Cambridge University’s Judge Business School uses @RISK from Palisade to advise on climate change

Cambridge University’s Judge Business School is using @RISK from Palisade (www.palisade.com) to advise on climate change. This work involved the risk analysis software forming a key element of the analysis model that supported the Stern Review, the largest and most widely referenced report on the economic impact of global warming.

Dr Chris Hope, reader in policy modelling at Judge Business School used @RISK to develop PAGE2002 (for Policy Analysis of the Greenhouse Effect). This model assisted staff at Stern to investigate climate change across the world. Issues including the impacts of sea level rising and increases in temperature were balanced against the cost of the various options available to tackle the problem, such as alternative energy sources and reducing oil-fuelled traffic. The model aims to enable people to make informed decisions on the optimum way to deal with climate change.

The PAGE 2002 model aggregates information from various other sources to use as inputs. Therefore it uses scientific studies and knowledge for details on the climate’s sensitivity on an increase in CO2 emissions. It combines this with economic expertise to look at the effect of an increase in temperature on gross domestic product (GDP).

In particular, the Stern Review looked at the social cost of carbon (SCC), measured in terms of the economic impact of the extra damage done by each additional tonne of CO2 in the atmosphere. The @RISK PAGE2002 model helped it to determine that if, for example, one extra tonne was going to cause $100 worth of damage in the long term, then any activity costing less than $100 which resulted in at least one less tonne of emissions was therefore both viable and desirable.

@RISK also deals with the problem that the different effects of various factors which influence climate change are themselves, undetermined. For example, the historical evidence does not accurately predict potential rises in global temperatures if CO2 emissions double. Using @RISK in the PAGE2002 model, researchers can quantify this uncertainty, providing a measurement of the accuracy of their findings.

Dr Hope explains: “We needed the flexibility offered by @RISK in order to build a range of models to handle the uncertainty that goes hand-in-hand with climate change and its effects. The fact that the software works in Excel also makes it easy to use and ensures that the results generated are transparent. This ensures that the outputs are understood by everyone.”

The Stern report proposed that one percent of global GDP should be invested per year in order to avoid the worst effects of climate change. Failure to do so has the potential to reduce global GDP by up to 20 percent. As climate change continues to be a global issue, Judge Business School continues to use its PAGE2002 @RISK modelling tool to advise on ways in which to tackle it.

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Notes to editors:
About Judge Business School, University of Cambridge
Judge Business School is internationally recognised as one of the leading providers of innovative, intellectually challenging and practical business management education across a portfolio of undergraduate, graduate and executive programmes. As a fully integrated department of a world renowned university, Judge Business School hosts one of the largest concentrations of interdisciplinary business and management research activity in Europe. Built on an ethos of collaboration, the School is a unique place where policy makers, regulators, industry leaders, not for profit organisations, entrepreneurs and academics can meet, interact and share ideas. Judge Business School delivers business education for the 21st Century networked economy, fostering collaborative leadership skills, developing communities of partners to meet the challenges of the new global business landscape.

Ranked 17th in the 2009 FT Global Rankings of business schools, 7th in the 2008 Economist Intelligence Unit Global MBA Rankings, and 3rd in the 2007 Forbes Global Rankings for one year MBA programmes, the Cambridge MBA sits alongside the very best in the world.

http://www.jbs.cam.ac.uk/

About Palisade Corporation

Palisade is the market leader in risk and decision analysis software for Microsoft Excel and Microsoft Project. Headquartered in Ithaca, New York, where the company was founded, Palisade also maintains offices in London, England; Sydney, Australia; and offers special services to Latin American customers. Palisade users can be found in over 100 countries, and include the likes of AT&T, Hewlett Packard, Hitachi, IBM, Proctor & Gamble, Dow Chemical, Citigroup, Bristol Myers-Squibb, PricewaterhouseCoopers, Unilever, London Underground, Infineon and Statoil.

For further information:
Kate Alexander / Nicola Males
Vanilla Public Relations Ltd
Email: kate {at} vanillapr.co(.)uk / nicola {at} vanillapr.co(.)uk
Tel: +44 (0)20 8543 8481 / +44 7976 652491