Viewing Climate Change as a Prisoner’s Dilemma
https://www.theatlantic.com/notes/2016/04/climate-change-game-theory-models/479340/
Climate change has become a growing concern around the world. Individuals are taking action to fight climate change by switching their lightbulbs to LEDs, washing their clothes in cold water, and planting community gardens. However, in order to see substantial improvements, countries with large CO2 emissions will need to develop more strategies for promoting renewable energy and cleaner overall practices. There appears to be universal recognition that something ought to be done to address climate change, yet little progress has been made. One of the most compelling explanations for this failure involves the logic of game theory.
In class, we discussed the prisoner’s dilemma, in which two players decide between two options whose outcome depends crucially on the simultaneous choice made by the other. For example, in the traditional prisoner’s dilemma, there are two prisoners and they each have the choice to either confess or not confess. The payoffs are as follows
| Prisoner 2 Confesses | Prisoner 2 Does Not Confess | |
| Prisoner 1 Confesses | -5, -5 | 0, -9 |
| Prisoner 1 Does Not Confess | -9, 0 | -1, -1 |
Both prisoners will end up confessing in order to avoid a payoff -9 (nine years in prison). However, they would both receive the greatest payoff if they both kept quiet.
In this article from The Atlantic, Newkirk suggests that the lack of action surrounding the issue of climate change can be explained by the prisoner’s dilemma. For example, we can consider two large countries, the United States and China, that each have the option to either cooperate or exploit. Newkirk states that the climate change matrix would look like this:
| China Cooperates | China Exploits | |
| USA Cooperates | 1, 1 | 1, 3 |
| USA Exploits | 3, 1 | 3, 3 |
When there is no real threat to the ecosystem, there is no incentive to help protect the environment, especially when both countries are competing for money and productivity. Thus, both countries will try to maximize outputs without regard to the environmental impact. However, if an ecosystem is near collapse, the matrix changes:
| China Cooperates | China Exploits | |
| USA Cooperates | 1, 1 | 0.5, 0.5 |
| USA Exploits | 0.5, 0.5 | 0, 0 |
Newkirk decided to make some adjustments to the matrices above to the make the scenario more realistic. It appears that some damage to the climate is inevitable, so any new policy would simply work to minimize future environmental impacts. Also, emissions policies come with a cost in terms of investments and lowered productivity. So Newkirk presented a new matrix:
| China Cooperates | China Exploits | |
| USA Cooperates | -8, -8 | -11, -7 |
| USA Exploits | -7, -11 | -10, -10 |
The best option would be for both countries to cooperate. However, there is a risk that if one country cooperates and the other country exploits, the cooperating country will face a larger cost. Thus both countries will tend towards exploiting the environment as they have been and no changes will be made to stop climate change. There was an international consensus for action at the Paris climate conference, but still the United States backed out at the last minute. This demonstrated a tendency towards exploitation even when global cooperation has a much larger payoff. If countries continue to exploit the environment, there will eventually be no more natural resources left and that cost is drastically greater than the investment in emissions policies.