According to researchers Pierre-Marcel Desjardins, Colin Busby, and William B.P. Robson, 50-year projections for Atlantic Canada's population trends range from a nearly 16% increase to an 18% decrease, depending on whether migration trends improve or remain at low historical averages. More worrisome are projections for the working-age population. Even an optimistic scenario predicts a slight decrease by 2028, and only a very small increase by 2058. A pessimistic scenario for 2058 predicts a working-age population decrease of one-third. So the region is likely facing a future with fewer workers than it has today.

As we highlighted in a recent C.D. Howe Institute publication, policies and initiatives can impact the demographic situation facing Atlantic Canada, but the trends are irreversible. Immigration can help, but it's far from being a silver bullet. At best, it can help mitigate the trends.

A serious consequence of a shrinking workforce is that without an increase in productivity, the region will see a decline in the growth of goods and services, impacting well-being. Furthermore, this translates into reduced government revenues, while government expenses increase on spending programs such as health care. (Education costs will fall as the school-age population shrinks, but these forces will be overpowered by rising costs.)

This is a huge challenge for provincial governments, which have few politically appealing options at their disposal. Increasing taxation and/or reducing services will be unpopular and counterproductive. However, pre-funding future services with higher forms of direct taxation today represents an appealing option. Following the same principles as the mid-'90s Canada Pension Plan reforms, where funds were put aside for future expenditures, higher contribution rates could be levied today to pay for future health services such as pharmacare.

Another aspect of the demographic problem is human capital. Finding skilled workers will be a growing challenge. Hence, a focus on improving educational outcomes, from primary to postsecondary, is required. Boosting productivity and generating the skilled workers that society will require should become a policy priority.

Finally, Atlantic Canada's demographic challenges are more acute than in other Canadian regions. Rural areas face greater demographic challenges than urban areas, especially with regards to immigration.

The impending changes to Atlantic Canada's population point to some obvious areas for public policy focus. And the solutions, including improvements to education, public service prefunding, and increasing immigration, will take time. Policy-makers must act today.

Pierre-Marcel Desjardins teaches economics at the Université de Moncton, Colin Busby is a policy analyst at the C.D. Howe Institute, and William B.P. Robson is the president and CEO of the C.D. Howe Institute. The complete study is available at www.cdhowe.org/pdf/backgrounder_120.pdf.