The Nobel Prize in Economics, awarded to William D. Nordhaus and Paul M. Romer, followed a recent report from the Intergovernmental Panel on Climate Change, warning of urgent and dire effects if the world does not limit global warming to below 2 degrees Celsius (3.6 Fahrenheit). Nordhaus advocated carbon pricing and taxation, stating: When I talk to people about how to design a carbon price, I think the model is British Columbia. You raise electricity prizes by $100 a year, but then the government gives back a dividend that lowers internet prices by $100 a year. You’re raising the price of carbon goods but lowering the prices of non-carbon-intensive goods.
Co-laureate Paul Romer stated at a press conference following the announcement: It’s entirely possible for humans to produce less carbon. There will be some tradeoffs, but once we begin to produce fewer carbon emissions we’ll be surprised that it wasn’t as hard as it was anticipated. Romer advocated supporting and encouraging innovation, while at the same time starting with a very low tax on emissions that will rise over time, if required. Outcome? “Innovators will start investing now in ways for people to get what they want without paying the tax. They will stop investing in ways to extract more fossil fuels that will be subject to the tax. Recent pessimistic environmental warnings might be true, but bad news is not always motivating, and can even cause avoidance and apathy. Romer continued: Optimism is part of what helps motivate people attack a hard problem, hoping that the Nobel award “will help everyone see that humans are capable of amazing accomplishments when we set about trying to do something.”
Davenport, Coral. “After Nobel in Economics, William Nordhaus Talks About Who’s Getting Pollution-Tax Ideas Right: A few governments – notably parts of Canada and South Korea – have adapted the the ideas in ways that frame them as a financial windfall for taxpayers.” 13 October 2018. The New York Times.
Nordhaus, William. https://economics.yale.edu/people/william-d-nordhaus
Organization for Economic Cooperation and Development (OECD). “Few countries are pricing carbon high enough to meet climate targets.” 18 September 2018. http://www.oecd.org/tax/few-countries-are-pricing-carbon-high-enough-to-meet-climate-targets.htm.
Rathi, Akshat. “Why the newest Nobel laureate is optimistic about beating climate change.” 8 October 2018. Quartz Media. https://qz.com/1417222/why-new-nobel-laureate-paul-romer-is-optimistic-about-beating-climate-change/.
Romer, Paul. https://paulromer.net/about-paul-romer/
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