Policy analysis of the greenhouse effect An application of the PAGE model Chris Hope, John Anderson and Paul Wenman In this paper we introduce a comprehensive model for policy analysis of the greenhouse effect (PAGE). We apply the PAGE model to assess the merits of policies to prevent global warming (by controlling the emissions of green- house gases), and policies to adapt to any global warming that occurs. The results confirm that it is difficult to overcome the problem of global warming by taking preventive action alone. The argument for introducing an aggressive adaptive policy is very strong, We calculate the valuation that would have to be placed upon non- economic environmental and social impacts, for a combined strategy of preventive and adaptive policies to be considered a worthwhile option, both for individual regions and for the world as a whole. We also show that uncertainties in all four groups of inputs to the model (scientific, costs of control, costs of adaptation and valuation of impacts) have a great influence on the costs and impacts of the combined strategy. Keywords: Greenhouse effect; Modelling; Uncertainty There is a current consensus that emissions of green- house gases, if allowed to continue to increase, will lead to a rise in global mean temperature. The causal chain from emissions to temperature rise is complex, and even the best scientific estimates of the likely temperature rise by the end of the next century have a range of from 2 to 5 °c.t Chris Hope is with the Judge Institute of Management Studies, University of Cambridge, Mill Lane, Cambridge CB2 1RX, UK; John Anderson is at 34 Leake Road, Gotham, Nottingham NGll 0JL, UK; Paul Wenman is with Environmental Resources Ltd, 106 Gloucester Place, London W1H 3DB, UK. There is also much dispute about what damage a global temperature rise of a few degrees over a century or so would cause; regional climatic changeg, sea level rise, natural resource and ecolo- gical impacts have all been suggested as possible consequences. Some influential groups are suffi- ciently alarmed to have called for global agreements to stabilize or cut the emissions of greenhouse gases. 2 Others claim that the direct costs of such aggres- sive control measures would not be justified, and that adapting to a changed climate would be the best policy) Policy negotiations are further complicated by the global nature of the problem; if a country, or even a major trading block, decides to reduce emis- sions of a greenhouse gas, any benefit would also be felt in other parts of the world that do not share in the direct costs of control. These issues are clearly ones which would benefit from appropriate modelling activity, and models of parts of the problem have been constructed over the past few years. 4 The PAGE model (for policy analy- sis of the greenhouse effect) differs from these existing models in its scope. It is a first attempt at what Mors calls 'a comprehensive approach covering all the dimensions of the problem'. 5 The next section describes the main features of PAGE. Following sections report an application of PAGE to assess the merits of policies to prevent global warming by controlling the emissions of greenhouse gases, and to adapt to any global warming that occurs. Outline of the PAGE model PAGE contains equations that cover: • The EC and the whole world. Although PAGE was developed for European Community (EC) policy makers, the greenhouse effect is a global problem. EC emissions of CO~ are only 13% of 0301-4215/93/030327-12© 1993 Butterworth-Heinemann Ltd 327