Sustainable Development: Why the Focus on Population? Maria Sophia Aguirre Associate Professor Department of Economics The Catholic University of America Washington, dc 20064 Presented at the 2000 Harvard-mit conference on International Health

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Sustainable Development: Why the Focus on Population?
Maria Sophia Aguirre

Associate Professor

Department of Economics

The Catholic University of America

Washington, DC 20064
Presented at the 2000 Harvard-MIT Conference on International Health

Harvard, March 10-12

I. Introduction

The theme of population, and more specifically, overpopulation has been in the popular mind for the last thirty years or more. At the heart of the population-resources-environment debate lies the question: can the earth sustain more people? How you answer this question depends greatly on whether or not one sees population as a problem. Is population a problem? Some would argue that yes, population is a problem in that earth is limited, that it can only sustain a certain number of people (although no one knows what that particular number may be), that the more numerous we become, the poorer we will become. Others argue no, population is not a problem. Some contend that numbers in themselves do not equal poverty; rather, poorly structured societies and economies foster poverty. How people perceive the issue of population is critical, for it is by these perceptions that international legislative policies are formulated, and local medical plans and sex education classes are designed. Thus, it is equally critical that people ensure that their perceptions are grounded, not in rhetoric and emotions, but in established scientific and empirical data.

“Sustainable development” is a policy approach that has gained quite a lot of popularity in recent years, especially in international circles. The UN and other organizations such as Bretton Woods have taken an active role in defining “sustainable development.” By attaching a specific interpretation, they have made population control the overriding approach to development. An illustration of such policy-making is the recent Five-Year Review and Appraisal of Implementation of the International Conference on Population and Development (ICPD) Programme of Action (ICPD+5). As will be seen, such population policies have become the primary tool used to ‘promote’ economic development in developing countries and to protect the environment. However, these policies have failed to achieve either goal. Furthermore, I would like to argue, that the focus on population is not necessarily incorrect, but that the policies used are mistaken ever since it aims at hampering the growth of a key element of economic development: human capital, and thus renders it unsustainable. In order to obtain a clear analysis of the situation, it is necessary to address the theories upon which population control policies rest. Economics and environmental science are often used as supports for such policies in an attempt to establish a relationship between population, resources, environment, and economic development. However, literature from both disciplines suggests opposite conclusions. Thus, it is critical to hold up such policies to the light, as it were, of scientific research. To date, the research finds inconclusive support for such a relationship; this suggests motives other than economic or scientific ones behind population control policies.

  1. Economic Theories

The steps in the argument used to support the propagation of population control policies can be reduced to mainly three. First, rapid growth on population means the spread of poverty, and it is a main obstacle to economic growth in poor countries, reducing or canceling potential improvements in living standards, and aggravating such conditions as poor health, malnutrition, illiteracy, and unemployment. Second, the political implications of such trends threaten government stability in developing countries, and encourage the confrontation between developed and developing countries. Finally, it pushes future generations to scarcity, and an unsustainable environment carrying capacity.
1. Classical Economic Growth: Malthusian Theory

Historically, classical economists founded the relationship between population growth and real growth on Malthus' Theory of Population and Income. Thomas Robert Malthus introduced in his 1798 Essay in the Principle of Population a relationship between population growth and what he termed subsistence. The first grew geometrically while the second increased only at an arithmetic ratio. Thus, he proposed the existence of an inverse relationship between population growth and development derived from the law of diminishing returns. This law is the belief that more people mean fewer goods for each person; thus, as population grows, poverty inevitably increases. He believed that mans ability to increase his food supply was constrained in three particular ways: through land scarcity, limit productive capacity of cultivated land, and the law of diminishing returns.

Although he believed his predictions were inevitable, his intent was not to promote government-implemented population control policies. Instead, Malthus upheld the idea of a population optimum where human numbers would be held in balance with supply. This optimum was not to be achieved by promoting contraception but through preventive as well as what he called positive checks, particularly amongst the working classes. The first one was to be achieved through moral restraint'. The second one was to operate in tandem with the preventive checks which he described as all the causes which tend in any way prematurely to shorten the duration of human life, such as unwholesome occupations, severe labour and exposure to the seasons, bad and insufficient clothing arising from poverty (...) the whole train of human diseases and epidemics, wars, infanticide, palgue, and famine.1

Malthus' problem was that he failed to explore his theory against historical experience; no theory can said to be scientifically proven if that theory can not be verified by empirical evidence.

Following Malthus' inverse relationship between population and growth, Classical Economic Theory is founded on the following arguments2:

a. The consumption effect: For a given amount of resources, population growth affects consumption directly.

b. The production effect on private and public goods: Population growth affects consumption indirectly through the effect on production per worker. With a fixed capital, average production per worker will be lower with a larger labor force (the classical argument of diminishing returns). Along the same lines, with a fixed level of revenue, a larger population will increase the demand for public services, especially education and health care, thus reducing the quality of these services and indirectly hindering development through the reduction of funds allocated to infrastructure.

c. Age Distribution effect: A faster growing population implies a larger proportion of children and, given the amount of resources, a smaller output per capita. The effect on women has been added to this argument: the more children born per woman, the less chance she has to work outside the home; this hinders her personal development.

d. Dilution of Capital: With a fixed income, population growth reduces savings and human capital (education per person) and therefore reduces physical and human investment.

In summary, the classical theory of population growth, assuming a fixed level of resources, predicts a decrease in per capita income in two ways: more consumers divide any given amount of goods, and each worker produces less because there is less capital, private and public, per worker. In addition, the growing number of young children poses an additional burden in the reduction of consumption because they consume but they do not produce; it also hinders women's development as they may not be able to work outside the home. Finally, population growth hinders economic growth because, by reducing savings and education, it reduces investment. The key made in this theory is the ceteris paribus condition (other things being equal) where resources are given and therefore constant.

However, when challenged, this theory fails both theoretically and empirically. Analysis at both levels suggest that there is no statistically proven simple relationship between population growth and economic growth, population size and economic growth, population size and resources, or population growth and environment3. The absence of a correlation contradicts the conventional Malthusian deductive conclusion. The only persuasive argument in the face of this absence of correlation, as Simon (1996b) points, is a plausible scenario in which one or more specified variables that have been omitted from the analysis would, in fact, lead to a negative relationship between population growth and economic growth. Thus, results suggest that population growth is not the only relevant variable for development and thus, empirical evidence suggests that Malthus' dynamic growth theory has failed.

From the point of view of the population growth-development trade off argument, evidence shows that most underdeveloped countries that have implemented population control policies, however, have not shown definite signs of success in overcoming the problems of development, problems that are often attributed to the "population trap". In fact, since the seminal work of Coals-Hoover (1958), several studies have followed supporting or contradicting population control policies. In 1986, the National Academy of Science published a study entitled "Population, Growth and Economic Development", in which they studied the effect of slower population growth achieved by the reduction of fertility through national family planning programs. The results were ambiguous.4 On the other hand, developed countries, such as those in Europe, are facing the threat of an aging population and the consequent problems for public finance and productivity, a situation that I call the "aging trap." On the other hand, no clear causalities were found, as was previously mentioned between population and growth, population and poverty, population and resources, or population and environment. Some countries show some correlation between these variables, other do not and in all cases there is not possibility to prove is the population size what facilitated or hampered economic development. The same does not hold, however, when human capital is taken into consideration.

2. Neo-Classical Theory

In contrast to Malthusian theory, the neoclassical model of growth as presented by Solow (1956) as well as some models of technological diffusion, focus on economic growth through investment, ignoring any link between population and the economy. That is, adjustments in growth take place due to the behavior of investment in physical capital. In these models, growth is a worldwide process and country characteristics determine the relative level of income. Thus, low persistence is consistent with shocks of any size. Shocks may only play a minor role in determining the long-run path of output, despite being an important determinant of variance in decade-long growth rates. Although in certain cases, these models have been able to explain the experience of developed countries, they have failed to explain worldwide experience. Dowrick and Nguyen (1989) present results for OECD countries that support Neo-Classical theory. One may be tempted to think of the Newly Industrialized Countries (NIC) as examples as well. Yet, in these cases, human as well as physical capital investment took place as Blackburn and Ravn (1995) suggest. All NIC show large direct investments in the last decade, and American universities have experienced large inflows of NIC's citizen students. Also a significant improvement has been seen in Asian systems of education.

3. Human Capital Theory

Nobel Prize winner Gary Becker advanced a model that relates the concept of human capital to the family and growth. In it, he proposes an alternative to Malthusian models of economic growth. Becker introduces human capital as an important source of economic development that depends on advances in technological and scientific knowledge. A key assumption of this model is that the rate of return on investments in human capital rises rather than declines as the stock of human capital increases; man is creative and therefore the education of today implies more production in the future. For this reason, resources are not necessarily fixed and may increase as population increases.

In a 1993 paper Becker found that population growth, when studied in the light of human capital theory, leads to multiple equilibrium points: an underdeveloped steady state with high birth rates and low levels of human capital, and a developed steady state with low fertility and high stocks of human and physical capital. He concluded that this means that history and luck are critical determinants of a country's growth experience5. Thus, population growth is not the only determining factor in economic development as the Malthusian theory has predicted. Furthermore, he stated that training and educational programs together with physical capital investment are the important factors. He then concluded those developed countries with negative fertility rates and undeveloped countries would benefit from an expansion of both the pool of human capital and strengthening of the family as the principle promoter of education and quality of life. But what about diminishing returns? Becker found the answer to this issue in the increase of labor productivity due to education and consequently rejects the Malthusian assumption of fixed resources. Since the publication of Gary Beckers work in Human Capital, a large body of literature has developed over the past twenty-five years surrounding this topic. Interest has grown in the importance of the economic agent as an investment rather than solely as an actor in the economy. Following the concept of human capital, recent works have proposed models that relate population to growth6. They set forth an alternative to the Malthusian and Neo-Classical models of economic growth by introducing human capital as an important source of economic development, a source that depends on both technological and scientific knowledge. Such findings have been long sustained by Julian Simon, Norman Macrae, Aaron Wildavsky, Ben Wattenberg, Karl Zinsmeister, and others.

Economic development has not been solely explained by the expansion of physical capital per worker as the Neo-Classical school has proposed or by the decrease in population as Malthus suggests. Other issues, such as terms of trade, service of the debt, the cost of intermediate goods, and institutional features of each country, including political stability, are all important for developing economies. Yet, it has been the introduction of human capital that has shed new light on the understanding of the development process.

4. Neo-Malthusian Theory:

It has been only in the last thirty years that Malthusian theory has once more gained an audience in the population debate. The oil crisis of the 1970s and the famine in parts of the Sahel in Africa in the 1980s all seemed to vindicate Malthus. At the time, it seemed that he had been right, that human numbers had outstripped the ability to sustain them, not only with regard to food, but also with regard to resources such as oil, minerals, land, and water. In 1968, two influential ‘neo-Malthusian’ works were published, reintroducing the language of limits into the population debate with a new twist and vigor. Ever since Paul Ehrlich’s Population Bomb (1968) and Garrett Hardin’s "Tragedy of the Commons" (1968), warnings about the limits of sustenance, of resources, food, energy, land, the environment have flown fast and furious. Vociferous in their attacks on population growth, neo-Malthusians have captured the attention of the popular media and politicians alike. However, they are not without their flaws and their critics.

Within this theoretical framework, there are two main sub-categories: The Limited Resource Perspective and the Socio-Biological Perspective. The former takes the classic Malthusian argument and applies it to all natural resources, while the latter, almost acting as a sub-set of the former, treats the environment as a limited resource and regards people as a threat to the biodiversity and ecological balance of that resource.

The Socio-Biological Perspective has failed to produce sound projections because it lacks sound data and sound logic. With complete but unfounded confidence, Paul Ehrlich claimed in 1968 that ‘hundreds of millions’ of people would die of starvation by the 1970s, that 65 million Americans would starve, that the population of the U.S. would decline by 22.6 million persons, and that England would cease to exist by 20007. More recently, Mr. Ehrlich, writing with Anne Ehrlich, renewed his prediction in The Population Explosion (1990), although with more caveats, since his original predictions failed to materialize.

The population connection must be made in the public mind. Action to end the population explosion humanely and start a gradual population decline must become a top item on the human agenda: the human birthrate must be lowered to slightly below the human death rate as soon as possible. There still may be time to limit the scope of impending catastrophe, but not much time. … More frequent droughts, more damaged crops and famines, more dying forests, more smog, more international conflicts, more epidemics, more gridlock, more crime, more sewage swimming, and other extreme unpleasantness will mark our course.8
And so, despite the earlier failure of Thomas Malthus’ predictions and his own 1968 forecast, Ehrlich and other neo-Malthusians persist in calling for a future of doom. Lester Brown, of the Worldwatch Institute, has for years foretold famine. As recently as September 1998, he argued that the ‘frontiers of agricultural settlement have disappeared [and] future growth in grain production must come almost entirely from raising land productivity. Unfortunately this is becoming more difficult." He bases this prediction on the following data:

From 1950 to 1984, growth in the grain harvest easily exceeded that of population, raising the harvest per person from 247 kilograms to 342, a gain of 38 percent. During the 14 years since then, growth in the grain harvest has fallen behind that of population, dropping output per person from its historic high in 1984 to an estimated 317 kilograms in 1998—a decline of 7 percent, or 0.5 percent a year.9

These data do not correspond, however, to statistical data regarding crop yields produced by international bodies such as the United Nations and the World Bank. Both released reports that point out that the world is no where near the mass starvation predicted by Ehrlich or Brown. For instance, the 1999 Human Development Report, published by the United Nations Development Programme (UNDP) pointed out that "despite rapid population growth, food production per capita increased by nearly 25% during 1990-1997. The per capita daily supply of calories rose from less than 2,500 to 2,750 and that of protein from 71 grams to 76."10 In a similar fashion, the World Bank devoted a segment of its Development Report to refer to the Green Revolution as a ‘paradigm’ for development and knowledge sharing. It is through human ingenuity, the World Bank argues, that food production has stayed ahead of population growth; indeed, productivity gains in cereals such as rice, maize and wheat have been dramatic.11

  In like manner, the neo-Malthusian perspective encounters the same difficulties when grappling with the aspect of resources and environment in the population debate. Jeffrey Krautkraemer (1998) presented an insightful and complete review of the empirical evidence currently available on nonrenewable resources. The long term availability of fossil fuels, particularly petroleum, was the focus of concern about nonrenewable resource scarcity in the 1970s. In more recent years, however, this concern has shifted to an emphasis on the environmental impacts of nonrenewable resource consumption.

A common tool used in these studies has been Hottelling's formal analysis of nonrenewable resource depletion. This model provides some basic implications for how the finite availability of nonrenewable resource affects their price and extraction paths. The economic intuition behind these implications is as follows: A stock of nonrenewable resources can be viewed as an asset that generates returns over time. The opportunity cost of extracting and consuming is that there is less to extract and consume in the future. A firm that seeks to maximize the present value of profit takes this cost into account when deciding how much to extract. At the margin, the value of extraction should equal the value of not extracting (which is the value of the marginal opportunity cost of depletion or user cost.) Asset market equilibrium requires the rate of return to hold the nonrenewable resource stock at equal the rate of return to other assets. The basic form of this model assumes a known finite quantity of homogeneous resource, and the extraction cost is independent of the remaining stock. It follows that, in this case, the return to a nonrenewable resource asset consists entirely of the appreciation of its in situ value and market equilibrium requires that the in situ value increase at the rate of interest.

For the most part, the implications of the Hotteling model have not been consistent with empirical studies of nonrenewable resource prices and in situ values. There has not been a consistent increase over the last 125 years, but rather fluctuations around time trends, whose direction can depend upon the time period selected. This shows that finite availability is not the only factor that significantly affects these types of resources. Elements such as extraction technology, technological changes, the existence of non homogeneous qualities of resources, the fact that resource quantity is not known with certainty, as well as the frequent further developments of existing deposits, are all important features in minerals industries. In addition, since the cost of extractive capital increases with an increase in the rate of interest, it is no longer necessary to assume that an increase in the rate of interest implies more rapid depletion. Empirical evidence also indicates that the discovery of new deposits and technological progress has significantly mitigated the impact of the finite availability of the relative scarcity on nonrenewable resources used in commodity production. In addition, the finite availability of nonrenewable resources at a particular point in time has not yet led to increasing economic scarcity of nonrenewable resources for production and consumption activities. The development of new materials that substitute for nonrenewable resources, improvements in extraction and processing technologies that allow for economical use of low grade ores, and the greater efficiency in the use of nonrenewable resources are all likely to continue. It remains to be seen whether population growth and economic development have an effect. The evidence thus far does not provide any indication of such problems.

The same difficulty is found with the Neo-Malthusian theory with regard to the environment. The Neo-Malthusian approach has received several critiques. Some such as Avry (1998), Cao et al (1998) Cowen (1999) FAO (1997 and 1999), Sarmiento (1998) among others have challenged the statistical and scientific integrity of these studies by pointing out to dubious data or to misinterpretations of data. Supporters of market forces such as Fullerton (1998), Satvins (1989), and Kasun (1991) among others argue that the market will correct for inefficiencies, and that carefully constructed initiatives can help to guide the market, particularly in the area of environmental protection. There are also those who disagree with this perspective because they attribute the present problems not to population but to the distribution of resources given the present structures. Some of these authors include Dobson (1997), Kiester (1999), Matson (1997), and Rabkin (1997). Finally, the human capital approach criticizes this perspective because it underestimates the human dignity and creativity thereby failing to acknowledge that the economic agent is the ultimate resource. What we know is that among poor countries there are some that have a high rate of population growth and others have too little population and, that the overall decrease in population growth (the number of women per children worldwide has decreased from 3.6 in 1980-1985 to 2.7 in the present) has not helped some countries to overcome poverty. However, population has not become poorer in spite of having increased but it has produced beyond the subsistence level. The productivity of the earth's land has grown more quickly than the world's population, a trend which is expected to continue and grain per person has increased by 34%12. In July 1994, the Consultative Group on International Agricultural Research announced the finding of a new breed of drought-resistant corn that could boost crop yield by 30% in some developing countries. Later the same year, the International Rice Research Institute announced the development of a new strain of rice that yields 25% more food per acre than the best variety used up until now and that requires the use of fewer fertilizers. No country has a population growth rate of these orders.

In addition, the quality of life has increased also in less developed countries as it is reported by the 1998 Human Development Report. Today a child in this country can live 17 years more than 35 years ago. Infant mortality has decreased more than 50% since 1960, malnutrition has been reduced by more than 25%, and the number of children receiving vaccination has increased by 80%. The increased access to health services and clean water have allowed for these improvements. Alphabetization among adults has increased from 48% to 70% between 1970 and 1995. Primary education has increased from 48% to 77% while secondary education has moved from 35% to 47% during the same period. All these data corroborate that in economic development, the ceteris paribus condition is violated.

From an economic development perspective, then, it can be said that the economic theories used to support population control polices are unfounded and do not do much for the development of less developed countries. On the contrary, empirical results suggest that it hampers their most important resource: population. Malthusian considerations of the relationship between population and growth assume that this relationship is negative. However, this negative correlation has not been proven empirically. In addition, theoretical work has been developed where results a rejection of the Malthusian correlation, leaving it as a possible outcome; even then, it is not necessarily caused by population growth but by other external shocks to the economy. Thus, Malthus and his followers are mistaken on both the demand and the supply side. They are mistaken on the demand side because population does not follow a geometric growth as Malthus predicted. They are equally mistaken on the supply side because the resources are not easily extinguished; rather, they are created and expanded by the people who are born, live and work. Empirical results show that there is no clear connection between them, or that if there is any, population control is not a determinant variable for achieving and much less the solution for global pollution reduction. This is an important condition in order to understand one of the major shortcomings of Malthus' prediction and its variations.

Neo Malthusian population control programs such as the ones adopted in European countries do not fall short in their failure of predictions. They also have proven to hamper economic development and have led to an "aging population trap" rather than the "underdeveloped trap" predicted by Malthus. Today, several EU countries are reversing such policies because they can not support the aging population. On the other hand, developing countries are aware that population is an important resource. They also realize that its reduction will not produce sustainable development. Examples of population control policy failures in developing countries are numerous; some examples are Bangladesh, Zimbabwe, Mexico, Brazil, Singapore, Korea, and Taiwan before the mid 80s.

Aging Population

A growing proportion of the retired population to the active working population characterizes an aging society. The reversal of the age pyramid affects virtually all societies today, but more so the industrial countries. For some twenty years, decreasing fertility has affected developed countries such as Northern and Western Europe, Canada, US, Japan, Australia, New Zealand. It is now extending to several developing countries in Southern and Eastern Europe, Asia, and the Caribbean. As reported by UNFPA (1996), in 51 of 185 countries, or 44% of the population of the world, fertility is already below replacement level. The number of deaths per year is even higher than the number of births in 15 of these countries.

The causes of the present aging population are complex. Some sources have been found in the living conditions and socio-cultural changes that countries have faced in the past 30 years. Among these are:

  • Decreased infant mortality.

  • The marriage rate has declined in an environment that is hostile to matrimony.

  • The mean age at which women first give birth has sharply increased.

  • Labor codes do not facilitate women’s desire to harmoniously integrate their family life and professional activity.

  • A lack of true family policies does not allow families to have the number of children that they would like.

  • In developed countries, there is a widespread attitude that keeping a certain quality of life is more important than having children. This poses a paradox that Wattenberg describes in The Birth Dearth: “In the wealthier age of history many youth say that they can not afford to have more than two children.”

  • There is a divergence between pessimism and hope experienced by the population.

Over the last thirty years, the UN and its agencies have invested, and continue to invest, large financial resources in order to compel many countries to institute Malthusian polices. In addition, it has encouraged compulsory population control programs as a condition for international aid both, through their own institution or through other international organizations. As a consequence, local governments have also adopted such Malthusian policies and non-governmental organizations have actively fostered these policies. In some countries, regulation of fertility includes compulsory measures such as forced sterilization or sterilization performed without proper informed consent, contraception, and abortion. Introduction of chemical contraception techniques and frequent legalization of abortion have been widespread while policies in favor of welcoming new lives have been weakened.

In recent years, Mexico, Peru, Brazil, Guatemala, India, Pakistan, Uganda, Zambia, and several other developing countries have made denunciations of forced sterilization. However, such measures have not been limited to less developed countries; cases have been found in Sweden among handicapped women as well as in several refugee camps. Based on the information available, the first victims of these programs seem to be innocent and helpless populations.13 They are systematically deceived and driven to consent to their mutilation by false argument, if not by direct extortion, which puts birth control as a condition to the access of credit and food aid. This has been reported in the procedure used by the Grameen Bank in India and Pakistan and in certain African countries.14 Again, the critical assumption underlining these actions is that population control is a necessary antecedent to development.

Implosion and the consequent aging in population bring with them serious problems for both developed and even more so for less-developed and developing countries. Some of these problems include:

  • A smaller population needs to support an aging population that is less active and has a greater need of healthcare and medical services. If one adds to this the fact that most social security systems are predominantly of the pay-as-you-go type, the absence of younger generations endangers the possibility of supporting the elder population.15

  • Solutions proposed to alleviate the situation include resorting to euthanasia. In fact, some EU countries have already legalized it.

  • Within the active population there is a tension between the young and the somewhat older people, as the latter try to protect their jobs while younger generations enter into reduced job markets.

  • An impact on education: in order to provide for the economic burden of the elderly, there is a great temptation to cut down on the money allocated for the training of new generations. Consequently, the transmission of cultural, scientific, technical, artistic, moral and religious common goods is thereby endangered.

  • Danger of ‘moroseness,’ or a lack of intellectual, economic, scientific, and social dynamism and reduced creativity, resulting in systemic stagnation.

  • Population growth expands the market and facilitates creativity and dynamism. An important question arises regarding whether it is possible to maintain economic growth with population implosion.

  • The problem of increasing illegal immigration into population imploding countries.

  • Increasing loneliness among the population because of small families and reduction of extended family (Eberstadt, 1995).

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