Page in progress, July 26, 2019.
As mentioned above, there are actually two ways out of the climate-cooperation dilemma, but the easy one requires a global government that can enforce agreements. But that is not going to happen. Still, showing how cooperation is achieved without altruism when there is a government makes it easy to understand the basic idea.
Suppose a country wants to build a highway system. It could try putting a donation box at every gas station and asking everyone to please contribute 50¢ a gallon. That’s the altruistic solution. You know how well that would work. Some would cheat. Others will think, I would contribute if those guys weren’t cheating and then they cheat too. And so on to the full catastrophe.
Fortunately, we have a government with muscle so (by voting for representatives) we can do something that amounts to this: In a referendum, everyone checks a box for how high a gas tax they want, 10¢, 20¢, 30¢, … And they know that the highest tax with a majority will be made a law and enforced.
Why is that different? Because, if you vote for 50¢ a gallon, you are not taking a risk like you are when you donate 50¢ a gallon at the pump. If you position wins you will have to pay 50¢ a gallon, but you know everyone else must too, so the highways you want will get built.
By making a reciprocal agreement, “I will if you will,” we turn an action (paying 50¢ a gallon) that would be foolhardy altruism, into a something that is in each of or self-interests. But notice, a reciprocal agreement you can trust is absolutely necessary.
Without an international government, it is difficult, but not impossible to make a reciprocal agreement we can trust. Some type of enforcement is required, but this need not be harsh. Here is a partial list.
- Loss of international prestige.
- The termination of the agreement if someone defects.
- Withdrawal of some international privilege from any defector.
- A carbon-content tariff imposed on defectors.
Perhaps the most important general strategy for successful enforcement is this enforcement:
- Start with a small coalition of 2 – 4 larger players.
- Once that stabilized it can more easily use somewhat tougher measures against small players without fear of retaliation.
Obviously, stabilization is a complex issue and will require negotiation. But let me explain enforcement measure #2 because it clarifies how reciprocity works.
Enforcement measure #2
Say we have three large players, and they would be best off if they all agreed to a $50/ton price of carbon. They will each have a cost of adapting to that price, say that cost is $100 per person. (Remember each country pays that price to itself, so the price is not a loss.)
If only one of the three adopted this price it would reduce its carbon emissions and suppose that would benefit the whole world by $25 person. So acting on its own, its citizens spend $50 adapting, but gain only $25 in climate benefit. So this is a bad deal for them.
But if all three big countries do this, then each citizen gains from the emission reductions of the other two, and the climate benefit is $75 per person for a net gain of $25 per person. So if the reciprocal deal holds, all three big countries win.
But if one of them defects and does nothing, it gets $50 / person benefit from the other two at no cost to itself. Which is even better than cooperating. So the agreement would fall apart without enforcement measure #2.
With #2, all three agree that if any of the three defects, the other two will also defect. Now each country has a net gain of $25 if they all stick together, and a net gain of $0 if they defect, since the agreement falls apart.
So the full 3-way climate agreement works like this:
- I will do my part if both of you do your part.
- If one of you reneges, I will renege.
Ripped Apart
