The climate left attacks Nobel laureate William D. Nordhaus

Key Points

• William D. Nordhaus, having received the 2018 Nobel Prize in economics largely in recognition of his integrated assessment model of the science and economics of climate policies, now is under attack from the environmental left, almost certainly because that model does not support the policy preferences of the climate alarmists.
• The alarmists’ assertions about prospective climate phenomena are driven by climate models that have predicted the past and present poorly, under a set of assumptions that are deeply dubious. Those assertions are inconsistent with the evidence, and the alarmists’ policy prescriptions have been based in part on the application of low (or zero) discount rates, on the grounds that such discount rates are appropriate as a tool with which to incorporate the interests of future generations. That premise is incorrect.
• The proponents of the climate “crisis” attack on fossil fuels are driven by an imperative almost entirely ideological. That rather than any reliance on “science” explains why a dedicated scholar like Nordhaus finds himself under attack.

Read the PDF.

Introduction

Having received the 2018 Nobel Prize in economics largely in recognition of his economic analysis of climate policy—in particular the development and application of the Dynamic Integrated Climate-Economy (DICE) model—William D. Nordhaus now is under attack from the environmental left.¹

This emerging criticism of Nordhaus’ analytic framework is curious at a minimum. After all, is it not more study and analysis—more “science”—that the proponents of the “crisis” view of climate policy seek? The short answer to that question: decidedly not.² Nordhaus’ work is careful and detailed. Like any serious body of analysis, it raises more questions than it answers—there is good reason, for example, to question several of the underlying assumptions—and DICE can be criticized on several fronts.³ The same is true for Nordhaus’ policy argument in favor of a carbon tax or other such pricing policies, a policy prescription much more questionable than often asserted.⁴ But Nordhaus’ absolute honesty and rigorous approach to economic analysis are beyond reproach, which is one general reason that he now is under attack even though he favors such policies as the Paris agreement to reduce greenhouse gas (GHG) emissions, with tariffs to be imposed on nations not participating.⁵

For reasons summarized below, Nordhaus’ argument for an international “climate club” enforcing the Paris agreement is unlikely to prove workable.⁶ But that is not the central issue here. Instead, Nordhaus—by no stretch of the imagination a climate policy skeptic—is under attack more centrally

because DICE has not provided answers consistent with the ideological demands of the climate alarmists, and Nordhaus has refused to bend to the political winds. In the DICE model under a wide range of reasonable assumptions, and even under many not plausible, climate policy cannot satisfy a benefit/cost test, and the same is true for the other two major integrated assessment models.⁷

Accordingly, DICE provides no support for the ideological attack on fossil fuels, on the freedom that they facilitate, or for such “net-zero” policies as the Green New Deal.⁸ Notwithstanding the continued references to “science,” it is the bottom line in terms of climate ideology that motivates the environmental left. In that fundamental political context, DICE is worse than useless, which means that Nordhaus stands in the way regardless of his policy arguments.

Read the full report.

Notes

1. For the announcement of the 2018 Nobel Memorial Prize in Economic Sciences, see Nobel Prize, “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2018,” https://www.nobelprize.org/prizes/economic-sciences/2018/summary/. For materials on the Dynamic Integrated Climate-Economy (DICE) model, see William Nordhaus, “Scientific and Economic Background on DICE Models,” February 3, 2020, https://sites.google.com/site/williamdnordhaus/dice-rice. See also William Nordhaus, “Home Page of William D. Nordhaus,” http://www.econ.yale.edu/~nordhaus/homepage/homepage.htm.
2. See Benjamin Zycher, “Earth Day 2020: The Exhaustion of the Climate Left,” RealClearMarkets, April 22, 2020, https://www.realclearmarkets.com/articles/2020/04/22/earth_day_2020_the_exhaustion_of_the_climate_left_489297.html.
3. See Benjamin Zycher, “The Social Cost of Carbon, Greenhouse Gas Policies, and Politicized Benefit/Cost Analysis,” Texas A&M Law Review 6 (2018): 59–76, https://www.aei.org/wp-content/uploads/2019/01/SCC-TAMU-LR-Final-fall-2018.pdf; Kevin D. Dayaratna, Ross McKitrick, and David Kreutzer, “Empirically Constrained Climate Sensitivity and the Social Cost of Carbon,” Climate Change Economics 8, no. 2 (2017), https://www.worldscientific.com/doi/abs/10.1142/S2010007817500063;and Kevin D. Dayaratna and David Kreutzer, “Loaded DICE: An EPA Model Not Ready for the Big Game,” Heritage Foundation, November 21, 2013, https://www.heritage.org/environment/report/loaded-dice-epa-model-not-ready-the-big-game.
4. See Benjamin Zycher, “The Deeply Flawed Conservative Case for a Carbon Tax,” American Enterprise Institute, March 7, 2017, https://www.aei.org/research-products/report/the-deeply-flawed-conservative-case-for-a-carbon-taxconservatives-endorse-the-broken-windows-fallacy-reject-evidence-and-rigor/; and Benjamin Zycher, “Observations on the Alliance for Market Solutions’ ‘Conservative’ Case for a Carbon Tax,” American Enterprise Institute, May 28, 2019, https://www.aei.org/research-products/report/ observations-on-the-alliance-for-market-solutions-conservative-case-for-a-carbon-tax/.
5. See William Nordhaus, “The Climate Club: How to Fix a Failing Global Effort,” Foreign Affairs, May/June 2020, https://www.foreignaffairs.com/articles/united-states/2020-04-10/climate-club.
6. See Benjamin Zycher, “Trump Is Absolutely Correct to Withdraw from the Paris Climate Agreement,” InsideSources, November 12, 2019, https://www.insidesources.com/trump-is-absolutely-correct-to-withdraw-from-the-paris-climate-agreement/.
7. Details of the Climate Framework for Uncertainty, Negotiation, and Distribution (FUND) model can be found at Fund-Model.org, “FUND Model,” http://www.fund-model.org/. For details of the Policy Analysis of the Greenhouse Effect (PAGE) model, see Chris Hope, “The Marginal Impact of CO₂ for PAGE2022: An Integrated Assessment Model Incorporating the IPCC’s Five Reasons for Concern,” Bridging Sciences & Policy 6, no. 1 (2006): 19–56, https://journals.sfu.ca/int_assess/index.php/iaj/article/view/ 227/190.
8. Indur Goklany, “Fossil Fuels, and Human and Environmental Well-Being,” International Conference on Climate Change, March 2017, https://www.researchgate.net/publication/324761275_Fossil_Fuels_and_Human_and_Environmental_Well-Being. See also Zycher, “Earth Day 2020”; Loren E. Lomasky, “Autonomy and Automobility,” Independent Review II, no. 1 (Summer 1997): 5–28, https://www.independent.org/pdf/tir/tir_02_1_lomasky.pdf; and Benjamin Zycher, The Green New Deal: Economics and Policy Analytics, American Enterprise Institute, April 2019, https://www.aei.org/spotlights/the-green-new-deal-economics-and-policy-analytics/.