# 1.1 Introduction The topic has been part of the economic analysis of government policy at the national level, at least since 1997. Examples such as CFC emissions and ozone depletion, carbon emissions, and global warming. Then it was advocated and supported by the [[UNDP]]. # 1.2 [[public goods]], [[access goods]], and [[global public goods (GPG)]] ## 1.2.1 What is a public good? A classic example is the service provided by alighthouse: the warning itprovides is available to all who would benefit from it, and one ship's use of itdoes not limit the ability of other ships to use it. Virtually all public goods are such services or other intangibles, with few, if any, "commodities" (in the narrow sense of physical objects) meeting these criteria (the exception to this being physical infrastructure, such as sewage systems, which once completed are largely non-rival in consumption, and difficult to exclude people from using) (Kaul et aL 1999). ### [[Excludablility and rivalry elements of global public goods are relative, not absolute, concepts]] However, both excludability and rivalry are relative, not absolute, concepts. In terms of excludability, access to public goods in particular may be: (1) *geographically specific* (e.g. conventional television broadcasts, while they broadly satisfy the criteria for a public good, reach only an area defined by the location of transmitters, the strength of signals and topographical constraints); (2) subject to *indirect access costs* (e.g. following the above example, the cost of atelevision set), which may result in a "[[club goods]]" (see below); (3) subject to *administrative control* (e.g. television licences creating a"club good" out of the public good); and/or (4) subject to *change over time* as aresult of technological changes (e.g. satellite and cable television technologies enable restriction, again creating a "club good"). Similarly, *rivalry in consumption* may be relative to capacity, particularly in the case of physical infrastructure. For example, if a sew~e system has spare capacity, its use is non-rival, but as the capacity constraint is approached use becomes rivalrous, whereby the person whose use of itcauses capacity to be reached has effectively prevented the next person wishing to use it from doing so. Perhaps more usual is that the consumption of aparticular good may not prevent others from using it, but simply reduce the benefits to them of using it. For example, one person's use of aroad does not usually prevent use by others, but the use of roads becomes less beneficial as more people use them and they become more congested. ==Between the extremes of pure private and public goods lie a range of private goods with externality effects2 and public goods with private benefits==. There are two particularly important categories of such goods. First, "[[common pool goods]]" are non-excludable but rivalrous in consumption, such as forests: the environmental benefits of forests are not excludable, but if they are used for logging these benefits are forgone. Second, "[[club goods]]," which are, conversely, excllAdable but not/rivalrous, with the benefits spread among a subgroup of the population, whose membership may be controlled by the providers of the good or others. Examples include cable and satellite television broadcasts, which have the characteristic of non-rivalry for those who subscribe to them, with non-subscribers being excluded. Thus, ==the classification of a good as public or private may be somewhat misleading==. Rather, it is more appropriate to discuss the degree to which goods may be subject to excludability and/or the degree to which their consumption is rival. It is the understanding of these characteristics of the good in question that may then allow remedial action to be taken to correct market imperfections in their supply, as indicated below. However, for the purposes of this chapter, and this book, the broad categorization of goods as largely private or public, and within public as largely common-pool or club goods, is made to facilitate ease of comparison and analysis. ## 1.2.2 The importance of "[[access goods]]" Many public goods are only non-excludable to those who have the requisite private goods to access them. For example, a television is required to access broadcasts, a computer to access the internet and infrastructure to access clean water. Such private goods are here termed "access goods." However, while increasing demand is a "market friendly" approach, and will contribute to increasing coverage, it is Iikely to leave the problem of perverse targeting. This applies particularly where education and information themselves require access goods (e.g. literacy, access to media, and school attendance). ==The direct supply of access goods is likely to be more expensive than increasing demand, even where effective targeting is possible, but it may be more effective than a demand-based approach in increasing coverage and countering perverse targeting==. Decisions on the supply of access goods need to take account of alternative delivery mechanisms (e.g. the provision of access to computers through public libraries to facilitate access to the Internet) in terms of their cost and effectiveness in allowing access to public goods. It should also be noted that, even if access goods are supplied, there may still be a need to increase demand if there are indirect or non-financial costs (e.g. if vaccination requires traveling to a health center). Overall, it may therefore be that the [[provision of some private goods is considered as a part of the "package" of securing the wider consumption of the public good]]. In this case, these private goods may be considered as if they were public goods for analytical and policy purposed. In some cases, of course, the ==cost-effective supply of access goods may itself be a public good== (according to our modified definition, presented in Section 1.2.4), as the cost of providing the access goods to those who do not have them may be no greater (han the externalities arising from the additional consumption of the public good. [[access goods]] are also an important area of synergy, as essentially the same access goods may be required for a range of public goods. For example, public health infrastructure constitutes an access good for a range of public goods. This represents a strong case for the provision of free health services as a public good at the national level. ## 1.2.3 What is a [[global public goods (GPG)]] What then is a"global" public good? The [[UNDP]] defines a global public good as: > a public good with benefits that are strongly universal in terms of countries (covering more than one group of countries), people (accruing to several, preferably all, population groups) and generations (extending to both current and future generations). or at least meeting the needs of current generations without foreclosing development options for future generations). (Kaul *et al*. 1999. pp. 509-10; emphasis added) ^362944 [[Insights]] The definition from UNDP is problematic for three reasons: 1) it does not make explicit the distinction between cross-border and within-country externalities. In principle, this definition would include a public good whose benefits are limited to the country in which it is provided, so long as any country which provides it benefits from it. This allows, for example, broadcast television to qualify, although there is no obvious case for *international* provision or financial support. 2) implications of "strong universality" in terms of population groups could mean, for example, that women's health programs are excluded because they benefit only women, programs dealing with disease affecting only the genetically predisposed (eg, sickle-cell disease) or affecting racial or ethnic groups are excluded by virtue of this fact, or urban environmental programs are excluded as benefiting only urban populations. The irony is that this also suggests that programes benefiting only the poor would, in principle, fail to qualify. 3) the requirement that neither present nor future generations should be harmed arguably creates a "temporal stalemate" whereby programs which only benefit current *and* future generations equally are acceptable. One implication of this is that disease eradication programs would be excluded, as they may require allocation of resources from uses that are of greater importance to the health of the present generation in order to benefit the next generation (even though disease eradication comes closer to satisfying the strict definition of a public good at the global level than possibly any other). For example, while the reduction in the incidence of polio during the process of eradication benefits those who would otherwise suffer from it, the much greater benefits (to health and financially) of polio eradication per se accrue after it has been eradicated-that is, to future generations. Since the very considerable resources required to ensure that the last small pockets of infection are eliminated could be used instead for more cost-effective interventions, the effect is to worsen the health of the present generation in order to benefit future generations. In the light of the above problems, in this volume [[global public goods (GPG)]] are considered to be goods exhibiting a significant degree of publicness (i.e. non-excludability and non-rivalry) *across national boundaries* (and thus not necessarily population or generational boundaries), To make the distinction between global rather than merely "international" GPGs, we also suggest that this cross-national characteristic must involve more than two nations, ==with at least one outside the traditional regional groupings== (e.g. Europe, Sub-Saharan Africa, or South East Asia) of the other(s). There may be public goods across two or three close neighbors, but these would then be considered localized or regional public goods. Although many of the issues outlined in this chapter would nonetheless apply in these cases, the problems of collective action would be far smaller than that assumed below. [[Open Question]] Compare definition from UNDP and the author suggest above? ## 1.2.4 What is the policy relevance of [[global public goods (GPG)]] Free markets under-supply public goods because: (i) non-excludability means that aprice cannot be enforced, leading to "free-riding" (benefit from the actions of others without reciprocation); and (ii) non-rivalry means that efficient consumption is where individual marginal cost is just greater than zero-this will be below market price, leading to less than optimal supply. > Non-rivalrous but excludable: club goods Where a good is non-rivalrous in consumption, the extent to which it is excludable, and the means by which it may be made excludable, are relevant primarily because they affect how consumption can be broadened, and how provision can be financed. For example, where a non-rivalrous good is excludable the promotion of "[[club goods]]," as described above, is one means to broaden provision and secure partial financing. > Non-rivalrous but not-excludable: free-riding The fundamental problem arises, however, when benericial non-rival goods are not excludable. Here, society will benefit from provision of the good, but non-excludability means that individuals or nations may free-ride (i.e. benefit from the action of others without reciprocation), leading to under, or non, supply of the good and thus asocietalloss of welfareo (Hargreaves-Heap et al. 1992). We argue, therefore, that the core policy issue is one of ensuring collective action at the global level to facilitate the production of, and access to, goods which are largely non-excludable and non-rival in consumption, and yield significant external benefit, across multiple nation'. [[A good need not be a pure public good to suffer from a collective action problem]]. Collective action problems also apply to private goods which have substantial positive externalities, as these too will be under-supplied (since externalities are not talken into account by private suppliers and consumers) (Hargreaves- Heap et al. 1992). For example, an individual secures only part of the benefit from his/her treatment for tuberculosis, as others benefit from the reduced risk of infection. However, it is only this private benefit that the individual will take into account when considering whether to seek treatment. Where the private benefit is less than the cost to the individual, they will not seek treatment, even though the population as awhole (lncluding the individual sufferer) would be better off if the individual received treatment. [[From a global health policy perspective, it makes little sense to draw too categorical a distinction between private goods with large positive externalities and the pure public good case]] The author proposed a definition, modified from Kaul et al (1997): a good which it is rational, from the perspective of agroup of nations collectively, to produce for universal consumption, and for which it is irrational to exclude an individual nation from its consumption, irrespective of whether that nation contributes to its financing. ^41dc26 Thus, ==we include some goods which are clearly not public goods in terms of the conventional definition. but which it is appropriate to treat as if they were public goods from a policy perspective. For example, vaccination against communicable disease is clearly both excludable and rivalrous in consumption, and its primary benefit is to the individual recipients and their respective nations==. Nonetheless, if tbe effect on the risk of person-to-person or cross-harder transmission of communicable disease is sufficient, it is not rational either to exclude an individual or nation from consumption, or to limit production to a level at which consumption is rivalrous. # 1.3 [[global public goods (GPG)]] and health ## 1.3.1 Is health a GPG? Health per se is not a public good, either individually or nationally. It is a private good because he/she is the primary beneficiary, even though there are spillover effects to other people. Further, in terms of the goods and services which are necessary to provide and sustain health, such as food, shelter and use of curative health services, =="health" is often rival and excludable between individuals and nations==. Nonetheless, there are two important externality aspects of health, both at the local level and across national borders, which may be amenable to conceptualizing as having GPG properties. 1. The prevention or containment of communicable disease 2. Wider economic externality effects. While these effects appear essentially private, the cumulative effect on the national/regional economy of the resulting loss of production and income, and thus the potential gains from health improvements, may be substantial. For example, HIV/AIDS epidemic that threatens economic development by decimating the young adult workforce, reducing productivity and discouraging savings and investment. ## 1.3.2 [[Question]] What may be [[global public goods for health (GPGH)]]? 1. **Knowledge and technologies**. Information on health risks and treatment regimes, is in principle both non-excludable and non-rival in consumption. However, in practice, it may not be, eg, surveillance and tranmission of knowledge relies on the generation and transmission of knowledge about the incidence of disease, but to work effectively it requires all countries to produce and act on the information, which requires an effect.ive health infrastructure, and appropriate technical expertise, at the country level, thus excluding some countries. Similarly, much of the technology for curative and preventive interventions is necessarily embodied in private goods such as pharmaceuticals and vaccines, turning what is otherwise a GPG into a [[club goods]] 2. **Policy and regulatory regimes**. Policy can be used to restrict access to public goods, either by enforcing its restriction to a limited sub-group of the population to make it a [[club goods]] or by allowing its appropriation or retention by a particular agent, eg, [[Intellectual Property Rights (IPR)|patent regimes]]. Regulatory regimes (e.g. for food and product safety or pharmaceuticals) essentially form a particular sub-set of policy, falling mainly into the category of "club goods" (non-rival in consumption but may be excludable), as groups can be included or excluded by a regulation, but once a regulation exists it can apply to one or many (unless the cost of monitoring is very high, in which case regulation could possibly be considered rival in consumption). 3. **Health systems**. It is analogous to that of [[access goods]]. This suggests that support for the health system in countries where it is currently ineffective or inaccessible may, in principle, be treated as if they were GPGs dccording to the modified definition presented earlier. Financial support of national health systems, including general equipment, professional training, and information systems, may therefore be justified in some countries on GPG grounds, as well as (and in some cases potentially as a precondition for) support for specific interventions. ## 1.3.3 Vertical and horizontal approaches These limitations of vertical programs arise primarily from the asymmetry in financing between these, relatively weLl-financed, vertical programs and grossly under-resourced "horizontal" health systems. There are significant categories of potential GPG for health, detailed in Section 3.2, that cut across diseases. Adequate health systems (Chapter 8), for example, would benefit many areas of communicable disease control, while modifications to international rules on pharmaceutical patents would apply to products across the spectrum of communicable, and indeed noncommunicable, diseases (see Chapters 6 and 7 for example). Typically, these "vertical" and "horizontal" approaches may be seen to be competitors for funding: primary health-care systems in general competing with, for example, targeted immunization. # 1.4 The economics and politics of providing [[global public goods for health (GPGH)]]: who pays the piper calls the tune? Fundamental to securing the provision of global public goods is therefore the political process of ensuring collective action at the international level. Some GPGH may also impose costs on third parties other than the costs of their production, and in some cases these may also have health effects. For example, imposing stricter safety standards on internationally traded foods may result in a major loss of export revenues for low-income countries and of incomes for producers. The opportunity and incentive for each individual country to free-ride must therefore be overcome, as must the opposition of potential losers where they have the strength to block decisions to provide GPGs, or their involvement or cooperation is needed for provision. These points are considered in more detail with respect to specific contexts in the remaining chapters, but here we consider some common Issues. ## 1.4.1 Who pays for [[global public goods for health (GPGH)]]? Same with [[GHM101 Session 13 Global public goods]] content. ## 1.4.2 How could GPGH be financed? Same with [[GHM101 Session 13 Global public goods]] content. ## 1.4.3 What incentives should be used: coercion or compensation? Coercion doesn't work. Informal coercion is costly to LICs. # 1.5 Conclusion Increasing globalization has exposed a range of goods for which production is seen to be suboptimal, a number of which concern, to varying degrees, health. However, without an adequate consideration of why suboptimality occurs, there is a good chance that attempts to improve provision will, at best, be ineffective or, at worst, lead to greater sub-optimality. In this chapter we have therefore explored how the concept of ''[[global public goods (GPG)]]" may be defined and applied to address this problem. and outlined the economic and politic.al measures derived from such an analysis that may be used to improve the provision and finance of such goods. The essential characteristics of both pure and impure public goods were described, as was the meaning of "global" used in this volume. A definition of what we consider to he a GPG was then provided. It is worth highlighting three key aspects which result from the analysis provided here, as they foreshadow the reasons for, and discussions within, the following chapters. First, the importance of "access goods": private goods required to enable the public good to be fully accessed and/or utilized. The consumption of many goods classified as "public" goods will infact be determined by the ability of consumers to obtain the private good required to access them. Second, health per se is not a GPG, but a private good, although one which may provide substantial positive (health and economic) externalities. Third, the "horizontal" nature of GPGs. The primary "horizontal" GPG identified are knowledge and policy and regulatory regimes, with health systems being deemed a fundamental access goods to be included as if they were a GPG. # Appendix 1.1 [[global public goods (GPG)]] status of the control of major communicable diseases ## Malaria ## HIV/AIDS ## Tuberculosis ## Acute respiratory infection ## Diarrheal disease ## Maternal and neonatal health ## Non-eradicable vaccine-preventable diseases ## Eradicable diseases ## Antimicrobial resistance # Appendix 1.2 Knowledge and technology: public or private goods? # References