Toshi H. Arimura

Is a Voluntary Approach an Effective Environmental Policy Instrument? A Case for Environmental Management Systems

Using Japanese facility-level data from an Organisation for Economic Co-operation and Development survey, we estimate the effects of implementation of ISO14001 and publication of environmental reports on the facilities’ environmental performance. While most previous studies focused on an index of emissions toxicity, this study examines three areas of impacts, none of which have been explored in the literature: natural resource use, solid waste generation, and wastewater effluent. The study is also unique in that the effectiveness of ISO14001 is considered in relation to environmental regulations. Our findings are summarized as follows. First, both ISO14001 and report publication help reduce all three impacts; the former appears more effective in all areas except wastewater. Second, environmental regulations do not weaken the effect of ISO14001. Third, assistance programs offered by local governments—a voluntary approach—promote facilities’ adoption of ISO14001. These findings suggest that governments can use command-and-control and voluntary approaches concurrently.

The effect of ISO 14001 on environmental performance: Resolving equivocal findings

Previous research evaluating ISO 14001 certification has shown that it both increases environmental performance and has no effect. We hypothesize that the equivocal findings are due to two factors: institutional pressures arising from differences in regulatory settings across and within countries, and typical methodological approaches for addressing endogeneity. We examine these factors using facility-level data from the United States and Japan for two environmental impacts. After applying Altonji, Elder, and Taber’s (2005) method for dealing with the case where there are no potential instruments, we find evidence that the effectiveness of these environmental governance tools varies across countries and type of environmental impact being assessed.

U.S. Climate Policy Developments

This paper outlines recent developments in U.S. climate policies. Although the United States does not participate in the Kyoto Mechanism, a number of climate policies are being implemented at state level as well as at the federal level. First, we report and compare the federal cap and trade proposals in the 110th Congress. Then, the paper illustrates the current situations of state level climate policies, such as the Regional Greenhouse Gas Initiative in the northeastern states or AB32 in California. We analyze these proposals from the viewpoint of technology policies and impacts on international markets. It is found that technology policies play important roles in the cap and trade proposals and that there is a great expectation for carbon capture and sequestration (CCS) technology. In terms of the impacts on international markets, several federal proposals as well as regional programs permit trading in international markets. As emission targets become more stringent in the future, U.S. GHG emitters are more likely to interact with these markets. Thus, despite the lack of U.S. participation in the Kyoto Protocol, U.S. markets will be linked to foreign markets, at least, in an indirect way.

A Computable General Equilibrium Analysis Of Border Adjustments Under The Cap-And-Trade System: A Case Study Of The Japanese Economy

Using a multi-region and multi-sector computable general equilibrium model, this paper evaluates the border adjustment policies of carbon regulations in Japan. We consider five types of border adjustments and examine their effects on the welfare, carbon leakage, and competitiveness of the Japanese energy-intensive trade-exposed (EITE) sectors.Our analysis shows that no single border adjustment policy is superior to the other policies in terms of simultaneously solving three primary issues: Welfare degradation, carbon leakage, and a loss of competitiveness in the EITE sectors. In addition, we show that export border adjustments are effective at restoring the competitiveness of Japanese exporters and reducing leakage. Our analysis also reveals that border adjustment in Japan significantly affects carbon leakage to China and the competitiveness of the iron and steel sectors. Finally, we show that border adjustments with and without consideration of indirect emissions have similar impacts, which indicates that the information regarding direct emissions is sufficient for implementing border adjustment in Japan.

A CGE Analysis of Border Adjustments Under the Cap-and-Trade System: A Case Study of the Japanese Economy

Using a multi-region and multi-sector CGE model, this paper evaluates the impact of border adjustment policies of carbon regulations on the Japanese economy. We consider the following six scenarios: 1) no border adjustment, 2) carbon tariffs on imports based on the carbon content in foreign exporters’ production, 3) carbon tariffs on imports based on the carbon content in domestic production (BID), 4) carbon tariffs on imports and rebates on exports based on the carbon content in domestic production (BIED), 5) BID applied only to the EITE (energy-intensive trade-exposed) sectors, and 6) BIED applied only to the EITE sectors. In particular, we examine the impact of the border adjustment policies on the welfare of the Japanese economy, carbon leakage, and the competitiveness of the Japanese EITE sectors.Our analysis shows that no single border adjustment policy is superior to the other policies in terms of simultaneously solving all three issues: welfare impacts, carbon leakage, and the loss of competitiveness in the EITE sectors. In addition, we show that export border adjustment often plays a crucial role in Japan. This insight is interesting because the policy debate on border adjustment is often biased toward import border adjustment. Our analysis also reveals that border adjustment in Japan significantly affects carbon leakage to China and the competitiveness of the iron and steel sector. Finally, we show that border adjustments with and without consideration to indirect emissions have similar impacts, which indicates that the information regarding direct emissions is enough to implement border adjustment in Japan.

Same concerns, same responses? A Bayesian quantile regression analysis of the determinants for supporting nuclear power generation in Japan

Using internet survey data from 6,500 individuals, this study examines the determinants for supporting the restart of nuclear power plants operation in Japan. As in previous studies, the variable of interest is a categorical and ordered variable that measures the level of support, for which ordered logit or ordered probit is commonly estimated. This study departs from the literature by using Bayesian ordinal quantile regression recently proposed by Rahman (2015). This approach allowed us to explore whether covariates have differential effects at various conditional quantiles of the latent response variable, which can be interpreted as the willingness to support the restart. The results show that for most of the covariates we examined, including concerns about meltdowns and the storage of nuclear material and concerns about global warming, the effects differ across conditional quantiles. In other words, the covariate effects depend on individuals’ unobserved preferences for the restart (conditional on observables). The results also show that for some covariates, the effects differ considerably across gender.

Environmental Policy Evaluations in Japan: Concepts and Practice

In this chapter, we will introduce key economic concepts and discuss methods for evaluating environmental policies. We will then briefly review policy evaluations in Japan. Finally, we will provide an overview of our quantitative policy evaluations presented in the rest of this book.

The Impact on Japanese Industry of Alternative Carbon Mitigation Policies

To address the climate change issue, developed nations have considered introducing carbon pricing mechanisms in the form of a carbon tax or an emissions trading scheme (ETS). Despite the small number of programs actually in operation, these mechanisms remain under active discussion in a number of countries, including Japan. Using an input–output model of the Japanese economy, this paper analyzes the effects of carbon pricing on Japan’s industrial sector. We also examine the impact of a rebate program of the type proposed for energy intensive trade exposed (EITE) industries in U.S. legislation, the Waxman–Markey bill (H.R. 2454), and in the European Union’s ETS. We find that a carbon pricing scheme would impose a disproportionate burden on a limited number of sectors—namely, pig iron, crude steel (converters), cement, and other EITE industries. We also find that the determinant of the increase in total cost differs among industries, depending on the relative inputs of directly combusted fossil fuel, electricity, or steam, as well as intermediate goods. Out of 401 industries, 23 would be eligible for rebates if a Waxman–Markey type of program were adopted in Japan. Specifically, the 85 percent rebate provided to eligible industries under H.R. 2454 would significantly reduce the cost of direct and indirect fossil fuel usage. The E.U. criteria identify 120 industries eligible for rebates. However, the E.U. program only covers direct emissions while the U.S. program includes indirect emissions as well. Overall, despite the differences in coverage, we find that the Waxman–Markey and E.U. rebate programs have roughly similar impacts in reducing the average burdens on EITE industries.

Diffusion of Quality and Environmental Management Systems Through Global Value Chains: Cases of Malaysia and Vietnam

Chapter 10 examines the relationship between the diffusion of the quality management standard, ISO 9001, and the adoption of the environmental management standard, ISO 14001, in Vietnam and Malaysia. It shows that businesses in both countries that received requests from customers about their usage of chemical substances were also more likely to have adopted ISO 9001. If these requests from customers arise from Product Related Environmental Regulation on Chemicals (PRERCs), this suggests that PRERCs promote the diffusion of ISO 9001 in developing countries. In addition, given that businesses that have adopted ISO 9001 are more likely to adopt ISO 14001, then PRERCs also indirectly promote the diffusion of ISO 14001 in developing countries. This link may have important implications for the pollution haven hypothesis.

Do Social Norms Matter to Energy-Saving Behavior? Endogenous Social and Correlated Effects

A growing number of survey-based studies have examined individual environmental behavior and support the idea that social norms are an important determinant of the behavior. We depart from the literature by estimating a structural model of the social interactions in an individual’s decision to engage in energy-saving practices and account for the methodological issues that are inherent in survey data: simultaneity, common shocks, and nonrandom group selection. Using data from a Japanese household survey, we find that the influence of social norms on individuals’ energy-saving practices is small or insignificant and that unobserved individual characteristics are correlated between members in a group. Although based on a specific sample and a particular identification strategy, our results illustrate that reduced-form evidence, of positive correlation among group members, which is abundant in the literature, should be interpreted with caution because it may not reflect causation.