POPULATION, DEVELOPMENT AND ENERGY

Contributed by Robert Lyman © 2017

It’s tough to make predictions, especially about the future.”

(Yogi Berra)

The purpose of this note is briefly to summarize two alternative views about global population trends, those of the United Nations Population Division and the International Institute for Applied Systems Analysis (IIASA); to add some perspective about economic development trends in the countries with the fastest growing populations; and to relate these to future energy use.

The United Nations Population Division View

The most recent projections of the U.N. Population Division were published as World Population Prospects: The 2015 Revision. It can be read here:

https://esa.un.org/unpd/wpp/publications/files/key_findings_wpp_2015.pdf

According to this report, the world population reached 7.3 billion as of mid-2015. Sixty per cent of the global population lives in Asia (4.4 billion), 16% in Africa (1.2 billion), 10% in Europe (738 million), 9% in Latin America and the Caribbean (634 million), and the remaining 5% in North America (358 million) and Oceania (39 million). China  (1.4 billion) and India (1.3 billion) are the highest population countries in the world.

The world population is growing at the rate of 1.18% per year, or about 83 million people annually. The rate of increase has been declining for decades. Even assuming that fertility rates continue to go down, the U.N. expects the global population to reach 8.5 billion in 2030, between 9.4 and 10 billion in 2050 and between 10 and 12.5 billion in 2100.

The pattern of population growth varies considerably by region. The population of Europe and most other OECD countries is stable or declining, the results of fertility rates (number of children born per woman) well below the replacement rate of 2.1. The U.N. does not expect the migration of people from other areas to Europe to be enough to reverse this general decline. In contrast, the population in the 48 least developed countries, 954 million in 2015, is projected to increase 39% between 2015 and 2030, and to double to 1.9 billion persons by mid-century. Nine countries are expected to account for more than half the world’s projected population increases over the period 2015 to 2050: India, Nigeria, Pakistan, the Democratic Republic of the Congo, Ethiopia, Tanzania, the United States, Indonesia, and Uganda, in that order.

The most extraordinary growth projected is in Africa, especially in the period to 2100. By 2100, seventeen of the highest population countries in the world may be in Africa. Nigeria tops the list with a end-of-century population of 752 million, followed by the Congo with 389 million, Tanzania with 299 million and Ethiopia with 243 million. The total population of these seventeen countries is projected to be over 3.4 billion.

The Institute for Applied Systems Analysis View

The U.N. and IIASA follow different methodologies, the result of which is that IIASA’s projections are well below those of the U.N. The IIASA approach is based on the development of five different “Shared Socioeconomic Pathways” (SSPs), or scenarios, the second of which (SSP2) is considered its medium, or most likely, scenario. Under SSP2, world population grows to 9.2 billion by 2050 and then begins a long slow decline, reaching 9.0 billion by 2100.

As in the case of the U.N.’s projections, the IIASA outlook is for diverging trends in the world’s regions, as summarized in the following table.

The Different Methodologies

Population experts produce projections according to different assumptions about the future trends in fertility, mortality, migrations and other factors. The declines in infant mortality, improvement in water quality and other health conditions, and longer life expectancies experienced all over the world have been important determinants in the rise of global population since the 1950’s. In recent decades, demographers have examined other factors in greater detail. For example, the empirical data shows that in virtually all populations, more educated women and more women in the work force result in lower fertility rates. In many countries, an increase in the average age of the population signals that a lower percentage of the population is in the childbearing age range.

The U.N. and IIASA differ in their approaches to defining the assumptions underlying future fertility and mortality trajectories. The U.N. seeks outside expert opinion on the design of its statistical model, which is then applied to a national time series of 60 years (1950-2010) to extrapolate 90 years (2010-2100) into the future. IIASA claims that, in contrast, its projections are based on the substantive input of 550 experts worldwide that participate in a peer review of the assumptions based upon country-specific knowledge. IIASA also differentiates by level of education as well as age and sex in making its country-specific projections.

Despite the different methodologies, the U.N. and IIASA projections are in agreement on some key points:

• Global population will continue to rise at least until mid-century and reach at least 9.2 billion then
• The majority of the increases will occur in Asia and Africa as well as in the least developed countries
• Rising income levels, accompanied by increasing education levels and female participation in the labour market, are the most important factors tending to dampen population growth.

Will Economic Growth Align with Population Growth?

Increasing population is no guarantee of increasing national income. Historically, the economic growth of the most populous countries has been stunted by other factors, including poor governance, political corruption, excessive reliance on state planning, and a basic lack of resources and/or market access.

The World Bank is a good source of projections concerning future economic growth in all regions. Its current projections extend only to 2040, as there are far too many uncertainties beyond that point. The projections are shown in the following table.

Table 1-2 from the U.S. Energy Information Administration International Energy Outlook 2016 – page 14

https://www.eia.gov/outlooks/ieo/pdf/0484(2016).pdf

Note that there is a widening divergence over time between the GDP of the Organization for Economic Cooperation and Development (OECD) and Non-OECD areas. In 2012, the OECD accounted for $44.8 trillion in income, while the non-OECD accounted for $49.7 trillion, 11% higher. By 2040, OECD income is projected to increase to $78.0 trillion and non-OECD income to $158.8 trillion, over double the OECD total.  Asia accounts for the major share of the increased income in the non-OECD, but even Africa is projected to grow quickly. By 2040, Africa’s combined GDP is projected to be $17.1 trillion, close to that of OECD Europe in 2012. The expected annual average growth in non-OECD GDP is expected to be 4.2% and that in Africa 4.8%.

The Energy and Development Imperative

In its 2004 World Energy Outlook, the International Energy Agency explained the importance of energy to economic and social progress.

“Energy is a prerequisite to economic development… Energy services enable basic human needs, such as food and shelter, to be met. They also contribute to social development by improving education and human health. During the early stages of development, where many highly populated countries are, the absolute amount of energy used per capita and the share of modern energy services – especially electricity – are key contributors to economic development.

Energy alone is not sufficient for creating the conditions for economic growth, but it is certainly necessary. It is impossible to operate a factory, run a shop, grow crops, or deliver goods to consumers without using some form of energy, Most studies of the relationship between energy use and economic development have focused on how the latter affects the former. Economic growth almost always leads to increased energy use, at least in the early stages of economic development. Empirical analysis, however, demonstrates the importance of energy in driving economic development.

Without access to modern, commercial energy, poor countries can be trapped in a vicious circle of poverty, social instability and underdevelopment. Increased use of modern energy by households is a key element in the broader process of human development, typically involving industrialization, urbanization and increased personal liability. The facts bear this out: the share of modern energy in overall energy use is strongly correlated with indicators of human development.”

“Modern, commercial energy” does not mean the traditional biomass (wood and dried animal dung) upon which over 1.6 billion people now rely for light, cooking and heating. It means oil, natural gas and coal and the services produced by electricity generation. The poor countries with rapidly expanding populations and aspirations to attain living standards comparable to those enjoyed by people in western countries today must, and will, turn first to the lowest cost and most accessible sources of commercial energy supply available. Their people depend on it.

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