{"id":1124,"date":"2018-10-17T10:28:36","date_gmt":"2018-10-17T15:28:36","guid":{"rendered":"http:\/\/blogs.edf.org\/markets\/?p=1124"},"modified":"2018-10-17T11:00:42","modified_gmt":"2018-10-17T16:00:42","slug":"and-the-nobel-prize-goes-to-climate-economics","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/markets\/2018\/10\/17\/and-the-nobel-prize-goes-to-climate-economics\/","title":{"rendered":"And the Nobel Prize goes to\u2026 Climate Economics"},"content":{"rendered":"

How newer research is building off Nordhaus\u2019 past contributions<\/em><\/p>\n

\u00c4ntligen! (Swedish\u2014my native tongue\u2014for \u201cFinally!\u201d) Last week, the Royal Swedish Academy of Sciences awarded<\/a> the Nobel Prize in Economic Sciences to William Nordhaus for his pioneering work on \u201cintegrated assessment modeling\u201d (IAM) \u2013 a framework which has made it possible to analyze the interplay between the economy and climate change, and the consequences of climate policies. And while the recognition of Nordhaus\u2019 achievements is an encouraging sign that mainstream economics is starting to recognize the important contributions of environmental economics to the field, it\u2019s critical that economists continue to build on and strengthen the research Nordhaus initiated.<\/p>\n

Nordhaus started his research – in what was to become the now very active and expanding field of climate economics – already in the 1970s. His fundamental contribution<\/a> came in the early 1990s when he introduced his Dynamic Integrated model of Climate and the Economy (DICE), which became the foundational framework for the IAMs used today by the Intergovernmental Panel on Climate Change (IPCC) as well as by an Interagency Working Group to develop estimates of the Social Cost of Greenhouse Gas Emissions<\/a> during the Obama Administration.<\/p>\n

The novelty of DICE was the integration of findings across disparate disciplines including physics, chemistry, and economics to model the link between economic activity and carbon emissions, leading to higher atmospheric carbon concentration and related higher global average temperatures. Furthermore, his model linked this increase in average temperature to economic damages. This integrated framework laid out the principles for estimating the damaging impacts of greenhouse gas emissions (GHGs) on human welfare, and could therefore be used to calculate the social cost of greenhouse gas emissions and to study the consequences of climate policy interventions such as carbon pricing.<\/p>\n

In awarding him the Nobel Prize, The Royal Swedish Academy of Sciences recognized<\/a> Nordhaus\u2019 research as a methodological breakthrough and critical step forward \u2013 but one which does \u201cnot provide final answers.” While DICE, an acronym which nods to the perilous game we\u2019re playing with the planet, laid the groundwork for the development of robust estimates<\/a> of the social cost of GHGs by the Interagency Working Group (which experts agree reflect a lower bound<\/a>), his research has also served to highlight how newer and ongoing research can further strengthen these estimates.<\/p>\n

Such enhancements which further strengthen integrated assessment modeling include:<\/p>\n