Jevons paradox

Engraving of a view of Manchester from a distance, showing factories, smokestacks, and smoke. — Coal-burning factories in 19th-century Manchester, England. Improved technology allowed coal to fuel the Industrial Revolution, greatly increasing the consumption of coal.

In economics, the Jevons paradox (/ˈdʒɛvənz/; sometimes Jevons effect) occurs when technological progress increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the falling cost of use induces increases in demand enough that resource use is increased, rather than reduced.^[1]^[2]^[3] Governments typically assume that efficiency gains will lower resource consumption, ignoring the possibility of the paradox arising.^[4]

In 1865, the English economist William Stanley Jevons observed that technological improvements that increased the efficiency of coal use led to the increased consumption of coal in a wide range of industries. He argued that, contrary to common intuition, technological progress could not be relied upon to reduce fuel consumption.^[5]^[6]

The issue has been re-examined by modern economists studying consumption rebound effects from improved energy efficiency. In addition to reducing the amount needed for a given use, improved efficiency also lowers the relative cost of using a resource, which increases the quantity demanded. This may counteract (to some extent) the reduction in use from improved efficiency. Additionally, improved efficiency increases real incomes and accelerates economic growth, further increasing the demand for resources. The Jevons paradox occurs when the effect from increased demand predominates, and the improved efficiency results in a faster rate of resource utilization.^[6]

Considerable debate exists about the size of the rebound in energy efficiency and the relevance of the Jevons paradox to energy conservation. Some dismiss the effect, while others worry that it may be self-defeating to pursue sustainability by increasing energy efficiency.^[4] Some environmental economists have proposed that efficiency gains be coupled with conservation policies that keep the cost of use the same (or higher) to avoid the Jevons paradox.^[7] Conservation policies that increase cost of use (such as cap and trade or green taxes) can be used to control the rebound effect.^[8]

^ Bauer, Diana; Papp, Kathryn (18 March 2009). "Book Review Perspectives: The Jevons Paradox and the Myth of Resource Efficiency Improvements". Sustainability: Science, Practice, & Policy. 5 (1). doi:10.1080/15487733.2009.11908028.
^ York, Richard; McGee, Julius Alexander (2 January 2016). "Understanding the Jevons paradox". Environmental Sociology. 2 (1): 77–87. Bibcode:2016EnvSo...2...77Y. doi:10.1080/23251042.2015.1106060. S2CID 156762601.
^ York, Richard (2006). "Ecological paradoxes: William Stanley Jevons and the paperless office" (PDF). Human Ecology Review. 13 (2): 143–147. Retrieved 2015-05-05.
^ ^a ^b Alcott, Blake (July 2005). "Jevons' paradox". Ecological Economics. 54 (1): 9–21. Bibcode:2005EcoEc..54....9A. doi:10.1016/j.ecolecon.2005.03.020. hdl:1942/22574.
^ Jevons, William Stanley (1866). "VII". The Coal Question (2nd ed.). London: Macmillan and Company. ISBN 978-1-78987-646-8. OCLC 464772008. Retrieved 2008-07-21.
^ ^a ^b Alcott, Blake (2008). "Historical Overview of the Jevons paradox in the Literature". In JM Polimeni; K Mayumi; M Giampietro (eds.). The Jevons Paradox and the Myth of Resource Efficiency Improvements. Earthscan. pp. 7–78. ISBN 978-1-84407-462-4.
^ Wackernagel, Mathis; Rees, William (1997). "Perceptual and structural barriers to investing in natural capital: Economics from an ecological footprint perspective". Ecological Economics. 20 (3): 3–24. Bibcode:1997EcoEc..20....3W. doi:10.1016/S0921-8009(96)00077-8.
^ Freire-González, Jaume; Puig-Ventosa, Ignasi (2015). "Energy Efficiency Policies and the Jevons Paradox". International Journal of Energy Economics and Policy. 5 (1): 69–79. Retrieved 29 May 2015.

[1] Bauer, Diana; Papp, Kathryn (18 March 2009). "Book Review Perspectives: The Jevons Paradox and the Myth of Resource Efficiency Improvements". Sustainability: Science, Practice, & Policy. 5 (1). doi:10.1080/15487733.2009.11908028.

[2] York, Richard; McGee, Julius Alexander (2 January 2016). "Understanding the Jevons paradox". Environmental Sociology. 2 (1): 77–87. Bibcode:2016EnvSo...2...77Y. doi:10.1080/23251042.2015.1106060. S2CID 156762601.

[York-3] York, Richard (2006). "Ecological paradoxes: William Stanley Jevons and the paperless office" (PDF). Human Ecology Review. 13 (2): 143–147. Retrieved 2015-05-05.

[Alcott1-4] Alcott, Blake (July 2005). "Jevons' paradox". Ecological Economics. 54 (1): 9–21. Bibcode:2005EcoEc..54....9A. doi:10.1016/j.ecolecon.2005.03.020. hdl:1942/22574.

[Coal_Question-5] Jevons, William Stanley (1866). "VII". The Coal Question (2nd ed.). London: Macmillan and Company. ISBN 978-1-78987-646-8. OCLC 464772008. Retrieved 2008-07-21.

[Alcott2-6] Alcott, Blake (2008). "Historical Overview of the Jevons paradox in the Literature". In JM Polimeni; K Mayumi; M Giampietro (eds.). The Jevons Paradox and the Myth of Resource Efficiency Improvements. Earthscan. pp. 7–78. ISBN 978-1-84407-462-4.

[Wackernagel-7] Wackernagel, Mathis; Rees, William (1997). "Perceptual and structural barriers to investing in natural capital: Economics from an ecological footprint perspective". Ecological Economics. 20 (3): 3–24. Bibcode:1997EcoEc..20....3W. doi:10.1016/S0921-8009(96)00077-8.

[Energy_Efficiency_Policies-8] Freire-González, Jaume; Puig-Ventosa, Ignasi (2015). "Energy Efficiency Policies and the Jevons Paradox". International Journal of Energy Economics and Policy. 5 (1): 69–79. Retrieved 29 May 2015.

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