Analysis of Relation between Environmental Policy Instruments and Innovations: Case study in Japan

Event: EcoDesign 2015
Date: December 2015 (Tokyo International Forum, Tokyo, Japan)
Conference Proceeding

Economic analysis of environmental policy asserts that the negative impact of economic activities on the environment constitutes an externality. Environmental policies are designed to deal with externalities either by internalizing environmental costs or imposing specific standards for environmental pollution. In this research we aim to clarify the impact of environmental regulations related to end-of-life vehicles (ELV) on innovation in Japan. We explore the linkages between those regulations and innovations through the use of patent data as a proxy. In the analysis we find out whether there is any statistical difference in patent activity comparing the periods before and after the regulations were enacted. The relevant Japanese data on ELV was gathered for the period 1990-2013 and divided the periods into: 1990-2001, 2002-2005 and 2006-2013. We then measure the potential environmental benefits of such regulation using recycling levels, landfill pressure, and air pollution as indicators. The outcomes of the analysis will be used to design models that can be applied in rapidly emerging economies like China and India.