The Efficiency Mistake
Phil Henshaw   contact  

There are several mortal errors in using efficiency to sustain growth... making it a grave but fascinating error made by the leaders promoting sustainability:

•  it multiplies resource uses
•  eliminates diversity
•  increases dependency on temporary solutions
•  delays the turn toward sustainability

10/1/09 Despite fairly widely understood economic principles, many leaders around the world thought that improving efficiency would reduce our economic impacts on the earth.    Now the whole world is trying to reduce our impacts with it, though it has the opposite effect.   The true effect of investing in profitable efficiencies has always mostly been to multiply resource uses and other economic impacts.    The people who saw that it as a solution were thinking the effect would be linear and deterministic.  The economy is non-linear and opportunistic.  The bottom line is that, instead of being rigorous, thorough and truthful they went with ideas that were simple, appealing and profitable.  They put choosing a model that would be easy to sell ahead of getting it right.   The earth was "too important" not to have a solution that was easy to sell... is what many people told me over and over.   I'm a physicist and architect, and both teach you if you'll need to rely on it, it's always better to get it right.

Efficiency is economic stimulus, and using it to reduce our impacts seems to steer us straight into the calamity it was intended to steer us out of.   It makes our solution the main problem we have.   There's a hidden dimension that can snatch success from the jaws of defeat, though, that the solution that so many feel is intuitively right is only dead wrong and self-defeating when used for perpetuating growth, as we are now doing.      Our economic system is built and managed to be a perpetual growth system, so promoting efficiency now just speeds that up, promoting ever more rapid consumption of every affordable resource on earth.   That's the problem.   Efficiency reduces resistance for whatever it its applied to, though, so it could be applied to something else instead like maturing the system instead of growing it if its growth imperative were removed. 

I've been pointing out different sides of this, one after the other, for several years now.   Trying to point to the genuine greater profit in "doing it right" was a classic "hard sell" though, because would mean thinking it through with where it would lead not apparent to people who just glanced at the proofs and pushed them away.   

The analytical error was thinking that the economy would respond as a linear system, as represented in the commonly used expression:  I=P*A*T    What that promotes is selling technology, saying:   Impacts can be reduced if Technology is improved faster than Affluence and Population increase.   The error is forgetting that improving technology multiplies affluence and population. It was an easy sell, though, because it was profitable and fun.   It also just seemed 'intuitive' that doing more with less would mean using less, even though it never had before and for centuries business people used it to leverage doing and consuming ever more.   The trick is that doing more with less is about using less of one thing for the purpose of doing more of other things.    Our normal choice to use inventions to do that when the leverage is greater than 1.    What other things get stimulated tend to be ignored or come from what other things happen because of the money or energy being saved, or how the innovations involved spread.   Our economy is a self-investment growth system, using as much of it's products to multiply its process as it can, and so that is what any real surpluses tend to become picked up and used for. 

Fig. 1 - World energy use and energy productivity trends

Figure 1 is (see note box above) the convincing authoritative data, the IEA global data for fuel use and the global economy's efficiency in turning it into wealth.     it shows that improving efficiency of energy use is the larger part of GDP growth, but driving continual rapid energy use growth as well.

Think of what the money saved gets spent on or invested in.   Think of the expansion of previously uneconomic things that can now be done with the saved energy or using less energy.   Think of how businesses target the key efficiencies that remove bottlenecks for expanding the use of *other* resources.  

An easy example is water saving appliances that lets you build larger housing  subdivisions within the regulations.  There ends up being no reduction of stress on the water supply because the number of users increases to meet the maximum water use anyway.   Plus you get all the other impacts of building and occupying more houses….   In addition, and maybe the worst one, is the false psychological effect, of making people think they are cutting impacts when increasing them and the profits of that that go to doing more.   

These kinds of complex feedbacks are just what are always found in growing complex systems.   Growth is actually an opportunistic rather than a deterministic process, so that's the real reason that the deterministic causes are untraceable.   They emerge and vanish repeatedly as the active agents of the system discover and take advantage of their opportunities.  What I discovered is that they're a little more traceable if you are working backward from already knowing the total.   It's easier to find the unknowns if you're task is to divide up a known quantity rather than add up unknown ones.   In accounting for complex systems if you only add up the effects you can trace you're nearly certain to miss most of them!  

The usual "rebound effect" that sustainability leaders consider is called "Jevon’s effect".  That's the effect caused by reducing demand for a resource being conserved which also somewhat reduces the price, and so reduces how much demand declines.   That local traceable effect is usually found to dissipate, i.e. to be a small factor that reduces the amount of direct resource savings.   It doesn't consider what uses of other resources are increased as a result, or what other things are done with the saved costs or whether and how the innovation spreads and multiplies in a viral manner as many do.   So, Jevons' effect  doesn’t show the multiplying rebound effects that are evident, as above, in the measures of the economy as a whole. 

 So…. don't use I=P*A*T , because P*A (= GDP) seems clearly dependent on T.     Sometimes I get the arithmetic wrong, and should review this further, and it bears confirmation by others too.    For the past 30 years in our growth economy, in any case, one should have assumed that any efficiency would have the average reverse effect.   There may or may not be good ways to estimate how far above or below average the effects of any particular efficiency improvement would really be.  At this point it appears that the average effect is that energy uses increase 1.7 times the improvement in energy productivity, d(E)/(E) = 1.7*d(P)/P.

It means that the sustainability thinkers were less careful in looking for what was truthful than what was profitable… unfortunately.   The strategy picked, multiplying technology, is good at making money certainly, but when applied to speeding growth is also good at multiplying impacts.   It's how we got here.    It's critical that there be no delay in finding a better plan!    

I guess you could say the popular solution has made us into our own worst enemy.    We were clearly “thinking locally and acting globally” using a "good feeling" strategy chosen to be appealing and profitable.   I only noticed it because I already knew the cure, to switch the system as a whole from growth to maturation, using how nature does it as a guide.     I'd been trying to figure out why no one would listen to what would actually work.   There's both near and lasting profit in it.     Switching the economy to mature within its limits would effectively mean declaring an end to our very expensive "war with nature".     The trick needed to shift the resources used now use for ever  shorter term profits to funding the long term efficiencies a non-growing system needs results in a big "peace dividend".    It would be surprisingly profitable, too for long term investments in particular.  It would also be somewhat of a culture shock have free markets in which "prudent" meant "lasting" investments and quality rather than quantity returns...    Various aspects of how we could copy the way natural systems do that are in much of my writing, like: Economies That Become Part of Nature.

(old version)  the main unwanted reverse effects of efficiency & productivity 

• Decreasing waste increases use.  

04/15/09 05/20 Efficiency and productivity enhancements are the popular strategies for promoting sustainability, but generally have the opposite accumulative effect in fact because of how we use them.   It's both a "micro" and "macro" effect, of what we do with the resources "saved".  We spend them on something else!   If you make cars that use half the gas, "pushing to the limits" then gives you twice the cars, and the same dependency on foreign oil!   The problem is with the plan to push the limits, rather than hold back from them, because it actually ends up pushing all our interests into conflict!   That's why so many of our interests are coming into conflict.   Increasing the effectiveness of talents and techniques saves resources locally, but in our culture that is used to multiply what we do globally.  That's the problem.  Saving waste locally and ends up multiplying waste and complications globally.   It's an even bigger problem that we're relying on it as our primary sustainability strategy, and won't be solved without thinking it all the way through.
In a growth environment having everyone become more productive and efficient is what promotes growth, as it always did.  "Green design" is just improved technology with a new name.    With the global plan to always push the limits no global relief of the limits results.   Locally as you relieve pressure on one thing you remove constraints on using it.   For a business, reducing unit costs is done in order to multiply the units produced, though, increasing rather than decreasing its total impact on the earth.   That's what the curves all show, steadily improving technique with steadily multiplying impacts.  One of those is improving our techniques for protecting human lives and welfare, that increase population and the growing spiraling cost of resources for supporting people in the style they would like.  We're not confronting the real moral questions with that, and have not been adding up the totals.    Our desire to be ever more 'productive', defining "good" as "more", is exactly how we got in our present crisis of dependency on high consumption and multiplying impacts.   What we need is a complete switch from being "takers" to becoming "healers", but it's tricky to understand how, so we need to think it through.   It's NOT so much a question of reducing your 'waste'.   It's finding a way to relieve the urge for growth rather than satisfy it.   We need a change of purpose in how we spend the savings that efficiencies and productivity create, understanding true effects, to find choices with our intended effect.
Using efficiency for growth is likely a more urgent and larger hidden threat than global warming, actually, driving our overhead costs up and our remaining resource quality down, threatening a lasting collapse of our lifestyle, the opposite of our purpose.   As our efficiency and productivity have improved it has been increasing our energy use nearly twice as fast (see fig1 abv).   It's a profound error to think efficiencies in a growth system will reduce impacts, but it's nearly everyone's central sustainability plan.
How to tell if a particular efficiency has this rebound effect is partly whether it's profitable.  The "macro rebound effect" occurs by saving one thing to remove bottlenecks to profitability in using other things, having the net effect of causing those other things to multiply.   Efficiencies that save you money leave you more to spend on other things, so without cutting back you get to use more.    The solution is to make sure the impacts of your uses have your intended effect, figuring out how to use your taking for healing.    How to do it is a learning process we have yet to attend to, though, and starts with studying the problem and remembering details of the world we've been skipping over...  Your effect on the system is your ripple effect on others, so your way to change the loops is by changing the opportunity and signals offered to others, not by controlling their choices.   It's a different approach.
There are certainly positive aspects of simplicity too, and enjoying simple things is a natural part of healing, but to see how "pushing the limit" ends up multiplying conflict means going back to "book zero", and learning how the simplest growing things in nature manage the same problem with so little difficulty.   It's the growth oriented things that are also responsive to their neighbors that pass around the very simple wisdom that responsiveness creates independence, showing you what is free to take and stay out of trouble.  For us the ripple effects of our money choices are global, not just on our neighbors, so it also means learning what happens to our money, where it comes from and goes to, so we can see what's free and avoid sending messages to take what will get us in trouble.   Efficiencies also have the negative effects of 1) replacing our own ways of working that are like ecologies with ones like machines,  2) replacing nature's ecosystems with our mono-cultures and so sacrificing her own diversity, resilience, capacity to learn, adapt and innovate, while  4) increasing our dependence on using up things that are running out and so sacrificing our own resilience and adaptability to change too.