Environmental Change as a Classic Global Collective Action Problem

The Tragedy of the Commons and climate change

Since climate change emerged as a phenomenon of serious social scientific inquiry, generations of social science reference works have characterised the mitigation of climate change as a classic global collective action problem; a “tragedy of the commons'' that has the game-theoretic form of a “prisoner’s dilemma” (see, e.g., Stavins et al. 2014, 1007) (Figure 5.1).

“Climate change is a global commons problem, meaning reduction in emissions by any jurisdiction carries an economic cost, but the benefits are spread around the world … the public good characteristics of climate protection create incentives for actors to ‘free ride’ on other actors’ investments in mitigation. … International cooperation is necessary to significantly mitigate climate change because of the global nature of the problem…”

Intergovernmental Panel on Climate Change (2014)

‘The tragedy of the commons’ is a famous concept created by Garrett Hardin. It refers to a situation where individuals or private economic agents exploit scarce and rival common environmental resources for their own rational, self-interested aims, leading to overproduction and the possible permanent depletion of the resource for all.

The essence of this problem stems from insufficient and poorly protected property rights. In other words, as consumers do not own these common goods, they have little incentive to take care of and maintain it, but rather an incentive to extract as much personal utility or benefit from it as possible at that particular time.

Figure 5.1: The use of game theory (the prisoner’s dilemma) in showing how the tragedy of the commons leads to environmental market failures

Taking the most significant environmental issue of climate change, world leaders have essentially become ‘prisoners’ during various international agreements.

They have two options: to cut CO2 emissions or to remain the same. Assuming that there are 2 big countries at the discussion table (e.g. USA and China), if both cut, then global warming will be slowed down and the socially optimal outcome will be produced. If one cuts while the other does not, the latter will enjoy both the slowdown in global warming as a result of the former’s cuts, as well as the fact that they do not need to make costly CO2 cuts. Finally, if both do not cut, global warming is sped up and the world as we know it could come to an end.

As can be seen, doing nothing is the dominant strategy, as it is always preferable to cuts, regardless of what the other country does.

However, due to the symmetry of the game, the Nash equilibrium becomes the (no cut; no cut) outcome, which is collectively worse than if both countries adopt the dominated strategy in order to reach a (cut; cut) outcome.

Hence, each country following an individually rational outcome will paradoxically lead to a collectively irrational outcome.

Why do countries not take action in climate change?

There lies the assumption where it is not in the national self-interest of a representative state to take action on climate change, whether or not other states take action. In the rationalist tradition of scholarship, national self-interest is typically conceived in terms of economic efficiency — increasing or maximising a state’s economic resources. The traditional assumption is that climate change mitigation actions are net-costly for an individual state: they impose significant, immediate costs domestically, while the benefits accrue globally to all states and in the distant future, so the net-present value of those actions to the state is negative. Since the same incentive structure applies to all states, the collective outcome of this individually rational behaviour is the under-provision of mitigation action compared with what would be socially optimal.

This logic is increasingly being challenged as scholars and policy practitioners demonstrate ever more ways in which climate mitigation action can be in states’ national self-interest, even if the climate benefits of action are ignored (GCEC 2014a; Stern 2014a, 2014b, 2015). What the “national interest” consists in is a normatively controversial question, and this literature often appeals to considerations of national interest beyond narrow economic efficiency, including social welfare, individual well-being, social justice, sustainable development, environmental conservation, responsible global citizenship, and others. There are good reasons for incorporating such diverse considerations into calculations of national interest, especially for an issue as complex and far reaching as climate change.

“The investments and actions significantly reduce the carbon in economies but do so at the same time as delivering positive economic and social benefits to nations, even if one puts aside the value of the emissions reductions. In this sense, most of what is necessary for emissions reductions over the next two decades is in the self-interest of the individual nations.”

~Nicholas Stern (2015, 85)

There is growing case study evidence to suggest that co-benefits are “a particularly strong rationale and basis for mitigation action” (Somanathan et al. 2014, 1152).. Nonetheless, there is also a discrepancy between the amount of mitigation action actually occurring in the world and that which one might expect to see if states rationally pursued their national self-interest as typically defined in rationalist scholarship. The inescapable implication is that states do not always, or even mostly, act rationally in the sense of increasing economic efficiency, at least when it comes to climate mitigation. 

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