STOCKHOLM: US economists William Nordhaus and Paul Romer on Monday shared the 2018 Nobel Economics Prize for constructing “green growth” models that show how innovation and climate policies can be integrated with economic growth.

Working independently, they have addressed “some of our time’s most basic and pressing questions about how we create long-term sustained and sustainable growth”, the Royal Swedish Academy of Sciences said in a statement.

The academy said their models, both developed in the 1990s, have “significantly broadened the scope of economic analysis”.

The prize announcement came as the UN warned in a landmark report that an “unprecedented” transformation of society and the world economy was needed to avoid global climate chaos.

“The policies are lagging very, very far — miles, miles, miles — behind the science and what needs to be done,” Nordhaus, a professor at Yale University, told the Swedish Academy after the prize’s announcement, referring to US president Donald Trump’s withdrawal from the Paris climate accord. “We are actually going backwards in the United States with the disastrous policies of the Trump administration,” the 77-year-old added.

Romer, a former World Bank chief economist now at New York University’s Stern School of Business, said he was confident the world could reduce greenhouse gas emissions and still improve standards of living in the future.

“We can absolutely make substantial progress to protecting the environment, and without giving up the chance for sustained growth,” he said.

“One of the problems with the current situation is that many people think that dealing with protecting the environment will be so costly and so hard that they will ignore the problem and deny it exists,” he said. “I hope the prize will help people see humans are capable of amazing accomplishments when we try to do something.”

Nordhaus was specifically honoured for “integrating climate change into long-run macroeconomic analysis”. His “integrated assessment model” was created in the 1990s and combines theories and empirical results from physics, chemistry and economics.

The 62-year-old Romer meanwhile won the prize for “integrating technological innovations into long-run macroeconomic analysis”.

Complementing Nordhaus’ research, Romer laid the foundation for “endogenous growth theory”, which explains how ideas are different to other goods and require specific conditions to thrive. His research demonstrated how economic forces govern the willingness of companies to produce new ideas and innovations.

Romer resigned from the World Bank in January 2018 after raising questions about how the institution was ranking countries.

Unlike the other Nobel prizes, which were created in Swedish inventor and philanthropist Alfred Nobel’s will and first awarded in 1901, the economics prize was started by the Swedish central bank in 1968 to mark its tricentenary. It was first awarded in 1969.

The economics prize wraps up the 2018 Nobel awards season, notable this year for the lack of a literature prize.

Published in Dawn, October 9th, 2018