The Ecological Economics of
Canada’s Ageing Population
Eric Miller
emiller@h4x.ca
Presented Nov 1, 2013 at York University
Canadian 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:
•
𝐻𝑎𝑝𝑝𝑦 𝐶𝑎𝑛𝑎𝑑𝑎 = 𝑓𝑛
𝐽𝑢𝑠𝑡𝑖𝑐𝑒
𝑆𝑐𝑎𝑙𝑒 𝑜𝑓 𝑡ℎ𝑟𝑜𝑢𝑔ℎ𝑝𝑢𝑡 𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 𝑜𝑓 𝑡ℎ𝑟𝑜𝑢𝑔ℎ𝑝𝑢𝑡 𝑡𝑖𝑚𝑒
∴ 𝐻𝑎𝑝𝑝𝑦 𝐶𝑎𝑛𝑎𝑑𝑎 = 𝑓𝑛
𝐸𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒𝑑 𝑤𝑒𝑙𝑙𝑏𝑒𝑖𝑛𝑔, 𝐿𝑖𝑓𝑒 𝑒𝑥𝑝𝑒𝑐𝑡𝑎𝑛𝑐𝑦
𝑡𝑖𝑚𝑒
𝐸𝑐𝑜𝑙𝑜𝑔𝑖𝑐𝑎𝑙 𝑓𝑜𝑜𝑡𝑝𝑟𝑖𝑛𝑡
∴ 𝐻𝑎𝑝𝑝𝑦 𝐶𝑎𝑛𝑎𝑑𝑎 = 𝑓𝑛
𝐿𝑖𝑓𝑒 𝑠𝑎𝑡𝑖𝑠𝑓𝑎𝑐𝑡𝑖𝑜𝑛 × 𝐿𝑖𝑓𝑒 𝑒𝑥𝑝𝑒𝑐𝑡𝑎𝑛𝑐𝑦
𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 × 𝐴𝑓𝑓𝑙𝑢𝑒𝑛𝑐𝑒 𝑝𝑒𝑟 𝑐𝑎𝑝𝑖𝑡𝑎 × 𝐸𝐹 𝑜𝑓 𝑎𝑓𝑓𝑙𝑢𝑒𝑛𝑐𝑒 𝑡ime
(Inspired by NEF, 2012)
Demographics helps to deepen our understanding of life expectancy,
the characteristics and size of the population, and demographic patterns of affluence
An Empirical Model for Canada
Current patterns as model inputs (StatCan, 2012)
Average
Life
Expectancy
birth:
Lifetime
Fertility
Rate
=at1.678
Total
Totalimmigrants
emigrants
= 52,409
258,290
M = 78.6yrs, F = 82.7yrs
Possible futures as assumptions (StatCan, 2010)
Population
Scenario
Lifetime
Fertility
Gain in Average Life
Expectancy at Birth
Immigration Rate
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 historic
trends (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
__154=Value in 1971___________________________________________
__89=Value in 1971____________________________________________
Growth scenarios: 1 = Low, 2 = Medium based on trend of last 20 years, 3 = High
Stabilization:
4 = Medium trend with balanced migration, 5 = Same with “delayed retirement”
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
Modelled values: 4=Predicted Res structures
$M CAD
3=Actual Res land
5=Predicted Res land
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=Other
5=Modelled rate of investment from new structures
Annual
Rate
Speculating about future housing dynamics
(all scenarios assume 2010 patterns of household headship rates)
Growth scenarios: 1 = Low, 2 = Medium based on trend of last 20 years, 3 = High
Stabilization:
4 = Medium trend with balanced migration, 5 = Same with “delayed retirement”
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