EFFECT
REBOUND EFFECT
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
REBOUND
EFFECT
Rebound effect is the increase in consumption due to environmental efficiency interventions that can occur through a price reduction (i.e. an efficient product being cheaper and hence more is consumed) or other behavioral responses
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
REBOUND
EFFECT
Microeconomics Effects
Direct Rebound Effect
Macroeconomics Effects
Economy Wide Rebound Effect
Indirect Rebound Effect
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
REBOUND
EFFECT
The magnitude of the rebound effect is dependent on individual circumstances e.g. sectors, technologies and income and is linked with a range of factors impacting consumption and economic growth.
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
REBOUND
EFFECT
The Consumption Equation
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
EXAMPLES
Case 1: Lightning (Developed and Developing
Countries)
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
EXAMPLES
ECOS analysis of EU data, Source: Callwell, 2010
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
EXAMPLES
Developing Countries
The Indian Case
Unmet demand is very high
The Chinese Case
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
EXAMPLES
There are two types of behaviours of the rebound effect in the lighting sector
i) Rebound through reversion ii) Heat replacement effect – Nordic countries
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
EXAMPLES
Case 2: Private Transport
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
EXAMPLES
Fuel Consumption vs. Fuel Efficiency
Source: EEA, 2010
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
JEVONS
PARADOX
Technological progress that increases the efficiency of a resource tends to increase the rate of consumption of that resource.
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
JEVONS
PARADOX
Cost of Driving 1 Km
Hybrid Car Example
Price falls 1 un.
Kilometers
Quantity increases 2 un.
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
GREEN
PARADOX
Expected future reduction in carbon consumption has the effect of accelerating climate change.
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
COBRA
EFFECT
The cobra effect happens when an implemented solution to a problem makes the problem worse.
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
COBRA
EFFECT
Other examples include leasing cars in companies, traffic in Bogota and rewards for cutting CO2 emissions.
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
INCENTIVES
PROBLEMS
Case 1: The great Hanoi Rat Massacre
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
INCENTIVES
PROBLEMS
Case 2: Pig Bounty – Georgia, USA
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
INCENTIVES
PROBLEMS
“No matter how clever you think you are, there’s a pretty big chance that someone will figure out a way to beat the incentive scheme.”
Steven Levitt
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
MEASURES
There are three stages in the formulation of the rebound effect
IDENTIFICATION
Environmental Economics and Sustanainable Development
EXPLANATION
Rebound Effect
DESIGN
16 May 2013
CLSBE
MEASURES
Measures for tackling the rebound effect
1. Design, Evaluation & Performance Policy Instruments
Case: “water saving” in UK homes
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
MEASURES
Measures for tackling the rebound effect
2. Sustainable lifestyles & Consumer Behaviour
Case: Substitution of gas apliances for electric ovens
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
MEASURES
Measures for tackling the rebound effect
3. Technology and Innovation
SMART Billing/ SMART Metering of Electricity
Clean technology
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
MEASURES
Measures for tackling the rebound effect
4. Fiscal Instruments
Taxation
Carbon Tax
Regulation
Quotas & Permits
To stabilize/reduce consumption Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
CONCLUSION
Conclusions on the rebound effect
If energy efficiencies reduce price, producers and consumers will use more Very significant in the long term
Caused by human nature
Counteractions
Short-term – Fiscal Instruments
Long-term – Awareness raising, education and behavior
Environmental Economics and Sustanainable Development
Rebound Effect
16 May 2013
CLSBE
THE
END
Environmental Economics and Sustanainble Development
Rebound Effect
16 May 2013
CLSBE
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