FEATURE

The Next Move for Planet Earth

What game theory can teach us about climate-change negotiations.

by Claudia Dreifus Published Winter 2015-16
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“We find that most individuals are inclined to cooperate. But when the group observes one or two players failing to contribute many chips, a collective cynicism sets in."

Let’s talk about the real world. Heading into Paris, all the world’s major economies, including the United States, China, and India, have made pledges to reduce their carbon emissions. India, whose leaders had previously said they would not accept constraints on economic development to combat global warming, was the last to do so. Will India play the role of the free rider in this negotiation?

India is preoccupied with what its leaders perceive as a historical injustice. They view the rich countries as having gotten rich by burning fossil fuels, and now they are being told not to do that. Quite legitimately, they want to develop, too. There’s tremendous poverty there. The other side of it is that India’s population, like those of many developing nations, is especially vulnerable to droughts, floods, and other types of extreme weather events that will become increasingly common as a result of climate change. If we don’t get effective limitations, India will be a very big loser.
 

Will a Paris treaty get the world to that two-degree-Celsius target?

According to the International Energy Agency, even if countries fulfill their Paris pledges, they’ll fall short of meeting the two-degree target. My work suggests that they may not even fulfill their pledges. 

If this sounds negative, I should add that in the past many countries have made pledges and later failed to meet them. Why should things be different this time around? My reading of the draft Paris agreement is that it won’t bring about the needed change.

Key Moments in Climate-Change History

Why bother with it, then?

Because the consequences of failure are huge. This is why countries try again and again. They agree what they should do collectively. But the agreements they’ve reached so far do little to change the incentives they have to limit their emissions. We need to change the incentives so that countries behave differently.

My question to the Paris negotiators is this: why try the same approach — voluntary pledges — over and over again and expect a different result? We need to try other approaches.
 

What would you suggest instead?

The best way to address climate change may be for the countries committed to reducing emissions to shun the free riders and cooperate just among themselves. The Yale economist William Nordhaus has recently analyzed one way of doing this — forming a trade club, in which members adopt an emission-reduction policy and impose tariffs on countries that refuse to join their effort to limit climate change. However, I think this could provoke retaliation from the ostracized countries, stimulating conflict rather than cooperation. 

I’ve proposed a related but somewhat different approach, wherein countries with progressive emission policies offer others a combination of carrots and sticks, perhaps to include strategic trade measures, in hopes of broadening participation. That’s how the Montreal Protocol of 1997 worked. And as I said earlier, that agreement was a great success in protecting the stratospheric ozone layer.
 

Your Earth Institute colleague Michael Gerrard ’72CC, the head of Columbia Law School’s Sabin Center for Climate Change Law, is going to Paris as a member of the Marshall Islands diplomatic team. Will you also be a part of any official delegation?

No, I’m going as an academic. I’ll be giving talks. There are a lot of events around the negotiations: talks, debates, panels with political leaders. The event is being compared to a medieval bazaar.


Photographs by Jeffrey SachsSo, then, do you see the Paris meeting as just another game?

Climate change is a game — a very serious game — and Paris represents another round. 

Bear in mind that Paris is the twenty-first meeting of the parties to the first climate-change treaty. That treaty was adopted in Rio in 1992. We’ve done most of what is projected for Paris before, and it didn’t work. That’s including the Kyoto accord of 1997. And moreover, my work predicted that this approach wouldn’t work because it lacked enforcement. And Paris won’t work again, because while it may incorporate a review, it will still be voluntary. My models show that human nature is such that we need something stronger.

But, fortunately, people will keep meeting and keep trying. They’re also meeting outside of this process. One meeting in particular may prove at least as important as Paris. It is being held in Dubai in November, and there, countries will try to amend the Montreal Protocol. The new amendment would phase down the emissions of HFCs, or hydrofluorocarbons, a class of powerful greenhouse gases. This amendment could make a real difference, because its obligations wouldn’t be voluntary. The Montreal treaty has been a success because, unlike the various climate-change protocols, it has enforcement mechanisms.

My advice to climate negotiators, after they recover from the Paris summit, is to look for more opportunities like this one.
 

Why do you do this unusual work?

Because climate change is the biggest problem the world has ever faced, the greatest challenge of our time. Why work on anything else? 

 

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