Last week, former Yale Provost William Nordhaus ’63 GRD ’73 awoke to a strange phone call from a Spanish area code. On the other end of the line was a representative from the Banco Bilbao Vizcaya Argentaria Foundation, who informed the Yale economics professor that he had won the Frontiers of Knowledge Award in Climate Change for his work at the intersection of climate change and economics.
Nordhaus, who some call the “father” of climate change economics, received BBVA’s award for years of work at the intersection of the two fields. Over the pas three decades, Nordhaus developed the DICE and RICE models, which integrate economics, energy use and climate change modeling. Over the last decade, his research has focused on the role of carbon pricing in slowing climate change. The Frontiers of Knowledge Award is the first and only prize created to recognize outstanding achievement in the field of climate change science, BBVA Foundation jury category chair Bjorn Stevens said.
“Economists have long viewed environmental prices or environmental taxes as a way of reducing pollution,” Nordhaus said. “[Climate change economics] is a natural extension of that to climate change. My work over the last decade or more has been to focus on how we might introduce them into the economy.”
Nordhaus’ research explores two potential ways to introduce carbon pricing.
The first, a “cap-and-trade mechanism,” limits companies’ emissions and creates a market in which companies can buy and sell their greenhouse gas emission allowances. The second, which Nordhaus dubbed the “preferred mechanism,” is a tax on emission of carbon, under which revenue is recycled back into the economy.
“[His work is] a groundbreaking contribution to the field,” Stevens said. “It connects carbon to economy to temperature — things that, up until that time, people had thought about generally quite separately.”
Under former U.S. President Jimmy Carter, Nordhaus served on the Council of Economic Advisers, a group comprising three members who advise the president on tax policy and tax reform. Nordhaus told the News that, under Carter, the three advisers worked to deregulate prices on energy and airlines. Before then, those prices were controlled by stringent regulations.
At Yale, Nordhaus has worked to make campus more sustainable. In 2014, University President Peter Salovey announced that Nordhaus would chair the newly formed Presidential Carbon Charge Task Force, which studies the potential impact of carbon pricing at Yale.
The task force ultimately recommended the establishment of a carbon pricing initative on campus. Yale’s Carbon Charge Project has evaluated the impact of carbon pricing on emissions since its formation last July.
Casey Pickett, director of the Carbon Charge Project, said the task force, and Nordhaus in particular, has played an influential role in the community.
“Professor Nordhaus inspired the development of the Yale Carbon Charge through his groundbreaking scholarship and by speaking at Yale about the promise of internal carbon pricing,” Pickett told the News.
Pickett said the carbon pricing initiative has incentivized different parts of the University to reduce energy consumption. However, the impact of the initiative on Yale’s emission levels will not become clear until the University publishes its next report on emissions in 2019.
Climate change is one of eight categories in the BBVA Foundation Frontiers of Knowledge Award.
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