{"id":60846,"date":"2018-09-03T12:10:08","date_gmt":"2018-09-03T03:10:08","guid":{"rendered":"https:\/\/www.waseda.jp\/top\/en\/?p=60846"},"modified":"2018-10-03T09:32:48","modified_gmt":"2018-10-03T00:32:48","slug":"waseda-frontline-research-feature-vol-20-applying-the-power-of-economics-to-resolve-environmental-issues-part-1-of-2","status":"publish","type":"post","link":"https:\/\/www.waseda.jp\/top\/en\/news\/60846","title":{"rendered":"Waseda Frontline Research Feature Vol. 20: Applying the power of economics to resolve environmental issues (Part 1 of 2)"},"content":{"rendered":"

Environmental Economist
\nToshihide Arimura, Professor, Faculty of Political Science and Economics<\/h3>\n

Part 1: Transitioning environmental issues from \u201coutside\u201d the marketplace to \u201cinside\u201d the marketplace<\/h2>\n

\"\"The economic activities of human kind and preservation of the global environment are generally considered to be mutually exclusive. However, if we are able to fully harness the learnings of economics, I believe we may be able to combine efforts to preserve the environment and economic activities. Professor Toshihide Arimura, who specializes in environmental economics at the Faculty of Political Science and Economics at Waseda University, is working to establish methods to resolve environmental issues that make use of market forces and introduce these into the social framework by transitioning the concept of the environment, generally believed to be exclusive of the markets, into them. How can the learnings of economics contribute to resolving environmental issues? These next two releases will cover his research efforts and his thoughts on that research. (Date of interview: December 08, 2017)<\/p>\n

Giving economic value to the environment<\/h3>\n

\u201cEnvironmental economics\u201d, the field in which I specialize, is one applied field of economics. When the majority of people think of economics, they probably think of \u201cmaking money\u201d, however this is not necessarily true. Economics may also been seen as a field of study delving into \u201chow to make the most effective use of limited resources\u201d. The concept behind environmental economics, is attempting to resolve a variety of environmental issues, not through a planned economy or policies formulated by the government, but through use of the marketplace.<\/p>\n

Because the \u201cenvironment\u201d is generally considered exclusive of the \u201cmarketplace\u201d when human kind behaves in a normal manner, it is impossible to devise solutions to environmental issues using the marketplace. In order to resolve environmental issues, the concept of transitioning the concept of the \u201cenvironment\u201d into the \u201cmarketplace\u201d, in other words giving economic value to the environment is important. This is referred to as \u201cinternalization of external diseconomies\u201d. In Japan, the concept behind environmental economics, including this train of thought, first appeared in the 1960s, a period when air and water pollution worsened and pollution in general became a social issue. In the time ensuing, from the 1980s, acid rain, global warming and climate change, etc. garnered attention as environmental issues of a global scale and the field of environmental economics took on a whole new level of importance. Environmental economists focused on post-event solutions in relation to existing, local issues of pollution. In line with the globalization of environmental issues in the time following, these environmental economists began to focus on more pre-event, or preventive solutions. Further, in years past, economists were more focused on optimization of profits based on the model of the rational consumer, also known as the \u201ceconomic man\u201d, however, this has gradually changed to analysis based on realistic observation of the behavior of organizations and the consumer.<\/p>\n

\"\"

Professor Toshihide Arimura<\/p><\/div>\n

Emissions trading – One form of carbon pricing<\/h3>\n

One area of my research is \u201ccarbon pricing\u201d. This is the process of allocating a value to carbon dioxide (CO2) in an effort to reduce carbon dioxide emissions by making corporations and households accountable for the amount of CO2 they release into the atmosphere. The expectation behind this concept is that if releasing carbon dioxide into the atmosphere costs money, the consumer behavior of corporations and households will change to become more environmentally friendly.<\/p>\n

For example, one form of carbon pricing that I have focused on is \u201cemissions trading\u201d. This is a scheme in which units, or permits of emissions of pollutants, such as carbon dioxide, that have an impact on the environment, are traded between governments and corporations. During my time studying in the United States in the 1990s, the US led the way, implementing emissions trading for sulfur dioxide (SO2), as part of measures to combat acid rain. I saw this idea of combining the concept of market economics and environmental measures, concepts that often oppose each other, to reach a solution as an innovative concept and prompted me to write my doctoral dissertation on this topic.<\/p>\n

\"\"

Figure: Overview of emissions trading. Corporations that reduce their emissions to below the set limit of carbon dioxide emissions (dotted red line) are able to sell on the surplus of units to corporations that were unable to reduce emissions to their set limit.<\/p><\/div>\n

Validation of a \u201cdefinitive result\u201d from government emissions trading schemes<\/h3>\n

Following are some examples of my recent research into carbon pricing.
\nOne of these is an analysis of the effect of emissions trading in Tokyo. Presently in Japan, the Tokyo Metropolitan Government and Saitama Prefecture are implementing an emissions trading scheme for green house gases. While the amount of carbon dioxide emissions is actually falling, there has been insufficient validation that this is in fact a result of the emissions trading scheme. There are people who believe this is a result of the increase in electricity prices in the wake of the Great East Japan Earthquake that hit Japan in 2011. In response, I gathered data from office buildings of corporations all across Japan to perform a factor analysis. Based on my analysis, I reached the conclusion that \u201capproximately half the reduction in emissions was a result of the emissions trading scheme\u201d. This demonstrates a definitive result.<\/p>\n

Government officials show a tendency to be content simply by implementing new policy. However, it is important from a social viewpoint that validation is made to ensure that implemented policies are really functioning effectively.<\/p>\n

\"\"

Photo: \u201cWaseda University Research Council Forum 2017 – Paris Agreement and International Trends of Carbon Pricing\u201d held at the Nihonbashi Campus of Waseda University in December 2017 (Sponsors: Organization for University Research Initiatives, Waseda University and the Research Institute for Environmental Economics and Management) The event was covered by a large media contingent. Professor Arimura spoke on the subject of \u201cFollowing global trends! Emissions trading: The efforts of the Tokyo Metropolitan Government and Saitama Prefecture\u201d (Source: Professor Arimura)<\/p><\/div>\n

Realistic carbon pricing<\/h3>\n

One more area of my research is looking at carbon pricing schemes that will be realistically accepted by society and making policy recommendations.<\/p>\n

Society is reluctant to accept a carbon pricing policy when recommendations made by economists for the most effective policy are endorsed by government because they feel they have to reduce emissions to achieve set targets. It is important to make recommendations that achieve a balance with what is occurring in the real world. For example, one method is an \u201cUp-dating emissions trading scheme\u201d . This is a scheme under which emissions are traded based on information that is updated based on current conditions. This was proposed in the United States under the Obama Administration and based on this, I made recommendations to the Democratic Party governing Japan at the time.<\/p>\n

From 2006 through to 2008, I was a visiting research fellow at Resources for the Future in the United States. Over this period, I saw a variety of proposals to combat the issue of climate change and this helped me reaffirm the importance of research aimed at bridging the gap between the real world and academia and I came to feel strongly about feeding the results of my research back to society.<\/p>\n

\"\"

Photo: Forum held at the Walter H. Shorenstein Asia-Pacific Research Center, Stanford University, United States in October 2017, \u201cConfronting Climate Change\u201d (Source: Professor Arimura)<\/p><\/div>\n

Examining \u201cdouble dividends\u201d for carbon taxes<\/h3>\n

In December 2015, 18 years on from the Kyoto Protocol, the \u201cParis Agreement\u201d was adopted as a new, international framework to combat climate change. Since then, debates are emerging with long-term perspectives that look as far ahead as 2050 and beyond. As one of the most recent movements in Japan is the \u201cCommission for Carbon Pricing\u201d run by the Ministry of the Environment of Japan. I attend meetings of this commission as a committee member, making recommendations for the introduction of a “carbon tax\u201d, aimed at imposing a tax on carbon, petroleum and natural gas, etc. in addition to emissions trading schemes. In FY2018, I will also participate in a discussion held by the \u201cCentral Environment Council, Global Environment Subcommittee, Subcommittee on the use of Carbon Pricing\u201d.<\/p>\n

As stated in my proposal, the concept of \u201cdouble dividends\u201d is particularly applicable to carbon tax. To date, environmental economists have thought of ways to change public behavior by imposing environmental taxes, such as a carbon tax. However, little thought has been given to how to put the collected taxes to use. I believe there must be a way of using these collected taxes to stimulate economic activity. If this can be achieved, I feel that the resultant improvements, both in terms of reducing emissions of carbon dioxide in order to protect the environment and stimulation of economic activity, will be more significant or pronounced. This is the concept behind \u201cdouble dividends\u201d. For example, if we can allocate the tax revenue from carbon tax to reducing corporate taxes, reducing the burden of social insurance premiums and reducing income tax, etc., it will be possible to achieve economic growth while also creating a green economy.<\/p>\n

Over the long term, it is my hope to consider policy design that will ultimately be beneficial to the environment and economy of not only Japan, but also the world.<\/p>\n

In the next part, I will be introducing research into measures to combat indoor air pollution in developing countries.<\/p>\n

 <\/p>\n

\u261eClick here for Part 2<\/strong><\/a><\/p>\n

Profile<\/h4>\n

\"\"Toshihide Arimura<\/strong><\/p>\n

After obtaining his B.A. at the Faculty of Liberal Arts, the University of Tokyo and his M.S. in Environmental Sciences at the University of Tsukuba, Toshihide completed a doctoral degree in Economics at the University of Minnesota, where he obtained his Ph.D. in 2000. In the time following, Toshihide served as Assistant Professor at Sophia University, Department of Economics and Part-time Lecturer at the School of Social Sciences, Waseda University, while also serving as a Visiting Research Fellow at the Economic and Social Research Center, Executive Director of the Society for Environmental Economics and Policy Studies and as Visiting Research Fellow at Resources for the Future (Abe Fellow), and so on. From 2012 to present, Toshihide has served as Professor at the Faculty of Political Science and Economics at Waseda University. A long list of publications includes \u201cThe Frontier of Environmental Economics\u201d (Nippon Hyoronsha) and co-author of \u201cIntroduction to Environmental Economics\u201d (Chuokoron-Shinsha). Toshihide also plays an integral role at the Research Institute for Environmental Economics and Management, Waseda University.<\/p>\n

Major research achievements<\/h4>\n

Journal articles<\/strong><\/p>\n