can create the conditions for success as an adult. Education economist Atonu Rabbani’s research showed that two years of teacher-led play sessions would cost around $157 per student. A famous, long-term research experiment in Jamaica suggests that such a project would likely lead to a 35 percent increase in future earnings. Every dollar spent would generate returns to Haiti worth $17.
For shorter-term benefits, lifting immunization coverage for infants to 90 percent by 2020 would save more than 16,000 young lives over the next five years, according to research by Magdine Flore Rozier Balde of Haiti’s Ministry of Planning. This would cost just $36 million over five years, yielding benefits worth $13 for every dollar spent.
About 70 percent of electricity produced is lost or stolen. Less than one-third of households have access to electricity, and for only 5-15 hours a day, leaving many in darkness and forcing businesses to buy expensive diesel generators.
Bjorn Lomborg
Similarly, the panel endorsed increasing maternal and newborn health care. At a cost of $23.5 million per year, this intervention would cut maternal deaths by 65 percent and save more than 5,000 children, with every dollar spend producing $18 in social benefits.
As their second-highest priority, the panel endorsed investment in reducing the “hidden” scourge of micronutrient deficiency. Stephen Vosti of the University of California, Davis and co-authors proposed adding iron and folic acid to wheat flour when it is milled or bagged. This “fortification” is common in many countries, and can be adapted to add micronutrients to any staple food.
Such a program would have the biggest impact for pregnant women and young children. Spending around $5 million over 10 years to fortify 95 percent of wheat flour would prevent annually 140 deaths from neural tube defects and more than 250,000 cases of anemia.
The panel’s findings reveal powerful, lasting benefits from investments that focus on a child’s earliest and most crucial years. But ensuring that those children can one day contribute meaningfully to Haiti requires improving conditions for doing business. Many people believe the biggest barrier to the economy is the lack of reliable electricity. The eminent panel’s top-ranked proposal is to reform the public utility, Electricite d’Haiti (EDH).
Reform is unavoidable. EDH is insolvent and requires an annual subsidy of $200 million, or one-tenth of Haiti’s entire budget. About 70 percent of electricity produced is lost or stolen. Less than one-third of households have access to electricity, and for only 5-15 hours a day, leaving many in darkness and forcing businesses to buy expensive diesel generators.
The average Haitian consumes just 39kWh per year — about 10 percent of average consumption in Ghana, and less than what is needed to run an average American refrigerator for one month. Juan Belt, Bahman Kashi and Jay Mackinnon of Limestone Analytics found that reforming EDH could be done for about $33.3 million.
Drawing lessons from reforms in Afghanistan and their experience in Haiti, Belt, Kashi and Mackinnon suggest changing the power sector’s institutional and regulatory framework, corporatizing the EDH, and establishing cost-reflective tariffs. If successful, a second phase of reform would provide limited investment funds for continued improvement in service delivery and financial efficiency.
The result would be a significant reduction in EDH’s losses — and more reliable electricity. Each dollar spent would generate $22 of social benefits. As Haitian economist Kesner Pharel noted, the $200 million drain on the budget “could be better spent on areas like health and education, to achieve a lot more for Haiti.”
That is the goal of all of the investments highlighted by Haiti Priorize. The research provides NGOs and government officials with the intellectual ammunition to advocate for more funding for effective solutions, and it gives donors and elected officials a wealth of data on which to base tough decisions. Prioritizing problems, and then focusing on the most effective solutions, is a narrative that would benefit every country.
• Bjorn Lomborg is director of the Copenhagen Consensus Center and a visiting professor at the Copenhagen Business School.
©Project Syndicate