June 13, 2012 | Atlanta, GA
Emilson Silva devotes a great deal of thought to games -- not leisure activities such as soccer or Parcheesi, but the complex give-and-take of public policy and economics.
A professor of economics and director of the Ph.D. program in the Ivan Allen College's School of Economics, Silva analyzes the rationale behind the behavior of governments in determining policies that have transboundary effects, that is, policies that affect not only the citizens of a particular jurisdiction, but also the citizens of another jurisdiction.
Silva's research is conducted through the rubric of game theory, which employs mathematical models to describe the ways groups of people interact. The best-known example is the zero-sum game, where one person or group's gain is contingent on another's loss.
Game theory gained traction among economists in the late 1940s, and variations of it have been applied to studies in political science, psychology, and biology.
For Silva's research purposes, game theory provides a framework for studying the strategic considerations that lead entities, primarily governments, to adopt particular sets of policies and regulations. Understanding the rationale behind these decisions within the context of game theory could help policy makers coordinate their actions to convey maximum benefits to the greatest number of people, while minimizing or even eliminating the loss to other participants.
Environmental issues are of special interest to Silva because the tradeoffs involved in this particular policy-development ‘game’ do not produce clearly defined winners and losers.
"The effects of air and water pollution do not respect political boundaries," he said, "so the actions -- or inaction -- of one jurisdiction regarding pollution abatement typically impacts surrounding jurisdictions."
A recent research project examined the objectives of the Kyoto Protocol, designed in 1997 and intended to foster international cooperation toward reducing a number of climate-changing greenhouse gas emissions with specific benchmarks. Despite general agreement on the need to reduce atmospheric levels of carbon and other harmful emissions, the U.S. is conspicuously absent from the list of 190-plus signatories to the complex agreement, which began taking effect in 2005. The reasons behind the U.S. Senate's refusal to ratify the treaty include a claim that meeting the treaty's emissions standards would confer a competitive disadvantage to the U.S. relative to emerging economies elsewhere in the world. In game theory terms, the gains achieved by Kyoto in terms of air quality would be more than offset by the dollar cost of compliance by U.S. industry.
Silva set out to find an alternative to Kyoto that would mitigate American objections while staving off the global-warming threat thought to be caused by certain industrial pollutants. First, he formulated an ‘ideal’ model agreement, meaning a treaty that would maximize the welfare of all nations participating in this protocol. The model was tested with real-world scenarios and numbers, and employed emissions trading and other mechanisms that were defined in Kyoto to help countries lower the costs of meeting their emissions targets.
Silva concluded that under certain ideal conditions, "the Kyoto Protocol is actually a very efficient protocol that maximizes global welfare in terms of reducing greenhouse gases and industrial emissions."
But the more pressing issue, at least for the U.S., was how to reduce harmful emissions without sacrificing competitiveness, since any cooperative agreement by its very nature is anti-competitive at some level.
"Realistically speaking it's very hard to coordinate a global environmental agreement," noted Silva. Instead, he proposed a series of bilateral or regional pacts. "It might be much easier to enact smaller agreements involving fewer countries," he explained. "These countries would be parties to more than one agreement, so there could be some overlap on critical issues. In this way, all countries would be connected at least indirectly to a shared set of objectives. In principle, you could achieve the same outcome as you would with a large global agreement."
Silva illustrates his approach with the example of the 1991 treaty between the U.S. and Canada to limit the sulfur emissions that produce acid rain. Canada and several European countries, including France, signed a similar agreement among themselves six years earlier. More recently, Canada has been pursuing a carbon emission-limiting treaty with France. If such an accord can be implemented, "the U.S. is then indirectly connected to France via Canada," he said. While the original agreements were negotiated to maximize the benefits to each of the participants in a specific realm, each now derives a benefit from the others' pollution-control efforts and has an economic stake in their prosperity. Countries would continue to act in their own self-interest, but with those interests more narrowly defined, there is a greater likelihood that areas of cooperation or common benefit will be found. In other words, the scenario Silva sketched out could improve the odds of U.S. participation in some kind of cap-and-trade system. Overlapping agreements provide a diplomatic foot in the door for policy coordination on other issues as well.
The global perspective that Silva brings to his economics classes is an important component of a Georgia Tech education. "There is a trend toward globalization in many fields, and my research tends to fit squarely within global issues," he said. "I think in terms of ways we can improve the well-being of individuals not only in the West, but across the globe. So I'm looking for innovative ways in which multinational companies and governments can develop policies that improve the welfare of the whole world."
Silva's research not only features a wide geographic range, it reaches across disciplines as well. He works with colleagues in the School of Earth and Atmospheric Sciences on the nuts-and-bolts of emerging pollution-abatement technologies such as carbon capture. He also consults with public policy experts in the School of Public Policy.
"Their input is valuable because they tend to be pragmatic and focus on specific issues," he said, "so I learn from them as well."