Game Theory and Climate Change Policy

One of the arguments that the Bush government have against the Kyoto Protocol, is that it does not include China & India & that it shouldn't have to restrict its emissions unless China & India also does also ... makes sense, right ??

I've recently read a good book on game theory that gave me some insight on why this policy is a bad idea.

What should US government's objective be ? To have global CO2 emissions reduced at a safe level ... this means that the future of the US (as well as other countries) well being is ensured. The only way we can do this is if every country cooperates.

In this type of "game", the best strategy is to make your first move a positive one. Even if other countries don't initially cooperate. By making the first move negative (which the US is doing by saying, "if you won't reduce your emissions, we won't") it provokes a further negative move ("screw you, we're going to continue to build more Coal stations").

A more positive policy, such as the the EU's policy of reducing CO2 emissions by 20% by 2020 will do very little to stabilize CO2 concentration in the atmosphere on its own, but it gives it a much more credible position when it comes to persuading the Chinese and Indians to follow suit.