The Nobel economics prize was created by the Swedish central bank "in memory of Alfred Nobel" and first awarded in 1969, unlike the other prizes which were created in his last will and testament and first awarded in 1901. The model doesn't include climate tipping points, which have the capacity to be devastating, and it looks at keeping the climate below 3°C above pre-industrial levels, which we're already in line to hit.
He said he was being honored for his work on carbon tax as a mechanism to reduce global warming.
Responding to news of his award, Romer said it was perfectly possible for global warming to be kept to a maximum of 1.5 degrees centigrade, in line with the latest recommendation of the United Nations intergovernmental panel on climate change.
An assistant professor of economics at Rochester from 1982 to 1988, Romer went on to appointments at the University of Chicago, the University of California at Berkeley, and Stanford University before his appointment at NYU's Stern School of Business.
William Nordhaus has carried out research that shows how economics intersects with physics and chemistry to lead to climate change. They were honoured for integrating climate change and technological innovation into macroeconomic analysis.
Yale University economics professor William Nordhaus, who won the Nobel prize in economics for linking climate change and economics, says there's "pretty widespread acceptance" of climate change science outside the U.S. But he's optimistic that the United States will come around. In the 1990s, he created an integrated assessment model, which is a quantitative model that describes the global relationship between the climate and the economy.
Romer, 62, who has studied why some economies grow faster than others, has produced research that shows how governments can advance innovation. "Humans are capable of incredible accomplishments if we set our minds to it".
Nordhaus has argued that climate change should be considered a "global public good", like public health and worldwide trade, and regulated accordingly, but not through a command-and-control approach. His work is fundamental to endogenous growth theory, which holds that investments in human capital, innovation and knowledge are significant contributors to economic growth.
David Warsh, a blogger who follows economic research and has written a book on Romer's work, said he thought it was no coincidence that the Nobel committee made a decision to honor Nordhaus and Romer at a time of escalating alarm over climate change.
The peace prize was awarded Friday to Denis Mukwege of Congo and Iraqi Nadia Murad for their work in drawing attention to how sexual violence is used as a weapon of war.