Game Theory and the Paris Agreement
On June 1, 2017, Trump announced that the U.S. would no longer be part of the 2015 Paris Agreement, thereby stop meeting financial and other requirements and only rejoin if terms are renegotiated in the nation’s favor. The Paris Agreement is a negotiated agreement, signed by representatives of 196 parties, dealing with greenhouse gas emissions mitigation, adaptation and finance starting in the year 2020. In the agreement, each country determines, plans and regularly reports its own contribution it should make in order to mitigate global warming. The author of this article argues that America’s pursuit of short-term benefits in certain areas will come not just at the risk of longer-term damage, but will also undermine an overall global construct that has served it well and could still do so over time. In the short term benefits he references, Trump hopes to avoid the fact that, in his words, the Paris accord will undermine the US economy and put the US at a permanent disadvantage. He claimed that the agreement, if implemented, would cost the United States $3 trillion in lost GDP and 6.5 million jobs. The author also mentions benefits such as the U.S. can free-ride on the climate commitments of others, while minimizing its own financial contributions and retaining wide flexibility on how it promotes and uses its energy resources. Over the longer term, however, the absence of the U.S. surely will undermine the beneficial impact of the agreement, leaving everyone at the face of an array of environmental and environment-related threats.
In applying game theory to this current situation, the author explains a prisoner’s dilemma for the parties involved in the agreement. Now that Trump has announced the withdrawal of the US from the agreement, both parties end up in a worse situation than they would have otherwise attained had they cooperated. Since the main priority is environmental sustainability, they best choice is to try and come together with the U.S. in pursuit of a new collective solution to a common problem and a shared responsibility. In other trade agreements, the willingness to negotiate has giving the U.S. more incentives to retain a cooperative approach. In this case, a win-win outcome has been reduced and collective action has been undermined.