Population aging and future carbon emissions in the United States

Abstract Changes in the age composition of U.S. households over the next several decades could affect energy use and carbon dioxide (CO 2 ) emissions, the most important greenhouse gas. This article incorporates population age structure into an energy–economic growth model with multiple dynasties of heterogeneous households. The model is used to estimate and compare effects of population aging and technical change on baseline paths of U.S. energy use, and CO 2 emissions. Results show that population aging reduces long-term emissions, by almost 40% in a low population scenario, and effects of aging on emissions can be as large, or larger than, effects of technical change in some cases. These results are derived under standard assumptions and functional forms that are used in economic growth models. The model also assumes a closed economy, substitution elasticities that are fixed, and identical across age groups, and patterns of labor supply that vary by age group, but are fixed over time.

[1]  A. Perrels,et al.  Modelling lifestyle effects on energy demand and related emissions , 2000 .

[2]  J. Weyant,et al.  Discounting and Intergenerational Equity , 1999 .

[3]  B. O’Neill,et al.  Dangerous Climate Impacts and the Kyoto Protocol , 2002, Science.

[4]  William R. Cline.  Global Warming: The Economic Stakes , 1992 .

[5]  Fatih Guvenen,et al.  Reconciling Conflicting Evidence on the Elasticity of Intertemporal Substitution , 2000 .

[6]  Alan S. Manne,et al.  MERGE. A model for evaluating regional and global effects of GHG reduction policies , 1995 .

[7]  Lee Schipper,et al.  Life-styles and the Environment: The Case of Energy , 1997 .

[8]  Michael D Mastrandrea,et al.  Probabilistic Integrated Assessment of "Dangerous" Climate Change , 2004, Science.

[9]  G. Paulin.  Expenditure Patterns of Older Americans, 1984-97 , 2000 .

[10]  Warwick J. McKibbin,et al.  Modelling Reality: The Need for Both Inter-temporal Optimization and Stickiness in Models for Policy-Making , 2000 .

[11]  L. Goulder,et al.  Effects of Carbon Taxes in an Economy with Prior Tax Distortions: An Intertemporal General Equilibrium Analysis , 1995 .

[12]  Geir B. Asheim,et al.  ON INTERGENERATIONAL EQUITY , 2003 .

[13]  W. Nordhaus.  Managing the Global Commons: The Economics of Climate Change , 1994 .

[14]  R. Solow.  A Contribution to the Theory of Economic Growth , 1956 .

[15]  M. Farmer,et al.  Policies for Sustainability: Lessons from an Overlapping Generations Model , 1997 .

[16]  A. Freeman,et al.  Equity, efficiency, and discounting : The reasons for discounting intergenerational effects , 1977 .

[17]  Richard B. Howarth,et al.  CLIMATE CHANGE AND OVERLAPPING GENERATIONS , 1996 .

[18]  William H. Press,et al.  Numerical Recipes: FORTRAN , 1988 .

[19]  F. Ramsey,et al.  THE MATHEMATICAL THEORY OF SAVING , 1928 .

[20]  T. Teisberg,et al.  CETA: A Model for Carbon Emissions Trajectory Assessment , 1992 .

[21]  P. Krugman.  MODELLING REALITY : THE NEED FOR BOTH INTERTEMPORAL OPTIMIZATION AND STICKINESS IN MODELS FOR POLICY-MAKING , 2001 .

[22]  S. Fischer,et al.  Lectures on Macroeconomics , 1972 .

[23]  Laurence J. Kotlikoff,et al.  Dynamic Fiscal Policy , 1988 .

[24]  Richard B. Norgaard,et al.  Environmental valuation under sustainable development , 1992 .

[25]  R. Fair,et al.  Solution and Maximum Likelihood Estimation of Dynamic Nonlinear Rationalexpectations Models , 1980 .

[26]  Motohiro Yogo,et al.  Estimating the Elasticity of Intertemporal Substitution When Instruments Are Weak , 2003, Review of Economics and Statistics.

[27]  William D. Nordhaus,et al.  A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies , 1996 .

[28]  Robert J. Barro,et al.  Fertility Choice In A Model Of Economic Growth , 1989 .

[29]  R. Barro.  Are Government Bonds Net Wealth? , 1974, Journal of Political Economy.

[30]  Joel E Cohen,et al.  Population and climate change. , 2010, Proceedings of the American Philosophical Society.

[31]  Thomas C. Schelling,et al.  Some economics of global warming , 1992 .

[32]  Richard B. Howarth,et al.  An Overlapping Generations Model of Climate‐Economy Interactions , 1998 .

[33]  T. Kehoe.  Computation and multiplicity of equilibria , 1991 .

[34]  Reyer Gerlagh,et al.  Overlapping generations versus infinitely-lived agent: the case of global warming , 2001 .

[35]  Emrys D. Jones.  The Developing World , 1963, Nature.

[36]  J. Schmitt.  Estimating household consumption expenditures in the United States using the Interview and Diary portions of the 1980, 1990, and 1997 Consumer Expenditure Surveys , 2004 .

[37]  Shui Bin,et al.  Consumer lifestyle approach to US energy use and the related CO2 emissions , 2005 .

[38]  Reyer Gerlagh,et al.  The effects of ageing and an environmental trust fund in an overlapping generations model on carbon emission reductions , 2001 .

[39]  Katherin E. Seiferlein.  Annual energy review 2003 , 2004 .

[40]  J. Geanakoplos,et al.  Chapter 35 Overlapping generations , 1991 .

[41]  Thomas Sterner,et al.  Discounting and Distributional Considerations in the Context of Global Warming. , 1996 .

[42]  Paul Beaudry,et al.  The Intertemporal Elasticity of Substitution: An Exploration using a US Panel of State Data , 1996 .

[43]  T. Schelling,et al.  Intergenerational and International Discounting , 2000, Risk analysis : an official publication of the Society for Risk Analysis.

[44]  Alexei G. Sankovski,et al.  Special report on emissions scenarios , 2000 .

[45]  P. Scaramozzino,et al.  Overlapping Generations and Environmental Control , 1995 .

[46]  Emily C Lawrance.  Poverty and the Rate of Time Preference: Evidence from Panel Data , 1991, Journal of Political Economy.

[47]  J. Edmonds,et al.  The Economics of the Kyoto Protocol , 1999 .

[48]  Brian C. O'Neill,et al.  Toward a New Model for Probabilistic Household Forecasts , 2004 .

[49]  Yi Zeng,et al.  Household projection using conventional demographic data. , 1998 .

[50]  A. Deaton,et al.  The Analysis of Household Surveys (Reissue Edition with a New Preface): A Microeconometric Approach to Development Policy , 2018 .

[51]  G. Müller-Fürstenberger,et al.  Overlapping Generations or Infinitely-Lived Agents: Intergenerational Altruism and the Economics of Global Warming , 1997 .

[52]  Olivier J. Blanchard,et al.  Debt, Deficits, and Finite Horizons , 1984, Journal of Political Economy.

[53]  William H. Press,et al.  Numerical recipes in Fortran 90: the art of parallel scientific computing, 2nd Edition , 1996, Fortran numerical recipes.

[54]  Nancy L. Stokey,et al.  Recursive methods in economic dynamics , 1989 .