Game Theory and Climate Change
Did you know that humanity wields as much power as the asteroid that hit Earth circa 65 million years ago and wiped out all dinosaurs? The power that humanity holds is extremely harmful and dangerous to all other life forms, the atmosphere, and essentially Earth as a whole. Due to an increase in population and, hence, and increase in demand of produced goods, humanity has caused Earth an immense amount of pain through releasing immeasurable amounts of greenhouse gases, causing deforestation, destroying habitats, causing pollution, affecting climate levels, and the list goes on. Although it is common knowledge that reducing the amount of greenhouse gas emissions is of utmost importance, we see that there is still an immense amount of greenhouse gases being emitted because it is economically favorable (higher payoff) for certain companies, countries, individuals, et cetera. This is just the basis of how game theory can be used in explaining and reducing the actions of certain players that lead to an increase in greenhouse gas emissions.
Game theory is used to explain how one action by a player in a certain game can easily affect another person’s payoff, and vice versa. In a simplified game of reducing climate change, we see that there are two possible strategies: One is to use environmentally-friendly resources for production, and the second is to continue with the use of fossil fuels to produce goods. For example, in the article “Game Theory and Climate Change: Defining the Problem” we see that China and the United States average about 44 percent of all the world’s greenhouse gas emissions. Unfortunately, this greenhouse gas emission helps boost the economy of both China and the United States because they are producing products that will bring them revenue. There is a positive correlation between the amount of greenhouse gasses produced and net income. Also, the United States and China are more likely to use fossil fuels as they are currently cheaper and easily-accessible in comparison to their more eco-friendly alternatives (such as nuclear power, windmills, solar power, etc.). So, using fossil fuels would be the dominant strategy as it is the best response for both players; they would have a higher payoff. For example, if the United States were to decide to switch to renewable energy, they would have to spend more money in order to produce products which results in a lower net income and an increase in prices of products. Hence, China would profit more from using fossil fuels as they would have a higher net income and more consumers (because cheaper products) in comparison to the United States. So in this game, China would “win”. The issue is that China, in this hypothetical example, is directly responsible for high amounts of greenhouse gas emissions. In the big picture, these actions made by players in the climate game not only affect the other players’ payoff, but can affect all life forms on Earth.
One must remember that fossil fuels are finite. There will be a point where all players in this climate game will have to use renewable energy, but at that point the damage will be irreversible. Game theory allows us to see how certain self-centered actions made by players in this climate game may affect their own payoffs in a positive way, but it also reveals to us the main sources that emit immeasurable amounts of greenhouse gases. Game theory might just be the key to pointing out such sources and moving them to use renewable energy with a greater payoff of saving the Earth.
http://www.thelondonglobalist.org/how-game-theory-affects-your-everyday-life/
https://www.theatlantic.com/notes/2016/04/game-theory-climate-change-feedback/478842/