1 households, consumption, and energy use: the role of demographic change in future u.s. greenhouse...
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1
Households, Consumption, and Energy Use:
The Role of Demographic Change in Future
U.S. Greenhouse Gas Emissions
U.S. Environmental Protection Agency, Socioeconomic Causes and Consequences of Future Environmental Changes Workshop,
San Francisco, November 16, 2005
Brian O’Neill, Brown University & IIASAMike Dalton, California State University
Monterey BayLeiwen Jiang, Brown University
Alexia Prskawetz (VID) and John Pitkin (Cambridge)
2
Presentation Outline
1. Key drivers of greenhouse gas emissions and current treatment of population in energy-economic growth models
2. U.S. household projections from ProFamy model
3. Economic data for households from U.S. Consumer Expenditure Survey
4. Demographic structure of Population-Environment-Technology (PET) Model
5. U.S. CO2 emissions projections with and without demographic effects
3
Drivers of Greenhouse Gas Emissions
Demography
Economic Growth
Technology
Policy
Lifestyles
Energy use
Land Use
Emissions
• Demographic change is one among many drivers• Economic growth models have focused on
population size and technology as key drivers• What about other demographic factors?
4
Demography and Emissions
• Energy-economic growth models (used for
emissions projections) typically consider only
changes in population size
• What are the implications of other demographic
trends for future emissions?
Population Growth/Decline
Aging
Urbanization
Household Size
Energy use
Land Use
Emissions
5
Overview of U.S. Emissions Scenarios
• Case study of demographic trends in the U.S. that uses long-term (50-100 year) scenarios
• New household projections to quantify effects of future demographic change
• Combine household projections with benchmark income and consumption data
• Incorporate household projections and benchmark data into an energy-economic growth model
• Run numerical simulations with the model to compare CO2 emissions in scenarios that account for demographic change to those that do not
6
U.S. Household Projections with ProFamy Model
• ProFamy model (Zeng et al., 1997)– Uses demographic events as input– Produces consistent population and household
outcomes– Produces wide range of household types as output
• Inputs to projections of future living arrangements: – fertility, mortality, migration– marriage, divorce, cohabitation, age at leaving home,
propensity of elderly to live with adult children, etc.
What are plausible bounds for thecomposition of the U.S. population byhousehold size and age?
7
Total Fertility Rates in Low Scenario
Assumptions on the Changes of TFR in the US
1.2
1.6
2.0
2.4
2.8
2000
2020
2040
2060
2080
2100
Low projection
UN Long Term Projection
US SSA 2003US Census Bureau 1999Our Low AssumptionUN Population Prospects 2004
IIASA 2001
Low Scenarios for Total Fertility Rate(TFR), 2000-2100Assumptions on the Changes of TFR in the US
1.2
1.6
2.0
2.4
2.8
2000
2020
2040
2060
2080
2100
Low projection
UN Long Term Projection
US SSA 2003US Census Bureau 1999Our Low AssumptionUN Population Prospects 2004
IIASA 2001
Low Scenarios for Total Fertility Rate(TFR), 2000-2100
8
U.S. Household Projections
• Define one medium scenario and two bounding scenarios:
– Large/young scenario: high fertility, low life expectancy, high migration, and stable unions (marriage, cohabitation)
– Small/old scenario: low fertility, high life expectancy, low migration, and unstable unions
9
Total Fertility Rates, All Scenarios
Assumptions on the Changes of TFR in the US
1.2
1.6
2.0
2.4
2.8
2000
2020
2040
2060
2080
2100
High Projection
Medium Projection
Low Projection
All Scenarios for Total Fertility Rate(TFR), 2000-2100
10
Summary of Assumptions, 2100
11
Summary of Assumptions, 2050
• Medium scenario assumes all rates constant at 2000 level
• Small/old scenario: unstable unions, cohabitation is a substitute for marriage
• Large/young scenario: stable unions,cohabitation is a precursor to marriage
12
U.S. Population in Large/Young and Small/Old Scenarios
0
200
400
600
800
1000
2000 2020 2040 2060 2080 2100
Millions o
f P
eople Large
>65Small>65Large45-65Small45-65
Large<45Small<45
0
200
400
600
800
1000
2000 2020 2040 2060 2080 2100
Millions o
f P
eople
Large>65Small>65Large45-65Small45-65Large<45Small<45
13
ProFamy population distribution over households, by age of head
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
large/young <45
small/old 65+
small/old <45
large/young 65+
Household head <45
Household head 65+
Pro
po
rtio
n o
f P
op
ula
tio
n
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
large/young <45
small/old 65+
small/old <45
large/young 65+
Household head <45
Household head 65+
Pro
po
rtio
n o
f P
op
ula
tio
n
14
ProFamy population distribution over households, by size
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
1 2 3 4 5 6 7+
2100 large-young
2000
2100 small-old
Pro
po
rtio
n o
f P
op
ula
tio
n
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
1 2 3 4 5 6 7+
2100 large-young
2000
2100 small-old
Pro
po
rtio
n o
f P
op
ula
tio
n
15
U.S. Consumer Expenditure Survey
• We use household level economic data from the
U.S. Consumer Expenditure Survey (CEX) to
estimate benchmark per capita values for labor
and capital, and expenditures on 17 different
types of consumer goods
How do demographic changes projected by the ProFamy model translate into economic patterns of income and consumption?
16
Per Capita Household Income• U.S. Consumer Expenditure Survey indicates level and
composition of per capita income varies by age and size of the household head
• Per capita labor greatest in smaller, younger households
05,000
10,00015,00020,00025,00030,00035,000
<45 45-65 65+ <45 45-65 65+
Small Households Large Households
Per
cap
ita 1
998
dolla
rs Capital
Labor
17
CO2 Intensive Household Expenditures
• The PET model has 17 consumer goods: Utilities and Fuels have the greatest CO2 intensities
• Expenditure levels vary by household age and size, affecting direct and indirect energy use
0
500
1,000
1,500
2,000
<45 45-65 65+ <45 45-65 65+
Small Households Large Households
Per
cap
ita e
xpen
ditu
res
Fuels
Utilities
18
Non-CO2 Intensive Household Expenditures• Education and Health have the lowest CO2
intensities of consumer goods in the PET model• Expenditure levels for these goods differ
substantially across age groups
0500
1,000
1,5002,0002,500
<45 45-65 >65 <45 45-65 >65
Small Households Large Households
Per
cap
ita e
xpen
ditu
res Health
Education
19
Population-Environment-Technology Model
• We developed a dynamic general equilibrium modeling framework (with optimizing, forward-looking behavior) that can be calibrated to baselines with and without demographic change in labor supply, demand for consumer goods, etc.
How do emissions under baseline patterns of labor supply and household demand implied by the ProFamy projections and CEX data compare to baseline scenarios without changes in age structure or household size?
20
Introducing Demography into the PET Model
• Replaced standard “representative household” assumption by disaggregated household types
• Population composition of each household type driven by exogenous household projections
• Households are stratified into successive “cohorts”, and two size categories
• Within each size category, cohorts are linked together separated by a generation length (30 yrs), to form three co-existing infinitely-lived dynasties
21
PET Model Dynastic Structure• Lexis diagram
shows age structure of three co-existing dynasties
• Dynasty 1 consists of cohorts 1a-f Dynasty 2 consists of cohorts 2a-f Dynasty 3, consists of cohorts 3a-e
• For example: one dynasty includes today’s 20 year-old, 50 year-old, and 80 year-old households
0
10
20
30
40
50
60
70
80
90
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
Year
Age
1a 1b 1c 1d
1e
1f
2a 2b 2c 2d
2e
2f
3a 3b 3c
3d
3e
cohort:
22
PET Model Overview
HouseholdsConsumption & Savings
Capital & Labor
Final Goods ProducersConsumptionInvestment
GovernmentExports & Imports
Intermediate goods producersOil&Gas
CoalElectricity
Refined PetroleumMaterials
K & LC & I
E & M
CO2 Emissions
22
23
Per Capita Labor Income for 3 Dynasties (Old/Small Scenario, effects of age only)
10
12
14
16
18
20
22
24
2000 2020 2040 2060 2080 2100
Per c
apita
labo
r inc
ome
(thou
sand
s)
Dynasty 1Dynasty 3
Dynasty 2
24
Per Capita Asset Accumulation for 3 Dynasties (Old/Small Scenario, effects of age only)
30
40
50
60
70
80
2000 2020 2040 2060 2080 2100
Cap
ital
per
pers
on
(th
ou
san
ds o
f 2000 d
oll
ars
)
Dynasty 1Dynasty 3
Dynasty 2
25
US CO2 Emissions and Population Aging (solid = representative; dashed = w/age effects)
0
1
2
3
4
5
6
2000 2020 2040 2060 2080 2100
Gig
ato
ns
of
Ca
rbo
n
Lo-Rep Lo-Het
Med-Rep Med-Het
Hi-Rep Hi-Het
26
Effects of Aging and Changes in Household Size on Emissions in 2100
All changes relative to emissions in representative household case.No technological progress in this scenario.
-29
-23
-16-18
-10
-17
-35
-30
-25
-20
-15
-10
-5
0
Age Age +Size
Age Age +Size
Age Age +Size
%-C
han
ge f
rom
Rep
Small/Old Medium Large/Young
-29
-23
-16-18
-10
-17
-35
-30
-25
-20
-15
-10
-5
0
Age Age +Size
Age Age +Size
Age Age +Size
%-C
han
ge f
rom
Rep
Small/Old Medium Large/Young
27
SRES A1 Changes in GDP and CO2-Intensity
0
0.005
0.01
0.015
0.02
0.025
0.03
2000 2020 2040 2060 2080 2100
AIM
ASF
IMAGE
MESSAGE
MINICAM
MARIA
PET
-0.05
-0.04
-0.03
-0.02
-0.01
0
2000 2020 2040 2060 2080 2100
AIM
ASF
IMAGE
MESSAGE
MINICAM
MARIA
PETCh
ange
in C
O2-
Inte
nsi
tyC
han
ge in
per
cap
ita
GD
P
28
US CO2 Emissions in SRES A1 • Comparison of emissions with and without
technical change: population effects are larger than technology effects until almost 2090!
0
0.5
1
1.5
2
2.5
3
3.5
4
2000 2020 2040 2060 2080 2100
Gig
ato
ns
of
Ca
rbo
n No Tec Rep No Tec HetTec Rep Tec Het
Pop Effect with No Tec
Decline in C-Intensity overtakes effects of population heterogeneity
Pop Effect with Tec
29
Results Summary
• Population heterogeneity in the PET model reduces CO2 emissions in all scenarios, up to 30% by 2100 in the Old/Small scenario
– Age-effects reduce emissions in all scenarios
– Size-effects increase emissions in the Old/Small scenario, and decrease emissions in the Young/Large scenario
• Effects of population heterogeneity on CO2 emissions as large, or larger, than technology in some cases
30
Current and Future Work
• Immigration scenarios for the U.S.
• Household projections and household level
economic data for China, India (work in progress
at Brown, IIASA)
• Land use component for the PET model and link
to Integrated Science Assessment Model (ISAM)
31
Acknowledgements
• Financial support from the U.S. Environmental
Protection Agency, and U.S. Department of
Energy
• Warren Sanderson and other participants at the
Symposium on Population Ageing and Economic
Productivity, Vienna Institute for Demography
• Computational support from California State
University Monterey Bay and International
Institute for Applied Systems Analysis (IIASA)
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