But adopting the regulatory frameworks on a global scale has proved problematic, and the world's political leaders are failing to meet it, the head of the United Nations said last month.
The prize, which is officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, is financed by Royal Bank of Sweden and has been awarded for the 50th time, with 79 individuals winning it from 1969 to 2017.
Nordhaus is a professor at Yale University, who is most famous for his DICE computer model, . which integrates climate and economic models. and has proved many policymakers wrong about the true impact of global warming. Known as the Dynamic Integrated Climate-Economy (DICE) model, it built on traditional growth theory but added fossil fuels into the mix. Economic models he has developed since the 1990s are now widely used to weigh the costs and benefits of curbing greenhouse gas emissions against those of inaction. "Without him, there wouldn't be such a subject of climate economics".
Paul Romer of the Stern School of Business at New York University is being recognized "for integrating technological innovations into long-run macroeconomic analysis". His economic simulations show various scenarios where carbon taxes are implemented worldwide. The model has been used by the Environmental Protection Agency and the Intergovernmental Panel on Climate Change, an worldwide group of scientists who assess the global effects of climate change. Nordhaus has refined multiple iterations of his model.
Romer said that a lot of people ignore climate change as they are under the impression that protecting the environment may be too costly.
Romer was born in Denver, Colorado.
"'I didn't ever want it, but, yeah, I'll accept!'" he recalled replying at a separate news conference later at New York University.
Nordhaus was born in Albuquerque, New Mexico.
The Nobel prize in economics was awarded Monday to one American who has studied the economics of climate change - and to another whose research on technological innovation has raised hopes that human beings are creative enough to do something about it. A total of 81 laureates have been named over the prize's 50 year history. An additional seven former MIT faculty have won the Nobel Prize in economic sciences. He was awarded the prize in economic sciences in 2007 when he was 90 years old.