Will An Ever Increasing Population Affect Global Markets?

Posted by Allison on 4 April 2009, 10:00

The succinct answer to this question is a resounding yes! However, the only way that it can be answered properly is to say that it will have an effect, but currently no one knows exactly how much of an effect it will have.

Around 60 years ago there was something in the region of 2.5 billion people on planet Earth. In 2008 there is somewhere between 6.5 and 7 billion people. In fact nobody is exactly sure how many and once you start counting in billions it is actually very difficult to keep track.

However, overpopulation may well be an issue that affects all economies throughout the world, even those in the developed countries, since they may soon find themselves being asked for more and more aid and assistance. Over the longer term this will have an effect on economies all over the world.

Since 2005 food prices have started to go up and show no sign of stabilising as of 2008. Needless to say, the rising price of food is also closely linked to the rising price of oil.

So the price of food is increasing rapidly and we have more mouths to feed than at any point in the long and sometimes turbulent history of planet Earth.

Can we afford to keep populating the planet with more and more people, if we do not have enough money to feed them all?

Sensitive and emotive issue

The issue of overpopulation and its potential effects for economies throughout the world, is very obviously a sensitive one. Some people argue that Mother Nature will actually provide and that Mother Nature has a way of ensuring that the numbers of people on the planet, do not exceed its capacity to feed them.

So we will always have natural disasters, famines, droughts and other ways of keeping the population down. This seems a very harsh way of looking at things and is not in keeping with 21st century thinking, whereby people try to be relatively caring towards each other.

However, the reality is that we will also have natural disasters and these will usually, have some kind of impact on population levels.

Can the World Support 7 billion people?

Many involved in planning for the future, not just of the world's economies, but also in terms of governing people have expressed reservations about whether or not the world can actually support 7 billion people. However, 7 billion people may not even be the final amount of people on earth.

Some experts reckon that there will be in the region around at 9.2 billion people by the year 2050. We also increasing, by a whopping 78 million people each and every year.

Since food prices are continuously rising and indeed show no signs of abating, it is likely that as the population grows by 70 million people a year, food prices will continue to rise and we will see no reduction in the price of food.

The issue of global-warming is also pertinent to the issue of overpopulation, because it is likely that many countries will be affected by global warming and they may not be able to grow crops, which would help to sustain their population.

As yet it is not clear exactly how the issue of global warming will actually affect the environment, because to a very large extent it is an unknown quantity and the most that scientists can do is make projections.

However, should large areas of the planet suddenly become flooded, this is likely to have a significant impact on how much food the planet can actually produce. Currently, there is an argument presented in terms of global warming, which projects that within 50 years' time, much of the current country of Bangladesh will actually be under water and the country will not be able to produce enough food to feed its citizens. This is only one projection, there are many more that are circulated, which also present a very bleak picture of how the world will look in the next 50 or 100 years.

Yet it is too early to know if these predictions are actually accurate, which makes it difficult to know whether or not they will actually happen, or whether scientists are predicting the worst-case scenario, in an effort to shake people from their complacency.

The impact of pollution and getting rid of waste from manufacturing processes can, if not done properly, cause significant damage to the environment. China is currently finding out, that since many of her rivers have been polluted with industrial waste, there is an issue with regard to be able to provide enough drinking water for certain parts of northern China.

Unsustainable industrial activities have also resulted in soil erosion and soil degradation in some parts of the world and again, it is thought that this will impact on how much food we can produce.

Unfortunately, we will not know the cumulative effects of global warming, climate change and how much of the planet has experienced soil degradation for some time to come. This means that we are currently dealing with projections and it is very hard to look at the different sides of the arguments presented and ascertain whether or not global-warming will have the impact that people are predicting.

Some people believe that over population has actually contributed to global warming. This is because more and more forests are removed in order to make crocks for people or to provide them with some were to live. Much of the countryside in many countries, has long since been swallowed up by new housing developments and farming land has been in decline.

This is one of the complexities of the overpopulation issue, it is not just about how many people are on the planet, it is also about how these people use the Earth's resources and whether or not the Earth can sustain an ever increasing demand.

With regard to the issue of overpopulation, there are definitely two schools of thought. The first is a deeply pessimistic one, which predicts that the world's population will actually increase at such a level that it will become unsustainable. The second is a much more optimistic view, which indicates that human kind is extremely resourceful and will therefore find new ways to feed its people and the planet will survive.

The pessimistic approach

The pessimistic approach to over population asserts that the cumulative effects of global warming, climate change, rising food prices and the increasing demand for energy, which cannot be sustained will result in the planet simply being unable to sustain itself.

The picture painted is indeed a very bleak one. Obviously, the planet will not just wake up one morning, unable to feed the population. The planet will increasingly be divided into people who have access to money and to food and people who do not. This situation will cause all manner of difficulties, not just for the people who do not have access to food, but also for the people who do, because there will be an obvious duty on them to assist as much as they can. Whilst this may start with extensive food aid to the countries that are short of food, gradually the demands from people with no food will start to eat away at the very fabric of the society giving the aid. In other words, after a only a few years the countries that do have food will be financially unable to provide for the countries that do not have any food.

It would have to be a very rich economy indeed that could sustain a country that has food and a country that does not. Thus in purely economic terms, over the longer term it is not sustainable for one country to simply prop up another. Eventually, something would have to give.

Thus parts of the world would have to stand by as other parts slowly began to disappear, because the population is dying off. Morally this presents a real dilemma. How much do you give away and how much can you keep for your own people?

If the pessimistic predictions come true, then we may well see mass migration taking place with people leaving their homes, in search of food. Mass migration alone, would put a serious strain on many economies and would be very difficult to sustain on a longer term basis.

As of 2008, the Food and Agriculture Organization has warned that 37 countries worldwide and now facing extremely serious food crises. Of the 37 countries facing a food crisis, 24 are in Africa, 8 are located in Asia and there are some 5 countries in Latin America. There is only one in Europe. Given that Africa is already a very poor continent, this is quite serious news indeed and given that food prices are quite high, the situation is likely to be quite difficult for these countries. As a result, they will be requiring more aid from developed countries, which is particularly bad news when the dollar is so weak and oil prices are so high. Thus developed countries will find it more of a strain in financial terms, to be able to provide assistance.

Since these countries are particularly vulnerable to a food crisis, it is likely that these countries will be the first ones hit, if food really does start to be in short supply. The United States, Canada, Europe and countries such as Australia and New Zealand, should feel the effects of any global food crisis, to a much lesser extent. However, it is to these countries that the rest of the world will look to, for aid and assistance.

Particularly gloomy forecasts state that even the countries that had access to food for a long time, will not survive, because most countries in the developed world, which would be able to at least buy food for longer than poorer countries, do not have the infrastructure left to make all the things that we need to survive. We have become too reliant on imports and as a result, even the developed countries would find it hard to survive.

Optimistic projections

Optimistic projections are much more upbeat and refute many of the gloomy projections that are made by the pessimists.

One very compelling argument from an optimistic point of view, is that the world's population is not increasing at the rate that it once was. The World Bank first predicted that there would be over 10 billion people in the world by the year 2050. This figure has been reduced by the United Nations, estimated in 1996 that there would be around 9 billion people alive by 2050.

Thus the rapid acceleration of the population seems to have stabilised somewhat. So in actual fact, we may actually be worrying and fretting over nothing.

People who advocate a more optimistic view of population issues, feel that the issue of increased demand for both products and somewhere to live, will be addressed by new and innovative ways of production and also looking at different ways in which accommodation can be provided. They argue that just because we have more people in the world, we do not have to assume that they will simply cause the world to implode. There may be a potential problem, but most problems can be solved and instead of being pessimistic, we should instead attempt to find ways to solve the problem.

This may mean new methods of farming, reclaiming land and trying to make barren land more suitable for agricultural purposes. The use of genetically modified seeds may help promote agriculture in areas that have never been able to sustain their population. We may also seek new ways of providing energy, through the use of alternative forms of energy, or we may simply have to stop using as much energy as we have been used to.

Scientists may even be able to come up with some kind of crop that could be grown under water or in areas that are prone to flooding. Whilst this may seem too outlandish to be feasible, we should also bear in mind that even 30 years ago the concept of genetically modified food was unheard of and people would not have believed it possible.

So there may be ways that science can actually be used to help sustain the planet and make sure that people as a race can survive for the foreseeable future.

Optimists also point to the financial growth that has been experienced by both India and China, as a means of demonstrating that countries, which have been traditionally very poor and undeveloped can find ways of lifting themselves out of poverty.

They also present an argument that perhaps the over-consumption, which has taken place in developed countries for some time, may simply have to stop. Developed countries will have to start living in ways that are more sustainable and people will have to consume less.

So, they argue that the situation really is not as bleak as the pessimists would like us to think.

Who will win the argument?

Due to the fact that there is so much uncertainty and to some extent, myths surrounding the issue of population and the potential for over population, it is extremely difficult to know what will actually happen.

Certainly there seems to be a growing awareness of the issues surrounding overpopulation and global warming and this awareness may well translate into people being able to find solutions to these problems.

However, for those who are involved in financial markets, it is likely that the issue of overpopulation and the potential implications of overpopulation will be an issue that is debated more and more often.

Financially, countries need to start planning how they will be able to look after their citizens if the population is increasing. This ties in to, not just government spending, but also how financial institutions can meet the needs of its customers and also guide strategists, to ensure that countries have enough money to see them through what may be difficult times ahead.

Over population may well put a strain on some economies, which are less robust and able to cope with either mass migration or increased demands for aid.

By the year 2020, we should be able to make realistic projections as to how global-warming has changed the world and how many people will be alive in the year 2050. This will allow economists and financial experts the ability to plan effectively to ensure that the planet can cope and can feed its people, if the world's population reaches a peak of 9.2 billion in the year 2050.

This is a very complex problem and it is not eased by the fact that people do not want to spend too much time thinking about it now, when 2050 seems a long way off. Thus many people prefer to think that it is something that can be thought about tomorrow.