Have a read of the below summary from Professor Arnaud Chevalier, Department of Economics, as he outlines the activities organised by his department as part of our College's COP26 Forum.
COP26 is over, and for the next 12 months we will be waiting anxiously on world leaders to firm-up their commitments to prevent global warming. As part of the COP26 activities at our College, Dr Bjoern Hartig, Department of Economics, created an experimental game to make us better understand how we could help world leaders to commit their countries to limit global warming.
Bjoern organised a series of experimental games, whereby students became the leaders of different countries. Each leader had to allocate a fictional budget of $10 billion to invest either in “global climate protection” or in “local damage mitigation”. To stop the climate collapse, a total investment of $5b. into “global climate protection” per year per country was necessary.
If the climate collapse was prevented (and only then), each leader would receive a state pension from their home country. However, that state pension depended on how much damage from climate change was prevented in their home country; i.e. leaders had a personal incentive to invest in “local damage mitigation” and hope that the other countries would make the short-fall of investments in “global climate protection”. This is similar to real life where leaders have an incentive to invest in policy that rewards their political career (re-election) rather than saving the world. In this experimental game, there is a crucial difference: leaders could only realise their private gains if the public goal was achieved.
The participants played for 10 rounds, approximating yearly budget decisions; each year deciding how much to invest into “global climate protection” or “local damage mitigation” and then receiving an overview about the total and each country’s contribution to climate protection.
We had enough volunteers to play this “save the world game” three times. In one session, leaders did not manage to reach the investment threshold, and the world was left to over-heat. But it was not all gloom and doom - in the other two sessions, leaders did (just about) manage to get over the investment threshold to save the world. It would thus appear that linking the private benefits to leaders to the realisation of a public good could be key in making leaders invest enough in measure mitigating global warming.
After the game ended, we had a bit of a discussion about how realistic the scenario was, which aspects from reality were represented and which were not, and which characteristics made success more likely in the lab than in the real world and vice versa (e.g. all countries are equal, no communication, certainty of target, no sanctions, etc.).
Other COP26 activities organised by the Department of Economics involved Dr Juan Pablo Rud discussing in the EWD building various aspects of his research on the effect of climate change on various economic activities.
We would like to thanks all students who participated in the game or came to discuss with us. If you want to know more about how economists can inform the debate on global warming, please contact us.