Bangladesh and the Prisoner's Dilemma Structure of Capping Emissions

The day’s news about the promise to make a promise a year out on Climate Change is frustrating, to say the least.  This tactic of kicking the ball toward the goal post has just one problem: there is no goal post that all 192 countries convening in Denmark will agree upon.  In fact, it is unlikely that establishing such a goal is feasible; it is another, entirely different proposition that it is possible to collectively agree to this  altogether unfathomable goal.

The structure of the problem is essentially one of  a 192 country-player game of prisoner’s dilemma.  Assuming that goals are established, agreements are reached and outcomes can be pegged to cooperation or defection, we can assume the following: Every one will want to get the highest paying defection outcome, where each country free-rides on the commitment of every other country and does not, itself, implement any changes  in emission standards; similarly everyone will wants to avoid the lowest paying outcome: the sucker’s pay-off, where one country cooperates by (somehow) credibly committing to control emissions, but is then defected upon by every other country.  This pay-off will be lower than mutual defection pay-off where all countries defect on each other.  Finally, the pay-off to mutually cooperate tout court will be lower than the individual defection, high paying outcome.  In this circumstance, each country will defect and will maintain an mutual defection equilibrium where, even if an agreement is reached, no country will actually adhere to the letter of the agreement.  Anticipating this, the countries will not reach an agreement.

The reason that the bargaining structure is that of the prisoner’s dilemma is that the point of discussion is to mitigate the rise of an externality, carbon emissions that spillover from one national border to another.   However, because emissions traverse and disperse across borders, each country has an incentive to emit more carbon than if, say, carbon emissions somehow stayed  within discrete national borders.  Each country wants to emit more carbon while neighbor countries emit less.  In order to cut the Gordian knot, therefore, all countries must emit less carbon.  It is only through a joint commitment of all 192 countries convening in Copenhagen –and in the yet to be determined summit to take place next year–that a stable solution to the problem might surface.

From the available reportage, its looking like India and China are dragging their heels.  And Bangladesh–among other countries– is being left lurching in the winds.  As the Himalayan snow melts due to increasing Indian and Chinese emissions, the deluge will crash upon Bangladesh.  Ronald Coase, or at least his many followers bandying about the so-called Coase Theorem , would argue that India and China should bargain with Bangladesh to pay for the bad outcomes consequent from rising industrial emissions.  Hence, Bangladesh would get a fund–perhaps a grant– which would essentially require that Bangladesh become the dumping ground for emissions and other pollutants.  This is hardly what Bangladesh should suffer through; this is hardly the kind of grant Foreign Minister Begun Dipu Moni might accept in Copenhagen.