- Person
- William Nordhaus
- Lived
- b. 1941
- Field
- Climate economics
- From
- American
The story
William Nordhaus was born in Albuquerque, New Mexico, in 1941; his father came from a German Jewish family that had settled in New Mexico in the nineteenth century. A Yale economist from 1967, he began studying energy in the early 1970s. A 1970 MIT report on humanity’s impact on the global environment drew him to global problems, and in 1974 and 1975, at the International Institute for Applied Systems Analysis in Vienna, a climatologist with whom he shared an office encouraged him to think about how economic activity changes the climate.
Nordhaus taught himself climate science and combined an energy model with equations for carbon dioxide emissions and the carbon cycle. The result, published in 1977, was in his words the first integrated assessment model of climate-change economics. Its shadow price on carbon dioxide measured the cost to society of each extra ton of emissions, and Nordhaus explicitly interpreted it as a carbon tax. The idea later resurfaced as the social cost of carbon.
Over the next two decades he built the Dynamic Integrated model of Climate and the Economy, or DICE, published in Science in 1992. It links economic growth to emissions, the carbon cycle, global temperature and the damage that warming does, so that the cost of cutting emissions can be compared with the damage avoided. The Royal Swedish Academy of Sciences noted that his model is now widely used to simulate how the economy and the climate evolve together and to test policies such as carbon taxes.
Governments put the idea into practice. In 2009 and 2010 a U.S. federal working group of six agencies and several White House offices used DICE, together with two other integrated assessment models, FUND and PAGE, to produce the first official U.S. estimates of the social cost of carbon. Agencies used them to count the climate benefits of rules such as energy efficiency standards and the joint fuel economy and tailpipe emissions standards for vehicles. Economists have debated his assumptions, especially about discounting and the risk of catastrophic warming, but nearly all later climate-economy models build on the framework he created.
Nordhaus’s message has stayed the same for decades: emissions harm everyone, and the most effective response is a price on carbon that makes polluters pay for that harm.
Why it matters
Nordhaus’s models gave governments a way to measure the damage from carbon emissions, underpinning carbon taxes, emissions trading and the social cost of carbon used to judge climate and energy policies.
About William Nordhaus
Yale economist who built the first models linking the economy and climate, the basis of carbon pricing and the “social cost of carbon”. Nobel Prize 2018.
Sources
- William D. Nordhaus, Biographical NobelPrize.org
- Popular information: The Prize in Economic Sciences 2018 NobelPrize.org
- Estimating the Social Cost of Carbon for Regulatory Impact Analysis Resources for the Future
- William Nordhaus Wikipedia
Another act of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.