Rebound effect, round 725
Addendum/response to a blog post by David Keith (with huge help from Daniel Thorpe) on “LED salad and Jevon’s paradox“:
First off, yes, the Nobel committee goofed by citing that calculation. It ignored the rebound effect. Plain and simple. Shellenberger and Nordhaus were right to point that out.
That’s a broader phenomenon: physicists and engineers — present company excluded — tend to ignore these important behavioral effects. The same goes for some environmentalists with a clear agenda of talking up their favored approach. (EDF excluded on that one, which has long argued for the most economically sensible solution and (mostly) gets it right on rebound, too. Full disclosure: I still work with EDF on a consulting basis.)
That said, my first entry into this long-standing debate was a Nature comment arguing how “The rebound effect is overplayed.” I stand by these words, chiefly for the same reason David mentions above: Don’t focus on rebound. Trying to minimize it is the wrong target. Maximize welfare instead. David gets jollies out of his Aerogarden, as he should. I’ve seen and admired it. It’s a cool gadget.
David is also right, of course, that his Aerogarden fits squarely into the final rebound category: the macroeconomic growth effect. That’s also the category about which we know the least, largely because economists have a poor handle of why growth happens. That’s why we economists insist on a causal link. No causal link, no rebound. The Aerogarden might be closer to having such a direct link than many other examples.
Either way, back to the main conclusion: Don’t focus on rebound. Focus on welfare.
In the end, all of this is what makes Energy Within Environmental Constraints such an important course. It combines the fundamental physics and engineering with economics and policy.
For a comprehensive take, see “The Rebound Effect and Energy Efficiency Policy” (Review of Environmental Economics and Policy, Winter 2016). For a shorter argument, see “The Rebound Effect is Overplayed” (Nature). For an even shorter take, see our letter to the editor of The New York Times. Andrew Revkin ran a two-part debate on The New York Times’ DotEarth blog in response. Part 1: “Is There Room for Agreement on the Merits and Limits of Efficient Lighting.” Part 2: “Another round on energy rebound.”