Proceedings of the 28th EnviroInfo 2014 Conference, Oldenburg, Germany September 10-12, 2014 Modelling Rebound Effects in System Dynamics Mohammad Ahmadi Achachlouei 1,2,3 , Lorenz M. Hilty 2,3,4 Abstract The induction of demand by increasing the efficiency of a production or consumption process is known as the rebound effect. Feedback loops in System Dynamics can be used to conceptualize the structure of this complex phenomenon and also for communicating model-based insights. In passenger transport, the rebound effect can be induced through increased cost efficiency (direct economic rebound) and/or increase in speed (time rebound). In this paper we review and compare two models on environmental effects of passenger transport—including a model on the role of information and communication technology. We highlight the feedback mechanisms used to deal with the rebound effect (price, efficiency, and time rebound). 1. Introduction Energy efficiency helps devices provide the same services using less energy, and thus can be a solution for reducing greenhouse gas emissions. However, it can also induce more demand if the energy saved leads to a lower price of a service. The induction of demand by increasing efficiency is known as the rebound effect. To better understand the complexity of rebound effects of investments in efficiency, dynamic models have to be used. System Dynamics provides an approach to conceptualizing the structure of such complex phenomena and communicating model- based insights [13, 23, 25]. We will use the domain of passenger transport as an example. In passenger transport, the rebound can be induced through increases in fuel efficiency or other improvements reducing the variable cost per person-kilometre (direct economic rebound) and/or increase in speed of modes (time rebound). In this paper we review and compare two models on environmental effects of passenger transport, including a model on the impact of information and communication technology (ICT) on transport. We highlight the feedback mechanisms used in both models to deal with the different types of rebound effect (direct economic and time rebound). Brief definitions of the concepts of rebound effects, elasticity of demand, System Dynamics, causal loop diagrams are presented first. Rebound effects can be categorized as follows [14, 24] (See [12] for a very brief history of rebound analysis):  Direct economic rebound effects: When cheaper energy (or energy efficiency improvement in using energy-intensive goods) induces price reductions that trigger an increase in the demand for the cheaper good.  Indirect economic rebound effects (income rebound): If the consumer saves money on one good (because it is used more efficiently and its price goes down) her disposable income is higher than the income she can spend—because she didn’t use the money for the purpose, she can use it for something else. 1 KTH Royal Institute of Technology, SE-100 44 Stockholm, Sweden, Mohammad.Achachlouei@abe.kth.se, Division of Environmental Strategies Research (fms) 2 KTH Royal Institute of Technology, SE-100 44 Stockholm, Sweden, Centre for Sustainable Communications (CESC) 3 Empa - Swiss Federal Laboratories for Materials Science and Technology, 9014 St. Gallen, Switzerland, Technology and Society Lab 4 University of Zürich, CH-8050 Zürich, Switzerland, Hilty@ifi.uzh.ch, Department of Informatics Copyright 2014 BIS-Verlag, Oldenburg, ISBN: 978-3-8142-2317-9