Nobel 2018: Climate change and technological innovation for a sustainable economy

Nobel 2018: Climate change and technological innovation for a sustainable economy

October 26, 2018

Nobel 2018: Climate change and technological innovation for a sustainable economy

Economists William Nordhaus and Paul Romer were awarded the prestigious prize for economics for their models that take into account the impact of technology and climate change on development.

Nature, climate change and knowledge constantly interact with economic markets and it is possible, if not necessary, to design sustainable development models that can explain such interactions and widen the scope of economic science. And if this was not enough, scarcity of resources is often the core of economic analysis and nature forges different aspects of a country's growth. Also for these reasons the 2018 Nobel Prize for Economics – which, to be precise, should be called Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel – has pointed the spotlight on sustainable development, climate change and technological innovations, by awarding the two economists William D. Nordhaus and Paul M. Romer. The motivation is clear: "for integrating climate change (Nordhaus) and technological innovations (Romer) into long-run macroeconomic analysis”. 

The combination of science and economy

The announcement of the Nobel prize being awarded to William Nordhaus arrives at the same time as the publication of the report of the Intergovernmental Panel of Climate Change (IPCC), the UN agency dedicated to providing objective data on climate change, which warns of the importance of acting immediately to curb global warming. “When you look at the media, not a day goes by without news about climate change and its causes and consequences. This is a sign of how ubiquitous the issue is in our society”, says the US economist, born in 1941 in New Mexico and now lectured at the Department of Economics at the prestigious Yale University. The economist's interest in issues linked to nature and its interaction with society dates back to the 1970s, when scientists around the world started worrying about the constant increase in the use of fossil fuels and their impact on the planet's global warming


In the mid-nineties, Nordhaus was the first to create an integrated assessment model describing the interaction between economy and climate. The strong point of the model? Its ability to combine empiric theories and results derived from a range of different disciplines, including physics, chemistry and economy.  

The need for realism and targeted action 

Today, the model created by Nordhaus is used to better understand the evolving interactions between economy and environment, however, theories on their own are not enough. “I don't like using the term pessimism, but I cannot avoid using realism” says the economist, pointing out to the fact that the efforts made up till now are not sufficient to reach the target of curbing global warming, by keeping temperature rise within 1.5 °C. “And probably not even within 3 °C”. Despite there being no simple solution to the issue of global warming, Nordhaus suggests a number of strategies that could be useful. Firstly, it is essential to raise awareness on the issue, and in this sense, according to the economist, governments are still far behind the scientific community and the population in general. This awareness must be accompanied by targeted interventions, for example, tax on fossil fuels, the introduction of technological innovations, possibly in the terms suggested by the other 2018 Nobel Prize winner for Economics, which relies on technology for an economic system based on sustainable development.

The commitment necessary to combat climate change is one of the items on the agenda of BCFN Foundation's International Forum on Food and Nutrition, which will take place in Milan on 27 and 28 November 2018. 

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