The rebound effect refers to the derived changes in production and consumption that occur when the implementation of a decision liberates or binds a scarce production or consumption factor. This phenomenon represents an important consideration in Life Cycle Assessment, particularly when evaluating the full consequences of efficiency improvements or resource substitutions.
When a decision increases the efficiency of resource use or reduces the cost of a particular product or service, it effectively liberates production or consumption capacity. This liberation can lead to increased consumption of the same resource (direct rebound effect) or shifts in consumption patterns towards other goods and services (indirect rebound effect). For example, if a technological improvement reduces the fuel consumption of vehicles, the money saved on fuel may be spent on additional driving or on other consumption activities, potentially offsetting some or all of the anticipated environmental benefits.
Conversely, when a decision constrains or binds a scarce factor, it may reduce consumption or shift demand to alternative products or services. The magnitude of the rebound effect depends on various factors, including price elasticities, income effects, and the availability of substitutes in the economy.
In consequential LCA, accounting for rebound effects is essential to accurately model the system-wide implications of a decision. Ignoring these effects can lead to overestimation of the environmental benefits of efficiency improvements, as the analysis would fail to capture the additional consumption enabled by the liberated resources. The rebound effect highlights the importance of considering economic behaviour and market responses when assessing the environmental consequences of changes in production or consumption patterns.
Understanding rebound effects requires consideration of how changes in one part of an economic system propagate through connected markets and influence the overall allocation of scarce resources.
