It is time that we start doing the right things.
-- Paul Romer, Nobel Laureate in Economics
The UN Intergovernmental Panel on Climate Change (IPCC) just released a special report on the predicted impacts of global warming of 1.5 °C above pre-industrial levels. The aim is to emphasize that 1.5 °C is bad, 2 °C is worse, and we must all act now.
Shortly after the release of this urgent news, the award of the 2018 Nobel Memorial Prize in Economic Sciences to the American economists William Nordhaus and Paul Romer was announced.
This one-two punch poses a powerful call to action: maybe the combination of messages can motivate change where the consensus of 97% of global climate change research scientists has failed to achieve action in line with the Paris Accord.
The IPCC special report Global Warming of 1.5 °C starts with good news: a viable pathway to keep average global temperature rise below 1.5 °C is still open to us. But the window for action has narrowed to the next 12 years.
The report is full of the by now well-known predictions of the ecological damage and economic costs of global climate change, and the results of scientific models evaluating the progress that can be achieved if, and when, certain actions are taken. You can read more details in the many reports on the news, but suffice it to say that this combination of hope and gloom will leave most people feeling helpless to effect real changes with their individual behaviors. And given the current state of political support for the Paris Climate Accord, it is hard not to despair.
Announcement of the 2018 Nobel Memorial Prize in Economic Sciences
That's where the work of William Nordhaus and Paul Romer can help. While both great minds have long been expected to be recognized by the Nobel committee, the award to both at once came as a surprise to many. After all, Nordhaus works on how to include the external costs of climate change into macro-economic models while Romer's work addresses the rules of technological change.
Recognizing both Nordhaus and Romer together acknowledges the need to start using the power of the market economy to address unsustainable trends and the increasingly apparent reality that we can only achieve the necessary ends through technological advances, many of which do not yet exist.
Romer joined the press conference by phone and answered questions. While he observed that many of the questions might have been better put to Nordhaus, he gave a formidable performance, demonstrating how the issues of climate change are not far from his main focus either.
Romer pointed out that "once we start to try and reduce carbon emissions, we'll be surprised that it wasn't as hard as we anticipated." He supports this prediction by reflecting on the UN agreements to address substances that were causing an ozone hole, such as chlorofluorocarbons, "there were many people saying this would be enormously expensive and difficult and then once we actually set about reducing emissions of chlorofluorocarbons it was a non-event."
Romer warned against alarmist portrayals that it will make people feel hopeless, but emphasized, "it is time that we start doing the right things" to address the threats of climate change.
It seems likely that this most recent IPCC report will fall on the same deaf ears and face the same arguments that even if we did act now, the costs are too high for the current generation to bear. But we can hope that this year's Nobel Memorial Prize in Economic Sciences will motivate the people who matter: the policy makers and leaders who can use these tools to rally the power of market economics to drive action. There are a lot of individuals willing to join in support if a plan to multiply their single contributions into a global trend can be set.
Nordhaus and Romer show us that good policy for the economy is the same as good policy for promoting the technological advances essential to continued growth of our current economy and the sustainable balances necessary to ensure the future of the global economy and the global environment for the next generations.
