Jevons' Redux

Peak Oil Law Center: Jevons’ Redux & Efficiency Policy

Yesterday my article on Jevons’ Paradox was posted at The Oil Drum, and it led to quite a lively debate. Due to the complexity of the issue, I make no claims that I’m “right” on the topic, but by taking a position and defending it I certainly enhanced my understanding—hopefully others at TOD learned as well. Probably the greatest conclusion that I draw from the debate is that Jevons’ Paradox, like all other “real-world” economic phenomena, is incredibly complex and interconnected, and cannot easily be reduced to a “this is a good idea” or “this is a bad idea” dichotomy. Not coincidentally, this was exactly the point that I was trying to make by highlighting the “shadow rebound effect” caused by Jevon’s Paradox, but I ended up learning about several additional unanticipated effects as well.

So what are my conclusions about the validity of efficiency policy in light of a full consideration of Jevons’ Paradox? My ultimate conclusions—though this is a bit out in left field—is that our economic system has grown too complex for us to accurately implement policy with a full understanding of all effects of that policy. The system is simply too complex, too non-linear, and as a result I have to question the rationality of economic policy in the first place. Anyone who says that they understand how the economy works is flat-out lying. We have lots of theories. They work sometimes. But as the debate on Jevons’ Paradox, and the nesting Matryoshka dolls of paradoxes that spin off from Jevons’, we are not capable of identifying and accounting for all the ramifications of any economic policy. We are often unable to even predict the big-picture direction or impact that will be the result of a policy. What to do? The only proposal that seems rational at this point is to advocate a reduction in societal complexity. That is, unfortunately, the very policy choice that stands the least chance of ever being implemented in our current political system.

So from a policy perspective, what do we do? Does efficiency legislation or rule promulgation make sense? To reduce energy consumption, probably not. To enhance resiliency to systemic shocks, probably not. To reduce the vulnerability of critical sectors of our national, social, or personal economies—probably. This seems to be the most valid rational to back efficiency. If we, as individuals, enhance our energy efficiency in core areas of energy use (areas we can least afford to do without), we are more resilient to future scarcity. The same is true on a larger scale—this is probably the most valid reason to support electrified rail, for example.

The ultimate take-away that I hope most people gained from the essay on Jevons’ Paradox is that simplistic answers or solutions, and simplistic models of our predicament in the face of Peak Oil, are the most likely to be wildly inaccurate. Our predicament is highly complex, but that in no way justifies ignoring the complexity and arriving at policy choices based on simplified, and inaccurate, economic models.