Nobel Prize for the economics of innovation and climate change stirs controversy

first_img Click to view the privacy policy. Required fields are indicated by an asterisk (*) Nobel Foundation Country * Afghanistan Aland Islands Albania Algeria Andorra Angola Anguilla Antarctica Antigua and Barbuda Argentina Armenia Aruba Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belgium Belize Benin Bermuda Bhutan Bolivia, Plurinational State of Bonaire, Sint Eustatius and Saba Bosnia and Herzegovina Botswana Bouvet Island Brazil British Indian Ocean Territory Brunei Darussalam Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cape Verde Cayman Islands Central African Republic Chad Chile China Christmas Island Cocos (Keeling) Islands Colombia Comoros Congo Congo, the Democratic Republic of the Cook Islands Costa Rica Cote d’Ivoire Croatia Cuba Curaçao Cyprus Czech Republic Denmark Djibouti Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Falkland Islands (Malvinas) Faroe Islands Fiji Finland France French Guiana French Polynesia French Southern Territories Gabon Gambia Georgia Germany Ghana Gibraltar Greece Greenland Grenada Guadeloupe Guatemala Guernsey Guinea Guinea-Bissau Guyana Haiti Heard Island and McDonald Islands Holy See (Vatican City State) Honduras Hungary Iceland India Indonesia Iran, Islamic Republic of Iraq Ireland Isle of Man Israel Italy Jamaica Japan Jersey Jordan Kazakhstan Kenya Kiribati Korea, Democratic People’s Republic of Korea, Republic of Kuwait Kyrgyzstan Lao People’s Democratic Republic Latvia Lebanon Lesotho Liberia Libyan Arab Jamahiriya Liechtenstein Lithuania Luxembourg Macao Macedonia, the former Yugoslav Republic of Madagascar Malawi Malaysia Maldives Mali Malta Martinique Mauritania Mauritius Mayotte Mexico Moldova, Republic of Monaco Mongolia Montenegro Montserrat Morocco Mozambique Myanmar Namibia Nauru Nepal Netherlands New Caledonia New Zealand Nicaragua Niger Nigeria Niue Norfolk Island Norway Oman Pakistan Palestine Panama Papua New Guinea Paraguay Peru Philippines Pitcairn Poland Portugal Qatar Reunion Romania Russian Federation Rwanda Saint Barthélemy Saint Helena, Ascension and Tristan da Cunha Saint Kitts and Nevis Saint Lucia Saint Martin (French part) Saint Pierre and Miquelon Saint Vincent and the Grenadines Samoa San Marino Sao Tome and Principe Saudi Arabia Senegal Serbia Seychelles Sierra Leone Singapore Sint Maarten (Dutch part) Slovakia Slovenia Solomon Islands Somalia South Africa South Georgia and the South Sandwich Islands South Sudan Spain Sri Lanka Sudan Suriname Svalbard and Jan Mayen Swaziland Sweden Switzerland Syrian Arab Republic Taiwan Tajikistan Tanzania, United Republic of Thailand Timor-Leste Togo Tokelau Tonga Trinidad and Tobago Tunisia Turkey Turkmenistan Turks and Caicos Islands Tuvalu Uganda Ukraine United Arab Emirates United Kingdom United States Uruguay Uzbekistan Vanuatu Venezuela, Bolivarian Republic of Vietnam Virgin Islands, British Wallis and Futuna Western Sahara Yemen Zambia Zimbabwe However, some economists objected to the citations because both laureates’ work emphasized growth as the ultimate measure of an economy’s success—an approach they argue has contributed to the climate crisis. “I would say [this prize] is the last hurrah of a certain old guard of the economics profession that want to preserve the idea of growth at all costs,” says Julia Steinberger, an ecological economist at the University of Leeds in the United Kingdom. Email Nobel Prize for the economics of innovation and climate change stirs controversy Sign up for our daily newsletter Get more great content like this delivered right to you! Country It’s entirely possible for humans to reduce carbon emissions. There will be some trade-offs, but once we try we will find that it wasn’t as hard as we thought it would be. Paul Romer, New York University Stern School of Business The 2018 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel By Adrian ChoOct. 8, 2018 , 9:40 PM Often, the awarding of a Nobel Prize triggers a round of carping about who else should have shared in the prize. This year’s prize for economics—officially, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel—has sparked a rarer controversy. Some economists argue one winner’s work is wrongheaded and has compromised humanity’s ability to deal with the existential threat of climate change.Half of this year’s $1 million economics prize honors Paul Romer, 63, an economist at New York University’s Stern School of Business in New York City for his work “integrating technological innovations into long-run macroeconomic analysis.” The other half goes to William Nordhaus, 77, an economist at Yale University, “for integrating climate change into long-run macroeconomic analysis.”The awards came the same day that the United Nations’s Intergovernmental Panel on Climate Change (IPCC) released its latest report, which emphasized the increased environmental damage that will occur if humans do not limit the rise of global average temperatures to 1.5°C, but let it climb 2°C. The IPCC report also says people have about a decade to cut their carbon emissions in half before the lower goal slips away. “I am very, very pleased that somebody working on climate change got the Nobel Prize,” says Katheline Schubert, an environmental economist at the Paris School of Economics. “Certainly, it is well deserved.” In the late 1980s, Romer focused on the economic value of ideas. Until that time, economists had largely treated them as an external, or exogenous, factor in the economy. Instead, Romer asked what economic conditions spawn moneymaking ideas, an effort that came to fruition in 1990 when he published what has become known as endogenous growth theory.In an economy dominated by tech companies such as Apple and Google, investment in ideas and knowledge may seem like a no-brainer, says David Reiner, a political scientist at the University of Cambridge in the United Kingdom, “but in the 1980s and ’90s maybe it was less obviously the fundamental driver of long-term economic growth.” Although abstract, Romer’s theory has had an impact on governments around the globe, Reiner says. Romer himself has also played a role in setting economic policy, serving as chief economist and senior vice president of the World Bank from October 2016 until January.Everybody agrees that in the 1970s, Nordhaus pioneered the economic study of climate change. “He really invented climate economics,” Schubert says. In his integrated assessment model (IAM), Nordhaus explored how economic activity affected carbon emission, how emissions affected the environment, and how the environment then fed back to affect the economy. “Linking economics to the natural sciences is a big breakthrough,” says Dabo Guan, an environmental economist at the University of East Anglia in Norwich, U.K.Nordhaus’s model was relatively crude, but the IPCC relies on four newer, far-more-detailed IAMs to make its predictions about how emissions and the global economy will respond to various policy measures. Crucially, Nordhaus’s work suggested carbon emissions would plummet if governments could place a price on carbon dioxide emissions. The European Union has tried to implement such a scheme in its EU Emissions Trading System.However, this is where some economists object to Nordhaus’s work. The debate underscores a rift between environmental economists on one side and ecological economists on the other. As does Nordhaus, environmental economists apply the tools of mainstream economics to the climate problem, so their models focus on economic growth as the measure of a policy’s success. That approach is problematic, ecological economists say, because it leads to trade-offs to increase growth in the short term on the assumption that it will make it easier to deal with the increased environmental damage in the long term.But, instead of spurring governments to take action against climate change, Nordhaus’s approach has been used to justify putting it off, Steinberger argues. “His kind of analysis has been used to delay, delay, delay,” she says. In 1992 Nordhaus published an analysis in which he identified 3°C as the optimum temperature increase for the growth of capital, although he has since modified that position.Even when carbon pricing has been tried, it hasn’t had much effect, says John Barrett, an ecological economist at the University of Leeds. Referring to the European Union’s emissions trading scheme, Barrett says, “I think it’s fair to say that most people think that’s a disaster.” A better general approach, Barrett says, would be to define the environmental damage that cannot be endured and then, through regulation, shape economic activity to fit within the implied limits. “I’m not against pricing carbon,” he says. “I just see that as part of a more complex picture.”Environmental economists counter that Nordhaus’s work was just a first step toward confronting climate change. “Environmental economists put a big emphasis on a carbon tax, but they don’t say, ‘You don’t need anything else,'” Schubert says. “That would be crazy.”Romer sounded an optimistic note at the press conference announcing the prize. “It’s entirely possible for humans to reduce carbon emissions,” he said. “There will be some trade-offs, but once we try we will find that it wasn’t as hard as we thought it would be.” However, as the IPCC report makes clear, time is running very short.last_img