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CAN GAME THEORY HELP BREAK THE CLIMATE DEBATE DEADLOCK?

By Ed McCue on 19.03.18

Climate change negotiations have proven to be a slight headache. Promises to meet certain targets and goals at various summits are all well and good, but the 195 countries that have agreed limit global temperatures rises to well below 2°C above pre-industrial levels, following COP21, are now tasked with delivering such promises.

 

With the second largest emitter of greenhouse gases already withdrawn from the agreement, President Trump has ensured that things haven’t gotten of to the best start, despite countries individual climate plans. But here in lies the problem. Collectively, all countries should act on climate change, but it may not always be in a countries individual interest to act, especially if there is no guarantee that other countries will act too. If one participant withdraws, the system is jeopardised and has the potential to break down.

 

Achieving sustainability and addressing global warming is a global goal, but to get there, countries generally act independently, in regard to their own environmental policies. If all countries cooperate then great. But individually, a country may have the economic incentive to pollute (simply put, more CO2 produces more wealth). They see no individual short-term benefit to being sustainable. The system breaks down if one player isn’t playing by the rules. Consequently, what is best for the individual is not what is best for the group.

 

Climate change, or at least its negotiations, therefore acts as textbook game theory situation. Game theory uses mathematical models, to study conflict or cooperation between actors or groups. Its concepts apply whenever the actions of several agents are interdependent. The agents could be individuals, firms or countries. Game theory is usually applied to firms’ behaviour, but can also be seen in other situations, such as war and climate change negotiations.  

 

Game theory can help to describe and predict how climate negotiations may break down. Since withdrawing from the Paris Agreement, America can free-ride on the climate commitments of others in the short-term, while minimizing its own financial contributions and retaining wide flexibility on how it uses its energy resources. Over the longer term, however, with the absence of the U.S. in the Paris Agreement, the beneficial impact of the agreement would be severely eroded. Since the U.S. cannot isolate itself from the effects of global warming, it would also face an array of environment-related threats.

 

This situation also puts other participants in a tough position. Whilst the other 195 nations in the agreement could collude and carry on without the U.S, their collective action to limit global temperatures wont nearly be as substantial compared to if the U.S were on board. Both parties could find themselves stuck in a “prisoners dilemma” - a situation in which the two end up in a worse situation than they otherwise would have been, had they cooperated in a more proactive manner.

 

To achieve greater environmental sustainability, game theory predicts that the two players must unite again to form a new solution for a common problem - but politics is complex, and this doesn’t seem to be on Trump’s agenda. A stalemate upon agreeing new terms benefits no one.

 

Another major problem with beating the game is timeframe. The full force of global warming takes decades, if not centuries to arrive. We experience hyperbolic discounting – we often choose immediate rewards, knowingly risking extremely large future penalties. Any given government is more likely to spend more time and resources on immediate problems such as education or infrastructure, utilising fossil fuels in the process, as opposed to longer term problems such as global warming.

 

A game conducted by LSE showed that in order to achieve more successful climate negotiations, equality and good communication between countries proved critical. Inequality between countries in terms of wealth could be the greatest barrier to international climate negotiation deals. This is because the countries who emit fewer greenhouse gases are usually the ones who suffer from the consequences of climate change the most.

 

Vast inequality between industrialised and poorer countries could exemplify that we are not in fact all in it together when it comes to climate change. The impacts vary worldwide, skewing the rules and rewards of the game and assuring that each player has a different agenda when it comes to coping with climate change - unlike most other game theory scenarios where players incentives and objectives align.

 

Similar scenarios can be applied to what is known as the ‘tragedy of the commons’. In terms of game theory, man-made climate change is a game over a shared pool of resources that no one owns, and everyone has access to – fish in the sea, trees in a wood or even the air that we breath.

 

The tragedy of the commons describes the situation in a shared resource system, whereby individual users acting independently according to their own self interest behave contrary to the common good of all users by depleting that resource, through their collective action. Overfishing is a common example of the phenomenon. Each fisherman is incentivised to maximise their yield, but by doing do deplete the overall levels of fish, and so they all lose out in the long run.

 

Wild fish are an example of common goods. These are goods characterised by being non-excludable (it’s impossible to prevent people from catching fish) and rivalrous (as fish are caught, it reduces the amount available for others). Environmental common goods, such as fisheries, are at risk at being exploited because of the tragedy of the commons. But if access to the good is regulated to restrict exploitation, by imposing fishing quotas for example, the tragedy of the commons may be avoided.

 

Climate stability as a whole can therefore not only be considered as common or public good, but also an example of the tragedy. The causes of air pollution and global warming can partially be explained by the fact that the air and atmosphere have no ownership. We have an incentive to pollute the air because the financial cost isn’t accounted for – but the social and environmental costs, which are much greater in the long run, are borne by everyone.

 

If the right incentives are out in place, it is possible to avoid the tragedy of the commons from an environmental perspective. Game theory could be applied to reward cooperation and punish free riding off other’s commitments. But is it feasible? Is there a way to administer such rules within the landscape of international relations? No single government can demand inspections and impose fines to countries who don’t play along.

 

The climate change game requires collaboration amongst players and smarter tactics to win. But in a world where just six countries (the U.S, China, Germany, Japan, Russia and India) make up 65 percent of total CO2 emissions, it is key that the best players commit to change, so that the least vulnerable can help to protect the most vulnerable from global warming.