Question

Briefly describe the Nordhaus and Stern models of the economics of climate change, how they are similar, and how they differ.

Answer 1

Nordhaus developed DICE model i.e. Dynamic integrated model of climate and the economy and RICE model i.e. regional integrated model of climate and economy. Both models are almost same. It asks for investment in education, capital and technology by reducing current consumption to increase the consumption in future. Hence, Nordhaus worked on initiating sustainable development of an economy.

Stern asked for an immediate action to curb green house gases because it has severe impact on growth and development. It demands international attention towards framework of an action to abolish delay. the report says that cost of improvement of climate are manageable and should be priorities. A climate change policy should be formulated in terms of carbon price, tax.

Both work of Nordhaus and Stern is based on climate change and its improvement. But their modes of action to work on this are different as mentioned above.