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Jevons Paradox

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The Jevons paradox is that efficiency enables growth. New technologies that can produce more goods from a given amount of resources allow the economy as a whole to produce more. More resources get used overall.

This is the magic of industrial capitalism and the secret of growth. Economists have known it for a long time. So why is it called a paradox?

A question of scale

The paradox is that we tend to assume that the more efficiently we use a resource the less of it we will use.

This is the case in our personal lives. If you buy a more fuel-efficient car, you might drive a little bit more but overall you will likely burn less gasoline. Switching to a low-flow showerhead typically saves water at home.

This efficiency-for-conservation logic appears correct for most subsets of the economy. When a business switches to energy-efficient light bulbs, its electricity bills go down. Municipalities that require new buildings to meet energy efficiency standards might see energy use decrease within city limits.

But at the level of the whole economy, the reverse is true. These efficiency gains contribute to increasing production and consumption, which increases the extraction of resources and the generation of wastes.

This suggests that energy-efficient technologies do not reduce carbon emissions, that fertilizer-saving precision farming techniques do not decrease fertilizer applications overall, and that increasing agricultural yields does not spare land for nature. Real-world evidence supports these claims.

Environmental policy focused on efficiency gains does not by itself benefit the environment. Economies grow by developing and deploying increasingly efficient technologies.

How growth happens

Consider a hypothetical example. If the owner of a tea kettle factory installs a new machine that can make one kettle from less raw copper than before, he might continue to produce the same amount of kettles at a lower cost, or he might choose to make more kettles overall from the same amount of copper.

Either way, profits will go up. The factory owner can buy more machines to make even more kettles from even more copper. Or he can invest those profits elsewhere, increasing production in another sector of the economy and thus increasing the use of copper and other materials.

As more tea kettle factories adopt the copper-saving technology, they might start selling kettles at lower prices to compete for customers. As tea kettles get cheaper, people will be able to buy more of them. Since more kettles can be sold, factories will make more—using more copper.

Copper’s price might increase as factories increase their demand for it. When the price goes up, more potential copper mining sites become profitable, which further raises supply.

Or, even if all tea kettle factories end up using less copper with the new, copper-saving machines, copper’s price will fall and other sectors will be able to afford more copper and therefore demand more.

Cheaper copper could make all copper-containing things cheaper, not just tea kettles, leaving people with more money to spend. They can demand more of the products of all economic sectors, further increasing the use of many materials, including copper.

Cheaper copper might increase industrial profits, too, which capitalists either reinvest to increase production or spend on luxury things.

Even if the initial factory owner decides to give his workers a raise rather than keeping the profit or increasing production, then the workers will have more money to spend on tea kettles and everything else. Even if they decide to save all that additional income, the banking sector will direct it toward investing in more new machinery to produce more things from more materials.

No matter what, it seems, copper consumption rises in the end, because efficiency increases kickstart the growth machine.

The more efficiently society can use copper, the more of it will generally be used. Unless, that is, society intentionally limits its use of copper.

The same goes for just about any resource.

Uneven Earth

9 Comments on "Jevons Paradox"

  1. Kevin Cobley on Wed, 17th Jun 2020 8:14 pm 

    It’s necessary for a cap to be placed on the use of any resource, for a bidding process
    and tax applied for the use of the resources by industry.
    If a carbon tax/excise is applied efficiency gains will not generate increased volume of use.
    This has to be a consideration to the Jevons paradox.
    The current right wing publicity generating the idea that “efficiency” is bad or ineffective has to be countered.

  2. makati1 on Wed, 17th Jun 2020 8:24 pm 

    Efficiency is the promoter of more use and resource consumption. What is needed is for ALL government subsidies to be removed and the free market work. That would eliminate a lot of resource consumption. And the stock market casino. Go for it!

  3. The Nationalist on Wed, 17th Jun 2020 9:33 pm 

    Mr Cobley there is no evidence in my country, Australia to support your claim. The government talk about adding solar capacity but our total pollution increases. Australia introduced a carbon tax then removed it during political infighting and public indifference.
    Australia is a perfect example of Jevons Paradox, deforestation continues for tract housing even though we are full of ‘fully woke’ people.
    I refuse to reduce water consumption as it would only be used by people like Stephen Marshall ( our conservative state political leader) to justify more population increase or perhaps a block of student housing.

  4. Abraham van Helsing on Thu, 18th Jun 2020 2:47 am 

    “The more efficiently society can use copper, the more of it will generally be used. Unless, that is, society intentionally limits its use of copper.”

    There is nothing wrong with efficiency per se. Or even “economic growth”. You can imagine a society, with plenty of economic growth, that is not harmful for the environment, if only folks shift attention from acquiring ever larger SUVs towards ever more sophisticated computer games.

    The EU renewable energy policy is designed to limit, nay eradicate, the use of fossil fuels altogether. The purpose of the coming few decades will be to “refactor” the entire industrial society to really leave the “Carboniferous” behind us, once and for all. You could call that economic growth, replacing all these fossil fuel power stations, cars, planes, steel producing and what not, with shining new hydrogen equipment, even if the output doesn’t change. As long as you keep the lads busy and from the streets.

  5. Abraham van Helsing on Thu, 18th Jun 2020 2:58 am 

    Anyone fancy a holiday in la douce France?

    Here the always charming Dijon…

    …where you certainly won’t be bored with all these scenic (and armed) Arabs and Chechens around, trying to kill each other (what is the problem with that anyway? What happened to the efficiency idea?).

    George Soros’ his Open Society Program in action.

    Ah well. Soon it will be allowed for right-wing types all over Europe, as far East as the Ural mountains, to go to France and exercise in some major game hunting, once the empire has gone belly up and everything is allowed again. It has been peace for far too long. These Arabs could serve as practice material for the real work, later this decade, in North-America.

  6. Abraham van Helsing on Thu, 18th Jun 2020 4:43 am 

    40% GOP voters thinks CW2 likely:

    The rest is clueless (davy types).

  7. Sissyfuss on Thu, 18th Jun 2020 8:41 am 

    There is a complete lack of efficiency in the practice of adding 83 million more hungry mouths to feed in the era of Limits to Growth. We aren’t going to change on our own volition. We will be forced to change by Natures coming wrath.

  8. Duncan Idaho on Thu, 18th Jun 2020 10:40 am 

    Come for the racism, stay for the plague?

  9. Abraham van Helsing on Thu, 18th Jun 2020 11:20 am 

    This is the kind of racism you will never hear idaho duncan about:

    The liberation will truly begin if we admit to our self that we need duncan types like the plague and begin to act upon that insight. Put duncan in a land of his own, where he can do no harm to white people.

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