This article discusses the false choice between economic growth and combating climate change.
Toward the end of his landmark paper, “Resources as a Constraint on Growth,” Nordhaus discussed the possible adverse effects of energy consumption, most notably the “greenhouse effect.” From a “rough calculation,” he found that the atmospheric concentration of carbon dioxide would increase by more than forty per cent in the next sixty years. “Although this is below the fateful doubling of CO2 concentration,” he wrote—scientists had already predicted that such a doubling could cause the polar ice caps to melt catastrophically—“it may well be too close for comfort.” He was prescient. We are now dangerously on track to hit his estimate, four hundred and eighty-seven parts per million, by 2030.
In 1992, he created an integrated economic and scientific model that could be used to determine the most efficient ways to cut greenhouse-gas emissions. His work—and that of many other economists who followed his lead—showed that a low tax on carbon, set to rise slowly over time, could be enough to keep emissions at reasonable levels, saving us from climate change at little, if any, cost.