energy conservation more effective with rebound policy this article sketches the problem of indirect energy use effects also known as rebound of energy conservation there is widespread support for energy conservation especially when it is voluntary as this seems a cheap way to realize environmental and energy climate goals however this overlooks the phenomenon of rebound the topic of energy rebound has mainly attracted attention from energy analysts but has been surprisingly neglected in environmental economics even though economists generally are concerned with indirect or economy wide impacts of technical change and policies this paper presents definitions and interpretations of energy and environmental rebound as well as four fundamental reasons for the existence of the rebound phenomenon it further offers the most complete list of rebound pathways or mechanisms available in the literature in addition it discusses empirical estimates of rebound and addresses the implications of uncertainties and difficulties in assessing rebound suggestions are offered for strategies and public policies to contain rebound it is advised that rebound evaluation is an essential part of environmental policy and project assessments as opposed to earlier studies this paper stresses the relevance of the distinction between energy conservation resulting from autonomous demand changes and from efficiency improvements in technology equipment in addition it argues that rebound is especially relevant for developing countries

does predicted rebound depend on distinguishing between energy and energy services pour analyser le role des services energetiques et des combustibles dans l effet de relance de la consommation d energie liee a des actions d amelioration de l efficacite energetique plusieurs approches sont utilisees et comparees celle de cobb douglas celle de leontief et celle de la croissance equilibree

the macro economic rebound effect and the uk economy abstract this paper examines the macroeconomic rebound effect for the uk economy arising from energy efficiency policies 2000 2010 using the macroeconomic model mdm e3 the literature distinguishes between three types of rebound effect direct indirect and economy wide the macroeconomic rebound effect considered here is the combination of the indirect and economy wide effects policies for the domestic business commercial and public and transport sectors of the economy are analysed for 2000 2010 overall the policies lead to a saving of about 8 of the energy which would otherwise have been used and a reduction in co2 emissions of 10 or 14 mtc by 2010 there are also favourable macroeconomic effects lower inflation and higher growth we find that the macroeconomic rebound effect arising from uk energy efficiency policies for the period 2000 2010 is around 11 by 2010 averaged across sectors of the economy when this is added to the assumed direct rebound effect of around 15 this gives a total rebound effect of around 26 arising from these policies thus the findings of the study support the argument that energy efficiency improvements for both consumers and producers stimulated by policy incentives will lead to significant reductions in energy demand and hence in greenhouse gas emissions

the transition from dirty to clean industries optimal fiscal policy and the environmental kuznets curve abstract this paper investigates privately and socially optimal patterns of economic development in a two sector endogenous growth model with clean and dirty goods we consider a second best fiscal policy framework in which distortionary taxes jointly influence economic growth and environmental quality in this policy setting three conditions produce an environmental kuznets curve ekc i dirty output is bounded ii clean output grows endogenously and iii growth in the dirty sector reduces growth in the clean sector these conditions do not arise with a consumption externality but can emerge with a production externality endogenous labor supply implications are also investigated although not necessary for producing an ekc endogenous labor supply provides additional linkages that produce an ekc under circumstances in which it would otherwise not appear

a general equilibrium assessment of rebound effects in this paper we use a general equilibrium model applied to a national economy norway to explore the potential for energy efficiency improvements to trigger economic forces that offset potential savings from using more efficient technologies rebound effects two types of energy efficiency improvements electricity and oil are introduced into various sectors of the economy our results suggest significant and surprising differences across sectors concerning both energy use and consequences for the build up of greenhouse gases rebound effects are found to be quite significant for manufacturing sectors since long term consumption of energy undergoes minor reductions or increases in response to efficiency improvements in other sectors rebound effects appear to be weak or almost absent

environmental rebounds backfires macroeconomic implications for the promotion of environmentally friendly products abstract this paper develops a dynamic two good clean and dirty goods two sector model to explore the implications of the macroeconomic environmental rebound backfire effect for environmentally friendly product promotions on not only the demand side a subsidy on the clean good consumption but also the supply side a technology promotion in the clean good production the macroeconomic environmental rebound backfire is decomposed into three effects the substitution wealth and sectoral reallocation effects we show that the steady state pollution stock exhibits a u shaped relationship with either demand side or supply side green promotions our calibrated result indicates that in terms of pollution the macroeconomic rebound effectfor the economy as a whole appears to be substantial more pronounced rebound effects are present when the elasticity of substitution between the clean and dirty good consumption is lower the labor supply is more elastic the environmental efficiency of clean goods is lower and the technology level in the clean good production is higher we also show that a pollution rebound can result in a social welfare improvement implying that the rebound effect somewhat improves economic efficiency and so policies aimed at mitigating the rebound effect may be counterproductive from a welfare perspective

the rebound effect microeconomic definitions limitations and extensions abstract the rebound effect results in part from an increased consumption of energy services following an improvement in the technical efficiency of delivering those services this increased consumption offsets the energy savings that may otherwise be achieved if the rebound effect is sufficiently large it may undermine the rationale for policy measures to encourage energy efficiency the nature and magnitude of the rebound effect is the focus of long running dispute with energy economics this paper brings together previous theoretical work to provide a rigorous definition of the rebound effect to clarify key conceptual issues and to highlight the potential consequences of various assumptions for empirical estimates of the effect the focus is on the direct rebound effect for a single energy service indirect and economy wide rebound effects are not discussed beginning with khazzoom s original definition of the rebound effect we expose the limitations of three simplifying assumptions on which this definition is based first we argue that capital costs form an important part of the total cost of providing energy services and that empirical studies that estimate rebound effects from variations in energy prices are prone to bias second we argue that energy efficiency should be treated as an endogenous variable and that empirical estimates of the rebound effect may need to apply a simultaneous equation model to capture the joint determination of key variables third we explore the implications of the opportunity costs of time in the production of energy services and highlight the consequences for energy use of improved time efficiency the influence of time costs on the rebound effect and the existence of a parallel rebound effect with respect to time each of these considerations serves to highlight the difficulties in obtaining reliable estimates of the rebound effect and the different factors that need to be controlled for we discuss the implications of these findings for econometric studies and argue that several existing studies may overestimate the magnitude of the effect

dealing with environmental savings in a dynamical economy how to stop chasing your tail in the pursuit of sustainability abstract in most countries people are urged to change their pattern of consumption and lifestyle in a less energy consuming and more environmental friendly direction but gains in ecoefficiency are likely to be annihilated by a larger consumption the so called rebound effect resulting in an increased throughput in the economy here is an obvious contradiction another contradiction entails from the fact that most governments strive to promote economic growth which includes increased consumption the paper takes a look at various means to handle these contradictions in order to avoid or balance the rebound effect environmental policies including such measures as green taxes may redirect consumption from one kind to another but this demands that the alternative spending is less harmful than the one dissuaded from two other tested means are to alter the sector mix of the economy and to shorten the working hours work sharing to match the increasing efficiency

negative rebound and disinvestment effects in response to an improvement in energy efficiency in the uk economy this paper uses a computable general equilibrium cge framework to investigate the conditions under which rebound effects may occur in response to increases in energy efficiency in the uk national economy previous work for the uk has suggested that rebound effects will occur even where key elasticities of substitution in production are set close to zero the research reported in this paper involves carrying out a systematic sensitivity analysis where relative price sensitivity is gradually introduced into the system focusing specifically on elasticities of substitution in production and trade parameters in order to determine conditions under which rebound effects become a likely outcome the main result is that while there is positive pressure for rebound effects even where direct and indirect demands for energy are very price inelastic this may be partially or wholly offset by negative income competitiveness and disinvestment effects which also occur in response to falling energy prices the occurrence of disinvestment effects is of particular interest these occur where falling energy prices reduce profitability in domestic energy supply sectors leading to a contraction in capital stock in these sectors which may in turn lead to rebound effects that are smaller in the long run than in the short run a result that runs contrary to the predictions of previous theoretical work in this area

economic growth under money illusion abstract empirical and experimental evidence documents that money illusion is persistent and widespread this paper incorporates money illusion into a stochastic continuous time monetary model of endogenous growth we model an agent s money illusion behavior by assuming that he maximizes nonstandard utility derived from both nominal and real quantities money illusion affects an agent s perception of the growth and riskiness of real wealth and distorts his consumption savings decisions it influences long run growth via this channel we show that the welfare cost of money illusion is negligible whereas its impact on long run growth is noticeable even if the degree of money illusion is low

a view from the macro side rebound backfire and khazzoom brookes abstract this paper attempts to delineate a few key insights extracted from theoretical macroeconomic considerations of the rebound issue the goal has been to reduce these thoughts to a clear set of assertions that if true would be useful points of reference in the ongoing discussion despite their non empirical nature

fuel conserving and using production functions abstract this article compares eight production cost functions used or potentially useful for exploring how energy efficiency gains affect energy consumption we show the practitioner s choice of function can inadvertently pre determine results and make recommendations as to which functions are flexible enough to prevent this we also show pre selected factor substitution elasticities can similarly pre determine results to aid the comparison we decompose the energy consumption rebound effect into intensity and output income effects which also delivers insight into the mechanisms of rebound we conclude by recommending practitioners restrict themselves to either the gallant fourier or the generalized leontief symmetric generalized barnett cost functions as being sufficiently rebound flexible the translog cost function may be suitable given certain conditions and a particular form of the ces solow function is a possible but problematic candidate along the way the article provides a general methodology for similarly examining any arbitrarily defined constant returns to scale production or cost function

intertemporal substitution in labor supply evidence from micro data the sensitivity of the supply of labor to intertemporal variation in the wage is an important issue in macroeconomics the analysis of social security and pensions and the study of life cycle patterns of work this paper explores two approaches to the measurement of intertemporal substitution that have appeared in the literature the first approach is to use consumption to control for wealth and unobserved expectations about future wages in the labor supply equation the second approach is to estimate a first difference equation for hours in which labor supply from the previous period serves as a control for wealth and wage expectations the results indicate that intertemporal substitution elasticity for married men is positive but small

rethinking economy wide rebound measures an unbiased proposal in spite of having been first introduced in the last half of the ninetieth century the debate about the possible rebound effects from energy efficiency improvements is still an open question in the economic literature this paper contributes to the existing research on this issue proposing an unbiased measure for economy wide rebound effects the novelty of this economy wide rebound measure stems from the fact that not only actual energy savings but also potential energy savings are quantified under general equilibrium conditions our findings indicate that the use of engineering savings instead of general equilibrium potential savings downward biases economy wide rebound effects and upward biases backfire effects the discrepancies between the traditional indicator and our proposed measure are analysed in the context of the spanish economy

do increases in energy efficiency improve environmental quality and sustainability governments world wide increasingly see energy efficiency as an important aspect of sustainability however there is a debate in the literature as to whether the impact of improved energy efficiency on reducing energy use might be partially or more than wholly offset through rebound and backfire effects this paper clarifies the theoretical conditions under which such effects would occur and explores their likely significance using a computable general equilibrium cge model of the scottish economy we find that for scotland a general improvement in energy efficiency in the production sectors of the economy initially produces rebound effects that eventually grow into backfire energy use ultimately increases in response to an efficiency gain and the ratio of gdp to co2 emissions falls the economic factors underpinning rebound effects are straightforward energy efficiency improvements result in an effective cut in energy prices which produces output substitution competitiveness and income effects that stimulate energy demands however the presence of strong rebound or even backfire does not mean that efficiency enhancing policies are irrelevant rather it suggests that such policies operating alone are insufficient to generate environmental improvements the implication is that a co ordinated portfolio of energy policies is required

optimal environmental taxation in the presence of other taxes general equilibrium analyses this paper examines the optimal setting of environmental taxes in economies where other distortionary taxes are present we employ analytical and numerical models to explore the degree to which in a second best economy optimal environmental tax rates differ from the rates implied by the pigovian principle according to which the optimal tax rate equals the marginal environmental damages both models indicate contrary to what several analysts have suggested that the optimal tax rate on emissions of a given pollutant is generally less than the rate supported by the pigovian principle moreover the optimal rate is lower the larger are the distortions posed by ordinary taxes numerical results indicate that previous studies may have seriously overstated the size of the optimal carbon tax by disregarding pre existing taxes this abstract was borrowed from another version of this item

on the robustness and strategic implications of a parsimonious advertising inventory competitive model with extensions to pricing competition abstract using a market share attraction structure of advertising competition this research introduces first a parsimonious inventory advertising model for which competition is limited to two symmetric firms thus obtaining its related comparative statics following a supermodular game approach the derived comparative statics remain robust upon considering non dominant firms each with a market share of less than 50 competing in an asymmetric oligopoly of n rivals where each firm controls the inventory advertising decision variables furthermore changes in model parameters are investigated in terms of their relative impact on equilibrium measures in this regard the findings indicate that for the analyzed model the marketing parameters possess much more influence on the equilibrium measures than the operations parameters the generalization appears applicable to both non dominated oligopolies as well as dominated oligopolies where one firm has a market share equal to or greater than 50 where each firm controls the inventory advertising decision variables in addition to price however changes in shift parameters elicit a response from the dominant firm which will differ from its non dominant rivals for products and services additionally while the literature shows that the non dominant firm will pursue a defensive strategy of decreasing both the equilibrium price and the amount of equilibrium advertising in response to competitive entry our findings show that results for a fixed market potential may not continue to be robust once inclusion of the operations variables of order quantity are considered finally the study explores the implications of the free entry equilibrium for which the number of firms in the industry is determined endogenously

the impact of increased efficiency in the industrial use of energy a computable general equilibrium analysis for the united kingdom the conventional wisdom is that improving energy efficiency will lower energy use however there is an extensive debate in the energy economics policy literature concerning rebound effects these occur because an improvement in energy efficiency produces a fall in the effective price of energy services the response of the economic system to this price fall at least partially offsets the expected beneficial impact of the energy efficiency gain in this paper we use an economy energy environment computable general equilibrium cge model for the uk to measure the impact of a 5 across the board improvement in the efficiency of energy use in all production sectors we identify rebound effects of the order of 30 50 but no backfire no increase in energy use however these results are sensitive to the assumed structure of the labour market key production elasticities the time period under consideration and the mechanism through which increased government revenues are recycled back to the economy

the greenhouse effect the fallacies in the energy efficiency solution abstract the view that widespread improvements in energy efficiency can by themselves do anything to halt the build up of greenhouse gases around the globe is fundamentally unsound it is based on the same fallacies that underlie the claim that energy savings from improving efficiency can substitute for new energy supply the paper by keepin and kats1 claiming that per tonne of coal not burned improvements in energy efficiency are more cost effective than substituting nuclear for coal fired power is therefore an irrelevancy as far as this debate is concerned reductions is energy intensity of output that are not damaging to the economy are associated with increases not decreases in energy demand at the macroeconomic level even within the boundaries of their own flawed approach their attempt2 to refute the critique of their thesis made by jones3 was little more than misdirected grape shot with no discernable connected thread of argument

on the double dividend under imperfect competition we investigate whether and under which conditions a revenue neutral environmental tax reform may yield an employment double dividend i e an improvement of environmental quality and an increase in aggregate employment using a model with two market imperfections a rigid real wage and imperfect competition in one industry we show that an employment dividend is plausibly obtained however for countries where labor taxes are high and households spend a large share of their income in favor of environmentally harmful consumption goods a double dividend can nevertheless not be obtained for under these conditions environmental quality deteriorates

how to deal with the rebound effect a policy oriented approach policy makers and environmental agencies have echoed concerns brought forward by academics about the need to address the rebound effect for achieving absolute energy and environmental decoupling however such concerns have generally not been translated into tangible policy action the reasons behind this inaction are not fully understood and much remains unknown about the status of the rebound effect issue on the policy agenda and policy pathways available such knowledge gaps may hamper the development of effective policies to address this issue in this paper we examine the extent to and ways in which the rebound effect is considered in policy documents and analyse thirteen specific policy pathways for rebound mitigation the effectiveness of the pathways is scrutinised and conclusions are offered to mitigate rebound effects the main policy conclusions of the paper are that an appropriate policy design and policy mix are key to avoiding undesired outcomes such as the creation of additional rebound effects and environmental trade offs from the discussion economy wide cap and trade systems as well as energy and carbon taxes when designed appropriately emerge as the most effective policies in setting a ceiling for emissions and addressing energy use across the economy

minimum wage effects under endogenous compliance evidence from peru latin american labor markets feature large informal sectors in practice however the simple duality formal informal has many different shades firms tend to comply more with certain legislation than with other recent evidence has suggested that minimum wages have significant effects on the informal sector bell 1997 for mexico gindling and terrell 2004 for costa rica lemos 2004 and fajnzylver 2001 for brazil and maloney and nunez 2004 for colombia further some of this evidence suggests effects throughout a large part of the wage distribution this has been interpreted as evidence of lighthouse or numeraire effects we test this hypothesis using panel data from peru to identify effects throughout the wage distribution although there are some effects on informal sector workers overall results provide little support for numeraire or lighthouse effects labor monthly earnings are affected only at the bottom of the distribution 0 25 0 60 of the minimum wage made up mostly of informal workers and for formal workers earning between the old the new minima negative effects on the probability of retaining employed status after a minimum wage shock are either weak or non significant for wage earners below the minimum wage but significant for formal workers trapped between minima and for both formal and informal earning between 1 2 and 2 times the minimum wage independent workers earning below minimum suffer negative effects on both earnings and employment