Jevons paradox is a term associated with behavioural economics in which one, often a policymaker, expects a substantial decrease in energy consumption by replacing a lower efficiency unit with a higher one, instead finding only a marginal drop, or worse, an increase. It is also sometimes called the rebound effect.
Mexico’s C4C program
An example is a study by Davis et al. on the Cash for Coolers (C4C) program that ran in Mexico. C4C was a large-scale replacement program started in 2009 that helped ca. 1.5 million households to replace old refrigerators and air coolers with new energy-efficient (> 5% from the 2002 standard) ones. In return, the household can get up to $185 in subsidies.
A World Bank study, for example, estimated a savings of 481 kWh/y from the change out of refrigerators. In reality, Davis’ study found that the real benefit was about 11 kWh per month which translated to 11 x 12 = 132 kW/y, just over a quarter of what was originally envisaged.
Increased consumption from coolers
The air conditioner story was even more dramatic. After the substitution with the more energy-efficient ones, the overall energy consumption increased!
There can be different explanations for what happened. But one thing is clear – the implementor had made inaccurate assumptions about consumer behaviour. It is possible that in the process, the household got a chance to turn in some of the old, unused appliances in return for a subsidised new one.
