Let’s face it: world leaders have a really poor track record when it comes to taking climate action, as this 83 second video cutely summarizes. On a more personal level, I think most people (including politicians) would agree that climate change is one of the most pressing dangers threatening modern society, but if I asked them what they do to combat it, they probably wouldn’t come up with much. Why is this so? Are all politicians corrupt and all those who don’t take action selfish? No, I think that would be a premature and irrational conclusion to come to. But the question still remains, how do we explain this seemingly paradoxical behaviour? Game Theory, the branch of economics that studies strategic decision-making, certainly helps.
Under an economics light, the global environment is the ultimate public good. Everybody “consumes” it at the same time and it’s not possible to exclude anyone from it. The problem that occurs with all public goods is free riders — the proper term for those pesky freeloaders who reap the benefits of these public goods without paying the cost. In particular, international climate agreements suffer from incentives to free-ride and end up simply lowering targets when a country bails. Reducing carbon emissions comes at the cost of economic growth. However, the benefits of the reduced emissions are enjoyed by everyone — even those who did not pay the cost of sacrificed economic growth.
To further understand this dilemma, perhaps an example will be enlightening. Pretend you are Canada’s delegate at an international climate conference and you have to advise PM Trudeau on a course of action. If all other nations stay true to their commitments, it is best for us to forgo our promises and enjoy the benefits of their lower emissions; if no other nation delivers on their commitments, then it is futile for us to do so since everyone else will simply enjoy the fruits of our economic sacrifice. Therefore, it is in each nation’s best interests to not comply with international climate agreements no matter what the other nations do. Non-compliance is the dominant decision in this “dynamic climate change game”, and this position is known as the Nash equilibrium of the system (if that name sounds familiar, yes, it’s named after Dr. John Nash portrayed by Russell Crowe in The Beautiful Mind).
This theory has played out many times in history, most recently with the failed Kyoto Protocol, which aimed for a 5% reduction in emissions, but instead concluded in a 58% increase as countries dropped out or simply ignored their pledges. The consequences of a game theory analysis of climate change negotiations are dire and grim. This type of situation is commonly known as “The Tragedy of the Commons” — a situation in which all players act independently and in self-interest but behave contrary to the best interests of the group as a whole by overusing a public good.
Thankfully, all is not lost. Research and experimentation shows that repeating the game enough times will assure co-operation among the players as they see the effects of mutual destruction caused by their behaviour. However, in the climate change game, we only get one shot, so this strategy is not viable. A more promising strategy put forth by this paper involves self-enforcing to deter free-riding. Since there is no strong global government (the UN is too weak to count) to dole out punishments for non-compliance, we must “redistribute liability according to past compliance levels in a proportionate and timely way”.
One important ethical issue to note with sustainable living is recognizing the privilege of the first world in having the ability to make this choice. While developed nations cut back emissions, is it ethical to tell the rising developing nations around the world that they cannot burn anymore coal or gas to lift their people out of poverty? The developed nations went through over a century of burning fossil fuels to bring their economies to where they are today — don’t developing nations deserve the same opportunity?
If all this talk about governments and international negotiations feels too impersonal for you to care, don’t worry, this analysis can also be applied to individuals. Living more sustainably involves costs: a personal one (e.g. giving up meat), as well as an economic one (e.g. installing solar panels). Since the full benefits of sustainable choices are shared among everyone and often not felt directly by the individual, the equilibrium position is to encourage others to live sustainably but not incur the costs of doing so yourself. If you stand in support of the environment, but don’t really do much to show for it, this is probably the boat you’re in.
There are lots of ways you can change this and I have a lot to say about how we can live more sustainably as individuals, so I’ll write another blog post detailing them (coming soon!).
As much as environmental groups think sustainability is the easy choice, it is important to realize the difficult predicament our leaders are in trying to balance short-term national goals with long-term global ones. All the more reason for us to elect competent and representative leaders. It’s easy to criticize politicians’ decisions without understanding the biases and forces in play. Hopefully, a solid understanding of the game theory behind the negotiations will lead to increased cooperation and better decisions for our future.