📉 The Anti Jevons Paradox: avoiding the eficiency trap

This is essay 3 of 4 essays for The Network State Creators Cohort #3

“Efficiency is key”

Efficiency is a no-brainer. Something that we all try to achieve in whatever we do. Either in personal life, such as productivity hack from Tim Ferris, or in business, such as maximizing profit or reducing emissions.

But a part of being alive is learning new concepts and challenging our own assumptions. I discovered that striving for efficiency can actually lead to unintended consequences.

The term for this is Jevons Paradox, which describes how gains in efficiency can result in increased consumption. 

In this article, I will explain what Jevons Paradox is and how to avoid it in relation to energy and food, both in production and consumption. 

What is Jevons paradox?

The name Jevons Paradox comes from English economist William Stanley Jevons, who observed that increased efficiency in coal use in industries led to an increase in coal consumption, which was a surprising result

Economists then used this concept to analyze the rebound effect, which means that increased efficiency leads to a greater supply and lower prices, making it more attractive for consumers to consume even more. This phenomenon is not limited to energy but also applies to other industries like fast food, fashion, computing, and internet speed.

Essentially, people tend to consume more of something when it becomes cheaper, which can have unintended consequences. Who doesn’t like a good deal anyway?

Check out the short video below to get a clear explanation of this concept.

Becoming more efficient is not necessarily a bad thing, but it's important to be aware of Jevon's Paradox and not blindly accept the concept of efficiency without considering its potential consequences.

As Nassim Taleb mentioned in the book Fooled by Randomness:

"We are all fooled by randomness, but some of us are fooled by it more than others”

To avoid being a Turkey before thanksgiving (Nassim’s favorite analogy), let’s do a simple thought exercise and imagine an "Anti Jevon's Paradox," where we can have more of something but still result in less consumption.

Here are some examples 👇🏽

⚡️ Energy: Carbon trade and Steve Wozniak

William Jevons first observed the rebound effect in energy consumption, where increased efficiency can actually lead to increased usage. For instance, a more fuel-efficient car may encourage the driver to drive more often or for longer distances, even if it's not necessary.

The question then becomes: how can we incentivize more responsible behavior? Either a carrot or a stick?

For example, monetizing the efficiency gain through energy saving, like The European Union Carbon Emissions Trading System (EUTS). By reducing energy consumption and resulting emissions, a company can sell its "avoided" emissions as carbon credits to another company that cannot meet the emissions threshold.

Source: Climate policy info hub

The Web3 version of this is a platform called Efforce, founded by Steve Wozniak, the co-founder of Apple. Efforce is a platform that allows anyone to fund energy efficiency projects by purchasing NFTs (Non-fungible tokens).

Companies benefit from energy efficiency improvements that are backed by Efforce and the resulting savings are tokenized. The savings tokens are then distributed through a smart contract to NFT holders who contributed to the project.

A win-win for all parties while dodging the Jevons' trap.

🌽 Food: sustainable production and fasting

Another topic that is interesting to analyze from the Jevons lenses is food. With the increased efficiency in food production, we have access to an abundance of calories that our cave dweller ancestors could not have imagined.

Though this sounds like a positive development for humanity, it also has negative consequences.

First, is the negative environmental impact of unsustainable practices and waste. To produce more and more food, we are overgrazing our land and overgrowing our cattle, leading to a race to the bottom. An oversupply of perishable food products will only lead to waste. It’s estimated that ⅓  of food produced globally is lost or wasted along the production chain. 

To solve this issue, we can use a combination of old and new methods. Such as traditional regenerative agriculture practices that increase biodiversity and promote ecosystem resilience,  and new innovations like lab-grown meat with much lower environmental impact.

Source: Friends of the earth

While we often hear about hunger affecting many communities, obesity is also becoming a serious problem. According to the United Nations and FAO, 13% of the world population is obese, while 10% are malnourished. This means that one group is eating too much, while the other does not have enough to eat.

My own antidote to this problem is the practice of fasting or time-restricted eating. Though intermittent fasting now emerges as the latest fad trend, it is lindy, or already exist for a long time. Varying sorts of caloric restriction and mindful eating have been practiced for centuries in different cultures and religions, such as Buddhism.

Recent studies have shown that fasting can help maintain a healthy level of food consumption, lower cholesterol levels, and blood pressure, and increase longevity.

💡 Conclusion

Efficiency can have negative consequences if we ignore the Jevons paradox. It's important to be aware of this and find solutions in various areas like in energy and food production.

Sometimes, less is not always more, and simply having enough is the best way to go.

I’d like to finish this article with a poem like verse from the book Sacred Economics by Charles Eisenstein:

“We have bigger houses but smaller families; 

more conveniences, but less time;

We have more degrees, but less sense;

more knowledge, but less judgment;

more experts, but more problems;

more medicines, but less healthiness”

Thanks for reading this article and enjoy the weather ☀️

This is essay 3 of 4 essays for The Network State Creators Cohort 3.

Check out other essays from The Network State community here.