Changing The Behavioral Climate 🌍

Understanding why human psychology is preventing a solution to global warming.

This essay was submitted to The Economist’s Open Future competition and originally appeared on Medium.

Let’s play a game.

Imagine you’ve just received a parking ticket that requires payment by mail. Before walking away, the police officer offers you a deal: you can go to the post office and pay the fine right now, or you can choose to pay an extra dollar to extend the deadline a few months.

Standing before a group of students, Nobel Laureate and behavioral economist Richard Thaler asked this question in what would become a landmark experiment. Thaler’s research found that subjects tended to systematically overvalue near-term versus long-term rewards. Put simply: the majority of subjects were willing to extend payment, even if it meant paying an extra fee.

This is one of many psychological biases that shape our daily choices. As humans, we tend to maintain the status quo, avoid difficult decisions, and undervalue the future. These pitfalls can manifest in various ways: neglecting exercise, procrastinating, or under-allocating money for retirement. For individuals these tendencies are merely problematic. For society, they become catastrophic. 

Humanity’s response to climate change is creating a debt that represents a textbook example of the tendencies Thaler described half a century ago. Since these tendencies happen by default, they are hard to avoid -- humans slip back into them if not reminded otherwise. Yet, inverting the problems creates a list of commands: 

Encourage innovation; embrace difficult decisions; incentivize long-term thinking.

This framework provides the values that must be top of mind for anyone implementing a climate-change solution. Successfully developing these incentives requires understanding the role that the environment plays as a global public good. Public goods are commodities that are available to all and cannot be made exclusive. As a result, these goods also tend to reject the typical efficiency of markets. If a particular region experiences a food shortage, then market forces will raise the local price of food to create an equilibrium. Global public goods lack these incentive mechanisms, so it follows that a solution will not appear by default. Since maintaining the status quo is not an option, we must encourage innovation.

Historically, civilization has relied on governments to provide the planning, development, and maintenance of public goods. Bridges, roads, and utilities are built and operated without expectation of profit. If a bridge collapses, it is the responsibility of the government to provide a solution. However, no market or government mechanism has both the incentive and means to provide a solution for climate change. Therefore, there is a need for an external, sovereign body with the political and economic authority to oversee and enforce climate change related policy. 

This proposal is a fundamental shift from today’s increasingly nationalistic attitudes, but can be achieved in several ways. Consider precedent highlighting similarly enforced international rulings (e.g. the Geneva Convention) that have not reduced the autonomy of nation-states. It is possible for countries to only relinquish portions of their sovereignty that are associated with global public goods. Our society already recognizes that sovereignty does not apply in areas like child trafficking or terrorism, and the continued pollution of our environment must be raised to a similar level of severity. 

Additionally, recognize that previous attempts at global environmental cooperation have proven ineffective due to ineffective governance structures. The Kyoto Protocol and Paris Agreement fell short because participation caused nations to put themselves at an economic disadvantage. Although the atmosphere is a global public good, the authority to establish laws enforcing its upkeep happen at a national level. Representatives leaving these negotiations find themselves in the prisoner's dilemma: each country knows that working together is the optimal solution, but are they unable to enforce cooperation. By default, countries will resort to maximizing their own benefit at the expense of the global good. It is necessary to flip this dynamic through the creation of an independently funded and autonomous organization that provides significant economic upside through shared equity. Rather than relying on weakly enforced penalties, this structure incentivizes countries to capture revenue from the taxation of carbon-heavy economies. If it sounds far fetched, consider the frameworks offered by multinational corporations. Looking forward, blockchain technologies have already proven that autonomous organizations can supersede the control of nation-states and offer promise for this type of coercion-resistant business model. 

It’s also important to be realistic. Rather than simply relying on a breakthrough in international cooperation, countries should aggressively fund entrepreneurs and research focused on the development of zero-emission energy production and carbon sequestration. The Intergovernmental Panel on Climate Change (IPCC) has shown that the issue of climate change has escalated and will now require emission reduction and removal of CO2. International cooperation is useful to define promising technologies and goals, but the rewards from developing this technology can be captured by corporations. Among the scientific options available to us include desert flooding, ocean phytoplankton, electro-geochemistry, and cell-free systems. These large undertakings offer enormous returns on investment if properly executed, yet require capital only possible on the scale of governments and the most well funded private institutions. A small fraction of these solutions will prove feasible, but the ones that work will have monopolistic characteristics. 

While these new energy sources are critical, they are not enough to steer the course of humanity away from climate change. Carbon also needs to be removed from the air to reverse the effects that have already taken place. Not all carbon sequestration options need to be high-tech: reforestation has been shown to provide enormous environmental benefits, and the Earth’s capacity for forestation is much higher than currently utilized. The relatively simple act of planting trees can be scaled globally and offers an opportunity for individuals to get involved. 

It’s time that we made significant bets on how to shape the future before the choice is taken from us. Countries must be willing to encourage innovation through new international governance models, embrace difficult change in the near-term, and design financial incentives to foster collaboration. Thaler’s experiment revealed individual biases that drive our actions, but it doesn’t need to be a prophecy. The question remains: can we become more than the sum of our parts?


📚 Reading

Spend a week in the Scottish Highlands, growing trees, planting trees, monitoring wildlife and supporting other vital work which helps restore the Caledonian Forest. Link.

Empress trees are some of the fastest growing species and capture more CO2 per acre per year than oak or maple. Link.

The Eden Project is a non-profit which provides fair wages to impoverished villagers through reforestation efforts. Link.

OneTreePlanted will plant a tree on your behalf for $1. Link.

Data from the World Meteorological Organization shows the month of July "at least equalled if not surpassed the hottest month in recorded history.” Link.


💎 Quote of the Week

And in fact, that gets to the nub of the whole point, that we are facing problems that transcend nations, that when we talk about the greenhouse effect; we’re talking about something that affects not just the United States, not just Brazil, that affects the entire earth for the worse.

The only way we can solve a problem is by a human solution. A totally human solution, an international solution, a co-operative solution.

Isaac Asimov, Climate Change And Humanity, 1989


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