As I lay in bed, tossing and turning, I think about my air conditioner which has been running all day long. Of course, I can switch it off right now and reduce my carbon footprint. However, in the grand scheme of things, will it really matter if I did? If I switch my AC off, I may sweat uncomfortably throughout the night... Alas, my AC is left switched on as I fall asleep.
Over the past decades, the climate crisis has engendered international outcry: heat domes in Canada have pulverised more than a billion marine creatures and cascading floods in China have displaced over a hundred thousand people. Evidence foreshadows the apocalyptic ramifications and unprecedented pain that humanity faces. Yet, as the climate catastrophe looms overhead, we have done surprisingly little in the fight for environmental protectionism. The current metanarrative amongst politicians, corporations and policy-makers is ‘let someone else deal with it’. Of course, if everybody shares this attitude an obvious issue arises – who is to deal with climate change?
Economically, excessive energy consumption is illustrated through a matter of market failure i.e, a situation where resources are not allocated at a social optimum. Essentially, an agent’s failure to consider externalities while making decisions causes Pareto inefficiency. In the case of climate change, I may fail to consider, for instance, the cost borne by society due to my excessive electricity usage. Broadly, the situation exemplifies a Tragedy of Commons wherein excessive overconsumption by rational agents in the pursuit of selfish agendas causes the depletion of a common good – ‘air’. When tackling a global apolitical issue of climate change, individuals are concerned with the issue of free-riders. I may ponder: why should I bear the burden of using less electricity if I only have a small fraction of the benefits? Why can’t my neighbours do it? Similar sentiments are expressed by governments: why should my country sacrifice economic growth to cut-down emissions? Ergo, climate change carries on …
Nonetheless, such a pessimistic view appears detached from the recent efforts towards environmental protection shepherded by the United Nations and ardent activists such as Greta Thunberg. The truth is, we are all innately irrational with myriad cognitive biases that serve as double-edged swords. For instance, while the status quo bias, which is a preference for the current state of affairs, appears to be the reason for inaction during the current crisis, our irrational altruism has the power to forestall such inertia. The presumptions of ‘homo-economicus’, which reflects the portrayal of humans as rational, mathematical and self-serving agents, employed in voluminous economic models that project a dismal future are fundamentally flawed. After all, the only reason we have gotten so far is due to irrational ‘social contracts’ – charitable donations, public goods and voting ballots that are quintessential to the functioning of a democratic society. Given this history, it is not unreasonable to conclude that people will make small sacrifices to avert a larger crisis. Perhaps the burgeoning field of behavioural economics, pioneered by Thaler and Kahneman, indeed presents an alternative to doomsday that we seem to be headed towards. Such an optimistic belief begets another pressing question: if people are so altruistic then why haven’t we done more till date?
Despite being one of the most precarious global threats we face, climate change acts as a subtle storm that human irrationality cannot withstand alone. Primarily, people suffer from a present bias where individuals place greater importance on present gains over future ones. Psychologist Freud’s theory of delayed gratification refers to the ability to delay an impulse for an immediate reward to receive a more favourite reward in the future. However, in this modern epoch of instant gratification, people find it difficult to resist indulging in ephemeral pleasures. Since the costs of climate change will be borne by future generations, it is difficult for the present generation to sacrifice their current benefits to ameliorate future living standards. Such a view is aggravated by loss aversion, as individuals do not want to lose their current benefits for an uncertain future. Additionally, the ‘salience’ factor is important as people cannot see rising greenhouse gas emissions. In the case of climate change, it is near impossible to identify and villainize a particular perpetrator which makes fighting the threat challenging. Further, the issue of probabilistic harms persists: we cannot know with certainty that a particular hurricane is a product of man-made climate change and not just a natural phenomenon. The unique characteristics of the climate crisis thus make it inconceivable for individual actions to combat.
If the prodigious success of the Kyoto protocol i.e, a 12.5% reduction in carbon dioxide emissions uptil 2012, is indicative, international agreements and multilateralism are surely the pathway forward. The unanimity in such agreements ensures a fair distribution of climate change burden across different countries while asserting long-term systemic improvements. Nonetheless, it is challenging to attain a consensus apropos of the nuanced effects on several stakeholders. For instance, the Copenhagen climate conference in December 2009 failed to materialise a feasible climate deal. Overcoming the contesting interests between developed and developing countries appears especially gruelling. While it has been proclaimed that sustainable development is a rising tide that lifts all boats, there is an implicit ‘blame game’.
Developing countries find it unfair that they are compelled to compromise growth while developed countries have achieved growth at the cost of environmental detriments. For instance, the USA contributed to 30% of global emissions from 1890-1960 and shares a quarter of historic emissions due to its coal industries. Yet, developing economies such as India have become scapegoats for the current crisis, which naturally creates distrust. Additionally, it is imperative to consider that there will always be an economic incentive to withdraw from international agreements. Consider Trump’s withdrawal from the Paris Agreement in 2017. While it is clearly morally questionable for Trump to reject the agreement, there were no legal barriers enacted at the time and hence Trump was a rational economic agent. To explore the underlying mechanisms behind his decision, observe a rudimentary game theoretical model: the Prisoner’s Dilemma (1). In environmental politics, it happens to be the case that it is always better for a country to leave an agreement, pursue its individual self-serving agendas, and thereby not reduce emissions as illustrated in the pay-off matrix below.
Accordingly, it appears that each country has a rational selfish interest to withdraw from climate agreements. However, this simple payoff matrix has inherent constraints in modelling real-world phenomena. For example, the fact that these summits are iterated poses USA poorly in international relationships as it is known as an unreliable defector.
To gain a more holistic and insightful understanding of the topic, consider one more tool: the Nudge. The Nudge is a behavioural economics instrument attributed to Richard Thaler which employs choice architecture to ameliorate social outcomes. For instance, a recent study in Germany showcased that changing the default option to a green basic tariff increased renewable energy consumption by 20%. Likewise, an analysis of Home Energy Reports from OPower highlighted that including a comparison of a household’s energy usage with that of their neighbours resulted in a decrease of one billion pounds of emissions across 6 countries. While these initial results are telling, it is imperative to consider the audience that is being nudged; for example, nudges can have adverse impacts depending on one’s political ideology or social group. Other critiques of nudge arise from a philosophical standpoint: is it ethical to push people towards a particular choice at the cost of their free will? Is it possible that political pandering and corrupt governments may misuse nudges? While discussions about libertarian paternalism and institutional failure are relevant, these drawbacks are outweighed by the nexus of benefits that nudges provide society. In summation, this article discusses the relative efficacy of 3 imperative tools to counterpoise global warming.
Out of these, international agreements are the most promising weapons in the battle towards sustainable living due to rigid legislation. Of course, there are several other methods such as carbon taxes and outright bans that have been employed globally that merit meticulous analysis. While there is no panacea to the current environmental malaise, I believe that a melange of the policies mentioned must be utilised to promote sustainability. (1) In the original model, two prisoners are held captive and given the opportunity to betray their partner or stay silent. If both the prisoners stay silent, they both receive a reduced sentence which is socially optimum in this scenario. However, a closer inspection at the model unveils a scenario where the prisoner’s will always be better off if they betray their partner (termed a strictly dominant strategy). Hence, the Nash Equilibrium is when both players betray their partner, leading to the worst outcome for society.
Aishi Basu
High School Studen
I would like to conclude with a quote by Bruce Lee, which establishes an important guideline for the world’s clean energy endeavors,
“Long-term consistency trumps short-term intensity.”
Rishabh Rupani
High School Student
References:
“The Climate Disaster Is Here – This Is What the Future Looks Like.” The Guardian. Guardian News and Media. Accessed August 6, 2022. https://www.theguardian.com/environment/ng-interactive/2021/oct/14/climate-change-happening-now-stats-graphs-maps-cop26.
“Global Climate Agreements: Successes and Failures.” Council on Foreign Relations. Council on Foreign Relations. Accessed August 6, 2022. https://www.cfr.org/backgrounder/paris-global-climate-change-agreements.
“The Prisoner's Dilemma in Environmental Politics: One Model to Rule Them All?” E, February 2, 2019. https://www.e-ir.info/2018/06/14/the-prisoners-dilemma-in-environmental-politics-one-model-to-rule-them-all/. and Cass R. Sunstein. Nudge: The Final Edition. New York: Penguin Books, an imprint of Penguin Random House LLC, 2021.
