Rebound Effect

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REBOUND
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...
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