The move towards banning the incandescent bulb and replacing it with the compact fluorescent lamp (CFL) is getting stronger across the world. The CFL is far more energy efficient than the bulb using 20 to 33 percent of the power of equivalent incandescent bulb. The cost efficiency of CFLs, however, remains in doubt. But studies claim that in spite of higher initial costs, the extended lifetime and lower energy consumption of CFLs make it cost efficient too. The savings are more for commercial establishments where usage is greater. Moreover, when aspects like cooling costs and manpower requirements for the change of bulbs are considered, the CFL comes out a clear winner. The superior resource and cost efficiency of CFLs has by and large come to be widely accepted throughout the world. The benefits to society that arise from the resource efficiency of CFLs are many: cost savings at the micro level, lower utilization of fossil fuels for electric lighting thereby reducing green house gas emissions, and where power is generated from hydroelectric plants, saving of water resources and reduced need for building new plants that impact forests and ecosystems. Such positive externalities in containing environmental damage with the use of CFLs has even warranted governments to consider subsidies or utilization of carbon credit schemes to lower the initial investment of switching over from bulbs to CFLs. Will the CFL then bring in a greener future? One nineteenth century economist, William Stanley Jevons would have given an unexpected answer; no.
Jevons (1835-1882) is best known for his seminal work, The Theory of Political Economy (1871). But his recognition as an economist had come with the publication of The Coal Question (1865) in which he made a remark that has now come to be known as the Jevons Paradox,
It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth.
His explanation of the paradox was simple: physical resource efficiency implies lower costs and prices, stimulating demand that more than compensates the initial savings in the use of a resource like coal. It is important to understand that the paradox articulated by Jevons should not be taken as an anti-resource efficiency stance. There is no doubt that resource efficiency unequivocally benefits society. However, what the paradox makes us conscious of is the error to suppose that resource efficiency will lower overall consumption of that resource. It is this latter point that is especially critical in the context of policy formulation for environmentally sustainable development.
The Jevons Paradox can be extended to CFLs. If ultimately CFLs means cheaper lighting then a lot more of it will be demanded so that the need for power may well be more than was the case when expensive bulbs were the only option available. The increased quantum of lighting possible with CFLs is no doubt beneficial to society but what cannot be inferred is that this is also a solution to environmental concerns; in fact, the dilemma of development versus the environment might only deepen. The question that must then be asked is how are we to prevent the negative impact of resource efficiency from taking effect or even better, make sure that resource efficiency will generate a positive outcome? One option is to ensure that resource efficiency is accompanied by conservation. This, economists argue, requires a tax to be levied on the (efficient) resource rather than encouraging its extensive use through subsidies. With CFLs, their high initial costs might in fact serve as a kind of tax. But there is a concern that poor households may not be able to bear such high fixed cost and it is, therefore, necessary to subsidize CFLs. If the subsidy on CFLs is universal (available to all consumers) then the Jevons Paradox will take effect; subsidizing efficient resources to encourage their extensive use in order to address environmental issues becomes self-defeating. If, on the other hand, subsidies are targeted towards poor households only, there is a danger of re-sale of subsidized lamps in the grey market so that these households use even less lighting than before (à la Jevons Paradox). Policy formulation ignoring Jevons Paradox is fraught with danger of arriving at such unanticipated and unfavourable outcomes.
Like CFLs, there are many similar instances where Jevons Paradox might result in unexpected outcomes, both positive and negative. Positive examples including lower tax rates that beget higher net collections or new technologies which throw people out of work but eventually benefits labour because the additional demand for cheapened products. The introduction of computers into offices in the 1990s is a case in point. Instances where “resource efficiency” ends up generating unexpected adverse outcomes are even more common. Low-cal foods, lax diet control and increased food consumption that ends up in greater calorie intake; energy efficient air-conditioners prompts longer hours of use; fuel efficient vehicles to conserve petroleum that actually encourage more (wasteful) usage, microfinance to lower rural indebtedness but instead promotes greater profligacy, faster downloading speed that entices us to spend longer hours on the Net, organic foods that increase demand for dung and cattle grazing, spawning deforestation … the list where Jevons Paradox takes effect is endless. But in the Foreword to the book, The Myth of Resource Efficiency, Joseph A. Taitner suggests an even more interesting approach to its study with the question, “where is the Jevons Paradox not in effect?”
