Why it's so important to project P.E.I.'s future population and so hard

Projecting population growth isn't an exact science it involves gathering all kinds of data including past trends and assumptions around fertility, mortality and migration but it's a key piece of how provinces like P.E.I. plan for things like housing, transportation, health care, schooling, and more.

"Sometimes you're going to be high, sometimes you're going to be low. In both instances people say it's wrong," said Nigel Burns, director of economics and statistics for the Department of Finance.

"We're never going to get these projections perfect."

And it's even harder at a time of rapid change like P.E.I. has seenin recent years.

Growth on the Island was virtually flat from 2012 to 2015, ranging from 0.4 per cent to -0.3 per cent.

But in 2015, Premier Wade MacLauchlan concerned about an aging population and the resulting labour shortage announced a new population strategy that would increase immigration and encourage former Islanders to return home. And it seems to have been successful.

In 2016, the population grew 1.9 per cent. Rapid growth continued even through the worst of the pandemic, and hit 3.6 per cent last year.

"That is a phenomenal growth rate. The province is growing faster than any other province in Canada," said Prof. Don Kerr, a demographer at Western University.

"That's what you'd associate with places like Calgary during the boom years, that's what you're currently seeing. Now is that going to continue? That could change very quickly."

And that growth rate has already pushed the province's most recent projections based on July 1, 2021 numbers out of whack. P.E.I. had a projectedpopulation of 167,036 on July 1, 2022, but Statistics Canada's estimate came in at 170,688.

Preparing for new Islanders

Since thestrategy's launch,the population has grown at double the planned rate, contributing to the housing crisis as the construction industry failed to keep up with demand for new homes.

But that growth still hasn't prevented a labour shortage, so the province continues to pursue a high-growth strategy. The most recent projections forecast a growth rate of 1.5to two per cent in the coming decade it's historically high, but still lower than the 2.4 per cent average over the last seven years.

It may not sound like a lot, but that could mean an additional 15,000 Islanders looking for homes, andas many as 1,800 more children than expected needing schools and child care. Not to mention more traffic,higher demand for water, language services for newimmigrants, and a host of other services.

Components of growth

When making projections, provincial demographers consider three ways the population can shrink or grow: births, deaths, and migration, which includes internatonal migration and interprovincial migration.

Interprovincial migration is the most volatile number. Canadians can come and go as they please, and those trends can change quickly.

"That component is certainly the most difficult to forecast," said Colin Mosley, an economist with the P.E.I. Statistics Bureau.

In the years of near-zero growth, the province suffereda net loss of hundreds to interprovincial migration. That turned around to a gain of hundreds in just two years and from July 2021 to July 2022, there was a net gain of almost 2,000 people.

But the province is not predicting this trend willcontinue.

"It's surprising to see that they're forecasting a return to zero gain through interprovincial migration," said Kerr.

And that return to zero is a big piece of the province's projection of a return to more moderate growth.

Because interprovincial migration can change so drastically year to year, Moseley said the province tends to take a long view.

"We will normally, in our base projection, we will just keep it near net zero," he said.

"It normally goes with, if the economy out West is very strong that draws people out, if it's in a downturn then it'll bring people back. If you look at the trend over a long, 15-to-20-year period, it usually goes up and down."

Immigration expected to even out

Governments have more control over immigration than the other two population growth components. It starts at the federal level, with decisions on how many immigrants the country will allow, and moves down to the provinces that negotiate what share of those immigrants they will take.

P.E.I. shattered modern records by attracting 3,436 immigrants in 2021-22. In records going back to the 1970s, the Island had never brought in more than 2,500 immigrants in a single year.

And Ottawa is planning to attract more.

"All the major parties are pro-immigration. Practically every sector of our population, the business sector is pro-immigration, everyone is pro-immigration," said Kerr.

"We have very high immigration targets and we expect that to continue."

But the province is not expecting a repeat of 2021-22's large numbers, forecasting immigration to be steady at 2,500.

First, the province believes the numbers were partly a rebound from 2020-21, when mobility curtailed by the pandemic causeda drop in immigration.

Secondly, other Atlantic provinces didn't take as many immigrants as originally planned at the time, and P.E.I. picked up that slack.

And the 2,500 projected by the province is still above the average of 2,200 over the last seven years.

Rebound in birth rate expected

While the province is forecasting a decline in migration, it is expecting the birth rate to rise.

Birth rates have been declining across the developed world in recent years, and P.E.I. is no exception. The province's birth rate has dropped to about 1.3, down from about 1.7 a decade ago but that's now projectedto bounce back to 1.5.

The province says family-friendly benefits introduced in the early years of the century coincided with an increase in the birth rate. Nigel Burns thinks it's reasonable to expect improvementsto the affordability of day care on P.E.I. will have the same effect.

"It would be reasonable to expect that this will affect people's decisions on family size," said Burns.

"Might have had one child, would have liked to have had two but didn't know if we could afford it, and three was out of the question. More recently, with the introduction of expanding accessibility and lowering the cost of child care which for many families would be a significant barrier this will have an effect."

While birth rate isn't as big a factor in growth as migration, Kerr cautions it can be a factor in how the population ages.

"Fertility has historically been the most important factor in projecting population aging," said Kerr.

"If the province stops receiving as many migrants, one could easily see a higher proportion 65-plus than forecast by the province."

And that in turn would mean fewer workers, more pensioners, and higher health-care costs.

'Got the direction right'

The province has already started the process of creating a new population projection report with the release of new data in July, and officials are taking the long view in their projections.

The growth forecast, conservative by the example of recent years, is still higher than what the province saw before 2016.

"We think we've got the direction right," said Burns.

"The population's going to grow. It's going to grow by different rates every year, but our modelling and assumptions are that we smooth that through so that you end up with an average rate of growth."