Environment, social, and governance (ESG) reporting guidelines are institutional rules that can enhance the credibility of firms' publicly disclosed information related to ESG. Reporting is often voluntary and global ESG reporting guidelines typically rely on process-focused third party verification. However, in developing its reporting guidelines, the Japanese government gave firms the unusual option of pursuing either process- or content-focused verification. This paper draws on the unique Japanese setting to examine whether firms that use ESG reporting guidelines increase their quantity of disclosed sustainability information. Furthermore, it assesses whether, given the option, (1) firms tend to pursue process- or content-focused verification, and (2) which type of verification leads to greater information disclosure. We show that firms that follow ESG guidelines disclose 39% more sustainability information compared to firms that publish sustainability reports but do not follow ESG reporting guidelines. Content-focused verification leads to greater information disclosure than process-focused verification in that firms publish 23% more text in their sustainability reports. Moreover, given the option, firms prefer to use content- over process-focused verification. However, most global ESG reporting guidelines endorse process-focused verification and this verification is less effective than content-focused verification at encouraging firms' information disclosure. Our findings raise a timely and relevant question about the movement by global ESG standard developers to promote process- rather than content-focused verification. They also suggest that firms that wish to create sustainability distinction by way of ESG reporting may benefit by advocating for more robust forms of verification.

<title>Abstract</title>To reduce their environmental impacts, a growing number of organizations worldwide have implemented environmental management systems (EMSs). In these organizations, energy conservation activities become usual behaviors for employees; thus, we hypothesize that employees continue such energy saving behaviors at home. This hypothesis is supported by data from surveys of individuals in Japan. Specifically, we find that the probability of engaging in energy saving practices at home is higher and that expenditures on electricity use are lower for individuals who work in organizations that implement EMSs than for individuals who do not work in organizations with EMSs. Our results suggest that beyond the original purpose of helping organizations reduce their environmental impacts, EMSs work as an intervention to promote household energy saving.

In this study, we analyzed the external effects of wind turbines, which are often considered detrimental to the promotion of wind power generation. Understanding these externalities is essential to reaching a consensus with residents who live near the site of a planned wind turbine. Our research objective was to determine the relationship between wind turbines and people’s well-being in areas where they have been installed for a long time. We hypothesized that wind turbines would have a negative impact on people’s well-being. We conducted a survey by postal mail in Chōshi City, Chiba Prefecture, Japan, to examine the external effects of wind turbines, adopting a subjective well-being index to measure respondents’ well-being. Regression analysis suggests that having a view of wind power turbines has a positive effect on the subjective well-being of local residents. Moreover, the results indicate that such well-being increases with increasing distance from the turbines. Except for scenic elements, we found that wind turbines are not always considered desirable by residents. Therefore, it is important to further clarify the external influence of wind turbines and other facilities in local communities.

<title>Abstract</title>The Japanese government plans to reduce greenhouse gas emissions by 80% by 2050. However, it is not yet clear which policy measures the government will adopt to achieve this goal. In this regard, environmental tax reform, which is the combination of carbon regulation and the reduction of existing distortionary taxes, has attracted much attention. This paper examines the effects of an environmental tax reform in Japan. Using a dynamic computable general equilibrium (CGE) model, we analyze the quantitative impacts of an environmental tax reform and clarify which types of environmental tax reform are the most desirable. In the simulation, we introduce a carbon tax and consider the following four scenarios for the use of the carbon tax revenue: (1) a lump-sum rebate to the household, (2) a cut in income taxes, (3) a cut in corporate taxes and (4) a cut in consumption taxes. The first scenario is a pure carbon tax, and the other three scenarios are types of environmental tax reform. Our CGE simulation shows that (1) environmental tax reform tends to generate more desirable impacts than the pure carbon tax and that (2) the strong double dividend is obtained in some cases. In particular, we show that a cut in corporate taxes leads to the most desirable policy in terms of GDP and national income.

Many studies have empirically examined to what extent energy efficiency improvement causes rebound effects for various products. Energy efficiency improvement potentially induces behavioral changes resulting in a rebound effect. However, a limited number of studies have addressed what kind of behavioral changes the energy efficiency improvement of appliances can cause. For example, the energy efficiency improvement of air conditioners can induce a change in the room temperature setting. This paper examines whether the energy efficiency improvement of air conditioners impedes energy-saving behaviors. Specifically, using a Japanese household survey, we examined the energy-saving behaviors related to air conditioner usage: (1) setting the room temperature at 28 °C or higher in summer, (2) reducing unnecessary power consumption, and (3) cleaning the filters. We found that energy efficiency improvements reduce the probability of the behavior of setting air conditioner temperatures at 28 °C or more by approximately 25–45% during summer, while they have no impacts on the reduction of unnecessary air conditioner usage or filter cleaning. This finding implies that energy efficiency improvements may counteract the energy-saving behaviors of the temperature setting, resulting in a rebound effect. Thus, we clarified a mechanism of the rebound effect in the case of air conditioners.

The aim of this paper is to identify (1) the categories in which it is easier or more difficult for local municipalities to implement green purchasing and (2) the role and extent of green purchasing policy (GPP) in promoting green purchasing. To characterize the green purchasing potential of different categories, we examine the green purchasing rate, or the ratio of green products/services to total products/services purchased, of 21 categories of items. We employ data from a unique survey conducted by the Japanese Ministry of the Environment, which provides data on green procurement in municipalities. We observe that air conditioners suffer from low green purchasing rates, whereas most municipalities purchase green products in the paper products and stationery categories. We also examine the relationship between green purchasing rates and GPPs to identify the role and extent of GPPs. Our regression analyses reveal that the presence of a GPP is associated with higher implementation and measurement rates of green purchasing. This pattern is particularly evident for the categories in which many municipalities without GPPs purchase green products but, in most cases, do not measure their green purchasing rate.

To attain cleaner air, it is important that authorities make informed decisions when selecting a strategy. Concentrations of particulate matter with an aerodynamic diameter of less than or equal to 2.5 mu m (PM 2.5) are high in the Tokyo metropolitan area, even though concentrations of particulate matter with an aerodynamic diameter of less than or equal to 10 mu m (PM10) have dropped dramatically since the implementation of the NOx-PM Act. Currently, monitored concentration levels continue to exceed the designated ambient air quality standard set by the Japanese Ministry of the Environment. To our knowledge, no study has investigated a cost-efficient strategy for reducing PM 2.5 concentration levels in the Tokyo metropolitan area. This is the first study to examine a proper control strategy for Japan by developing an integrated model that includes both aerosol and economic models. The simulation results show that prefectures in the Tokyo metropolitan area cannot achieve the standards by relying on their own efforts to reduce PM 2.5. That is, prefectural governments in the Tokyo metropolitan areas need to cooperate with prefectures outside of the area to improve their PM 2.5 concentration levels. Thus, we simulated policies under the assumption that emissions from other sources are reduced to levels such that the PM 2.5 concentration declines by approximately 18 mu g/m(3). We first simulated an efficient policy, i. e., the implementation of a pollution tax. We found that the total abatement cost to meet the air quality standard using the cost-efficient strategy is approximately 142.7 billion yen.

The reduction of emissions from developing countries is essential in tackling climate change. The Clean Development Mechanism is effective in reducing greenhouse emissions but criticized by various parties. In response, the Japanese government has proposed the Joint Crediting Mechanism (JCM). Using the 2010 Japanese domestic and the 2005 Asian international input–output tables, we disaggregate the automobile industry and other electrical devices and parts industry to capture hybrid vehicles and solar panels. Moreover, we add the wind turbine industry and the geothermal turbine industry in our analysis. In evaluating the JCM, we find that the multiplier impacts of hybrid vehicles, wind turbines and air conditioners are high, whereas boilers and solar panels produce smaller effects. In contrast, the results for the employment effects show that the coke dry quenching plants and lighting equipment create more jobs. We also estimate the emission reduction from the JCM. Taking into account the lifetime of each product/technology and country-specific emission coefficients, we find that lighting equipment’s emission reductions are the greatest, whereas washing machines’ reductions are the least. Thus, it is important to choose the technologies/items suitable for the JCM by balancing their economic and reduction effects. The government must assess various technologies/items before determining the eligibility of each technology/item.

This research empirically estimates abatement costs under the Clean Development Mechanism (CDM) in India, using project-level data for 830 projects that had been registered as of April 2014. Emphasis lies on assessing the impact of international technology transfer on abatement costs and on testing whether CDM projects in India have experienced a “low-hanging fruits” problem or have benefitted from learning effects. The results suggest that projects that include technology transfer have higher abatement costs. However, this does not appear to be universally applicable when assessing technology transfer by project type. Second, no conclusive evidence is found to support a “low-hanging fruits” problem, both empirically and based on the finding that most Indian projects are conducted unilaterally. On the contrary, some project types showed that abatement costs decrease as more projects are implemented. Finally, results suggest increasing returns to scale as well as economies of time in terms of project duration.

Using the Internet survey data from 6500 individuals, this study examines the determinants for supporting the restart of nuclear power plants operation in Japan. The variable of interest is the level of support that is measured as a categorical and ordered variable, for which ordered logit or probit is commonly estimated. This study departs from the literature using Bayesian ordinal quantile regression (Rahman 2015, Bayesian Anal. doi:10.1214/15-BA939) to address whether covariates have differential effects at various conditional quantiles of the latent response variable. This approach allows us to explore, for example, whether three otherwise identical individuals, the first with an average unobserved preference for the restart, the second with a low unobserved preference, and the third with a high unobserved preference, respond similarly or differently to a change in a covariate. The results show that for most of the covariates examined, including concerns about meltdowns and concerns about global warming, the effects differ across conditional quantiles of the latent response variable. In other words, the covariate effects depend crucially on individuals’ unobserved preferences for the restart (conditional on observables). The results also show that there are considerable gender differences in response to changes in covariates.

<p>自然環境の価値を評価する手法として，主観的幸福度を用いた分析が注目されている。そこで本研究も主観的幸福度を用いて，日本に存在する自然資本が地域住民にどのように評価されているかを分析した。本研究では資本を自然資本，物的資本，人的資本，社会関係資本の4種類に分類して分析を行った。分析に使用する主観的幸福度に関するミクロデータはWebアンケートにより日本全国から収集した。また日本全国から市区町村ごとの自然資本のデータと物的資本のデータを収集し，位置情報をもとに地域住民の主観的幸福度のデータと結合して分析した。回帰分析の結果，河川や湖といった開放水域と植林地が人々の幸福度と正の相関があることが分かった。つまり，人々の幸福度を増加させるという観点から見た場合，これら自然資本を整備するような政策が望ましい。</p>

<p>途上国の家庭内での調理に起因する室内大気汚染が問題視されている。調理時に発生する煙の健康への悪影響が報告されている。調理時に使用する燃料・エネルギー源を変えることでこの室内大気汚染を減らすことが可能であるが，途上国の多くの家庭が汚染を引き起こす伝統的な燃料の使用を続けている。家庭の燃料選択を対象とした実証研究が始まっているが，家計レベルのミクロ・データセットを用いた研究はまだ少ない。本研究はインド・西ベンガル州の68世帯を対象としたフィールド調査と収集したデータを用いた計量経済学的分析によって，インドの家計の燃料選択に影響を与える社会経済的要因を明らかにした。対象地域から無作為に抽出した家計の調理担当者を対象としてインタビュー調査を行い，薪・牛糞・石炭を「汚い燃料」，ケロシン・液化天然ガス・電力を「きれいな燃料」と定義し，データを生成した。家計の燃料選択をランダム効用モデルを用いてモデル化し，収集したデータを用いて，回帰分析を行った。ロジット・モデルを用いた最尤法による回帰分析の結果，調理が家の中で行われる家計ほど，また，燃料を無料で入手することができない家計ほど，「きれいな燃料」を選択することがわかった。加えて，「家計所得」，「回答者の年齢」，「教育水準の高さ」に関する指標と「きれいな燃料」の選択との間に正の相関が見られ，「家計の構成員数」，「最も近い市場への距離」に関する指標と「きれいな燃料」の選択との間に負の相関が見られた。これらの結果を活用し，家計の社会経済的状況に応じた室内大気汚染削減政策を立案することが求められる。</p>

<p>近年，自治体レベルの温室効果ガスの排出量削減政策が普及している。中でも，「地球温暖化対策などに係る計画書制度」（以下，計画書制度）が多くの都道府県で共通して導入されている。当該制度は，一定規模以上の事業所に対し温室効果ガス排出量削減のための具体的な計画と，その結果報告を定期的に義務づける。更に，計画もしくは報告の内容に対し，自治体が助言などを行う規定も付加されている場合が多い。このように，計画書制度は自治体レベルで事業所に排出量削減についてモニタリングと補助を行う枠組みである。しかし，制度の効果には疑問の声もある。各事業所の排出量削減の水準について罰則が存在していないのである。計画書制度において罰則と呼べるものは計画／報告の未提出や虚偽報告に対するものに限られる。すなわち，実際に排出量削減が実現するかは定かではない。そこで，本研究では計画書制度が削減効果を有するか否かについて検証を行う。具体的には，1990年度から2013年度の製造業部門の都道府県レベル集計データを用い，制度の有無による排出量の変化を計量分析した。その結果，計画書制度を導入した都道府県では，平均的に約8％から約10％製造業部門の従業者一人当たり排出量が削減されていることが示唆された。計画と報告，及び省エネ指導という枠組みが有効な可能性を示唆する結果である。</p>

From 1997 to 2012, 114 Japanese industry associations implemented voluntary action plans, which are not enforced by laws or regulations, to reduce carbon emissions. This paper investigates whether the establishment of these voluntary action plans by industry associations contributed to the adoption of a carbon emissions target at the firm level within the associations. Using a survey of approximately 1000 firms in Japan, this paper finds that small and medium-sized firms in sectors with voluntary action plans were 2-4 times more likely to establish their own carbon emissions targets than were firms belonging to industry associations without voluntary action plans. In contrast, the paper finds that voluntary action plans did not affect the establishment of emissions targets among firms with more than 3000 employees. This result is consistent with the survey responses, which found that periodic follow-ups under a voluntary action plan helped small firms to obtain important pieces of information and that industry associations played an important role in this process. In general, small firms have relatively large potential for energy saving, but the lack of information prevents its realization. The results, confirm the importance of voluntary action plans in removing the information barriers of relatively small firms and encouraging them to implement carbon emissions targets. (C) 2015 Elsevier Ltd. All rights reserved.

Using a household survey conducted in a suburb of Tokyo, we examine whether individuals properly perceive the benefits of energy-saving actions. A bivariate regression shows that, on average, individuals overestimate the benefits. The tendency to overestimate is robust to controlling for individual and home characteristics. Our results are contrary to those of Attari et al. (2011), who found that individuals in the U.S. tended to underestimate the benefits of energy-saving activities. The difference in our results suggests that the provision of information about the benefits of energy saving may be an effective policy to address global warming issues in one country but not necessarily in all countries. We also find that the magnitude of overestimation is greatest among young single males, whereas the benefits perceived by older married females are the smallest. This result suggests that the provision of tailored information (i.e., highly personalized and specific information) can be an effective intervention even in Japan. (C) 2014 International Energy Initiative. Published by Elsevier Inc. All rights reserved.

大企業を中心とした自主的な環境取組みが広がりをみせるなか，中小企業の環境問題への取組みは，依然として大企業に比べて遅れていることが指摘されている。本研究では，自主的環境取組みの中でも特にISO14001認証取得に焦点を当て，認証取得のインセンティブと，さらに認証取得が実際の環境負荷の削減をもたらすのかという点について，先行研究では行われてこなかった大企業と中小企業との比較という視点から分析を行った。<BR>分析の結果，主要販売地域が海外市場であるかどうかという点については，大企業事業所のISO14001の認証取得インセンティブの要因とはならないが，中小企業事業所にとっては取得インセンティブとなるという点が明らかになった。また，中小企業事業所のISO14001認証取得インセンティブが大企業事業所に比べて弱いという結果が示された。しかし，この2つのタイプの事業所の間では，ISO14001の認証取得が大気汚染物質排出量，自然資源利用量，固形廃棄物排出量，廃水排出量に対する削減効果に差がないことが明らかになった。このことから，現在，各地方自治体で導入されている環境マネジメントシステム導入支援策は，中小企業の自主的取組みを促進し，環境負荷削減を果たす上で，効果的な手段であると考えることができる。

大企業を中心とした自主的な環境取組みが広がりをみせるなか，中小企業の環境問題への取組みは，依然として大企業に比べて遅れていることが指摘されている。本研究では，自主的環境取組みの中でも特にISO14001認証取得に焦点を当て，認証取得のインセンティブと，さらに認証取得が実際の環境負荷の削減をもたらすのかという点について，先行研究では行われてこなかった大企業と中小企業との比較という視点から分析を行った。<BR>分析の結果，主要販売地域が海外市場であるかどうかという点については，大企業事業所のISO14001の認証取得インセンティブの要因とはならないが，中小企業事業所にとっては取得インセンティブとなるという点が明らかになった。また，中小企業事業所のISO14001認証取得インセンティブが大企業事業所に比べて弱いという結果が示された。しかし，この2つのタイプの事業所の間では，ISO14001の認証取得が大気汚染物質排出量，自然資源利用量，固形廃棄物排出量，廃水排出量に対する削減効果に差がないことが明らかになった。このことから，現在，各地方自治体で導入されている環境マネジメントシステム導入支援策は，中小企業の自主的取組みを促進し，環境負荷削減を果たす上で，効果的な手段であると考えることができる。

The adoption of domestic emissions trading schemes (ETS) can impose a heavy burden on energy-intensive industries. Particularly, energy-intensive industries competing with foreign competitors could lose their international edge. Although the abatement of CO2 emissions in industrialized countries entails the reduction of their energy-intensive production, a corresponding increase in the production of energy-intensive goods in countries without CO2 regulations may lead to carbon "leakage." This paper examines the effects of various allocation methods of emissions permits in the Japanese ETS on the economy and CO2 emissions using a multiregional and multisector computable general equilibrium model. Specifically, we apply the Fischer and Fox (Land Econ 83(4):575-599, 2007) model to the Japanese economy to address carbon leakage and competitiveness issues. We compare auction schemes, grandfathering schemes, and output-based allocation (OBA) schemes. We further extend the model by examining a combination of auctions and OBA. Though the auction scheme is found to be the best in terms of macroeconomic impacts, the leakage rate is high and the harm to energy-intensive sectors can be significant. OBA causes less leakage and damage to energy-intensive sectors, but the macroeconomic impact is undesirable. Considering all three effects-leakage, competitiveness, and macroeconomics-we find that combinations of auctions and OBA are desirable. © 2013 Springer Japan.

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 programmes 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 article analyses the effects of carbon pricing on Japan's industrial sector. We also examine the impact of a rebate programme 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. Out of 401 industries, 23 would be eligible for rebates according to the Waxman-Markey-type programme, whereas 122 industries would be eligible for rebates according to the E.U.-type programme, if adopted in Japan. Overall, despite the differences in coverage, we find that the Waxman-Markey and E.U. rebate programmes have roughly similar impacts in reducing the average burden on EITE industries. (C) 2013 Elsevier Ltd. All rights reserved.

Technological innovation has recently become more essential than ever. To examine the factors that might induce environmental technological innovation, we focus on ISO 14001, a voluntary approach to environmental management, and scrutinise how the proficiency or maturity level of ISO 14001 in facilities influences environment-related research and development (R&D) expenditures that promote environmental technological innovation. We measure the maturity level based on the length of time since a given facility adopted ISO 14001. Using Japanese facility-level data from "Environmental Policy Tools and Firm-Level Management and Practices: An International Survey" (OECD Survey), we estimate two Tobit models by addressing an endogeneity issue in ISO 14001. The estimation results provide empirical evidence that as the ISO 14001 is improved in facilities, those facilities are likely to spend more on environmental R&D. The facility age and market concentration also positively affect environmental R&D. These findings suggest that the maturity level of ISO 14001 is an important factor influencing the investment in environmental R&D. (C) 2013 Elsevier B.V. All rights reserved.

We analyze the cost-effectiveness of electric utility ratepayer funded programs to promote demand-side management (DSM) and energy efficiency (EE) investments. We specify a model that relates electricity demand to previous EE DSM spending, energy prices, income, weather, and other demand factors. In contrast to previous studies, we allow EE DSM spending to have a potential long-term demand effect and explicitly address possible endogeneity in spending. We find that current period EE DSM expenditures reduce electricity demand and that this effect persists for a number of years. Our findings suggest that ratepayer funded DSM expenditures between 1992 and 2006 produced a central estimate of 0.9 percent savings in electricity consumption over that time period and a 1.8 percent savings over all years. These energy savings came at an expected average cost to utilities of roughly 5 cents per kWh saved when future savings are discounted at a 5 percent rate.

This paper examines whether voluntary actions can lead to manufacturing sector investment that reduces environmental impact. Our approach relies on unique firm-level panel data. First, we investigate the effects of the Keidanren's (Japanese Business Federation) voluntary action plans (VAP) on investment in energy efficiency and environmental preservation. We also consider the type of VAP used by a firm, whether absolute or relative targets. We conclude that firms with absolute targets are more likely to invest in energy-efficiency processes than those with relative targets. Our simulation confirms that the use of absolute targets can increase investment in energy efficiency by 7%. Hence, we confirmed that voluntary action plans with absolute targets are effective in increasing investment related to energy efficiency. Second, we examine whether VAP promotes investment in low-emission processes at the expense of productive investment. We conclude that VAP promotes investment in energy efficiency and protecting the environment by reducing productive investment. Finally, our results did not verify the existence of a liquidity constraint for emission reduction investment for large firms. © 2011 Springer.

Using Japanese facility-level data, we estimate the effects of ISO 14001 certification on the promotion of more advanced practices, namely green supply chain management (GSCM). Our results show that ISO 14001 promotes GSCM practices. Facilities with environmental management systems (EMS) certified to ISO 14001 are 40% more likely to assess their suppliers&apos; environmental performance and 50% more likely to require that their suppliers undertake specific environmental practices. Further, government programs that encourage voluntary EMS adoption indirectly promote GSCM practices. These programs increase the probabilities that facilities will assess their suppliers&apos; environmental performance and require suppliers to undertake specific environmental practices by 7% and 8%, respectively. Combined, these findings suggest that there may be significant but previously unnoticed spillover effects of ISO 14001 and government promotion of voluntary action. (C) 2010 Elsevier Inc. All rights reserved.

This paper reviews policy measures to deal with the environmental problems and energy conservation in Japan and the United States. First, we examine Japan's policy toward air pollution. Second, we discuss the effects of energy conservation policies in the consumer sector in Japan and the United States. Third, we review the voluntary approach to ameliorating environmental problems that have recently garnered attention. By reviewing the studies evaluating these policies, we find that the policies have been mostly successful in both countries. We conclude the paper by discussing the necessity for the future research in applying these policies to local cities in Asian countries.

This paper examines the vehicle type regulation that was introduced under the Automobile Nitrogen Oxides-Particulate Matter Law to mitigate air pollution in Japanese metropolitan areas. The vehicle type regulation effectively sets the timing for vehicle retirement by initial registration year and type. However, there was no consideration of cost or efficiency in choosing the timing of retirement. We solve an optimal problem to maximize the social net benefit under the current framework of the vehicle type regulation. The analysis finds that the net benefit can more than double if the optimal retirement timing is chosen. Further, we find that even a simple alteration of the retirement timing can increase the social net benefit by 13%. (C) 2008 Elsevier Ltd. All rights reserved.

Using Japanese facility-level data from an OECD 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. (C) 2008 Elsevier Inc. All rights reserved.

This paper investigates the impacts of environmental regulations on technological innovation using a unique data set of Japanese firm-level environmental R & D expenditure. First, from descriptive statistics, we find that environmental R & D increased from 1991 to 2001. The two sources of the expansion are confirmed: 1) more firms investing in environmental R & D and 2) increase in the average environmental R & D expenditure per firm. Second, we empirically test the "weak version" of the Porter Hypothesis, defined by Jaffe and Palmer (1997). We find that environmental regulation, measured by environmental conservation investment, increases the probability of investing in general R & D and environmental R & D. In contrast, the expenditures of R & D and environmental R & D, standardized by sales, are not found to be affected by environmental regulations. The stringent environmental regulation, however, increases the ratio of environmental R & D to general R & D expenditures. Thus, we find a supporting evidence of the "weak version" of the Porter Hypothesis.

This paper investigates electric utility behavior under the SO2 allowance market in Phase I. The probit model shows that cost recovery rules promoted high sulfur coal usage for utilities located in states with coal mines. A simulation shows that protecting these local coal industry increased high sulfur coal usage by 50%. Another finding is that the uncertainty of PUC regulations pushed utilities from the allowance market toward fuel switching/blending. Since the second effect was stronger than the first, the overall PUC regulations contributed to an unexpectedly low allowance price at the beginning of Phase I. (C) 2002 Eisevier Science (USA).