Today's crises are different

Just as one generation gives way to another, a new cohort of global challenges replaces the old.

Rare events, such as the covid-19 pandemic and the risk of dangerous new viruses emerging at any time, are not the only example.

Extreme weather events resulting from climate change already have catastrophic consequences.

Information technology and data are sometimes used for malicious or war purposes.

Even today's rising food prices and rising global hunger can be linked to insufficient dissemination of open source technologies.

It seems that we live in a permanent state of danger.

Crises are no longer unlikely, isolated events that affect a few.

They are much more frequent, multidimensional and interdependent;

and, by transcending national borders, they have the potential to affect the entire world at the same time.

Furthermore, they involve so many externalities that neither markets nor national governments have sufficient incentives to resolve them.

Solutions to these problems depend on the availability of global public goods;

but the current international system is unable to provide a sufficient supply.

We need large coordinated investments in pandemic preparedness and response, for example, or to reduce greenhouse gas emissions (a global public bad), because no single country acting alone will be able to solve current crises, let alone prevent new ones.

It is imperative to reconsider the functioning of multilateralism.

The postwar international financial architecture was designed to support national governments in the provision of national public goods.

Now it is a priority to think about the new institutions that are needed to provide public goods beyond borders.

In 2010-19, the proportion of the global land area affected by extreme drought in any one month reached 22%, compared to 13% in 1950-99

The overlapping nature of the current crises further highlights the need for a new structural framework.

The increased frequency of extreme weather events (eg floods and droughts) increases the risk of infectious and waterborne diseases.

Rising average temperatures and changing rainfall patterns are reducing the potential productivity of staple crops (for example, by 6% in the case of maize) that are crucial for food security, an essential component of health.

In 2010-19, the proportion of the global land area affected by extreme drought in any one month reached 22%, compared to 13% in 1950-99.

Previous emergencies, such as the global financial crisis of 2008-09 (which was actually a developed world phenomenon) or the Asian and Latin American economic crisis of the late 1990s, were basically economic in nature and a result of the excessive accumulation of financial risks.

Solutions lay in the hands of central banks and finance ministers, and included the adoption of new monetary regulations and fiscal policies that would reverse job losses and revive economic activity.

The current crises are interdependent and truly global in scope, with the potential to produce far greater effects

The current crises, on the other hand, are interdependent and truly global in scope, with the potential to produce much greater effects.

What distinguishes them is that the solutions no longer depend exclusively on the capacity of the national economic authorities.

An effective response demands leadership and action from governments around the world.

An example of this approach is the proposal to create a World Council on Threats to Health.

The early detection of pandemic threats and the development of herd immunity against known pathogens are classic examples of global public goods with the properties of non-rivalry and non-exclusion.

But in each country, separately, taxpayers have no incentives to provide goods with a global reach.

Nor is it possible to delegate this task to official development aid (ODA) or philanthropy, because the numbers simply do not add up.

Last year, total ODA reached €170 billion, with private donors adding a few billion more.

But for the provision of global public goods billions of dollars are needed.

Furthermore, official aid budgets are too variable and priorities change.

But what seems urgent and politically attractive does not always coincide with what is important, which should be the focus on the provision of global public goods.

That is why we have to create a new multilateral system.

Ideally, its main elements should be modeled on the basis of the tools used for the provision of national public goods: taxation, incentives and accountability.

Since global public goods require a significant and stable volume of financing, we must point to the creation of international taxation, financed through universal contributions based on ability to pay.

Of course, leadership is also needed at the national level to ensure an adequate intergovernmental and intersectoral response.

Giving taxpayers and governments the right incentives for action will not be easy.

But most states take regular International Monetary Fund missions under Article IV very seriously;

including in them an assessment of the national response to climate and pandemic risks would be a good starting point.

Also, credit rating agencies should expand the methodologies they use for government and corporate risk assessment.

The world is not prepared to face the new generation of crises.

Instead of just focusing on shortcomings within a particular area at the time of a crisis, we need to understand why time and time again we fail to provide the global public goods that all these new crises demand.

If we do not solve this problem, specific flaws will continue to appear.

If, for example, a pandemic threat were to appear again tomorrow, it would not find us better prepared than covid-19.

The current crises (climate, health and food) should be enough to set in motion the mechanisms of global collaboration necessary to face these threats.

Mauricio Cárdenas

is a former Minister of Finance of Colombia, he is a Visiting Senior Research Fellow at the Center on Global Energy Policy at Columbia University.

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