The Jevons Paradox: Time to Send it The Way of the Dodo?
The Jevons Paradox has been the elephant in energy efficiency's room since energy efficiency was in diapers. It casts a gloomy shadow over the industry, raises doubts about the sanctity of our mission, and the fact that it exists at all is, frankly, kind of a drag.
But here's the thing: energy efficiency is all grown up now, and Jevons is dead. It's Hans Castorp's grandfather-on-the-wall in The Magic Mountain—archaic, mysterious, and useless. Time to move on.
In case you're unfamiliar, the Jevons Paradox was first suggested by William Stanley Jevons in 1865 in a book called The Coal Question, and essentially claims that as technological improvements increase the efficiency with which a resource is used, use of that resource increases rather than decreases. The classic case in point was that when James Watt invented his coal-fired steam engine, which was drastically more efficient than Thomas Newcomen's earlier design, coal became a more cost effective power source, its range of applications increased, and ultimately, coal consumption boomed. Good bye, blue skies.
The same principle has held true for nearly every other major fuel source since. Likewise, in more modern times, the Jevons phenomenon has manifested itself in the growing efficiencies of typical houses (as measured by mmbtu's/sq ft), that have been offset by—guess what—larger houses. (This may be changing; see below.)
But while it continues to be broadly accepted as an economic principle, we think there's growing reason to question the validity of Jevons in a new era, and certainly good cause for those of us in the energy efficiency business to stop talking about it as though it were an immutable law of nature. Here's why:
1) It's no longer the height of the Industrial Revolution. James Watt was born in 1736. Times have changed (needless to say, but we'll say it).
2) Times have changed more recently, too. The housing boom is over. Americans are no longer looking to get rich quick (or feel rich quick) by investing in bigger, badder, further out of town houses. As Warren Buffett wrote of housing in his 2009 shareholder letter, "prices will remain far below 'bubble' levels..." I question whether those days will ever return.
3) Today's economic environment is uniquely bad, and, despite our highest hopes, may stay so for some time; so the trend of increased consumption that's carried on for the past 50 years may be grinding to a halt. As Nobel-prize winner Paul Krugman predicts, things "could be unpleasant for a very long time."
4) Demographics are changing. Today's generation, the "Echo Boomers," is big, and entering the home buying years, but not as wealthy as the baby boomers. They like to spend money, but maybe not quite as much as their parents. And perhaps more importantly, research suggests that today's up-and-coming, soon-to-be-home-buying generation is the most socially conscious, environmentally driven generation in recent history. I'm hopeful that this is the renovation generation, less concerned with real estate flipping, more committed to quality of place and the impact of their housing on the planet.
5) Houses are no longer growing. While increased efficiency in homes over the past 30 years was offset by bigger homes, what we're seeing in the post-bubble housing market is a veering away from McMansions in favor of smaller, more affordable, more efficient homes.
6) Energy prices are growing faster than incomes. Despite the energy price hiccup of the last couple years, the broad trend is that energy prices are on a steady rise, taking into account the recession drop, and even in the absence of shock factors like peak oil or major supply disruptions. The growing disparity, and increase in energy costs as a percentage of family income, means that people will need efficiency just to survive, unless we want to live in a state of permanent recession.
Of course, this is, in the end, an opinion piece, and we'd be tremendously curious what you might have to say about the matter. Let us know in the comments section.
ENDNOTE: Two posts on the topic of energy efficiency versus conservation lit the match for this one. Thanks to Allison Bailes' post on Energy Vanguard and to Sean Lintow's post on the SLS Construction Homeowner's Resource Center Blog. Both highly recommended reads.