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Gaming global warming

Gaming global warming
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First Published: Mon, Nov 23 2009. 10 12 PM IST
Updated: Mon, Nov 23 2009. 10 12 PM IST
You could have asked Garrett Hardin in the 1960s about the potential outcome of any of the summits, whether Copenhagen, Kyoto or Rio, and his answer would have been the same—not much. Hardin’s paper The Tragedy of the Commons held the answer. The Tragedy of the Commons, representing the theory of freeriding, is well known. The “tragedy” refers to a hypothetical pasture that has a carrying capacity of 10 animals, open to everyone. To begin with, 10 herdsmen each graze an animal in the pasture to fatten them for the maximum yield of milk. The 10 animals are now consuming all the grass that the pasture can produce. Sooner or later, one of the herdsmen figures that by adding one more animal to the pasture he can make an incremental profit. Adding one more animal will mean less food for each of the present animals, leading to thinner animals and lower milk yields. But since the overall cost arising from the additional cow will be shared by all 10 herdsmen, he rightly determines that his incremental revenue from the additional cow will be higher than the incremental cost. So he decides to exploit the system. But what is smart for him is smart thinking for all the herdsmen, and soon, every herdsman begins to add more cows. This process of mutual exploitation, or freeriding, continues until overgrazing and erosion destroy the pasture system and all the herdsmen are driven out of business.
Now all one has to do to see why a Rio or a Kyoto protocol did not achieve much, and why Copenhagen will do no better either, is to replace the pasture with the earth, herdsmen with countries, grass with carbon emissions, and milk with clean and habitable atmosphere, and you can easily see why these protocols will not work till the cows come home—or until global warming gets too hot for a cure.
Steven Levitt and Stephen Dubner in Superfreakonomics make the same point. If one of the countries decided one fine morning to eliminate its carbon emissions, the benefit of this painful and costly decision would not accrue to that country unless each and every country in the world also simultaneously curbed their emissions. But The Tragedy of the Commons will ensure that they don’t.
Compounding the freeriding problem is history. Even if the US were to suddenly turn a green leaf and offer to curb its emissions drastically, it will find it difficult to lean on India and China, which are just finding their way to economic prosperity.
Game theory has been applied to global warming, albeit sparingly. It is clear, however, that the situation represents a prisoner’s dilemma-like game. Ideally, for maximum benefit, the players, say, groups of developed and developing countries, must cooperate. But the two groups have incentives that would cause both of them to defect rather than cooperate and lead to collectively detrimental payoffs. Thus, the Nash equilibrium predicts that the countries will not cooperate, and sure enough they don’t!
Nobel laureate Thomas Schelling, the eminent game theorist, had a different take. His conclusion was that the theory was being used only to gain bargaining margins in international trade commitments and price wars, and that the threat of global warming was being overstated, at any rate for the US. In fact, for these reasons, he advised former US president George W. Bush against signing the Kyoto Protocol. Now juxtapose Schelling’s view with Levitt and Dubner’s observation, and you can see why there need be no prizes for guessing the outcome at Copenhagen!
V. Raghunathan is CEO of GMR Varalakshmi Foundation. These are his personal views. Comment at otherviews@livemint.com
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First Published: Mon, Nov 23 2009. 10 12 PM IST