William Nordhaus and Paul Romer
Citation: For integrating climate change into long-run macroeconomic analysis (Nordhaus) and for integrating technological innovations into long-run macroeconomic analysis (Romer).
The key idea
Nordhaus: DICE model — economy and climate as a coupled system; price carbon at the social cost. Romer: ideas are non-rivalrous; endogenous-growth theory makes innovation a function of investment in R&D.
The explanation
Nordhaus's DICE/RICE models (1992 onward) coupled an economic model with a climate model to compute the optimal carbon-emission trajectory. He estimated the social cost of carbon at roughly $50-100/tonne. Romer's 1990 endogenous-growth model made ideas the primary driver of long-run growth — and emphasised non-rivalry as the key to increasing returns at scale.
Why Africa should care
Climate is the African issue of the century. Nordhaus's framework underlies every African climate-policy analysis: Kenya's Just Energy Transition, Nigeria's net-zero pledge, the AU's Africa Just Transition Framework. African countries are climate-vulnerable but low-emitting — the equity case for Loss and Damage payments rests on this framework. Romer's endogenous growth theory underpins industrial-policy arguments for African R&D investment, technology transfer, and AfCFTA-driven scale effects.
How to use it
When evaluating an African climate policy, separate adaptation (Nordhaus damages already locked in) from mitigation (Nordhaus carbon-pricing) from technology-transfer (Romer non-rivalry of ideas). Each calls for different international architecture.
Canonical works
- Paul M. Romer (1990) "Endogenous Technological Change" Journal of Political Economy
- William D. Nordhaus (1992) "An Optimal Transition Path for Controlling Greenhouse Gases" Science
- Lint Barrage and William D. Nordhaus (2024) "Policies, Projections, and the Social Cost of Carbon: Results from the DICE-2023 Model"
More from Search, experiments, and climate · 2010-2019
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- 2011Thomas Sargent and Christopher Sims
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- 2012Alvin Roth and Lloyd Shapley
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- 2013Eugene Fama, Lars Peter Hansen, and Robert Shiller
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- 2014Jean Tirole
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