What is Jevons Paradox?
In a technological age, we've grown used to the idea that the new is faster, better, cheaper than the old. And because the latest model is more efficient, it'll be better for the environment. Technology is the path to a sustainable future because the new airplane burns less fuel and cars can go further on a tank.
Sadly, things are not that simple because reality is sometimes the opposite of what we expect.
William Jevons realised this was the case, and hence his ''paradox''. Of all things, the story begins with coal!
In his 1865 book The Coal Question, he observed consumption soared after James Watt found ways to greatly improve the steam engine.
Jevons' two-step logic is simple - efficiency reduces cost, which in turn increases demand.
The paradoxical result is that instead of consumption falling, it rises.
We saw this back in the mainframe computer days when overnight, a new model would double capacity. Within a few days, utilisation would jump back to ''full''. That partly reflected unfulfilled demand, but it was also that improvements encouraged people to use more.
We may see the same effect if driverless cars become ubiquitous - people will travel more because it's easier and cheaper.
William Jevons was concerned about exhausting the finite reserves of coal. He was not aware of the dire consequences of climate change, though he was prescient in observing that we are going to run out of non-renewable resources. Or as economist EF Schumacher observed, we are spending capital as if it were income.
Imagine telling your financial adviser that your strategy is to spend your bank balance as fast as you can.
Later, the curiously named ''Khazzoom-Brookes postulate'' suggested that improvements in energy tends to increase overall use, not only because of efficiency, but because consumers have more real income.
While Jevons Paradox is a deep insight, like anything in economics, there are a few caveats and assumptions. One is that the market is insatiable. The modern PC, for example, was driven for years by exponential performance gains made possible by Moore's Law. Today, however, there are competing devices such as tablets and smartphones. It seems likely too, that a modern PC is powerful enough for the great majority of users.
Even while more efficient power plants become available, the demand for coal is now in terminal decline as renewable sources offer a cheaper and more reliable replacement.
Jevons Paradox should not be taken as saying that efficiency can be ignored. On the contrary, it's as important now as it ever was, but on its own it's not enough. Instead, it warns us that without restraint, a market will consume and pollute until a resource is gone.
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