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(Roger Hallett/The Globe and Mail)
(Roger Hallett/The Globe and Mail)

What is the cost of war? About $9.46-trillion Add to ...

Is there a business case for peace?

We know there’s big money to be made by the military-industrial complex: producing and selling arms, paying soldiers, running private security operations, the list goes on. But conflict also comes with a price tag. According to a recent paper by the Institute for Economics and Peace, a Sydney-based research organization, about $9.46-trillion.

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That’s about 11 per cent of gross world product – or the equivalent of $1,300 for each person on the planet in 2012. Put another way, if the world trimmed spending on keeping violence at bay by 15 per cent, there would be enough cash to repay Greece’s debt and cover the funding needed to reach the United Nations Millennium Development Goals.

The Institute for Economics and Peace, which also produces an annual Global Peace Index, says its aim is to encourage decision-makers to consider the long-term economic costs of conflict – as well as the benefits of peaceful societies.

For many business leaders, “peace is something that’s in their best interests – it has a financial value and not just a moral value,” says Michelle Breslauer, the institute’s director of the Americas.

To prove this, the institute has adopted the classic business adage: “You get what you measure.” Their work looks at the direct impact of violence on productivity. It also calculates lost opportunities as money is diverted from, for example, sending kids to school, funding business start-ups, building roads or improving hospitals.

By country, North Korea spends the most trying to contain violence, mostly on military spending, at more than a quarter of GDP. Bhutan lies at the other end of the spectrum, spending only 0.5 per cent of GDP. (Canada spends 2.3 per cent of GDP.)

Conflict, the study finds, costs much more than peace. In Nepal, for example, armed conflict until 2006 resulted in thousands of killings and an estimated cost of more than $3-billion. The subsequent peace process cost about $207-million – less than 10 per cent.

Peace is also good for foreign direct investment, while conflict – such as Colombia’s turmoil in the 1990s and Russia’s encroachment into Ukraine this year – tends to scare off investors who may otherwise have been spurring economic activity.

The institute’s effort to quantify the value of peace fits with other work that measures quality of life beyond mere GDP – from the UN’s human development index (Canada has slipped to 11th) to the Organization for Economic Co-operation and Development’s better life index (Canada is near the top) and Harvard’s “social progress index” (Canada is seventh).

This particular effort is the brainchild of Steve Killelea, an Australian who made his fortune as a tech entrepreneur. He set up a charitable foundation to help some of the poorest of the poor, which entailed travelling through regions riddled with conflict. It was while visiting eastern Congo in 2006 that he wondered which nations in the world are most peaceful, and what lessons could be learned from them.

To his surprise, no one was systematically tracking any of that. Which made him ask another question: “How well do we really understand peace?” he wrote.

The latest report from the institute is one way to change that. Its annual global peace index is another. It hs been running since 2007. Most recently, Iceland, Denmark and New Zealand ranked as the world’s most peaceful nations, with Afghanistan, Somalia and Syria are the least peaceful. The United States sits at a distant 99th while Canada ranks eighth.

What we learn from these places, Ms. Breslauer says, is that more peaceful countries tend to be more resilient ones.

They are lessons we’ll all require, she says, as the world becomes ever more intertwined. “Given the challenges that we face now, climate change, overpopulation and decreasing resources, peace is something that we’re absolutely going to need.”

 

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