Over the past several hundred years natural resource usage has increased despite more efficient technology advancements. This inconsistency is known as Jevon’s Paradox and should be of concern since the inputs to economic production come from the environment, particularly from the energy sector. Much has been made of the current status of the energy sector, with policy-makers debating peak oil, the high petroleum and natural gas prices, and what the causes of these phenomenon are. On many occasions Chinese demand for energy has been offered as the main reason for the problems. This has caused policy-makers to debate the future of the world energy sector looking for a technological saviour, examining the future of biofuels and other alternative energy sources as a solution to the crisis. However, these discussions will be for naught if, as Jevons’ predicted, improved energy efficiency leads to greater consumption of energy resources. In this paper, we will examine various factors that have been discussed as the reasons that energy consumption in China has increased so much over the past decade. Specifically, we describe macroscopic theoretical and applied models of the energy sector to empirically show that Jevons’ Paradox may exist for China by showing which of the variables have the greatest impact on energy consumption. Finally, we examine the resulting policy implications.
|Keywords:||Jevons' Paradox, Energy Economics, Sustainability|
Assistant Professor of Economics, Department of Economics, Albany College of Pharmacy, Albany, New York, USA
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