To address natural resource scarcity, pollution, and other harmful effects of climate change, some scientists and policymakers emphasize the adoption of input-efficient technologies like water-saving devices and fuel-saving stoves.
To address natural resource scarcity, pollution, and other harmful effects of climate change, some scientists and policymakers emphasize the adoption of input-efficient technologies like water-saving devices and fuel-saving stoves. Proponents often refer to these input-efficient technologies as “win-win,” for the benefits to their users and to the environment, and lament their low adoption rates by consumers, in what they call an “efficiency paradox.”
A paper published in the January 2024 issue of the Journal of the Association of Environmental and Resource Economists examines this paradox and finds that the benefits to consumers from input-efficiency adoption are, on average, negative. In “Input Efficiency as a Solution to Externalities and Resource Scarcity: A Randomized Controlled Trial,” authors Francisco Alpizar, Maria Bernedo Del Carpio, and Paul J. Ferraro conclude that, with respect to the input-efficient technologies that they study, no efficiency paradox exists.
Much of the data regarding the efficiency paradox has been taken from the energy-efficient context. In “Input Efficiency,” the authors report instead on a randomized controlled trial (RCT) of water-efficient technology adoption. The trial took place in Costa Rica, where the overexploitation of public aquifers is a pressing concern. Nearly 900 households, from a group of over 1300 households, were selected at random to receive water-efficient showerheads and faucet aerators. Engineering methods predicted an average reduction in water use of about 30%, whereas the actual reduction in the trial was only about 9%. According to the authors, that gap between prediction and reality stemmed from a set of faulty engineering and behavioral assumptions. For example, engineers assume households do not change their behaviors after the technology is adopted, whereas survey data suggested that households often left the water running longer to compensate for the lower flow rate of the efficient devices. When the authors assess how the participating households value the water savings, which are both uncertain and realized over many years, and compared this value to the upfront cost of purchasing the technologies, they conclude that, for the average user, the net benefits of these input-efficient technologies are negative.
Read more at: The University of Chicago
