Jevon’s Paradox

Jevon’s paradox proposes that efficiency improvements increase demand because costs are lowered and the efficiency improvements are counteracted. Some examples of this are carbon taxes and advances in oil extraction technology. One possible example of the rebound effect is the results of Levinson (2014) study “How Much Energy do Building Energy Codes Really Save? Evidence from California.” Levinson examined the change in energy use of homes built before and after California instituted building energy codes in the 1970’s. Levinson found that there wasn’t a significant reduction in the amount of energy used by homes after the legislation was enacted. One explanation for this is the rebound effect, in this case being that people installed more energy consuming appliances, such as air conditioners, when houses were retrofitted because they knew it would be cheaper. This is a perfect example of Jevons paradox because as houses were made more energy efficient, demand for energy increased because costs were lower. One way to prevent the rebound effect is to increase government regulation. In this case, had the state been more strict about the requirements for retrofitting buildings to meet the building energy codes, there wouldn’t have been energy sucking appliances installed in the buildings. At the end of the day, jevons paradox shows that efficiency improvements won’t solve environmental crises, but rather we need to reduce consumption.