Climate Change: Transitioning from a Prisoner’s Dilemma to a Stag Hunt
Maldives is a tiny nation in the Indian Ocean, with a maximum level of natural ground to be a mere 7 ft. This makes the nation particularly vulnerable to the rising mean sea levels. Weeks before the UN Climate Change Conference in 2009 (COP15), the Maldivian president and cabinet ministers held an underwater cabinet meeting. “We are trying to send our message to let the world know what is happening and what will happen to the Maldives if climate change isn’t checked” said the President. The conference concluded with a mere political statement affirming the need to limit the global temperature rises to 2°C above pre-industrial levels. The developing nations believed that it was the onus of the developed countries to curb the climate change as they are the ones who contributed significantly to the degradation due to their development activities.
Fastrack to COP21, a legally binding treaty was signed by 196 parties to limit global warming to 2, preferably 1.5°C above pre-industrial levels. In 2020, the superpower, the US withdrew from this agreement. The developed countries were to provide financial and technological aid to the other countries to curb climate change. The US was contributing to 11% of the global GHG emissions. However, a developing nation like China was emitting 27% of the global GHG. The Trump administration felt the agreement was rather unfair.
Climate Change is an issue vastly considered to be a problem of Prisoner’s Dilemma from Game Theory where the payoffs were higher only if all nations co-operated since, the more the carbon is emitted, the more the wealth. For the uninitiated, Game theory is the mathematical study of conflict and cooperation between actors or groups: animals, people, businesses, countries or even computer algorithms. The prisoner’s dilemma is a paradox in decision analysis in which two individuals acting in their own self-interests do not produce the optimal outcome.
Consider a scenario where 2 players are arrested for a crime. If only one player confess the crime he/she will be given no prison sentence while the other will be given a 5 year sentence. If both confess, they’ll each be given a prison sentence of 3 years. If neither confess, the prison sentence is 1 year each.
Here, the left number in each cell indicates the prison sentence for Player 2, the right indicates the prison sentence for Player 1. As betraying the other player offers a lesser sentence than cooperating with them, all purely rational self-interested prisoners will betray the other. Thus, the only possible outcome for two purely rational prisoners is for them to betray each other leading to a 3 year sentence (known as their dominant strategy), even though mutual cooperation would mean a mere 1 year sentence.
Analysing climate change from this lens,
Thus, both the nations benefit from exploiting the natural resources rather than employing expensive technology to protect the environment. For instance, both nations will extensively use fossil fuels and open up coal plants
However, since the Earth’s resources are finite. With time, these resources tend to start depleting and the profits from exploiting the environment tends to start diminishing. Eventually, a point will come when the exploitation would yield 0 payoffs and the dominant strategy for both nations would be to co-operate and protect the environment. This scenario is known as Stag Hunt.
Probably we haven’t reached this stage yet where the payoffs from exploiting the natural resources has reached zero. However, we are reaching there. The incentives of exploitation are diminishing and the nations are realising this. The Biden administration re-joined the Paris Agreement. In COP 26, the US and China also signed a joint declaration to boost climate co-operation and reduce methane emissions.