The Ecological Economics of Canada’s Ageing Population
Eric [email protected]
Presented Nov 1, 2013 at York UniversityCanadian Society for Ecological Economics Conference
A Conceptual Ecological Economic Demographic Model
We should seek to model the means to an efficient, just, and sustainable Canada:
∴ ime
Demographics helps to deepen our understanding of life expectancy, the characteristics and size of the population, and demographic patterns of affluence
(Inspired by NEF, 2012)
An Empirical Model for Canada
Current patterns as model inputs (StatCan, 2012)
Lifetime Fertility Rate = 1.678Total emigrants = 52,409 Total immigrants = 258,290Average Life Expectancy at birth:M = 78.6yrs, F = 82.7yrs
Possible futures as assumptions (StatCan, 2010)
Population Scenario
Lifetime Fertility Immigration Rate
Gain in Average Life Expectancy at Birth
1: Low growth Falls to 1.5 Lower (0.6% / yr) Slower than historic trends (15 years slower)
2. Medium growth Stays at 1.7 Current (0.8% / yr) Historic trends(+7M, +5.7F by 2043)
3: High growth Rises to 1.9 Higher (0.9% / yr) Faster than historictrends (7 years earlier)
4: Stabilization Stays at 1.7 Equals migration (0.15%) Historic trends
Results of Canadian demographic scenarios
Scenarios: 1=Low, 2=Med, 3=High, 4=Stabilization
The Hypothesis of Apocalyptic Demography
“Today, there are 4.2 working-aged Canadians for every senior citizen, making contributions to cover retirees' pensions and health care. By 2031, that ratio will be cut in half. The tax base will shrink, growth will slow and labour shortages will become even more dire...”
Demographic (age-based) dependency
Medium growth scenario
Labour market dependency
Medium growth scenario
What about unpaid work?
Effects of population growth on dependency
Growth scenarios: 1 = Low, 2 = Medium based on trend of last 20 years, 3 = HighStabilization: 4 = Medium trend with balanced migration, 5 = Same with “delayed retirement”
__154=Value in 1971___________________________________________
__89=Value in 1971____________________________________________
Understanding the dynamics of Canadian housing
• Demographics Household formation & dissolution
• Macro-economics Rates of change in household formation
• Affluence Demand for number of dwellings, and value
• Financial system Cost of financing, risk tolerance of lenders
• Expectations of capital gains Willingness to inflate prices
• Cohort norms Value of strategic locations
Results impact the stock of residential dwellings and market value their land
An empirical Canadian housing model
Dynamics of residential land value
1=Actual total Res Capital Stock 2=Actual Res structures 3=Actual Res land Modelled values: 4=Predicted Res structures 5=Predicted Res land
$M CAD
Dynamics of investment in residential structures
1=Actual rate of gross investment in Res Capital Stock 2=Modelled rate (of #1)3=Modelled rate of invest from renovations to existing structures; 4=Other5=Modelled rate of investment from new structures
AnnualRate
Speculating about future housing dynamics
Growth scenarios: 1 = Low, 2 = Medium based on trend of last 20 years, 3 = HighStabilization: 4 = Medium trend with balanced migration, 5 = Same with “delayed retirement”
(all scenarios assume 2010 patterns of household headship rates)
Concluding messages
• Demographics should play an important role in EE
• Beware of apocalyptic demography in Canada as a new rationale for austerity and growth for the sake of growth
• Systems dynamics modelling useful for modelling residential housing market (structures and land value)
• Understanding housing will help to understand an important component of life satisfaction during working years and into retirement, and the future ecological implications of growth in households, dwellings per household, and value per dwelling
References cited
• Globe and Mail. 2012. The great expansion. Saturday May 4. Section F.
• New Economics Foundation. 2012. Happy Planet Index: 2012 Report. A global index of sustainable well-being.
All other Statistics Canada data is from CANSIM