The Ecological Economics of Canada’s Ageing Population

Eric Milleremiller@h4x.ca

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:

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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