Before the second design alternative is given, the so called rebound effect is explained. See Fig. 4.3b.
The rebound effect has to do with consumer preferences. When eco-costs are reduced by “savings”, the economic value (costs for the consumer) is reduced as well, so the consumer will spent the money somewhere else. In the example of product 1 of slide 4.3b, the net result is positive, since the money which is saved, is spend on another product with a lower EVR. In the example of product 2 of slide 4.3b, however, the net result is negative, since the saved money is spent on a product with a higher EVR.
The conclusion is that “savings of money” are only positive for the environment when the savings are achieved in areas with a high EVR.
A typical example of the rebound effect is related to the efficiency increase of light bulbs: when consumers spend the saved energy on more light (e.g. in their gardens) or on electricity for other domestic appliances, it does not help much in terms of de-linking the economy and the ecology.
In general, savings on energy often have a positive effect in terms of sustainability, since the EVR of energy is relatively high in comparison with other expenditures. However, savings on luxury goods (generally a low EVR because of the high labor content), might be negative since the “rebound” might be in the area of more energy (e.g. in the form of travel, as it has been explained on the page “consumer expenditures”) !!!