Jevons’ Paradox and the myth of technological liberation
Introduction
Standard economic theory and neoclassical economists argue that higher energy prices will be the result of diminishing natural resources that are used to produce energy. These higher energy prices will stimulate investment into the research and development of more efficient technologies that will conclude in energy conservation. In the long run, these technologies will lead to lower energy intensities of households and firms (Velthuijsen and Worrell, 2002). The magic bullet of technology will create environmental improvement with the least effect on the economy (Foster, 2000). However, is technology that leads to greater energy efficiency a solution to the depletion of natural resources as many people believe? We will argue in this paper that technological improvements that create increased energy efficiency do not lead to decreased energy consumption and, therefore, improved environmental conditions. Furthermore, we will contend that increased energy efficiency actually results in increased demand and use of energy. Thus, technological efficiency will not result in the liberation from environmental damage as has been promised. This argument is known as ‘Jevons’ Paradox’.
Jevons concluded that increased demand for a resource due to efficiency would occur because of a rising level of possible production (Jevons, 1865, 1965). In chapter seven, entitled “Of the Economy of Fuel,” in The Coal Question, Jevons eloquently detailed his ideas. He used the history of the steam engine to illustrate his point of how each improvement led to increases in the scale of production and in the demand for coal. Jevons wrote, “Every such improvement of the engine, when affected, does but accelerate anew the consumption of coal. Every branch of manufacture receives a fresh impulse—hand labor is still further replaced by mechanical labor” (Jevons, 1865, 1965). Improvements in technology tend to be energy-using and labor-saving, through the use of more powerful energy converters (Georgescu-Roegen, 1975).
Efficiency gains only result in savings if a complex adaptive system would not be able to adapt. However, complex systems tend to adapt quickly, and once technological improvements are introduced room is created for either: (1) an expansion of current levels of activity within the original setting, and/or (2) an increase in the option space with additional activities (Giampietro and Mayumi, 2005). In other words, as a resource becomes more efficient to use, and, therefore, more affordable, current technology will be used more or new technology will be introduced that contains more options and features. For example, efficiency increases make a resource less expensive, thus allowing more of the resource to be consumed with the same budget constraint.
Research studies of Jevons’ Paradox have examined the residential sector of individual countries (Scott, 1980, Haas and Biermayr, 2000, Milne and Boardman, 2000, Berkhout et al., 2000, Roy, 2000), used production functions to examine how industries consume energy when energy efficiency increases (Jaccard and Bataille, 2000, Saunders, 2000a), examined the determinants of energy use (Schipper et al., 2001) and other studies project how the paradox might impact future energy consumption (Birol and Keppler, 2000, Laitner, 2000). For our purposes, the above-mentioned papers are considered micro level studies, focusing on specific forms of energy consumption such as sectors of the economy (i.e., the energy sector) and/or activities (i.e., refrigerators, cars, etc.). This paper will take a different approach examining energy consumption on a macro (country and multi-country) level. The purpose of this paper is to provide empirical analysis to show that Jevons’ Paradox may exist on a macro level for total primary energy consumption in different regions of the World. Analysis of this kind is important because it will enable global and regional public policies to be developed while accounting for the stages of economic development they are in. Using data for 154 countries, broken into various sub-groupings, we develop a simplified systematic macro-level empirical approach to resolve which factors drive the paradox. There will be no discussion as to the reason for either the existence or lack of existence for Jevons’ Paradox for specific regions or countries, as that would require a much deeper examination and will be the focus of further research on the subject by the authors. For similar reasons, there will be no discussion of the changes in the data over the time period of the study. Section 2 presents a discussion of Jevons’ Paradox and examines the relevant literature on the subject. Section 3 describes the data and the various models that are used in the paper. Section 4 presents the results of the models. Lastly, Section 5 discusses the implications of the findings and concludes the paper.
Section snippets
Jevons’ Paradox: the debate
As stated previously, Jevons’ Paradox occurs when an increase in the efficiency in using a resource leads to a medium to long-run increase in the consumption of that resource rather than a reduction (Giampietro and Mayumi, 2005). When William Stanley Jevons first made this claim in his book The Coal Question in 1865, he was referring specifically to coal consumption and other fossil energy resources. Specifically, he argued that improved coal efficiency leads to increased coal consumption
Data and models description
A cursory examination of World energy consumption statistics might provide enough proof for some that Jevons’ Paradox exists. However, to fully comprehend the relationship between energy consumption and energy efficiency a macro level statistical analysis must be done. Analyzing why resource use (I), specifically energy consumption, has increased will require examining the three main macro factors influencing consumption: (1) population size and growth (P), (2) consumption per person, or
Results and findings
Each of the two models described above were tested for a variety of countries broken down into the following major sub-regions of the World: (1) North America, (2) Central and South America, (3) Western Europe, (4) Asia, (5) Africa, and (6) the Middle East. Countries were categorized into these major groupings to determine if there are regional differences that could cause Jevons’ Paradox to possibly exist in some parts of the World while not in other parts.
Conclusions
Jevons’ Paradox is little known outside a few academic circles. However, the result is of prime importance, especially in current times. Citizens around the world have to deal with the problems related to pollution. Energy blackouts, while rare, occur and will likely happen more often as energy demand increases. Every day the news reports on higher energy costs and a diminishing supply of natural resources to use for energy production. Policy-makers, scientists, economists, etc. around the
Acknowledgements
The authors would like to thank Katharine Farrell, Ralph Winkler, Kozo Mayumi, and two anonymous reviewers for their suggestions on previous versions of this paper.
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