Scotland had hoped to defy the odds by beating the world's top ranked team to book a place in the quarter-finals, but after falling behind to an early Irish try they opted three times to spurn kicks at goal and go for a lineout.
The decision was costly.
"I was proud of the effort, intent and to not let the score become a bigger one," Townsend told a news conference.
"Three points wouldn't have helped us. We had a couple of occasions when we didn't turn that pressure into five or seven points, which we would have needed given the way Ireland were playing."
Ireland, whose Green Army of fans out roared and outnumbered the Tartan Army at the Stade de France, ran away with the rest of the half, scoring another three tries, all but sealing Scotland's fate.
"They are the best in the world for a reason. From an attacking perspective when you give them entries into the 22 they come away with points," Townsend said, adding that the Irish were excellent and probably favourites to win the tournament.
The Scots were able to rally scoring two tries to restore some respectability to the score, including a wonderful flowing move from their own half concluded by Ali Price.
Scotland had lost their last eight tests against Ireland and their previous four victories in this fixture had all come by margins of five points or fewer.
There was a lot of talk of ambition and exceeding expectations ahead of the tournament, but they were unable to turn that into a performance on the pitch when it mattered.
"We’ve never beaten a team ranked above us in any World Cup we’ve played in, so you may have to go all the way back to 1987 to ask can we do better, and we certainly have to do better, and the responsibility is mine," Townsend said.
Despite that damning statistic, he hoped for better this time round and believed the work they had done in the previous four years had laid the platform for success.
"We believed we could get out of this pool. We still believed that after losing to South Africa," Townsend said. "The response the players showed in training gave us an opportunity which we didn’t take – Ireland took it – and they are a better team than us on performance.
"If we can get on the journey they have been over the last few years then great. It’s easy saying that, it’s another thing doing it. We’ve got to make sure that this defeat makes us a better team for the Six Nations and the next World Cup."
Townsend believes any Scotland improvement in the next World Cup cycle has to start at club level and bringing through players with the quality to compete in international rugby.
"The way Irish rugby is set up, they could dominate world rugby for the next five, 10 years," he said. "They’re the number one team in the world and they have pro rugby and age-group systems that are very strong.
The Scots will now turn their attention to next year's Six Nations.
"I hope this makes a better team for the Six Nations that is coming up," Townsend said, adding that he had a solid core of 33 players.
He acknowledged that unlike Irish rugby's strong age system that could keep it at the top for the next 10 years, Scotland needed to do more to get a new generation to come through.
"We have to get more players through," Townsend said. "This group is fifth in world, but we have to make sure it continues not for the next couple of years but the next 10 years."