What if consumers decided to all ‘go green’? Environmental rebound effects from consumption decisions

Shifting consumer preferences towards ‘green’ consumption is promoted by many governments and environmental groups. Rebound effects, which reduce the effectiveness of such actions, are estimated for cost-saving ‘green’ consumption choices using Australian data. Cases examined are: reduced vehicle use, reduced electricity use, changing to smaller passenger vehicles, and utilising fluorescent lighting. It is found that if rebound effects are ignored when evaluating ‘green’ consumption, environmental benefits will be overstated by around 20% for reduced vehicle use, and 7% for reduced electricity use. Rebound effects are higher, and environmental benefits lower, when more efficient vehicles or lighting are utilised rather than simple conservation actions of forgoing use. In addition, lower income households have higher rebound effects, suggesting that environmental policy directed at changing consumer behaviour is most effective when targeted at high income households. An inherent trade-off between economic and environmental benefits of ‘green’ consumption choices is demonstrated. The size of the rebound effect, and the observed variation with household income, is attributed to Life-Cycle Analysis (LCA) methodologies associated with the calculation of embodied GHG emissions of consumption goods. These results should be therefore be interpreted as the minimum rebound effect to include in policy evaluation.