London (CNN Business) American economists William Nordhaus and Paul Romer have been awarded the Nobel Prize for their work on understanding how economies can grow sustainably.

Nordhaus, a professor at Yale University, is best known for his work on climate economics. Romer, of NYU's Stern School of Business, is a proponent of a theory that examines how the world can achieve sustainable growth.

"This year's Laureates have designed methods for addressing some of our time's most basic and pressing questions about how we create long-term sustained and sustainable economic growth," the Royal Swedish Academy of Sciences said in a statement.

Nordhaus developed an influential model that examines the consequences of climate policy interventions, including carbon taxes, on the global economy.

His work on climate was recognized the same day that a key UN panel warned that governments around the world must take " rapid, far-reaching and unprecedented changes " to avoid disastrous levels of global warming.

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