The Global Climate Change Game

Introduction

The Global Climate Change Game highlights key challenges facing international climate change negotiations, the original inspiration for its development being the Copenhagen Summit. It combines standard public good and trust games, and gives them an ultimatum twist. It can also be played intuitively, and so is accessible to students with limited economics: initial piloting was conducted as part of an intermediate undergraduate development economics course, and on a final year course in development finance. The game is a fun way to illustrate the incentive for countries to free-ride but goes beyond a simple prisoner’s dilemma by allowing for multiple rounds and the effects of uncertainty, not least arising from rushed negotiation processes.

The game is straight-forward to run, requiring only a computer and projector with which to display a relatively simple Excel spreadsheet. It can be squeezed into a one hour teaching slot, though this allows limited time for debriefing and discussion of learning outcomes. Alternatively it can be combined with a lecture on related concepts and issues; for example, as part of a session introducing the concept of global public goods. Appendix 2 suggests a range of supporting materials.

Overview

Students are divided into eight groups, and each is allocated a country. The difference between Annex 1 (high-income) and Annex 2 (low-income) countries should be explained. Although the game can be played with a minimum of eight students, it is preferable that students work in groups of 3-4 to allow internal group discussion. With more students additional countries could be added, but this will prolong the process of negotiating each round.

Each country is instructed to maximize its net benefit over the period of the game, subject to the additional constraint of avoiding global catastrophe. They do this by deciding how much money to contribute to a global ‘green spending’, which generates a public good benefit. This may be through actual contributions to a global fund or de facto contributions by controlling activities that generate greenhouse gases, therefore limiting economic growth. To start the game off, countries are informed that a total public good benefit of 80 over the five rounds is estimated to be sufficient to prevent potentially catastrophic climate change. Green spend is more effective in Annex 2 countries, with a spend to public good benefit ratio of 0.5, whereas for Annex 1 countries it is 0.2. This opens up the possibility (introduced in the second or third round) of Pareto efficient gains through green transfers between countries. However, such transfers are subject to uncertainty over whether recipients will use them to add to their green spend.

Getting Started

Ensure that you have:

• Separated students into eight groups and allocated countries to each;
• distributed slips of paper to each group, with which to make bids in each round;
• projected the Global Climate Change Game Excel spreadsheet onto a screen at the front of the class.

The game can now be started with the following briefing: -

Running the Game

After briefing the groups as above, allow three minutes discussion before collecting in the first round of contributions. In no particular order, type these into the Global Climate Change game spreadsheet, ensuring a minus sign is used. Highlight to the students the overall public good benefit, as well as the net benefit for individual countries. Repeat the process for a second round.

The expected outcome is that second round bids will reveal more selfish behaviour, and that prospects of meeting the target look bad (see Intermediate Example). Even if this is not obvious from the data, the important thing is to ensure everyone realises the danger of this “prisoner’s dilemma” outcome and the logic behind it.

Green transfers (or “carbonaid”) can now be introduced with the following briefing:

‘You now have the option of transferring funds to other countries. There is no limit on the amount that can be transferred or to whom, nor is the recipient country required to use the transfer on green spend. Annex 1 countries must specify how much and to whom they will make green transfers to, even if it is zero and to no-one.’

With this additional information, allow the groups three minutes discussion time before asking for third round contributions and transfers, collecting and typing up these for Annex 1 countries first. At this point switch to collecting bids verbally. As facilitator this gives you the scope to try to influence the outcome by strategically varying the order in which you collect these bids.

The final two rounds are now played in similar fashion, allowing extended discussion – as time allows – before the final round. The game leader may wish to introduce additional information at this point (e.g. a revised higher target due to new scientific data). One reason for doing this is to ensure that that the prospect of hitting the target is uncertain until the final round.

Adaptations to the game

This game itself started out as an improvisation from the generic public good game and can itself be adapted in numerous ways. Simple adaptations might include:

• Adjusting time for countries to deliberate and the mechanism for declaring their decisions in each round. One reason for doing this is to attempt to steer outcomes by giving the lead to countries that have been more or less generous in earlier rounds, or whose earlier bids were not serious. Another option is to deliberately shorten time in order to force countries to make mistakes.
• Allowing green transfers from the start, for students who are already familiar with the standard public good result.
• Making green transfers compulsory for Annex 1 countries, or facilitating negotiations of rules to govern transfers, raising questions about how/whether they are enforceable.
• Extending the timeframe as an alternative to adjusting the public good benefit target.
• Limiting the amount of funds. Countries can be given a fixed amount of funds which can be used on green spend or green transfer to reflect differences in their wealth and national income. See Appendix 1.

Debrief

An effective debrief is integral to the success of the game as a learning experience and can be separated into three sections.

Reflection on the game itself

Some questions to ask include:

• With the benefit of hindsight would you have behaved differently?
• Which other countries performed well or badly, and why?
• Were green transfers used by recipient countries in addition to their own green spend or in place of it?
• To what extent did being a low- or high-income country inform decisions?
• How did collusion between groups help or hinder achieving the objective?
• To what extent was trust developed or eroded between countries over successive rounds?
• What contributed to Pareto efficient green transfers happening or not happening?
• Was the final outcome what you expected?
• How could the facilitator have helped to ensure a better outcome?

Relating the game to historical events

This can include discussion of what happened at the Copenhagen summit, or even Kyoto before that, and prospects for the next round of face-to-face meetings at Cancun. It may be useful here to circulate some additional material (see Appendix 2). There is also the issue of how countries contribute to climate change mitigation, including the role of cap-and-trade carbon markets. These have an opportunity cost in terms of a growth counter-factual, but they also have important within-country distributional effects. One problem to highlight is the way technical discussion of climate mitigation instruments (particularly carbon trading) have concealed to wider audiences the political issue of how to agree on a fair distribution of initial ‘rights’ to pollute. One issue here is the relevance to the game of the idea that some countries have carbon debts, where the latter can be defined as a historic contribution to filling the global carbon envelope that is much higher per person per year than that of other countries.

A further line of discussion is the relevance of the game to financing of other global public goods, including international research, disease control, peace-keeping and poverty reduction.

Relating the game to theoretical issues

Finally, relate the game to economic concepts and issues that arise with global public goods and climate change in particular. These include the definition and typology of global public goods (see Handout). Additional issues concern the principal-agent problem arising from green transfers: how can input additionality be guaranteed to result in outcome additionality?

Learning Outcomes

The game illustrates problems associated with the financing of public goods, especially the importance of trust, providing students with insight and experience from which they can base their discussion. The range of topics include the prisoner’s dilemma, principle-agent problems, additionality outcomes with transfers of any kind, political and ethical aspects of climate change and public good provision (see Tata Energy Research Institute – 2009); and ultimatum elements.

The game not only allows students to develop their understanding of climate change negotiations but also their skills in team working, negotiation and cooperation.

Downloads

These materials are licensed under a Creative Commons Attribution-Non-Commercial 2.0 UK: England & Wales License.

• Student handout, "Global Public Goods and Development Finance"
• Initial spreadsheet
• Intermediate example spreadsheet

Appendix 1. Specifying total country incomes or budgets

Starting incomes can be introduced into the game to add additional realism, by making mitigation for countries in Annex 1 a small proportion of their total budgets but a substantial amount of Annex 2 countries’ ones.   Alternatively, they can be used to influence outcomes, by being set at a level where Annex 1 countries have to make green transfers to reach the target, or where achievement of the target is trivial.

To reflect reality Annex 1 countries should be given a starting income vastly in excess of the 100 each it would take them to meet the target through green spend alone. This reflects the small percentage of their annual GDP necessary to mitigate climate change. On the other hand, Annex 2 countries should receive only slightly more than the 40 each it would take for these countries to meet the target alone. Introducing starting incomes in this way highlights the distributional effects on individual welfare of different allocations of the burden of meeting the target between Annex 1 and 2 countries.

By limiting the starting incomes of both Annex 1 and Annex 2 countries a situation can be created by which the target can only be met through cooperation, therefore game leaders should introduce green transfers earlier in the game. Alternatively, and if time allows, this could be done by leaving students to deduce the necessity of green transfer to meet the target on their own. A suitable starting income would be 40 for Annex 1 countries and 20 for Annex 2 countries. This requires collective green transfers from Annex 1 to Annex 2 countries to be at least 14 to reach the target. Of course, starting incomes can be revised to make cooperation more or less important and game leaders should be prepared to introduce new income if the target starts to become unachievable due to selfishness early on.

Appendix 2. Supplementary materials

Newspaper articles: e.g. "Copenhagen closes with weak deal that poor threaten to reject", The Guardian, 19 December 2009; or "Costing the Earth: who would pay more to tackle climate change?" The Economist, 7^th December 2009.

DFID (2009) Eliminating world poverty: building our common future. Ch.3. Sustaining our common future, Ch.6. Acting together through the international system.

Heimans, J (2008) Multi-actor global funds: new tools to address urgent global problems, in Development Finance in the global economy: the road ahead edited by T Addison and G Mavrotas, UNU-Wider, Basingstoke: Palgrave Macmillan.

Hulme, M (2010) Why we disagree about climate change. Cambridge University Press.

Kanbur, R & T Sandler (1999) The future of development assistance: common pools and international public goods. Overseas Development Council Policy Essay 25. Chs.4-5.

Kaul, I et al. (2003) Providing global public goods. UNDP/Oxford University Press.

Kaul, I et al. (2006) The new public finance. UNDP/Oxford University Press.

Tata Energy Research Institute (2009) The right to sustainable development: an ethical approach to climate change and ODI (2010) Climate financing and development: friends or foes?

World Bank (2010) Development and Climate Change. The World Development Report. Chapter 6. Generating the funding needed for mitigation and adaptation.

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