Jevons paradox: When doing more with less isn't enough
I recently had the chance to participate in a panel about energy efficiency at the Aspen Ideas Festival in Colorado. I expected the usual discussion of all the opportunities we’re missing to be more energy efficient and save money in the process — what Amory Lovins calls the “free lunch … you’re paid to eat.”
Instead, I found myself vehemently defending the very idea of energy efficiency against an idea with the odd name of Jevons paradox, which is undergoing a resurgence since David Owen’s article on it in The New Yorker.
Jevons paradox is named after William Jevons, who observed in the 19th century that an increase in the efficiency of using coal to produce energy tended to increase consumption, rather than reduce it. Why? Because, Jevons argued, the cheaper price of coal-produced energy encouraged people to find innovative new ways to consume energy.
Jevons paradox, as currently stated by Owen and others, is really an extreme statement about an effect economists commonly observe called “rebound”: some of the gains from energy efficiency are lost because people’s consumption rises in response to lower prices.
For instance, when the federal government requires more fuel-efficient cars, aggregate demand by cars for gas is less. So prices tend to decline, and (to a limited effect) that lower price motivates a few people to drive a little more than they might have, perhaps taking advantage of the lower prices to take an extra weekend trip to the beach.
Jevons paradox claims that, over the very long-term, the rebound effect can dramatically exceed the original gains from energy efficiency. A classic example is lighting, which has gotten vastly cheaper per unit as the world has moved from lamp oil to tallow candles to incandescent bulbs to fluorescent bulbs. Yet people now use more resources for lighting than we ever have in the past, since we have chosen to put lights almost everywhere.
Notice that this argument doesn’t just hold for energy, but really applies to the use of any resource. If humanity is going to feed another 2.3 billion people by 2050 [PDF], and accommodate increases in meat and dairy consumption from the rising middle class in places like India and China, we will need to roughly double food production. If we are to avoid having to plow under the Earth’s remaining natural forests and grasslands to reach this target, then clearly we will need to get more efficient in how we grow food.
However, Jevons paradox would suggest that in the process of making agriculture more efficient, we will increase total food consumption, perhaps by supporting greater meat and dairy consumption than would otherwise be affordable for many people.
To mainstream environmentalists, this whole line of reasoning is blasphemy. Efficiency is seen as an unqualified good, a necessary first step toward a more sustainable society. If energy efficiency is the free lunch one is paid to eat, the sad truth is that environmentalists have only been partially successful at getting people to pick up that lunch: There’s still a lot of food rotting on the table. If environmentalists have had only partial success at promoting energy efficiency, what are the prospects of fighting for an even more fundamental change in our society’s relationship to resources?
I’ve struggled since Aspen to figure out why Jevons paradox seems to me so meaningless from the perspective of actual policy decisions facing society. Here’s what I’ve come up with:
- Energy use by itself is not a bad thing: Indeed, anyone reading this blog online would view the life of hundreds of millions of the world’s poor, living in villages without electricity, as one of extreme deprivation. With food, it’s even more clear: Access to enough food is a basic human right which close to a billion people are denied, although granted, some of us in the developed world (myself included), sometimes eat so much it damages our health.
The issue is not consumption of a resource, but the environmental costs of satisfying demand. In other words, focus on limiting greenhouse-gas pollution or erosion, not on limiting energy or agricultural production.
- Jevons paradox suggests a false choice to policymakers: Either make energy production and consumption more efficient, or do something more fundamental. It’s not clear why society can’t work on both options in parallel, especially since empirically, the rebound effect for most technologies over the timescale of decades is much smaller than the original efficiency gain.
I like to call the next few decades “The Great Crunch.” As humanity strives to meet the resource demands of more than 10 billion people, many of them aspiring to live as resource-intense a life as people reading this blog, we will struggle greatly to protect or restore nature and the benefits it supplies us. Efficiency gains buy us time to make our whole economy more sustainable.
The more I confronted the Jevons paradox argument, the more it seemed to be just an excuse to stand back and do nothing. Why should government promote efficiency, ask proponents, when Jevons paradox would imply it’s a wasted effort?
To me they seem like fisherman on a sinking boat who, when the boat begins to take on water, would rather finish the beer they have on board than start bailing: “Pass the beer, boys — nothing to do but enjoy the time we have left.” A very convenient attitude, but a dangerous one to the extent that it distracts people from, say, putting on their lifejackets or trying to build a lifeboat.
What do you think?