Jevons' Paradox and the myth of technological liberation

Natural resource consumption has increased considerably in the past 200 years despite more efficient technology advancements. This correlation between increased natural resource consumption and increased efficiency is known as Jevons' Paradox. Since all the inputs to economic production come from the environment, increased resource consumption and ecosystem destruction should be of concern. Furthermore, the expenditure of natural resources to provide energy and other consumer goods is an irreversible process, worsening the human condition instead of improving human welfare as neoclassical theory would have one to believe. Therefore, sustainable development policies need to be considered to end the continued excess consumption, beyond sustainable levels, of natural resources and the potential resulting conflicts. To design environmentally sustainable policies, the effect of economic activity, of resource utilization, and increased efficiency must be understood. In this paper, we attempt to illustrate how human consumption of natural resources alters the natural state of the economy and the environment. Further, using energy data from the Energy Information Administration we develop models that provide some empirical support that Jevons' Paradox may exist on a macro level. Finally, we examine the resulting policy implications and the applications for an ecological economic approach.