Rebound effect (conservation)
A definition of the rebound effect is provided by Thiesen et al. (2008)[1] as, “the rebound effect deals with the fact that improvements in efficiency often lead to cost reductions that provide the possibility to buy more of the improved product or other products or services.” A classic example from this perspective is a driver who substitutes a vehicle with a fuel-efficient version, only to reap the benefits of its lower operating expenses to commute longer and more frequently.
[3][4][5] Generally, economists and researchers seem to agree that there exists a rebound effect, but they disagree about its volume and importance.
"[14] When studying the increase in energy consumption due to coal burning, Jevons initially presented the idea of rebound effect in academic literature in 1865.
The concept of rebound effects have taken various iterations in different disciplines and has come to encompass several spheres of challenges and negative externalities.
[15] However, most contemporary authors credit Daniel Khazzoom for the re-emergence of the rebound effect in the research literature.
[17] His study was based on energy efficiency gains in home appliances, but the principle applies throughout the economy.
Developing Khazzoom's idea further, and prompting heated debate in the Energy Policy journal at that time, Len Brookes wrote of the fallacies in the energy-efficiency solution to greenhouse gas emissions.
Commenting in regard to energy efficiency advocates, he concludes that, "the present high profile of the topic seems to owe more to the current tide of green fervor than to sober consideration of the facts, and the validity and cost of solutions.
… These results, while by no means proving the Khazzoom-Brookes postulate, call for prudent energy analysts and policy makers to pause a long moment before dismissing it.This work provided a theoretical grounding for empirical studies and played an important role in defining the problem of the rebound effect.
However, if the first position more accurately reflects economic reality, current efforts to invent fuel-efficient technologies may not much reduce energy use, and may in fact paradoxically increase oil and coal consumption, and greenhouse gas emissions, over the long run.
For cost reducing resource efficiency, distinguishing between direct and indirect effects is shown in Figure 1 below.
The rebound effect can increase the difficulty of projecting the reduction in greenhouse emissions from an improvement in energy efficiency.
Research has found that in developed countries, the direct rebound effect is usually small to moderate, ranging from roughly 5% to 40% in residential space heating and cooling.
An improvement in energy efficiency has the same effect as lower fuel prices, and leads to faster economic growth.
Economists generally believe that especially for the case of energy use, more efficient technologies will lead to increased use, because of this growth effect.
While CGE methodology is by no means perfect, results indicate that economy-wide rebound effects are likely to be very high, with estimates above 100% being rather common.
[36] Research has shown that the direct rebound effects for energy services is lower at high income levels, due to less price sensitivity.
[37][38] Evaluation methods have also been used to assess the scale of rebound effects from efficient heating installations in lower income homes in the United Kingdom.
The size of the rebound effect is likely to be higher in developing countries according to macro-level assessments [30] and case studies.
One case study was undertaken in rural India to evaluate the impact of an alternative energy scheme.
[22][40][41] Research articles often examine increasingly convenient and more rapid modes of transportation to determine the rebound effect in energy demand.
[9][40] While important, it is almost impossible to estimate empirically the scale of such effects due to the subjective nature of the value of time.
[43] Perhaps due to the ongoing discussions and lack of mutual understandings related to importance and influence of rebound effects, it is outlined that policy responses to mitigate risks and address challenges related to rebound effects remain scarce and too little ambitious.
