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How economics can help mitigate climate change - a critical review and conceptual analysis of economic paradigms


  • Wolf Rogowski
  • Wolfram Elsner


In economic research about climate change mitigation, there is a tension between the objectives to ensure scientific rigor (focusing on orthodox theory) and to illuminate blind spots of relevance (drawing on different "heterodox" theories). Our aim is to develop an economic perspective on climate change mitigation which considers both objectives. We conduct a critical literature review, searching for coherent economic theory lattices, which meet the requirements of research programs, i.e. contain a pre-analytic vision, an analytical core including a concept of rationality, and examples of applications in empirical research. We develop a framework structuring these research programs and associated research fields and search for examples illustrating their applicability to climate change mitigation. We identify several research fields within four major research programs that perceive economic phenomena as (1) individual optimization decisions (neoclassical analysis of efficient and of inefficient equilibria and behavioral economics); (2) a set of institutions (New and Original institutional economics); (3) a complex evolutionary system (Biophysical and Evolutionary economics); and (4) an objective function (which can guide research focusing on the content or the distribution of the normatively defined units of interest). For each research program and its subdivisions, we present theoretical elements and illustrate how they can improve our understanding of how economic activity contributes to climate change and how these impacts can be alleviated. There is a need for more systematic evidence synthesis to validate the contributions of the different economic research fields and to improve their selection and application to climate change.

Suggested Citation

  • Wolf Rogowski & Wolfram Elsner, 2021. "How economics can help mitigate climate change - a critical review and conceptual analysis of economic paradigms," Bremen Papers on Economics & Innovation 2106, University of Bremen, Faculty of Business Studies and Economics.
  • Handle: RePEc:atv:wpaper:2106

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    More about this item


    Climate change; neoclassical economics; behavioral economics; economic heterodoxies; evolutionary economics; institutional economics; objective functions; research programs; policy implications.;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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