The Jevons Paradox
Recently, I was reading an article in The New Yorker about the ecology and the green movement in the United States. This article mentioned an economic principle that apparently has been around since long before my time. I’d never heard of it, probably because I didn’t study economics in school. It’s called the Jevons Paradox.
William Stanley Jevons was a British subject. In 1865 he wrote a book called, The Coal Question. In his book, Jevons was proposing a theory for the usage of coal, then the primary source of energy in the developing industrial world. He observed the effect that fuel efficiency had on coal usage.
Instead of improved efficiency limiting coal usage, it actually had the opposite effect. Because technology allowed less coal to be used to produce the same or better results, that lowered the cost of the coal, and then the coal, as more and more people became able to afford the latest technology, became cheaper. A cheaper product created greater demand. Thus, more coal was used.
The increase in demand, which fuels the increase in usage, is called the rebound effect. When the rebound effect is an increase of more than 100%, then it’s called a backfire. And the backfire is the crux of the Jevons Paradox, when the rebound effect exceeds the gains made from conservation.
We don’t use coal as our primary fuel source anymore. It’s interesting to note that at the time that Jevons wrote his book people were worried about eventually running out of coal. Coal was eventually replaced with petroleum and natural gas. And people currently worry that we are running out of all fossil fuels at the rate we’re depleting them.
Frequently, this scientific theory is quoted by conservatives as a reason not to bother with energy conservation efforts. After all, they don’t work anyway. In fact, they produce the opposite result. We should all just go out and buy Hummers. The only problem with that is that eventually we will run out of fossil fuels, and it will become impossible to use them as our primary energy resource any longer. And if we don’t have an alternative in place by then, then we’re kind of screwed.
The oil won’t just keep perpetually replenishing itself. And with more and more developing nations, particularly in Asia, requiring their own increasingly larger slices of the pie, it’s likely to run out sooner rather than later if we don’t take the lead in looking for a replacement.
This is not to mention that our dependence on fossil fuels puts us at the mercy of volatile middle-eastern governments. In some cases, one could even go so far as to say that every time you fill your gas tank you’re funding some terrorist organization.
Where do you think Osama bin Laden’s money came from? Much was made of the Hummer and then the Hummer II during both Iraq Wars. It was like a symbol of patriotism to drive a military tank as your personal vehicle. The truth is just the opposite. The symbol of true patriotism is a Smart car, or, better yet, a bicycle.
Our government should encourage conservation by taxing fossil fuels at a rate that makes up for any savings created with the Jevons Paradox. Then we should take that savings and invest it in research and development toward clean energy resources. We could do the same thing with cigarettes and junk food and the health crisis. Our government gives a lot of breaks to tobacco farmers and to growers of corn and soy beans. And where have you heard the words corn and soy bean come up most in the news lately? Oh, yeah.
No doubt, some of the actual economists or business enthusiasts who read this article will fault me for wanting to interfere with a “free market” economy. But this isn’t a free market economy and never has been. Our government picks and chooses which industries that it sanctions in the form of tax breaks, incentives, trade embargoes, etc. It always has; that is nothing new. Why not sanction our future instead of continuing to pour money into dinosaurs, both literally and figuratively?
The world is changing, whether we like it or not. We can do nothing and perish, or we can evolve and survive.
Entry filed under: Ecology, Economy, Foreign Policy, Money and Finances, Politics, Science, Technology. Tags: Coal Question, Jevons Paradox, New Yorker, Osama bin Laden, Rebound effect (conservation), United States, William Stanley Jevons.