Two Americans won the award for integrating studies on climate change and technological innovations in macroeconomic analysis
William D. Nordhaus and Paul M. Romer have been awarded the Nobel Prize in Economics 2018. The first to integrate climate change into economic analysis by determining the costs and benefits of reducing polluting emissions. And the second to do the same but with technological innovations, explaining what makes an economy innovate and, therefore, grow more than others. “Their findings have significantly broadened the scope of economic analysis by building models that explain how the market economy interacts with nature and knowledge,” said the Swedish academy.
William D. Nordhaus, born in 1941 in Albuquerque (United States), is a professor at Yale University. Its main contribution is to create economic models that also integrate climate change, the damage it causes and the corrective policies that can be used. In Nordhaus’s opinion, economic agents do not pay a price for carbon emissions. So he is in favor of correcting these so-called negative externalities by applying CO2 taxes. And these must be implemented globally, to avoid the free ryder phenomenon, that is, some countries do not fight climate change because others are doing it.
“Governments, companies and households pay practically nothing today,” he said this year when he received the BBVA Frontiers of Knowledge award. Their research allows us to put a price on emissions as we try to do in the European market of CO2 emission rights. If it were to do so, it would invest more in other technologies such as renewables, says the new Nobel laureate.