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The Jevons’ Paradox or when efficiency becomes inefficient

Common sense drive us to assume that when a more efficient input or process is implemented, a reduction in consumption –or pollution– should be expected after this improvement. But this common belief is not always true, and in some cases when the fact is analyzed deeply and all the interactions are understood completely, efficiency might become inefficient.

In 1865, English economist William Stanley Jevons observed that technological efficiency on coal use led to increased consumption in different industries, and for that reason this effect is called the Jevons’ paradox. Is also called generally as rebound effect in economics due to the response after an introduction of efficient technologies that finally causes an increase in the consumption of the basic resource.

On water resources management these paradox has shown by Ward and Pulido-Velazquez (2008) demonstrating that water conservation on irrigation can finally increase water use.  That paper focus its research in New Mexico, stating that water conservation subsidies are unlikely to reduce water use under conditions that occur in many basins because decreases aquifer recharge and can actually increase depletions when the basin-scale is analyzed. More efficient drip irrigation implies a greater crop evapotranspiration, and furthermore, because economic benefits for farmers increase, it is likely that acreage irrigated will spread out causing a greater water demand.

On the energy side, and considering greenhouse emissions and climate change as a corollary of energy consumption, is where most of the current research is focusing on. Looking as an economist, direct consequence of improved efficiency is a reduction on input costs, and that might cause an increase in consumption in order to obtain more utility. But what can be more interesting –but also more difficult to analyze and explain– is the indirect effect either in the microeconomic or in the macroeconomic scale: a policy encouraging clean energy in California that results in an improvement in energy efficiency for the state can reduce energy costs for costumers that can use the money saved purchasing products more pollutant than the primary energy abandoned; on the global scale, this policy could delocate some energy intensive companies to other countries with less restrictive regulations, resulting in an increase of greenhouse emissions.

It might seem discouraging, but actually is not anything more than a challenge for researchers and policy-makers in order to consider the system as a whole and include all the processes and interrelations that can arise in the analysis. Efficiency does not can be considered as a problem, quite the opposite, it can help us to become more sustainable, but in the decisions that we take, we should be conscious about all what is implying that decision. Definitely we have to keep in mind what Jevons taught us almost 150 years ago.

More information:

Water conservation in irrigation can increase water use, F. Ward and M. Pulido-Velazquez

The efficiency dilemma, by David Owen.

Why efficiency gains accelerate global energy consumption and CO2 emission rates, by T.J. Garret.

The rebound effect: a perennial controversy rises again, by Cameron Burns and Michael Potts.