Nobel Laureate Nordhaus Sees Cause for Hope In the ‘Spirit of Green’

It’s been almost three years since William Nordhaus became the first economist to win a Nobel Prize for research on climate change. Now the Yale professor, who turns 80 at the end of May, has a new book out with a note of optimism. The Spirit of Green: The Economics of Collisions and Contagions in a Crowded World describes how fields from economics and finance to ethics and chemistry can rise to the challenge of protecting the planet. Even households can do a little to help a lot. A decade in the works, Nordhaus’s book also draws on lessons from the coronavirus pandemic to show what’s needed to save the world from the threat of global warming. He spoke with Bloomberg Markets in early April.

Nobel Laureate Nordhaus Sees Cause for Hope In the ‘Spirit of Green’

What is the “spirit of Green” with a capital G?

The spirit of Green is a way of synthesizing various areas of modern society that relate to spillovers or externalities. The environmental, or green, approach crops up in many areas of our society, but it’s never been clearly conceptualized as a way to think about organizing it.

It took you a decade to write the book. Why so long?

When I began the project, I thought it was relatively simple. But I kept encountering the same basic set of green ideas in different areas. I had no conception that there was a field called green chemistry or green architecture. It’s unlikely that those who do green finance are aware of green chemistry or green ethics. So the book is a way of trying to synthesize a coherent set of thinking about how to manage a good society.

Your book sounds quite upbeat about our ability to tackle climate change.

I’m optimistic about the progress of green ideas and the development of new tools to promote these ideals. We can take an example from the externality of pandemics. If you take the great influenza of 1918 and Covid-19, they’re actually pretty similar in terms of their basic viral impacts. But look at the differences in how we dealt with them. The 1918 flu killed almost 5% of humans. It took decades before we understood that the flu is a virus and longer still to get a vaccine. It’s really quite extraordinary how much better we’ve done with Covid-19. This is a really, really dangerous virus. But if we go back to earlier viruses like the plague or smallpox, they just wiped out whole communities. So part of my optimism is that we’re developing the tools to deal with dangerous collisions and contagions.

Or take the example of global warming. The science is increasingly understood. The impacts are much better known than they were two or three decades ago. We’ve developed the policy tools to slow warming, such as carbon taxes and cap and trade. And we’re beginning to understand better the issues of international climate policy.

Does dealing with the pandemic give us insights into dealing with green challenges?

A solution to pandemics is what I call a best-shot technology. You need to get a few countries who are technologically capable to develop one or more effective and cheap vaccines. So one good shot (or vaccine), and you can slay the virus, just as we have with smallpox.

With climate change, you’ve got to get everybody to act together. It requires the kind of international cooperation that vaccine development doesn’t need.

Tell me about your “no regrets” model and how that could help people and companies make small changes to beat back climate change?

The no regrets approach is truly strange. Here’s an example. Say you live in a cold climate and you set the temperature to 70F in the winter. You could actually turn it down to 69, and you’d hardly notice it. But it turns out you use a lot less fuel and have a much smaller carbon footprint. So it is no regrets in the sense that you can get a big social impact at virtually no cost to yourself.

Do you feel green ideas are gaining ground?

The ideas are getting more acceptance. But realistically, it usually takes at least five years for a new and radical idea to even get a fingerhold.

Nobel Laureate Nordhaus Sees Cause for Hope In the ‘Spirit of Green’

How do you feel the Biden administration is changing the conversation around these issues?

The most important change is that we have sanity back in the White House. We have sane leaders who listen to competent people. They’ve addressed the pandemic with great vigor, and they’ve dealt with the economy very forcefully. Climate change is going to take a little longer. It’s more complicated, and they don’t have the political support for that yet. The Biden team has made ambitious proposals for limiting U.S. emissions, but we’re waiting for the details of how the plan will be implemented. I would emphasize that it’s at the outer limit of what is feasible.

What would you like the reader to draw from your book?

One is we need to recognize that, as we become a more globalized and integrated world, we’re going to have more and more of these collisions and spillovers across and within countries. It’s the nature of our highly integrated technological society that we’re going to have more and more of these bumps and collisions and contagions.

And second, it’s important to recognize that societies have ways to deal with these problems using expertise from different fields, whether it’s taxes or chemistry or finance.

We have to also realize there are some things markets can’t handle effectively. Markets alone won’t slow global warming sufficiently, and we must supplement markets to deal with contagions and collisions like climate change, pandemics, conflict, and the growing mountains of trash in our oceans.

Kennedy is executive editor for Bloomberg Economics in London.

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