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Nobel Prize in Economic Sciences 2018

The 2018 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to William D. Nordhaus and Paul M. Romer for integrating climate change and technological innovations, respectively, into long-run macroeconomic analysis. In recognition of this award, we present a collection of content from Nature Research that celebrates Nordhaus’ foundational contribution to the field of climate economics.

Early efforts by Nordhaus to integrate a simple representation of the climate and carbon circulation system with a forward-looking economic model helped pave the way for what is now known as integrated assessment modelling. Two models — DICE (Dynamic Integrated model of Climate and the Economy) and RICE (Regional dynamic Integrated model of Climate and the Economy) — developed by Nordhaus in the 1990s remain in use today. His work has led to a wide-ranging debate on the social cost of carbon, how to value the future, the nature of economic damages from climate change, and optimal climate policies. His impact on the field of climate economics continues, as we reflect in this collection of Research, Reviews, News and Commentary from our journals.

Research & Reviews

  • Nature Climate Change | Letter

    Integrated assessment models estimate the impact of climate change on current economic output, but not on its rate of growth. This study modifies a standard integrated assessment model to allow climate change to directly affect gross GDP growth rates. Results show that climate change significantly slows down GDP growth in poor regions but not in rich countries, with implications for the level of near-term mitigation.

    • Frances C. Moore
    •  &  Delavane B. Diaz
  • Nature Climate Change | Review Article

    This Review assesses climate change damage functions, which relate climate variables to economic losses, and how integrated information from impacts, adaptation and vulnerability research could be used to improve estimates of economic risk.

    • Delavane Diaz
    •  &  Frances Moore
  • Nature | Letter

    Economic productivity is shown to peak at an annual average temperature of 13 °C and decline at high temperatures, indicating that climate change is expected to lower global incomes more than 20% by 2100.

    • Marshall Burke
    • , Solomon M. Hsiang
    •  &  Edward Miguel
  • Nature Climate Change | Article

    Most integrated assessment models used to estimate the long-term economic loss from current carbon emissions, and to evaluate climate policy, are deterministic. By including the risk of damage in these models, research now shows that estimates of the optimal rate of emissions abatement and carbon taxation are double the levels obtained by using the standard formulation.

    • Benjamin Crost
    •  &  Christian P. Traeger
  • Nature Climate Change | Article

    Global estimates of the economic impacts of CO2 emissions may obscure regional heterogeneities. A modular framework for estimating the country-level social cost of carbon shows consistently unequal country-level costs.

    • Katharine Ricke
    • , Laurent Drouet
    • , Ken Caldeira
    •  &  Massimo Tavoni
  • Nature Climate Change | Letter

    A newly developed modelling approach reveals how future global climate change might severely dampen economic growth in poorer countries, while increasing the variability of growth in both poorer and richer countries.

    • Derek Lemoine
    •  &  Sarah Kapnick

News & Comment

  • Nature Climate Change | Commentary

    Adaptation and geoengineering responses to climate change should be taken into account when estimating the social cost of carbon.

    • Joseph E. Aldy
  • Nature | News

    Efforts to forecast how Earth's future climate will affect us must consider the economic growth of both rich and poor nations. But there are doubts over the theories being used, as Quirin Schiermeier explains.

    • Quirin Schiermeier
  • Nature Climate Change | Comment

    With country-specific development objectives and constraints, multiple market failures and limited international transfers, carbon prices do not need to be uniform across countries, but must be part of broader policy packages.

    • Chris Bataille
    • , Céline Guivarch
    • , Stephane Hallegatte
    • , Joeri Rogelj
    •  &  Henri Waisman