The hardest climate problem is not CO2, or fossil fuels, or rising seas. The hard nut to crack is getting people to cooperate
Climate change is fundamentally a problem of cooperation.
But after 25 years of failure, climate negotiations still use an ineffective pledge-and-review approach. Countries pledge almost anything, subject to unenforced review. This approach ignores everything we know about how to promote cooperation.
Fixing the climate may be the toughest cooperation problem ever faced by humanity. Every country wishes the others would solve the problem for them, and many try to get a free ride. So the Paris agreement is weak and calls for repeated reviews to “increase ambition.” Will this work? A large body of science, including hundreds of laboratory experiments and field studies, says it won’t. Paris negotiators didn’t reject this science. They just didn’t discuss it.
There is only one successful approach to cooperation: reciprocal agreements — “I will if you will.” The other approach, pledge and review, is just a practical-sounding euphemism for what might be called contagious altruism. Here’s how it unfolds in hundreds of experiments.
A typical experiment might have 10 players. If they all cooperate they win big (think: save the planet). But if all cooperate but one, that one wins even bigger, because the others pretty much “save the planet,” and the one gets a free ride. In the actual experiment, each player can contribute $10 to the “pot,” then the experimenter (nature) doubles what’s in the pot and divides it (the improved climate) equally among all — no matter who didn’t contribute.
If each contributes $10, all of that is doubled and each gets $20 back. The payback from saving the climate is greater than the cost. But if one does not contribute, that one (and everyone) will get $18 back because the pot is slightly smaller. But $18 combined with the $10 he didn’t contribute, makes him the big winner.
This game is sort of like pledge and no review. Some pledge $10 to look good, but some free-ride, and the game is over. That’s why Paris adds the review, where everyone gets to see others’ actual contributions. If altruism is contagious, the cheaters will turn to altruism in the next round. And the world is saved.
In the experiment’s first round, some cooperate, while others free-ride — just like in Paris. But here’s the dreadful news. What almost all experiments and studies show is that without an “I will if you will” agreement, cheating is more contagious than altruism. Seeing others cheat makes people cooperate less while they wait for others to improve. The result is a downward spiral toward minimal cooperation, like what happened with the Kyoto protocol.
Now here’s the good news. Nobel Prize winner Elinor Ostrom studied hundreds of real-world situations where moderate sized groups needed to cooperate but had no government to enforce cooperation. This is much like the 200 countries of the world that have no world government to enforce a reciprocal agreement. She found these groups often succeeded.
When they did, they always used a reciprocal common agreement that said, “I will if you will.” The rules must be the same for all, but they can be subtle. For example, contributions could depend on wealth or CO2 emissions.
The Kyoto negotiators knew they needed a reciprocal common agreement. But after a year of searching and a dozen dead-end proposals, they gave up and let everyone pledge whatever they wanted. Their mistake was to rule out from the start an agreement based on a common price for carbon.
Crucially, that’s the only commitment that requires a similar effort by all parties.
A carbon price also allows nations to choose cap-and-trade, carbon taxes or hybrid schemes. It’s the cheapest way to reduce emissions. And it generates revenue that can used to fight poverty, develop infrastructure, reduce other taxes and so on.
The hardest climate problem is not CO2, or fossil fuels, or rising seas. The hard nut to crack is getting people to cooperate. Solve the cooperation problem and the rest will follow. It’s about time to open our eyes and look at the one science that matters most. The science of human cooperation.
Peter Cramton and Axel Ockenfels are economists from the University of Cologne, Germany. Steven Stoft is an economist in Berkeley, USA. Their research on the design of climate negotiations is elaborated in a book with David JC MacKay on Global Carbon Pricing.
Ripped Apart
Hi Louis,
Your question is right on point. It is being politicized — in two ways. First, it’s being used to attack climate initiatives, via attacks on wind power. This is nonsense. Wind power was frozen out in proportion to other power sources. And all of the technologies can be made to withstand the cold. It just costs a little extra and the owners thought they could get by while avoiding the cost.
Since wind power was a relatively small (maybe 20%) part of the mix, it was a similarly small part of the problem — one estimate puts it at 13%. But that’s not too relevant, since the problem was not wind, or gas, or coal, or nuclear. It was a lack of weatherization, pure and simple.
The other politicized issue is market-incentives vs regulation. Both approaches have their shortcomings. First, a free market cannot solve the problem of optimizing blackouts, caused by too little generating capacity. The regulator ERCOT knows this. I know this for a fact because I’ve worked closely with Peter Cramton, the new vice-chair, on this very problem.
So what ERCOT does is regulate prices to be supper high when there is, or is likely to be a blackout. But people, even businessmen with a lot at stake, don’t respond entirely rational to incentives that kick in once every 35 years. So some more direct regulation is probably a good idea. –Steve
Hello Stephen,
My name is Lou Milone. I have commented on your zfacts site in the past and I’ve been following your economic data for several years.
I’m hoping you will come out with at least an overview – if not detailed description and analysis of the recent Texas energy debacle. As with most issues these days, I see it being politicized beyond reason, with a lot of – what I think is misinformation, particularly about the cause of the problem that ended up creating blackouts and such.
Will you come out with some data and analysis on the issue? I sure hope so.
Thank you,
Lou