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 & IIASA
Mike Dalton, California State University Monterey Bay
Leiwen Jiang, Brown University
Alexia Prskawetz (VID) and John Pitkin (Cambridge)
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Presentation Outline
Key drivers of greenhouse gas emissions and
current treatment of population in energyeconomic growth models
U.S. household projections from ProFamy
model
Economic data for households from U.S.
Consumer Expenditure Survey
Demographic structure of PopulationEnvironment-Technology (PET) Model
U.S. CO2 emissions projections with and
without demographic effects
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Drivers of Greenhouse Gas Emissions
Demography
Economic Growth
Energy use
Technology
Land Use
Policy
Emissions
Lifestyles
• 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?
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Demography and Emissions
Population Growth/Decline
Aging
Urbanization
Household Size
Energy use
Land Use
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?
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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
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U.S. Household Projections with ProFamy Model
What are plausible bounds for the
composition of the U.S. population by
household size and age?
• 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.
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Total Fertility Rates in Low Scenario
Assumptions
on the
Changes
of TFR in the
US
Low Scenarios
for Total
Fertility
Rate(TFR),
2000-2100
2.8
2.4
Low projection
2.0
UN Long Term Projection
US SSA 2003
US Census Bureau 1999
Our Low Assumption
UN Population Prospects 2004
1.6
IIASA 2001
2100
2080
2060
2040
2020
2000
1.2
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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
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Total Fertility Rates, All Scenarios
All Scenarios
for Total
Fertility
Rate(TFR),
Assumptions
on the
Changes
of TFR in2000-2100
the US
2.8
2.4
High Projection
2.0
Medium Projection
1.6
Low Projection
2100
2080
2060
2040
2020
2000
1.2
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Summary of Assumptions, 2100
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Summary of Assumptions, 2050
• Small/old scenario: unstable unions, cohabitation
is a substitute for marriage
• Large/young scenario: stable unions,cohabitation
is a precursor to marriage
• Medium scenario assumes all rates constant at 2000 level 11
Millions of People
U.S. Population in Large/Young and Small/Old
Scenarios
Large
1000
800
600
400
200
0
2000
2020
2040
2060
2080
2100
2000
2020
2040
2060
2080
2100
Millions of People
1000
800
600
400
200
0
>65
Small
>65
Large
45-65
Small
45-65
Large
<45
Small
<45
Large
>65
Small
>65
Large
45-65
Small
45-65
Large
<45
Small
<45
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ProFamy population distribution over
households, by age of head
Proportion of Population
0.7
0.6
Household head <45
large/young <45
0.5
small/old 65+
0.4
small/old <45
0.3
large/young 65+
0.2
0.1
Household head 65+
0.0
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
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ProFamy population distribution over
households, by size
Proportion of Population living in the households by size
0.35
2100 large-young
Proportion of Population
0.30
2000
2100 small-old
0.25
0.20
0.15
0.10
0.05
0.00
1
2
3
4
5
6
7+
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U.S. Consumer Expenditure Survey
How do demographic changes projected by
the ProFamy model translate into economic
patterns of income and consumption?
• 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
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Per Capita Household Income
Per capita 1998 dollars
• 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
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Capital
Labor
<45
45-65
65+
Small Households
<45
45-65
65+
Large Households
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CO2 Intensive Household Expenditures
Per capita 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
2,000
Fuels
Utilities
1,500
1,000
500
0
<45
45-65
65+
Small Households
<45
45-65
65+
Large Households
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Per capita expenditures
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
2,500
2,000
1,500
1,000
500
0
Health
Education
<45
45-65
>65
Small Households
<45
45-65
>65
Large Households
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Population-Environment-Technology Model
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?
• We developed a dynamic general equilibrium
modeling framework (with optimizing, forwardlooking behavior) that can be calibrated to baselines
with and without demographic change in labor
supply, demand for consumer goods, etc.
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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
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PET Model Dynastic Structure
90
cohort: 1a
80
2a
3a
1b
2b
3b
2c
3c
1d
2d
3d
70
1e
60
Age
1c
2e
50
40
3e
30
1f
20
2f
10
0
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
Year
• 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 yearold, 50 year-old,
and 80 year-old
households
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PET Model Overview
Households
Consumption & Savings
Capital & Labor
C&I
CO2 Emissions
K&L
Intermediate goods producers
E
&
M
Final Goods Producers
Oil&Gas
Consumption
Coal
Investment
Electricity
Government
Refined Petroleum
Exports & Imports
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Materials
Per capita labor income (thousands)
Per Capita Labor Income for 3 Dynasties
(Old/Small Scenario, effects of age only)
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Dynasty 1
Dynasty 3
Dynasty 2
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20
18
16
14
12
10
2000
2020
2040
2060
2080
2100
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Capital per person (thousands of 2000 dollars)
Per Capita Asset Accumulation for 3 Dynasties
(Old/Small Scenario, effects of age only)
80
Dynasty 1
Dynasty 3
Dynasty 2
70
60
50
40
30
2000
2020
2040
2060
2080
2100
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US CO2 Emissions and Population Aging
(solid = representative; dashed = w/age effects)
6
Gigatons of Carbon
5
Lo-Rep
Lo-Het
Med-Rep
Med-Het
Hi-Rep
Hi-Het
4
3
2
1
0
2000
2020
2040
2060
2080
2100
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Effects of Aging and Changes in Household
Size on Emissions in 2100
Small/Old
Medium
Large/Young
0
%-Change from Rep
-5
Age
Age +
Size
Age
Age +
Size
-10
Age
Age +
Size
-10
-15
-16
-20
-25
-30
-18
-17
-23
-29
-35
All changes relative to emissions in representative household case.
No technological progress in this scenario.
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Change in per capita GDP
SRES A1 Changes in GDP and CO2-Intensity
0.03
AIM
0.025
ASF
0.02
IMAGE
0.015
MESSAGE
0.01
MINICAM
MARIA
0.005
PET
0
Change in CO2-Intensity
2000
0
2020
2040
2060
2080
2100
AIM
-0.01
ASF
-0.02
IMAGE
MESSAGE
-0.03
MINICAM
-0.04
MARIA
PET
-0.05
2000
2020
2040
2060
2080
2100
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US CO2 Emissions in SRES A1
• Comparison of emissions with and without
technical change: population effects are larger
than technology effects until almost 2090! Pop
Effect
with No
Tec
Gigatons of Carbon
4
3.5
No Tec Rep
Tec Rep
No Tec Het
Tec Het
3
Pop
Effect
with
Tec
2.5
2
1.5
1
0.5
0
2000
Decline in C-Intensity
overtakes effects of
population heterogeneity
2020
2040
2060
2080
2100
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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
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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)
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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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