numbers, not adjectives — D. J. C. MacKay

5  The power and challenges of cooperation

There are two ways in which humanity can avoid burning all recoverable fossil fuels and the resulting >+4°C global warming. One way is if renewables for virtually every possible use become cheaper than fossil fuels. The other way is if we decide to cooperate not to burn the fossil fuels, even if it’s the cheaper option (in the short term). For a number of reasons (which I won’t discuss here), I think the first option is unlikely to happen — which is why I think we should be seriously exploring cooperation.

5.1 An illustrative game

To get us thinking about cooperation, consider the following simple game: Ten players each have 100€ and play a game consisting of a single round: Each player commits some of their cash to a central pot; when all players have committed, the pot (somewhat magically) doubles, and is divided evenly between all players (irrespective of how much they put in). That’s it. Each player can commit all, or none, or any fraction of their cash. Take a minute to consider how you would play.

Your reasoning may go something like this: collectively, the best outcome would be if all players commit everything; the pot would receive a total of 1000€ (100€ per player), it would double, and everyone receives 200€. Collectively, the worst outcome is that no-one commits anything, and everyone keeps their 100€. But what would you do? You would hope that everyone else contributes as much as possible. But if you contribute your 100€, then it will double and add 200€ to the collective pot, but you would have to share the proceeds with nine other players and get only 20€ (from the 100€ you contributed). So it would be rational for you to hope that all other players contribute maximally, but you would withhold your own contribution. The essence is this: collectively, it is better if everyone commits all their cash, but individually your incentive is to commit nothing. And since every player is likely applying similar reasoning, it is unlikely that the pot will receive very much.

The game is an extremely simplistic illustration of our climate dilemma. The players represent nations. The commitments represent the individual national costs of moving to alternative more expensive solutions or accepting not to engage in certain carbon emitting activities. The doubling of the pot represents the payout, of not having to pay the large (future) costs associated with climate change. The even splitting of the doubled pot, represents the fact that every nation would benefit from smaller climate impact (irrespective of how much they contributed). I’m not claiming that the game accurately represents all aspects of our climate predicament, but it highlights the basic mechanism: even though the world collectively would be much better off with stronger climate action, individually every country would rather not.

The problem in a nutshell is that the individual and collective incentives are misaligned. Let’s make a tiny modification to the rules of the game: instead of committing an amount of your cash, you only have to pay the minimum of what everyone committed. How would you play now? Well, in the modified game, you have no risk that someone free-rides on your generosity. If someone commits less than their full 100€, then everyone pays only the lower amount. This means, that there is no-longer any reason for you not to commit all of your cash; and since everyone can apply the same reasoning, the likely outcome of the game is that everyone commits their full amount.

What can we learn from this? Cooperation will only work if individual and collective incentives align. But since the cooperative solution is so much better collectively, there is plenty of scope to incentivise nations to cooperate.

5.2 The real world

The idealised game differs in many significant ways from the real world. Most obviously, the game assumes that all players are equal, but nations differ in wealth, in emissions, in exposure to climate change and in natural resources. So, in order to create a cooperative in the real world, we must substitute equal commitments in the game with fair commitments in the real world.

We must first agree what “fairness” means in the context of carbon emissions and climate change. This is a moral and ethical judgement, but a good starting point which few would seriously contend with, would be one of equity: that every person has an equal right to our shared atmosphere. That would mean that nations who contribute more than an equal share (per capita) of greenhouse gas emissions would have a larger fair share of commitments. Notice also, that cooperation of a majority may be a better option than not, even if a few nations resist — single nations should not be able to hold the collective hostage.

The world is full of examples where people cooperate, because the collective benefits of doing so outweighs the price. For example, I don’t particularly enjoy paying taxes, but I still vote for political parties who implement them. Although I don’t think the tax system is completely fair, I still think it’s better than not having one. Are humans capable of cooperating on a global scale?

What would the next practical steps for global climate cooperation be? We first have to align on fairness. Which nations might sign up for an equitable notion of fairness, that the atmospheric resource belongs equally to everyone? We need a coalition of the willing, not necessarily universal agreement. It doesn’t have to be perfect, it just has to better than the alternative.