Recently I wrote a post about how if we start producing energy more efficiently, we can decrease dependence on fossil fuels and bide time until renewable energies become truly viable. Elementary economics states, however, that as the price of something decreases, demand for it will go up. The Jevons paradox occurs when the rebound effect is greater than 100 percent, exceeding the original efficiency gains. This greater than 100 percent rebound has been called 'backfire' (wiki). If the demand curve for fuel is elastic, then Jevons paradox will likely occur. 

In the past, this has certainly been the case, which is why technology has been improving to make devices more efficient, but energy usage has been skyrocketing. Take refrigerators, for example. Cooling technology has improved, which has made food production and storage much cleaner and cheaper. As a result, people buy bigger refrigerators, store more food, and consequently waste more food. Better cars and roads also encourage people to live in sprawling suburbs because everything seems closer and closer together. As utility bills get cheaper, people don't care as much about wasting energy. 

As efficiencies decrease the cost of raw materials, businesses tend to start changing the way they make decisions. Since NPVs are driven by cost / benefit analysis, it becomes more and more risky to under-produce relative to estimated demand than overproduce and then scrap what you can't sell. Actual costs are included in financial models, after all, not externalities that come from increased consumption of fossil fuels. As energy becomes cheaper to produce, the true cost of energy is diluted. 

Some people think that Jevons paradox makes energy efficiency efforts worthless and sometimes even detrimental to society in the long run. Increased efficiencies allow more work to be produced with the same resources, thus fostering economic growth, quality of life, and productivity at a macroeconomic level. These are all good things. There needs, however, to be some sort of incentive structure put in place that controls for industry demand like cap and trade, carbon taxes, fuel tax, higher energy prices, and so forth. 

For individuals, there needs to be some sort of reasonable usage level established per household depending on how many people live the household. Utilities should be charged at current rates up to that threshold, and then the price per unit of electricity, water, and gas should increase to a higher rate for each additional unit of use. This type of model would both encourage conservation and not place an economic burden on people who are using resources responsibly.

The most important thing, though, is educating people about how their choices affect energy consumption at a macro level and encouraging them to live responsibly. It's impractical to run on good vibes alone because most people don't think that their individual actions can make a difference, it's hard to get people to care, and it's incredibly difficult to motivate people to change. This is why we should use what people care about: economic incentives in terms of increased prices and taxes.

We are basically trapped in our perceived freedom to mindlessly consume.