Project Syndicate - Grim-faced border guards and tough security measures at international airports provide powerful reassurance that the developed world is spending hundreds of billions of dollars to protect against terrorism. But is it worth it?
Although citizens of rich countries regard terrorism as one of the world�s greatest threats, trans-national terrorists take, on average, just 420 lives each year. So, have the terrorists succeeded in getting the developed world to invest poorly in counterterrorism, while ignoring more pressing problems involving health, the environment, conflict, and governance?
Recently, the Copenhagen Consensus, whose purpose is to weigh the costs and benefits of different solutions to the world�s biggest problems, commissioned new research into the merits of different methods of combating terrorism. The results are surprising and troubling.
Global annual spending on homeland security measures has increased by about US$70 billion since 2001. Unsurprisingly, this initially translated into a 34% drop in trans-national terrorist attacks. What is surprising is that there have been 67 more deaths, on average, each year.
The rise in the death toll is caused by terrorists responding rationally to the higher risks imposed by greater security measures. They have shifted to attacks that create more carnage to increase the impact of fewer attacks.
Increased counter-terrorism measures simply transfer terrorists� attention elsewhere. Installing metal detectors in airports in 1973 decreased skyjackings but increased kidnappings; fortifying American embassies reduced the number of attacks on embassies but increased the number of assassinations of diplomatic officials. Since counter-terrorism measures were increased in Europe, the United States, and Canada, there has been a clear shift in attacks against US interests to the Middle East and Asia.
Spending ever-more money making targets �harder� is actually a poor choice.
Increasing defensive measures worldwide by 25% would cost at least US$75 billion over five years. Terrorists will inevitably shift to softer targets. In the extremely unlikely scenario that attacks dropped by 25%, the world would save about US$22 billion. Even then, the costs are three times higher than the benefits.
Put another way, each extra dollar spent increasing defensive measures will achieve � at most � about 30 cents of return. We could save about 105 lives a year in this best-case scenario. To put this into context, 30,000 lives are lost annually on US highways.
Contrary to the effect of increased defensive measures, fostering greater international cooperation to cut off terrorists� financing would be relatively cheap and quite effective. This would involve greater extradition of terrorists and clamping down on the charitable contributions, drug trafficking, counterfeit goods, commodity trading, and illicit activities that allow them to carry out their activities.
While this approach would do little to reduce the number of small events, such as �routine� bombings or political assassinations, it would significantly impede the spectacular attacks that involve a large amount of planning and resources.
The increase in international cooperation that this approach requires would be difficult to achieve, because nations jealously guard their autonomy over police and security matters. A single non-cooperating nation could undo much of others� efforts.
The advantages, though, would be substantial. Doubling the Interpol budget and allocating one-tenth of the International Monetary Fund�s yearly financial monitoring and capacity-building budget to tracing terrorist funds would cost about US$128 million annually. Stopping one catastrophic terrorist event would save the world at least US$1 billion. The benefits could be ten-times higher than the costs.
Another option is for target nations to think more laterally in their approach to counter-terrorism. Some observers argue that the US � a key target � could do more to project a positive image and negate terrorist propaganda.
This could be achieved in part by reallocating or increasing foreign assistance.
Currently, the US gives only 0.17% of its gross net income as official development assistance � the second-smallest share among OECD countries � and aid is highly skewed toward countries that support America�s foreign policy agenda. By expanding humanitarian aid with no strings attached, the US could do more to address hunger, disease, and poverty, while reaping considerable benefits to its standing and lowering terror risks.
We do not advocate conceding to terrorists� demands; rather, we recommend that foreign policy be smarter and more inspirational.
There is no panacea for terrorism. That in itself is scary. However, we should not allow fear to distract us from the best ways to respond. Nor should fear stop us from saving many more lives by spending the money on less-publicized issues facing the planet.

Bjørn Lomborg is the organizer of Copenhagen Consensus, adjunct professor at the Copenhagen Business School, and author of Cool It and The Skeptical Environmentalist. Todd Sandler, Professor of Economics and Political Economy, University of Texas at Dallas, received the National Academy of Sciences Award for Behavioral Research Relevant to the Prevention of Nuclear War.

Copyright: Project Syndicate, 2008.
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