28 October 2006

Insuring against catastrophe

In retrospect most of us probably wish more resources had been devoted to stopping the spread of nuclear weapons. Many of the things we most value are difficult to define precisely, and so require some effort to incorporate into a Social Policy Bond regime. 'Peace' for instance is perhaps the most valued outcome of all. It would probably need to be expressed in terms of an array of outcomes and indicators. Nuclear proliferation, again, would need to be defined quite technically before it could be made the object of Social Policy Bonds aimed at preventing it. Nevertheless I believe such targeting could be done and should be attempted as a complement to existing efforts to solve these problems.

More readily definable is the detonation of nuclear device in anger. This would be a catastrophe in itself, and would represent a discontinuity in human history that could precipitate untold further suffering. The policymakers, as with nuclear proliferation, seem to be failing. This is where Social Policy Bonds targeting such an explosion could score heavily over the current approach. Their objective would be simple to define - the sustained avoidance of a nuclear explosion - and easy to verify. It's an objective that almost everyone would support, and one that, in my view, requires more imagination and brainpower than is currently being channelled in that direction. It's also an ideal goal for Social Policy Bonds in that it's not at all clear from where the most obvious threat to its achievement is likely to originate. Helen Caldicott, for instance, points to the fact that Russia and the US together own 96 per cent of the world's 30000 nuclear weapons. With current efforts at keeping the nuclear peace apparently faltering; with an easily expressed, easily verified goal that is highly correlated with human well being, and with a real need for imaginative solutions and rewards beyond those available to bureaucrats, maybe Nuclear Peace Bonds would be the way forward.

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