First As Tragedy, Then As Farce

A tragedy of the commons is a situation where many people have access to a common, limited resource, which is slowly depleted as individuals use it. This leads to an incentive system where every individual uses the resource as quickly as possible, mindless of the long term consequences of overexploitation and depletion, as anything unused by themselves will be used by someone else. In this way, individuals acting independently and rationally according to their self interest behave contrary to the best interests of the whole group. It is a common pattern studied in economics, which appears in some very diverse real world settings, a well known and well studied failure of a free market. A more thorough description of this phenomenon is supplied by La Wique.

Global warming is caused by humans emitting greenhouse gases such as methane and carbon dioxide into the atmosphere, concentrations of which are reaching levels unprecedented in recent geological history. Although debate continues over the exact nature of the relationship between atmospheric pollution, climate change, and how this will manifest in terms of changing weather patterns, the broad pattern is well established. More carbon dioxide means a warming planet, and this means bad news for us.

An important reason meaningful attempts to limit carbon dioxide emissions have been unsuccessful is because of the nature of this incentive structure. The benefits of industry are local, immediate, and individual. They are the comfort and convenience of modern cars, homes which are cool in summer and warm in winter, cheap bulk transport which allows us to take advantage of the efficiency gains afforded by global trade. At the nation state level, the wealthy, comfortable, industrialized lives we have grown accustomed to always mean pollution. Make no mistake; despite what some people say, it is impossible to meaningfully reduce carbon dioxide emissions without big drops in our standard of living. The plight of people in poor countries is even worse, being able to burn fossil fuels, and thus pollute, could be the difference between living a life of abject poverty and misery and having some measure of assurance that their life is not as precarious as the quality of the next harvest. The damage caused by this sort of pollution is dispersed, it has an insignificant effect on the individual polluter but, added up, is bad news for humanity and bad news for the planet.

This analysis applies at three levels – individually, nationally and internationally. At the individual level, being able to use fossil fuels, and thus pollute, is the difference between living warm, comfortable, convenient lives and living in poverty for many, many people. And while the benefits of being able to pollute in this way are immediate, tangible, and individual, the adverse consequences are delayed, hard to measure and dispersed. Individuals acting independently and rationally, according to their own self interest, pollute – to the detriment of humanity as a whole.

At a national level, being able to use fossil fuels in a country’s development can be the difference between industrializing and being able to offer a nation’s citizens some hope of material well being, and resigning them to the same grinding poverty that their ancestors were forced to endure for generations. Free market economic reforms over the last 30 to 40 years have lifted vast numbers out of poverty, in China alone, Deng Xiaoping’s market liberalisation efforts have lifted over 500 million from extremely precarious existences as subsistence farmers to having some measure of wealth and security. These reforms have been perhaps the most successful antipoverty efforts in history; yet they come at the cost of increased atmospheric pollution which threatens the whole planet. Nations such as China are right to argue for the benefit of their citizens and thus that they should be allowed to pollute, however this concentrated benefit comes at the cost of all the nations of the world.

A further complication is that, even if national leaders are motivated to take steps to reduce their nation’s carbon dioxide emissions, in democracies they are beholden to their voters. Those voters are often reluctant to make large sacrifices to their standard of living when the benefits that accrue as a result of those sacrifices; less global warming, are dispersed across the entire world. Voters in places like New Zealand or Australia look to China and are reluctant to substantially reduce emissions, as even large reductions are rendered moot by pollution produced by the rest of the world. The incentives faced by national leaders compel them not to drastically reduce their nation’s climate emissions, to do so would be to risk the wrath of their constituents reluctant to commit to large, unilateral emissions cuts.

The single thread running through this essay has been that people and nations don’t commit to meaningful emissions cuts not because they’re ‘evil’ or willfully ignorant of the consequences of climate change, but because of the nature of the incentive structure they face. They are behaving perfectly rationally given the nature of those incentives. This problem of coordination between different parties, the difficulty of getting diverse groups of people to agree to sacrifice their standards of living when that is contrary to their individual self interest, lies at the root of the politics and debate around global warming and how best to approach it. These sorts of problems are difficult to solve, but the first step is a sober understanding of what is going on, of different people and institutions’ incentive structures and how this motivates them to behave. Only given a thorough understanding of these constraints can solutions be proposed that have a realistic chance of actually succeeding. An in depth and fascinating discussion on this class of coordination problem is given here. SlateStarCodex is a blog I cannot recommend more highly.

So where does that leave us? I’m not sure how realistic it is to expect a coherent international response to the problem of climate change given these constraints. Although the recent Paris agreement displays some promise, only time will tell if it has teeth. Probably the best any individual can do is reduce their own emissions as much as possible, as well as lobby their government and try to convince other voters of the importance of emissions cuts. I think it’s important to try and avoid politicizing climate change; it’s something that affects us all. If it becomes an inherently ‘left wing’ or ‘right wing’ thing, effort to address it will be doomed to failure. Too many people use it as a vehicle to try and push their own, unrelated, political viewpoints, about inequality and so forth. Although these are often important issues in their own right, associating them with global warming emissions reductions automatically makes large segments of the population suspect emissions reductions are a figleaf for a political agenda they disagree with. I hope you agree that emissions reductions are far too important to be allowed to fail because of that! Convincing people that reducing climate emissions is important involves listening to them, taking their opinions and values seriously and understanding what motivates them to hold the opinions they have – even if you find many of their other positions abhorrent, climate change is too important not to talk respectfully to other people about. Remember, people don’t feel motivated to make serious efforts to reduce their emissions not because they’re stupid, or evil or willfully ignorant, but because of the incentive structures they face. It’s up to all of us to understand this and try to convince others on the basis of that understanding.

-Simon Holdsworth


One thought on “First As Tragedy, Then As Farce

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s