Strange How An Economist Won The Nobel Prize For Arguing That We Shouldn't Do "Too Much" To Avert Climate Collapse
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Last week, the United States withdrew from the world’s climate treaty, the United Nations Framework Convention on Climate Change, among other international agreements and organizations that the White House said ran counter to “national interests, security, economic prosperity, or sovereignty.” President Trump and his allies have previously claimed that climate change poses only a minor threat and have cherry-picked economic studies to support that view. In July, for instance, the administration released a report arguing that mainstream economics showed such negligible damages from climate change that any strong policy response was unjustified.
The report relies heavily on the work of the Yale economist William Nordhaus, who pioneered the use of economic models to quantify certain categories of damage caused by climate change. Nordhaus weighed those damages against the potential costs of reducing emissions, to identify what he called the “optimal” global-emissions path. This was groundbreaking work that won him the Nobel Prize in 2018, but his conclusions cut against the goals the world had set out in the Paris Agreement three years earlier: to limit warming to well below 2 degrees Celsius. Because Nordhaus’s model showed relatively modest damages and high costs of avoiding them, it implied that only limited efforts should be taken to reduce warming. The optimal pathway that he presented in his Nobel Prize lecture entails well more than 3 degrees Celsius of warming by 2100, similar to projections of where the world appears headed today.
Although Nordhaus himself has long supported climate policy, in particular a carbon tax, opponents of climate policy have embraced his results as validation of doing nothing at all. Before becoming U.S. secretary of energy, Chris Wright wrote that Nordhaus’s damage estimates show that climate change is “far less urgent” than other societal priorities and that reaching net-zero emissions by 2050, a key goal of the Biden administration, is “neither achievable nor humane.”
At the opposite end of the spectrum, similar economic models are invoked to justify climate action at almost any cost. The Network for Greening the Financial System—a global consortium of central bankers and financial supervisors—had relied on a prominent study showing that climate change could reduce per capita incomes by 20 to 60 percent, compared with a world without climate impacts, by 2100. Events widely regarded as economic catastrophes—wars, financial crises, pandemics—are often shown to cause permanent income losses of single-digit percentage points. That study, by researchers at the Potsdam Institute for Climate Impact Research, was retracted from the journal Nature last year because of methodological errors. (The paper’s authors have said the issues raised were fair, and they are revising the article in hopes of republishing it.) The retraction, however, has largely been treated as an isolated incident, because the study was just one contribution to a growing body of research estimating that large economic damages will come from climate change, as well as disastrous noneconomic effects, including warming-induced deaths. Almost any climate policy appears cheap by comparison.
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https://www.theatlantic.com/science/2026/01/climate-economics/685609/