Monday, October 03, 2005

The Environmental Benefits of Population Growth?

Gary Becker has posted a concise optimistic statement on his blog that all “Oil Drummers” should read.

“Neo-Malthusians who fear larger populations typically stress the effects on pollution and on the demand for non-renewable resources, like oil and natural gas. Clearly, the demand for fossil fuels and other non-renewable resources grows with population as well as with economic development. However, during the past 150 years, the real price of fossil fuels like coal and oil fell rather than increased as world population exploded, and additional economies prospered. More efficient use of fossil fuels and discoveries of new reserves of these fuels, and innovations that produce alternate sources of energy, like nuclear power, explain why prices of fossil fuels did not rise along with population and industrialization. Larger populations stimulated the search for new resources and new sources of energy because they increased the market for these discoveries (for the reasons I gave earlier about the positive effect of larger populations on incentives to innovate). That is, while larger populations use up fossil fuels, they also stimulate the effective supply of these fuels and of substitutes.

Obviously, given per capita incomes, larger populations also tend to produce greater pollution both locally and globally as more cars are driven, industrial output rises, and more homes burn fuels. Yet it is well documented that local pollution eventually begins to fall rapidly as countries develop and their populations increase because of new discoveries that reduce pollution, and also because a larger share of the incomes of richer countries is spent on controlling the output of pollutants.

I believe the same will happen to the risk from global warming. Not only will countries impose greater restrictions on output of greenhouse gases, as in the emission trading system of the European Union, but probably even more important will be the development of new ways to absorb C02 and other gases from the atmosphere.”

MY one caveat with Gary’s statement concerns the obvious point that most of the population growth is taking place in poorer nations and that these folks are “trapped” in these nations because of immigration restrictions. I would want to ask Gary, “Would you be less optimistic if population growth took place in a poor nation whose population has little prospect of receiving a good basic science focused education?” In this case, these new people will not have the purchasing power to stimulate new R&D. In addition, such a nation would be less likely to produce an Einstein. Finally, such a large uneducated population would increase the scale of consumption that environmentalists fear so much. He would probably respond that if these poor nations adopt secure property rights and reduce the size of the state and foster competition that these nations would experience per-capita income growth and then their population growth would offer environmental benefits for the reasons he sketches above.