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Sciences Updated: 08 Oct 2018

William Nordhaus and Paul Romer win Nobel Prize in Economic Sciences 2018, for finding answers to the challenges of our time

The Royal Swedish Academy of Science has awarded the Nobel Prize in Economic Sciences 2018 to U.S. Scientists William D. Nordhaus and Paul M. Romer in Economic Sciences. Nordhaus, who earlier this year won the BBVA Foundation Frontiers of Knowledge Award in Climate Change, has developed the first model capable of integrating economic and environmental data to identify the most efficient policies against global warming. Romer has pioneered the use of technology in macroeconomic research.

William Dawbney Nordhaus is an economist and Sterling Professor of Economics at Yale University and has been awarded the Nobel Prize in Economic Sciences 2018 for the development of an economic model capable of gauging the impact of climate change. The two laureates “have developed methods that respond to challenges among the most fundamental and pressing of our time: to combine long-term sustainable growth of the global economy and well-being of the population of the planet,” said the royal Swedish Academy of sciences.

Earlier this year, the BBVA Foundation awarded him the Frontiers of Knowledge Award on climate change, recognizing his standing as father of climate change economics by “pioneering a framework that integrates climate science, technology and economics to address the critical question: What should the world do to limit climate change?”

Nordhaus began studying the economic impact of climate change in 1975, just as climate scientists were issuing their first, tentative warnings about a rise in global temperatures due to greenhouse gas emissions caused by the burning of fossil fuels. Due to the complexity of the challenge, it took him over fifteen years to develop his model. By then an active community of climate researchers was already in existence, but the climate change issue had yet to garner the attention of economists.

Today, Nordhaus’s DICE (Dynamic Integrated Climate-Economy) modelo, and its regional variant RICE, have become tools that are “widely used” worldwide, to estimate the costs and benefits of curbing emissions.

William Nordhaus, winner of the BBVA Foundation Frontiers of Knowledge Award in Climate Change.

Setting the price for carbon in response to climate change

For Nordhaus, the crux of the matter is to set a realistic price on carbon. This, in his opinion, is the right way to go about limiting climate change: “The main recipe to alleviate climate change is to make sure governments, corporations and households face a high price on their carbon emissions. Today it is virtually zero. If the price were higher people would have other choices, like renewable energies.”

Nordhaus has his reservations about the effectiveness of the Paris Agreement: “For a start, the price put on carbon emissions is far too low, I would guess just 10% of what is needed right now if we want to curb emissions. The Paris effort is worthwhile, because it is a good thing to bring countries together, but is much too little to reach the goal of reducing emissions to contain temperature rises at under 2ºC.”

Allison wins Nobel Prize in Medicine

A few days ago, another BBVA Frontiers of Knowledge awardee, James P. Allison, was announced winner of the Nobel Prize in Medicine 2018 for his pivotal research in the development of new therapies against cancer.

One of Allison’s (Texas, 1948) main studies, as the award’s citation notes, focused on a protein that had been identified as a restraint on the immune system. He realized the potential of releasing the brake and thereby unleashing our immune cells to attack tumors and developed a brand new approach for treating patients.