On the ageing population

Ageing and Climate change

Structural ageing of Australia

In Australia, a rising proportion of the population is made up of those over working age (i.e. 65 plus) and there is a consequent decline in the proportion of the population who are able to participate in the workforce. This leads to:

  • a decline in the rate of economic growth and
  • a slow down in the rate at which government revenue grows coupled with
  • increasing government costs in meeting the needs of the growing number of those outside the workforce.

Former treasurer Peter Costello noted in an address to the National Press Club on 2 April 2007 that the most recent intergenerational report (IGR2) did not include the impact from climate change. Rather, its conclusions were based on historical experience, historical demography, participation, tax and expenditure, and did not introduce the much more inexact variables involved in environmental change. This is seen as a major omission by some commentators.

Some cost pressures

Some of the costs to the federal budget arising from structural ageing that may be attributable to the economic effects of climate change include:

  • Lower rates of GDP growth—thereby decreasing the rate which government revenues grow and, with that, the government's ability to meet these costs.
  • Increased health costs arising from climate change induced diseases. For example, if the climate gets hotter and wetter the areas in which malaria or other tropical diseases occur may expand.
  • Increased costs of building/modifying Commonwealth funded aged care facilities to cope with extreme weather events.
  • Higher public transport subsidy costs as older drivers may be unwilling to use their own cars due to more frequent adverse weather conditions.
  • Higher subsidised energy costs due to increased use of heating/cooling devices by older retirees during extreme weather conditions and the higher costs of alternative energy used by retirees.
  • In the case of extreme climate change causing a significant rise in sea levels, the costs of relocating retirees from vulnerable areas.

The above list is highly speculative.

It's not all bad news

Given the above points one could be forgiven for considering that an ageing population will have a negative impact on the environment. However, according to Juliet Schor in an International Longevity Center paper:

The older generation's consumption habits and patterns are far more ecologically sustainable than those of younger generations. Consumers over 65 take on less debt and, despite much lower incomes, save more, except at the very end of life when they have high medical costs. They spend their incomes on less environmentally damaging goods and services. They are less involved in material acquisition … In sum, older consumers do less acquiring and more divesting—downsizing rather than upscaling.

This trend will, all other things being equal, reduce the older generation's impact on the environment on a per person basis.

See also:

Social effects and policy implications of climate change.

 

27 October, 2009

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