Spending Money on Foreign Aid instead of Renewables

On the Discussion at BishopHill, commentator Raff asked people whether the $1.7 trillion spent so far on renewables should have been spent on foreign aid instead. This is an extended version of my reply.

The money spent on renewables has been net harmful by any measure. It has not only failed to even dent global emissions growth, it will also fail even if the elusive global agreement is reached as the country targets do not stack up. So the people of the emissions-reducing countries will bear both the cost of those policies and practically all the costs of the unabated warming as well. The costs of those policies have been well above anything justified in the likes of the Stern Review. There are plenty of British examples at Bishop Hill of costs being higher than expected and (often) solutions being much less effective than planned from Wind, solar, CCS, power transmission, domestic energy saving etc. Consequences have been to create a new category of poverty and make our energy supplies less secure. In Spain the squandering of money has been proportionately greater and likely made a significant impact of the severity of the economic depression.1

The initial justification for foreign aid came out of the Harrod and Domar growth models. Lack of economic growth was due to lack of investment, and poor countries cannot get finance for that necessary investment. Foreign Aid, by bridging the “financing gap“, would create the desired rate of economic growth. William Easterly looked at 40 years of data in his 2002 book “The Elusive Quest for Growth“. Out of over 80 countries, he could find just one – Tunisia – where foreign aid conformed to the theory. That is where increased aid was followed by increased investment which was followed by increased growth. There were plenty examples of where countries received huge amounts of aid relative to GDP over decades and their economies shrank. Easterly graphically confirmed what the late Peter Bauer said over thirty years ago – “Official aid is more likely to retard development than to promote it.

In both constraining CO2 emissions and Foreign Aid the evidence shows that the pursuit of these policies is not just useless, but possibly net harmful. An analogy could be made with a doctor who continues to pursue courses of treatment when the evidence shows that the treatment not only does not work, but has known and harmful side effects. In medicine it is accepted that new treatments should be rigorously tested, and results challenged, before being applied. But a challenge to that doctor’s opinion would be a challenge to his expert authority and moral integrity. In constraining CO2 emissions and promoting foreign aid it is even more so.


  1. The rationale behind this claim is explored in a separate posting.

Kevin Marshall


  1. Brian H

     /  17/11/2014

    “where foreign aid conformed lead to” Say wot?

    “all the costs of the unabated warming as well. ”
    Considering that:
    a) warming confers massive net benefits, especially economically, and so has net negative cost, and
    b) that abating them is a fool’s errand,
    there are only the opportunity costs of not being able to do something useful with the funds and resources blown on AGW. (See a) also, for a negative negative: we didn’t mitigate and harm the warming trend! So, that’s good. )

  2. manicbeancounter

     /  18/11/2014

    Brian, thanks for the editing comment.
    On the warming having net benefits, then this would exacerbate the harm that policy causes. But even assuming that the worst doom scenarios are true* the case for mitigation is still not made, as I will demonstrate more fully in a later posting.

    * If you believe that, for a large fee I can show you the fairies that live in the bushes at the bottom of my garden.

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