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Embracing the bright side of population decline

A growing body of research is showing that global population growth is slowing down and will likely drop into negative territory within the next few decades.

One study predicted that the global population would peak at 9.7 billion people in 2064 – up from around 7.9 billion currently – before falling to 8.8 billion by the end of this century. If this is true, it'll be the first sustained period of world population decline since the Black Death.

But what’s worrying some experts today is that many countries are already seeing natural population growth come to a standstill. Here in Australia, the lack of immigration contributed to population growth of practically zero in the year to March 2021 . Similar stories are playing out in the UK, the US, and many other developed countries.

Shrinking populations and financial markets

What economic impact will these demographics shifts have? After all, we can't ignore the human aspect of our economies. Financial markets are complex, interconnected ecosystems, and our attitudes and behaviour are key to how they perform.

Well, when it comes to population decline, many analysts are bearish.

They say lower birth rates create ageing nations, with fewer people available to look after the elderly. These stretched workforces limit innovation and productivity. Growing economies need growing populations, it is claimed.

However, I believe this is an overly pessimistic view. I'm far more bullish about the impact of declining populations. There are many possible benefits to having fewer people in the world. And I suspect even the negatives aren't quite as bad as people suggest, given humans have an incredible knack for adapting to change.

Wage growth

It's widely thought that a smaller working-age population could lift wages. Fewer workers give the labour market greater bargaining power, leading to better working conditions.

There would also likely be more opportunities for women and ethnic minorities, increasing workforce diversity. Research shows that diverse organisations tend to financially outperform their less inclusive competitors. They are also six times more likely to be innovative and agile.

Economic growth might slow, but it is my hope that the above changes would lead to healthier, happier, and more engaged workers – and a more even wealth distribution.

The late Swedish statistician Hans Rosling argued convincingly for bringing the world's final 1 billion people out of extreme poverty to limit population growth and provide better opportunities for millions of families who are struggling.

I'm confident that humans can adjust to a 'new normal' where economic growth is still a goal, but not the only goal. Instead, perhaps we can focus more on creating a world where living standards and wealth distribution are our barometers of success.

Then, freed from poverty, some people will inevitably go on to become the scientists, entrepreneurs and leaders of tomorrow that we'll need when populations decline.

Innovation and productivity

The conventional logic is that bigger is better when it comes to population and innovation. More people means more researchers and innovators (as well as more consumers to sell to). And yet, only three of Bloomberg's top 10 most innovative economies have populations exceeding 10 million people (South Korea, Germany and Sweden).

So, it's clearly not just a numbers game.

Investing in education and encouraging more people to work in research and development also facilitates the flow of new ideas. Furthermore, automation can accelerate innovation and productivity by performing all of the tedious, time-consuming tasks that would usually fall to humans, freeing them up for more value-oriented work.

Initial predictions for automation were bleak. The 'rise of the robots' would mean job losses, economists said, as employers replaced workers en-masse with machines that never get sick or tired.

More recent research is challenging that theory. One study found that each robot per 1,000 employees boosts employment at a firm by 2.2%. Essentially, automation makes companies more competitive and profitable, helping them to grow the business and swell their ranks.

Sustainability matters

It's common to hear industry commentators make statements like "ignoring the environmental benefits for a moment" or "sustainability aside" when talking about population decline. But we can't simply forget about the environment. It's too important. Ever-growing populations continue to put a strain on the world and its resources.

Declining populations can help.

Researchers recently calculated that having one child fewer saves approximately 59 tonnes of CO2 emissions per year. "Having one less child saves each parent more than 20 times (of CO2 emissions) as living without a car, or about 70 times as much as eliminating meat from the diet" Sustainable Population Australia says.

To be clear, I'm not advocating that people should stop having children. I have written previously about the potential repercussions of a 'baby bust' if rising infertility rates are ignored. In addition, and as things stand right now, the global human population begins to decline at the end of this century and is likely to continue along the decline trajectory.

What I am wanting to highlight is the environmental benefits that are associated with population decline.

Finding the right balance

Of course, there are some roles that robots simply can't fill. Ageing populations will place more pressure on our healthcare and elderly care systems, for example. And it's hard to imagine artificial intelligence ever having as good a bedside manner as a real doctor or nurse.

Australia's healthcare and superannuation systems are excellent, which should relieve some of this burden. But we must also find ways to make certain roles, such as elderly care, more rewarding.

Automation is therefore just one piece of the puzzle. We must also recognise there are complex services that only humans can provide.

There are undoubtedly challenges we face with declining populations, and I don't pretend to have the answers.

But do our narratives have to be so gloomy? There is far more room for optimism based on the human capacity to adapt.


Emma Davidson is Head of Corporate Affairs at London-based Staude Capital, manager of the Global Value Fund (ASX:GVF). This article is the opinion of the writer and does not consider the circumstances of any individual.


April 24, 2022

Perhaps too, if we could all learn to live with a little less the world would be a better place! How much new stuff bought is simply discarded in a matter of weeks or months or short years, to be replace with shinier, better new stuff?

For instance, I live a short walk from a beautiful beach and have resisted the "keeping up with the Jones's" to put in pool like so many of my neighbours. Expensive to build and operate, for use for maybe 4 months in a year! Yet apparently an essential lifestyle item!

Great article!

April 25, 2022

So, James, you're the reason the unemployment rate among pool installers.

If everyone cut their spending by 5% - "just a little bit less" - there'd be a deep recession.

Poverty has been reduced around the world because of economic growth, not because everyone spent less!

April 26, 2022

"unemployment rate among pool installers":

Installing artificial pools next to natural ones is inefficient / wasteful use of capital. Only slightly more use for economic growth than digging circular holes. Consumes resources with no useful outcome except to keep hole diggers employed, raising the price of hole digging for all others who have more useful uses.

April 12, 2022

'...creating a world where living standards and wealth distribution are our barometers of success...' sounds like a future I can get on board with! Great article!

Emma Davidson
April 12, 2022

Thanks Laurence, me too!

Michael J. Sloboda
April 11, 2022

Fertility is always recorded as children per woman, not per man. Why? Because an early census taker realized that it's harder to count children per man accurately. If fertility is too high or too low for the government or the stock market, don't blame only women.

Emma Davidson
April 11, 2022

Thanks Michael, thank you for commenting. I don’t think anyone is blaming anyone for fertility decline, well, I certainly hope not. Fertility decline is what it is, what’s important is us adapting to these changes as they come about.

Nicholas Gilbert
April 10, 2022

Great article. Funny how countries like Sweden and Japan with stable or negative population growth rates also measure highly in the variables which contribute to successful , sustainable society. Like happiness and social cohesion. If planet earth is a finite lifeboat with limited resources and declining biodiversity, the moral dilemma facing unlimited choice in family size suggests that having more than 2 children is being greedy and essentially immoral.

Emma Davidson
April 11, 2022

Thank you for the comment Nicholas, I love a strong point of view ?? As with everything in life, it’s just not that simple, well, at least I don’t think it is.

Leon Levy
April 10, 2022

The degradation of society, no less than the degradation of the planet, is an unavoidable consequence of over-population. If ever there was a topic that is “the elephant in the room”, the negative consequences of population growth is surely it: it never rates a mention other than in terms of its opposite, i.e. the promotion of policies in favour of population growth without any acknowledgment of the profound cost that it carries.
One can only hope that Emma’s timely article will promote greater awareness of this issue and of the need for it to be part of serious political debate and policy.

Emma Davidson
April 12, 2022

Thank you Leon for the support and yeah, it is all about awareness.

May 10, 2022

Yet we all are so worried about covid and all so worried about vaccines being accepting by all as if they are becoming the next Jesus Christ to save mankind where upon any non uniform acceptance by all is a kin to a denial of this modern day savior held with in a syringe. . Perhaps covid is a great thing for the planet and pandemics serve to reset populations back to proper sizes by naturally pruning out the weak. ? Yet governments oppose such principles of Darwin ... I ask you all why?

April 08, 2022

If the proponents of Modern Monetary Theory are correct then the funding of pensions, etc., in the future needn't be a problem. Money can be issued, as needed, to fund specific purposes in the domestic economy. Taxes won't be needed to raise funds, only to counteract any inflationary effect that might occur.

April 08, 2022

Great article Emma. I would add that the suggested population decline will not be equal across all countries or regions. The growth in the MENA regions will provide challenges as these populations will place greater demands on food and water security/availability, will it increase migration to other regions? We are also currently seeing these growing (young) populations look for jobs to compliment their increased education opportunities. If this demand is not met there is the risk of unrest in these regions.
The issue of food security will continue to build in the near term as the population continues to grow, however any population decline will reduce this concern. From an Australian perspective this may impact on our exports; however, in the short term we will see continued strong demand. The challenge for our industry bodies will be to continue the market access into high value markets, so that if the growing population led demand comes to an end, we will have adequate markets for the perceived higher quality food & fiber we produce.

Emma Davidson
April 12, 2022

Robert, I love your insights especially with regards to Australia positioning itself as the higher quality food and fiber provider, that is so smart and will be very valuable both short and long term. Just in the 2.5 years that I have been away (was on the ground in Nov 2019 and have been here for 3 months now), I can see a marked change in the food quality - at least in the cities. This feels smart.

In terms of unrest in the short term (as the population increases before decreasing at the end of this century), I do hope this can be avoided by those younger people being welcomed into countries like the UK who will need the labour as their populations start declining. We need a few years where the population really feels the labour shortage and then immigration becomes less of a political issue - I HOPE!

April 07, 2022

Brilliant article Emma. Really liked the ending statement ,"There is far more room for optimism based on the human capacity to adapt''. Our ability to adapt intrigues me. If/when this time comes, I'm confident we'll navigate it better than the gloomy news currently suggest. Will love to read more of your thoughts - add me to your newsletter if you have one! :)

Emma Davidson
April 11, 2022

Thanks Simi!! Email me on and I’ll ensure you get added to our list ??

Adam Olds
April 04, 2022

Hi Emma, great to read your thoughts. I agree, human beings are so good at , so far , at still being here on Earth. Innovative and tenacious we are. The world is becoming a harsh place to live. Less empathy etc, etc. If I was still in my twenties I would probably focus on travelling the world before it gets difficult to do so.Instead of children. At least that what my Son says. Sounds negative I know ,sorry. Anyway , if this is a general feeling of young people then population decrease may happen quite quickly. On the positive side we will have lower CO2 levels. More housing available as sea levels accelerate their inevitable rise. And many other advantages I am sure. I feel though that mankind should start taking some control of this population decrease, through education, sooner than later. A rapid decrease would definitely cause financial shock at a Global level. You can already feel Australia's grab for quality migrants now. Its the toil of people within a country that creates its internal wealth. And everyone wants wealth. Today its oil and coal for energy. Tomorrow , people.

Emma Davidson
April 04, 2022

Adam, I love your comment and agree with so much of it, especially you final lines: 'And everyone wants wealth. Today its oil and coal for energy. Tomorrow, people.'

Thank you for taking the time to read what I said and take the time to comment.

April 01, 2022

Great article Emma. Its a very worthwhile thought exercise to challenge the idea that a declining population is something we need to be terrified about. Japan has shown of the past few decades that you can still grow your economy and bring incredible innovation to the table, despite very challenged demographics.

Emma Davidson
April 01, 2022

Great point Miles. Thank you for making the time to read the article.

Emma Davidson
April 01, 2022

I couldn't see a chart John, perhaps you could resend the link? In terms of your comment, our impact has indeed been exponential in the last 100 years.

April 01, 2022

Inspiring thoughts and analysis. Excellent article.

Emma Davidson
April 01, 2022

Thank you so much Satya, I very much appreciate your comment :-)

Andrew Smith
March 31, 2022

Interesting article and many are realising that 'population growth' is not such an issue, it has stalled with long term fertility decline (below replacement), while recent analysis suggests peak mid century (Lancet etc.) while researchers Bricker & Ibbitson ('Empty Planet') predict precipitous decline after the peak.

The headline number is not the issue but as the late Hans Rosling said, it's the make-up and how the population is managed at different life stages e.g. oldies now outnumber youth which electoral repercussions when voting for short term horizons aka Brexit.

Population obsessions, have also been used to support an unsubstantiated environmental link of 'sciency sounding' PR that deflects from carbon regulation, fossil fuels, often blames 'immigration' to at least preserve the status quo; from the time of Malthus and Galton through ZPG, and the UNPD (whose formulae are used by ABS & UK too).

The issue is not just skills gaps nor is demanding all retirees continue to work (involuntarily), but how to fund budgets when we are dependent upon taxes from working age and temporary churnover via PAYE system, but these cohorts are in decline viz a vaz increasing numbers of retirees?

OECD demographic data, i.e. medium to long term trends of working age/retirees + kids, is more informative and gives comparisons with other nations, vs. our obsessions with short term headline NOM net overseas migration data snapshots that make for media headlines (but normally dominated by students and backpackers).

Quite obvious, like elsewhere, temporary churn over is important, as 'net financial contributors' to support budgets, then more retirees/pensioners tugging on the same with ageing declining tax payers.

See Oz working age demographics with other comparable nations here via OECD

All have passed the 'demographic sweet spot', hence, how can budgets be supported further? Increase taxes for low income types and/or retirees (mooted in the US by some in the GOP), or cut services and health care, or privatise more services for user pays (political suicide)?

Emma Davidson
April 01, 2022

Andrew, your comment is outstanding, thank you for your thoughts and insights.

Great OECD data and something I looked at a lot when writing this piece. You are right, we have basically passed the 'demographic sweet spot' as defined to date in most OECD countries. Your very pertinent question at the end is indeed one of the biggest dilemma's we will face over the next decades and one I am hopeful humanity will acknowledge and address, especially if we all start talking about this openily and constructively. Essentially, if I have understood you, the question is How do we go forward in the fairest way possible while not taxing our children to death, taxing our retirees again and reducing social services. I wish I had the answer.

All I can say at this stage is that I believe that going forward, when we go to the polls, I believe we have to think about so much more than what our vote can do for us as one person and think about what it might do for us, our kids, their kids, our neighbours, society and so on...

If you have any ideas, I'd love to hear them :-)

One of my more hairbrained ideas is that we tax robots i.e. treat robots as contributors to the betterment of society. This is a pandoras box but it's something I think about.

March 31, 2022

A positive slant on population decline. Always good to read an uplifting opinion. Time will tell and human innovation may win.
Thank you.

Emma Davidson
April 01, 2022

Thanks Jane.
Yeah, so much of our news is filled with the negative and I understand it, this is what humans have always done, communicate around the fireplace on bad things that happened or things that could go wrong so as to protect our species and learn from one another. It means that we instinctively gravitate to the negative news to 'ensure we dont miss anything'. That said, it's wearing thin and I for one am a bit tired of the constant doom and gloom :-)

March 31, 2022

A very interesting article Emma. Good to see some positives amongst the gloom of a declining population. One factor that is relevant, is that when reaching the the traditional retirement age of 65 years, many do not particularly want to retire. With life expectancy of an extra, possibly up to 20 plus years after reaching their 65th birthday, this group of people is used to being active (mentally, physically, socially and financially) members of their society. Many will take up the slack of a declining population and hence a declining workforce, by continuing working, albeit not full time, long into their 'golden years". This serves a two-fold purpose, in that apart from providing employment in a shrinking population, it reduces the burden of the younger generation to support them by through pensions.

Emma Davidson
March 31, 2022

Fantastic comment Rhonda, thank you and I agree completely with your final point, another silver lining.

March 31, 2022

Interesting article - thanks Emma!

Emma Davidson
April 01, 2022

Thank you Mark.

March 31, 2022

Thank you for such a thought-provoking, concise and well researched article Emma. As well as learning something new from the content, I really enjoyed reading it too.

March 31, 2022

In regard to "strain on the world and its resources" Why are people blind to this issue ? Look at this chart to see the world population increase, especially in about the last 200 years. In that period the massive increase has been many times any period in the planet's history. 


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