Michigan State University Extension
Ag Experiment Station Special Reports - 03239569
07/28/98
Michigan Agricultural Experiment Station, Michigan State University
SPECIAL REPORT
Lead Author: John N. Ferris Graduate Assistant: Paul McVeigh
To assess the status of Michigan's natural resources and project their potential 15 to 20 years into the future is a formidable task. Some would deny that such an effort could be fruitful, and they would not venture into these murky grounds. Yet, we have little choice. Decisions are being made and will be made based on some presumptions about the distant future, stated or unstated. Risks of making wrong decisions cannot be eliminated. But with careful attention to underlying trends, combined with inter-disciplinary analysis and a broad base of expert judgment, researchers will be able to articulate more clearly the public and private choices ahead for managing and utilizing Michigan's natural resources.
The purpose of this paper is to provide background information on some of the salient demographic, social and economic trends and projections that have implications for natural resources in Michigan. Most of the projections represent analyses from government and private sources believed to represent a traditional view of the long-range future.
Global
The passage of the North American Free Trade Agreement (NAFTA) by Congress and the likely acceptance of the Uruguay Round compromise on GATT will accelerate a long-term trend to international trade liberalization. The eventual impact of GATT alone has been estimated to add as much as $200 billion to the world's gross product annually or about 1 percent of the total. This may be a conservative estimate because of the dynamics of trade liberalization. This means that increased access to markets unleashes entrepreneurial skills which generate results not easily measured.
Also, NAFTA and GATT will likely bring global environmental issues more into focus. As products and services move more freely across national borders, pressures will build for more consistency in national environmental policies. While environmental problems are universal, the poorer nations have not had the capacity to confront these deficiencies as have the more developed nations. A major challenge will be how to assist these nations to achieve a balance between economic development and protection of the environment.
This challenge is underscored by the prospective growth in world population. The World Bank projects that the growth rate in low income countries will decline from just over 2 percent per year in the past couple of decades to 1.8 percent in the 1990's to 1.3 percent in the period 2000-2030 (World Bank, 1992). A similar growth rate in population is projected for the middle income nations. For high income nations, the population growth rate has declined from 0.8 percent per year in the 1970's to 0.6 percent in the 1980's and is projected to be about 0.5 percent in the 1990's and down to about 0.2 percent in the period 2000-2030.
Trends and projections of these growth rates for low and middle income nations (also called less developed countries, or LDC's), the U.S. and other developed nations are illustrated in Figure 1 for 1970-2010. While the growth rate in percent is diminishing, emphasis should be made that the absolute annual increase in world population is currently the greatest in history. The population equivalent of Mexico is being added to the globe each year.
In spite of this progress in reducing the population growth rate, total world population is projected to increase from 5.3 billion in 1990 to 6.2 billion in 2000 to 8.9 billion in 2030, increases of 17 percent and 68 percent, respectively, over 1990. In 1990, 58 percent of the world's population was in the low income nations, 21 percent was in the middle income nations, 15 percent in high income countries and the balance of 6 percent in other economies (the former USSR, People's Democratic Republic of Korea and Cuba). The World Bank projects, that by 2030, the current low and middle income nations (LDC's) will account for 84 percent of the world's population. Population trends and projections for the U.S., other developed nations and the LDC's for 1970 to 2010 are illustrated in Figure 2. Even under the most optimistic assumptions about the ability of the world to reduce fertility rates, the World Bank projects a doubling of the population by the end of the next century.
Although GNP is an imperfect measure of a nation's wealth, it can serve to highlight the extreme differences among countries in their stage of economic development. In 1990, the average per capita GNP in U.S. dollars for low income nations was $350, in middle income nations, $2,220, and in high income nations, $19,590. Combining the population data with per capita GNP figures, the high income countries with 15 percent of the world's population accounted for nearly three-fourths of the world GNP in 1990.
In the 1960's and 1970's, the low and middle income nations outpaced the high income nations in terms of real per capita economic growth (percent), albeit from a much lower base. However, the rate of growth diminished over this period and, in the 1980's, the annual growth in real per capita incomes was only 1.5 percent per year, well below that of the high income nations. Many reasons can be cited including the world-wide recession in the early 1980's, rising interest rates following increased indebtedness in the 1970's and falling commodity prices.
Of major concern for high as well as low and middle income nations is the slow economic growth of the past decade. In round numbers, the world's real per capita economic growth in the 1960's was about 3 percent per year, in the 1970's about 2 percent per year and in the 1980's about 1 percent per year. The early 1990's has been characterized by no growth or recession.
This slowing of economic growth is shown in Figure 3 in which the annual percent change in real gross domestic product per capita in the U.S. and the rest of the world is plotted for 1960 to 1993 and projected to the year 2010. Also apparent is the increased economic interdependency between the U.S. and the rest of the world. This trend will continue with expanded world trade.
The projected real economic growth rate in the U.S. and elsewhere (Figure 3) at about 1 percent per capita per year, may appear conservative based on long-term trends and achievable economic expansion. However, the experience of the past decade indicates certain structural barriers to growth which are likely to persist for some time. These projections do not fully account for possible acceleration attributable to NAFTA, GATT and additional progress in trade liberalization, but do highlight why efforts must be intensified toward freer trade and reduction in barriers to growth.
United States
To a major extent, trends and projections for the U.S. as a whole will be reflected in Michigan. This section deals with some of the salient developments in U.S. demography and macroeconomics.
Population
The Bureau of the Census of the U.S. Department of Commerce, based upon the 1990 Census, has projected the U.S. population to increase from 249.4 million in 1990 to between 278.1 million (lowest series) and 317.9 million (highest series) by 2010 (USDC, Bureau of the Census, 1992). The middle series projection of 298.1 million represents an increase of nearly 50 million persons or 20 percent of the 1990 population.
Of particular interest are the projected changes in the age distribution of the population (Table 1). Of the nearly 50 million increase in the U.S. population, 41 million, or 85 percent of the increase, will be persons 45 years of age or older. The number of persons in the 25-34 age category will actually decline. A recent reversal in the long-term decline in birthrates is expected to build the numbers in the 5-24 year age group; but in the long-run, birthrates are expected to decline gradually.
A number of implications can be drawn from these projections. The 71 percent increase in the population aged 45-64 represents individuals in higher income brackets with substantially more discretionary income than other individuals. The task of market analysts will be to determine how this group will likely spend this income. Those in the 65-84 age group will have both more discretionary income and leisure time. Those 85 and over will have ample leisure time, but will be less mobile than the younger groups.
Households
A special report from American Demographics highlights some of the salient developments in households (American Demographics, 1993).
The number of households in the U.S. increased 27 percent in the 1970's. Growth hen slowed to 14 percent in the 1980's. We project that the number of households will increase 6 percent between 1990 and 1995, and 11 percent from 1995 to 2000. But household growth will virtually cease between 2000 and 2005 (1 percent) before returning to slow growth from 2005 to 2010 (6 percent). The fluctuations are due to the differing sizes and habits of the baby-boom, baby-bust and baby-boomlet generations. They will have a dramatic effect on consumer demand for hundreds of products and services.
The household profile and projections to 2010 from American Demographics are summarized in Table 2. The major baby boom, which started in 1946 and lasted 18 years, is now responsible for 4 out of every 10 adults. The oldest of the baby boomers began to form households in the mid-1960's. However, the birthrate from this group did not match that of the major baby boom period as many more women entered the laborforce, divorce rates increased rapidly, marriage rates dropped and married women postponed child-bearing.
The next cycle in the birthrate will not likely repeat the previous one. Divorce rates and the pace at which women are entering the labor force are leveling off. Even in recent years, an increase in the birth rate is evident. This will result in some pick-up in household formation after 2005.
Following are some of the features of household formations as projected by American Demographics over the 1990-2010 period.
1. Married couples comprised 56 percent of all families and 70 percent of consumer spending in 1990. In 2010, these couples will still make up half of the households and two-thirds of consumer spending.
2. Between 1990 and 2010, couples with children under age 18 will drop from 47 percent of all married-couple households to 38 percent. Sometime before the turn of the century, couples with children under 18 will be outnumbered by couples who have no children of any age living with them, i.e., "empty nest" couples.
3. In the 1990's, married parents aged 45 to 54, with children under 18 years of age, will increase by 34 percent and in 2000-2010, married parents aged 55-64 will increase 47 percent. Even so, nearly 70 percent of couples with children under 18 will be younger than 45 in 2010.
4. By 2010, the number of empty nest couples aged 45 to 64 will double from the number in 1990. Incomes to these households will be enhanced by the contributions by working women from their careers and pensions. The travel business should benefit, particularly those that sell long vacations.
5. The number of older single mothers should grow slightly below the average rate for households, but remain the bulk of single parents. Growth in single fathers will exceed the national average growth rate for households.
6. Persons living alone will increase more rapidly than all households between 1990 and 2010. Most men who live alone are under the age of 45, while most women who live alone are aged 55 or older. However, the proportion of single-household men under 45 will drop from 54 percent to 35 percent, while those 45 to 64 will increase sharply. Women who live alone are predominately older women on fixed incomes. Between 1990 and 2010, the age profile of these women will shift toward the middle as baby boomers enter these age groups.
Macroeconomics
The consensus about the prospective economic growth in the U.S. is that it will not be robust. Real Gross Domestic Product (GDP) per capita increased 2.7 percent per year in the 1960's, 1.8 percent per year in the 1970's and 1.5 percent per year in the 1980's. In 1990-1993, the increase was a puny 0.4 percent per year. The consensus from the "Blue Chip Economic Indicators" is that in the latter part of the 1990's, the real GDP per capita will increase about 1.6 percent per year, and into the early part of the next century, about 1.8 percent per year (Eggert, 1993).
These modest forecasts are accompanied with some positive signs in terms of inflation rates, interest rates, unemployment rates, housing starts and auto sales (Table 3). Inflation in consumer prices is projected to remain below 4 percent, short-term interest rates below 5 percent and long-term interest rates around 8 percent. Projections for inflation and interest rates with comparisons to the past are portrayed in Figures 4 and 5. While the scenario for the coming decade or two is one of modest growth, the consensus is that the unemployment rate will continue to decline, housing starts will remain equal to, or above, the 1993 pace, as will auto sales.
Energy and Food Prices
Two components of the Consumer Price Index (CPI) which generate the most variability in the index are energy and food prices. Energy prices depend on crude oil prices which, in turn, are related to efforts of OPEC nations to regulate supplies. The Department of Energy projects that the price of crude oil (U.S. refiner acquisition cost of imported crude oil), which averaged $17.69 per barrel in 1992 will range from $18.50 to $39.00 per barrel by 2010, in 1992 dollars (Department of Energy, 1993). The range reflects the uncertainty related to oil prices and whether economic growth is low or high. The Department of Energy's (DOE's) medium projection to 2010 is about $30 per barrel in 1992 dollars.
Because of the difficulty OPEC nations have had in controlling production to enhance prices, the DOE's low and medium projections would appear to be the most reasonable. The medium and low projections are illustrated in Figure 6 as the high and low scenarios, using 1987 dollars. The implications of these projections are that softness in oil prices should continue in the near future. In the longer-run, crude oil prices will remain about steady in real terms with low economic growth or increase about 75 percent in real terms with moderate economic growth.
While a 75 percent increase in real crude oil prices would appear substantial, such an increase would be muted at the wholesale or retail level. As shown in Figure 7, the Producer Price Index for Fuels and Energy is projected to remain steady in real terms or increase about 25 percent over the projection period, depending on economic growth.
The DOE projects natural gas prices to double in real terms between 1990 and 2010 in their medium economic growth rate scenario. This represents a greater percentage increase than projected for crude oil. Even with low economic growth, they project an 85 percent increase in real natural gas prices. On the other hand, projections for real electricity prices are relatively steady. Real coal prices are projected to increase about 40 percent between 1990 and 2010.
Over the years, the efficiency of American farmers and the food industry has kept food prices in check (Figure 8). Food prices have tended to increase less rapidly than general inflation. In the future, food prices will likely increase at least in line with the Consumer Price Index for all goods and services. This will be due to the decline in the farmer's share of the retail food dollar. The price spread between the farmer and the consumer has been closely tied to general inflation. In addition, as a greater share of farm inputs were purchased, costs of production became more closely tied to general inflation.
As the world population continues to expand and per capita purchasing power increases, demands on agricultural resources could drive farm and food prices up sharply, at least for a period of time. Most likely, this would not develop until after the turn of the century. Agriculture has the capacity to meet projected demands, but shortfalls in world food supplies and the attendant higher food prices may be needed to generate public support for the necessary research and educational programs to match production with demand and keep food prices in check.
Particularly pessimistic about the ability of the world to feed itself over the next quarter of a century is Lester Brown who sees crop yields and fish-catch leveling off (Brown, 1994). With the projected rise in population, he projects sharply declining fish, beef and mutton production per capita from 1990 to 2030. Grain production will barely keep up with population growth. While this view would be regarded as an extreme position, this scenario should be retained in the minds of policymakers as a possibility, although not the baseline.
The implication to Michigan's natural resources is that the demand on land for agriculture could heat up in the next century. Very likely, much of the land in set-aside programs and the Conservation Reserve will return to food production. Also, in the balance of the 1990's, the direct subsidies to agriculture will continue to diminish. Rather than having subsidies available as incentives to participate in conservation programs, the government will have to resort to more regulation.
Consumer Spending, Investment and Employment
How consumers will be spending their income is forecast by the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor. For the period of 1990-2005, BLS projects personal consumption expenditures to increase 2.3 percent per year in real terms (U.S. Department of Labor, 1992). Expenditures for durables will increase somewhat more rapidly at 2.4 percent annually on motor vehicles and parts and 3.0 percent on furniture, clothing and other durables. Expenditures on housing will proceed at 1.9 percent per year and on services at 2.9 percent per year.
In the investment area, business expenditures on buildings and other construction is projected to increase 1.1 percent per year. Residential construction is projected to expand by 1.4 percent per year.
According to the BLS, employment growth will be in the service industries; that is, practically all of the increase in employment from 1990 to 2005 will be in the service producing industries-transportation, communications, utilities, wholesale trade, retail trade, finance, insurance, real estate, government and other services. Employment in eating and drinking establishments and in hotels and other lodging places is projected to increase by 1.9 percent per year. Employment in amusement and recreation services is projected to increase 1.8 percent per year.
Michigan, the East North Central Region and Ontario
Michigan, being highly dependent on sales of durable goods-primarily automobiles and parts-suffered loss of population in the recession of the early 1980's. By the mid-1980's, population began to recover and by the early 1990's, population moved back above the earlier peak and reached 9.4 million in 1992. Even so, Michigan's share of total U.S. population continued to decline (Figure 9).
Similar patterns can be seen in trends in real personal income per capita in Michigan compared with the U.S. Prior to the recession, personal income per capita was above the U.S. average, fell below during the recession and pulled back near to the national average later on (Figure 10).
While Michigan's total real personal income rebounded and reached $130 billion in the early 1990's, the growth did not keep pace with the U.S. (Figure 11). While Michigan was hit harder than the other East North Central States (Wisconsin, Illinois, Indiana and Ohio) during the recession, Michigan population recovered enough to bring its share of the total population of the East North Central States back to the 22.1-22.2 percent level of the 1970's (Figure 12).
While the entire East North Central Region was adversely affected by the recession, Michigan's vulnerability can be observed in Figure 13, which shows the variability in real total personal income in Michigan over the past two decades and Michigan's share of the East North Central Region.
The need for diversification in the Michigan economy is even more apparent when reviewing the occupational outlook of the Bureau of Labor Statistics. U.S. employment in motor vehicles and parts is projected to decline nearly 10 percent between 1990 and 2005.
Projections
The prospective demands on Michigan's natural resources and the products of these resources will be a function of population growth and the purchasing power of the residents of the state and surrounding regions. Demographers and economists with the U.S. Department of Commerce, NPA Data Services, Inc., Statistics Canada and the Conference Board of Canada have projected population, income and employment to 2010 and beyond for the U.S. and Canada. Following is a summary of their analysis for the Great Lakes region, which includes Michigan, Ontario, Ohio, Indiana, Illinois and Wisconsin.
As indicated in Table 4, the population growth in the decade of the 1980's slowed in every East North Central State, plus Ontario, with the total for the region increasing by 3 percent as compared to 5 percent in the decade of the 1970's. Some acceleration in population growth is projected for each of the East North Central States for 1990-2010, while Ontario's population growth is expected to diminish. However, Ontario's population expansion has far outpaced the East North Central States over the past two decades and will continue this pattern in 1990-2010, though at a slower pace than in the 1970's and 1980's. The population for the entire region is projected to increase 6 percent in the 1990's and 5 percent in 2000-2010. In total, the increase from 51.8 million in 1990 to 57.5 million in 2010 represents an addition of 5.7 million persons.
In Michigan, population increased 4 percent in the 1970's and a scant 1 percent in the 1980's. A pick-up of 5 percent is projected for the 1990's and for 2000-2010.
Real personal income per capita is a key indicator of economic growth and purchasing power. By this measure, economic growth in the East North Central States slowed noticeably in the decade of the 1980's compared to the 1970's (Table 5). The increase in real per capita income in Wisconsin, for example, declined from +26 percent in 1970-1980 to +11 percent in 1980-1990. In Michigan, real per capita income increased 13 percent in the 1980's compared with 23 percent in the 1970's. Real personal income in Ontario, converted to U.S. dollars, actually was fairly robust in the 1980's, increasing 23 percent, even a bit above the rate in the 1970's.
Projections for the next two decades point to continued relatively slow economic growth for the region, at 13 percent in real per capita incomes in the 1990's and 12 percent in 2000-2010. Only in Indiana and Wisconsin are real per capita income growth rates projected to accelerate. In Michigan, real per capita personal incomes are projected to increase 10 and 11 percent in the 1990's and 2000-2010, respectively.
Combining population and per capita income data, trends and projections for total purchasing power in the region can be generated (Table 6). Total real personal income increased 27 percent in the 1970's, 20 percent in the 1980's and is projected to continue near the 20 percent rate (19 percent) in the 1990's, slowing to 17 percent in 2000-2010. While also slowing, the total real personal income in Ontario is projected to continue to outpace the growth in the East North Central States. (Michigan should take note of this prospect and nurture this close-by market.) In absolute terms, purchasing power of the East North Central Region, plus Ontario, is projected to expand by a third of a trillion dollars between 1990 and 2010.
Michigan's total real personal income grew 28 percent in the 1970's, but only 13 percent in the 1980's. A modest recovery to a 16 percent rate in the current and following decade is expected. Similarly, somewhat higher growth rates are projected for other states except Illinois.
Trends and projections for employment reflect similar patterns as does real total personal income, with some notable differences (Table 7). The growth in employment for the region in the 1980's was 17 percent, slightly above the increase for the 1970's. Except for Wisconsin, the growth for the East North Central States was greater in the 1980's than in the 1970's. In Ontario, the growth in employment dropped from the higher rate of 33 percent in the 1970's to 22 percent in the 1980's.
The fact that total real personal income in Michigan grew only 13 percent in the 1980's while employment increased by 18 percent indicates the extent to which employment shifted to lower paying jobs. This was also true, but to a lesser extent, in Indiana, Ohio and Wisconsin.
Projections indicate that this shift may have run its course_in all the East North Central States and Ontario, total real personal income will increase more rapidly than employment. Employment growth in the region is projected to increase 12 percent in the 1990's and 8 percent in 2000-2010. This is a much slower expansion rate than in The past couple of decades. This slow-down will be registered in all the East North Central States and Ontario. In Michigan, employment is projected to increase 11 percent in the 1990's and 8 percent in 2000-2010.
In absolute terms, the region is expected to create another 5.7 million jobs between 1990 and 2010.
Table 1. Projections of the age distribution of the U.S.
population from 1990 to 2010 based on the middle series
of the Bureau of Census of the U.S. Department of
Commerce
Change from 1990 to 2010
Age Category 1990 Population Absolute Percent
(Million) (Million) (%)
Under 5 18.9 +.9 +5
5-13 32.0 +3.4 +11
14-17 13.3 +3.6 +27
18-24 26.8 +3.2 +12
25-34 43.1 -4.8 -11
35-44 37.8 +1.1 +3
45-64 46.3 +32.8 +71
65-84 28.2 +5.8 +21
85 and over 3.0 +2.7 +87
Total 249.4 +48.7 +20
Figure 1. Annual growth in population in the U.S., other developed nations and and less developed countries (LDCs).
Figure 2. Population in the U.S., other developed nations and less developed countries (LDCs).
Figure 3. Annual change in real domestic product per capita in the U.S. and rest of the world (R.O.W.).
Table 2. Households to 2010 (numbers in thousands and percent of all households by type, 1990-2010; and percent change 1990-2000 and 2000-2010).
1990 1995 2000
Number Percent Number Number Percent
All HH 93 ,347 100.0 98,872 110,140 100.0
Families 66 ,091 70.8 68,937 77,705 70.6
Married
couples 52,317 56.0 53,408 60,969 55.4
with children
<18* 24,537 26.3 24,410 24,286 22.1
with children
18+ only 6,258 6.7 4,750 5,318 4.8
Single
fathers 1,153 1.2 1,366 1,523 1.4
Single
mothers 6,599 7.1 7,238 7,473 6.8
Other
families 6,022 6.5 6,925 7,741 7.0
Nonfamilies
27,257 29.2 29,935 32,434 29.4
Men living
alone 9,049 9.7 9,983 10,898 9.9
Women living
alone 13,950 14.9 15,153 16,278 14.8
Other nonfamilies
4,258 4.6 4,800 5,258 4.8
Percent Percent
2005 2010 Change Change
Number Number Percent 1990-2000 2000-2010
All HH 111,039 117,696 100.0 18.0 6.9
Families 76,100 80,193 68.1 17.6 3.2
Married
Couples 58,269 61,266 52.1 16.5 0.5
with
children <18* 23,807 23,433 19.9 -1.0 -3.5
with children
18+ only 6,108 6,884 5.8 -15.0 29.4
Single
Fathers 1,598 1,660 1.4 32.1 9.0
Single
Mothers 7,607 7,779 6.6 13.2 4.1
Other
Families 8,626 9,488 8.1 28.5 22.6
NonFamilies 34,940 37,503 31.9 15.6 18.0
Men living
alone 11,751 12,577 10.7 20.4 15.4
Women living
alone 18.397 18,578 15.8 16.7 14.1
Other
nonfamilies 5.792 6,347 5.4 23.5 20.7
Source: American Demographics. *Includes those with children both younger than age 18 and 18 and older. Note: Numbers may not add to total due to rounding.
Table 3. Selected projections of U.S. economic variables
representing the consensus of 40 major sources of
economic forecasts.
Period
Item Unit 1993 1994 1995-1999 2000-2004
Real GDP % change 3.0 3.0 2.6 2.6
CPI % change 3.2 3.3 3.7 3.5
Treasury
bills
(3 months)Avg. % 3.1 3.7 4.8 4.7
Corporate
AAA bonds Avg. % 7.6 7.7 8.1 7.9
Unemployment Avg. % 6.9 6.5 6.1 5.8
Housing
starts Mil. units 1.30 1.38 1.40 1.39
Auto
sales Mil. units 8.8 9.3 9.7 9.9
Source: Eggert Economic Enterprise, Inc.
Figure 4. Annual change in the Consumer Price Index.
Figure 5. Interest rates on new home purchases and three- month Treasury BillS (T.B.).
Figure 6. Price of crude oil in the U.S, in actual and 1987 dollars, under high and low scenarios.
Figure 7. Producer Price Index for Fuels and Energy, in actual and 1982 dollars, under high and low scenarios.
Figure 8. Consumer Price Index for food, actual and in 1982-1984 dollars.
Figure 9. Population in Michigan and percent of U.S. total.
Figure 10. Real total personal income per capita in Michigan and the U.S. (1982-1994 dollars).
Figure 11. Real total personal income in Michigan (1982-1984 dollars) and percent of U.S. total. Figure 12. Population in Michigan and percent of East North Central total (East North Central States include Illinois, Indiana, Michigan, Ohio and Wisconsin).
Figure 13. Real total personal income (1982-1984 dollars) in Michigan and percent of East North Central total(East North Central States include Illinois, Indiana, Michigan, Ohio and Wisconsin).
Table 4. Trends and projections of population for the East North Central States and the Province of Ontario.
Year and Percent Change from 10 Years Earlier
State or 1980 1990 2000 2010
Province 1000 % 1000 % 1000 % 1000 %
Michigan 9,256 +4 9,311 +1 9,799 +5 10,268 +5
Ontario 8,570 +19 9,750 +14 10,853 +11 11,761 +8
Ohio 10,803 +1 10,856 NC* 11,220 +3 11,625 +4
Indiana 5,492 +6 5,552 +1 5,838 +5 6,094 +4
Illinois 11,442 +3 11,440 NC* 11,765 +3 12,157 +3
Wisconsin 4,714 +7 4,905 +4 5,302 +8 5,621 +6
Regional
total 50,277 +5 51,814 +3 54,777 +6 57,526 +5
Source: NPA Data Services, Inc. and Statistics Canada. *No change; i.e., less than 1 percent.
Table 5. Trends and projections of personal income per capita for the East North Central States and the Province of Ontario, in 1987 U.S. dollars.
Year and Percent Change from 10 Years Earlier
State or 1980 1990 2000 2010
Province $ % $ % $ % $ %
Michigan 4,235 +23 16,027 +13 17,648 +10 19,560 +11
Ontario 14,731 +19 18,184 +23 21,356 +17 23,927 +12
Ohio 13,617 +20 15,320 +13 16,947 +11 18,905 +12
Indiana 12,949 +22 14,756 +14, 16,783 +14 19,799 +18
Illinois 15,177 +18 17,820 +17 19,764 +11 22,081 +12
Wisconsin 13,776 +26 15,339 +11 17,567 +15 19,790 +13
Regional
total 14,221 +21 16,521 +16 18,603 +13 20,808 +12
Source: NPA Data Services, Inc. and Statistics Canada and the Conference Board of Canada.
Profile of Michigan and Projections
The demographic profile of Michigan in 1990 is summarized in Table 8 with projected changes to 2010 (Terleckyj and Coleman, 1991). Because this analysis preceded the availability of the 1990 Census of Population, the population figures are slightly different from the final estimates. The projected increase in the total population, between 1990 and 2010, at 7 percent, is below the most recent projection of 10 percent by NPA Data Services, Inc. However, the projected change in the demographic profile provides some insights that will likely be consistent with revised estimates.
Unlike the projections for the nation, the population 24 years of age and younger is expected to decline in Michigan. Like the nation, the population in Michigan between the ages of 25 and 34 is projected to drop and numbers 45 and older are projected to increase substantially. All of the growth in the Michigan population is expected to be nonwhite. The number of households is projected to increase about 13 percent, with slightly fewer persons per household than the average of 2.72 in 1990. Real income per household at $36,452 (1982 dollars) was projected to increase by 20 percent between 1990 and 2010.
NPA Data Services, Inc., has generated projections for states, cities, counties and Metropolitan Statistical Areas, based on information from the U.S. Department of Commerce (Terleckyj and Coleman, 1993). Their county figures for Michigan provide a profile of the past and future for various districts of the state as well as of the differences from district to district.
Procedures used by NPA Data Services, Inc., to derive county projections involve allocation of national projections to economic regions and then to counties utilizing "relative growth rate differential and multiplier analysis." For the "economic area" forecasts, employment for each industry within each area is projected based on area historic growth rate differentials from U.S. growth rates. Projections include special local adjustments for closings and relocations of military bases and for reductions in private employment resulting from cuts in defense procurement.
Figures 14-15 and 19-22 portray the trends, status and prospects for growth in population, income and employment for districts of the Michigan Department of Natural Resources (MDNR). These maps were generated from the county estimates of NPA Data Services, Inc. The only difference from the MDNR districts is that District 7, which encompasses the Thumb, Saginaw Valley and north to the tier of Crawford, Oscoda and Alcona counties, was divided into two areas. The southern of the two sections is bounded on the north by Isabella, Midland, Bay and Arenac counties.
As shown in Figure 14, 45 percent of the state's population and 50 percent of the personal income resides in the metropolitan counties of southeast Michigan-St. Clair, Oakland, Macomb, Wayne and Monroe counties. This implies that the per capita personal income in that district is above the state average-in fact, at $17,854 in 1987 dollars in 1990, southeast Michigan was significantly higher than in any other district. Within that district, variation was substantial, however, ranging from about $23,500 in personal income per capita in Oakland County to just over $15,000 in Wayne and Monroe counties.
The state's most populous counties had very high rates of poverty in 1990, with poverty defined as equivalent to a four-person household with incomes below $13,360 in 1990. The poverty rate in Wayne County was 20 percent, and in Saginaw, Genesee and Ingham counties, around 17 percent-comp 1993). Also, most of the counties in the Upper Peninsula (UP) and northern Lower Peninsula (NLP) had poverty rates above the state average. Outside of the populous counties mentioned, most of the southern Lower Peninsula (SLP) had poverty rates below the state average. The percent of individuals living in poverty increased in almost every county between 1980 and 1990.
As indicated in Figure 14, average per capita incomes tend to be lower in the NLP and the UP than in the SLP. To some extent this may reflect differences in the cost of living, but is likely also to reflect differences in levels of living.
Table 6. Trends and projections of total personal income for the East North Central States and the Province of Ontario, in billion 1987 U.S. dollars.
Year and Percent Change from 10 Years Earlier
State or 1980 1990 2000 2010
Province Bil. $ % Bil. $ % Bil. $ % Bil. $ %
Michigan 132 +28 149 +13 173 +16 201 +16
Ontario 126 +35 180 +43 232 +28 281 +21
Ohio 147 +22 166 +13 190 +14 220 +16
Indiana 71 +29 82 +15 98 +20 116 +18
Illinois 174 +22 204 +17 233 +14 268 +15
Wisconsin 65 +34 75 +16 93 +24 111 +19
Regional
total 715 +27 856 +20 1,019 +191,197 +17
Source: NPA Data Services, Inc. and Statistics Canada and the Conference Board of Canada.
Table 7. Trends and projections of employment for the East North Central States and the Province of Ontario, in thousands.
Year and Percent Change from 10 Years Earlier
State or 1980 1990 2000 2010
Province 1000 % 1000 % 1000 % 1000 %
Michigan 3,991 +14 4,729 +18 5,269 +11 5,689 +8
Ontario 4,053 +33 4,937 +22 5,723 +16 6,375 +11
Ohio 5,127 +11 5,830 +14 6,392 +10 6,824 +7
Indiana 2,603 +15 3,062 +18 3,464 +13 3,722 +7
Illinois 5,594 +10 6,349 +13 6,845 +9 7,248 +7
Wisconsin 2,402 +24 2,809 +17 3,289 +17 3,586 +9
Regional
total 23,770 +16 27,716 +17 30,982 +12 33,444 +8
Source: NPA Data Services, Inc. and Statistics Canada.
Table 8. Demographic status of Michigan in 1990 and projected changes to 2010.
Percent Change
Item Unit 1990 to 2010
Population
Total 1,000 9,323 +7
Age Group
Under 5 1,000 731 -2
5-9 1,000 718 -1
10-14 1,000 674 -5
15-19 1,000 688 +7
20-24 1,000 707 -4
25-34 1,000 1,573 -15
35-44 1,000 1,396 -8
45-54 1,000 957 +48
55-64 1,000 779 +52
65-74 1,000 627 +1
75 and over 1,000 474 +17
White 1,000 7,870 NC
Nonwhite 1,000 1,453 +43
Male 1,000 4,533 +8
Female 1,000 4,791 +6
Households 1,000 3,430 +13
Persons per
household Number 2.72 -6
Income per
household 1982 $ 36,452 +20
Source: NPA Data Services, Inc.
Population Projections
Trends and projections of the rate of growth in Michigan's population by MDNR districts are shown in Figure 15. The four figures from top to bottom in each district depict annual percentage changes in 1970-1980, 1980-1990, 1990-2000 and 2000-2015, respectively. Changes in each district can be compared with the state averages presented in the lower left quadrant of Figure 15.
The metropolitan counties in southeast Michigan lost population at the rate of 0.32 percent per year in the 1970's and 0.26 percent per year in the 1980's. Small growth is projected for the 1990's, picking up to 0.27 percent per year in the first 15 years of the next century. Outside of this area, only the eastern UP lost population in the 1970's. In the 1980's, the central and western UP lost population as did the Thumb and Saginaw Valley area.
The most rapid growth (in percent) in Michigan's population in the past two decades has been in the NLP. Population in this area is projected to expand at the most rapid rate for the next two decades. This scenario is more clearly presented in Figure 16, which divides the state into the UP, NLP and metropolitan and rural SLP. The metropolitan counties were defined as those with more than 200,000 persons in 1990. These counties included Genesee, Ingham, Kalamazoo, Kent, Macomb, Oakland, Saginaw, Washtenaw and Wayne.
The metropolitan counties in the SLP collectively lost population in the 1970's and 1980's. This, of course, was heavily weighted by Wayne County which lost population at the rate of 1.35 percent per year in the 1970's and 0.96 percent per year in the 1980's. Even so, Saginaw and Genesee counties also lost population in the 1980's and their gains in the 1970's were below the state average. Ingham, Kalamazoo, Kent, Macomb, Oakland and Washtenaw counties gained populations in both decades.
With the exception of the UP in the 1980's, rural Michigan has had relatively strong drawing power for population. This was particularly evident in the 1970's. Projected population growth for 1990 to 2015 is positive for the metropolitan counties except for Wayne and Genesee counties in the 1990's. The rate of expansion in population in rural counties in the SLP, NLP and UP is expected to continue to outpace metropolitan SLP.
A closer look at the changes projected for Michigan's population can be seen in Figures 17 and 18. While the metropolitan counties will gain population at a slower pace than the rural counties in percent, the absolute gains in metropolitan counties will be substantial. Note in Figure 17 that over a third of Michigan's population was in Wayne and Oakland Counties in 1990. The trends and projections for those two counties are quite different. In fact, with the exception of Monroe County in 1980-90, the ring of counties around Wayne experienced population growth rates above the state average in both the 1970's and 1980's.
Projected changes in population of counties between 1990 and 2015 by NPA Data Services, Inc., are given in Figure 18. The top number represents the absolute change in thousands and the bottom number the percentage change. Only in Wayne and Luce counties are populations expected to decline. The projections do reflect past trends.
In absolute terms, Macomb, Oakland, Livingston, Washtenaw, Kent and Ottawa counties will represent about half of the growth of 1.2 million persons projected for the state between 1990 and 2015. The most rapid percentage growth, however, will be in the NLP.
Income Projections
The relatively slow economic growth projected for the U.S. and North Central States is reflected in the various MDNR districts in Michigan (Figure 19). Within the state, the annual percent change in real personal income per capita declined from just over 2 percent in the 1970's to about 1.2 percent in the 1980's and is projected to average about 1 percent in the 1990's and the first 15 years of the next century. These projections, of course, are quite tentative and would be regarded as fairly conservative. Certainly the potential and capacity for the Michigan economy to perform more vigorously is present.
Partly because of the lower level of per capita incomes in the UP and NLP, those regions are expected to exceed the state average growth rates. Per capita incomes are projected to increase more rapidly percentage-wise in rural counties than in metropolitan counties.
Combining the growth in per capita incomes with population provides a picture of the total real personal income stream, in the past and expected in the future (Figure 20). For the state as a whole, total personal income in 1987 dollars increased about 2.5 percent per year in the 1970's, 1.25 percent per year in the 1980's, and is projected to increase about 1.5 percent per year in both 1990-2000 and 2000-2015.
The rural regions are expected to outpace the metropolitan counties, with growth particularly strong in the NLP and the Grand Rapids-Muskegon area. While the southeast Michigan metropolitan area will lag behind in percentage terms, total personal income growth in that region is expected to represent over a third of the total increase in the state of $67 billion (1987 dollars) between 1990 and 2015.
Employment Projections
Employment levels in the MDNR districts mirror the population distribution with 46 percent of the jobs in 1990 in the southeastern metropolitan counties, an equal 46 percent in the remainder of the SLP, 5 percent in the NLP and 3 percent in the UP (Figure 21). The population per job was somewhat higher in the UP and NLP than the SLP, at 2.22 persons per job in the UP, 2.19 persons in the NLP, 1.91 persons in the southeastern counties and 1.98 persons in the remainder of the SLP. This probably reflects an older population and higher percentage of retirees in the northern regions.
NPA Data Services, Inc., projects a progressively slower growth rate in employment in Michigan from the annual increase of 1.71 percent in the 1980's and 1.09 percent in the 1990's to 0.77 percent in the 2000-2015 period (Figure 22). This pattern is generally reflected across the state with the exception that sharp dips in the growth rates north of the Saginaw Valley (northern part of MDNR District 7) and the southeastern district in 1990-2000 will be followed with some recovery in 2000-2015.
Reflections on Rural-Urban Population Trends
While "natural resources" and "rural" are not synonymous, the linkages are strong. Some review of the shifting balances between metropolitan and nonmetropolitan regions may help provide some insights into future demands upon natural resources as well as the supply of these resources.
Nationally and in Michigan, the 1950's and 1960's were periods of notable shifts of the population from rural to metropolitan counties. Demographers refer to the 1970's as the "nonmetropolitan turnaround" as population in rural counties increased significantly more than in metropolitan counties. This was the case in all regions except in the southeastern section of the U.S.
In all four decades from 1950 to 1990, the population in rural counties adjacent to metropolitan areas increased more rapidly than other rural counties. In the 1970's, however, the population increase in the nonadjacent rural counties approached the rate of increase in the adjacent rural counties.
Glenn Fuguitt provides some explanation for this "population turnaround" and the "turnaround reversal" which furnishes some perspective on the future for nonmetropolitan areas of Michigan (Fuguitt, 1993). He cites these reasons for the t urnaround, i.e., the shift to nonmetropolitan areas in the 1970's:
1. Strong farm income slowed the movement of individuals out of agriculture.
2. The energy crisis generated increased employment in mining; and manufacturing continued to deconcentrate into nonmetro areas, providing increased employment, particularly in low-wage industries.
3. Those who moved gave quality-of-life reasons, based on favorable views about rural life and negative views of the big city.
4. Recreation increased in importance and appreciable numbers of retired persons migrated to nonmetro areas situated in attractive locations.
The 1970's was a period when the first large cohort of
the elderly emerged with the means to live where
they chose, and many in this group had previous ties to
rural areas. Some reasons for the turnaround
reversal in the 1980's were:
1. The farm income crisis precipitated an acceleration of movement out of agriculture.
2. The energy boom of the 1970's was followed by sharp declines in most energy activities in nonmetro areas in the 1980's.
3. Manufacturing went into a decline and this slump was felt more in nonmetro areas than in metro areas.
4. Macroeconomic policies contributed to a strong dollar which particularly placed the products of nonmetro areas at a competitive disadvantage.
5. Slower population growth in counties with (1) a high degree of commuting to metro areas and with (2) attraction as recreation and retirement communities.
Fuguitt concludes that, while quality-of-life and family considerations will continueto be important to future population growth in rural areas, an expanding underlying economic base will predominate.
While the population in Michigan shifted from metropolitan to rural in the 1970's, as did the nation, a "turnaround reversal" did not emerge in the 1980's (Figure 16). Population in the UP in the 1980's did decline somewhat more rapidly than in the metropolitan SLP, but in the NLP and rural SLP, the rural population increased 0.83 and 0.30 percent per year, respectively, while the metropolitan population declined at a rate of 0.10 percent per year.
The metro-rural population shifts in the 1970's and 1980's in Ohio and Indiana were similar to the pattern in Michigan. Metropolitan counties lost population in both decades while the population in rural counties increased. In Illinois, the metropolitan counties gained population in the 1970's and 1980's. Rural population increased more rapidly than the metropolitan population in the 1970's, but actually declined in the 1980's. Population shifts in Wisconsin were similar to that in Michigan in the 1970's, but metropolitan counties there gained population in the 1980's.
The patterns in Michigan, Ohio and Indiana may be attributable to their ties with the automobile industry, which lagged behind other manufacturing industries during the 1980's. This would help explain the continued decline in the urban population during the 1980's. The projected steady growth in automobile sales and other manufacturing probably explains NPA Data Services' projection for growth in Michigan's urban population, albeit at a slower pace than the rural population.
Emerging from these trends in rural-urban population balances is that strategies for Michigan's natural resources need to be tied to strategies for rural economic development. Secondly, policymakers for rural development should recognize the advantage Michigan has in having a large metropolitan population base close at hand.
Figure 14. Population (thousand), personal income per capita (1987 dollars) and total personal income (million 1987 dollars) in Michigan, in 1990, by MDNR districts.
Figure 15. Annual percent change in population in Michigan, 1970-1980, 1980-1990, and projected for 1990-2000 and 2000-2015, by MDNR districts.
Figure 16. Annual percent change in population in Michigan, 1970-1980, 1980-1990, and projected for 1990-2000 and 2000-2015, by region and urbanization.
Figure 17. Population (thousands) in Michigan counties, in 1990.
Figure 18. Projected change in population in Michigan, from 1990 to 2015, in absolute (thousands) and percentage terms, by counties.
Figure 19. Annual percent change in personal income per capita in Michigan, in 1987 dollars, 1970-1980, 1980- 1990, and projected for 1990-2000 and 2000-2015, by MDNR districts.
Figure 20. Annual percent change in total personal income in Michigan, in 1987 dollars, 1970-1980,1980-1990, and projected for 1990-2000 and 2000-2015, by region and urbanization
Figure 21. Employment (thousands) in Michigan, in 1990, by DNR districts. .
Table 9. How U.S. consumers allocated their expenditures on travel, outdoor recreation and vacation homes, as related to income, 1992.
Item Before Tax Income Percent Difference
of Consumer Unit from Average
$40,000 to $70,000 $40,000 to $70,000
Average $69,999 and over $69,999 and over
Income per Capita
$ $ $ % %
Before
taxes 13,542 17,033 34,879 +26 +158
After
taxes 12,314 15,477 30,519 +26 +148
Expenditures per Capita
$ $ $ % %
Out-of-town trips
Transpor
-tation 126 153 293 +22 +133
Lodging 67 83 183 +24 +174
Entertain
-ment 35 48 83 +38 +135
Total 228 284 559 +25 +145
Outdoor recreation Water -related 48 99 78 +105 +62 Not water -related 41 78 30 +88 -28 Total 90 177 108 +97 +21
Owned vacation homes 46 51 147 +10 +220 Total 364 512 814 +41 +124
Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey of 1992, printout.
Demand for Natural Resources as Reflected in Consumer Expenditures
A theoretical framework is necessary to interpret the projections of population, personal income, energy prices and other demographic and economic elements in terms of demands on natural resources. Population is a key variable and often, as a first approximation, it is assumed that demands on natural resources bear a one-to-one relationship with population. That is, if total population increases 10 percent, the demand for natural resources will increase by 10 percent.
This assumption may be useful as a starting point, but we also know that per capita demands have changed and will continue to change. This may be due to increases in purchasing power and variation in the age distribution of the population, costs of transportation, lifestyles, values and other demographic and socio-economic profiles of the market.
Unfortunately, the data base for analyzing demands for the services of natural resources is not extensive, especially in comparison with the data base for the products of natural resources such as food and forest products. Some information can be gleaned from the annual Consumer Expenditure Survey of the Bureau of Labor Statistics (U.S. Department of Labor, 1992). Expenditures by consumers in several demographic and economic classifications can be reviewed in these surveys. As an example, consumer expenditures for travel, outdoor recreation, and vacation homes are presented for selected income and age groupings in Tables 9 and 10.
Allocations of these expenditures by selected income classes are shown in Table 9 for 1992. The average expenditures for consumer units (households) with before-tax income of $40,000-$69,999 and of $70,000 and over were compared to the average consumer unit. The average household spent about 3 percent of its after-tax income on out-of-town travel, outdoor recreation and owned vacation homes. This percentage increased to 3.3 percent for consumer units grossing $40,000 to $69,999, but fell back to 2.7 percent of after-tax income for households grossing $70,000 and more.
Income per capita (after taxes) for households in the $40,000 to $69,999 category was about 26 percent above the average and in the $70,000 and over category about 148 percent above the average. Note that the percent increase in expenditures on out-of-town trips was higher for these two income groups by nearly identical percentages (+25 percent and +145 percent). This implies an income elasticity of nearly "1"; that is, you might expect that as incomes increase, expenditures on out-of-town trips will increase by a similar percentage to the increase in incomes.
Expenditures for outdoor recreation per capita for households grossing $40,000-$69,999 were nearly double the expenditures by the average consumer unit implying an income elasticity of nearly "4", i.e., for every 1 percent increase in income, expenditures for outdoor recreation would increase by 4 percent. At household incomes of $70,000 and over, however, expenditures on outdoor recreation were below those for households in the $40,000-$69,999 classification, but still above average.
From Table 9, it is clear that the major jump in demand for vacation homes will follow the numbers of households moving into the $70,000 and over income category.
Because of the prospective aging of the population, forecasting demand on natural resources can be enhanced by knowing how households headed by persons in the older age category use their leisure time. As presented in Table 10, households in which the reference person (head) is over 45 years of age spend progressively more than the average on out-of-town trips until they reach the age of 75 and over. Even those households with the reference person 75 and older maintain spending for out-of-town trips at the average level.
On outdoor recreation, households with the reference person 45-54 spend 14 percent more than the average and households with the reference person 55-64 spend 38 percent more than the average. At 65 and above, however, spending on outdoor recreation drops well below average. Note, however, how differently aging households allocate their recreation dollars to "water-related" versus "not water-related" activities. Expenditures for "water-related" recreation drops progressively below the average as the reference person gets older. The "not water-related" expenditure jumps sharply above average for the 45-54 aged reference person's household and even more for those with the reference person aged 55-64. Above that age category, even recreation expenditures "not water-related" drop sharply below average.
The major spenders on owned vacation homes are households with the reference person 55-64 years of age. Above that age category, spending has been below average.
As indicated in Table 4, population in the East North Central States and the Province of Ontario is projected to increase about 11 percent between 1990 and 2010. In Table 5, personal income per capita is projected to increase 26 percent over the same period for this region. In Table 9, per capita incomes in homes grossing $40,000 to $69,999 in 1992 were 26 percent above average. If the average consumer in 2010 emulates today's consumer in the $40,000 to $69,999 household, per capita expenditures would be about 25 percent greater on out-of-town trips, about double on outdoor recreation and 10 percent greater on owned vacation homes in the year 2010. The population growth effect would add about 11 percent to these numbers.
Some additional impetus for demand for these items would be generated by the aging population. Population aged 45-64 is projected to increase about 55 percent in Michigan and 70 percent for the U.S. A 70 percent gain in U.S. population 45-64, coupled with the fact that those in this age classification have spent 14 percent (45-54 age group) and 47 percent (55-64 age group) more than the average on travel, outdoor recreation and vacation homes, bodes well for these industries.
This example of how the incomes and ages of consumers affect their spending patterns on items of particular interest to natural resources serves to illustrate how information can be applied to forecasting demand. However, this example is not a model of how an analysis should proceed. Many other factors would have to be introduced into such analysis and more refined tools should be applied.
Figure 22. Annual percent change in employment in Michigan, 1970-1980, 1980-1990, and projected for 1990-2000 and 2000-2015, by MDNR districts.
Agricultural Linkages with Michigan Natural Resources
Agriculture and natural resources are closely linked. This publication, which attempts to establish the environment for Michigan's natural resources over the coming decades, would be incomplete without some reference to agriculture's interface. This includes the prospective impact of agriculture on land use, especially between intensive row crops, small grain, hay and idle land. More detail is contained in Special Reports SR-32 to SR-65 of the Michigan State University Agricultural Experiment Station, entitled "Status and Potential of Michigan Agriculture."
Total land in farms in Michigan declined from just under 50 percent of the total land area in 1950 to about 30 percent in the mid-1970's (1987 Census of Agriculture). Since the mid-1970's, land in farms has stabilized at around 30 percent of the total land base. Below the Bay City-Muskegon line, land in farms represents at least 50 percent of the total area in three out of every four counties. Only in Wayne and Oakland counties is land in farms below 25 percent of the total area. In the UP, only in Menominee County do farms take up as much as 20 percent of the land. In the NLP, Leelanau, Antrim, Presque Isle, Alpena, Mason, Osceola and Gladwin counties have farms occupying at least 20 percent of the land base. In other NLP counties, the farmland share is less.
While farmland represents a small part of the area of a number of counties in the UP and NLP, agriculture is prominent in the landscape of most counties in the state. As such, the future direction of agriculture can have a number of implications on the supply of, and demand for, natural resources and the quality of these resources.
Of the approximately 10,200,000 acres in farms in 1993, an estimated 5,425,000 acres were planted as major field crops (corn, soybeans, wheat, dry beans, sugarbeets, oats, potatoes, barley and rye). Another 1,500,000 acres were harvested as hay. About 147,000 acres were in fruit and 134,000 acres in vegetables (Michigan Agricultural Statistics Service, 1993). The total area in these crops in 1993 was 7,209,000 acres, about 70 percent of the total land in farms.
The balance of 3,009,000 acres were in woodland, pasture, cover crops, summer fallow, failed crops, idle cropland and a combination that included house lots, ponds and wasteland. Of the idle cropland, 234,000 acres were set aside under the 1993 Acreage Reduction Program (ARP) on corn. Another 332,000 acres were in the Conservation Reserve Program (CRP).
How farmland is used in Michigan in a bit more detail is indicated in Table 11. As can be noted, a substantial share of Michigan farmland is in fairly benign uses with regard to soil conservation-areas devoted to hay, idle cropland, woodland and pastureland for a total of about 40 percent of all farmland. These areas also provide a habitat for wildlife. Only about 45 percent of the land is in row crops. Idle cropland under ARP and CRP represents 5.5 percent of the total land in farms and nearly 10 percent of the major field crop acreage.
Key considerations for soil conservation, water quality, wildlife and the general natural environment are: (1) how farmers manage that important 45 percent of farmland in row crops; (2) what happens to ARP and CRP; and (3) what pressures will emerge in the future to place growing demands on farmland that is fragile with respect to erosion and which would encroach upon wildlife habitat. While many farmers are shifting toward minimum tillage and more sustainable cultivation practices, it is generally recognized that much more could be accomplished with site specific fertilization, reduced application of certain fertilizers, integrated pest management and a number of the practices more accommodating to the total natural environment.
Trends and projections for the allocation of cropland are presented in Figure 23. With the tight world grain supplies in the early 1970's, farm prices increased sharply, encouraging farmers to expand planting of major field crops by 2 million acres. Land idled under federal farm programs became nil. Worldwide recession and a reversal in export market growth triggered price declines in the early to mid-1980's. Farmers cut plantings by over a million acres in response.
A modest economic recovery in the late 1980's, coupled with a major drought in 1988, brought carryover stocks of grain and soybeans down, enabling the government to reduce land set-aside requirements. At about the same time (1986), CRP was introduced.
Land harvested for hay declined from the 1960's to the 1970's as farmers intensified their rotations with more corn and soybeans (Figure 23). This was reversed in the 1980's as grain and soybean prices fell.
Projections of the utilization of Michigan cropland to the year 2010 were generated by "AGMOD" and "MIAG," econometric/simulation models of U.S. and Michigan agriculture. Developed in the MSU Department of Agricultural Economics, these models measure supply and demand relationships and incorporate assumptions about future economic growth, farm programs and technology.
Applying the macroeconomic and demographic scenarios discussed in the first section of this publication and assuming continued reduction in federal farm income support programs, acreage planted to major field crops is projected to expand over the next 25 years. Land in ARP will remain relatively low or at zero levels (as in 1994). Land in the CRP is presumed to decline in the latter part of the decade and into the next century to about half of its peak level. Hay acreage will remain relatively stable.
AGMOD projects that a fair degree of slack will remain in the U.S. food production system for the rest of the decade. While reserve capacity should be at a comfortable level for the U.S. until the year 2000, after the turn of the century, world reserves may decline to a point where the world will be more vulnerable to unusual weather.
Brown contends that crop yields are leveling off and will continue to do so as application rates of fertilizers and chemicals are restricted for environmental reasons (Brown, 1994). Nitrogen application rates have declined on U.S. corn, for example, and some signs have emerged that yield increases since 1980 have been less than the routine 2 bushels per year observed over the long-run. However, if the drought year of 1988 and flood year of 1993 are excluded, yields have continued to increase by about 2 bushels per year. We believe that biotechnology will assist in expanding agricultural production on a limited land base in a framework of environmentally sound cultural practices.
A review of crop yields around the world since 1960 reveals that the trends have been linearly upward, except on wheat in major exporting nations outside of the European Community (EC). Some leveling off of wheat yields in the U.S., Canada, Argentina and Australia can be detected during the 1980's. In spite of the fact that the highest yields on wheat have been in the EC, trends there have continued linearly upward. This provides some indication of the potential to increase wheat yields outside the EC, although climate will be limiting for many production regions. While wheat yields have leveled off in Michigan as well as in the U.S., a resumption of an upward trend is projected.
Past trends strongly support a continued linear increase in coarse grain yields over the foreseeable future as a baseline assumption. Also, the extent to which corn yields in the U.S. and Michigan are above yields of coarse grain (including corn) in the rest of the world is an indication of the potential to increase yields abroad_with allowances for climate differences.
While appropriate response for public support of research and education in the U.S. and abroad can reduce the probability of world food shortfalls and meet the challenges of growing demands for some time to come, current land use policy still needs to consider protecting the food production capability of farmers. The world will probably need a "wake-up call" in the form of rising real food prices and growing incidents of hunger and starvation before putting the necessary resources into "food security." Also, the strong interests environmentalists have in retaining a substantial portion of the land which has been in the Conservation Reserve Program can counter the projected reduction in this program. This can be accomplished with a balanced policy between food production and preservation of natural resources.
Under the program entitled "Revitalization of Animal Agriculture," efforts are underway with public support to strengthen this industry in Michigan. The economic environment and infrastructure are reasonably favorable for livestock expansion. Major obstacles will be odor control and avoiding any negative effects on the natural environment.
The major agricultural enterprise is dairy. While milk production will likely increase, the number of dairy cows will likely continue to decline. This is partly due to the application of BST, the hormone which will boost milk production per cow. Beef cow numbers will fluctuate cyclically, but remain fairly close to 1993 levels in the long-run. Cattle feeding will continue to increase. Major expansion will likely emerge in hogs and turkeys. Expansion is also seen in horses and sheep. Egg production will not change appreciably.
Implications for Michigan's Natural Resources
The preceding has been an enumeration of salient trends_global, national, regional, state and county_and some traditional views from authoritative sources about the future. Most of these projections would be considered exogenous to policy making as regards to Michigan's natural resources; that is, outside of the ability of Michigan to influence the emerging scenario. On the other hand, not all of the projections are "written in stone."
Careful planning and proper execution of programs can make a difference and modify the projections. To some degree, the future can be what we want it to be. A major task is obtaining consensus on goals and objectives. Even if we can agree on "what is," we may have more difficulty in agreeing on "what ought to be." What should be the strategy for the next 20 years for Michigan's natural resources?
If preserving the current natural resources and creating a pristine environment is the goal, then economic development would be put on hold. The challenge would be how to accommodate the expanding population (over which we will have little control) without encroaching on use of land, water, air and other natural resources. If capitalizing on Michigan's potential for economic growth is the objective, sacrifices have to be made in terms of the natural resource base. Clearly, some compromise position is the only realistic alternative.
Careful measurements are taken by the federal and state governments of gross domestic product, investment, personal income and expenditures, employment, etc.-indicator indicators of sustainable development, however, are only in a formative stage. No official time series data are available to monitor the environment in a comprehensive manner. Proposals such as AMOEBA-called the ecological Dow Jones Index-have merit and need to be made operational before much progress can be made in developing a balanced approach to managing Michigan's natural resources (Brink, 1991).
Drawing from the United Nations System of Environmental Accounting, the Bureau of Economic Analysis of the U.S. Department of Commerce has developed a plan for natural resource and environmental accounting (Carson, 1994). The purpose is to develop satellite accounts, which are "frameworks designed to expand the analytical capacity of the national accounts without overburdening them or interfering with their general purpose orientation."
Early work has focused on mineral resources, including an evaluation of depletion. The next phase will extend the accounts to renewable natural resource assets (trees on timberland, fish stocks, water resources). The final phase will address a broader range of environmental assets, such as the economic value of the degradation of clean air and water and the value of recreational assets such as lakes and national forests. This will place increased demands on the underlying environmental and economic data.
Presuming that an objective of this project on the "Status and Potential of Michigan Natural Resources" is to enhance economic development with strong regard for the environment in Michigan, certain strategies should be considered. After reviewing the exogenous influences, we should ask ourselves, "What is our comparative advantage?"
William Galston, Deputy Assistant to the President for Domestic Policy, provides some insights on the changing rural scene. He believes that the success of rural development must be built on a realistic assessment of rural comparative advantage (Galston, 1993).
Early in U.S. history, the development of rural America rested primarily on place-specific resource advantage: land, timber and minerals. The central rural disadvantage-the obstacle of distance-was overcome in part by natural locational facts (for example, long navigable rivers), and in part by publicly guided development of communication and transportation systems. These advantages have not disappeared, but their significance has been steadily eroded (as we have seen) by changes in technology, relative factors of production, and the composition of final demand.
In the 1960's and 1970's, the primary basis of rural comparative advantage shifted from resources to factors such as cheap land, low-cost labor, relatively relaxed regulations, and weak or nonexistent unions. Combined with a new burst of public investment in transportation (the interstate highway system), these advantages spurred a significant expansion of routine manufacturing in rural America....
But these advantages, too, have been eroded by economic change. The importance of land costs in plant siting decisions has diminished, and in a global marketplace with fully mobile capital, cheaper labor can be found and employed outside our borders.... In the longer-term, there is every reason to believe that labor will continue to shrink as a component of manufacturing costs and therefore as a determinant of production siting.
During the 1980's, rural America appears to have entered its third major phase. The kinds of natural characteristics regarded as "amenity values" by retirees, vacationers, and certain businesses have emerged as the chief new source of rural comparative advantage.... Rural places with substantial locational assets have commanded the lion's share of nonmetro population and employment gains.
Galston also points out some of the negatives for rural areas and their lower population densities-inability to achieve local diversification, and higher costs of communication and transportation. He could have also added that rural areas have difficulty in achieving economies of scale in furnishing public services. Of course, there is the dilemma that "successful amenity-based development may eventually erode the original advantage, as population size and density increase and amenity values decline." He suggests that "a central challenge for U.S. rural development in the 1990's will be to conceptualize and put in place new kinds of linkages between metropolitan areas and remote communities. Absent without such innovations, the prospects for remote communities without significant natural amenities can only be regarded as bleak."
Galston's assessment of which rural areas have promising development possibilities has to be a plus for rural SLP and the NLP, which indeed have benefited from the combination of amenities and the proximity of a large and growing population. The UP has more of a challenge, but can champion the amenities of a remote area not quickly to be disturbed by a rapidly growing population. Some will prefer the scenario for the NLP with close ties to metropolitan areas.
Others will prefer the prospects for amenities in a low density population area.
While the growth rate in Michigan's rural population is projected to outpace the urban counties, strategies for Michigan's natural resources should be developed with recognition that population will continue to be concentrated in a few counties. In the year 2015, the projected population of Wayne and Oakland counties, at about 3.3 million, will still represent about one-third of Michigan's projected 10.5 million. The projected population of these counties, plus Genesee, Ingham, Kalamazoo, Kent, Macomb, Saginaw and Washtenaw counties, is 6.3 million, and will represent 60 percent of the total population of the state. The population of Ottawa County will exceed 200,000, moving up to about 270,000.
Slow economic growth for the nation and the state suggests limited resources for public funding of projects for natural resource development. While a larger share of the budget for federal agricultural programs will be directed toward conservation and the environment, the total budget will likely decline. Compliance will be based more on regulation and less on the inducement from federal subsidies. An issue will be the disposition of land in the Conservation Reserve Program.
Land use policy should be developed with some attention to the possibility that cropland not now in food production may be needed to help the nation "buy time" for technology to catch up with growing food demands. Because of the close interface between rural and urban in Michigan, pressure will be more intense here than in many other states to develop balanced programs between natural resource preservation, sustainable agricultural production and economic growth for rural communities.
Not to be overlooked is the important role of public and private leadership in Michigan in capitalizing on the state's comparative advantage and removing barriers to sustainable economic growth and preservation of natural resources. While comparative advantage is important, entrepreneurship is a prime mover that can make a difference. The combined efforts of those in public and private institutions have helped to make Michigan an attractive place to live in the past. Such leadership and cooperation can make a difference in the future.
Table 10. How U.S. consumers allocated their expenditures on travel, outdoor recreation and vacation homes as related to age of reference person in consumer unit, 1992.
Item Age of Reference Person
Average 75 and
(47.6) 45-54 55-64 65-75 over
Expenditures per Capita
$ $ $ $ $
Out-of-town trips
Transpor
-tation 128 142 168 194 144
Lodging 67 81 86 98 67
Entertain
-ment 36 38 43 41 23
Total 231 261 297 333 234
Outdoor recreation Water -related 45 43 42 37 2 Not water related 38 52 73 10 2 Total 83 95 115 47 4
Owned vacation homes 46 54 119 42 43
Total 361 410 532 422 281
Percent Difference Item
from Average
75 and
45-54 55-64 65-75 over
Out-of-town trips
Transpor
-tation +31 +51 +51 +12
Lodging +21 +29 +47 NC
Entertainment +7 +20 +14 -35
Total +13 +29 +44 +1
Outdoor recreation Water -related -5 -7 -18 -97 Not water related +36 +92 -75 -94 Total +14 +38 -44 -95
Owned vacation homes +16 +159 -10 -6
Total +14 +47 +17 -22
Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey of 1992, printout.
Table 11. Estimated allocation of farmland in Michigan in
1993
Acres Percent of
Classification (1,000) Total
Major field crops
Row crops 4,582 44.8
Small grain 840 8.2
Hay 1,500 14.7
Fruit 147 1.4
Vegetables 134 1.3
Idle cropland
Set-aside (ARP) 234} 5.5
Conservation Reserve 332
Woodland a/ 1,201 11.8
Pastureland a/
Cropland used
only for pasture 517} 7.0
Other 200
Land in house lots, ponds,
roads, wasteland, etc. a/ 531 5.2
Total 10,218 100.0
Source: National Agricultural Statistics Service, USDA; Michigan Agricultural Statistics Service, MDA, 1992 Census of Agriculture, USDC; and Agricultural Stabilization and Conservation Service, USDA. a/ Assumes same area as reported in the 1992 Census of Agriculture.
Figure 23. Utilization of cropland, in Michigan, 1960-1993 and projected to 2010. (Idle represents cropland in the APR and CRP.)
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Reports on the Status and Potential of Michigan Natural Resources
This special report is one of a series (listed below) prepared for a project of the Michigan Agricultural Experiment Station (MAES) called the "Status and Potential of Michigan Natural Resources" (SAPMINR).
The project was designed to take an inventory of the current status of Michigan natural resources, identify emerging trends, and appraise future opportunities. The purpose was to assist MAES in establishing priorities and planning programs.
Both overview and focused topic assessments have been made. The overview reports provide background information on the political, economic, and social environments influencing Michigan natural resources. The focus reports examine specific resources, including timberland resources, fisheries and wildlife resources, parks and recreational resources, and land and water resources.
The SAPMINR project began in early 1993. At that time, interdisciplinary teams of MSU faculty members, graduate students, federal and state government officials, and others collaborated to develop preliminary reports. In March 1994, a SAPMINR conference took place during MSU's Agriculture and Natural Resources Week. The objective of the conference was to provide a public forum for discussion of the preliminary reports. Based on interaction with conference participants, the authors prepared the final drafts of the special reports (SR).
This report should not be considered final. Efforts to analyze the past and forecast the future are ongoing. Even so, this report is a base for dialogue on both the status and potential of Michigan natural resources.
To receive any of the reports listed below, contact: MSU Bulletin Office, Room 103 Agriculture Hall, Michigan State University, East Lansing, MI 48824-1039.
Status and Potential of Michigan Natural Resources List of Reports
Overview Reports
SR 67 --SAPMINR Highlights
SR 68 --Michigan Natural Resources Policy
SR 69 --Demographic, Social and Economic Trends
SR 70 --Integrated Natural Resource Systems Focus Reports
SR 71 --Timber and Timberland Resources
SR 72 --Lumber, Furniture, Composition Panels and
Other Solidwood Products
SR 73 --Pulp, Paper, Allied Products and Wood Energy
SR 74 --Fisheries
SR 75 --Wildlife
SR 76 --Tourism
SR 77 --Boating and Underwater Recreation
SR 78 --Camping, Trails and Dispersed Recreation
SR 79 --Water Resources
SR 80 --Land Resources
SR 81 --Nonrenewable Resources
SR 82 --Natural Resources and Communities
Acknowledgements
The following individuals provided helpful reviews of this publication. The authors, as usual, bear the final responsibility for content.
James Bonnen, Agricultural Economics
James B. Hart, Forestry
Larry Leefers, Forestry
Les Manderscheid, Agricultural Economics
Colletta Moser, Agricultural Economics
Larry Pedersen, Michigan Department of Natural Resources
Bill Rockwell, Michigan Department of Natural Resources
Al Schmid, Agricultural Economics
Gerhardu Schultink, Resource Development
Daniel Stynes, Parks and Recreation Resources
Ching-li Wang, State Demographer, Office of Management and Budget Demographic, Social and Economic Trends
The Michigan Agricultural Experiment Station is an equal opportunity employer and complies with Title VI of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972. printed on recycled paper using soy based ink New_1:95_.75M_TCM_CW