There has been a lot of debate about whether economic growth and environmentalism can be reconciled. Many politicians are tempted by the idea of green growth. This approach to political economy has a close fit with the United Nations discourse of sustainable development. However, experts like Brian Czech have been keen to support the notion of a steady-state economy. Part of his anti-growth argument stems from Jevons’ paradox.
Dr Czech has outlined the paradox for people who are unfamiliar with economic theory:
“He said that efficiency in the use of a resource never actually reduces the use of that resource- it always does the opposite because it becomes cheaper to use.”
This principle seems clear enough. In the nineteenth century, William Stanley Jevons came up with the paradox by studying the coal industry. Nonetheless, extending its applicability might be a step too far. There is not necessarily enough evidence to say that the paradox holds when countries take active steps to limit resource use. It is possible that a state can use industrial policy, planning and regulation to prevent the paradox from being confirmed in practice.
It is apparent that there are practical problems associated with green growth. Promoting growth can lead to negative environmental outcomes (even when sustainable development is pursued). Nevertheless, some types of growth are greener than others. Critics of growth can appeal to Jevons’ paradox, but it is a generalisation which might obscure aspects of reality.
Chancellor Rishi Sunak seems to be focusing too much on the wrong type of economic growth. Billions of pounds are being spent on roads. This investment may increase pollution just when the UK should be adapting to mitigate the threat of climate change. One does not need to reach for Jevons’ paradox to suggest that the country is travelling in the wrong direction.
Economic theory is useful for illuminating aspects of reality. However, neat rules do not always match with the patterns of complex adaptive systems. Human behaviour is inherently unpredictable and this chimes with the idea of radical uncertainty. Jevons’ paradox helps actors to think, but making it into a ‘real world’ fact is a jump too far. Critical realists stress that it is important not to confuse economics with the natural sciences.