Then it was announced that William Nordhaus awarded this year’s prize in economic sciences in memory of Alfred Nobel ”for having integrated climate change into long-term macro-economic analysis” has many outraged. The price has been called ”shameful” and ”a disaster for the climate”.
the main Reason for criticism has been that when Nordhaus himself made calculations to answer the question of what is a good trade-off between economic growth and climate change, so the lands he in accepting a global temperature rise of around 3 degrees Celsius. It is far above the target of 2 degrees celsius as agreed at the climate change conference in Paris and even longer from the 1.5 degrees as the UN’s climate panel, the IPCC recommends in its latest report.
the Answer is of course: no problem at all. On the contrary, many economists (including me) are skeptical about Nordhaus’s conclusions, and within the scientific community, this has been much debated for a long time. The problem lies in how you criticized him, and on what grounds. The arguments in several of the discussion papers that have received the most attention in the Swedish media is directly incorrect and likely to play the climate and vetenskapsskeptiker in the hands.
Many economists (including me) are skeptical about Nordhaus’s conclusions, and within the scientific community, this has been much debated for a long time.
as for the actual price, you must to begin with be clear that the prize is not awarded Nordhaus for his recommendations. He gets the prize for the he since the beginning of the 1970s, created the models, where the economy cannot be considered separately from the climate, but interact with it, models of the economy where planetary limits must be taken into account. His contribution has been important for the international climate change process and is also used by the IPCC when they make their calculations come to completely different conclusions. The award is not at all a person who comes to the conclusion that 3-degree global warming should be tolerated without his contribution in the form of economic models which try to take into account the climate.
There are mainly three types of argument that are problematic in the criticism expressed.
. The problem is said to lie in the actual ”scoring”, or as it is expressed in an article: ”A crucial flaw in [Nordhaus models] …is that many climate damage is irreversible and self-reinforcing, and threatens to destroy the prospects for our civilization. The calculation loses its explanatory power when the environmental cost may be infinite.” ( Haikola with several, SvD, 25/11).
the Argument will join a long tradition of misinterpretation of any attempt to quantify the truly difficult trade-offs. The truth is that for every action taken is made as a calculus of any kind. The advantage of the Nordhaus model is that it is clear what assumptions are made. These should of course be discussed as well as of course, it should be emphasized what is not in the models. But it is something completely different than to say that it is not meaningful to do the calculations at all.
In an article called the ”Nordhaus climate economics teaches that policy either can or should affect the economic and technological development” ( Haikola with several, SvD 25/11), in another that ”[Nordhaus] consistently sought to convince politicians not to act decisively against climate change, because this, in his view, this would risk damaging the economic growth.” ( Metzger (14/10). In the Swedish Radio ”vetandets Värld” 5/12 ” explains Max Jerneck, a researcher at the Misum at the Stockholm school of Economics, Nordhaus ”advocates a tax on carbon dioxide that do not distort the markets in any way…it is just the marknadslösningen advocated.”(Sic!)
These arguments are arcane. Nordhaus whole modellramverk is ultimately about how much the state should intervene in the form of tax on carbon dioxide. In the popular science explanation of the award is: ”The external effects such as the Roma and Nordhaus analyzes the global long-term consequences and without regulation they will lead to that the market is not functioning well. [Their] research indicates clearly that it requires market regulation to get to grips with such positive or negative external effects.” In the Nordhaus case is the negative external effects of emissions and of the second prize-winner Paul Roma case, the realization that research and development may need to be subsidised. Common to both is their strong arguments for the need of political intervention, precisely in order to only market solutions do not work!
As it is expressed in an article: ”[the Model] can also counter with klimatförhandlingarnas starting point that present generations should not compromise the well-being of future generations” ( Haikola with several, SvD 25/11). FT-journalist Brendan Greely asks: ”How much less shall I value my daughter’s life than my own?” ( Financial Times, 17/10)
It all sounds undeniably specious; who wants to be associated with that value their children less than themselves? But it is not true that such a valuation must be made in the Nordhaus model. There is nothing that says you can’t value future generations as much as the living. At this point, economists have for a long time been deeply divided. Nordhaus advocated for a discount rate of 1.5 per cent, which in practical terms means that the outcome of 45 years from today, only be valued at half of the outcomes in the day. One of his main critics, the economist Nicholas Stern, mean that we do not have any reason to value future outcomes less, and puts the figure to 0.1 per cent. In this case, the half-life of 700 years. Both options are possible and illustrates the importance of how one chooses to evaluate the future.
and , of course, all such models are severe simplifications that do not contain all that is relevant. It is both vetenskapssamhällets but also vetenskapsjournalistikens task to try to sort out not just the figure one or the other, the researcher comes up to but, above all, how they arrive at it. What assumptions are made and why, what does it matter, what things are not included in the models?
of Course, are politicians and others who are of the opinion that the two degree target is too ambitious pleased when they can point to support from a laureate. But there is one thing that makes them even happier and it is to be able to tap on a debate within the scientific community in which arguments are brought forward against Nordhaus is that It is too complicated to calculate” and ”Everything is in the end ideologically-biased guesses”. Then they can, like the current US president, sit back and say: ”You see, we don’t know. It can be si, but it can also be so. We’ll have to wait and see.”
