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GTAP Resource #4453

"The Economy-Wide Rebound Effect and Climate Policy Effectiveness in a Multiregional General Equilibrium Framework"
by Parrado, Ramiro

The insights about an increased energy consumption following efficiency improvements from technical progress, proposed initially by Jevons (1866), have significant implications on the effectiveness of energy efficiency policies. Moreover, the essential role of energy and its efficiency either in economic development or in climate change mitigation might have different and sometimes contradictory outcomes. On the one hand, economic development is closely related to an increasing use of energy while on the other hand, the rising demand for energy might be related to an increased use of fossil fuels or other polluting activities with negative consequences on the environment and climate. Therefore, rebound effects should be taken into account for policy design and assessment.

In this context, there are two main concerns for climate policy regarding the rebound effect and economic development. First, the negative implications of the rebound effect might reduce the effectiveness of energy efficiency improvements, as shown by the empirical evidence. This could lead to disregard the promotion of efficiency and technology transfer policies related to technical progress and a more efficient use of energy. Second, curbing greenhouse gas emissions through reduced economic growth creates an obstacle in reaching a global agreement to deal with global warming. Nevertheless, appropriately considering the rebound effect in policy design could provide an opportunity to address both concerns at the same time.

The extent of how much an energy efficiency improvement might be taken back because of the Jevons’ paradox, also called the Khazoom-Brookes postulate, has been theoretically analysed considering different functional formulations. It has also been tested empirically for specific sectors using different methodologies through historical data analysis, econometric estimations, and numerical simulations, most of them highlighting the importance of rebound effects.

The ...

Resource Details (Export Citation) GTAP Keywords
Category: 2014 Conference Paper
Status: Published
By/In: Presented at the 17th Annual Conference on Global Economic Analysis, Dakar, Senegal
Date: 2014
Created: Parrado, R. (4/15/2014)
Updated: Parrado, R. (4/15/2014)
Visits: 1,024
- Dynamic modeling
- Climate change policy
- Economic growth
- Technological change
- The GTAP Data Base and extensions
- Not Applicable

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