Talking a Lot,Yet Little to Say: Economics Imperialism in the Economics of Climate Change

Abstract

Mainstream economics is ill equipped to deal with systemic issues such as the climate crisis. Yet there is no shortage of approaches that extend neoclassical principles to nature-economy relations, and they hold considerable currency in policy discourses. This article interrogates neoclassical thought on climate change from the perspective of economics imperialism, the expansion of economic analysis onto new subject matter at the expense of other approaches. Drawing on the work of William Nordhaus and Nicholas Stern, I argue that climate change economics has been underpinned by economics imperialism in its second “market imperfection” and third “suspension” phases. Economics imperialism has thus contributed to excluding considerations of power, race, class, gender, and other systemic inequalities from the field, and underpins solutions that delay radical climate action.

JEL Classification: B41, B50, Q50, Q54

1. Introduction

The world is staring into a climate abyss. 2024 was the hottest year on record, having surpassed the Paris Agreements’ target of 1.5 degrees Celsius above pre-industrial levels. Death and destruction from climate and environmental crisis are wreaking havoc everywhere, if unevenly. Scientists are finding the climate to be in such a critical and unpredictable state that they are engaging with the possibility of societal collapse (Ripple et al. 2024). Although rapid fossil fuel phase-out has never been more urgent, oil and gas expansion is booming, leading researchers to argue that we are witnessing an energy addition, not an energy transition (York and Bell 2019). And climate policy is unlikely to offer respite anytime soon: a systematic evaluation of 1500 climate policies implemented over the last 25 years found that less than 5 percent effectively reduced emissions (Stechemesser et al. 2024). The clearer the science on climate and environment becomes, the less likely it seems that its recommendations will be followed.

As distressing as this is, the contradiction between what science demands and what capitalism delivers is hardly surprising. Capitalism has always survived on the accumulation and exploitation of new and different (environmental) resources (Moore 2014), and so it makes sense that environmental problems deepen even as the world has woken up to the climate crisis. Under capitalism, environmental crises—of which climate change is but one—are systemic; they are deeply embedded in its structures, agencies, processes, and relations. But while this is well acknowledged in political economy, analysis of the systemic nature of environmental crises is absent from mainstream economic analysis in all but token form. ¹ Critics of neoclassical environmental thought have long pointed out that it relies on limiting assumptions and mathematical methods at the expense of realism (Bakker 2010; Buller 2022; Keen 2021; Spash and Ryan 2012). This is especially true for mainstream economic analysis of climate change and its flagship analytical tools, the Integrated Assessment Models (IAMs). In this article, I propose that the poverty of mainstream thought on climate change is a reflection of economics imperialism, the tendency of economics inappropriately to engage new fields of analysis. ²

Extending the critical analysis of the economics of climate change to economics imperialism highlights that its problems extend beyond just environmental topics, for they are woven into the fabric of economics itself. Economics imperialism is a well-documented phenomenon across various fields of economic thought such as the new institutional economics, economic sociology, behavioral economics, development economics, education, and more (Allais 2012; Fine 2002, 2024a, 2024b, 2024c, Fine and Milonakis 2009; Lazear 2000; Perry-Kessaris 2011). Given its strength across these and more fields, it is surprising that just two studies connect economics imperialism as an explicit theoretical framing to neoclassical environmental thought. One is a discussion of economics imperialism in the case of ecosystem services research (Thorén and Stålhammar 2018). The other is my own research into economics imperialism and natural capital (Heisse 2025a, 2025b). To my knowledge, analysis of economics imperialism has not yet been extended to climate change economics even though IAMs have been extremely influential in policy debates.

To address this gap, I explore the connection between the economics of climate change, on the one hand, and economics imperialism as a defining characteristic of mainstream economics, on the other. I propose that the poverty of IAMs is both a symptom and a consequence of economics imperialism, with ramifications beyond the academy. Section 2 lays out the cornerstones of economics imperialism as a conceptual framework. Section 3 shows that economics imperialism was instrumental in forming IAMs, specifically through Nordhaus’s influential Dynamic Integrated Climate-Economy model (DICE). Section 4 turns to the way in which mainstream climate economists are grappling with the (now well established) shortcomings of IAMs, arguing that once again, economics imperialism is leading the way in the field’s further evolution. Section 5 looks beyond IAMs to identify commonalities for economics imperialism in climate change economics and the economics of biodiversity. Section 6 concludes with an outlook on how economics imperialism has come to inform non-academic discourses and applications through the economics of climate change.

2. Economics Imperialism and Why It matters

Economics imperialism refers to the tendency of orthodox economics to bring theoretical, analytical, or subject matter from other disciplines into its own frames of analysis (Fine 2002, 2019). Irrespective of where this subject matter stems from, its (re-)incorporation into economics typically takes place on the analytical and conceptual terms of the mainstream. Although economics imperialism has been a defining feature of orthodox economics and its offshoots during at least the last half century, there is disagreement about its scale, scope, and direction for at least some of that period. For some, economics imperialism was merely a feature of Chicago-style neoclassical economics of the last century (Nik-Khah and Van Horn 2012). Similarly, Ambrosino et al. (2024) take the position that economics imperialism was once a defining feature of mainstream economics but that the tables have since turned, with economics now being taken over by a plurality of other influences (a position I debate in Heisse 2025b). That each of these accounts agrees that economics imperialism ruled strong in the 1970s and 1980s is to be expected; back then, several mainstream economists themselves clearly denoted what they do as economics imperialism (Swedberg 1990; Lazear 2000). But the idea that economics imperialism is no longer a defining feature of the mainstream is debatable with significant evidence to the contrary. I side with the position of Fine, who takes economics imperialism as an ongoing phenomenon and who, over the course of several decades, has published prolifically on the topic. His most important articles on economics imperialism were recently republished in a series of five edited volumes (Fine 2024a, 2024b, 2024c, 2025a, 2025b). Based on these works, I now briefly summarize the defining characteristics of economics imperialism as a conceptual framework for interrogating the economics of climate change.

At the core of economics imperialism is what Fine terms its “historical logic.” The formalist and marginalist revolutions stripped most of the social, ecological, and otherwise complicating factors away from political economy, leaving neoclassical economics with an oversimplified theoretical architecture and apparatus (TA²). ³ Economics was not always TA², it was made to be this way by discarding anything that did not fit the bill of seemingly elegant mathematics at a time when mathematical modeling was emerging as the method of choice. Achieving this came at the expense of realistic assumptions, by first focusing on the characteristics of demand and supply functions (the Hicks-Slutsky-Samuelson conditions), and later, aggregating an equilibrium out of the individual agents to model the macroeconomy (Arrow and Debreu). As Fine (2024c: 189) explains:

I call the process an implosion—for it involved making whatever assumptions are necessary to be able to derive meaningful results, assumptions such as fixed individuals, preferences, endowments, technologies, single motivation, fixed goods, etc., even technical assumptions within its frame such as no externalities, increasing returns, concavities, and imperfect competition.. . . Theoretically, we do whatever is necessary to get what we want.

The result—still taught as Econ 101 in mainstream departments around the globe—is a bare-minimum conceptual apparatus in which economic agents float freely of any context, historical or otherwise. But precisely because of their abstract and idealized setup, neoclassical models have proven extremely versatile for new and different contexts, and this is the historical logic. Simply put, the term “historical” refers to the conceptual shrinking of economics throughout the formalist and marginalist revolutions, “a historical confinement of economics to the market” (Fine 2024c: 191). The term “logic” refers to the fact that this set up neoclassical economics in a way that is easily applied to all sorts of “universal, not market-confined conceptualizations and potential application” (Fine 2024c: 191). Economists wishing to explain social phenomena simply bring back in (BBI) what had been taken out, incorporating new subject matter based on neoclassical terms of reference. This dynamic is the bread and butter of economics imperialism.

Of course, other fields, too, have a tendency for disciplinary expansion; take for example Marxism’s increasing interest in environmental issues beyond Marx’s own engagement with ecological themes. However, this typically involves a broadening of the discipline onto new subject matter in a way that is broadly consistent with the discipline’s core remit and not generally at odds with its new object of inquiry. For economics, the opposite is true; its core theoretical and methodological setup is ill suited to studying even its own original remit, “the economy.” Even if one subscribes to the notorious Robbins definition of economics as resource allocation, the problem remains that a neoclassical architecture cannot seriously engage with political, power, historical, or otherwise systemic dimensions of that resource allocation process. The expansion of economics is therefore imperialist in the sense that it is not an act of intellectual strength, advancement, or even exchange, but rather akin to an illegitimate takeover by an already flawed framework bringing fundamental inadequacies into new contexts. ⁴

From this, Fine contends that economics imperialism unfolded in three phases. The first phase or “old” economics imperialism began in the late 1950s and held sway until the 1980s and 1990s. It applied economic models, especially rational choice and utility maximization, to non-economic subject matter as if the market was perfect; Gary Becker’s household economics comes to mind as an illustrative example, modeling the unequal and gendered division of household labor as the outcome of individual optimizations. Then, as economic theory moved on from the perfect market to imperfection economics so did economics imperialism. Its second phase, or “new” economics imperialism, saw economics expand onto new subject matter by invoking market imperfections, especially information asymmetries. There are countless examples of economics imperialism from this phase, ranging from the new institutional economics, over the new economic sociology, to the economics of climate change, and of biodiversity (section 5). Third came a “newer” phase of economics imperialism, which is ongoing and characterized by the suspension of economic principles and assumptions which are implicitly retained as a theoretical point of departure even where they are dropped for the sake of modeling. Bounded rationality and its applications in behavioral economics come to mind as examples, where the perfectly rational agent is retained as an idealized (if unobtainable) conceptual point of departure, and realism is added to this model through the suspension of perfect rationality and other assumptions. Crucially, economics imperialism has become harder to spot in this third phase compared to before, because it presents as having left the most unrealistic constraints of neoclassicism behind, despite retaining the same individualistic and ahistorical tenets as its point of departure (Fine and Milonakis 2009; Stein et al. 2021). New fields of economics may appear as if they are taking the shortcomings of neoclassicism seriously, while explicitly or implicitly retaining its assumptions. ⁵

This has allowed economics to branch out into ever more different and specialist subfields, not least in response to the pressures of neoliberal academia to publish or perish. This trend was reinforced in its third phase, which has coincided with a general trend toward interdisciplinarity in the social sciences. Paradoxically, however, this outward proliferation of economic fields through economics imperialism came with a marked decline in scholarship debating the phenomenon. During the first and second phases, economics imperialism was openly acknowledged both by those engaging in it and their critical commentators, but interest in the phenomenon plummeted after a spike in the early 2010s. Fine (2024a) refers to this as a “watershed,” after which economics imperialism flourished but became mostly overlooked as such. In part, this explains why recent developments in environmental economics (for the climate or otherwise) have not yet been analyzed from the perspective of economics imperialism.

3. DICE and Economics Imperialism as a Foundation for Climate Change Economics

As a starting point for analyzing economics imperialism in climate change economics, it is worth revisiting the late 1980s and early 1990s, when the economics of climate change and the economics of biodiversity emerged as twin research programs in response to the twin challenges of the climate and biodiversity crises (section 5 for a comparative account). Now an established field of inquiry, the economics of climate change was pioneered by William Nordhaus in the early 1990s and taken up in the United Kingdom by Nicholas Stern and colleagues from the mid-2000s onwards. It is a highly specialized and niche subfield dealing with questions of the compatibility between economic growth and global warming, of identifying “optimal” emissions (reductions) paths, and of containing greenhouse gas emissions through carbon pricing mechanisms. At its core are IAMs, macroeconomic models that calculate the impact that climate change is set to have on Gross Domestic Product (GDP).

Nordhaus’s DICE is one of the earliest and most influential IAMs. He proposed it in its basic form in 1992, drawing on his earlier work in cost-benefit analysis and climate change (Nordhaus 1977, 1992). DICE links climate-economy interactions by integrating an aggregated general equilibrium model of the global economy with climate-related functions and parameters for a simplified depiction of the global carbon cycle. ⁶ Nordhaus built the model based on the Ramsey optimal growth model, a standard neoclassical general equilibrium model of the macroeconomy. Simply put, DICE augments Ramsey’s model by adding a series of functions to link economy and climate change: an abatement function to estimate the costs of climate mitigation and adaptation, a damage function for the costs inflicted by global warming on GDP, and a suite of additional equations to model rising emissions from economic activity. This relationship between warming temperatures and GDP growth is mediated via parameters of emissions, climate policy, consumption, population, productivity, social utility, discount rates, and more. The ultimate output of DICE and other IAMs is to calculate the social cost of carbon, a monetary estimate of the GDP loss incurred by emitting one additional (i.e., marginal) ton of carbon dioxide or equivalent greenhouse gases into the atmosphere (Carbon Brief 2017). This allows modelers to compare policy scenarios and to analyze the costs and benefits of different emissions pathways in terms of (damage to) GDP growth.

Even in this short and simplified introduction to DICE, one does not have to look far to spot economics imperialism. Incorporating atmospheric warming (i.e., a phenomenon previously studied in the natural sciences) into a neoclassical general equilibrium model via simplified parameters is a textbook example of BBI into TA². That it made sense for Nordhaus to do so as he did, when he did, is testament to the historical logic of economics imperialism. Both the Ramsey model and cost-benefit analysis had been around for decades, and Nordhaus and others had done preliminary work on climate change and economics as early as the 1970s. But the late 1980s and early 1990s saw a heightened interest in climate change and environmental sustainability as a policy issue, evident for example in the 1987 “Brundtland Report,” (World Commission on Environment and Development 1987), the 1992 Rio Summit, and the first “Conference of Parties” Climate Change negotiations in Berlin in 1995. This came with increasing interest in environmental issues including among economists, and with policy demand for models and discourses that could bring the economy together with the environment. ⁷ Economics’ newfound love for market imperfections then offered an easy segway for BBI of climate change into neoclassical analysis, as exemplified by the work of Nordhaus and others.

As is typical for economics imperialism, the integration of climate science and neoclassical economics took place on the theoretical and analytical premises of neoclassical economics. IAMs take markets and equilibrium as the overarching analytical structure, and prices as the signals through which climate and economy interact. ⁸ DICE conceptualizes climate impacts in terms of costs to GDP (and, thus, to welfare). There is no denying that climate change inflicts economic costs both for mitigation and adaptation; however, taking a dent in GDP as the main or most important lens through which to study such an existential crisis as that posed by climate change remains extremely limiting. It eclipses the myriads of other ways that climate impacts could reasonably be framed: in moral terms, in biophysical terms, in existential terms (as seen in the popular activist slogan that there is “no profit on a dead planet),” in terms of limits to growth, and in terms of the intrinsic value and rights of nature, to name just a few. By analyzing climate-economy relations through market and price mechanisms alone, DICE takes rising temperatures not as a systemic feature of capitalist relations, but as an unintended by-product of economic activity, floating free of systemic entanglements with the economic, social, distribution, power, and historical contingencies—a mere externality. This ahistorical and nonsystemic understanding has severe ramifications for the results presented by IAMs.

The main problem is that IAMs seriously misrepresent the scientific consensus on climate change, with their results depending heavily on the models’—often unrealistic and arbitrary—assumptions (e.g., Asefi-Najafabady et al. 2021; DeCanio 2003; Grubb et al. 2021; Keen 2021; Malm and Carton 2024; Pissarskoi 2019; Weitzman 2009). ⁹ Remember that because of its reliance on TA², economics simulates an idealized abstract model world into which any new subject matter can only be incorporated in token form. Atmospheric warming (as a biophysical phenomenon) and the relationship between capitalism and the climate crisis (as a systemic crisis) each have their own logic, idiosyncratic features, and contradictions. Incorporating these features into a general equilibrium framework comes with extreme sacrifices regarding both the environmental and the economic, with economics imperialism doing the heavy lifting to make it all fit, however uncomfortably. I now draw on some of the many excellent critiques to IAMs to have come out of the heterodoxy in recent years to illustrate this point.

One of the most staggering oversights of DICE is its disregard for climate tipping points, which would have extreme and hard-to-predict effects on atmospheric and social systems if crossed. The existence of tipping points represents a fundamental problem for equilibrium-based models such as DICE, because equilibrium-based models are ill suited to analyze uncertain and unstable phenomena, as critics have explained in detail (DeCanio 2003; Keen 2021). DICE assumes a quadratic damage function for estimating the impact that climate change has on GDP, which seriously underplays the devastating impact that warming temperatures will likely have if tipping points are triggered. As a result, “costs from climate change and ecological breakdown tend to be radically underestimated” in IAMs (Asefi-Najafabady et al. 2021: 1184).

But a functional form that disregards the existence of tipping points is not the only example of economics imperialism giving neoclassical principles primacy over scientific facts. Keen (2021) presents compelling evidence that the data on which IAMs build, too, are seriously flawed: first, because it extrapolates a specific temperature GDP relationship measured at the level of US states to apply universally, entirely disregarding the importance of geography in determining climate impact (the same can be said for time); second, because DICE draws to a large extent on surveys of expert opinions which likely contain bias over simply adhering to the findings of climate science. The oversimplification is reinforced by the model’s flagship output, consisting of just two headline figures—a temperature of global warming on the one hand, and a concomitant rate of GDP growth, on the other. Again, this oversimplification of complexity from other disciplines is typical of economics imperialism. While all science requires abstraction, the reduction in complexity typical of economics imperialism is problematic in that it systematically prioritizes analytical tractability within the extant architecture of mainstream economics at the expense of critical scientific facts (such as tipping points) and social relations (such as power structures, historical contingencies, and so on). ¹⁰

But it is not just the ecological that gets lost in IAMs, the economics, too, is seriously flawed. By relying on representative agents, rational expectations, aggregation, and an arbitrary choice of key measures such as the discount rate, IAMs create a sanitized fantasy land that has little relevance to actual economies, let alone the global. For example, “new technologies in IAMs simply appear (at a given rate) and impact the entire production composite instantly and uniquely. Moreover, it is only through technology that the system moves forward” (Asefi-Najafabady et al. 2021: 1184). And with serious implications, in a fascinating analysis of the history of the climate crisis, Malm and Carton (2024) suggest that the evolution and deployment of IAMs (beyond just DICE!) has been integral to legitimizing the idea of climate “overshoot,” the acceptance of exceeding climate targets based on a speculative promise of future technological fixes.

But the problems do not stop with modeling, the data on which DICE builds is equally as unrealistic. A particularly absurd assumption of early DICE models is that 87 percent of industrial activity is assumed to be exempt from climate impacts because it takes place indoors or is otherwise unaffected. Keen (2021: 1186) thus concludes that “it does not matter how good or how bad the actual model is, when it is fed ‘data’ like that concocted by Nordhaus and the like-minded Neoclassical economists who followed him.” That these are highly problematic assumptions is well established in heterodox commentary on climate change economics but mostly overlooked in mainstream analysis. If at all, the lack of realism inherent in economic modeling and data is acknowledged but then accepted as a necessary evil, a Faustian bargain readily accepted to be able to provide “economic” analysis on the subject in question (with recent exceptions, see section 4).

That DICE and other IAMs proved to be hugely successful despite seriously lacking in academic rigor for both the ecological and the economic is instructive for the institutional dynamics that keep economics imperialism alive. After all, DICE pioneered a whole suite of different IAMs which continue to be used as a basis for economic calculations by governments worldwide, including for the economic reporting included in the Intergovernmental Panel on Climate Change’s reports. Keen (2021: 1169) points to the importance of peer review in upholding the construct:

As any published academic knows, once you are published in an area, journal editors will nominate you as a referee for that area. . . . As one of the first of the very few Neoclassical economists to work on climate change, and the first to proffer empirical estimates of the damages to the economy from climate change, this put Nordhaus in the position to both frame the debate, and to play the role of gatekeeper.

Indeed, economics imperialism is bolstered by gatekeeping. Because orthodox thinkers tend to stay among their own, and radical critiques are marginalized from mainstream journals, the mainstream engages with criticism on its own timeline, its own premises, and through more and not less imperialist economics. To illustrate this point, I now turn to recent discussions on the shortcomings of IAMs found in mainstream economics of climate change.

4. IAMs Are Dead—Long Live IAMs!

Up until this point, the discussion focused on economics imperialism in the basic features of (early) IAMs and the fundamental criticisms deriving from heterodoxy. But neoclassical climate economics has not been immune to the shortcomings of IAMs, especially since worsening climate change called into question their endorsement of extremely high warming temperatures as socially optimal. This led leading climate economists, including Nordhaus himself as well as Nicholas Stern and colleagues, to admit to the problems inherent to IAMs.

Nordhaus (2018: 452), when awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for his contributions to the economics of climate change, stated in his acceptance lecture that:

In the DICE model, it is essentially infeasible to attain the stringent temperature target of 1.5°C.. . . Another finding, much more controversial, is that the cost-benefit optimum rises to over 3°C. in 2100—much higher than the international policy targets. Even with the much more pessimistic alternative damage function, the temperature path rises to 3°C. in 2100.

Stern et al. (2022), who also discuss the passage just quoted, take the position that standard climate models are inadequate when confronted with the extreme risk, uncertainty, urgency, and ethical changes thrown up by climate change today. The authors concede that standard models have had alarmingly little to offer when it comes to addressing questions of climate policy:

We conclude. . . that the IAMs have very limited value in answering [the most critical questions about climate change policy today]. They fail to provide much in the way of useful guidance, either for the intensity of action, or for the policies that deliver the desired outcomes. In spite of these basic problems of methodology and sensitivity, the IAMs have had enormous influence, especially in the United States, and their shortcomings have had serious policy consequences.. . . Given the severe limitations of the IAMs, and the multitude of key issues that arise in fostering a green transition, it makes sense to adopt a diversity of approaches to analysis and modelling to understand and illuminate [issues of the green transition] and relevant policy responses. (Stern et al. 2022: 183)

These contributions are both remarkable and welcome: remarkable because the authors are among the most eminent figures in the climate change literature, and welcome because it offers a much-needed reflection on some of the shortcomings of mainstream economic analysis of climate policy.

But that some of the leading thinkers on climate change economics admit to the problems of IAMs does not mean that mainstream environmental-economic thought has woken up to economics imperialism. After all, economics imperialism is a broad-ranging phenomenon that pre-dates even the formation of environmental or climate change economics. It is therefore to be expected that the next iteration of mainstream climate change economics, too, will be entangled in it. My guess is that mainstream “solutions” to the problems of IAMs will come with more BBI, continue to uphold TA² either explicitly or in suspended form, and thus further cement neoclassical principles in economists’ response to climate change. And indeed, a closer reading of Stern et al. (2022) points to exactly that. To overcome the problems caused by IAMs, the authors suggest a more pluralist approach within economics alongside interdisciplinary collaboration:

[The required] modelling advances will necessarily involve assembling microeconomic, structural technological and macroeconomic analyses. . . . This must involve a whole range of economics, working with science, technology, and other social sciences and even humanities. . . . The work will involve bringing the best of economic analysis to the table, including around innovation, behavior, political economy, and growth and development, which will be central to change. (Stern et al. 2022: 207)

While intra- and inter-disciplinary collaboration is necessary and to be welcomed for analyzing an issue so wide ranging as the climate crisis, the devil is in the detail. Note that the authors call upon a variety of fields to come in and “improve” IAMs, ranging from behavioral economics, through focusing on market imperfections, to (mainstream) political economy and institutional economics. What all of these have in common is that none of them challenges the core tenets of neoclassical economics’ TA² and, subsequently, that none of them can properly engage with the systemic interrelations between capitalism and climate change.

While the proposed fields might modify or suspend some of the aspects of TA² (as behavioral economics does for rationality), they stick firmly to its underlying premises of methodological individualism, methodological instrumentalism, equilibrium, efficiency, and market-based and ahistorical framing of the social, the environmental, and the economic. And with economics imperialism’s poor track record of integrating foreign disciplines at face value, it is difficult to imagine how IAMs could usefully engage with the humanities or other social sciences, as the authors suggest. Reading Stern et al. from the perspective of economics imperialism paints a picture of more of the same to fix problems inherent within IAMs. This is typical of economics under economics imperialism; the mainstream is so set in its ways that any alternative it suggests to the status quo is, at its core, the status quo “plus” (Fine 2019). ¹¹ This holds true even if what is proposed is somewhat augmented from what came before, in token recognition of its fundamental deficiencies and omissions.

For Stiglitz et al., these deficiencies especially concern the nature of the environment itself and its systemic essence, although they conceptualize the systemic in a different way than critical political economy does. Let me draw on a different article by two of the three authors, Stern and Stiglitz (2023), to elaborate. Here, too, the authors make a point of criticizing the old climate models (i.e., IAMs) considering climate science, arguing that they build on “assumptions on the functioning of markets that are profoundly misleading” (Stern and Stiglitz 2023: 277). In response to the shortcomings of the old models and their policy recommendations, Stern and Stiglitz then make a case for head-on investments into a green economy, so that “the innovation, investment, and systemic change brought about by a strong and purposive tackling of climate change can create a new, attractive, and sustainable growth story” (Stern and Stiglitz 2023: 277). In a further break from the old economics of climate change, they then suggest that relying on carbon pricing alone (as IAMs such as DICE would have), is going to miss the mark on climate policy.

It is true that climate action, were it to be pursued in line with scientific assessments of the urgency and scale of the crisis, would require a broad policy mix. But it would also require a radical shift in economic production and consumption, not just to decarbonize but also de-commodify and redistribute, to address the systemic root causes of environmental destruction. True to their mainstream allegiance, Stern and Stiglitz have none of that. Instead, they hold on to a vision of green growth in which “the key issue [is] breaking the relation between consumption and production on the one hand and destruction of the environment on the other” (Stern and Stiglitz 2023: 286). The problem is that decoupling emissions from economics activity has come to be widely regarded as being biophysically impossible (Fletcher and Rammelt 2017). Once again, climate change economics glosses over other sciences (according to which green growth cannot infinitely be sustained). This is not without irony given that the authors are responding to criticisms that what came before in the economics of climate change did not hold up to scientific findings on climate. Ideology may or may not be to blame, and one can only speculate on that as there is no such thing as perfectly neutral (social) science. Instead, I want to highlight the extent to which economics’ imperialist tendencies, firmly baked into (climate change) economics, narrow the scope in which authors working in a tradition with mainstream roots can accommodate scientific facts or social phenomena that challenge the very underlying tenets of the mainstream.

And there is more. Once the possibility (yes, necessity!) for green growth is established, the authors’ climate-friendly future reads like an economics imperialist’s shopping list:

Energy, cities, land, and transport systems can all become more productive through improvements to how each operates as a system and how these systems interact. . . acting on negative externalities and recognizing how systems function can improve efficiency and productivity, including ecosystems that are robust, fruitful, and more productive across whole areas of human activity and well-being. (Stern and Stiglitz 2023: 288)

This quote—and there are more—shows clearly that although Stiglitz and Stern accept that the old climate change economics built on unrealistic assumptions and parameters, the notions of productivity, efficiency, externalities, and markets still rule. Note also how differently the authors deploy the notion of the systemic; for political economy, systemic means that climate change is inherent to the structures, agencies, processes, and relations of capitalism. Here, in contrast, the notion that climate change is systemic means that it will affect all equations in the model and, subsequently, issues of systemic risk, for example, are discussed purely by reference to model parameters.

This critique aims at the economics of climate change, and as such makes no claim on proposing solutions to solving the climate crisis. Rejecting market-based assessments of climate change as imperialist economics therefore, importantly, does not imply a blanket rejection of market-based tools for working towards a green transition. Quite the opposite, pragmatic reliance on well-designed and implemented market solutions, even non-market technological interventions such as Direct Climate Cooling, might be inevitable for meeting the rapid pace at which the climate is known to be deteriorating (Baiman 2021, 2022; Baiman et al. 2024). There is a very real concern that without such pragmatic reliance on market-based and capitalist solutions, a more structural long-term overhaul of the economic system may be eternally out of reach because of the sheer scale and pace of environmental destruction. However, engaging in these discussions is beyond the scope of this article. The important point to note for economics imperialism is that it keeps more fundamental issues from being discussed in economics theory and scholarship. Insofar as climate change economics relies on economics imperialism, it will therefore necessarily miss the mark on discussing the root causes of the very problem it seeks to address, climate change. Instead, it reinforces the view that climate change can, and should, be fixed within the market (not for pragmatic, but for ontological reasons). And in doing so, it keeps alternative thought including from radical political economy at bay.

The passages of Stiglitz and Stern just discussed include shining examples of the gatekeeping by which economics props up neoclassical principles at the expense of true heterodoxy and radical alternatives. To quote just one other issue, the authors rightfully criticize the use of GDP as a (sole) measure of progress in IAMs, as it is not a good enough indicator of well-being. Yet their treatment of degrowth economics is cursory at best, with no real considerations being given to the possibility that there are biophysical limits to growth, let alone taking seriously the implications for power, colonialism, and redistribution to which degrowth economics and other heterodox traditions speak. Similarly, the article references the need to decarbonize, promote green growth, and curb climate change, but fossil fuels are mentioned only twice throughout the text, with no reference at all to the power and influence of fossil fuel industries. Neither of the pieces engages with literature from heterodox nor radical political economic traditions, thus contributing to the marginalization of these voices in the economic mainstream. Economics imperialism, as a defining (if far from uniform) characteristic of mainstream traditions, inherently enables such marginalization, as it allows mainstream economists to pick up issues from outside their own field at a whim, without fully engaging with the theoretical foundations or analytical implications from those notions’ fields of origin. Whatever concern arises is simply adopted within the extant theoretical and analytical architecture, or briefly acknowledged but not dealt with substantively, at all.

Taken together, the accounts presented in Stern et al. (2022) and Stern and Stiglitz (2023) paint a grim picture for the state of mainstream economics of climate change. Although they take seriously the scale of the challenge posed by climate change, and the inadequacy of DICE and other IAMs to live up to it, the articles ultimately uphold unrealistic visions of green growth and decoupling that rely on the same principles as before and which, just like the original DICE models, are therefore at least in part scientifically unfounded (see also Asefi-Najafabady et al. 2021). In another crucial parallel to previous instances of economics imperialism, they do so with the aim of improving the literature that they critique. If the articles’ predictions for the future of IAMs and mainstream climate change economics come true even just in part, we might be at the cusp of a new wave of BBI (via suspension or otherwise) of more and different factors into the field. Sadly, the mainstream is so caught up in economics imperialism that just when good climate economic analysis is needed the most, economic orthodoxy is the least likely to be able to deliver it.

5. Looking Beyond IAMs

The beauty of taking economics imperialism as analytical point of departure is that it points to similarities and differences across different subject matter, subfields, and over time. I therefore now briefly turn to the parallels between economics imperialism inherent within IAMs and the economics of biodiversity, another important area of mainstream environmental thought. Whereas climate change economics estimates macroeconomic impacts of rising global temperatures, biodiversity economics deals with questions of resource use and estimating the economic valuation of natural capital and of ecosystem services. Like the economics of climate change, the field took shape as a standalone literature in the 1990s, building on earlier work on resource accounting. To reiterate, that the two fields emerged at the same time is telling for the rising recognition of environmental problems generally, including in economics (other more heterodox fields, like ecological economics, also formed around that time [Costanza 1989]). The 1990s were thus a defining moment for economics imperialism as it branched out into the realms of the natural sciences (ecology and climate sciences), when previously, it had mostly targeted social phenomena. ¹²

Like the economics of climate change, its foundations are entrenched in economics imperialism, although in slightly different ways. First and foremost, both the economics of biodiversity and of climate change share a primacy of markets as the main analytical structure, as opposed to alternative starting points such as the biophysical foundations of our economy (as for ecological economics) or social relations (for political economy). ¹³ Both fields draw on BBI aspects of environmental relations into preexisting models, but they draw on different tenets of TA² to do so.

Natural capital and ecosystem services valuation, two central tenets of biodiversity economics, are textbook examples of second-phase BBI based on market imperfections. After all, their underlying logic is that environmental valuation will enable pricing in previously overlooked environmental costs, thus solving the externality problem which is taken to be the root cause of environmental degradation. In true economic imperialist fashion, Pearce and other early thinkers simply added environmental factors into neoclassical production functions via the notion of them as capital (Pearce 1988; Pearce and Atkinson 1993; Pearce and Turner 1990; see Nadal 2016 for a critique on the incompatibility with neoclassical theory). The IAMs’ basis in general equilibrium, on the other hand, leaves little room for market imperfections. Still, DICE’s main policy element is a carbon tax, broadly consistent with an externality framing and the imperative of “getting the prices right.”

Another point of difference between how economics imperialism has operated in each of the fields is their disciplinary scope. Climate change economics stayed a relatively closed and small field, staying true to its neoclassical origins. For biodiversity economics and concepts like ecosystem services and natural capital, the story is more complex, as it branched out into a wider area of application. On the one hand, there is the neoclassical economics of biodiversity that works in a more orthodox tradition, now focusing on moving “beyond GDP” through inclusive wealth accounting. One of the leading publications to have come out of this strand is the 2021 Dasgupta Review (Dasgupta 2021; see Spash and Hache 2021 for a critique). On the other hand, the concepts proved to be hugely successful in ecological economics, a field that formed around the same time but with a paradigm of economy-environment relations that differ markedly from that of neoclassical environmental economics. ¹⁴ Ecological economics has grown to attract a plurality of environmental economic thought ranging from the orthodox to the radical. The lines between what is orthodox and what is heterodox have, therefore, at times been blurry within ecological economics, and its treatment of natural capital and ecosystem services in the 1990s and 2000s is one such case. That a framing like natural capital gained considerable traction in ecological economics even though the field was seeking to break with mainstream environmental thought is a testament to the strength of economics imperialism and its ability to survive under the guise of addressing the fallacies and pitfalls of the mainstream (Heisse 2025a, 2025b).

Although the economics of climate change and of biodiversity emerged roughly around the same time, they did so as distinct fields, with different journals, models, and applications to suit. To some extent, this is emblematic of an overall trend toward specialization in economics. But it also mirrors the binary way in which these issues are discussed in the global political arena. The climate and biodiversity crises are often mentioned in the same breath but always as separate problems, and they each have different “Conference of Parties” meetings. Yet this is a somewhat artificial distinction. While biodiversity loss and the climate are different phenomena, they are strongly related and can be difficult (and flawed) to disentangle (Pörtner et al. 2023). This is true for their ecological dimension as for their systemic root causes in capitalism. For example, ecosystems in decline are less resilient to the impacts of a changing climate, and climate impacts, in turn, significantly impact habitats. The siloed treatment of these issues in mainstream environmental economics is typical for economics imperialism, which works through picking and choosing subject matter as needed to expand mainstream analysis.

6. Why Does It Matter? The Impact of Economics Imperialism on Climate (In)action

This section concludes by discussing how economics imperialism, inherent to climate change economics, links to the non-academic realm. To preface this, it is important to note that economics imperialism is a theoretical phenomenon, a characteristic of neoclassical economics and its dealings with other disciplines. Its existence does not, per se, imply impacts outside the academy. In fact, economics imperialism is rampant in many fields of economics which have zero policy relevance at all, such as cliometrics as economics history (Fine 2025a). However, for climate change there are noticeable connections between how economics has dealt with the issue (through economics imperialism) and how it is dealt with in policy and business framings—both rhetorically and in terms of actual climate solutions.

Because of its reliance on economics imperialism, climate change economics frames climate problems in ways that are broadly consistent with the interests of the capitalist class, and which delay climate actions that might threaten profits. This is typical for economistic framings of environmental problems (Buller 2022; Coffey 2016). For example, Coffey (2016) found that when environmental problems are metaphorically framed in relation to the market—as environmental assets, ecological debt, and more—the discussion of policy options becomes measurably confined to market-based initiatives. Framing the problem, analytically, as merely an externality (which economics imperialism does) misses the mark in terms of understanding the root causes of climate change under capitalism. Again, as stated in section 4, this is not to be taken as a rejection of market-based instruments, which from a pragmatic perspective are crucial for working toward decarbonization (if not decommodification) given that the climate is rapidly deteriorating while capitalism rules strong (Baiman 2021, 2022; Baiman et al. 2024). Rather, it is to say that in the orthodox economic academy, economics imperialism systematically inhibits discussing radical, systemic, and non-market alternatives even at the conceptual level.

For IAMs, which DICE pioneered, this reaches to the highest political levels. IAMs inform analysis ranging from the US government to the economics portions of the reports of the Intergovernmental Panel on Climate Change, with two ramifications. First, identifying optimal temperatures that are inconsistent with conditions for human flourishing or even survival (and an insult to millions of people around the world who are already suffering existential threats from climate impacts); and, second, they have had such success in policy applications that a carbon tax is treated as the most effective tool for curbing emissions despite evidence to the contrary. ¹⁵ This is not to say that price instruments do not work; in fact, the policy evaluation quoted in the introduction to this article found that the few successful cases of climate policy featured price instruments (Stechemesser et al. 2024). However, there are two important qualifications. First, successful climate policy contained price instruments as part of a policy mix. And second, over 96 percent of analyzed policies were found to be unsuccessful, which raises the question if it is high time to take a step back from neoclassical framings and toward a more realistic assessment of how the climate crisis relates to economic activity.

As outlined in section 4, climate change economists are becoming increasingly aware of these issues and are navigating a way forward for the field. But this has not done any damage to the reputation of the field or the hegemony of mainstream analysis as a go-to for economic discussions of environmental problems. Take for example the fact that Nordhaus was awarded the 2018 Sverige’s Riksbank Prize for Economics in Economic Sciences Memory of Alfred Nobel, commonly mistaken for one of the original Nobel Prizes. How is it possible that someone whose models have, over many years, received serious and well-founded criticisms for their lack of realistic assumptions gets awarded the highest accolade in the field, and for establishing these models? The hegemony of the mainstream is so strong, upheld by institutions such as the Nobel prize but also peer review, uniform teaching curricula, and hiring criteria, that research programs founded on economics imperialism can thrive even if they have shockingly little to contribute to the understanding of their subject matter.

In a recent article on the connections between capital and nature, Somerville (2021: 49) observes that “a greener world, dominated by wind and solar power, is not necessarily a fairer world.” To the extent that mainstream economic analysis underpins the guiding principles for economic transformation under climate change, I agree. Its lack of engagement with power and exploitation, grounded in and reproduced by economics imperialism, continues to uphold the absurd notion that if only we get the incentives right, a “greener” version of capitalism will come to the rescue. And indeed, the green economy is emerging, but it is questionable whether this provides any rescue (and if so, for whom). Recent years have spawned countless industries around “greening” capitalism and recently, of greening finance. What they have in common is a reliance on market-based framings and solutions (Buller 2022). ¹⁶ But more often than not, these industries are found to reproduce exploitative relations, leading to serious problems of green-grabbing, more surplus accumulation, more primitive accumulation, the reproduction of colonial power relations, and so on (Bumpus and Liverman 2008; Fletcher et al. 2019; Huff and Brock 2017; McAfee 1999; Kenis and Lievens 2016; Rivero and Cooney Seisdedos 2010). Economics imperialism (with an “s”) is mutually constitutive with these forms of economic imperialism because it readily provides the necessary tools and framings for green capitalism to evolve. In this way, it is a mediating factor between capitalism and the climate and ecological crises, primarily in discursive terms but with material impacts.