The environmental rebound effect is probably the greatest threat to the eco-efficiency concept. It occurs when clean technologies offer eco-efficient gains but where these gains are absorbed due to market stimulation of increased consumption patterns. For illustrative purposes two examples are given here. Virtual Road Building In the future traffic will flow more efficiently. On board computer systems linked to geo-positioning satellite technology, and road side sensors linked to intelligent traffic management systems will lead to reduced congestion and lower city pollution levels. On motorways freight trucks will link together telematically to make more effective use of existing road capacity. Together this technology will build virtual new roads. The choice for society is then, either to accept these efficiencies in the name of eco-efficiency, or to do what has always happened when a new road is built - fill the gap through the generation of new trafic flow. Energy Efficiency The concept of energy efficiency is often promoted on the basis of sound economic management - i.e. saving energy saves money. This is very true, but the potential rebound occurs when that extra pound begins to burn a hole in the pocket. When people have additional cash they inevitably spend it - and to a first approximation the cost of nearly everything is a measure of its embodied energy content; from a car to a foreign holiday. Even diamonds are expensive because of the tons of earth that has to be mined and sorted to find a single gemstone - a very energy intensive process. So, although undoubtedly energy efficiency measures are unquestionably important, the net reduction in energy consumption is likely to be considerably less than would appear at first sight. The difference, of course, representing the rebound. Next