The Nobel prize for economics this year has been awarded to William Nordhaus and Paul Romer for their work on climate and sustainable growth.
The Royal Swedish Academy of Sciences (RSAS) said both the award winners designed methods for addressing “some of our time’s most basic and pressing questions” about how to create long term sustained and sustainable economic growth.
Professor Nordhaus from Yale University was the first person to create an “integrated assessment model”, i.e. a quantitative method that described the global interplay between the economy and the climate.
It is now widely used to simulate how the economy and the climate co-evolve and examine the consequences of climate policy interventions, like the carbon taxes.
Professor Romer from New York University’s Stern School of Business demonstrated how knowledge can function as a driver of long term economic growth and showed “how economic forces govern the willingness of firms” to produce new ideas and innovations.
The duo will receive SEK9 million (£0.75m).
The RSAS said: “The contributions of Paul Romer and William Nordhaus are methodological, providing us with fundamental insights into the causes and consequences of technological innovation and climate change.
“This year’s Laureates do not deliver conclusive answers but their findings have brought us considerably closer to answering the question of how we can achieve sustained and sustainable global economic growth.”
The UN Intergovernmental Panel on Climate Change (IPCC) today urged governments across the world to take “rapid, far-reaching and unprecedented changes in all aspects of society” to avoid catastrophic consequences of global warming.