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Jevons paradox
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From Wikipedia, the free encyclopedia
Efficiency leads to increased demand
Coal-burning factories in 19th-century Manchester, England. Improved technology allowed coal to fuel the Industrial Revolution, greatly increasing the consumption of coal.<br>In economics, the Jevons paradox , or Jevons effect , is said to occur when technological improvements that increase the efficiency of a resource's use lead to a rise, rather than a fall, in total consumption of that resource.[1][2][3][4] Greater efficiency reduces the amount of the resource needed per application, lowering its effective cost; if demand is sufficiently price elastic, this induces demand, frequently resulting in a net increase of total resource consumption.[5]
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.[6][7]
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 use.[7]
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.[5] 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.[8] Conservation policies that increase cost of use (such as cap and trade or green taxes) can be used to control the rebound effect.[9]
History<br>[edit]
William Stanley Jevons, after whom the effect is named<br>The Jevons paradox was first described by the English economist William Stanley Jevons in his 1865 book The Coal Question. Jevons observed that England's consumption of coal soared after James Watt introduced the Watt steam engine, which greatly improved the efficiency of the coal-fired steam engine from Thomas Newcomen's earlier design. Watt's innovations made coal a more cost-effective power source, leading to the increased use of the steam engine in a wide range of industries. This in turn increased total coal consumption, even as the amount of coal required for any particular application fell. Jevons argued that improvements in fuel efficiency tend to increase (rather than decrease) fuel use, writing: "It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth."[6]
At that time, many in Britain worried that coal reserves were rapidly dwindling, but some experts opined that improving technology would reduce coal consumption. Jevons argued that this view was incorrect, as further increases in efficiency would tend to increase the use of coal. Hence, improving technology would tend to increase the rate at which England's coal deposits were being depleted, and could not be relied upon to solve the problem.[6][7]
Although Jevons originally focused on coal, the concept has since been extended to other resources, e.g., water usage.[10] The Jevons paradox is also found in socio-hydrology, in the safe development paradox called the reservoir effect, where construction of a reservoir to reduce the risk of water shortage can instead exacerbate that risk, as increased water availability leads to more development and hence more water consumption.[11]
Cause<br>[edit]
Main article: Rebound effect (conservation)
Elastic demand: A 20% increase in efficiency causes a 40% increase in travel. Fuel consumption increases and the Jevons paradox occurs.<br>Inelastic demand: A 20% increase in efficiency causes a 10% increase in travel. The Jevons paradox does not occur.<br>Economists have observed...