Rebound Effect (conservation) - Suggested Solution

Suggested Solution

In order to ensure that efficiency enhancing technological improvements actually reduce fuel use, the ecological economists Mathis Wackernagel and William Rees have suggested that any cost savings from efficiency gains be "taxed away or otherwise removed from further economic circulation. Preferably they should be captured for reinvestment in natural capital rehabilitation." This can be achieved through, for example, the imposition of a green tax, a cap and trade program, or higher fuel taxes.

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