Global Warming: The World’s Most Dangerous Game
Global climate change has (with good reason) rapidly taken over the spotlight of international discussion. But while global warming poses an increasingly imminent threat to the worldwide landscape, few nations have demonstrated a willingness to take concrete action towards mitigating this threat. Australia is one such country that, in the past few years, has made a bold effort to substantially reduce its long-term carbon dioxide emissions, in the form of a bill that, if passed (it’s currently in Parliament), will levy a relatively steep carbon tax (A$23/metric tonne) on Australia’s 500 largest emitters of greenhouse gases. Since many of these “offenders” are coal-power energy companies (coal power constitutes about 80% of Australia’s energy supply), this tax has implications that pervades nearly every facet of Australia’s infrastructure, from top to bottom; for this reason, it has been met with considerable opposition from all sides. For one, this measure would cost the government billions of dollars and potentially compromise thousands of jobs in the short term – and, even more importantly – it would require the cooperation of other nations to follow suit and make short-term sacrifices for the sake of reducing their own carbon emissions – otherwise the entire plan goes to waste. Unilaterally, Australia can do little to solve this global problem (160 million tonnes is miniscule compared to 30000 million tonnes worldwide). The question is, is Australia’s strategy to push forth with this legislation a good idea, despite not knowing how the rest of the world will react?
Interestingly enough, Australia’s current predicament is quite well modeled by game theory’s famous Prisoner’s dilemma, where two captured criminals are forced to decide whether to cooperate (not confess) or defect (confess), without knowing what the other will choose. The ideal outcome for both players is for both to cooperate and not confess – then they’ll both get off with nothing. However, if a player cooperates, he risks getting burned by the other player if he chooses to defect. If both players defect, they will both serve a much-reduced sentence. Analysis of the corresponding payoff matrix suggests that the most prudent action is to defect no matter what.
Game theory suggests that Australia’s Prime Minister Julia Gillard is, in essence, taking a big, ill-recommended gamble by choosing the “cooperate” option – pushing forth with the carbon tax – in hopes that other countries will follow suit, and everyone benefits in the long run. If not, Australia runs the risk of finding itself in a pretty bad economic situation.
Luckily for Australia, the situation’s not so black and white. If they find that other countries refuse to cooperate, they aren’t forced to crash and burn alone while the rest of the world watches – they can pull out before too much damage is done. Maybe I’m terrible for thinking that the consequences of the whole carbon tax dilemma is going to be a pretty interesting game over the next several years.
Sources: http://www.abc.net.au/unleashed/2900870.html