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Global warming -- Seeking solutions based on solid science

Toshihide Arimura

Everybody on board

We began the Research Institute for Environmental Economics and Management (RIEEM) with the idea that tackling environmental issues requires an interdisciplinary approach. I wanted to create an institute not just consisting of economists, but with participation from researchers from various backgrounds. I belong to the Faculty of Political Science and Economics, and I knew there were people doing research on environmental studies in different departments. So I reached out to scholars working on environmental issues in different faculties and different departments, and as a result RIEEM helps promote collaboration among scholars inside Waseda.

We look at five major areas of research -- energy conservation in households, indoor air pollution in developing countries, carbon pricing, voluntary corporate actions and policy acceptance.

From the viewpoint of climate change, energy conservation is crucial. We’re studying people’s energy conservation behavior, and the influence of social norms and peer pressure. For example, the Japanese government promotes the proper use of air conditioners in the summer, recommending people set the temperature at 28C. Our research shows that compliance often depends on the behavior of other people. We call it the impact of social norms.

We set up some experiments in hotels, to see how guests contribute to conserving energy and water. We put up a poster saying, "Please help us save energy" and provided incentives -- one was a gift card if they reduced electricity use compared to a year ago; another was a donation to the World Wildlife Fund in their name, to see if they’d save energy for a good cause. We found that people actually did save energy in this case, though the impact was not as strong as with the monetary incentive.

The second field is conservation in developing countries, where energy consumption is growing much faster than in developed countries. We are conducting two projects in the Philippines -- one studies people’s response when they clearly see their energy use. We gave them tips on saving energy, such as proper use of air conditioners or refrigerators. We also investigated the concept of social norms. We showed people their consumption and that of their neighbors, and we found evidence that they reacted to those messages. We’re looking at how to use these findings to promote energy efficient appliances.

We have two other ongoing projects, in Bhutan and India, where people use firewood for cooking inside the home. Burning wood produces small particles known as PM2.5 that can cause severe health impacts. In Bhutan, we are studying how to get information on indoor air pollution to rural people, especially using television, which has the most important role in conveying these negative impacts. We hope that if they get information, they may switch to cleaner fuels.

Climate change

To deal with climate change, putting a price on carbon emissions would be effective. So, our most important project is carbon pricing, and for this we are collaborating with scholars at other institutes, affiliate members of RIEEM.

Japan’s Ministry of Environment provided funding for a three-year, two-part project.

In the first part, we conducted ex-post analysis of emissions trading schemes (ETS) in Tokyo and Saitama. We found that it is having a satisfactory impact.

The second part is designing carbon pricing at a national level. We are focusing especially on the double dividend of carbon pricing, in which a tax is imposed on carbon emissions, and the revenue is used to reduce corporate tax. So they are reducing greenhouse gases, and at the same time they are promoting economic activity. The “green” companies are growing, but the dirty industries will have a hard time. We are investigating whether this scheme is applicable in the Japanese context.

<> Our fourth project looks at voluntary corporate action. We are investigating how businesses recognize the environmental impact of their activities, decisions and strategy, and how they account for them in their decision-making. It is important to design efficient policy, but it is just as important for these policies to be accepted by stakeholders. Focusing on this point, we are conducting a survey of the general public, to gauge support for a carbon tax or emissions trading scheme or both, and what would be the right use for the resulting revenue.

Worldwide effort

We are publishing a book called “Carbon Pricing in Japan,” which will come out later this year. This is part of our efforts to reach out to researchers in other countries. For the carbon pricing project, we are collaborating with Tsinghua University in China and Kyung Hee University in South Korea. We are also editing a special edition of the academic journal of Environmental Economics and Policy Studies (EEPS) called “Carbon Pricing in East Asia,” featuring research by scholars from China, South Korea and Japan.

We are also expanding our international activities. One is a project with Arizona State University, regarding green purchasing by local governments. We have collected data in Japan and found several ways to promote green purchasing. In collaboration with University of Kassel in Germany, we are studying people's conservation behavior to see if non-state actors like businesses or schools have an impact. We found that indeed, working at a company that is really into conservation and has an environment management system, makes people more likely to save energy at home.

Our big ambition is for RIEEM and Waseda to be the Asian hub for research on environmental economics and policy. Waseda has a good reputation in China, South Korea and Southeast Asia. So we have potential to collaborate with Asian universities.

インタビュアー 青山聖子

Accumulating evidence

There are past successes to draw upon, for example a trading scheme for sulfur dioxide from power plants in the U.S. The aim was to tackle the acid rain problem in Canada and the U.S. due to SO2. That was my PhD dissertation at Minnesota. When I returned to Japan, I started research into climate change, and I have been involved in policy discussions with the Ministry of Environment since 2008.

I’ve proposed different designs for emission trading schemes or carbon taxes in the past 12 years. From 2008 to 2010, I proposed ways to approach carbon reallocation using emissions trading.

The power sector is a crucial component of Japan’s economy, and since the Paris Agreement, we have found that Tokyo emission trading scheme, Tokyo ETS, has been successful in reducing carbon emissions in the Tokyo area, and the European Union has had some success in reducing emissions as well. The corporate sector is coming to understand the importance of these kinds of policies, and a few global companies have begun supporting this kind of carbon pricing.

Our institute wants to contribute to what is known as evidence-based policy making. This is a buzzword; you hear it all over the world. We want to accumulate evidence that is useful to policy makers.

Future directions

As we continue this work, the next project will also be carbon pricing. So far I have been focusing on efficient design of carbon pricing, but we have to also look into the fairness or inequality that could result from policy based on households. Some regions could face heavier burdens than others from carbon pricing, so we have to equalize any burdens from this kind of policy.

As an economist, I love efficiency. But fairness and equality will be crucial if the decarbonization effort is to succeed. Therefore, I want to focus our research efforts on making the process as fair as possible.

Interviewed and written by Robert Cameron