Can game theory help solve the problem of climate change?

The Guardian 13th April 2016

Can’t we all just get along. Play nicely? Share? Such laments could be applied to many economic, political and social problems today. Perhaps the thorniest of them all is, climate change. Despite the relative success of the Paris COP21 in November, we are still far from effectively controlling greenhouse gas emissions. Could game theory help us rein in our impacts on the climate?

Game theory is the mathematical study of conflict and cooperation between actors or groups: animals, people, businesses, countries or even computer algorithms. It became a formal topic of study in the 1950s and has since made significant impact on economics, political science and evolutionary biology and ecology.

The fundamentals of the climate change are simple: the Earth’s finite capacity to absorb additional CO2 produced by burning fossil fuels, and the self-centred motivations of governments, businesses, and people which leads them to try and use as much of this capacity as possible. Simply put, more CO2 produces more wealth. Consequently, what is best for the individual is not best for the group. Somehow these two incentives need to align. One way would be for all 197 nations to cooperate in working out how to allocate carbon emissions. Presumably they would then move onto world peace.

In game theory speak, man-made climate change can be cast as an iterated game over a common-pool resource that no one owns and everyone has access to. For example, fish in a fishery, trees in a wood, or pasture land grazed by cattle. They regenerate and if sustainably managed, can provide valuable resources for many. Take too much however, and they can collapse.

Such collapses cause the ‘tragedy of the commons’, a concept that was popularised by Garret Harding’s 1968 article, in which we find a prescient summary of climate change “… the rational man finds that his share of the cost of the waste he discharges into the commons is less than the cost of purifying his wastes before releasing them”. Everyone would benefit if everyone played ball and cleaned up their mess. But that takes resources and money so the temptation to pollute is often too strong.

It is possible to avoid a tragedy of the commons if the incentives are setup right – reward cooperation, and limit the benefits of temptation to free ride on others’ contributions. Such temptations can be reduced by punishing free riders. But how can you administer such rules within the largely lawless landscape of international relations? There is no single government that can demand inspections and impose fines. Climate change seems to require a game to facilitate cooperation, but there is nothing to stop any individual nation picking up the board and scattering all the pieces if things aren’t going their way.

One approach is a bootstrapping process. Thinking global while acting local recognises that local interactions are important. It has been shown that cooperation can be enhanced if people repeatedly play the same game with the same set of people. When they do, systems of reciprocity and trust can evolve. This will also allow effective punishment of defection. People trying to free ride either get penalised or thrown out of the group. A classic example of the emergence of such cooperation is the live-and-let-live system that operated in the British and German trenches during the first world war. This involved a number of behaviours that sought to minimise casualties on the opposing side. Soldiers would deliberately shoot high to miss the enemy, or shell the same spot with artillery at the same time of day.

In essence, this is a simple and robust strategy. Along with tit-for-tat. Play nice with someone and they return the favour. Upset or hurt them and expect consequences. Social scientist Robert Axelrod discovered tit-for-tat as an effective strategy in repeated social games in the 1980s. It’s not the best strategy for all interactions, but it’s robust and lends itself to modification.

With regards to climate change, the hope is that if likeminded people within a group can agree to limit greenhouse gas emissions, then a group can make similar agreements with other groups. Regional agreements can help scaffold international agreements. It’s a bottom up approach. Finally a tipping point is reached in which limiting emissions becomes a social norm that is widely recognised. Think of the rapid changes in people’s attitudes to drink-driving, smoking in public places, or smacking children.

If cooperation can emerge in the midst of the horrors of war, then surely we can find the right incentives to combat climate change. Unfortunately, there appears to be a crucial difference. What drove cooperation in the trenches was a realisation that while the uniforms may differ, all the soldiers were in it together. We are not all in this together with respect to climate change. The impacts on the climate and vulnerabilities to climate change vary considerably.

In fact, the rules of the game appear to operate exactly in opposition to what’s required. Those that have the greatest impacts on the climate – the most industrialised nations – are those nations that will be least affected. It’s some of the poorest people living in some of the least developed nations that are going to bear the brunt of climate change.

This doesn’t mean the climate change game can’t be beaten. But we would do well to remember just who has most to lose if we collectively fail.