Jevon’s Paradox

Efficiency isn’t sufficient.

The Jevons paradox is an interesting phenomenon in economics that applies to climate change, and it is an illustration of the sometimes non-straight-forward nature of the area. The paradox was first described in 1865 by British economist William Stanley Jevons as an example of how more efficient steam engines led to increased coal consumption since although each engine consumed less coal, with better engines the market expanded and more engines were produced. Thus one cannot assume that a solution that lowers emissions in e.g. a factory will lead to an overall reduction in emissions. Of course, this should not be an excuse for inaction, but rather be a reminder of the importance of listening to advice from experts when trying to work on tackling climate change.

Let’s take a scenario where we are trying to minimize the damage of apparel retail by incorporating circular design aka ‘rentals’. For the fast-fashion world, rental is a potential workaround for its impact on the environment. This model promises more efficiency, without the same damage to the environment.

The benefits seem trivial

• The reduction of the environmental impact of an item of clothing produced, as it is circulated between multiple customers
• Out of date items can be captured back into the production chain, reducing waste and material costs
• Potential for greater social inclusion. Customers who were previously priced out of owning an item of clothing could now rent it.

However, it turned out to be as bad as manufacturing new apparel. The model made it more efficient to re-use clothes, driving down the environmental impact per item. However, as it’s that much easier (and less emotionally costly) to consume the resource, overall consumption increases — customers demand more and more styles to rent.

To summarize:

1. As a ‘buyer’ didn’t own the clothes they had less emotional investment in them.
2. They also didn’t have to worry about not having adequate wardrobe space to accommodate their clothes.
3. Therefore, people would cycle through styles more often, and therefore demand to constantly produce newer more fashionable styles to keep up with the cycle.

When a resource in our economy gets more efficient, this lowers the cost, and we consume until the price goes up to where it was before.

Another example would be, if TV prices fall by 50%, consumers spend the difference on new products (or more TVs, or BIGGER TVs) rather than halting consumption. If cars use 50% less gasoline, we drive more, buy more vehicles, and increase general consumption until price equilibrium sets in again.

That same paradigm can be applied to customers and consumption levels. You can focus on designing easier consumption or access paths to your sustainable product or service, focusing on “frictionless experiences”. Yet by making it easier to access or use your product or service, you could still be increasing consumption levels, contributing to its environmental impact (and this doesn’t even explore potential psychological or social impacts of certain design decisions), somewhat of a consumption conundrum!

So what is the point?

Efficiency of a system cannot be the sole answer to our sustainability considerations.

This optimism for our future is quite prevalent, as seen in this Mckinsey article where better efficiencies should solve our main challenges. Jevon’s paradox highlights how purely thinking about efficiency forgets to consider the full system.

Human-centered design was definitely the right start, but this myopic view seems to be nudging us into a narrow corner of chasing efficiencies and short term wins without considering the bigger picture. We need to expand that view from just the individual, to community and now to the planet. Can you think of more such examples where Jevon’s paradox is overlooked?