Climate Change and Game Theory
Although global warming continuous to increase, the world’s nations seem to be no closer towards securing a net-zero emissions future in a reasonable timeframe. The article illustrates how game theory can be used to describe why this is occurring. For a company or country, using CO2 reliant technology increases profits; overhauling their infrastructure would incur a temporary cost. If all countries work together to overhaul their infrastructure, then the dangers of climate change would be averted. However, every country as an incentive to continue creating CO2, especially if their neighbors took the cost of ensuring net-zero emissions. The article goes on to discuss bootstrapping as a possible solution, where people focus on local interactions which hopefully build up to a global scale.
This article discusses a relevant topic in our course — game theory. Most notably, the “climate change game” can be expressed as a game similar to the prisoner’s dilemma. Take two countries, A and B. They each have two strategies — overhaul their infrastructure (O) or don’t (C). The game is described in the following image, with payoffs being net economic change
If both overhauled their infrastructure, then the climate crisis would be diminished, increasing general welfare and the economies of both nations. However, if one overhauls their infrastructure, the other has an incentive to continue using CO2, as they can take advantage of the other nation’s cost of reducing emissions to net-zero. Thus, both countries end up continuing to use carbon, for the net detriment of both of them. This result — (-1, -1) — is the pure strategy Nash equilibrium of this game.
Of course, this game only really pertains to the relative short term, about 5-10 years. The long term effects of not reducing CO2 emissions would be disastrous. However, world leaders and CEO’s mostly care about the things keeping them in their job, which are current approval rates and profits — things relevant to the short term, not the long term. Thus, they will continue to play the short term game and continue delaying the much-needed reduction of CO2 emissions. The only ways to change the outcome of this game would be to change the payoffs in the short term. This could involve finding cheaper ways to reduce CO2 emissions, demanding climate action from leaders and CEO’s, and creating awareness in local situations.
Guardian article: https://www.theguardian.com/science/blog/2016/apr/13/can-game-theory-help-solve-the-problem-of-climate-change