First, demography. Populations in the developed world are already ageing. Longer life expectancy is a great achievement. But coupled with declining birth rates, we are facing serious economic and social consequences – and soon, if current trends persist, fewer and fewer people of working age will have to support more and more retirees. The cost of pensions and healthcare, together with rising public debt, could very well place an intolerable burden upon public finances and on future workers.
Will policies be identified to arrest this demographic decline, or to increase the productivity of a smaller working population? Or will we revise social contracts in order to reduce pensions, healthcare or other social security benefits? Can we find ways to provide benefits more efficiently?
Alternatively, will OECD countries supplement their populations by attracting large numbers of migrants from the developing world? Are our societies ready to receive and integrate waves of new minorities with different cultures, religions and social values? It would be nice to think so. But even such a policy would likely founder because birth rates in many countries that send migrants are plummeting.
Perhaps our governments will respond by pushing the retirement age to 70 or 75, or higher. Perhaps they will increase the number of hours worked – from lows such as the 1,500 hours per year worked today in Germany, to higher numbers such as the 2,400 hours in Korea.
These are difficult questions facing the developed world today. In a slightly longer timeframe they will beset developing countries, especially China which has followed a one-child policy! I am worried. Will our politicians be able to deliver the answers?
About a decade ago, conventional wisdom held that the earth’s population would reach an unsustainable 12 billion people by the year 2050. We often referred to the “population time bomb” and the challenge of feeding this burgeoning population in the developing world. The reality is that the bomb already exploded as the world population increased from 1.6 billion at the end of the 19th century to over 6 billion at the end of the 20th.
The Malthusian nightmare has receded, at least for now. But humans are exerting enormous pressure on the global environment and this brings me to the second global phenomenon which will drive policy agendas during this century: climate change.
There now seems to be indisputable evidence that global warming is upon us and accelerating. The extent to which this warming is the result of human activity remains moot, although the strong coincidence of rising temperatures and rising CO2 emissions should give pause to even the most sceptical observers. The real question about climate change is “at what rate”: slow, rapid or abrupt?
The nightmare scenario is the abrupt climate change that would ensue if global temperatures passed a threshold that would induce the equivalent of climatic chaos. An analogy is a canoe which gradually tips as it fills with water – until it capsizes. This is a terrifying prospect and some argue that it may be only a decade away.
Fortunately, the more likely scenario is that climate change will continue at a pace which will permit us to adapt. It is for this reason that I have encouraged OECD members to address two issues in our environmental work: first, how to slow down climate change through the reduction of greenhouse emissions, including through the implementation of the Kyoto Protocol, and the wider use of non-greenhouse gas emitting technologies; and, second, to identify areas where adaptation and preparedness are clearly necessary.
Adaptation is the relatively new issue. Evidence is mounting that extreme weather conditions, such as the heat wave which brought death to many elderly people in Europe last summer, will be more frequent. Are we now in a position to deal with such heat waves? Can our infrastructure, such as for power provision, withstand long periods of severe heat or deep freeze? Have we identified communities at risk from flash floods? Are we ready to fight the tropical diseases that will invade our warming climates? In agriculture, can we change crops as quickly as the climate evolves and can we cope with reduced rainfalls in some areas and dramatically increased precipitation elsewhere? If sea walls cannot protect low lands, are we ready to receive “environmental refugees”? Are we ready for the day that the Gulf Stream stops?
Many questions, yet they all point to just one: are we getting ready for inevitable climate change? Whether the problems are about demographic change or climate change, thinking about them – in laboratories or universities – is not enough. We need options for public policy that can be implemented in our capitals. Obviously, these are areas where the interdisciplinary strength of the OECD, complemented by direct access to decisionmakers, should be brought to bear, and as quickly as possible.
©OECD Observer No 243, May 2004