COMMENTAI Three books agree thathuman psychology is a barrier
to robot superiority p.320

MUSIC In conversation withthe creator of a chamber
opera exploring time p.322

OBITUARY William Paul,
discoverer of interleukin-4,
remembered p.324

ILLUSTRATION BY GREG CLARKEPOLICY Eightways to get the bestout of experts p.317

Price carbon — I will
if you will

To forge a strong climate accord in Paris, nations must agree on a common goalin everyone’s self-interest, say David J. C. MacKay and colleagues.

Negotiations at the United Nations
climate summit in Paris this December will adopt a ‘pledge and review’approach to cutting global carbon emissions.
Countries will promise to reduce their emissions by amounts that will be revised later.
The narrative is that this will “enable an
upward spiral of ambition over time”1. History and the science of cooperation predictthat quite the opposite will happen.

Climate change is a serious challenge
because the atmosphere gives a free ride tocountries that emit. If some nations sit backand rely on others’ efforts, the incentives foranyone to act are weakened. Review of thefirst phase of the Kyoto Protocol at the 2012
UN climate meeting in Doha, for instance,
resulted in Japan, Russia, Canada and New
Zealand leaving the agreement, frustrating
those who kept their promises.

Success requires a common commitment, not a patchwork of individual ones.
Negotiations need to be designed to realignself-interests and promote cooperation.
A common commitment can assure participants that others will match their efforts
and not free-ride. A strategy of “I will if youwill” stabilizes higher levels of cooperation.
It is the most robust pattern of cooperation
seen in laboratory and field studies of

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COMMENT
situations open to free-riding2.
A global carbon price — so far excluded
from consideration in international negotiations — would be the ideal basis for a common commitment in our view. A price iseasy to agree and handle, relatively fair, lessvulnerable to gaming than global cap-andtrade systems, and consistent with climate
policies already in place, such as fossil-fueltaxes and emissions cap-and-trade.
Only a common commitment can lead toa strong treaty. Forty years of empirical andtheoretical literature on cooperation confirmsthat individual commitments do not deliver
strong collective action. Cooperators find that
defectors take advantage of them. Ambition
declines when others are revealed to be freeriding3. Dishes often stack up in the sinks ofshared apartments. But in the Alps, villagers
have successfully managed shared land for
hundreds of years, with a common commitment governing grasslands4.

COMMON COMMITMENTImagine that you and nine other self-interested players (representing countries) takepart in a game. Each player has $10, some or
all of which they may simultaneously pledge
to a common pot. A referee makes sure thatthey honour their pledges. Every dollar (forcarbon dioxide abatement) placed in the pot
will be doubled (by climate benefits) anddistributed evenly to all players. So putting
a dollar in the pot will return 20 cents toeach player.
Consider two variants of the game. First,
in the ‘individual commitment’ version,pledges are made independently. This is
the classic public-goods game, in which therational selfish strategy is to contribute nothing, because this makes a player better off nomatter what the others do. The result is thefamous tragedy of the commons. Cooperation does not occur, even though everyone
would gain from it.
Second, in the ‘common commitment’version, players condition their contributions on others’ pledges: a referee ensuresthat all contribute the amount of the lowest
pledge. After enforcing this common commitment, the money is doubled and distributed evenly, exactly as before.
This changes everything. Pledging$0 will mean simply keeping your $10,
whereas pledging $10 could result in ending up with anything between $10 and$20, depending on what others pledge. So,
because you cannot lose and could gain bypledging $10, that is what you would do,even if you are completely selfish. Since allparties would pledge $10, the group’s $100
is doubled and all end up with the maximum amount of $20.
Selfish behaviour has been changed from‘contribute nothing’ to ‘contribute everything’, because the common commitment

protects against free-riding.
In 1997, the Kyoto negotiators initially
did try to agree a common commitment,
expressed as a formula for national emissions caps, but failed. In the end, each nation
was simply asked to submit their final numbers for insertion into the draft annex5. The
result was a patchwork of weak and unstablecommitments. Similarly, in response to the2009 Copenhagen Accord, China pledged
emissions equal to those considered ‘business as usual’ before the accord; and India
pledged even less.
Enforcement is widely thought to be themissing ingredient in the Kyoto Protocol andcrucial for the success of a Paris agreement.
This is only half right — both enforcement
and a common commitment are required.
For example, if drivers chose their own speed
limits, there would be no use enforcing them,because everyone would drive at their desired
speed. Instead, because it limits others as well,people agree to a common speed limit thatis lower than almost everyone’s individuallimit. In other words, with individual commitments, there is nothing meaningful toenforce, whereas enforcement strengthens acommon commitment.
What could all countries commit to?
National limits on the quantity of emissions
will not work. Kyoto negotiators suggested atleast ten formulae to determine the reductions that each nation should make, but could
not agree. When attention turned to reducing emissions by some
“Harness
percentage relative toself-interest
1990 levels, individualcommitments rangedby aligningfrom an 8% decrease
it with theto a 10% increase.
commonThe United States andgood.”developing countries
made no commitments at all.
Percentage pledges failed because countries differ; for instance, some economies
declined after 1990 and some grew. Developing countries fear caps that curb theirgrowth. Instead they see it as fair to allocate
emission permits on an equal per capita
basis. Because permit sales would result inhuge wealth transfers to poor countries, richcountries find such proposals unacceptable6.
There is no longer any serious discussion of
a common commitment to reduce the quantity of carbon emissions.

GLOBAL CARBON PRICE

We, and others, propose an alternative: aglobal carbon-price commitment7. Eachcountry would commit to place charges oncarbon emissions from fossil-fuel use (bytaxes or cap-and-trade schemes, for example) sufficient to match an agreed global
price, which could be set by voting — by asuper-majority rule that would produce acoalition of the willing.

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A uniform carbon price is widely accepted
as the most cost-effective way to curb emissions. Carbon pricing is flexible, allowing
fossil taxes, cap-and-trade, hybrid schemes
and other national policies to be used (unlikea global carbon tax). All that is required of acountry is that its average carbon price — cost
per unit of greenhouse gas emitted — be atleast as high as the agreed global carbon price.
Unlike global cap-and-trade, carbon
pricing allows countries to keep all carbon
revenues, eliminating the risk of needing tobuy expensive credits from a rival country.
Taxes need not rise if a nation performs agreen tax shift — reducing taxes on goodthings such as employment by charging forpollution. Shifting taxes from good things tobad things could mean there is no net social
cost to pricing carbon, even before counting
climate benefits8.
A global price does not automaticallyresult in acceptable burden sharing. A ‘Green
Climate Fund’ will be needed to transfer
funds from rich to poor countries. To minimize disputes, the objective of climate-fundtransfers should be to maximize the global
price of carbon. This can be implemented
in a way that encourages rich countries tobe generous and poor countries to vote for ahigher global carbon price9, for example, bymaking all climate-fund payments proportional to the agreed carbon price.
After decades of failure, a fresh approachis needed — one that is guided by the scienceof cooperation. A common price commitment would harness self-interest by aligning
it with the common good. Nothing could be
more fundamental. ■David J. C. MacKay is professor ofengineering at the University of Cambridge,
UK. Peter Cramton is professor of economics
at the University of Maryland, College Park,Maryland, USA. Axel Ockenfels is professorof economics at the University of Cologne,
Germany. Steven Stoft is an economist in
Berkeley, California, USA.
e-mail: steven@stoft.com
1. Ad Hoc Working Group on the Durban Platform.
Parties’ Views and Proposals on the Elements fora Draft Negotiating Text ADP.2014.6 (UNFCCC,2014); available at http://go.nature.com/x1fjcd
2. Kraft-Todd, G., Yoeli, E., Bhanot, S. & Rand, D.
et al. Curr. Op. Behav. Sci. 3, 96–101 (2015).
3. Ledyard, J. in The Handbook of Experimental
Economics (eds Kagel, H. & Roth A. E.) 111–194(Princeton Univ. Press, 1995).
4. Ostrom, E. Governing the Commons: The Evolutionof Institutions for Collective Action (CambridgeUniv. Press, 1990).
5. Depledge, J. The Origins of the Kyoto Protocol(UNFCCC, 2000)
6. Stiglitz, J. in Making Globalization Work Ch. 6(Norton, 2006).
7. Cramton, P., Ockenfels, A. & Stoft, S. Econ. Energy
Environ. Policy 4, 1–4 (2015).
8. Bovenberg, A. L. Int. Tax Public Finance 6,
421–443 (1999).
9. Cramton, P. & Stoft, S. Econ. Energy Environ. Policy
http://dx.doi.org/10.5547/2160-5890.1.2.9(2012).