Generic chart depicting the demand for an input to product increasing as the efficiency of the input increases

Jevons paradox refers to the increased use of a resource as a result of its efficiency. In other words, that reducing costs, alleviating difficulty, or increasing availability of a resource will result in more of it being used.

Definition[edit | edit source]

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In economics, the Jevons paradox (; 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. Governments, both historical and modern, typically expect that energy efficiency gains will lower energy consumption, rather than expecting the Jevons paradox.

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.

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.

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. 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. Conservation policies that increase cost of use (such as cap and trade or green taxes) can be used to control the rebound effect.

Examples[edit | edit source]

  • Fuel
  • Digital technologies
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License CC-BY-SA-4.0
Language English (en)
Translations Russian
Related 1 subpages, 5 pages link here
Impact 203 page views
Created May 12, 2022 by Emilio Velis
Modified October 31, 2023 by Emilio Velis
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