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Original research article
An ecological economic interpretation of the Jevons effect Nilton Bispo Amado a,*, Ildo L. Sauer a,b a b
Graduate Program on Energy – University of Sa˜o Paulo (PPGE-USP), Avenida Professor Luciano Gualberto, 1289, Butanta˜, Sa˜o Paulo, Sa˜o Paulo State, Brazil Institute of Electrotechnics and Energy – University of Sa˜o Paulo (IEE-USP), Avenida Professor Luciano Gualberto, 1289, Butanta˜, Sa˜o Paulo, Sa˜o Paulo State, Brazil
A R T I C L E I N F O
A B S T R A C T
Article history: Received 4 February 2010 Received in revised form 13 September 2011 Accepted 31 October 2011 Available online 22 December 2011
This article develops an ecological economic interpretation of the Jevons effect. Moreover, it is argued that under the neoclassical paradigm there are no elements with which to foresee the long-term existence of this phenomenon. The objective of these arguments is to demonstrate that the Jevons effect can be used to compare the ability of neoclassical and ecological economics describing the social appropriation of nature. This is elaborated in two steps. First, we show the importance of the thesis that the economy cannot be cut off from the biophysical materiality of what is produced to give consistency to the so-called Khazzoom–Brookes postulate. It is made clear that this supposition is exogenous to the neoclassical paradigm. Second, the supposition of the biophysical materiality of what is produced is utilized to make an ecological economic interpretation of the Jevons effect. Afterwards, a comparison is made between the neoclassical and the ecological economic perspectives. This comparison leads to the following conclusions: (i) the persistent presence of the Jevons effect in the long run is an anomaly in the neoclassical paradigm; (ii) the observation of the non-existence of the Jevons effect is a refutation of the supposition that economic growth and biophysical materiality are not separable, a central thesis defended by ecological economists. This situation makes possible to use the Jevons effect as a ‘laboratory test’ to compare the ability of neoclassical and ecological economic paradigms to describe the social appropriation of nature. ß 2011 Elsevier B.V. All rights reserved.
Keywords: Jevon’s Paradox Sustainable development Energy efﬁciency Energy analysis
1. Introduction Polimeni and Polimeni (2006) published an article in this journal showing the empirical relevance of the Jevons effect. In this work we argue that the Jevons effect is important also for theoretical reasons because it allows confronting the social appropriation description of nature by neoclassical and ecological economics. This has been overlooked in studies on the effect Jevons. The Jevons effect is normally presented in the context of the debate regarding the rebound effect, the phenomenon by which increased energy efﬁciency stimulates the consumption of more energy. This work does not aim to make a detailed presentation of the literature on the rebound effect. For this purpose, the report of Greening and Greene (1998), the special edition of Energy Policy (June of 2000) and Alcott (2008) should all be consulted. In the rebound debate, a careful distinction of the types of rebound is not always made, which may indicate that the qualitative dimension of this phenomenon is not given enough attention. The typology presented here is based on the elaboration by Greening and Greene (1998), but it does not strictly follow its steps and assumptions. Based on this typology, the rebound effect can be classiﬁed as follows:
* Corresponding author. Tel.: +55 11 3091 2656; fax: +55 11 3091 2631. E-mail address: email@example.com (N.B. Amado). 1476-945X/$ – see front matter ß 2011 Elsevier B.V. All rights reserved. doi:10.1016/j.ecocom.2011.10.003
(a) Direct Rebound. The energy efﬁciency gains, ceteris paribus, reduce the real price of energy services when reducing the quantity of energy demanded by them. The consumption of these services is therefore stimulated. (b) Indirect Rebound. Due to the reduction of energy expenses, the increase of the consumers’ income and the reduction of the companies’ costs provoke secondary effects connected to the consumption of other goods and services, which increases the demand for energy. In this case, the rebounds are indirectly connected to the price effect, that is to say, the reduction of energy expenses allows an increase of the consumption of other goods and services, which leads to a higher energy demand. (c) Usually, the effects of increasing energy efﬁciency at the macroeconomic level are seen as the mere aggregate result of the direct and indirect rebounds. In this perspective, an increasing demand for energy results from the effect of the energy efﬁciency gains over the totality of the activities of output and consumption. These global results are called economy-wide effects. We agree with the distinction between economy-wide effects and other types of rebounds. However, we argue that the economywide effects cannot be taken as the mere aggregation of direct and indirect rebounds. Actually, the view of the economy-wide effects
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of energy efﬁciency gains as the aggregation of events occurring at the microeconomic level is the corollary of considering the economic system as a closed system. We do not adopt this supposition. If the economic system is viewed as an open system whose reproduction happens through relations with the ecological system, energy efﬁciency gains lead to both a fall in real energy prices as an increase in the total quantity of socially available energy. This last consequence is the direct implication from the fact that energy efﬁciency gains always increase the social ability to explore the physically available resources. Therefore, if the economy-wide effects are not reduced to a mere aggregate effect of direct and indirect rebounds, then the economy-wide effects can be used to expose the open character of the economic system. As a result of this open character, the dynamics of the economic system implies that biophysical materiality inﬂows support the reproduction of monetary materiality ﬂows usually observed in economic domain. To be consistent with the distinction between economywide effects and other types of rebounds, in this article we use the term ‘‘Jevons effect’’ to refer speciﬁcally to the economy-wide effects of energy efﬁciency gains. As it is known, neoclassical and ecological economists disagree greatly on the substitution possibilities between natural and manufactured capital. However, the fact that a careful observation of the Jevons effect can be a laboratory test to contrasting suppositions adopted by each framework is something not yet well appreciated. The main objective of this article is to demonstrate that the Jevons effect is cardinal to interpret appropriately the intensity and the way by which the economic system as a whole relies upon primary inﬂows. We aim to do this in two steps. First, we present the most consistent contemporary neoclassical interpretation in defense of the relevance of the Jevons effect written by Brookes (1990, 1992, 1993, 2000). In the presentation of Brookes’ (1990, 1992, 1993, 2000) ideas, emphasis is given to the fact that a central premise for ecological economics is tacitly used, which is fundamental to his arguments. Brookes (1990, 1992, 1993, 2000) makes the assumption that the economic system cannot be independent of an increase in energy usage inputs to obtain real economic growth. He sees increasing energy inﬂows as an essential instrument to obtain productivity gains and sustain economic growth. Second, we use Lotka’s (1922a,b) hypothesis that organic systems always increase energy inﬂows over time to change the way how the Jevons effect is observed. Based on this hypothesis, the incongruity is not the existence of the Jevons effect, yet rather its possible absence. Finally, we compare the neoclassical and ecological economic frameworks. It is argued that the lasting existence of the Jevons effect is an anomaly for the neoclassical framework. It is also argued that an ecological economic interpretation of the Jevons effect can be used as a starting point to build a falsiﬁable ecological economic theory of economic growth. 2. The Jevons effect according to Brookes The macroeconomic effects of the energy efﬁciency gains are summarized by the so-called Khazzoom–Brookes postulate. According to this postulate, economically justiﬁable energy efﬁciency gains necessarily lead to an energy consumption higher than otherwise. If this is true, the growth of an economic system cannot be independent of the biophysical materiality of a growing demand for goods and services. Otherwise, how can we be so certain of the impossibility of economic growth without increasing energy consumption? Actually, the main argument to question the relevance of the Jevons effect is precisely the supposed possibility of a dematerialized demand. This argument is used in the
controversy between Grubb (1990, 1992) and Brookes (1990, 1992, 1993), where the main assertions for and against the relevance of available energy for the mechanisms by which economic growth is produced are presented and criticized. Brookes (1990, 1992, 1993, 2000) presents cogent arguments showing the importance of the mechanisms by which the socially available energy is increased. As Brookes (1990, 2000) himself recognizes, he resumes a position already defended by Jevons (1865) in the 19th century. There are two central observations by Brookes (1990, 1992, 1993, 2000): (i) the economic use of energy resources is always tied to the economic use of non-energy resources. The economic use of energy resources is dependent on available quantity of physical energy and the quantity of non-energy resources necessary to make use of one unit of energy. Energy efﬁciency gains act to reduce the quantity of non-energy resources necessary to use energy, and (ii) the biophysical materiality of the economic demand. The latter is afﬁrmed less clearly than the former. The ﬁrst observation implies that energy efﬁciency gains and new sources are both social strategies of increasing the socially available energy. However, as Brookes (2000) rightly points out, there are important differences. New sources increase the physically available quantity of energy, thereby reducing real energy prices; energy efﬁciency gains reduce real energy prices by means of decreasing the necessary non-energy resources but do not modify the physical availability of energy resources, therefore, they tend to accommodate price rises. How does the mechanism by which socially available energy is increased operate? The relation between energy resources and non-energy resources is tacitly tied by Brookes (1990, 1992, 1993, 2000) to the supposition of the biophysical materiality. This connection is made to emphatically defend energy policies based on increases in energy supply. The mechanism by which increasing energy supply is used to increase energy consumption is seen by Brookes (1990, 1992, 1993, 2000) as a strategy to obtain productivity gains that cannot be abandoned. Brookes (1990) considers two scenarios to defend the thesis that energy efﬁciency gains lead to the highest energy consumption. These scenarios also allow to know more clearly the mechanism by which increases in socially available energy is probably indispensable to increase productivity. One scenario is that in which the energy price is a restriction to the economic activity and the other is that in which it is not (Brookes, 1990, p. 199). In the ﬁrst scenario, if the energy price increases to the point of becoming a restriction to the economic activity, as occurred in 1973 and 1979, the countries have three courses of action open to them (Brookes, 1990, pp. 199–200): (1) to reduce the output; (2) to substitute labor and capital for energy: they will be able to do so because the higher energy prices signal that other available resources are not being used; and (3) to introduce lower priced energy sources. Brookes (1990) discards option 3 in the speciﬁc context of the article when addressing the question of the possible substitution involving energy and others factors (that is, the effects of energy efﬁciency gains). Option 1 is used only as a base for comparison, which is consistent with the existence of a growing economy. Brookes (1990) understands that the real cases are a combination of options 2 and 3. Under option 1, the consumers give up part of what can be produced by the utilization of energy resources and accept to live with a lower level of output. In such a case, the equilibrium between supply and demand leads to a reduction of the energy prices and energy consumption. Under option 2, the equilibrium between supply and demand involves much higher prices as well as higher energy consumption, compared to option 1. The
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substitution of labor and other forms of capital with energy resources allows the consumers to deal with the price increases without giving up the beneﬁts of the utilization of the energy resource. So, necessarily, the energy consumption will be higher than if the substitution were not possible (Brookes, 1990, p. 200). This is not a depreciation of the energy efﬁciency gains, but barely the veriﬁcation that its effects are opposite of those aimed by the defenders of the energy efﬁciency policies (Brookes, 1990, p. 200). Although it is unquestionable that the energy efﬁciency gains are strategies to obtain productivity gains, as Brookes (1990, 1992, 1993, 2000) emphasizes, it does not follow from the scenario exposed in the last paragraph that the demand for more goods and services could not be independent from more units of energy, as he claims. Why should it not be possible to reduce the consumption of energy, which in this context has increased in price, by utilizing other resources? Although the impossibility of this in the short term can be admitted, what authorizes us to expect that it would not be possible at some point? What prevents option 2 from, in the long term, diminishing the absolute energy consumption? More precisely: why should the demand be extensive in energy? Actually, the argument of Brookes (1990) supports itself in some respects that tacitly accepts the biophysical materiality of a growing demand: (i) the growth of the economic system assumes the growing output of objects, or bearers of biophysics materiality capable of satisfying human needs; (ii) due to the biophysical materiality of these objects, we cannot have economic growth without increasing primary inﬂows in the form of energy in the long run when the economic system is considered in its totality, whatever be the combination of labor and manufactured capital used; and (iii) the economic system is a growing economy and not merely an economy in growth. These are conditions under which the effective demand for energy is always increasing in the long run. Without the above suppositions tacitly made by Brookes (1990), it is not possible to understand why the increase in price of a speciﬁc resource would not be accompanied by the utilization of substitute goods, leading to a drop in price and even in the demand of this speciﬁc resource restricting the economic activity. Only if we admit that primary inputs have concrete qualities such that the economic system cannot grow when isolated from these qualities can we accept Brookes’ (1990) explanation. Therefore, his explanation tacitly uses a growth deﬁnition under which concrete qualities and price system are interconnected and working as complementary units. To clarify the meaning of Brookes’ (1990) arguments, it is useful to draw an analogy to the mental experiment made by Carnot to show the Second Law of Thermodynamics. In essence, Carnot argues that a heat engine cannot indeﬁnitely increase its power without increasing the absolute consumption of fuel. This is true independently of the constructive arrangement of the machine; that is, it is true independently of the combination of non-fuel resources used to extract work. Similarly, Brookes (1990) argues that in the long run it is impossible to get a combination of factors able to provide economic growth without increasing the absolute quantities of energy used. This is true independently of the combination of nonenergy resources employed. Without this assumption, we cannot reject the possibility of the advent of a pattern of technological innovation where the economic growth can happen without increasing energy ﬂows. We can say that Brookes (1990) sees the economic system as a gigantic heat engine using an algorithm incorporating the dynamics of price levels. That is the reason why the demand for fuel (energy) is always increasing. Now, what does Brookes (1990) say about the second scenario, in which the energy prices do not constitute themselves as a limitation to the economic activity? In the analysis of this scenario,
Brookes (1990) refers to the works of Schurr (1982, 1984), who investigated the behavior of the economy of the United States over a long period of time. Schurr’s (1982, 1984, 1985) ﬁrst observation was that to substitute labor and capital for energy leads to the growth of the multifactor productivity (Brookes, 1990, p. 200). If the analysis goes back far enough in time, this occurs as a drop in the energy productivity (that is to say, it is observed an increase in the energy intensity). However, for a long period of time, what is observed is an increase of the productivity of the energy factor simultaneous with the substitution of energy with labor and capital. This was particularly true during periods of time when energy prices were decreasing. It is noteworthy that high rates of improvement in multifactor productivity were essentially not associated with increases in energy intensity (Schurr, 1982, p. 7). Why were falling energy prices not followed by increasing energy intensities at any time during all of Schurr’s observations (1920–1969)? Schurr (1984, p. 413) answers this question by saying that in reality there was no drop in the intensity of energy use, but increase, pointing to the following qualiﬁcation: ‘‘But it rose relative to labor and capital inputs, not relative to output. The statistics [. . .] show that between 1920 and 1973, the ratio of total energy use to worker hours in the business economy more than doubled and, in relation to capital, increased by about 50%. Why, then, did energy use fall relative to output? The apparent reason is that technological advance (and related factors) exerted enough leverage on overall productive efﬁciency for ﬁnal output to have increased faster than the growth in energy consumption’’. The substitution of energy for labor and capital had such an effect on the productivity of these two input factors that the productivity of the factor energy grew less than the combined productivity of these inputs (Brookes, 1990, 200). It is a truism that if the productivity of the factor energy grows less than the multifactor productivity without a drop in the inputs of capital and labor, then the net effect is an increase in the total energy consumption, even with a drop in the energy intensity (Brookes, 1990, p. 200). In short, both Schurr (1982, 1984, 1985) as Brookes (1990, 1992, 1993, 2000) noted that low energy prices have been associated with high overall productivity gains, decreases in energy intensity and increases in total energy consumption. In the above description of Brookes’ arguments shares are likely to sound unclear or contradictory. How is possible to say that that there was energy ‘substitution’ at the same time it is said that there was an increase in total energy consumption? The obscurity here stems from the inadequacy of the categories and terminology used by orthodox economics to represent the role of natural resources in the economic system reproduction. Even authors like Brookes (1990, 1992, 1993, 2000), with rare insight about the role of natural resources in the path of productivity gains triggered by the Industrial Revolution, use the term ‘substitution’ loosely. His use blurs the fact that the system is undergoing permanent growth: the term ‘substitution’ suggests a stationary state entirely inadequate to represent the situation since all factors are being used in growing quantities and not being replaced. This confusion would be avoidable if orthodox economics distinguished between extensive and intensive variables and, consequently, between extensive and intensive substitution. An extensive variable represents absolute quantities, while intensive variables measure relative quantities. For example, total energy consumption is represented by an extensive variable, while energy efﬁciency gains are represented by an intensive variable. When economists say ‘energy substitution’ they mean an intensive substitution. That is, they make reference to the fact that fewer
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units of energy and more units of non-energy resources are used to produce one unit of output. Here we say that there is ‘intensive substitution’ of energy if the necessary quantity of energy to obtain one unit of economic output is reduced; we say that there is ‘extensive substitution’ of energy if the reproduction of the economic system happens by means of diminishing energy inﬂows. In this last case, there is reduction in the energy per capita consumption for a non-decreasing population. The usual substitution terminology is particularly harmful when we need to investigate the possible existence of biophysical growth limits. The restriction condition implied by sustainable development is the following: under what conditions can we expect to have simultaneously extensive substitution of natural resources and economic growth? In this context it is misleading to say that variables are ‘substituted’ by observing only indicators related to intensive substitution. Yet this is precisely what is made very often in the debates on the contribution of energy efﬁciency policies for sustainability. In the process of economic growth, a strong tendency to increase the total use primary inputs in the form of energy (an extensive variable) simultaneously with the drop in the indicators of energy intensity (an intensive variable) has been observed. As in the debate between neoclassical and ecological economists these distinctions and evidences, quite favorable to the position of ecological economists, are generally not made it is highly likely that the importance of them is not clear even to ecological economists. If considered alone, indicators of the energy intensity themselves constitute biased indicators of the economic system behavior. The bias happens because the permanent process of ongoing growth is not represented. By that, we mean that the fact that the economic system is constantly regenerated to reproduce itself in an extended scale is completely ignored when observed only in terms of intensive variables. When an increase of energy efﬁciency is used to produce the same product quantity, it will diminish the consumption of energy, like in a stationary economy. However, if these efﬁciency increases are systematically used to increase the production by increasing energy inﬂows it is not plausible to believe that natural resources can be substituted in a literal sense. Actually, the fact that the intensive substitution is not tied to extensive substitution reveals the biophysical materiality of the growing demand. Moreover, it signals the high opportunity costs of not increasing energy consumption. If technologies are recurrently designed to make more efﬁcient use of a resource and yet its per capita consumption continues to increase, there is a clear sign that the opportunity cost of not increasing the resource use is very high. In fact, the evidence we have today allows us to reverse the neoclassical interpretation of the relationship between technology and natural resources: it is wrong to conclude that technology innovations have made us less dependent on nature. On the contrary, the right conclusion is that technology innovations have made possible to increase the dependence on natural resources by making possible for the economic system to increase energy and material inﬂows, as Brookes (1990) rightly realizes. It is amazing how the majority of orthodox economists claiming the opposite have successfully convinced people. To summarize, Brookes (1990) tacitly assumes the major importance of biophysical materiality of what is produced to build his arguments in both scenarios. The fact that the most cogent argument to explain the Jevons effect be based on a central supposition of ecological economics has some relevance. However, more importantly, the supposition of the biophysical materiality of the demand is totally exogenous to the neoclassical framework although explicit in ecological economics.
Brookes (1990, 1992, 1993, 2000) description implies that natural capital has had non-transferable functions to other resources, even if observing the economic use of natural resources focusing strictly in ensuring economic growth. If the pattern of resource use presented by Brookes (1990, 1992, 1993, 2000) is essential to describe the high economic growth ratios observed since the industrial revolution, the distinction between natural capital and manufactured capital is indispensable in explaining economic growth. Given Brookes’ (1990, 1992, 1993, 2000) arguments, it seems desirable to make an explicit ecological economic interpretation of the Jevons effect. In the following section, we use a hypothesis derived by Lotka (1922b) to do that. 3. Using Lotka to deduce the Khazzoom–Brookes postulate An important aspect of Lotka’s approach is that his use of the laws of thermodynamics is accompanied by the perception of the insufﬁciency of these laws.1 They are not enough to determine the energy and material inﬂows through organic systems over time. What should we expect in relation to trends in energy and matter inﬂows through organic systems? Do these ﬂows tend to increase or decrease? Or should we assume that the trend involving such ﬂows are randomly distributed around an average? Or maybe these ﬂows of energy and matter tend to some limit. Issues of this nature certainly disturbed Lotka.2 Lotka believes that the inadequacy of the laws of thermodynamics to determine the course of events in physical systems can be overcome by incorporating the principle of natural selection as a physical law (Lotka, 1922a). Lotka (1922a, p. 153) sees this principle as a third law of thermodynamics. An eloquent example of the application of this approach is Contribution to the Energetics of Evolution. In this work Lotka (1922b) demonstrates that the evolution of organic systems occurs in order to always increase the circulation of energy and matter through the system. No organism can exist without transforming energy into species members. Therefore, for quantitative analytical purposes, we can apply the reductionism of representing the organism as an energy capture device which transforms energy in species members: ‘‘It has been pointed out by Boltzmann that the fundamental object of contention in the life-struggle, in the evolution of organic world, is available energy. In accord with this observation is the principle that, in the struggle for existence, the advantage must go to those organisms whose energycapturing devices are most efﬁcient in directing available energy into channels favorable to the preservation of the species’’. (Lotka, 1922b, p. 147) The variations in the ability to capture energy does not necessarily need to be generated by the organisms beneﬁted from them. Whenever such organisms arise the principle of natural selection will operate to preserve them and consequently the ability of the organic system to capture energy (Lotka, 1922b, p. 147). These propositions should not be taken as a deterministic law. Since the set of variations that cause the evolution is not limited, it cannot be guaranteed a priori that all changes will 1 Lotka (1922a, p. 151): ‘‘The two laws of thermodynamics are, of course, insufﬁcient to determine the course of events in a physical system. They tell us certain things cannot happen, but they do not tell us what does happen’’. See also (Lotka, 1922a, p. 152): ‘‘[. . .] Whether life is present or not, something more than the ﬁrst and second laws of thermodynamics is required to predict the course of events. And, whether life is present or not, something deﬁnite does happen, the course of events is determinate, though not in terms of the ﬁrst and second laws alone’’. 2 See for instance Lotka (1921, 1922b). In these works the author investigates if the evolution of organic systems tends to maximize the inﬂows involving a speciﬁc physical quantity, energy.
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increase the ﬂow of energy through the system (Lotka, 1922b, p. 148). The most one can say a priori is that it is more likely that changes that favor the ﬂow of energy and materials tend to be selected (Lotka, 1922b, pp. 148–149). Indeed, it is hard to accept this probabilistic reasoning presented by Lotka (1922b) without having in mind the restrictions imposed by the laws of Thermodynamics. The evolution relies on increases in the ability to convert energy into species members, that is, it occurs in the contours determined by the energy productivity of the species. Not all variations that increase the energy productivity involve increases in energy ﬂows. However, recall that the laws of thermodynamics impose restrictions as to increases in productivity in a heat engine operating with limited heat inﬂows and ensure that productivity can be increased, for the same environmental temperature, if it can operate with larger amounts of fuel. Clearly, variations in energy productivity based in increasing energy inﬂows are subject to fewer restrictions than other types of variations in energy productivity. Therefore, the simultaneous application of the laws of thermodynamics and the principle of natural selection ensures that changes that increase energy inﬂows are a priori more likely. Actually, Lotka (1922b) showed, from a completely different point of view, similar conclusions to those presented by Jevons (1865) and reafﬁrmed by Brookes (1990, 1992, 1993, 2000). Both believe that an increase in available energy always increase energy consumption by a growing system. Both understand that to increase conversion efﬁciency is to increase energy availability for this system. This is central for Jevons (1865) and Lotka (1922b). Would this convergence be fortuitous? The possibility that this convergence says something about the speciﬁcity of the economic role of natural resources has not been inﬂuent between ecological economists discussing the Jevons effect. It has already been said that is central in Lotka both the perception of the inadequacy of the laws of thermodynamics and the incorporation of the principle of natural selection as a physical law. What the relevance of these considerations for the account of the Jevons effect? This can be shown by a reasoning similar to that of Lotka (1922b). Certainly, the direction of the course of economic events in the current production system is governed by the principle of reproduction and accumulation of capital. The economic system runs on a permanent unit between concrete used qualities and abstract quantities given by monetary values (capital). Although from the biophysical point of view the concrete qualities are a priority, from the economic point of view the priority is for the capital: the unity of concrete qualities and capital is changed and modiﬁed repeatedly to increase as much as possible the rate of capital reproduction. All the effects arising from this process are taken into account by the producer only to the extent that interferes with the reproduction of its own capital. In short, variations in production are selected based on the principle of reproduction and accumulation of capital. The goods produced from this process are as susceptible to the laws of thermodynamics as the biological structures that were the focus of Lotka (1922b). From the standpoint of the producer, the commodity is only a necessary mediator for capital reproduction. Therefore, we can reduce the commodity to an energy capture device which transforms energy in capital. By the principle of reproduction and accumulation of capital innovations that increases socially available energy tend to be selected. This increase may occur either because the social capacity to make use of a given amount of energy resources increased (efﬁciency gains), and because new energy sources become viable. The two possibilities are not mutually exclusive in any way. Since the production of goods is subject to the laws of thermodynamics and the principle of reproduction and
accumulation of capital, it is reasonable to expect a priori that the development of the economic system occurs increasing the circulation of energy through economic system: any increase in socially available energy tends to be used to raise as much as possible the rate of capital reproduction, leading to higher energy consumption than what it would be observed in the absence of such increase. Therefore, starting from the Lotka’s approach we come to the same conclusion given by the so-called Khazzoom– Brookes postulate. Above we mention the principle of reproduction and accumulation of capital and not merely principle of reproduction of capital. This is not by chance. In its current form the use of markets as an allocative system incorporates economic growth as an unquestionable goal that guides and gives meaning to economic activities. Not mere reproduction, but reproduction with growth, is the goal of economic activities. In a society where the maximization of capital was not seen as the ultimate goal of production, it is possible to speculate that efﬁciencies could result in reduced consumption. But how to believe that this is possible in a society that is organized around the principle that any increase in the capacity of social production must be converted into increases of capital reproduction rate? By principle, the reproduction of the current economic system is always an extended reproduction. The best way to represent the development of the current economic system is to refer explicitly to the principle of reproduction and accumulation of capital. Clearly, the material properties used as production factors acquire economic meaning only when viewed in light of this principle. Conversely, the monetary dimension of capital cannot succeed without linking to material properties such as those directly extracted from nature. Although Lotka (1922b) have not mentioned the importance of the principle of reproduction and accumulation of capital for the explanation of the evolution of the present economic systems, he clearly noted the importance of increasing the circulation of energy and matter to obtain productivity gains. In this sense, it can be said that he had a more materialistic vision of the process of technological innovation than that provided by economic orthodoxy, since he explicitly recognizes the role of biophysical materiality for the productivity gains that have been observed since the industrial revolution.3 The vision of Lotka (1922b) becomes quite plausible when one observes that the enormous gains in productivity and efﬁciency, observed since the industrial revolution, have been consistently linked to an ever-increasing appropriation of ecosystem services (for the use of the concept of ecosystem services see Burkhard et al., 2010 and also Spangenberg and Settele, 2010). A neoclassical economist who carefully analyzed the role of increasing appropriation of natural resources to achieve productivity gains is Brookes (1990, 1992, 1993, 2000). Brookes (2000) argues that the market for more efﬁcient fuel is larger than for less efﬁcient fuel, or alternatively that for a resource to ﬁnd itself in a world of more efﬁcient use is to appreciate a reduction in its implicit price with obvious implications for the demand. This is the neoclassical way of representing the fact that any increase in the available energy supply has a tendency to induce an increase in energy inﬂows through the economic system. Rigorously speaking, the supposed ‘obvious’ implications for the demand cannot be maintained without admitting the biophysics materiality of this demand, although the neoclassical apparatus does not contain the elements for such an assumption. 3 See for instance (Lotka, 1921, pp. 171–172): ‘‘The inﬂuence of man upon world’s events seems to have been largely to accelerate the circulation of matter and energy through such cycles, either by ‘‘enlarging the wheel’’, i.e., increasing the mass taking part in certain cycles, or else by causing it to ‘‘spin faster’’, i.e., increasing the velocity of the circulation, decreasing the time required for a given mass to complete the cycle. In either case he has increased the energy turn-over per unit of time’’.
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When Lotka (1922b) reduces the organism to an energy converter in elements of the same species he provides a starting point to the systematic recognition of the biophysics materiality. This starting point supports itself in the observation that the organism’s reproduction presumes the reproduction of the objective conditions for the organism’s reproduction. Lotka (1922b) realized that the organism’s body is part of the objective conditions to be reproduced to guarantee the reproduction of the organisms’ ethology. From the biophysics point of view both organisms as commodities are ‘produced’, meaning that Lotka’s (1922b) perspective can be used to make an economic ecological interpretation of economic growth. In the next section we develop implications of this approach for a positive analysis of the Jevons effect. 4. Implications for the observation of the Jevons effect The positive analysis of the effect Jevons has been marked by the idea that energy intensity indicators, a measure of intensive substitution, would be enough to determine the relevance of this phenomenon (see for instance Schipper and Grubb (2000) in which an applied methodology to build energy intensity indicators is used to defend the irrelevance of the Jevons effect). Instead of observing the relationship between indicators of intensive substitution and total consumption of resources, the methodology has tacitly assumed unproven relations between intensive and extensive substitution to restrict the analysis to indicators of intensive substitution. Nevertheless, only in a steady state economy indicators of intensive substitution would be enough to support directly conclusions relative to extensive variables, for the simple reason that in this case the extensive variables remain constant. Without specifying the relationship between extensive and intensive substitution, there is no way to use energy intensity indicators to conclude that intensive substitution contributes to the extensive substitution of energy resources. An increase in energy intensity does not necessarily indicate a decline in economic efﬁciency of energy resources utilization. This increase indicates only that the increase in demand for energy is greater than the increase in efﬁciency. However, a decline in energy intensity truly indicates an increase in economic efﬁciency. The causes for a possible drop in energy intensity can vary greatly, ranging from incremental improvements in pre-existing processes to structural changes. A possible structural change is the transition from an economy based on energy-intensive industries to less intensive ones, with energy-intensive industries being transferred to other regions or countries. Although the relevance of all these relations, bearing in mind some care it is possible to use energy intensity indicators as part of the relevant evidences to characterize the socio-economic appropriation of nature. In a growing economy is essential the simultaneous observation of intensive and extensive substitution. Furthermore, the observation of the indicators of intensive substitution should aim solely to establish whether any increase in energy and material inﬂows are due to an efﬁciency loss by the economic system. The importance of observing these patterns can be made clearer through an example (Table 1). It is clear that in the 1949–2004 period it increases considerably the economic efﬁciency in the energy resources utilization, given the observed decrease in energy intensity. But why, despite this huge increase in intensive substitution, there is no evidence of extensive substitution? Instead, the trend in the intensive substitution was recurrently accompanied by what we here call extensive complementation, as shown by the increasing trend in per capita energy consumption. If we go back further in time, these patterns persist. Per capita energy consumption data from Schurr and Netschert (1960)
Table 1 Evolution of energy use (1949–2004). Energy consumption ﬁve-year intervals, 1949–2004 Year
Energy consumption per person (in million Btu)
Energy consumption per real dollar of GDP (in thousand Btu per chained dollar taking 2000 as the reference year)
1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004
214 225 244 270 324 346 359 325 344 339 347 343
19.57 17.74 17.80 17.28 17.43 17.13 15.64 13.20 12.17 11.39 10.22 9.40
Source: Downloaded from Energy Information Administration (EIA) site: http:// www.eia.doe.gov/emeu/aer/txt/ptb0105.
covering the 1850–1955 period also show this tendency to always increase. Interestingly, the energy intensity grows in U.S.A. in the 1880–1920 period, but it persistently decreases in the 1920–1955 period. This body of evidence ensures that economic efﬁciency in the use of energy resources has increased consistently since 1920 at least. Nevertheless, the per capita energy consumption has always a tendency to increase, even when we extend the analysis to 1850. Why the persistent trend of increasing energy efﬁciency does not lead at any time the economic system to display a downward trend in per capita energy consumption? Actually, the difﬁculty of substituting extensively natural resources even in the midst of pronounced efﬁciency gains can be taken as strong evidence of the existence of the Jevons. Such evidence may even be viewed as placing the burden of proof on the shoulders of those who deny the existence of this phenomenon: if the effect Jevons does not exist, why is it so difﬁcult to reduce per capita energy inﬂows even in a long trajectory of pronounced gains in efﬁciency? It is important to emphasize that the crucial evidence regarding the effect Jevons are increasing per capita energy associated with the process of economic growth. Indicators of intensive substitution are relevant only as evidence that this trend cannot be attributed to a decrease in the efﬁciency of the economic system. We cannot say that in the period 1880–1920, in which the energy intensity increased, there was efﬁciency loss. Indeed, further studies are needed to explain why there was a persistent upward trend in energy intensity followed by a persistent tendency to fall. The development patterns, shown above, have not received enough attention because of the prevalence of monetary preanalytical views on the description and explanation of economic processes.4 As argued persuasively by Giampietro et al. (2006), the construction of quantitative analysis is always linked to the purposes of those who use them, which has a decisive inﬂuence on the perspective of observation adopted by analysts. It is possible that the excessive focus on monetary material dimension is blinding analysts and decision makers for important patterns involving non-monetary material dimensions, such as those relating to energy and materials inﬂows. Actually, it is reasonable to say that evidence patterns supporting the thesis that the Jevons effect is real and relevant are present at least since the industrial revolution. It should not be seen as a fortuitous event that the 4 But obviously alternatives to the monetary pre-analytic view are not completely absent, see for instance Stahel (2006) and Spangenberg and Settele (2010).
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expanded reproduction of the economic system has always been supported by increasing per capita energy inﬂows. This occurs even today with highly capitalized economies and in a political reality probably more concerned with environmental issues than at other times. We did a statistical test to determine whether there is any trend of decreasing per capita inﬂows involving the ten largest OECD economies (Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, United Kingdom, United States).5 The hypothesis that there is a downward trend for energy inﬂows can only be accepted for Germany. Yet the result of Germany should be viewed with caution. First, it is important to note that the data were used ignoring the impact of reuniﬁcation, in 1990. In addition, there are intrinsic limitations to the test performed: the test measures only applied to direct energy consumption, not taking into account the energy consumed indirectly through embodied energy in goods and services imported from other countries. For an analysis of the importance of this last point in the Brazilian case see Schaeffer and Sa´ (1996). An economic-ecological interpretation of economic facts must position themselves about the observable trends involving energy and material inﬂows through the economic system. Just as the laws of thermodynamics are insufﬁcient in Lotka (1922a,b) are also in the context of the Jevons effect. It is essential to recognize that the course of events involving the ﬂow of energy and matter is directed by the principle of reproduction and accumulation of capital. This principle should not be confused with the mere existence of money and markets. The principle of reproduction and accumulation of capital requires that activities that increase the capital reproduction rate have priority over all other, what is much more than the mere existence of money and markets. Without assuming that the increasing energy inﬂows observed since the industrial revolution is a direct consequence of the tie between biophysical and economical materialities, the standards of per capita consumption of energy and economic growth observed since then are unexplainable. If we start from the neoclassical perspective, which assumes that the material nature of the factors used in production is irrelevant to explain the economic facts, these patterns are a real anomaly. Since the nature of the employed material factors is irrelevant, increasing and decreasing inﬂows are equally likely. Why then this persistent trend of the economic system to reproduce based on increasing energy inﬂows? If the economic system has the ﬂexibility assumed by neoclassical economists, why even today, about 250 years after the industrial revolution, there is strong evidence that economic production cannot dematerialize itself? Why increasing circulation of goods based on declining rates in the circulation of energy and matter are not observed? We have to choose between submitting the hypothesis constructed from Lotka (1922b) to testing or close our eyes to what the evidences tell us. It is likely that the difﬁculty to understand the meaning of these patterns is due to the absence of a production theory alternative to the neoclassical one. Feyerabend (1965) argues that without an alternative theory facts that refute the accepted theory are no longer perceived by the community, becoming hidden facts6. It seems unclear to ecological and
5 The data used in the test were obtained from the on line OECD database. We used the Cox and Stuart test for trend. This technique was used to test the hypothesis that there is a downward trend of per capita energy consumption adopting a signiﬁcance level of 5%. A detailed description of this technique, which is a particular type of hypothesis testing, can be found in Conover (1980, pp. 132– 139). 6 Feyerabend (1965, p. 177): ‘‘Now if it is true, as was argued in the last section, that many facts become available only with the help of alternatives, then the refusal to consider them will result in the elimination of potentially refuting facts. More speciﬁcally, it will eliminate facts whose discovery would show the complete and irreparable inadequacy of the theory’’. Italics in the original.
neoclassical economists that the Jevons effect, for different reasons, it is critical for both and that the increasing circulation of matter and energy through the economic system is important evidence to assess the ability of these two paradigms to describe this phenomenon. In fact, if we use the term contradiction in the sense proposed by Ravetz (2006), that is, as something that cannot be resolved within the terms of reference used by the analysts to describe and perceive the system, then the Jevons effect should be recognized as a neglected and persistent contradiction. While the effect Jevons is an anomaly in the neoclassical perspective, their absence is a strong incongruity to the ecological economics. The observation of a long-run economic growth without increasing energy inﬂows would be a proof that the economic role of natural resources can be accomplished by others resources categories. Indeed, it is doubtful that ecological economics can consolidate itself without providing a satisfactory explanation for the Jevons effect. If the economic system can grow without increasing the ﬂow of primary inputs, neoclassical economists would be right when betting on substitution technologies. As already said, the term ‘‘substitution’’ is usually used loosely, yet this does not prove that there can be no real substitution technologies, that is, extensive substitution of natural resources. In a sense, the relative position between neoclassical and ecological economists is analogous to that between kinematics and thermodynamics in physics. We cannot restrict ourselves to kinematics if we want to explain why heat always ﬂows from hot to cold body, as the reverse process is also possible and equally likely from kinematics standpoint. With thermodynamics the conception that there is a preferred direction in the occurrence of physical events is incorporated systematically in science. Georgescu-Roegen (1971, p. 196) sees clearly the signiﬁcance of this to scientiﬁc theories: ‘‘If science were to discard a proposition that follows logically from its theoretical foundation, merely because its factual realization has never been observed, most of modern technology would not exist. Impossibility, rightly, is not the password in science. Consequently, if one cornerstone of science is the dogma that all phenomena are governed by mechanical laws, science has to admit that life reversal is feasible. [. . .]Classical thermodynamics, by offering evidence- valid according to the code of scientiﬁc court procedure – that even in the physical domain there are irreversible processes, reconciled science’s stand with generally shared common sense [. . .]’’ What is not forbidden is allowed. If the basic suppositions used by a science does not forbid an event, this event can happen. So why does not reversibility happen? In other words, irreversibility is an anomaly if Physics is reduced to Classical Mechanics. In the neoclassical perspective no hypothesis about the nature of the factors used in production is assumed. The concrete qualities used to gain economic growth are not relevant in explaining the observed economic facts. Prices and markets should be articulated to any available evidences to explain these facts. To describe the Jevons effect, the neoclassical economists must reconcile their representation about the role of prices and markets to the historical knowledge of technological patterns used to get productivity gains. It is important to note that important aspects of these patterns are exogenous to the neoclassical framework. Actually, the adoption of exogenous factors in an explanation is not necessarily a defect, but there is more than that here. It is worth noting again that if the production does not depend on the material nature of the production factors increasing ﬂows involving a speciﬁc material property are as likely as decreasing ﬂows. This makes disturbing the long-observed correlation between economic growth and increasing inﬂows of
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energy and materials. It must be explained why economic growth with decreasing inﬂows is not observed even in the reality of the socalled developed countries. On the other hand, the absence of effect Jevons is a denial of the assumption taken by strong sustainability that economic growth and biophysical materiality cannot be untied. It is precisely because it is an unacceptable incongruity in the perspective of ecological economics that a consistent theory denying the absence of Jevons effect is necessary and beneﬁcial for ecological economics. If we want to investigate whether the mechanism by which growth is produced is economically incompatible with non-increasing primary inputs, it is essential that a falsiﬁable theory linking natural resources and economic growth be used. The importance of Lotka’s (1922b) hypothesis lies in the fact that it provides a starting point for building an ecological economic theory of economic growth. In theory, it is possible to use careful observations to test the link between energy inﬂows and capital accumulation here proposed using Lotka (1922b). If this hypothesis is refuted, it forces ecological economics to provide new explanations; if it is not refuted, it can be used to build an ecological economic theory of production. This theory should explicitly forbid long run trajectories of economic growth without increasing energy and material inﬂows and provide testable reasons for this impossibility. 5. Conclusion The Jevons effect can be used to compare the ability of neoclassical and ecological economic frameworks to describe the relations between nature and the economic system. The long tendency involving increasing inﬂows and economic growth are strong evidence of the existence of the Jevons effect. Without assuming the relevance of the Jevons effect these tendencies cannot be explained. In the perspective of neoclassical economics there is no reason to long run tendencies involving increasing inﬂows; in the perspective of ecological economics the absence of the Jevons effect in a growth economy is a incongruity. The observation of the Jevons effect from the ecological economic perspective can be used as a starting point to build a falsiﬁable ecological economic theory of economic growth. Acknowledgments We would like to thank Blake Alcott for the many discussions that one of the authors had with him. Without such discussions, this article would not be possible. We are responsible for any errors or limitations still present. This work is part of a research program
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