How Will 7 Billion Earthlings Affect the Economy?
According to the United Nations, the world population has reached 7 billion people. No one really knows the exact date, but the announcement has sparked a round of commentary, most of it pessimistic. The doubling of the world’s population over the past 50 years is the most rapid in history. Demographers expect another 3 billion at least before global population finally peaks early in the next century and begins a gradual decline. Can we make it until then? Or will our overburdened spaceship earth suffer environmental collapse?
Population growth poses real challenges for environmental policy. The more people, the more important it is to get things right in the relationship between people and the planet. At least three issues require even closer attention as the population grows than they would with a constant population.
The first is pollution, both local and global. If world population is going to increase another 50 percent before it peaks, pollution per person will have to decrease by at least a third just to keep total pollution from getting worse.
Achieving the needed decrease will be a challenge, but it need not be an insurmountable one. Consider CO2. For some time there has been a global downward trend of about 2 percent per year in CO2 emissions per dollar of GDP. That downward trend provides a basis for hope, but it will have to accelerate in order for total emissions to fall while still allowing room for rising standards of living. There does not appear to be any technical reason why that would be impossible. After all, even with today’s technologies, emissions per capita in Japan and Norway are only half as high as in the United States, and they are only a third as high in France and New Zealand. If all countries cut CO2 output by the difference between the U.S. rate and the New Zealand rate, total world carbon emissions could fall by half even while world population grew to 10 billion people.
What we need to make this happen is better policy that imposes the full costs of pollution on the polluters themselves through higher prices, both at the producer and the consumer level. The tools are well known: Pollution taxes, cap and trade, better protection of the property rights of pollution victims. Rather than argue endlessly about which is best, we need to get on with one or another of them, or a shamelessly eclectic combination of all three.
Nonrenewable resources are a second problem that will need closer attention as population grows. We can look at nonrenewable resources as a bridge from a low-tech past, with short lifespans, high infant mortality, and a low standard of living, to a future with a higher quality of life based on sustainable technology. Since energy and mineral deposits of any given quality are finite, more rapid population growth means that we must be that much more careful to make the best use of this resource bridge.
Doing so will require policies that encourage efficient use. Today, instead, resources are too often used wastefully, especially when governments encourage rapid development without placing the full costs of depletion, and of pollution associated with extraction, on the developers.
Management of local and global commons is the third problem that needs extra attention as population grows. Local commons include things like public parks and local groundwater reservoirs. Global commons include, most importantly, the world’s atmosphere and oceans.
More than 300 years ago, John Locke proposed that people have a right to take what they want from the commons only to the extent that in doing so, they leave as much and as good for others. That works well when the demand for use of the commons is low. However, as population increases, there are fewer commons from which people can take what they need and still leave enough for others.
When pressure on common resources reaches the tipping point, unrestricted access becomes inconsistent with efficient use. Pastures are overgrazed, aquifers are pumped dry, fish stocks are depleted to the point of extinction. Then one of two solutions to the problem of overuse needs to come into play.
One is privatization. That has worked well for many once-common resources. The common pastures and woodlots that were open to European villagers in Locke’s day were privatized through “enclosure” centuries ago. Western grasslands that were once seen as a limitless commons for hunting and grazing were privatized through homesteading.
The alternative to privatization is common management for mutual benefit. Unfortunately, that mechanism has not always worked so well. Common management of forest land has often, in practice, been biased toward commercial uses like logging at the expense of competing recreational and conservation interests. Attempts to manage ocean fisheries have often broken down either because governments give in to short-sighted pressures for more fishing, or because regulations are poorly designed or enforced.
Taking all of the above into account, we can summarize the relationship between population growth and the environment in these three propositions:
- Without adequate controls over pollution, wise use of nonrenewable resources, and rational management of local and global commons, the planet will face environmental degradation even without runaway population growth.
- At the margin, population growth is not environmentally neutral; it increases the urgency of adopting sound environmental policies, including policies based on the principle that polluters and resource users pay in full for all environmental impacts.
- There is a need to act but no need to panic. The world’s human population is not, as once feared, on a track toward endless doublings. With sound policies in place, the world’s expected peak population of 10 billion or so should be able to live together on our small planet in an environmentally sustainable manner.
Population pessimists often point out the physical impossibility of billions of Chinese and Indians ever enjoying today’s American standard of living, by which they appear to mean driving the same number of miles per year in equally inefficient cars and eating the same annual quantity of cheeseburgers. People who think this way suffer from Imagination Deficit Disorder. Of course the future will not just be one of more people doing exactly what a few people are doing today. After all, today we do not, could not, and should not want to live as our ancestors did two centuries back, eating game killed in local forests, using backyard outhouses for our sanitary needs, and burning whale oil in our lamps. The future will be different from the present, and in most respects, it will be different in ways we cannot foresee, just as has always been the case.
What we do know about the future is that if we allow markets to function, people will use relatively less of things whose prices increase most rapidly. As GDP grows, the long trend toward consumption of relatively more services and relatively fewer goods will continue. If energy prices are allowed to rise, entrepreneurs will develop more energy-efficient lighting, transportation, and housing. As relative prices change, diets are likely to change, too. For example, it is likely that rising global incomes will cause an increase in the price of meat relative to the price of plant-based foods. If so, people in the future will probably eat less meat than people in rich countries do today, and will very likely be healthier as a result.
Some people will find the views expressed here overly optimistic. There are those who still think we must employ coercive population policies to defuse a looming population bomb. There are deep ecologists who see people themselves as a form of pollution, and who would like to see a population no larger than could live as hunter-gatherers, with no agriculture, mining, or industry whatsoever.
If we still believed that the future would bring endless population doublings, I, too, might succumb to the gloom. However, if what we are really facing is one final fifty percent increase before global peak population is reached, I prefer policies that reduce units of pollution per person rather than those that aim to reduce persons per unit of pollution.
Don’t Miss Ed Dolan’s “Quantitative Easing: Your Ultimate Cheat Sheet to the Monetary Policy“.