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Japanese Case Studies and Lessons for Developing Countries

Adriana Bianchi,
R Cruz, and Masahisa Nakamura

WORLD

BANK

INSTITUTE

Promoting knowledige andi learning for a better worldlWBI LEARNING RESOURCES SERIES

Local Approaches toEnvironmental ComplianceJapanese Case Studies andLessons for Developing Countries
Edited by
Adriana Bianchi
Wilfrido Cruz
Masahisa Nakamura

The World Bank
Washington, D.C.

© 2005 The International Bank for Reconstruction and Development / The WorldBank
1818 H Street, NW
Washington, DC 20433
All rights reserved.
1 2 3 4 08 07 06 05
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Contents
Foreword
Prefacev
vii

Acknowledgmentsix

About the Editors and Contributors

xi

Environmental Compliance: Case Studies from Japanand Their Relevance to East Asian Developing Countries
Adriana Bianchi, Wilfrido Cruz, and Masahisa Nakamura

1.

2.

1

Successful Air Pollution Control in Japan: History and Implications
Ryo Fujikura

3.

Water Management Standards and Environmental Compliance53
in Japan at the National and Prefectural Levels
Thomas J. Ballatore, Victor S. Muhandiki, and MasahisaNakamura

4.

Local Efforts to Control Water Pollution: Case Study69
of a Metal-Plating Industry in the Shiga Prefecture
Nakamura
Victor S. Muhandiki, Thomas J. Ballatore,and Masahisa

5.

Economic Incentives to Promote Compliance:
89
Japan's Environmental Soft Loan Program
Ueta
Akihisa Mori, Soo Cheol Lee, and Kazuhiro

6.

The Link between Compliance at the Local Level and Global
City
Environmental Goals: Waste Reduction Measures in Nagoya
Kazuhiro Ueta

7.

Conclusion: Lessons Learned on the Importance of Local Initiatives
Adriana Bianchi, Wilfrido Cruz, and MasahisaNakamura

Appendix A. Summaries of Reviews of Japanese Case Studies

iii

121

19

101

115

Preface
improvements to help control problems ofJapan has been a leader in the use of technologicalprogress in improving air and water quality andurban and industrial pollution. However, Japan's
within a certain policy, institutional, and local
in managing solid and hazardous wastes occurredThus, the focus of this book, and ofcontext that made possible these technological improvements.
and in Kusatsu in 2002, is on local participathe World Bank Institute (WBI) workshops in Manila
than on technological improvements per se.
tion, economic policy, and institutional issues, rather
factors that contribute to effective environThe case studies and reviews emphasized the following
the local level:mental regulation and compliance mechanisms at****

the involvement of local authorities;
and private industry;
the influence of community-based constituencies
andcapacity;
the availability of technology and management
to industry.
supportthe role of favorable economic conditions and financial

society help explain Japan's success in
In addition, a number of characteristics of Japanese
underlying characteristics are highly relevant
urban environmental management. (Some of thesecommunity widely encourages them, apartfor developing countries. Indeed, the development
Such factors include decentralizafrom their beneficial impact on environmental considerations.)
local government; a competent labor force; ation of decisionmaking; an efficient and democraticpress. Although they are necessary condiwell-educated and articulate population; and an active
factors are not directly in the scope of envitions for sustainable environmental management, theseresource persons focused on howronmental agencies. Thus, the reviews by developing-country
and how the environmental strategies inJapanese approaches accommodated these other factorsof Japan.
their own countries could benefit from the experienceof the Japanese experience that are relChapter 1 of this book synthesizes the key elements
political, economic, and institutional constraints
evant for developing countries. In particular, thediscussed. Differences and similarities beto environmental compliance and enforcement are
in developing countries are explored. Chaptween Japan's past experience and current conditions
Japan has managed air, water, and solid
ters 2 through 6 present case studies that detail howof the Japanese experience to East Asianwaste problems. Conclusions regarding the relevancein the final chapter.
developing countries and "emerging lessons" are presentedvii

Acknowledgments
who helped in the preparation of this book.
The editors and contributors are grateful to everyone
Bank Institute capacity-building program
The publication effort was part of a broader World
Regulation, Compliance, and Enforcement,"
entitled "Practical Approaches to Environmental
government.
which received financial support from the Japanese
resource persons who served
developing-countryof
We acknowledge the important contributions
D. Almendras, Nam Thang Do, Rosa Vivien
as reviewers for the Japanese case studies: Ruben
Budi Widianarko, and Jianyu Zhang.
Ratnawati, Indra Mufardi Roesli, Supat Wangwongwatana,
A. We also thank the numerous individuals,
Summaries of their reviews are presented in Appendix
and environmental agencies, who assisted in theboth from the World Bank and other development
the following: Pamela Gallares-Opus, regional
preparation of these program activities, especiallyfor Local Environmental Initiatives (ICLEI),
director for Southeast Asia of the International Council
Lake Environment Committee (ILEC).
and Akiko Murano of the secretariat of the International
John Didier, and Chiharu Ima of the WorldWe are grateful to Laura Tlaiye, Michele de Nevers,
phases of preparation and completion of WBI's
Bank Institute for their support during the various
Regulation, Compliance, and Enforcement."
program on "Practical Approaches to Environmental
Ministry of the Environment, we are especiallyWith regard to our cooperation with the Japanof the Global Environment Bureau of thegrateful to Kazuhiko Takemoto, deputy director-generalproject. We also thank Michio Hashimoto, who
Ministry, for his help as an external adviser on thisin Japan, for his helpful and insightful comis widely regarded as the father of environmentalismof the Environment Agency in Japan and is now
ments about the case studies. He was the first head
Center in Tokyo.
the president of the Overseas Environmental Cooperation
were received from Hisakazu Kato andDuring the publication phase, constructive suggestions
We acknowledge the help of Adelaida Schwab for
Colin Rees, the external reviewers for this book.
for her editing of the manuscript, and WBI
her technical reviews of the papers, Barbara de Boinville
Schwartz ) for providing excellent administrastaff (Nelvia Diaz, Teresa Argueta, and Maria Rosative support during the various phases of the program.
are the sole responsibilities of the editors.
Any remaining omissions or errors in the bookix

About the Editors and Contributors
THOMAS J. BALLATORE

Researcher
Research DivisionInternational Lake Environment Committee
Kusatsu, JapanADRIANA BIANCHI

Senior Institutional Development Specialist
World Bank InstituteWashington, D.C.
WILFRIDO CRUZ

Consultant
World Bank InstituteWashington, D.C.
RYo FUJIKURA
Professor
Faculty of Humanity and Environment
Hosei University
Tokyo, Japan
Soo CHEOL LEE
Assistant Professor
Faculty of Economics
Nagoya Gakuin University
Nagoya, Japan

AKIHISA MORI

Professor
Graduate School of Global Environmental
Studies
Kyoto University
Kyoto, Japan
VICTOR S. MUHANDIKI

Researcher
Research DivisionInternational Lake Environment Committee
Kusatsu, Japan
MASAHISA NAKAMURA

Director
Lake Biwa Research InstituteKusatsu, Japan
KAZUHIRO UETA

Professor
Graduate School of Economics and Global
Environmental Studies
Kyoto University
Kyoto, Japanxi

Environmental Compliance:
toEast Asian Developing Countries
Adriana Bianchi, Wilfrido Cruz, and Masahisa Nakamura

in developing countries? The
Why have environmental regulations been so difficult to enforce
on environmental manageconventional answer, often repeated since the Rio de Janeiro summit
environmental protection;
for
exist
ment more than a decade ago, is that the necessary regulations
what is absent is implementation.
Constraints to Environmental Compliance and Enforcement
ment in developing countries
The principal obstacles to environmental compliance and enforce
As demonstrated in therevolve around constraints that are political, economic, and institutional.
and commitment at theJapanese case studies, effective responses have often required consensus
instances when implementalocal government and community levels. Although there are many
the underlying contechnology,
dedtion is hindered by lack of technical skills or lack of the nee
straints are rarely technological.
in Japan is merely
In fact, the technological facet of environmental compliance and enforcement
this itipi ar e political, ecothe itip of the iceber gJ As the case studies demonstrate, underlying
and community and prinomic, and institutional factors. In Japan local government r esources
on ways to implement
vate industry resources have been mobilized in the search for agreement
remedial action.
the local initiatives to impleThe constraints to environmental compliance and enforcement, andng the relevance of Japanfs
ment pollution management, constitute the framework for analyzi
first type of constraint istheexperience to developing countries in this book. As noted earlier,resist environmental protecpolitical. Strong vested interests compete with each other and often
are externalities; benefits fromtion measures. Almost by definition, environmental problems
group, but the damages are
emissions (or overexploitation) accrue to an individual or to a small
competing priorities, envir onborne by society at large. With regard to economic constraints andto promotion of industrial
mental management historically has played a minor r ole comparedlate, and even when they weredevelopment in many countries. Thus, regulations in Japan wereenacted, implementation was limited.
weak compared to trade
In most developing countries, environmental agencies are relatively
constraints, enviinstitutional
se
the
of
and industry agencies and agricultural agencies. Because
to implement
consensus
build
toronmental agencies in most developing countries are unable
to envihostileareand many
standards. Government agencies disagree on what should be done,a sumsection,
as the nextronmental regulation. Japanfs experience speaks to these challe nges,
mary of the main findings of the case studies, makes clear.

I2

Local Approaches to Environmental ComplianceJapan's Experience in Addressing Environmental Constraints
In Japan communities and private sector initiatives have played a significant
role in promoting
environmental enforcement and compliance. The Japanese experience underscores
the importanceof fostering community and private sector involvement and a clearer understandingof the role ofgovernment at the local and national levels. At the national level, an appropriate
legal and regulatory framework is required. It is also important for the policy and economic
incentives to be conducive to environmental management. At the local level, there is a need to
improve the capacity of
local government units and their pollution management agencies. Lastly,at the community or site
level, private industry and community groups need to be better informed
and organized to promote proactive implementation of environmental management programs.
The experience of Japanis especially relevant in demonstrating the power of local communities
to effect change.
This section presents the main findings of the five case studies presented
in Chapters 2 through6. The first case study describes the evolution of air pollution control
in Japan. It focuses on local
management efforts in selected cities. The second case study is on waterpollution management
at the national and local (or prefectural) levels. It highlights the developmentof water quality
management at Lake Biwa, Japan's most important lake, locatedin the Shiga Prefecture. This
discussion of water pollution programs at a broad level is complemented
in the next chapter by
the specific example of water pollution control by an individual
factory. The intent of this thirdcase study is to highlight the extent of remediation at the private industry
level. The last two casestudies-one on the implementation of the "soft loan" program to financeindustrial investment
in pollution control and the other on the contribution of a city's solid
waste program to global
environment goals-discuss economic incentives that can support
environmental protection
measures under changing environmental concerns for industry andlocal governments.
Successful Air Pollution Control in Japan: History and Implications
The case study by Ryo Fujikura (see Chapter 2) discusses Japan's legislative
policies to address
air pollution caused initially by the use of coal in factories in the
1960s and subsequently by thefuel switch to heavy oil, which led to sulfur oxide pollutants. Japan's
rapid economic growth in
the 1960s was achieved by the country's promotion of heavy industries.
This economic expansion
was attained, however, with limited consideration for the environment.
Industrial activities caused
serious air pollution in the country's major urban areas. Then, in thelate 1960s and early 1970s,
protests by citizens forced government officials to shift their focus
from mere "economic development" to "pollution control." National policy was adjusted toemphasize antipollution measures, and this marked the beginning of the period known as "Japan's
Pollution Miracle."
LEGISLATION FOR

POLLUTION CONTROL. During the 1930s, Osaka was
known as the "City of
Smoke." Its very high levels of coal dust falls originated from factories
in and around the city.
Although two important regulations were passed at that time inresponse to citizens' protests, theweak regulatory enforcement, because of strong opposition fromlocal businesses, and a lack ofantipollution technology resulted in persistent pollution problems
in Osaka. In Tokyo andKitakyushu, dust falls and soot pollution from coal use in factories
and homes were also creating
environmental problems. Unlike in Tokyo, where residents strongly
petitioned the local government to take appropriate measures to address the air pollution problem,in Kitakyushu residents
regarded the black smoke as a "symbol of economic prosperity."
During the reconstruction era after World War II, major cities (suchas Tokyo, Fukuoka, andUbe) passed ordinances for controlling coal dust and soot emissions
from factories. These ordinances, like the regulations passed in Osaka, were largely ineffective
for the same reasons. At
the national level, the Ministry of Health and the Ministry of International
Trade and Industry

Environmental Compliance: Case Studies from Japan and Their Relevanceto East Asian Developing Countries

3

account the health implications(MITI) collaborated to draft a pollution control bill that took into
blocked the introduction of thebusinesses
local
of poor air quality for local residents. However,bill to the Diet.
energy source from domestic
During the 1960s, industries throughout Japan changed theireconomic events influenced thiscoal to heavy oil imported from the Middle East. Two main
coal prices and unstable supply)change: strikes by coal mine workers (which resulted in higher
shift to heavy oil from coal shifted
and the development of oil fields in the Middle East. The
pollution concerns from particulates to sulfur oxides.
Control. Like the previous
In 1967 the National Government passed the Basic Law of Pollution
level, this bill accommodated thelegislation for soot and smoke control passed at the national
was to be undertaken "in harmony
interests of the business sector. Environmental management
influence of the business community
with sound industrial development"-reflecting the strong
control measures. Nevertheless,on government decisions to implement less stringent pollution(EQSs) for sulfur oxides, which
the 1967 law established ambient environmental quality standards
years.
became critical in enforcing pollution control in Japan in succeedingby Prime Minister E. Sato,convenedwas
SessionDiet
During the 1970s, the Pollution Controlof them established the Environand fourteen environmental conservation bills were passed. One
environmental management Agency of Japan, and the controversial provision harmonizing
the 1967 law. These legislative
ment with sound industrial development was deleted fromenvironmental awareness and didevelopments occurred in response to citizens' growing
In some of Japan's major cities (forminishing support for the Liberal Democratic Party (LDP).
Socialist Party members to reexample, Yokohama, Tokyo, and Kawasaki), citizens elected
a better job in protecting thedoplace LDP incumbents, believing that leftist politicians would
environment.
Yokohama, Kitakyushu,
LOCAL APPROACHES TO COMPLIANCE AND ENFORCEMENT.

Osaka,

approaches to control pollution
and Yokkaichi, four major industrial cities in Japan, used different
based on pollution control
from sulfur oxides. Yokohama City adopted an innovative approachthrough a combination of citizens'agreements. Kitakyushu City achieved air pollution reduction
success in pollution control was based
protests and pollution control agreements. In Osaka City
local residents, and the local
on (a) traditional cooperation involving the municipal government,
individual factories by thetogiven
business community and (b) the administrative guidance
resorted to direct pollution regumunicipal government. In Yokkaichi City the local government
The actions taken by four cities
lation after other efforts failed to reduce emissions significantly.
using local partnerships and common
described below illustrate both the limits and the value ofinterests to manage pollution.
defeated the incumbent mayor, aYokohama City. In 1964 Ichio Asakata of the Socialist PartyAt the time local residents weremember of the conservative Liberal Democratic Party (LDP).
and local government levels,
convinced that the pro-business policies of LDP, both at the national
there was a plan to establish
were responsible for polluting the environment. Before the election
Company (EPDC).
Development
Powera new coal-fired power plant at Isogo by the ElectricElectric ComTokyo
from
land
The national government required that EPDC should purchase
the approval
effect,sale to takepany Ltd. as the site of the proposed power plant. For the land
plant was a national policy, Mr.
of the mayor was needed. Since the building of the coal power
constitute a new tax base for the
Asakata could not oppose the plan. The power plant wouldof local coal miners, supporters
local government. Its construction also would be in the interest
protests by local residents whoof the Socialist Party. Complicating the mayor's dilemma were
had become more vocal about their environmental concerns.
legal right to purchase land fromThe conflict was resolved when the mayor granted EPDC theagreements (PCAs). Under theseTokyo Electric, and EPDC, in exchange, accepted pollution control

4

Local Approaches to Environmental Complianceagreements, the municipal government required EPDC to (a) use low-sulfur
coals from the Hokkaido
mine in new power plants; (b) adopt the best available technologies
to reduce sulfur oxides emissions; and (c) permit inspections by municipal government officials.
In 1970 actual sulfur oxides
emissions in Yokohama City were estimated at 60 tons per day,down from an estimated 300 tons
per day in 1966.
Kitakyushu City. For years Kitakyushu residents had regarded
the black smoke coming fromthe city's factories as a symbol of economic prosperity. The majorityof local residents were factory workers or relatives of factory workers; many residents
were employed by Yahata Works,
Japan's largest iron mill. (Yahata Works later became part of the
Nippon Steel Corporation.)
Local residents had kept quiet over a long period of time about
the growing deterioration of
air quality in Kitakyushu City. However, in the mid-1960s, local
women organized groups tostudy pollution problems in their area. They did not directly
challenge the factory owners, sincethese factories were their families' means of livelihood, butthey petitioned the municipal government to enforce antipollution measures. These women backed
their petitions with the resultsfrom their study, and they reported their study findings to themass media. These actions helped
inform the general public about the health hazards of air pollution,and they were essential inwinning support from the municipal government.
Pollution became the most important issue in the 1971 mayoralty
election. Fearful of losing
popular support, the incumbent mayor of Kitakyushu City, G.
Tani, undertook drastic pollution
control measures: in 1970 he upgraded the eight-member Pollution
Control Division to a twentytwo-member Pollution Control Department, and in 1971 he upgraded
the department to a fortyseven-member Pollution Control Bureau. Local industries
supported the mayor because they
were convinced that, if he was defeated in the election, his leftist
replacement would institute
more stringent measures.
In 1970 the Fukuoka Prefectural Government, the Kitakyushu
City Government, and majorindustries (thirty factories emitting 97 percent of the city's sulfur
oxides) established the Joint
Committee on Air Pollution Prevention in Kitakyushu. To meetnational environmental standards by fiscal 1973, the municipal government concluded
pollution control agreements with
fifty-four factories based on agreements reached at the Joint Committee
meeting.
There were other events that led to considerable reductions insulfur oxides emissions both at
the national and local levels. The oil shocks of the 1970s had
forced Japanese industries to consider energy conservation measures, and by 1974 flue gas desulfurization
technology was practicable. In Kitakyushu City about 42 percent of reductions in sulfur
dioxide emissions in 1990 were
due to switching to low-sulfur fuels in industries, 33 percent
to energy savings and recycling, and25 percent to flue gas desulfurization.
Osaka City. Through the traditional cooperation between themunicipal government and local
communities, the residents of Osaka had a "sense of ownership"of the city. Local residents andbusinesses looked upon the municipal government as theirown organization for managing theircommunities. Consequently, they provided continuous financial
donations to the city. The municipal government, in turn, provided support to local industries(for example, soft loans, especially to small-scale and medium-scale industries). This
traditional cooperation between local
government and local communities made the enforcement ofindustrial pollution control measures in Osaka City effective.
Through support from the municipal government, local businesses
established the Soot andSmoke Prevention Cooperation Association at the ward levelin 1958, and two years later they
established the Osaka Alliance of the ward-level associations.
Both organizations conducted aninvestigation into pollution control technologies and raised environmental
awareness within thebusiness community. Based on these efforts, the municipal government
was able to provide administrative guidance to local factories without having to resort
to legal requirements.

Enviromnncittal Compliance: Case Studies from Japan and Their Relevanice toEast Asian Developing Countries

5

Guidance Plan
In turn, the municipal government prepared for public review an Administrative
controlling air pollution,
based on scientific data. Local industries understood the importance offrom government
and they prepared their own antipollution plan. After consolidating information
for individual
targets
reduction
emissionand industry sources, the municipal government issued
succeeded ingovernment
municipal
thefactories and facilities. It was through this process that
reducing air pollution in Osaka City.
the largest petrochemical
Yokkaiclhi City. In the mid-1950s, Yokkaichi City was the site of
was extremelycomplex in Asia. Pollution in residential areas in the vicinity of the complex
The municipal
there.
reported
were
asthmaofserious, and in the early 1960s, numerous cases
to provide
yenmilliontenofgovernment's initial response was to allocate a special budget
theorganized
ministry
medical assistance to asthma patients. In 1963 MITI and the healthadoption by petrochemical
Kurokawa Committee to identify pollution control measures forwould entail a switch tothatmeasuresany
factories. Since these factories strongly opposed
smoke stacks to dishigherof
low-sulfur fuel, the committee recommended the installation
recommendation. By
thisperse emissions. The Air Pollution Control Law of 1967 implemented
stacks as high as 100
1967 almost all of the factories in the petrochemical complex had installed
to increase. Some of themto 200 meters; the number of asthma patients, however, continued
court ordered the factories
sued the factories for compensation for health damages and won. The
to pay the victims over 88 million yen.
and because of the
Because of the limited impact of the preceding pollution control measuresin the early 1970s tocourt decision, the prefectural government required petrochemical factories
based on the Mie Precut their sulfur oxides emissions. Total emissions control was introduced
concentrationtarget
interimanfecture Ordinance for Pollution Control. This measure included
a final target
1974;
byannual average of 0.025 parts per million (ppm) of SO 2 -to be reached
not to exfactoryat eachconcentration (0.017 ppm) to be reached thereafter; fuel consumption
and expansion of existing
ceed the 1973 consumption level; control of the sulfur content of fuel;the prefectural governby
approval
tosubjectbetofacilities and/or establishment of new ones
emissions in Yokkaichi
oxidesulfurment. As a result of the total emissions control measure, annual
City declined from over 100,000 tons in 1971 to 17,000 tons in 1975.
WaterManagement StandardsandEnvironmentalCompliancein Japanat the Nationaland PrefecturalLevels
Nakamura (see ChapThe case study by Thomas J. Ballatore, Victor S. Muhandiki, and Masahisa
national and local (preter 3) focuses on the evolution of water quality standards in Japan at theJapan and legislafectural) levels. It also reviews the major causes of water pollution in postwar
from industrial
discharged
tion to resolve the water pollution problems in the country. Phosphorous
has been
Prefecture,sources, causing eutrophication of the Lake Biwa watershed in the Shiga
industrial
388
data fromcontrolled successfully by efforts at the prefectural level. Using effluent
effluents well below
phosphorous
their
reducedhave
firms
dischargers, the authors analyze why
required standards.
in postwar Japan are
and resource use. Fromhigh population growth, rapid industrialization, and changes in land
110 million. Japan became
1945 to 1975, Japan's population increased from 70 million people toper square kilometer.
persons
340
withworld,
thethe fourth most densely populated country ingrowth in its
economicofrates
highestIn the years 1955 to 1973, Japan experienced some of thefavorable
andrate,
savings
history. Massive increases in labor productivity, a high domestic
Rapid
percent.
10
overofinternational economic conditions contributed to annual GDP growth
CAUSES OF WATER POLLUTION. The three main causes of water pollution

6

Local Approaches to Environmental Complianceindustrialization in the early postwar period, however, had led to a dramatic increasein environmental pollution.
Industrialization and population growth resulted in a shift from traditional lifestyles
to moreconsumption-oriented lifestyles. Increases in per capita consumption and waste
output, and drastic changes in resource use, had major adverse impacts on the environment. For
example, in agricultural production the replacement of "night soil" by increased application ofsynthetic fertilizers-and the consequent discharge of night soil into waterways and offertilizer runoff intorivers-seriously degraded Japan's water quality
POLLUTION CONTROL AGREEMENTS (PCAs). Public discontent with the adverse
effects ofpollution markedly increased as the population's income and living standards
rose sharply. Indeed, public discontent was the most important factor to influence Japan's legislative
regulations
and judicial measures for addressing environmental pollution. Pollution
at the local level was
dealt with successfully through pollution control agreements that involved
participation by local
residents, the business community, and local government officials. PCAs are
the direct result of
increased public awareness of the negative health effects of environmental pollution.
As noted in
the previous case study, the first PCA was between the city of Yokohama andan electric company;
it was signed in 1964. Adoption of PCAs became widespread in the other major
cities of Japan.
There are several reasons, among them cultural mores, limited space to relocate
businesses, as wellas public shame and community pressure on polluters. Together these influences
contributed to thesuccess of PCAs in abating pollution at the local level. The total numberof PCAs reached about
30,000 by the late 1990s.
Japan's water quality for the period 1971 through 2000 was analyzed separately
for toxic pollutants-for example, lead, arsenic, cadmium, mercury, and cyanide-and for nontoxic
pollutantsfor example, biological oxygen demand (BOD) and chemical oxygen demand(COD). Nonconformity with ambient standards for discharges of regulated toxic substances fromindustries decreased
significantly from 1971 to 1992. By 1992 the rate of nonconformity had fallen
below 0.1 percent formost toxic substances. However, there was a sudden increase in nonconformity
in 1993 due to (a)the addition of new substances to the regulated list and (b) the general tighteningof standards.
Japan has been less successful controlling nontoxic pollutants than in controlling
toxic pollutants. Conformity with ambient standards for BOD and COD has not improved
significantly sincethe 1970s, especially regarding the water quality of Japan's lakes andreservoirs. The Shiga
Prefecture, located in central Japan and surrounding Lake Biwa, is an exception.
SHIGA PREFECTURE. By law, the ambient concentration of phosphorous(P) is required to be
below 0.01 milligrams per liter (mg/l), and effluent standards have beendeveloped (both at thenational and prefectural levels) to control industrial and municipal point
sources. The Shiga Prefecture imposed strict measures to improve water quality in Lake Biwa.
For example, it banned
P-containing detergents, it extended the collection area of the seweragesystem, and it re-introduced natural reed beds around the lake.
The Water Pollution Control Law of 1970 is the statutory basis fornational effluent standards. This law sets a minimum standard of environmental protection,
but it contains provisions that allow prefectural governments to set stricter standards asneeded. In the case of
Shiga Prefecture, the national effluent standards were inadequate. In 1972
the Prefecture implemented an ordinance imposing stricter levels on COD, BOD, and suspended
solid (SS) discharges from industrial facilities. In 1979 the Shiga Prefecture also passed
the Eutrophication
Prevention Ordinance (EPO) to regulate discharges of nitrogen and phosphorous.
The Water Pollution Control Law sets concentration-basedstandards for pollutants
like phosphorous; however, eutrophication of water bodies depends on nutrient load.
Consequently, the Lake

Environmental Complianice: Case Studies from Japan and Their Relevanceto East Asian Developing Countries

7

the statutory basis for loadLaw of 1984, which was modeled after Shiga's EPO of 1979, codifies
based standards to control eutrophication.
quality throughout
Spot inspections and self-monitoring are the main ways to monitor effluent
office andgovernor's
thebyJapan. Water samples are taken during spot inspections conductedof theviolationarevealsent to a laboratory for nutrient analysis. If the results of the spot inspection
noncompliance. Self-monitoringstandards, the discharger is given the opportunity to explain its
warning" is issued. Otherwise,"lightasmall,
isdata may be used in the process. If the violation
stringent "administrative meamoreor
improvements in production technology may be required,sures" maybe imposed.
(food, textile, chemical,
An analysis of spot inspections and monitoring data of 388 dischargers
had phosphorous effluand other industries) in Shiga Prefecture showed that most dischargers
this interesting finding.
forreasons
ents well below allowed levels. There are several possible
factor into their effluent
to
One is that variability in process efficiency has encouraged dischargers
may have made investabatement decisions a margin of safety. Another is that some dischargers
may have bought equipment inments in abatement equipment that is larger than needed. Others
Finally, companies' sense of good
discrete sizes for more flexible control of effluent discharge.
levels.
will may have induced voluntary reduction of effluent
Local Efforts to Control Water Pollution:
A Case Study of a Metal-PlatingIndustry in the Shiga Prefecture
Masahisa Nakamura (see ChapThe case study by Victor S. Muhandiki, Thomas J. Ballatore, andlevel. Its focus is on the pollution
ter 4) explores in detail pollution control decisions at the local
operating in the Shiga Prefecture
control history of RK Excel Co., Ltd., a metal-plating industry
company, such as RK Excel, to makesince 1951. The authors assess what motivates an individual
appear to have a less importantthe environmental decisions it does. Formal laws and regulations
their environmental perforrole than community pressure in influencing industries to improve
environmental values throughout
mance. Community pressure, within the context of changing
has been the motivation for RK
Japan and expanding markets for pollution control equipment,
Excel's decisions to reduce its effluent discharges into the environment.
6
metal-plating operations,
Hexavalent chromium (Cr +), the main pollutant from RK Excel's
and ingested. RK Excel's
has severe toxic and carcinogenic effects if released into the environment
are less toxic metals.
by-products, such as reduced chromium (Cr3+), copper, and nickel,
quality control since 1951,
Although RK Excel has implemented various methods of effluentof Cr6+ to Cr3 +, coagulationits basic processes have remained virtually unchanged: reduction
time are the extent and quality of
sedimentation, and pH neutralization. What has changed overpollution control activities
these methods. Following is a chronological account of RK Excel's
since 1951.
regulations were in operation.
6
to control the discharge of Cr +.
The main purpose of the company's antipollution activities waswas controlled effectively.
RK Excel used simple earthen pits as reactors, and Crs+ effluent
PHASE I: 1951-58. In the first phase no formal environmental

declined in fields using water from apond were also adversely affected.
thepond receiving inflows of RK Excel's effluent. Fish in
introduced improved limeIn response, RK Excel took two important actions. First, in 1959, it
for damages. These actions
dosing and pH neutralizing systems. Second, it compensated farmers
ostracized by the commuwere done to maintain good relations with the community. Fear of being
nity was crucial in fostering improved environmental performance.
PHASE II: 1959-69. During the late 1950s, rice output

8

Local Approaches to Environmenital Compliance

PHASE III: 1970-72. With the increase in the public's environmental
consciousness inJapan in the 1960s, and with the new leadership of the country's "pro-environment"
prime minister, K. Tanaka, RK Excel initiated a major upgrade of its pollution control
processes in 1970. For
example, it abandoned use of open pits, constructed coagulation-sedimentation
tanks with improved pumps and meters, and further upgraded its pH neutralization
system. Markets for pollution control equipment were rapidly developing. At the national level,
the Water Pollution Control
Law was enacted in 1970. RK Excel, however, did not attribute its
decision to upgrade its processes to this legislation but rather to the growing public awarenessof environmental issues.
PHASE IV: 1973 TO PRESENT. RK Excel implemented a fully automatedpollution control system

in 1973. (Most factories in Japan started automating in the early 1970s.)
At the local level, stricter
regulations were implemented under the 1972 Pollution Control Ordinanceof Shiga. RK Excel,
however, changed its processes to bring the company in line with generalindustry practice. Pollution control efforts were undertaken primarily to maintain the best practiceat the time.
In 1976 RK Excel and the residents of Yagura town signed a pollution control
agreement. In lateMarch residents living one kilometer from the RK Excel factory complainedof severe skin irritation for
more than a year. They also noted that the color of water pumped fromtheir wells had turned yellow,
and they suspected that the well water was contaminated. Analysis showedthat the water wascontaminated with Cr6 +,at a concentration of 8.2 milligrams per liter. Contamination
was, therefore,
very high since the drinking water standard was 0.05 milligrams per liter.
This finding was immediately reported to the Pollution Control Departmentof the Shiga Prefecture Government. Following its own investigation at the factory, theShiga Government established that the source of pollution was the leakage of hexavalent chromiumfrom the concrete
floor of a chrome-plating tank in the factory. Soil below the tank wasalso contaminated. The
Shiga Government required the factory to (a) terminate its metal-platingprocesses; (b) replace
the broken chrome-plating tank; (c) treat all the polluted soil within its
compound; and (d) pumpand treat groundwater from the contaminated wells. The treatment andmonitoring of groundwater quality were to continue until the concentration of hexavalent chromium
met the drinking
water quality standard of 0.05 milligrams per liter. To date, RK Excel
is still undertaking thepump-and-treat operation. Since 1977 it has cost RK Excel between 300
million and 400 million
yen to treat and monitor groundwater quality.
RK Excel complied with the foregoing orders set by the Shiga Prefecture
Government; it also
did the following:* Paid the cost of switching from groundwater to piped water for Kusatsu
City residents
whose well water had been contaminated.
* Covered the costs of medical examination and treatment of affected
residents.
* Reached an out-of-court settlement with Yagura residents in mid-September
1976 by agreeing to pay a total of 34 million yen as compensation.
This case study highlights three key points. First, in controlling industrial
pollution, community pressure is extremely important. Second, institutional and government
capacity at the local
level must be developed. Third, pollution prevention is easier andless costly to implement thanpollution remediation.
Economic Incentives to Promote Compliance:Japan'sEnvironmental

Soft Loan Program
Compliance with and enforcement of environmental regulations areoften hindered by a lack of
economic resources or incentives. The case study by Akihisa Mori, Soo
Cheol Lee, and Kazuhiro

Environmental Complianice: Case Studies fromi Japan and

Their Relevance to East Asian Developing Countries

9

incentive, the environmental soft loan
Ueta (see Chapter 5) examines how one form of economic
policies in Japan.
program, contributed to the overall system of environmental
soft loans on firms' investenvironmentalofeffects
The case study focuses on (a) the incentive
for an environmental soft loan
ments in pollution control equipment and (b) the preconditions
reduce the cost to firms of complying with
program that is effective. The program was created tomobilizes savings at low cost (fortighter environmental regulations. The Central Government
the funds to public financial institutions
example, postal savings, national pension) and allocatespostwar reconstruction period, soft loan
for lending at preferential rates of interest. During theas electricity, steel, coal mining, and shipfunds were used to finance strategic industries, sucha major public concern, the use of soft loansping. In the 1970s, when industrial pollution became
investments.
was expanded to include financing pollution abatement
funds through the environmental
lending
inengagedThe major public financial institutions(JDB), the Japan Financial Corporation forsoft loan program are the Japan Development Bank
Corporation (JEC). Together these three
Small Business (JFCSB), and the Japan Environment
soft loans disbursed in 1975. JDB
institutions accounted for 95 percent of the total environmental
JFCSB and JEC to small and medium-sized
provides environmental soft loans to big businesses,
to 2 percent lower than the long-term
enterprises (SMEs). The lending rate is usually set 1 percent
lower for SMEs. JDB and JFCSB
percent
to 3
prime interest rate for big firms, and about 2 percent
the lending rate lower thansets
rate; JEC
generally set a lending rate higher than the borrowing
small and medium-size enterprises.
the borrowing rate to reduce the investment cost for
applied over the repayment period of a
The "incentive" effect of the preferential interest rate
firm's pollution abatement investment, thesoft loan can be estimated based on the amount of the
between the open market rate prevailingloan ratio caused by the soft loan, and the difference
interest rate. Specifically, the effectduring a particular time period (month) and the preferential
in every time period-from theof the preferential interest rate of a soft loan can be calculated
up by fiscal year. In the case of JDB, analytime of the loan until its repayment-and then added
period was "negative" (-3.78 billion
sis has shown that the overall effect throughout the 1965-95
a subsidy to firms during the periodyen). This suggests that soft loans did not always provide
burden to firms.) The "positive" (subsidy)
analyzed. (A "negative" effect means a financial costand 1970s, for example, was more thaneffect of the preferential interest rate during the 1960s
the 1980s and 1990s when the open market
offset by the "negative" effect experienced for most ofeffect was "positive" (83.57 billion yen).
rate declined considerably. In the case of JEC, the overallthan JDB's over the loan period analyzed.
This is because JEC's lending rate was always lower
was used to estimate the "incentive" efRegression analysis based on a logarithmic function
concerning pollution abatement technolofect of soft loans on large firms' investment decisions
control facilities undertaken by big firms
gies. The total amount of investments for pollutionof the soft loan, (b) the preferential interduring 1968 through 1993 was a function of (a) the size
pollution control investments. The analyest rate, and (c) tax savings from special tax breaks forat the 1 percent level) provided the strongest
sis showed that the size of the soft loan (significant
investments. The preferential interest rate is
incentive for firms to undertake pollution abatement
factor is not significant.
significant at the 5 percent level, while the tax savings
the environmental soft loan program in
Four important factors contributed to the success ofwhich was put together when the governJapan. The first was the timing of the soft loan package,
provided industries with considerable
ment established tight pollution standards. The package
In support of this package an information
assistance in responding quickly to these regulations.
up. The pollution abatement investment
setsharing system for government and business wasfunds from public banks. MITI collected
needs of firms was matched with available soft loan
through JDB and other public finaninformation on demand for pollution abatement investments
government.
cial institutions, and it relayed this information to the10Local Approaches to Environmental Compliance

Second, investment loans for designated "standard"' pollution
abatement technology were provided to firms, regardless of their environmental performance.
Performance evaluations by MITI
had to show that the standard technologies would resultin significant reductions in pollution.
This second factor promoted the development of an environmental
abatement technology industry
in Japan. The demand for a pollution abatement technology
naturally increased once it was designated as "standard" and a soft loan could be provided forfirms to invest in it.
Third, public financial institutions did not conduct ex-postmonitoring of the actual reductionsin pollution. Instead, monitoring was carried out by the
local government, which also strictly
enforced environmental regulations. Firms that did
not comply with regulations could be ordered to close down production or to relocate. At thesame time, there existed a "partnership"
between JEC and the local government that directly influenced
a firm's behavior. Firms applying
for a soft loan from JEC could only do so with the priorapproval of the local government, statingthat the technology investment was needed. Strict regulatory
enforcement by the local government ensured that firms did not divert funds to otheruses.
Lastly, Japan's environmental soft loan program wasfinanced through the Fiscal Investment
and Loan Program. Public banks were charged a fixedinterest rate on their borrowings and givena repayment period of fifteen years. They were allowed
to vary their annual borrowings according
to demand for soft loan funds, and they could set the interest
charges for those funds. The repayment period for loaned out funds was five to twenty years,
and this enabled public banks to use
repaid loans as a revolving fund. Thus, banks were able
to conduct business for a profit, and firms
were able to comply with environmental regulations
without delay.
The Link between Compliance at the Local Level and Global
EnvironmentalGoals:
Waste Reduction Measures in Nagoya City
The case study by Kazuhiro Ueta (see Chapter 6) investigates
the possible effects of local environmental actions on global environmental issues. For example,
it explores how the waste reduction
measures taken by Nagoya City could have affected
global warming. The case study also analyzes the cost-effectiveness of implementing measures
for waste reduction and recycling given
the difficulties in finding suitable sites for final waste
disposal.
Although costs for addressing issues such as global warming
are to be covered by each local
community, it is hard for these communities to directly
realize the resulting benefits. At the sametime, measures taken for local communities, such as antipollution
policies, are often implemented
without acknowledging their impact on global environmental
conservation. In fact, measurestaken to conserve the global environment often improve
the quality of the local environment, andmeasures taken for the local environment often contributeto global environmental conservation.
This "synergy effect" must be taken into account in thedecision-making process. An awareness isneeded of the ancillary benefits from promoting environmental
conservation and efficient environmental control. Measures to mitigate global warming,measures that tend to be viewed asirrelevant by the local community, must be linked toits specific needs.
Benefits from the synergy effect can be classified in three
ways: (1) benefits to other fields frommeasures to mitigate global warming; (2) benefits
to global warming mitigation from efforts inother fields, such as antipollution measures; and (3)aggregate benefits of the measures to mitigate
global warming and to address other environmental
problems. The first two types of benefits arecalled ancillary benefits; benefits in the third category
are called co-benefits.
In 1996 Nagoya City generated about one million tonsof solid wastes. Nearly 70 percent was
domestic wastes (such as kitchen refuse, plastic containers,
packaging materials, etc.). The city constructed a disposal site in Tajimi, Gifu Prefecture, but
its landfill capacity became very limited. Plans
were developed to construct another landfill in the Fujimae
tidal flat. Since this tidal flat was a habitat for
migratory birds, the plans met strong opposition fromthe public and were eventually abandoned.

Environmiental Compliance: Case Studies fromn Japan and Their Relevance toEast Asian Developing Countries

11

the lack of adequate
In 1999, alarmed by the critical need to deal with huge urban wastes anddeclared a state ofdisposal sites due to physical and social land use constraints, Nagoya City
was to reduce wastes by
emergency. An action plan for waste disposal was formulated. The goal
local residents. Various
200,000 tons (20 percent) over two years, with participation from theto cover all theextendedwasbottles
specific measures were implemented. Collection of cans andthrough subpromoted
wassixteen wards in the city. Voluntary collection of wastes by citizens
improved.
wereefficiency
sidy provisions. In addition, recycling of solid wastes and incineration
incineration, although it
Several Japanese cities, including Nagoya, have depended upon waste
contributing to thehas been associated with significant local energy costs and CO2 emissions
problem of global warming.
Nagoya City had signifiBy 2000, two years after the declaration of the state of emergency,
reduction and recycling
cantly improved its waste disposal through implementation of its waste
program. The following achievements are noteworthy:
Partly because of strict* The disposal of combustible wastes decreased by 20 percent in 2000.
wastes were
controls on separated collections, wastes formerly disposed as combustible
collected as recyclable wastes.
* The amount of recyclable wastes collected by the city tripled.
* Final waste disposal, including incineration, decreased by half.
wastes disposal throughThus, Nagoya City succeeded in achieving a large-scale reduction in
emergency.
of
state
the
measures implemented after the declaration of
the above-mentioned
The case study quantifies the changes in CO, emissions associated withresults. Key findings are as follows:2000 by about 1,500 tons.
* CO2 emissions during the process of waste collection increased in
CO2 emissions
incineration,forwastesof* As Nagoya City significantly reduced its amounttons.
during the incineration process decreased in 2000 by 60,000
by 55,000 tons in 2000.
* For the whole waste disposal process, CO 2 emissions were reduced
waste reduction/recyThe case study also analyzed the cost-effectiveness of Nagoya City's
results of theImportantmitigation.
cling measures, and their contribution to global warming
analysis are as follows:
problems it encoun* Nagoya City's waste disposal reduction measures were driven by theconstruction of a
postponingof
benefitThe
tered in securing a final waste disposal site.
yen.
billion6.25
atdisposal site, through waste reduction measures, was estimated2000, while
in
tons)* The total amount of waste disposal decreased by 20 percent (or 198,463
in the amountthe costs of waste disposal increased by 4 billion yen. Meanwhile, the reduction
abatement
emissionsCOinresulted
recycling)of2of disposed wastes (for example, because
theestimate
authors
the
,
CO
of
ton
2
of 55,000 tons. Using the carbon tax of 3,000 yen per
benefit of CO2 abatement to be 165 million yen.
construction of a
* The benefit/cost ratio was estimated at 1.56: the benefit of postponing
for waste reduction
disposal site (6.25 billion yen) was evaluated against the costs requiredof reducthebenefits
when
1.60
to
increasedratio
measures (4 billion yen). Thebenefit/cost
ing CO2 emissions were taken into account.
cost-effective. AlBased on the above analysis, Nagoya City's waste reduction measures were
they contributed tothough they were measures implemented to deal with local pollution problems,
global warming mitigation.

12

Local Approaches to Environmental Compliance

Most developing countries do not use incineration, and they view the employment
associatedwith disposal sites as an economic benefit. Thus, this example from Nagoya City
is not directly
applicable to the situation of most developing countries. However, other local
environmental
concerns could be linked to clean air, and habitat issues could be relevant to global
environmental programs. If there are joint local and global benefits, the framework used in
Nagoya could
help in the process of evaluating these benefits. Indeed, global environmental financing
might beincorporated in local strategies for environmental management.

A Comparison of Japan and East Asian Developing Countries
Japan's rapid industrial growth during the postwar period resembles in some ways
the growthduring the 1990s in many developing countries in East Asia. The timing of development
is different, however, and so are the sources of pollution, particularly air pollution.
Sources of Pollution
In many developing countries in East Asia, including Indonesia, Thailand, and thePhilippines,
widespread air pollution in cities is caused mainly by motor vehicles. In contrast,
during Japan's
early industrialization phase, the main concern was to control air pollution causedby coal andheavy oil use in power and industrial development and in home and building heating.
In Vietnam environmental pollution was not placed high on the country's agenda
until theearly 1990s, following passage of the Law on Environmental Protection and the establishmentofthe Ministry of Science, Technology and Environment (MOSTE) in 1993.' In Japanattention tourban air pollution problems began much earlier. Citizens' anti-pollution movements began
beforein the 1960s, and growing environmental awareness among local residents and the mass
media inthe 1970s forced governments at the national and local levels to establish pollution control
measures in Japan (see Table 1.1) and set up ambient environmental quality standards. The
industry,transportation, and construction sectors are the significant sources of air pollution in Vietnam.
Oldfactories (built before 1975) and small and medium-scale industries with old production
technologies are the major emitters of air pollutants in that country. Very few of these facilities havescrubberequipment. Most of the old industries ended up within the confines of urban centers. For
example,Ho Chi Minh City has about 700 factories; 500 of them are located in the urban areas. In
Hanoi 200
out of 300 factories are located in the urban areas.
Japan and Vietnam also differ in terms of pollutant sources. Factory emissions in many
Japanese cities during the early industrialization phase caused alarm. In contrast, the two worst
sourcesof air pollution in Vietnam are: (a) dust from industrial production and construction
activitiesand (b) emissions from mobile sources. Monitoring results for 1995 to 2001 indicatethat dust
concentrations in residential areas close to factories or near major roads were often twoor threetimes higher than the permitted levels. The places with the highest levels of dust pollution
wereresidential areas near Hai Phong cement plant, VICASA plant in Bien Hoa Province,
Tan Binhindustrial zone in Ho Chi Minh City, and Hon Gai coal plant in Ha Long City.
Construction activities throughout Vietnam, particularly in the urban centers, havegeneratedserious dust pollution problems. Monitoring results for the 1995-2001 period showthat 60 percent to 70 percent of dust volume in urban air is from construction activities.
Pollution in Vietnam is caused by mobile sources as well as by urban and industrial
expansion.
The number of motor vehicles has increased sharply in Vietnam's major cities. Before
the 1980s, 80
percent to 90 percent of urban residents used bicycles. Today 80 percent of these residents
are usingmotorcycles. The number of registered motorcycles in Vietnam has increased at an annual
rate ofbetween 15 percent and 18 percent. Vehicle emissions are particularly troublesome inlarge cities
such as Hanoi, Ho Chi Minh City, Hai Phong, and Da Nang.

Environmental Conipliance: Case Studies fronm Japan and Their Relevance to East

Asian Developing Countries

13

The PoliticalContextfor Environmental Complianceand Enforcement
Asia is the lack of
A major obstacle to effective environmental compliance and enforcement in Eastno political supor
littleispolitical support for the environment. For example, in Indonesia there
2of Japan, a country
port for environmental management. This is very different from the experience
Citizens' protests
where political will has been critically important in addressing pollution concerns.
have motivatedagainst pollution and fear of being voted out of office in favor of leftist politicians
political will
IndonesiaIntargets.
reduction
incumbent local officials to enforce stringent emission
and
implemented,
being
were
was inadequate at the time when industrial development programs
public.
generalenvironmental pollution was not an important issue in the mind of thepoor interagency
Lack of political support for environmental measures is accompanied byof coordinating
coordination. In Indonesia the Ministry of the Environment has the major task
making has
decisionenvironmental
theenvironmental activities in the provinces. Nonetheless,participation
the
lacks
it
not been fully transparent across relevant government agencies, and often
of stakeholders.
also proved exIntegration of environmental regulations with sectoral department policies
and industry
tremely difficult to implement in Indonesia. Forestry, mining, fishery, agriculture,
without
programs
implement
they
are sectors associated with strong economic interests, andRegulaagencies.
coordination among themselves or with national ministries and local official
tory enforcement and compliance remain at the margins.
undermined by
In the case of Thailand, the potential for interagency coordination has been
3
achieved, but
been
has
consensus
cases
some agencies' failure to abide by agreements. In someactions.
some parties have not fully cooperated in carrying out the agreed
CommuSometimes the problem of a lack of consensus extends beyond government agencies.
some comnities may be at odds with private companies over pollution-related issues. Indeed,
the Thai govmunities have demonstrated to demand cancellation of projects. In the late 1990s,
because
years
two
for
plantspower
ernment decided to postpone the construction of two coal-fired
Asia.
East
of community demands. This has been repeated in many instances throughout
The Role of Local Governments in EnvironmentalManagement
have theJapan has a long history of local environmental management, and local governments
have
that
factorsareauthority and capability to establish and enforce environmental laws. Thesein Indonesia
contributed significantly to the control of urban air pollution in Japan. In contrast,
governlocal
Traditionally,level.
government
centralthemajor development decisions are made at
local
and
potential
local
on
based
plans
ments have had little opportunity to make development
centralizedafromneeds. Then, in the late 1990s, the political system in Indonesia was transformeda stronger role forto a decentralized form of government, and environmental laws provided for
were
local governments. Based on the environmental law enacted in 1997, the local governments
plans.
management
granted authority to carry out their own environmental
compliance
The lack of local government authority is not the only constraint on environmentalof local
involvement
androle
and enforcement in developing countries in East Asia. Often the
mangovernment are quite limited by budgets, personnel, and technical capability. Environmental
and in developing
agement potential, especially at the local level, also differs markedly in Japaninspection
environmental
theofestablishment
thecountries. For example, in Vietnam, following
division
inspection
environmental
anhadservice in 1994, 60 out of 61 provinces in the country
inspecthese
However,under the Department of Science, Technology, and Environment (DOSTE).
environwith
tion divisions are so understaffed that it is difficult for them to monitor complianceby residents
mental regulations. Consequently, most environmental violations have been reported
who live close to factories instead of by the inspection service.

14

Local Approaches to Environmental Compliance

In Thailand the Constitution of 1997 delegated to local governments administrativeand management authority that had been held by the national government. However, lack oftrained personnel and technical capability at the local level remain obstacles to effective implementationof environmental measures.
In Indonesia the process of devolving power from the central government to local
governments is even more recent. Act No. 22/1999 now enables local governments to formulate
their
own development plan with input from the local population. In addition, Act No.
25/1999 on
Fiscal Balance provides local governments and communities with financial resources
and authority to manage their own natural resources for economic development. However,there is still aneed to develop the technical and financial capacity at the local government level.
The lack of professional and technical expertise at the local government level is
a commonconstraint in developing countries. In Japan environmental professionals are givenhigh status,
and it is not difficult to attract them into local government service. In contrast, in Thailand,
as inmany other developing countries, environmental engineers have yet to be given highstatus ingovernment and their wages in government agencies remain low. Thus, there are few
government officials knowledgeable about pollution control and management, and this has
had a debilitating impact on the country's ability to address its environmental problems.
Economic Incentives
Soft loan programs can help developing countries achieve pollution reductions at reduced
costs. 4
However, certain conditions must be met before an environmental soft loan program can be
implemented successfully. In Japan large sums are available for environmental soft loans fromdomestic sources, such as postal savings and pension funds. In developing countries the fundingforenvironmental incentive programs often comes from foreign sources. For example, in Indonesia
funding has come from financial institutions like JBIC (apan Bank for International Cooperation)
and KfW (an international aid agency in Germany).
Major public financial institutions are engaged in the execution of Japan's environmental soft
loan
programs. JDB lends to big businesses; JFCSB and JEC extend soft loans largely to small and mediumsize enterprises. In contrast, Indonesia has a less-organized and focused system for executing
its
environmental soft loan programs. The Central Bank asks banks to distribute soft loans whenfunds
become available from abroad, or, in the case of environmental loan funds from KfW, provincial
development banks and commercial banks are appointed as executing institutions.
In Indonesia, unlike in Japan there is no specialized network of financial institutions to implement the economic incentives programs. Another difference in the use of economic incentives
hasa longer term implication: in Japan, soft loans are intended to cover only the capital expendituresof pollution abatement investments; in Indonesia, soft loan programs also cover operation
andmaintenance costs. In developing countries, environmental training of industry personnel
is important to build capacities for dealing with environmental concerns.
In the case of China, economic incentives have been increasingly used to promote environmental management and compliance. 5 The "polluter pays" principle has been incorporatedinthe design of the economic incentive system in China. Pilot projects in Tianjin and Shenyang,
China, are using pollution charges as revolving funds to help in pollution management. In
Japan,
however, the soft loan program was not built upon the "polluter pays" principle, and thisshortcoming has increased the possibility of low efficiency in the implementation of the program.
China, Indonesia, and other developing countries may have an advantage over Japan in anotherarea: their emphasis on "clean production technologies" rather than "end-of-pipe technologies"
toreduce pollution. In the early days developing countries did stress end-of-pipe technologies
because these technologies satisfied the needs of the time; developing "clean production technolo-

Environnmental Comnpliance: Case Studies from Japan and Their Relevance to East Asian Developing

Counztries

15

cleanergies" would have taken too long for the government to respond to social demands for a
production"cleanenvironment. From the viewpoint of developing countries today, investments intechnologies" are more favored than "end-of-pipe technologies."
Imtplementing Entvironmental Management: Conditionsfor SuccessenvironmenEffective monitoring is one of the most important conditions for ensuring a successful
monitoring total management program. In Japan local governments have been very effective ingoverndetermine if industries are in compliance with the local environmental regulations. Local
needed.
isinvestment
theifevaluatingbyments also are involved in approving soft loan proposals
discussion
the
at
still
is
In many developing countries, however, environmental accountability
withstage. Without accountability, monitoring of pollution control and industries' complianceregulations would be difficult to implement.
andStrict enforcement of environmental regulations by the local and national governmentsofachievement
Japan'sforreasonsstrong public support for a clean environment are important
however,countries,
substantive improvements in environmental quality. In many developing
issues, andthe opposite actually holds. There is a lack of public awareness of environmental
to impleregulatory enforcement mechanisms are weak-factors that impede a country's ability
moniquality,
environmental
in
gains
For
ment economic incentives, such as soft loan programs.
greatlybetoneedgovernmentof
toring capacities and regulatory enforcement at the local levels
andimproved, local citizens' participation in environmental management must be promoted,
accountability needs to be incorporated in the system.
the parMany of the successful environmental management efforts in Japan directly involve
probpollution
theinvestigatingin
ticipation of local government, industry, and the community
experiThese
actions.
lem, deciding on environmental standards, and implementing remedialin East Asia.
ences are relevant to similar initiatives that can be observed in developing countriesa
The Japanese experience has demonstrated that good govemance is central to achieving
a "Goodclean, healthy environment. In Indonesia the Ministry of Environment has introduced
envienforce
tocapacities
Environmental Governance Program" to strengthen local government
residents.
ronmental regulations and encourage the active participation of local
has been
Japan's overall approach to promoting compliance with environmental standardsof this apbased on the concept of "deterrence" or "command and control." The effectivenessawareenvironmental
publiconandcomplytoproach depends on the motivation of industries
In
problems.
environmental
toness and the willingness of people to cooperate to find a solution"detertheonIndonesia the Environmental Management Act of 1997 (EMA 1997) is also basedin underrence" approach. This legislation includes provisions for soft loans to assist industries
taking pollution abatement investments.
to settle
In Indonesia, like in Japan, public pressure has proved to be an effective instrument
northerninlocatedfactory
environmental disputes. Consider the case of the pulp and paper
rivers andSu-matra. A few years ago local residents complained that the factory had polluted
Publiccaused deforestation. They also complained about the foul odor coming from the factory.
the
order
to
govemment
local
theforcedorganizations
demands and pressure by nongovernmental
factory to close down.
to theIndonesia's experience with groundwater pollution also demonstrates some similarities
6
contaminatedJapanese experience in terms of local involvement. Groundwater in West Java wasstation inwhen gasoline was accidentally spilled during the filling of a ground tank in a gasoline
the local
Bogor. In an experience similar to the one described earlier in the case study on RK Excel,
howExcel,RK
Unlikeindustry.
gasoline
community received compensation payments from the
RK
of
study
case
The
measures.
ever, the industry was not required by law to undertake clean-up

16

Local Approachles to Emzironowental Comzpliance

Excel underlines the importance of monitoring, a quick response system, and technology adoption
in pollution control.
In the Philippines, community awareness and initiatives in Cebu Province helped the local
government control toxic contamination. 7 The toxic contamination incident was brought
to theattention of government agencies, local officials, the local business community, and themass
media. The polluting company was forced to comply with environmental regulations andtreat
its chromium discharge because of pressures from the government and community as a whole.
In
the Philippine system, because local governments have limited authority to enforce environmental laws, the media and community organizations play a key role in pressuring polluting
companies to comply with legislative regulations.
The pollution problem was similar to the case in the Shiga Prefecture of pollution by a metalplating industry. Cebu Province also experienced toxic contamination of groundwater involving
hexavalent chromium caused by a metal plating industry. In the Cebu case, however, theprovincial water company discovered the toxic pollution of one of its production wells while the degreeof pollution was still relatively early. Thus, the water quality with respect to hexavalent chromium was restored to meet the standard (0.05 mg/l) within a year.
In Thailand experience with developing pollution standards has shown that national regulations tend to be too general and that local criteria are needed. Thailand's first and largest petrochemical complex is located in the Map Ta Pud District of Rayong Province in the easternseaboard. The air pollution problem from this complex is similar to the air pollution problem
that
occurred in 1955 in Yokkaichi City.
When the factories in the petrochemical complex in Thailand started operating fully around1997, a community downwind from the complex began complaining about the offensive odor
ofvarious volatile organic compounds (VOCs). Schoolchildren in the community school locatedless than 1 kilometer from the petrochemical complex suffered respiratory illnesses. Six
major
factories, including two refineries, were identified as sources of VOCs emissions. As in thecase of
Kitakyushu City of Fukuoka in 1970, a joint committee consisting of representatives fromnational and local government agencies, industries, and the community was establishedto develop
air pollution control measures and then monitor their implementation. After more than
two years
the offensive odor had been reduced more than 90 percent.
There is currently a plan to establish in the Map Ta Pud area a new coal-fired power plantonland reclaimed from the sea. Local communities are concerned that air pollution will
increaseagain. A comprehensive study is being undertaken to determine whether the area can
assimilate
such a plant and whether further industrial development is feasible without causing
adverseimpacts on air quality in the vicinity. The study will also establish the fair distribution offinancialand operational burdens to be shared among factories according to their contribution to
the air
pollution. This case is similar to that of Kitakyushu City.
With regard to local initiatives, the situation in Vietnam has some similarities to Japaneseexperience (in particular, to the key role of local involvement in achieving successful pollution
control in Osaka City). Vietnam, unlike other developing-country cases noted earlier, hasseen
traditional cooperation between local governments, local residents, and local businesses.
Vietnamattaches importance to this kind of cooperation in dealing successfully with pollution
problems
caused by the Phailai thermal power plant. The plant, a state-owned enterprise, was establishedin1960 to supply electricity to eight provinces in the Red River Delta. Its facilities were outdated
andinefficient. Although the plant was causing serious air pollution in the area, it continued tooperatein order to meet the growing demand for electricity. Citizens' complaints about plant emissions
became more frequent and vocal during the mid-1990s. As a result of public pressure, theDepartment of Science, Technology and the Environment and the National Environment Agency(NEA)
decided to implement environmental improvements in the power plant's operations.

Environimenital Comiplianice: Case Studies from Japan and Thteir Relevance to East Asian Developing CounEtries

17

In response to citizens' protests, NEA conducted plant inspections, collected data on the environmental and health consequences of plant emissions, and involved local residents, power sector
personnel, government officials, and the mass media in a "participatory approach" to reaching asolution. Through these efforts, power plant officials agreed to (a) comply with the Law on Environmental Protection; (b) invest 12 billion Vietnam dollars (VND) in new dust precipitators; and (c) pay
900 million VND to affected residents. In this instance in Vietnam, as in Osaka City, effective
pollution control was achieved as a result of several factors-public pressure, the political will to
enforce regulations, and the commitment of industry to comply with environmental regulations.

Conclusion
Despite increasing recognition of the ill effects of pollution and the enactment of various environmental management laws and regulations, pollution monitoring and compliance in developing
countries in East Asia continue to lag. One of the main constraints to practical implementation ofpollution control is the lack of environmental awareness and sustained public involvement at the
local level. The experience of Japan, where communities became active proponents of pollution
control and local governments and industries were pressed to adopt pollution abatement activities,
is of relevance to developing countries today. The case studies from Japan and the reviews ofdeveloping-country resource persons indicate that some Japanese approaches may not be directly transferable to developing countries. However, the wide range of approaches to promote
cooperation among community organizations, local government agencies, and concerned industries in Japan's experience provide useful models that may be adapted to conditions in developing countries.

Notes
1. The discussion of issues regarding Vietnam is based on the review by Nam Thang Do (see Appendix A).

2. Examples for Indonesia are based on the review by Rosa Vivien Ratnawati (see Appendix A).

3. Examples from Thailand are based on the review by Supat Wangwongwatana (see Appendix A).
4. The relevance of the soft loan program to Indonesia was reviewed by Budi Widianarko (see Appendix A).

5. The examples for China are based on the review by Jianyu Zhang (see Appendix A).

6. Water pollution issues in Indonesia are based on the review by Indra Mufardi Roesli (see Appendix A).
7. The Philippine examples are based on the review by Ruben Almendras (see Appendix A).

2
Successful Air Pollution Control in Japan:
History and Implications
Ryo Fujikura
Japan succeeded in achieving rapid economic development in the 1960s by promoting heavy
industries. Because this industrial expansion was attained without sound consideration of environmental consequences, industrial cities in Japan experienced serious pollution. As a result, thecountry's industrial policy during the late 1960s and the early 1970s drastically shifted from afocus on "economic development" to "pollution control." Since then the urban environment inJapan has steadily improved to an acceptable level. This improvement in environmental quality
is known as "Japan's Pollution Miracle" (Broadbent 1998, 18-20). Table 2.1 shows the timeline andscope of the evolution of pollution regulation in Japan.
This chapter identifies the social and economic context in which this "miracle" occurred. It tries
to clarify why Japanese industry so intensively invested in air pollution control measures, actions
that can lower not only a company's profit but also its productivity. Focusing on air pollution fromstationary sources, particularly on dust fall and sulfur oxide pollution, the chapter presents (1)thehistory of Japan's response at the national level to the problem of air pollution, including theconstraints encountered in implementation of pollution control measures and the factors that
contributed to Japan's eventual successes in compliance and enforcement; and (2) detailed examples of envirionmental management efforts in four cities.
Part I. Air Pollution in Japan and Factors Affecting Environmental Management
PrewarPeriod

By the late nineteenth century, air in some Japanese industrial cities was already polluted (mainly
by coal dust). In response to increasing complaints from local residents, the Osaka Prefecture
Government prohibited the establishment of factories emitting significant amounts of soot in downtown areas; specifically, it enacted in 1931 the "Osaka Regulation for Soot and Smoke Prevention."(Please refer to Table 2.1.) The purpose of this law was to regulate soot according to the Lingerman
Chart, which measures the intensity of smoke. Then the prefecture government and the Osaka
Municipal Government encouraged factories to use relevant technologies to improve their combustion efficiency. Despite these efforts, urban air pollution problems were not solved, and Osaka
became notorious as the "City of Smoke."
This chapter is based on interviews with former local and national government officials, former employees of local industries, and local citizens. The author expresses special thanks to Katsumi Saruta (former
director of the Pollution Control Bureau, Yokohama Municipal Govemment); Satoshi Nakazono, directorof the Environment Conservation Department, Kitakyushu Municipal Government; and Takshi Matsumiya(former director of Environment Department, Osaka Municipal Govemment). The author also would liketo express his sincere gratitude to Michio Hashimoto (former director of Pollution Control of the Ministryof Health and former director general of the Air Pollution Quality Bureau of the Environment Agency) for
his kind review of an earlier draft and his useful suggestions.
19

20

Local Approachies to Environmental Compliance

Table 2.1 Timeline and Scope of Japan'sKey Pollution ControlRegulations
Time period
and scope

Pollutioncontrol measure

Key developments

Prewarperiod
Late 19th century,
Osaka

Osaka Prefectural
Orders1931, Osaka

Osaka Regulation for
Soot and Smoke
Prevention

Issued in response to increasing complaints from thepublic; prohibited factories that would emit a significant amount of soot from locating in downtown areas.
Established to regulate soot emissions. Factories were also
required to adopt new technologies to improve combustion efficiencies. Nonetheless, air pollution persisted,
and Osaka became known as the "City of Smoke."

Postwar period
1949, Tokyo
Metropolitan

Tokyo Ordinance for
Factory Pollution
Control

1951, Ube

Resolution (adopted byan ad hoc committee
at municipal level)for dust fall control
Fukuoka Ordinancefor Pollution Control

1955, Fukuoka

1955, Japan

Bill for Standards on
Living Environmental Pollution Control

Issued in response to growing public complaints about
air pollution. Because the ordinance did not explicitly
define the technical criteria for pollution control, it
was not effective.
Required local industries to install precipitators tocontrol dust emissions. Although initially poor,
compliance by industries had improved significantly
by 1953.
Stipulated technical criteria for pollution control. Lack ofappropriate antipollution technologies hindered
implementation. Enforcement was weak partly
because of strong opposition from local businesses.
Drafted by the Ministry of Health in response to thedamaging effects of air pollution on local residents.
Strong business sector opposition blocked the introduction of the bill to the Diet.

Energy shift period
1960s, Japan

1962, Japan

1967, Japan

Economic factors rather
than regulations were
the reason for significant reductions in coal
dust fall in major industrial cities in Japanin the 1960s.

Industries throughout Japan switched from domestic
coal to imported heavy oil, and sulfur oxides replacedcoal dusts as the main source of air pollution. Strikes
by coal mine workers had increased the price of coaland destabilized supply. The development of oil
fields in the Middle East made imported oil morecompetitive than Japanese coal.
Soot and Smoke Control Established as a result of collaboration between the
Law
Ministry of Health and MITI. The sulfur oxides
emission standards were not realistic to control
pollution levels, and they were applied to certain
designated areas only. Enforcement was delegatedonly to the municipal government and did not include
the prefectural level. Desulfurization technologies had
not yet been developed. Because of its serious limitations, the law was not effective.
Basic Law for Pollution
Established by the national government. This law, likeControl
the Soot and Smoke Control Law, stipulated "undertaking living environmental management in harmony(Table continues on thefollowinig page.)Successful Air Pollution Control in Japan: History and Implications

21

Table2.1 (cotitinued)
Time period
and scope

Pollution controlmeasure

1968, Japan

Air Pollution ControlLaw

1970s, Japan

Pollution Control Diet
Session was convened
by Prime Minister
E. Sato; 14 environmental conservation
bills were passed.

Resuilt
with sound industrial development." Businesses
succeeded in weakening pollution control activities.
Although the Basic Law for Pollution Control did not
directly improve the urban environment in Japan, it
included measures that later helped control air
pollution in cities. The law established the ambientenvironmental quality standards(EQSs) for sulfur oxides.
Replaced the Soot and Smoke Control Law (1962);
regulated sulfur oxides emissions from factories andnitrogen oxides from automobiles. The law became
the fundamental tool for achieving the EQSs
established in succeeding years.
Established the Environment Agency. Deleted from the
Basic Law for Pollution Control the controversial
provision on harmonization of living environmental
management with sound industrial development. In
Yokohama, Tokyo, Kawasaki, and other cities, citizens
replaced Liberal Democratic Party incumbents withmembers of the Socialist Party. The Socialist Party was
believed to enforce more stringent pollution control
measures.

Source: Unpublished documents of the Ministry of the Environment of Japan and interviews of national and city

officials undertaken by the case study author.

During the prewar period, air pollution in the Tokyo metropolitan area was a serious problem aswell. Between 1924 and 1936 the Tokyo Metropolitan Police received 246 petitions and complaints;of these, 46 were for soot and 25 were for dust fall (IPCS 1970). Dust fall in Tokyo's downtown areas
reached 18 tons per square kilometer per month in 1927, indicating that domestic use of coal forheating was a significant pollution source (Hishida 1974). Local residents continuously petitioned
the local governments to take appropriate measures, but air quality only got worse.
By contrast, in Kitakyushu City, local citizens appeared to welcome signs of air pollution. Residents of the Yahata Area, which later became a part of Kitakyushu, noted (in a 1909 essay) that"sparrows in Yahata are black." Sparrows in Japan are typically brown, but darker sparrows might
have become dominant in this area at the beginning of the twentieth century (Yahata Works 1980).
Although no scientific investigation was conducted, the thick black smoke being emitted from the136 chimneys in Yahata may have made brown sparrows black. Black smoke was regarded by the
local citizens as a symbol of successful modernization.'
Postwar Period
World War II was over in the Asian theater on August 15,1945. Japan's physical infrastructure wascompletely destroyed. After the war tens of thousands of Japanese people returned home from
northeastern China and the Korean Peninsula. Japan had to reconstruct its economy to feed its
people. Until the early 1950s, finding food and meeting other necessities of daily life were the mainconcerns of the Japanese people. However, local governments in major cities did receive complaints
from citizens about pollution (for example, about offensive odor and dust). With the postwar recon-

22

Local Approaches to Environmental Compliancestruction of industry and Japan's increasing population, pollution problems became more andmore obvious.
INEFFECTIVE MEASURES BY THE ToKYo METROPOLITAN GOVERNMENT AND THE FUKUOKA PREFECTURE GOVERNMENT. In response to increasing complaints from the public, the Tokyo Metropoli-tan Government in 1949 established the Tokyo Ordinance for Factory Pollution Control. Because it
failed to specify the technical criteria of "pollution" and simply prohibited "significant" pollution
without precisely defining "significant," the ordinance was ineffective.
In 1955 the Fukuoka Prefecture Government established the Fukuoka Ordinance for Pollution
Control despite strong opposition from local businesses, which feared pollution control measureswould hinder economic development of the region (Shoji and Miyamoto 1964). This ordinance stipulated technical criteria for designating pollution but was not enforced. Even if more of an effort had
been made to enforce this ordinance, it still would have been very difficult for the government tocontrol pollution because of the lack of appropriate antipollution technologies at that time.
EFFECTIVE MEASURES IN UBE CITY. The major industries in Ube City, Yamaguchi Prefecture, were coal mining and cement production. Coal mined from Ube contained 40 percent to 45
percent ash, and the coal was used mostly for power generation. Coal and cement dust fall began tobother local residents in the late 1940s. By 1951 dust fall was recorded at 55.86 tons per square
kilometer per month, the highest level for the world's 43 major cities where dust fall was being
measured at that time (Nose 1997).
An ad hoc committee of the municipal assembly in Ube City adopted a resolution in 1951 tocontrol dust fall. The resolution, which required every local factory to install a precipitator, was
not taken seriously by local businesses. The municipal government entrusted a university professor with monitoring responsibilities, but monitoring was often obstructed and monitoring equipment even destroyed.
In 1953 a vice-president of Ube Kosan Company, a leading cement manufacturing company,
visited Europe and the United Sates and became convinced of the importance of dust fall control.
Subsequently, local factories undertook pollution control measures. Cement industries recognized that pollution control would not only improve air quality, but also would contribute totheir economic profits. In fact, collecting and recycling cement dust improved their productivity.
As a result, the number of precipitators installed in Ube City increased considerably after 1957,
and recorded dust fall significantly decreased in the early 1960s as shown in Figure 2.1 (Ube City
1997). Unfortunately, this early experience in pollution control was not replicated in other Japanese industrial cities seriously affected by dust fall.

Energy Shift Period
Economic factors, more than governmental regulations for pollution control, reduced the problem
of coal dust fall in Japan's major industrial cities. In the 1960s, industries throughout Japan changed
their major energy source. Although the national government instituted measures to encourage
Japan's industries to continue using domestic coal, they failed to comply. With the development ofMiddle Eastern oil fields, the price of foreign oil became cheaper than coal. The standard price oftype C-heavy oil dropped by 50 percent from 1956 to 1969. The price of domestic coal was 7,400 yen
per ton in 1969; the prices of one-kiloliter of A-, B-, and C-heavy oil were 10,000 yen, 7,000 yen, and6,300 yen, respectively. The energy generated by one kiloliter of heavy oil was greater than that of
one-ton coal (IPCS 1970). Moreover, the supply of domestic coal was unstable due to frequent coalmine strikes.
Oil had other advantages that made it the preferred fuel: oil was easier to handle, and required
less storage space than coal. As factories switched from coal to oil, significant reductions in dustSuccessfrl Air Pollution Control in Japan: History and Implications

23

Figure2.1 Dust Fall and Number of Precipitatorsin Ube City
Number of precipitators
40

Monthly dust fall in tons per square kilometer
60
Precipitators
us fll

-

50

30

4020

30 20

10

10
a
1950 1951

1952 1953

1954 1955

1956 1957

1958 1959

1960 1961

1962 1963

0

Source: Ube City (1997).

correlation between the decline infall were observed throughout Japan. Figure 2.2 illustrates theamount of dust fall in Shiroyama
the consumption of solid fuel (coal) and the decrease in the
district of Kitakyushu City (Fujikura 1998).

Figure 2.2 Solid Fuel Consumption and Dust Fall in Kitakyushu

City
Monthly tons per square kilometer
100

Tcal
20,000....

16,000-Solid fuel consumption
Dust fall (Shiroyama District of Kitakyushu)
Dust fall (throughout Kitakyushu)

80

60

12,000

40

8,000

20

4,000

0r
0

1960

1965

1970

1975
Year

Source: Fujikura (1998).

1980

1985

1990

28

Local Approaches to Environmental Compliance

Its petroleum consumption for the production of one ton of crude steel declined from 120.8 liters in
1973, to 89.0 liters in 1978, to 59.3 liters in 1979 (Yahata Works 1982). At the same time, energysaving activities in Japanese industries significantly reduced the emission of air pollutants. The
Environment Agency estimated that energy savings contributed to around 40 percent of the total
reduction in sulfur oxides emissions in Japan in 1986 (Environment Agency 1990,128).
MITI's LOW-SULFUR PROGRAM. As early as the mid-1960s, MITI became concerned aboutindustrial pollution. It felt that worsening pollution would intensify citizens' movements against
industrial development and hinder implementation of its industrial policies. As long as fuel wasvery cheap for Japanese industries, energy conservation was not pursued as a way to reduce
sulfur dioxide emissions. During the 1960s, flue gas desulfurization technology was not yet
available, so importing low-sulfur crude oil was the only feasible option to reduce emissions atthat time.
The first oil shock in 1973, however, changed the picture. The approach of lowering sulfur
content to reduce emissions became difficult with constraints on oil supply. Subsequently, by providing economic incentives (tax exemptions and concessional loans from the Japan Development
Bank), MITI promoted research and development of desulfurization technologies and installationof oil desulfurizers.
Neither emission charges nor taxes
were used in Japan to control emissions. An emission charge on sulfur oxides was introduced, but
it was to compensate patients suffering from pollution related-diseases (under the Law for Pollution-Related Damage Compensation of 1973). Instead of using direct economic charges or taxes, thenational government provided economic incentives to facilitate factories' adoption of antipollution
and energy savings measures. These incentives included soft loans by public financial institutions
and local governments, and tax exemptions.
The soft loan program is discussed in detail in Chapter 5, so we focus on the tax measures in thissection. The Basic Law for Pollution Control, as well as the Air Pollution Control Law and theWater Pollution Control Law, stipulated that the national government should encourage pollution
control investments through financial support and tax exemptions or reductions accorded to industries. Among various tax measures, reduction of the depreciation term seemed to be effective,
particularly for the SMIs. Since it was difficult for the SMIs to have a long-term perspective, they
preferred to complete the repayment of their investment loans as soon as possible while business was
profitable. This tax measure was widely adopted by local governments (Osaka City is one example).
SMIs supported it, although the measure did not reduce the overall amount of taxes they had to pay.
Decreases in tax revenues of the national government, due to tax reduction measures intended topromote pollution control investments, reached 100 billion yen in 1975. Of this amount, 60 billion
yen was the reduction in the direct national tax, equivalent to 20 percent of the total reduction incorporation taxes for the year (Terao 1994). Tax reduction measures encouraged businesses toinvest in pollution control. These measures were gradually abandoned after the antipollution
investment program was completed in Japan. The national government later encouraged energy
savings investments by introducing new tax reduction schemes. In the late 1980s, the decrease incorporation taxes due to these new measures had exceeded 70 billion yen per year, and air pollution was further reduced through energy savings efforts (Terao 1994)
ECONOMIC INSTRUMENTS TO CONTROL EMISSIONS.

Factors that Hindered Environmental Management
Proper management of the environment by Japanese industry was hindered until the 1970s by
three main factors: the public's lack of awareness of the dangers of pollution, the government's lackof commitment to pollution control, and inadequate technology and scientific knowledge.

Successful Air Pollution Conitrol in Japan: History

and Implications

29

Lack of PublicAwareness of Pollutionor
not concerned about protecting the environment
Until the mid-1960s, most people in Japan were
local
the
both
pressure,
their health. Without publicaware of the hazards pollution could pose toenvito enact regulations for pollution control andand national governments had little incentive
polairconsidered pollution, particularlyronmental management. The majority of the population
viewedAs noted earlier, black smoke waslution, as an unavoidable outcome of industrialization.
idea
of local development. Many Japanese had nowith pride in their communities as a symbol
Environment
Japan
the
of
the first president
what pollution was. When Bunbei Hara becameof kogai (pollution) to those who came tomeaning
Corporation in 1965, he had to explain thecooperation was necessary (JEC 1976).
celebrate his promotion and why environmental
directly affected by pollution began to initiate
Fishermen and farmers whose livelihoods were
demanded that polluting companies compenpublic protests. Yokkaichi fishermen, for example,
was polluting their fishing areas. Other local
sate them because the effluent from the factories
about air pollution and offensive odors.
citizens followed suit and started to complain
importance of pollution control was not reached
A consensus in the business community on thea pro-business rather than a pro-environment
until the 1970s. Before then, national politics hadof the Ministry of Health was warned by his service
slant. As an example, Mr. Michio HashimotoPressures from the business community and lacksuperior not to go too far on air pollution control.
for opposition to strict control measures. Whenof public demand for cleaner air were the reasonscriticharge of pollution control, he was sometimes
Mr. Hashimoto became the national officer incized as aka (communist) by businesspeople.
Management
Lack of Commitment by Government to Environmental
national government was rapid economic developUntil the 1960s, the primary objective of theheavy industries. The national government clearly
ment, and it sought to attain this by expanding
management. All laws established during thevalued economic development over environmental
Law of 1962 and the Basic Law for Pollution Control
1960s, including the Soot and Smoke Control
development." The goal of these laws was toof 1967, contained articles ensuring "sound economic
to "prevent" pollution.
"improve" polluted areas. The legislation failed
andaccount in the development of land use plans
Environmental issues were seldom taken into
from
focus
policyits
national government changed
during economic planning. In the 1970s, thethecitizens' movements became intense throughout
pro-business to pro-environment only when
impact on the environment of Japan's industrial
country. The media began to stress the negative
began to be replaced by leftist politicians one
policy, and conservative heads of local governments
after another in major industrial areas.
Lack of Technology and Scientific Knowledge
in thesome industrial areas, such as Kitakyushu,
Air quality was continuously monitored intogovernments
local
for
was a difficult task
1950s. In general, however, monitoring emissionsforcasescientificinsufficient to establish a solid
undertake, and the monitoring data were often
and Osaka, scientific data helped the mupollution control measures. In Yokohama, Kitakyushu,
to cut down emissions, institutions for pollution
nicipal governments persuade local factories
cities. The responsibility of each factory for local
control studies were established in each of these
subsequently adopted antipollution measures.
air pollution was made clear, and the factories
difficult; removing dust was relatively
Controlling emissions of sulfur oxides was technicallyas switching from the use of coal to oil, increasing
easily attained through several methods, suchor filters. Both oil and flue gas desulfurization
burning efficiencies, and/or installing precipitators
depen1960s, when Japanese industry was heavily
technologies were not available until the late.

32

Local Approaclhes to Environimental Complianceopinions on the feasibility of the policy during this formulation process. If a very stringent emission
standard is needed, measures necessary to secure proper implementation by industry are considered. A step-by-step approach to achieving the desired standard may be adopted. NGOs and local
residents in favor of stringent measures are often dismayed when the "good" draft has its teeth
removed. However, this process of reaching consensus promotes implementation. A target set toohigh may discourage industries from even attempting to meet it.
Attitude of Business
Once consensus within industry on the need for pollution control was achieved in Japan, competition to reduce emissions followed. For example, managers of Nippon Steel's factories throughout
Japan added interfactory pollution control competitions to their traditional productivity competitions. Managers devoted themselves to the development of new pollution control technology because winners would have a greater chance of promotion.
The attitudes of Japanese manufacturing industries contributed to improvements in the environment. In fiscal year 2000, there were 2,360 environmental law violations: 2,319 waste treatment
violations (primarily dumping of wastes generated from construction), 7 violations of water quality
laws, and 34 violations of other laws (Environment Agency 2001). Manufacturing enterprises have
improved their environmental record under the guidance of their local governments. If a violation
is discovered, the enterprise will be targeted as a "polluting industry" and looked upon with scornby the community. Enterprises care about their social status and try hard to avoid being branded asa "polluter."Traditionally, factory engineers have enjoyed high status in their companies; they have been
eager to develop new and innovative technologies, including those to control pollution and conserve energy. Engineers' efforts are appreciated even in routine work, such as waste treatment,
which does not increase productivity directly. A national certification of "pollution control manager" has contributed to the prestige of engineers. Every factory is required by law to have a pollution control manager.

Part II. Pollution Control Measures of Municipal Governments
Before the national government implemented serious measures to control pollution, municipal
governments in major industrial cities pursued their own initiatives to reduce air pollution. Threeindustrial cities-Yokohama, Kitakyushu, and Osaka-have already been investigated as casestudies by the Metropolitan Environment Improvement Program (MEIP 1994). This section, therefore, focuses on the social and administrative factors that enabled the improvement in pollution
from sulfur oxides. 6
In all three cities the municipal governments were pressured by a growing number of citizens'
complaints against air pollution, but they had limited authority for pollution control because theSoot and Smoke Control Law delegated authority to the prefecture governments. Municipal governments were not authorized to monitor emissions or to inspect pollution sources located in theircities. It was only after passage of the Air Pollution Control Law of 1968, replacing the old law, thatthese cities were delegated the needed authority.
This section describes, in addition to the three industrial cities, the case of Yokkaichi City of Mie
Prefecture. In this particular case, both the municipal and prefecture governments failed to control
Japan's worst sulfur oxide pollution until 1972, when the local court required payment of compensation for health damages to Yokkaichi asthma patients. The introduction of total emission control
by the prefecture government after the court decision reduced pollution levels substantially. It also
facilitated the introduction of similar measures at the national level.

Successful Air Pollution Control in 7apan: History and Implications

33

Yokohama City
Air quality in Yokohama City was poor after World War II. During the late 1940s, U.S. military men
and their families in Yokohama began to suffer from asthma and did not completely recover evenafter they returned to the United States. This illness became known as "Yokohama Asthma." Likeother industrial cities in Japan, Yokohama City became even more polluted during the era of reconstruction and thereafter. Iron dust from iron mills penetrated through shut windows in houses andclassrooms. The shirt collars of businesspeople turned black whenever they spent time outside. In
some areas, laundry was not hung outside for drying because the mist of sulfuric acid made small
holes in the clothes.7
PLAN FOR A NEW COAL-FIRED POWER PLANT. In 1964 Ichio Asukata defeated the incumbent conservative and became the mayor of Yokohama City. Mr. Asukata was a member of theSocialist Party. It claimed that the conservative and pro-business policies of LDP at the national
and local government levels were responsible for polluting the country and that only leftist policies
would improve the environment. Mr. Asukata, therefore, had a mandate to improve the environment, particularly air quality.
When Mr. Asukata took office, a coal-fired power plant had been planned for the Isogo area of thecity-an area reclaimed from the sea by the municipal government during the former mayor's
administration. One piece of the reclaimed land (ca. 300,000 square meters) had already been soldto Tokyo Electric Co. Ltd, which had a plan to establish an oil-fired power plant. Later it was decided
by the national government that the Electric Power Development Company (EPDC) should purchaseone-third of this land from Tokyo Electric Co. and establish a new coal-fired plant.
In those days local citizenry in the area intensely protested against air pollution caused by an oil
refinery. Concerned that the proposed coal-fired power plant would worsen pollution, the municipal government assessed the environmental impact of the power plant using a wind-tunnel experiment and found that it would be significant. Under the Soot and Smoke Control Law, emissions
from power plants were regulated by the MITI, which was in charge of Japanese energy policy.
Neither prefectural nor municipal governments were authorized to control emissions.
THE YOKOHAMA METHOD. A land contract concluded between the Yokohama Municipal Gov-

ernment and Tokyo Electric Co. stipulated that the approval of the municipal government was
required before the company could sell the land to a third party. This provision prevented thepurchasers of land reclaimed by a public body from selling it to other parties seeking profits.
Without the municipal government's approval, Tokyo Electric would not be able to sell land to the
EPDC. Establishing a new coal power plant was a national policy, however, and it was difficult fora municipal government to directly oppose it. Moreover, the municipal government needed a new
local tax source, and the labor union for the coal mine was a strong supporter of the mayor's
Socialist Party. Instead of opposing the new plant, the municipal government obtained an agreement with MITI to negotiate with EPDC about the plant. Then it succeeded in reaching pollution
control agreements with the EPDC; in exchange the city let EPDC purchase the land.
In those days precipitation technologies were available, but flue gas technology was not. Using
low-sulfur coal was the only available method to control sulfur oxide emissions. Fortunately, domestic low-sulfur coal containing only 0.3 percent sulfur was available at a mine in Hokkaido.
With this coal the sulfur oxide concentrations in flue gas would be about 250 ppm, far below thenational standard of 2,200 ppm. Even if coal containing 1 percent sulfur was used, the sulfur oxide
concentration would only be 500 ppm. Under the pollution control agreement, the municipal government required the EPDC to use low-sulfur domestic coal. In addition, EPDC had to adopt thebest available technologies, reduce power generation during periods of serious air pollution, andallow inspection by municipal officers.

34

Local Approaches to Environmental ComplianceThis innovative approach encouraged the municipal government to control pollution despite its
limited authority to implement pollution control measures. The mass media accused the national
conservative policy of the LDP of polluting Japan, but they unanimously supported Mr. Asukata as"a mayor combating against polluting companies." He often attended meetings held by citizens
protesting pollution, and local citizens strongly supported him, believing that the municipal government would be able to solve the pollution problems.
As for the companies, they needed to expand production as the Japanese economy rapidly grew
during the 1960s. Yokohama was one of Japan's most attractive areas for business. It has an international port and is located very close to Tokyo, the largest Japanese market. On the one hand, local
citizens, often supported by local medical doctors, were speaking out against pollution. On theother hand, the companies needed some affirmation of their activities from the municipal government in order to win acceptance by the citizenry. The municipal government concluded pollution
control agreements one after another whenever companies expanded their facilities and/or established new ones, thus successfully reducing sulfur oxide emissions (see Figure 2.4). Reachingpollution control agreements remained a popular approach for local governments even after they
were delegated pollution control authority. 8 This approach became known as the Yokohama Method.
IMPLICATIONS OF THE YOKOHAMA METHOD. Mr. Asukata and the municipal government

considered scientific knowledge and monitoring data indispensable in their efforts to convince
factories to adopt adequate measures and enforce environmental policies. The municipal government developed and operated Japan's first air quality monitoring telemeter system using public
telecommunication lines as early as 1966. It also established the municipal research institute forpollution control with thirty-five staff members. (Currently, the number of personnel exceeds
seventy.)

Figure2.4 Sulfur Oxide Concentrations in Ambient Air
Daily sulfur oxide concentrations in milligrams per 100 square centimeters
2.0
1.8

,'

1.6

-

.

Osaka

Kitakyushu

1.41.2 12-<Yokohama
1.0

*

.

.

0.8
0.6

Nationwide

0.4

average

0.2
0
1960

1965

1970

,
1975
Year

Source: MEIP (1994), Fujikura (1998), and Osaka (1998).

1980

1985

1990

Successful Air Pollution Control in Japan: History and Implications

35

The legal basis of the pollution control agreements was seldom discussed. Some lawyers andcompanies doubted their effectiveness because the agreements were not based on enforceable laws.
Mr. Asukata, a lawyer, insisted that the pollution control agreements were private contracts andthat punishments could be specified for violators of the agreements. The companies observed theagreements because the agreements implied that they had obtained the city's approval for theiractivities and because the agreements ended citizens' protests.
Sulfur dioxide concentration in ambient air started to decrease in 1966. Actual emissions ofsulfur oxides from large factories in an industrial area declined 60 tons per day in 1970, while that
forecasted in 1966 was 300 tons a day.
This method was effective only for newly established facilities of large industries. The municipal
government was not able to conclude agreements with existing facilities or with large numbers ofsmall and medium-size industries. In dealing with them, the municipal government established aseries of guidelines on each pollutant, such as sulfur oxides, nitrogen oxides, and noise, andshifted its focus from reaching pollution control agreements to implementing guidelines. The guidelines were not based on local ordinances, and they were established without any consultation withthe local assembly. Recently, these guidelines were replaced by ordinances in order to reduce thenumber of guidelines and to make regulations simpler.
Kitakyushu City
Kitakyushu's major industries were iron and steel, chemical products, and stone and clay products. After air pollution in Uibe City improved, the residential district of Shiroyama, surrounded byindustrial areas, in Kitakyushu held the record in Japan for the worst dust fall from the late 1950s
to the mid-1960s. A monthly record of 123.8 tons of dust fall per square kilometer was recorded in
September 1966. Roofs caved in under the weight of the dust. Oily dust stuck to electric wires andformed "dust icicles." Every elementary school classroom was equipped with two air-cleaningmachines. Sprinklers were installed in the playgrounds to prevent the dust from blowing into theclassrooms. Pupils had to gargle every day using special "gargling equipment." Although the
Kitakyushu schools took every possible measure for adequate health management, many pupils
continued to suffer from pollution-related illnesses. The proportion of absentees in Tobata Wardschools from 1963 to 1965 always exceeded 10 percent and sometimes even exceeded 50 percent(Hayashi 1971, 111-18).
As industrial fuel in Kitakyushu City was switched from coal to petroleum and as consumptionof petroleum increased, the coal dust problem was naturally solved (see Figure 2.2), but sulfur oxide
concentrations in ambient air gradually increased (see Figure 2.4).
Despite severe pollution, the local people did not protest. One of thereasons for the silence of Kitakyushu's citizens was their ignorance of the health effects of pollution. Most of the local citizens were factory laborers and their families, and they regarded smokefrom the factories as a symbol of prosperity. People were particularly proud of the smoke from the
Yahata Works, Japan's largest iron mill. Moreover, factory laborers did not regard Kitakyushu as aplace to live but a place to work. Most of them had come from rural areas. They tended to return totheir hometown villages and farms after retirement. Thus, their living environment was less important to them than the economic benefits they derived from working in the factories.
The Yahata Works dominated local politics and economics. Before the Second World War, theYahata Works was a national iron mill, and it did not have to pay taxes to the city. It voluntarily"subsidized" local development projects such as water works, schools, and fire stations (Yahata
Works 1980, 608-17; Hayashi 1971, 51-60). After the war the Yahata Works was privatized andbecame one of the Nippon Steel Corporation's iron works. However, the Yahata Works' influence
SILENT CITIZENS.

36

Local Approaches to Environmental Complianceremained unchanged from the prewar period. Two retired Yahata Works staff members served as
mayors of Yahata City before the city became part of the newly formed Kitakyushu City in 1963. The
relationship between the municipal government and the Yahata Works was closer than the relationship in other Japanese cities between businesses and the government. The majority of theresidents were employees of these industries, or they were related to employees. Understandably,
local citizens hesitated to do anything that might jeopardize their employers.
ROLE OF WOMEN IN RAISING AWARENESS OF POLLUTION. As time passed, an increasing numberof laborers brought up their children and retired in Kitakyushu. As Kitakyushu became a place tocall "home," a place to reside and not just to work, more people became concerned about its pollution. Women were the first to take action to address the problem. In the mid-1960s, they organizedgroups to study local pollution problems. The polluting enterprises quickly learned about the
women's activities and used whatever means they could to stop them. Many of the husbands of thegroup members worked at the polluting factories, and the companies threatened them with transfers from their jobs.
The women did not challenge the enterprises directly. Instead they petitioned the municipal
government to implement effective antipollution measures, and they backed up their petitions
with the results from their pollution studies. They also reported these findings to the public. The
women produced an eight-millimeter film about local industrial pollution to show to the public.
Newspapers and television stations reported their activities. This stimulated a general awarenessof the impact of local air pollution on human health and the environment. According to a survey
conducted by the municipal government in 1971, 49.6 percent of the citizens became aware of"smog pollution."

MUNICIPAL SUPPORT FOR POLLUTrION CONTROL MEASURES. Gohei Tani, the mayor of Kitakyushu,
was a conservative politician supported by the conservative Liberal Democratic Party and by
local industry. When he was first elected in 1967, he thought that pollution was strictly a matterfor the prefectural government. However, as the general public became increasingly aware of pollution problems, citizens' complaints to the municipal government about air pollution increased: thenumber of complaints increased from an annual average of sixty-one during the 1960s to a recordof 179 in 1971. Both the local media and municipal assembly members criticized Mr. Tani for "thedelay in pollution control" and "loose antipollution regulations."
During the late 1960s, the local media and opposition party members of the municipal assembly compared Kitakyushu City unfavorably to other industrial cities governed by leftist politicians. A comparison of sulfur oxide concentrations in ambient air showed that improvement of air
quality in Kitakyushu City was two years behind that of the socialist-governed Yokohama City
(see Figure 2.4).
Pollution problems became the most important issue in the 1971 mayoralty election. Mr. Tani's
rival, who was supported by the Communist Party, criticized his pro-business policies and appealed for more stringent pollution control. Mr. Tani was forced to counter this attack by proposing
a progressive policy on pollution control. It was only through an intensive political campaign by
the business community in support of Mr. Tani that he obtained 61 percent of the vote and was reelected. However, the number of votes for his rival was more than three times the number of local
Communist Party supporters, an indication of strong support for his candidacy.
Both the severity of the pollution problems and the loss of popular support for conservative
politicians forced Mr. Tani to take drastic antipollution measures. Having upgraded the eightmember Pollution Control Division in 1970 to a twenty-two-member Pollution Control Department
in 1971, he upgraded the department to a forty-seven-member Pollution Control Bureau. While themayor and senior municipal officials tried to counter criticisms from the media, these officials

Successfnil Air Pollitioni Control in Japan: History and Implications

37

devoted themselves to enforcing measures that they believed would be the most effective in controlling pollution.
Local industry, like the mayor, gradually recognized that there was no alternative but to support
the municipal government's increasingly progressive stance on pollution control. If pollution worsened, a leftist would replace the conservative mayor of Kitakyushu and might impose even more strict
controls.
SCIENTIFIC DATA AS BASIS FOR STANDARDS. In 1970 the Fukuoka Prefectural Government and the
Kitakyushu Municipal Government, in collaboration with the major industries of Kitakyushu,
established the Joint Committee on Air Pollution Prevention in Kitakyushu. This joint committee
included representatives of the thirty factories emitting 97 percent of the city's sulfur oxides. In
order to meet the environmental quality standard for sulfur dioxide by fiscal 1973, the municipal
government in 1972 concluded a First Agreement on pollution control with fifty-four factories. Thisagreement was based on agreements reached by the joint committee. Factories utilized higher
smoke stacks, and the EQS was attained by 1973.
However, in 1973 the environmental quality standard was made three times more stringent
than it had been, and ambient air quality in Kitakyushu was required to meet the new EQS within
five years. The members of the joint committee concluded a new pollution control agreement (theSecond Agreement) to reduce total emissions in Kitakyushu by one-third in order to meet the new
EQS by 1977.
An important issue was the distribution among factories of the financial and operational burdens of the antipollution measures. What would be fair? A factory's burden should depend on its
responsibility for the air pollution problems. However, factories did not know the degree to which
their operations were responsible for pollution. In order to solve this problem, the municipal government utilized the results of a study carried out by the Ministry of International Trade andIndustry.
In 1969 MITI started a Comprehensive Study on Industrial Pollution (CSIP) in the Kitakyushu
area in order to forecast the environmental impact of a new industrial complex planned for
Kitakyushu. This was Japan's first comprehensive environmental impact study. Data accumulatedby the municipal government through continuous monitoring since the 1950s were utilized for thisstudy. A fluorescent substance was sprayed from a helicopter in order to determine meteorologicalelements. Based on these data, a wind tunnel experiment was conducted, and each factory's shareof responsibility for existing air pollution was determined.
Guided by the CSIP, the municipal government recommended that each factory adopt specificmeasures, such as installing higher smoke stacks (under the First Agreement) or switchingpermanently from high-sulfur to low-sulfur heavy oil (under the Second Agreement). A detailed
plan for sulfur dioxide reduction based on the city's recommendations and prepared by eachfactory was described in the "Annex" of each agreement. If the factories wanted to change theirplans, they had to consult with the municipal government beforehand. By utilizing the Annex, themunicipal government was able to provide each factory with ongoing individualized and comprehensive administrative guidance.
Solid scientific findings were used to require factories to take specific antipollution measures.
The only way for an industry to resist was to challenge the scientific data. One company carried out
the same wind tunnel experiment at its own expense only to confirm that the city's data werecorrect. Because the data could not be disproved, local industry had no choice but to comply withthe city's directives.
All local industries tacitly agreed that Nippon Steel, the largest company operating in Kitakyushu
and their traditional leader, would represent them. As a result, the municipal government only
needed to negotiate directly with the Yahata Works of Nippon Steel. Once the municipal govern-

38

Local Approaches to Environmental Compliancement and Yahata Works reached an agreement on any antipollution measure, the other companies
would comply with the agreement. The social conscience of the Yahata Works facilitated this process.
The employees had always been socially elite and taken pride in their company's role in the local
society. Once Yahata Works accepted the city's stringent antipollution measures as being necessary forthe general welfare of the city, it persuaded the other enterprises to comply (Shikata 1991).
A mutual reliance and cooperative relationship continued to exist between industries and themunicipal government. The Annexes of the pollution control agreements included trade secrets
about raw materials, kinds of fuels, the sulfur content of these fuels, fuel consumption, maximum
emissions, and other matters. Industries felt that they could trust the conservative municipal government to treat these Annexes as classified information. They feared these secrets might be disclosed to the public if their conservative mayor was replaced by a leftist. (All of the contents ofpollution control agreements concluded in Yokohama City, governed by leftists, had been opened
to the public.) Because of this concern about disclosure, mutual dependence and cooperation
between industries and the municipal government in Kitakyushu increased.
ANTIPOLLUTION MEASURES. As industries were required to adopt pollution control measuresthroughout Japan, the demand for low-sulfur heavy oil increased, and the supply became insufficient. The price of low-sulfur heavy oil relative to high-sulfur heavy oil increased dramatically (seeFigure 2.5). In 1969 one kiloliter of high-sulfur heavy oil cost 5,900 yen; one kiloliter of Indonesianheavy-oil containing only 0.3 percent sulfur cost 6,100 yen. The price difference amounted to only
3 percent. By 1973, however, this difference jumped to 61 percent (Yahata Works 1982).

Figure 2.5 Prices of Low-Sulfiir and High-Sulfur Heavy Oil
Price of oil in yen (nominal) per kiloliter

Low-sulfur oil price as a percentage of high-sulfur oil price

70,0001.8=

60,000-Low-sulfur heavy oil
High-sulfur heavy oil
Ratio of price1.6

50,000-1.4

40,00030,000.

-20,000Ii H I H

10,00:0
1958

1960

1963

1965

1969

1972
Year

Source: Yahata Works (1982).

.i _

1973

'

H~~ ~~~,

1978

1980

1982

1

1990

~~~~~1.0.

Successful Air Pollution Control in Japan:History and Implications

39

The difficulties of procuring low-sulfur fuel and its high cost inconvenienced Japanese industries. When the municipal government required a particular factory to reduce its sulfur dioxide
emissions to one-sixth between 1970 and 1975, the factory estimated that the additional expense ofswitching to low-sulfur oil would eliminate half of its profits. Despite strong opposition within thecompany, it nonetheless accepted the cost increase and changed fuels.
Desulfurization technology was nearly available by 1974, but the municipal government remained disinterested in flue gas desulfurizers. When a factory prepared a plan to install desulfurization equipment, the municipal government requested the installation of backup emergency
equipment. It also asked for a commitment to stop the whole operation whenever the desulfurization equipment stopped functioning. Steel works that used coal or petroleum as a raw material
were already equipped with desulfurization technologies, but for the Kitakyushu industries theswitch to low-sulfur fuel was the only way to conform to the city's antipollution guidelines.
The switch to low-sulfur fuels and energy-savings efforts after the 1973 and 1978 oil shocks
enabled Kitakyushu to reduce its sulfur dioxide emissions substantially. For example, the sulfur
oxides emissions of the Yahata Works in 1990 were about 2.2 percent of the 1970 emissions. The
switch to low-sulfur fuels and raw materials accounted for 42 percent, the largest share, of theemission reductions (see Figure 2.6). Energy savings and recycling accounted for 33 percent, andflue gas desulfurization, 25 percent (IES 1996). The sulfur dioxide concentrations of ambient air
also decreased to satisfactory levels. Test results show that in all the monitoring stations, national
environmental quality standards have been met since 1976.
Osaka City
In the seventeenth century Osaka City enjoyed special status among municipalities and was granted
various autonomous authorities by the Japanese feudal government. For centuries the local communi-

Figure2.6 Sulfur Dioxide Emission Reductions at the Yahata Works
Raw materials

Fuel

Switch to low-sulfur
material, 42 percent

Coke oven gas
Flue gas desulfurization,
25 percent

1970 emissions
Sintering furnace gas

Change of production process
Increasing productivity
Waste heat recovery (steam)
Waste heat recovery (electricity)
Actual emissions in 1990
Soiurce: IES (1996).

Energy savings andrecycling, 33 percent

40

Local Approaches to Environmental Complianceties have played an important role in the "management" of the Osaka municipality. Since the postwar
period, Local Development Associations (LDAs) have cooperated with the municipal ward office toenforce Osaka City's local policy.These associations have a pyramidal structure: the LDAis composedof local community unions, which are composed of local communities, which are composed of local
citizens' "groups," and every family belonged to one local group. Merchants or factory owners were
influential in local politics and were often appointed as directors of these local organizations.
Because of this cooperation between the municipal government and the local communities,
citizens viewed the municipal government as their own organization and were seldom in conflictwith it. Local businesses and citizens donated funds for a variety of projects in Osaka City. 9 In turn,the municipal government provided support to local industries, particularly small and mediumsize industries, in various ways. For example, the municipal government financially supported
local SMIs through soft loans. The Osaka Municipal Institute of Technologies granted its patents to
SMIs without charge. This harmonious relationship between local businesses and the municipal
government, a relationship not usually found in other municipalities, promoted effective measures
for industrial pollution control in Osaka City
AIR POLLUTION CONTROL MEASURES. In the mid-1950s, as during the prewar period, sootand smoke, which became known as "smog," again started to annoy residents of Osaka. Onefourth of the complaints about pollution in Osaka concerned smog. Most of the air pollution problems then were caused by coal dust. In the winter time thick smog, emitted from building heating
systems, covered the downtown areas. The smog sometimes became so thick that it blocked sunlight, and drivers had to turn on their headlights even in the daytime. Local businesses understoodthe importance of adopting pollution control measures in order to protect human health and to
improve the city's air quality.
The municipal government encouraged local businesses to organize the Soot and Smoke Prevention Cooperation Association, and the first association was established in 1958 in the Higashi
Ward. Later associations were established in every ward, and the Osaka Alliance of these associations was established in 1960. The associations, like the Osaka Soot and Smoke Prevention Study
Commission in the prewar period, investigated antipollution technologies and raised the business
community's awareness of environmental concerns. Through this infonnal, rather than legal, mechanism, the municipal government was able to guide local factories.
When the Soot and Smoke Control Law was established in 1962, the authority to control air
pollution was delegated to the prefectural governors, and the municipal mayor was not given any
authority to control pollution. Although the guidance given to factories by the municipal government
lacked a legal basis, the mayor, Mr. Chuma, continued to give it. Most factories allowed inspections by
the local officers without questioning the legal basis of their activities. Only a few refused to beinspected. Even the power plants and gas plants permitted the inspections and followed the guidance, even though power and gas plants were not subject to the Soot and Smoke Control Law. (Other
laws gave the MITI control over their emissions.) The municipal government was the largest stockholder of the Kansai Electric Corporation. The Osaka Gas Corporation, originally the Municipal Gas
Department, was later privatized. The municipal government was able to control air pollution fromthe power plant and the gas plant without any difficulties.
When the Soot and Smoke Control Law was fully enacted in 1963, the Osaka Prefecture Government delegated to the municipal government the authority to enforce it. The law allowed
prefectural governors to delegate their authority to municipalities, but prefectural governments
usually resisted this. In Osaka the prefecture government recognized the effectiveness of implementing antipollution measures under the municipal government and therefore decided to delegate its authority.

Successful Air Pollution Control in Japan: History and Implications

41

Guidancemunicipal
the
Then
Plan based on solid scientific data and made the plan open to the public.
government held meetings to explain its policy to the local business community and to convey
information about air pollution and health damages, antipollution technologies, soft loans, factoryandrelocation as an antipollution measure, tax exemptions, the supply of low-sulfur heavy oil,other issues.
The factories, including the SMIs, that attended the meetings understood the necessity of adopting measures to control air pollution, and they were able to prepare their own antipollution plan.
After convening the meetings, the municipal government presented an emission reduction target
for individual facilities, and it asked the facilities to submit their own Plan for Air Pollution Prevenair
tion. Through this individual guidance, the municipal government succeeded in lowering
ADMINISTRATIVE GUIDANCE. The municipal government prepared an Administrative

pollution in Osaka.
areas, like in Kitakyushu, the MITI
polconducted a Comprehensive Study on Industrial Pollution (CSIP). The ministry forecast air
theinlution in Osaka Prefecture in 1972 based on emissions data from ninety-five large factories
prefecture and on the results of a wind tunnel experiment. The maximum concentration of sulfur
oxides on the ground could be reduced by approximately 30 to 40 percent if heavy oil in thesefactories was switched to heavy oil with a sulfur content of less than 1.7 percent. Then, in June 1969,the prefecture government established the first Blue Sky Program, and the municipal government
gave guidance to large factories in order to attain the target.
Building heating systems in downtown Osaka City significantly contributed to local air pollution. Even if all large factories attained their emission reduction targets and the other facilities
thecomplied with the newly established emission standards of the Air Pollution Control Law,
municipal
theenvironmental quality standard for sulfur oxides appeared unattainable. Thus,wasgovernment established the Second Blue Sky Program in October 1969. The program's purposeofownersguidedgovernment
municipal
Thefacilities.
to reduce emissions from nonproduction
1.0
than
less
containing
oil
heavy
to
fuel
buildings located in the downtown areas to switch theirpercent sulfur. Except for a few cases, most of the building owners were cooperative and switched
their fuel once they understood the necessity of the measures.
THE BLUE SKY PROGRAMS. In the Osaka and Amagasaki

of Osakaplenty of
were
there
surprisingly,
City, small factories were built close to residential houses. Notmonthlytheandcomplaints about air pollution. Monitoring of ambient air quality began in 1964,
average for emissions of sulfur oxides sometimes exceeded 0.2 ppm. In 1970, 653 citizens were
officially designated as patients suffering from pollution-related diseases.
In 1966 a monitoring station was established at every block of 400 x 400 meters, and the 230
factories that had installed a smoke stack were inspected. Based on the data obtained from thisstudy and on simulation analysis, the municipal government estimated the contribution of eachfactory to local air pollution. Using the results of the study, it guided the factories on how theyshould address the pollution problem. In order to implement emergency measures, the municipal
government organized the Special Guard for Nishiyodogawa Ward Pollution Control. Thirteen
local officers formed this guard.
The target of the emergency measures was to attain within two years the EQS for sulfur dioxide of 0.05 ppm. (The national government target for a similar EQS was attainment within ten
years.) The pollution control measures commenced in 1970. The ambient concentration at 0.083
ppm in 1969 decreased to 0.042 ppm by 1972. The municipal government thus succeeded in reaching its target within two years.
EMERGENCY MEASURES IN THE NISHIYODOGAWA WARD. In the Nishiyodogawa Ward

42

Local Approaches to Environmental Compliance

THE KEYS TO SUCCESS IN OSAKA CITY. The Yokohama Method described earlier in thischapter
was widely viewed as an effective tool for pollution control. Leftist parties in the municipal assembly, the mass media, and academicians repeatedly demanded that the Osaka Municipal Government adopt the Yokohama Method. However, the municipal government refused and continued
instead to give administrative guidance to factories. It should be noted that the Yokohama Method
was not intended to control pollution from existing factories that had no plan to expand or renovate
their production facilities.
Reliance on Administrative Guidance. The municipal government argued against pollution control
agreements as too restrictive. If the municipal government reached an agreement with factories, itwould not be able to request any additional measures to control pollution, even when better technologies than those already subscribed to in the agreements were developed. The municipal government feared that pollution control agreements would become a sort of "indulgence," allowing
factories to operate without adopting the "best" measures arrived at in a dynamic situation of
antipollution technology development.' 0 For these reasons the municipal government opted to
institute administrative guidance instead of pollution control agreements.
Cooperation between the Government, Business, and Citizens. The good relations between the municipal government, local businesses, and citizens enabled substantial pollution control in Osaka
City. Local businesses participated in the management of the municipality and generously gave
donations for the development of the city. Small industries were technically and financially supported by the municipality and consequently felt indebted to it. They readily invested in antipollution measures once they understood the pollution problem and the degree to which they were
responsible for it.
Company owners and factory managers often served as directors of local organizations such as
the Local Development Associations mentioned earlier. These groups served as the forum for citizens' complaints about pollution. Complaints were submitted to the municipal government throughthe local organizations. Often the directors of groups voicing complaints were also the polluters of
the local environment. Therefore, they adopted antipollution measures to hold their prestige in thecommunity.
Once the municipal government officially received an antipollution plan from a factory, it asked
citizens to endure the pollution until the plan was implemented. Citizens trusted the municipal
government and usually waited patiently for improvements. Demonstrations and sit-ins did occur,
but the municipal government believed the participants were organized by leftist political groups
as part of their antigovernment campaign. In its view, few of the protesters were actually residents
who were affected adversely by pollution. Therefore, the municipal government concentrated on
dealing with complaints submitted through the local communities.
Initiatives of the Mayor. Both Kaoru Chuma, the mayor during the 1960s, and his successor,
Yasushi Oshima, the mayor during the 1970s, were conservative, and they were widely supported by the local citizens. Osaka's leftist governor and mayors in other industrial cities, such as
Yokohama and Tokyo, enjoyed less grass-roots support.
The mayor of Osaka City understood that the municipal government had to address the air
pollution problem. Polluting factories were given incentives to adopt antipollution measures. Since
the 1960s, pollution control measures had been the most important focus of the municipal government, and the mayor actively expanded environmental divisions to control air pollution. In 1975
the number of staff involved in pollution control reached 192. These initiatives of the mayor werewelcomed by the local citizens.
FinancialSupport. A unique facility of Osaka for purchasing factories' land encouraged pollution
control among small and medium-size industries. A number of factories in Osaka City owned by
SMIs were on land too small to install pollution control equipment that was effective; hence, toaddress the pollution problem, they had to relocate or shut down. According to a study by themunicipal government in 1968, 182 factories opted for relocation of the 290 factories that had

Successful Air Pollution Control in Japan: History and Implications

43

Osaka'scaused (or may have caused) pollution-related complaints from local citizens. Underoffactories
after
vacatedlots
theboughtgovernment
facility for purchasing land, the municipal
192,780
of
area
total
a
boughthad
SMIs relocated to other areas. By 1991 the municipal government
government
square meters from seventy-two factories. Some of this land acquired by the municipal
became municipal parks or was used for community centers.
acquire new
Through Osaka's facility for purchasing land, SMIs were able to obtain funds togovernment
land to relocate and sometimes to build new production facilities. The municipal
where it
land
new
the
of
price
the
than
bought land in the city at the market price, much higher
indusofimpactrelocated. Sometimes the municipal government also assessed the environmental
government
local
trial operations at the new site instead of the assessment being done by thethe capability of the
responsible for the site; this was because local government officials trusted
municipal government in pollution control matters.
Yokkaichi City
production, wereDuring the prewar period, light industries, such as textile and light machinery
Prefecture."1 In
Mie
the
of
City
Yokkaichi
the major industries in the Tokai region, which includes
oil refinery station
1939 the Japanese navy established its fuel depot at Yokkaichi Harbor, and an
war. In 1955 thethebegan operating in 1941. These facilities were completely destroyed during
to establish a
Cabinet decided to hand over this place to Mitsubishi Corporation and Shell Groupan oil refinery,large-scale petrochemical complex. In 1959 the whole complex, which included
2
It was theoperations.'
startedplant,
chemical product industries, and an oil-fired thermal powerlargest petrochemical complex in Asia.
domestic
Until the early 1960s, industries in the Tokyo-Yokohama industrial area consumed
in Osaka andcoal mined in the Tohoku and Hokkaido regions (northeastern Japan), and industries
far from
locatedwasregionTokai
Theregion.
Kitakyushu were dependent on coal from the Kyushu
theresult,aAsexpensive.
was
all of the coal mines, and thus the price of coal in the region
percenta
as
oil
1962
Yokkaichi area was already dependent on imported oil in the early 1960s. In
for Yokkaichi.
age of all industrial fuel was 39.8 percent for Japan as a whole but 88 percent
in 1965,
SULFUR OXIDE POLLUTION. According to an estimation of sulfur dioxide emissions
annualOsaka's
exceeding
Yokkaichi City emitted annually 140 thousand tons (420 tons per day),inconcentrated
wereemissions of 110 thousand tons. All major sources of emissions in Yokkaichitimes more intensea small area (about 30 square kilometers). Emissions were estimated to be ten
than those in Osaka City.
In the early
Residential areas near the petrochemical complex had extremely serious pollution.
area,
polluted
most
1960s, an automatic measuring instrument installed in the Isozu area, the2.5
wasfor the area
often recorded 1 ppm of sulfur dioxide in the ambient air; the worst record
and the acidity
ppm. In addition to sulfur oxides, the Yokkaichi area was polluted by sulfuric acid,complex, soiltheAround
1967.
in
pH4
to
of rain water gradually increased from pH6 in 1961
became acidic with a pH less than 4.
was anYOKKAICHI ASTHMA. The first sign of air pollution recognized by the local residents
about an offenoffensive odor. As soon as factories in the complex began operating, complaintsof thesenumberthemid-1960s,
theInsive odor were submitted to the municipal government.
comtotalofpercent
70
than
more
for
complaints annually was more than 400 and accounted
sulhydrogenassuchfacilities,
plaints concerning pollution. Chemicals emitted from oil refinerybetosuspected
fide and mercaptane, and various substances emitted from chemical factories weregroups tothe cause of the odor. The prefecture and municipal governments organized "patrol"
no effecmonitor the situation and suggested that factories should take remedial action. However,44

Local Approaches to Environmental Compliancetive measures were implemented by the factories.
As early as 1960, medical doctors reported an increase in cases of asthma in the Isozu area.
The
municipal government conducted a medical survey of more than 30,000 citizens. The survey
foundthat cases of respiratory diseases and throat ailments were significantly more numerous
in polluted areas than in unpolluted areas. Sukenori Hirata, the mayor of Yokkaichi City, allocatedaspecial budget of 10 million yen in 1960 to treat asthma patients. This was Japan's
first official
measure to help designated patients of pollution-related illnesses. Mr. Hirata was a conservative
politician, a member of the LDP. He believed that the city was able to develop its economy
becauseof the petrochemical complex, and that the city, therefore, was obligated to share part ofthe benefits
it derived from the complex with the victims. 13
The mayor and the governor invited the petrochemical factories to Yokkaichi to develop
thelocal economy. The factories became the mainstay of the local economy and were politically
influential. They felt that it was unnecessary to adopt antipollution measures (because Yokkaichi
wasnot designated as a pollution control area according to the Soot and Smoke Control Law)"4
and thatfactories were not subject to any national emission standards. Citizens in Yokkaichi appreciatedthe municipal government's effort to provide financial support to asthma patients. Local
citizens
were politically conservative. Few protests took place despite the worsening air and sickening
population.
KUROKAWA'S COMMITTEE. In 1963 the Ministry of International Trade and Industry
and the
Ministry of Health organized an official committee (later called the Kurokawa Committee
after thefamily name of the chairperson) to investigate the air pollution situation in Yokkaichi City,
identify
possible countermeasures, and examine whether the Yokkaichi area could be appropriately
designated as a pollution control area. Because Yokkaichi had factories producing various
chemicals
and the sources of pollution were diverse, an interdisciplinary approach, relying on
the production
expertise of MITI and the health-related expertise of MHW, was needed.' 5
The business community strongly opposed committee recommendations to switch
to low-sulfur
fuel. The committee was not able to introduce emission standards for major facilities in
the complex
that were more stringent than the standards under the law (2,200 ppm). Despite strong
opposition,a slightly more stringent standard was applied to the power plant, but this standard of 1,800ppm
was not strict enough to reduce pollution.
The factories did adopt the committee's recommendation to install higher smoke stacks todisperse emissions. Later this concept was included in the Air Pollution Control Law of 1967,
and theK-value regulation was adopted as a standard. Constructing a higher stack was cheaper
thaninstalling flue gas desulfurizers. By 1967 almost all factories in the complex had smoke
stacks 100
to 200 meters high. It was an effective measure to reduce local air pollution as longas the numberof stacks was small. The measure reduced pollution in the Isozu area but spread it
elsewhere. The
polluted area increased from 20 percent of Yokkaichi City in 1965 to more than 50
percent in 1971.
YoKKcACHI LITIGATION. Without effective measures to cut down emissions, the numberof asthmapatients increased. In 1964 an asthma patient died whose symptoms resembled thesymptoms from"smog death" reported in London during the 1950s. Some despairing asthma patients
committed
suicide. In 1967 nine patients sued six factories in the complex, demanding compensation
for theirruined health. During the trial, the factories insisted that they had been complying
with national
regulations and had installed the most advanced antipollution technologies.
The Tsu local court in 1972 decided in favor of the plaintiffs. It ruled that there was an epidemiological cause-and-effect relationship between air pollution and the respiratory diseases
suffered by
the plaintiffs. The activities of all of the factories in the complex were declared to be
an illegal act.
Even a factory that did not emit a significant amount of sulfur oxide was regarded
as a part of theSuccessful Air Pollution Control in Japan: History and Implications

45

illegal activity of the whole complex as long as it utilized chemical products and electricity generated there. The court ruled that the factories were negligent in their responsibility to pay attention
to the impact of their activities at the time, and it ordered the factories to pay 88.2 million yen ascompensation for the damages inflicted on the plaintiffs (ICETT 1992). Although the factories were
unsatisfied with the ruling, they later gave up an intermediate appeal and abided by the decision of
the court.
court
(KLaw
Control
Pollution
Air
the
in
suggested that neither the emissions control measures embodied
protect
toablevalue regulation) nor the environmental quality standard for sulfur dioxide were
human health. One year before the court decision, Kakuzo Tanaka, the governor of the Mie Prefecture,
had decided to introduce "total emission control." One month after the court decision, the Mie Prefecture Government established "urgent antipollution measures" and asked the factories of the petrochemical complex to reduce their emissions of sulfur oxides. In 1973 total emission control was
implemented based on the Mie Prefecture Ordinance for Pollution Control.
This legislation included the following provisions. First, an interim target concentration of 0.025
ppm of sulfur dioxide (annual average) in the ambient air should be met by 1974. Second, a final
target concentration of 0.017 ppm (annual average) should be met as soon as possible after theinterim target was obtained. Third, fuel consumption at each factory should not exceed the amountconsumed in 1973. Fourth, the sulfur content of fuel should be regulated below certain levels (0.67
percent to 2.2 percent by 1973,0.45 percent to 1.5 percent by 1974). Finally, the establishment of new
facilities and / or expansion of existing facilities would require permission by the prefecture government. As a result of the introduction of the total emission control measure, annual sulfur oxide
emissions from Yokkaichi City declined drastically from over 100,000 tons in 1971 to 17,000 tons in
THE IMPACT OF THE LITIGATION ON NATIONAL POLICY. The 1972 decision of the Tsu local

1975 (ICETT 1992).
When the total emission control was officially introduced by the Prefecture Ordinance, concerns
were raised concerning its lawfulness. The Air Pollution Control Law did not permit the local
government to establish any regulation of sulfur oxides other than the K-value regulation. Furthermore, the final target of the sulfur dioxide concentration in ambient air of 0.017 ppm was more
stringent than the national EQS of 0.05 ppm (annual average). However, based on the experience of
Yokkaichi City, the Cabinet amended the national EQS for sulfur dioxide to a standard approximately three times more stringent than the 1973 level. The national government also amended the
Air Pollution Control Law in 1974 by including total emission control. These amendments made16
the local emission control measures of the Mie Prefecture adequate.
A Comparison of the Local Initiatives
Table 2.2 presents the air pollution control measures adopted by the case study cities (Yokohama,
Kitakyshu, Osaka, and Yokkaichi) and by Ube City. Citizens' complaints, differing in intensity ineach city, proved to be a significant catalyst for environmental management. In Kitakyushu andYokkaichi, industry was politically influential and economically dominant. The citizens rarely
united in collective action; rather they expressed their will through local elections or, as a lastresort, through court litigation. In Yokohama and Osaka, citizens were more free from the influenceof local industry, and collective actions were taken. In Ube, the pollution control measures occurredin the 1950s when public awareness of the dangers of pollution was much less than in later years.
In Yokohama, Osaka, and Kitakyushu, the mayors played an important role in facilitating pollution control measures. In Yokkaichi, the political will of both the governor and the mayor to arrest
pollution was not as evident as in the other three cities. Neither the prefecture nor municipal
governments were able to control pollution before the court decision. In Yokkaichi the court deci-Table 2.2 Air Pollution Control Measures Adopted by Five Local Governments
City

Ube

Yokohama

Osaka

Kitakyushu

Yokkaichi

Period of measure1950s

mid-1960s

late 1960s and early 1970s

early 1970s

mid-1970s

National law

None

Soot and Smoke Control
Law

Soot and Smoke Control
Law; later the Air Pollution Control Law

Air Pollution Control Law

Air Pollution Control Law

Local government
taking initiative

Municipal government

Municipal government

Municipal government

Municipal government

Prefecture government

Main source ofpollution

Large cement factories

A coal-fired power plant
and large factories

Small and medium-size
industries and building
heating facilities

Large factories

A petrochemical complex

Major pollutants

Cement and coal dust

Sulfur oxides

Sulfur oxides and coal
dust

Sulfur oxides (coal dust
until mid-1960s)

Sulfur oxides

Form of civic protest

Complaints about pollution were submitted tothe municipal government; no obvious
citizens' movement
occurred.

Local medical doctors led
intensive movement
against air pollution.

Local communities submitted complaints tothe municipal government; leftist politicalparties led antipollution
movement.

Citizens supported
mayor's rival in thelocal elections.

Litigation was the catalyst
for pollution control
measures. No obvious
collective action occurred.

Key player or players

A university professor
who monitored dust
fall

Mayor

Local communities

Local women's associations that conductedstudies of pollution

Lawyers ruling in the Tsu
Court decision

Administrative
instrument

Dust control resolution
adopted by municipal
assembly

Pollution control agreements (later a municipal ordinance)

Administrative guidance
Pollution control agreewas provided with techments between thenical and financial supmunicipal government
port for SMIs
and major polluters

Total emission control(compensation for victims
during the 1960s)

N

Government-industry
communication

Meetings between themunicipal government
and factories

Meetings where the muniBargaining between acipal government excompany and the muniplains the necessity of
cipal government whenpollution control
the company establishes
measures to polluters
and/or expands its
production facilities

Political stance ofthe mayor

Conservative

Leftist (Socialist)

Motives of industries
to control pollution

To increase production
efficiency

To preserve feeling of
To obtain acceptance ofparticipation in thelocal citizens by concludmanagement of theing a pollution control
municipality and toagreement with themaintain prestige inmunicipal government
the local community

Outcome

The first successful air
pollution control
measures were adopted
before the passage ofnational legislation.

Japan's first pollution
control agreement was
concluded.

Souirce: Author's summary

Fairly neutral

No substantive commumicaDiscussions within thetion seemed to be madeJoint Committee on
before the court decision
Air Pollution Prevention
in 1972

Conservative

Conservative

To help mayor win
re-election

To reduce public criticism

Nippon Steel's initiative
Successful antipollution
facilitated the dialoguemeasures, particularly
between the municipal
for SMIs, were madegovernment andpossible by cooperative
local businesses.
relationship between themunicipal government
and local businesses andby strong administrative
capability of the municipal government.

Court decision forced thenational government toamend the EQS. Introduction of total emission
control by the prefecture
government led thenational government tofollow suit.

48

Local Approaches to Enivironmental Compliancesion was instrumental in changing the policy of the governor on pollution problems. He finallymade a strong political commitment to total emission control.
The factors that influenced polluting sources to adopt antipollution measures varied in the fivecities. In Ube a cement company recognized the direct economic merit of collecting dust. Polluters in
the other cities dealt with public pressure by adopting costly measures to reduce sulfur oxides.
Their motivations differed: to establish new facilities in Yokohama, to keep their local prestige inOsaka, and to support their conservative mayor in Kitakyushu. In Yokkaichi, factories in the petrochemical complex undertook antipollution measures after the court decision because of the strong
political will of the prefecture governor and growing public pressure.
Solid scientific data played a crucial role in all of the cities. In Ube a university professor
monitored dust fall and convinced the factories of the necessity of antipollution measures. In theother three cities, local air pollution problems were scientifically investigated based on accumulated monitoring data using simulation models and costly wind tunnel experiments. By 1965
Yokohama, Kitakyushu, and Osaka had each established a local institute to conduct pollution
studies. Clearly, the municipal governments regarded scientific studies as crucial to environmental
management. These scientific investigations quantified each polluter's contribution to the local air
pollution problem, and the local governments persuaded the polluters to adopt antipollution measures after showing them the results of the investigations.

Conclusion
Japan's sulfur oxide emissions decreased by 82.4 percent from 1970 to 1989. These emissions
amounted to 0.5 kilogram per US$1,000 GDP in 1990; in the same year the average of all countries
that are members of the Organization for Economic Cooperation and Development was 3.7 kilograms (OECD 1994, 35-36). Japan's timely adjustment in its national policy during the 1970s to
include antipollution measures has been aptly described as a "pollution miracle." This adjustment
in national policy can be attributed to municipal governments' prior policy changes in response to
local citizens' complaints about pollution.
Several factors help explain why pollution in Japan had become so serious: lack of awarenessamong the local people, industry, and governments; ineffective legislation; and lack of technology andscientific knowledge. As demonstrated by the cities discussed in this chapter, Japan's experience in air
pollution control has not been simple but diverse because of cities' differing social and economic
backgrounds. Nonetheless, there is no doubt that the Japanese experience can provide useful lessons
for developing countries in their efforts to arrest pollution. For example, in cities where small numbersof large factories are the major polluters, similar approaches like that in Yokohama or Kitakyushu,
reaching pollution control agreements, may be effective. In cities where small-sized sources arepolluting the environment, Osaka's approach may be applicable.
Lastly, the availability of scientific data is very important. All the case cities fully utilized monitoring data and the results of simulations to force factories to adopt anti-pollution measures. They
made every effort to collect the data, although it was technically far more difficult to do so duringthat period than today. In developing countries today, it is a big task to collect and analyze environmental data. By disclosing environmental data, governments can exert pressure to factories andpromote public awareness.

Notes
1. Smoke emitted from stacks was also regarded as a symbol of industrialization and economic prosperity in Manchester, England, during the nineteenth century (Bowler and Brimblecombe 2000) and in Pittsburgh, Pennsylvania, in the United States between the late nineteenth and early twentieth centuries (Tarr
1996, 232).

Successful Air Pollution Control in Japan: History and Implicationis

49

2. Business communities strongly opposed the EQS for sulfur dioxides for the following reasons. First,
the standards were more stringent than those established in other industrial nations. Second, vast investments in antipollution measures would be required to attain the standards. Third, procurement of lowsulfur oil became increasingly difficult. Fourth, scientific knowledge at the time was insufficient to establish
the EQS (ICETT 1992). As a compromise, the attainment rates stipulated in the draft EQS were amended
from 99 percent to 88 percent for hourly values and 70 percent for daily values. Later it became obvious thatthe standards were unable to prevent adverse health effects (Yoshida 2002).
3. While energy savings investments reduced energy consumption by 4.7 percent, the remaining 5.7
percent reduction was attributed to improvements in operation and management.
4. The OECD reported how Japanese environmental policies are integrated into sector policies (OECD1994, 95-158).
5. During the 1960s, Mr. Hashimoto, the director of the Pollution Control Division of MHW, was able tomeet a director of the Ministry of Construction to discuss environmental issues only after he had visited theoffice of his counterpart more than ten times.
6. The discussion in this chapter of municipal governments' pollution control measures is primarily basedon Fujikura (1998), Osaka (1998), Yoshida (2002), and interviews by the author.
7. The author gratefully acknowledges the helpful information he received from Professor Saruta during
several interviews
8. About 40,000 pollution control agreements are still in effect in Japan. Most of the current agreements
require factories and other facilities (such as waste incinerators) to meet standards that are much more
stringent than national standards. For example, in an agreement the effluent standard for heavy metal is ten
times more stringent than the national standard.
9. In 1930 companies along Midosuji Street donated funds for the construction of an undergroundmunicipal subway. The main tower of the Osaka Castle was reconstructed in the prewar period withdonations from citizens, and a surplus went toward construction of the Osaka Divisional Headquarters of
the Imperial Army. Some facilities at the Osaka Port were donated by companies. Because of donations,many municipal elementary schools and kindergartens in Osaka's downtown area have much better facilities than the education facilities in other Japanese municipalities. Finally, donations funded equipment in thecity hall and other municipal buildings.
10. In order to avoid this problem, the pollution control agreements concluded in Kitakyushu stipulated that the companies had to adopt new pollution control technologies and that they should make aneffort to improve their antipollution measures. The pollution control agreements concluded in Chiba
Prefecture during the 1970s were subject to revision every five years in order to catch up with technology
development.
11. The discussion of Yokkaichi City is s based primarily on interviews with Professor K. Yoshida and on
his report (Yoshida 2002).
12. As early as 1957, fish caught near Yokkaichi began to smell oily, and fish markets refused to buy them.
Economic losses reached 79 million yen in 1960, and fishermen demanded that local govermnents andfactories in the complex pay 3 billion yen as compensation. Finally, they agreed on a compensation of 100
million yen, but no measures would be undertaken by factories to treat the effluent.
13. In 1961 the MHW provided a subsidy of one million yen to the municipal government as financial
support. In 1969 the national government established the Extraordinary Relief Law for Pollution-Related
Health Damage and took over support from the municipal government.
14. During that period, only Tokyo, Kawasaki, Osaka, and Kitakyushu were designated as pollutioncontrolled areas based on the law.
15. Professor Michio Hashimoto made this statement at a workshop on Practical Environmental Compliance and Enforcement Approaches, held by the World Bank Institute, Kusatsu, Japan, December 9-13, 2002.
16. National "total emission control" has been applied to areas where emission sources are so concentrated that it is deemed difficult to attain the EQS solely with the local emission standards. Prefecture
governors determine the total amount of emissions that would be permissible in each area regulated andformulate programs to reduce total emissions. This regulation system has been imposed in twenty-fourareas for SOx and eleven areas for NOx.

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------I

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-

3
Water Management Standardsand
Environmental Compliance in Japan
at the National and PrefecturalLevels
Thomas J. Ballatore, Victor S. Muhandiki, and Masahisa Nakamura
importance to
The question of how Japan resolved its postwar pollution problems is of great
examines thedeveloping countries currently experiencing rapid economic growth. This chapter
perforevolution of water quality standards in Japan and considers how good environmental
mance has been promoted.
control expeThe first part of the chapter analyzes, at the national level, the Japanese pollution
the counexamines
rience. It reviews the fundamental causes of pollution in postwar Japan andlevel
termeasures and resulting trends in ambient pollution levels. Actions at the subnational
Accordingly,
have been the most important in resolving man y environmental problems inJapan.
has
phosphorus
howexploresandthe second part of the chapter focuses on the prefectural level
Using
Prefecture.
Shigabeen controlled at industrial sources in the Lake Biwa watershed in thetheir phoseffluent data from 388 dischargers, this part analyzes why certain firms have reduced
questions unanphorus discharge. While such a broad analysis is valuable, it leaves specific
We turn to thisdecisions.
certainmakes
swered, such as why an individual discharger or firm
subject in Chapter 4.
Pollution Control at the National Level: An Overview of Japan's Experience
II, rapid ecoAlthough environmental problems were not unheard of in Japan before World War
in the use ofchanges
nomic and population growth after the war, along with the concomitantovercome thoseland and resources, put tremendous pressure on the environment. The battle totoday thanproblems has been largely successful: Japan's environment is certainly in better shapepostwarinpollution
waterofcausesanyone could have imagined in the 1960s. The three main
resource-use
andlandJapan-population growth, economic growth (industrialization), andchange-are examined below.
Fundamental Causes of Pollution in PostwarJapan(Ministry of
From 1945 to 1975, Japan's population jumped from 70 million people to 110 million
its relatively
Public Management, Home Affairs, Posts and Telecommunications 2002). Givenless than 10
small amount of habitable land (only a fifth of Japan's total land area has a slope of
popudensely
mostfourth
the
was
1945
in
percent) and an already large population base, Japan
2000).
Nations(Unitedlated country in the world, with 340 persons per square kilometer
growthIn the period from 1955 through 1973, Japan experienced some of the highest economic
and a
rate,
rates in its history. Massive increases in labor productivity, a high domestic savings
national
favorable international framework contributed to annual growth in the nation's gross53

Local A

54

56

o-.. --.

Local Approaches fo Environmental Compliance

Table 3.2 National Effluent Standardsfor

Nontoxic Pollutants in Japan
Year of enactment(most recent revision)Standard

Pollutant

1970
1970
1970
1970
1970
1970
1970
1982 for lakes,
1991 for coastal areas
1982 for lakes,
1991 for coastal areas

5.0 to 8.6
5.8 to 8.6
160 (daily average, 120)
160 (daily average, 120)
200 (daily average, 120)
5.0
3
Daily average of 3,000/cm
120 (daily average, 60)

pH (discharge into coastal areas)
pH (discharge into other water bodies)
BOD (rivers)
COD (lakes and coastal areas)SS
n-Hexane extracts (coastal areas)
Total coliforms (rivers and lakes)
Total nitrogen

16 (daily average, 8)

Total phosphorus

per liter unless indicated.
Note: Maximum values are in milligrams(2000).
Source: Ministry of Environmentis3.1). The sudden increase in 1993 of nonconformity
Figure(see
1992
bysubstances
toxic
most
for
the tightening ofto the regulated list (see Table 3.1) andbecause of the addition of new substances
1992 should beafter
the data in Figure 3.1 before andstandards for other substances. Therefore,
1992 is significant,drop in nonconformity from 1971 toanalyzed separately. While the generalregulated pollutants
the environment are not on the list of
many toxic substances discharged into
Standardsfor
Figure3.1 Nonconformity with Ambient
Percent of nonconforming companies

Toxic Pollutants, 1970-2000

1.6
1.41.21.0
0.8

0.4
0.2-

1975

1970

1980

+ Cadmium-Lead+ Total mercury
Dichloromethane
1,1-dichloroethylene
1,1,2-trichloroethane---- 1,3-dichloropropene
xa Thiobencarb
Source: Ministry of Environment (2000).

1985

1995

1990

Year
Organic phosphorus-u--Total cyanide

Hexavalent chromium

Alkyl mercury
Tetrachloroethylene-- cis-1,2-dichloroethylene
Trichloroethylene
z- Thiram
Benzene-Ke

Arsenic

PCB
1,2-dichloroethane
1-I,1,1-trichloroethane
Tetrachloroethylene-A-Simazine- -- Selenium-

2000

Water Management Standards and Environmental Compliance in Japan at the National and Prefectural Levels

57

Figure3.2 Conformity with Ambient StandardsforBOD/COD, 1970-2000
Percent of conforming companies
9080

Enclosed seas

605060 -40

Rivers

-

_--,

40 -

-

-Lakes-_ _ _,

and reservoirs

30 20
10
0

1970

1975

1980

1985

1990

1995

2000

Year
Source: Ministry of Environrnent (2000).

and have no ambient standard. The current list is disproportionately composed of substancesthat have at one time or another caused serious problems in Japan. Nevertheless, Japan's successin reducing the concentrations of the toxic substances shown in Figure 3.1 is noteworthy.
Japan had less success in dealing with nontoxic or organic pollutants. Conformity with ambient standards for biological oxygen demand (BOD) or chemical oxygen demand (COD) did not
significantly improve between 1970 and 2000 (see Figure 3.2). Notably, the pollution rates forlakes and reservoirs stayed fairly constant. This indicates that the responses outlined above were
not sufficient to halt the deteriorating quality of many of Japan's water bodies.
Summary
Although environmental problems remain in Japan today, the nation's handling of the pollution
crisis that developed after World War II can be praised as a success. Interestingly, the causes ofthe environmental problems and the solutions to them had similar roots. The environmental problems were caused by the economic and social developments that took place in Japan after thewar. That is, socioeconomic developments led to pollution problems; they also led to an aversion
to pollution by the general public and its desire to tackle the problems by any means. In Japan thisshift in thinking was first demonstrated at the local level through pollution control agreements
and lawsuits only to be later augmented by formal laws and regulations.

Pollution Control at the Prefectural Level:
The Case of Phosphorus Pollution in the Shiga Prefecture
The Shiga Prefecture, located in central Japan and surrounding Lake Biwa, has been relatively
progressive in combating environmental pollution. The importance of Lake Biwa to the economy
and culture of the area helps explain the greater value given to the environment in Shiga than insome other places in Japan. This section examines the evolution of environmental policies in58

Local Approaches to Environmental Compliance

Shiga, particularly those policies related to phosphorus, which is the limiting nutrient in Lake
Biwa's eutrophication. Ambient and effluent standards for phosphorus in the Lake Biwa watershed are discussed as well as the legal bases for those standards and the rationale behind them. In
addition, monitoring and enforcement are described. Compliance rates are based on raw datafrom monitoring and published government statistics on regulatory actions for noncompliance.
Finally, nonregulatory constraints on dischargers' behavior are examined in order to explain why
so many dischargers are well below their allowed effluent concentrations.
Ambient Standards
The Basic Environmental Law sets ambient standards to (1) protect human health from toxic
chemicals and (2) preserve the living environment by reducing nontoxic pollutants such as COD,
nitrogen, and phosphorus. Standards to preserve the environment are called environmental quality
standards (EQSs), and they have a legal basis in Article 16 of the Basic Environmental Law. Paragraph 1 states that the national government (Ministry of Environment) shall establish ambient
standards for the protection of the living environment for different classes of water bodies. Paragraph 2 states that the national government may delegate the authority to designate the class of awater body to the prefectural governor by means of a Cabinet Order. However, for major water
bodies like Lake Biwa, the national government directly sets the class level, partially to discourage prefectures from competing to attract or keep dischargers by implementing weak standards.
Although EQSs are goals that are not legally binding, they serve an important role as a basis forsetting effluent standards.
Lake Biwa is classified as Class AA for nontoxic pollutants such as pH, COD, suspended solids(SS), dissolved oxygen (DO), and fecal coliforms. It is classified as Class II for nitrogen and phosphorus; the ambient concentration of phosphorus must be below 0.01 milligrams per liter (mg/L), and nitrogen must be below 0.1 mg/L. The EQSs for nitrogen and phosphorus were added
following the Lake Law of 1984. Recognizing the difficulty of quickly meeting the phosphorus
EQS for the Southern Basin, the Environment Agency set a target of 0.012 mg/L in 1985 to be met
as soon as possible. However, compliance has not yet been attained, nor does it appear imminent.
The phosphorus level in the Northern Basin has been below 0.01 mg/L since 1980, yet algal
blooms and other signs of eutrophication continue to occur. This suggests that the EQS for phosphorus may be inadequate.
Effluent Standards
In order to meet the ambient standards, effluent standards have been developed and implemented
at the national and prefectural levels for control of industrial and municipal point sources. In
addition, Shiga has undertaken other important measures. For example, it has banned phosphorus-containing detergents, extended the collection area of the sewerage system, and reintroduced
the natural reed beds surrounding the lake. The national effluent standards, however, have beensignificant in reducing the pollution load entering the lake.
NATIONAL CONCENTRATION-BASED EFFLUENT STANDARDS. The Water Pollution Control Law
of 1970 is the statutory basis for national effluent standards. It should be noted that these standards are concentration based. The authority to make load-based standards is given by the Lake
Law of 1984.
Article 3, Paragraph 1, of the Water Pollution Control Law states that "the effluent standards
regarding the extent of pollution ... shall be established by Ordinance of the Prime Minister's
Office." Paragraph 2 requires that the standards be the maximum permissible amount (load) forWater Managemiient Standards and Environmental Compliance in lapan at the National and Prefectnral Levels

59

health-related items (that is, for toxic pollutants) and the maximum permissible level (concentration) for items related to the living environment (that is, for nontoxic pollutants such as phosphorus). Article 2, Paragraph 2, of the law designates "Specified Facilities" that are the targets ofregulation to be determined by Cabinet Order.
The standards for phosphorus are for the daily maximum less than 16 mg/L and for the daily
average less than 8 mg/L.] These levels are designed to provide the minimum level of environmental protection: they must be met by specified facilities anywhere in the nation. National uniform standards discourage prefectures from setting weaker effluent standards to attract dischargers. Prefectures that must protect sensitive resources (for example, the Lake Biwa watershed in
the Shiga Prefecture) need standards that are stricter than the national standards.
PREFECTURAL CONCENTRATION-BASED EFFLUENT STANDARDS. As noted earlier, the national
uniform effluent standards provide a minimum level of environmental protection. For prefectures like Shiga that have resources that are heavily dependent upon environmental factors, thesestandards are inadequate. Therefore, the Water Pollution Control Law authorizes prefectural governors to set stricter standards.
Article 3, Paragraph 3, states that "when there is any Public Water Area under prefecturaljurisdiction for which the effluent standards as established under Paragraph 1 are recognized to
be insufficient for... protecting the living environment, the Prefecture may establish more stringent standards than the maximum permissible levels stipulated ... by enacting Prefectural Ordinances in accordance with criteria to be stipulated by Cabinet Order." Shiga determined the national standards to be insufficient and passed prefectural standards first in 1972 on COD andthen in 1979 on nitrogen and phosphorus.
Under the authority of Article 3.3 of the Water Pollution Control Law, Shiga implemented aprefectural ordinance in 1972 that set stricter levels on COD, BOD, and SS discharges from specified facilities. At that time the Water Pollution Control Law did not specify nitrogen or phosphorus as items to be regulated, so they were left out of the 1972 ordinance. By the late 1970s, eutrophication symptoms (like algal blooms, loss of transparency, excessive weed growth, and taste andodor problems in the water supply) had become increasingly obvious. Control of COD alone was
not enough; nutrient control was also necessary. In 1979 Shiga passed the Eutrophication Prevention Ordinance (EPO), this time including nitrogen and phosphorus. This practice of including
nonspecified items in prefectural ordinances became known as yokodashi (roughly translated as"added on the side"). It was quite revolutionary at the time, reflecting as it did a major increase inlocal autonomy. The same practice was followed later by Shiga to extend the range of regulated
dischargers to include flow rates below 50 cubic meters per day (m 3 /day).
Concentration-based effluent standards for phosphorus are shown in Table 3.3. The levels are
maximum allowable concentrations. In 1997 new standards for companies discharging between
10 and 30 m 3 /day were added, but monitoring data were not available for this study.
In general, standards are established through the following process. An issue comes up and isrecommended by the Environmental Policy Section of the prefectural government to the head of
the Environmental Bureau. Under the authority of the governor, the head of the Environment
Bureau refers the issue to the Prefectural Environmental Council. The council is made up of Assembly members, professors, business leaders, and other concerned parties. The council makes
recommendations on effluent levels, for example, to the governor, who can then recommend the
proposal to the Prefectural Assembly, which has the final vote on whether or not to pass theordinance (Kagatsume 1998).
In the case of Shiga's Eutrophication Prevention Ordinance of 1979, debate among the council
members concerning the standards in Table 3.3 was contentious (Fukada 1984). The standards
were based on criteria shown in Table 3.4. It was assumed that all dischargers-except food

60

Local Approaches to Environmental Compliance

Table 3.3 Concentration-BasedEffluent StandardsforIndustries in Shiga, Japan

Type of industry
Food

Lunch box

TextileChemicalGelatin

Other

Flow rate in
cubic meters per day

Total pollution(milligrams per liter)
for existing sources

Total pollution(milligrams per liter)
for new sources

30-50
50-1,000

4
3

2
1.5

1,000-

2

1

30-50

5

4

50-1,000

53

1,00030-50

3
2

2
1.2

50-1,000

1.5

0.8

1,000-

1

0.5

30-50

2

1.2

50-1,000
1000-

1.5
1

0.8
0.5

30-50

2

1.2

50-1,000
1,000-

1.5
1

0.8
0.5

30-50

1.5

1

50-1,000

1.2

0.6

1,000-

0.8

0.5

Source: Shiga Prefectural Government (1998).

industries-could achieve a phosphorus effluent of 1 milligram per liter in their process water byusing the coagulation-sedimentation process. The standards take into account that different typesof manufacturers use different ratios of cooling and mixing water to dilute effluents. For foodindustries it was assumed that biological treatment would be used, but food industries could notachieve the same consistent removals as coagulation-sedimentation, so for them less strict standards were set (Oka 1997).
PREFECTURAL LOAD-BASED EFFLUENT STANDARDS. As mentioned earlier, the Water Pollution
Control Law of 1970 only gives the authority to set concentration-based standards for living
environment-related pollutants like phosphorus. For a long time, the prefectural government

Table 3.4 CriteriaforPhosphorusStandards
Phosphorus concentration in milligrams per liter by industry type
Standard

Food

TextilesChemicals

OthersRaw process water

5

10

5

10.5

Treated process water

1

1

1

1

Total wastewater [PIStandard (average)
Standard (maximum)

0.97
2
3

0.83
1
1.5

0.8
1
1.5

0.94
0.8
1.2

Note: The standards shown are for industries with flow rates between 50 and 1,000 cubic meters per day. The standards are approximately 30 percent looser for flows between 30 and 50 cubic meters per day and 30 percent tighter forflows more than 1,000 cubic meters per day.
Source: Oka (1995).

Water Maniagement Standards and Environmental

Compliance in Japan at the National and Prefectural

Levels61

to the load-based standards because concentrationpreferred the concentration-based standards
competing goal of economic expansion of existing
based standards would not interfere with theare related to load, not concentration, of nutrients.
firms. However, problems like eutrophication
to control eutrophication was recognized
The need for a statutory basis for load-based standards
was modeled on Shiga's EPO of 1979). The prefecand codified in the Lake Law of 1984 (whichitregulations for specified facilities. However,tures were given the authority to set load-basedarewere set in Shiga. The levels for new sources
was not until 1996 that load-based standards
3
dishave flow rates of 50 m /day and over. New
shown in Table 3.5. The targeted dischargers
chargers must meet a standard of
Load = aFlowl x 10 I
in cubic meters per day. Existing dischargers arewhere load is in kilograms per day and flow iswere set so as to mirror the concentrationgiven a slight break. Nonetheless, the a and b coefficients
based standards.
Monitoring and Enforcement

main ways in which effluent quality are monitored
Spot inspections and self-monitoring are theof
In Shiga the seven district offices are in charge
in the Shiga Prefecture and throughout Japan.
also
arefor dischargers within their districts; they
monitoring and enforcing effluent regulations
centralThe
noncompliance.
forand setting penalties
in charge of determining who is complying
EnvitheonPapersummaries in its annual White
prefectural office compiles data and publishes
decisions.
ronment, but it does not make enforcement
ingovernor the authority to conduct unannounced
SPOT INSPECTIONS. Article 25 gives thegovernment.
thebyof these inspections is borne
spections of regulated dischargers. The cost
yearlythat inspections are usually carried out on a
Budget and human resource limitations meantake place at night, and all are unannounced
basis (Shichiri 1998). Roughly 4 percent of inspections
appropriate identification, and the law specifically(Ishiguro 1998). The inspector must present
Water
construed as part of a criminal investigation.
states that such inspections shall in no way be
on a
based
prefecture
chosen yearly by the
samples are taken and sent to an analysis company
Table 3.5 Load-Based Standardsfor Phosphorus
Flow rate inmeters per day
cubicType of industry
Food
Lunch box
TextileChemicalGelatinOthera coefficientb coefficient

50-1,000

1.93

0.94

1,000-

1.54

0.94

3.85
3.08
0.91
0.62
0.91
0.62
0.91
0.62
0.71
0.67

0.94
0.94
0.97
0.97
0.97
0.97
0.97
0.97
0.96
0.96

50-1,000
1,00050-1,000
1,00050-1,000
1,00050-1,000
1,00050-1,000
1,000-

Source: Shiga Prefectural Government (1998).

.

Local Approaches to Environzmenital Compliance64

environmental bureaus in the local prefectural offices. The number and type of administrative
actions taken in 1997 for nitrogen and phosphorus violations are shown in Table 3.6.
Shichiri (1998) estimates that phosphorus violations account for approximately 40 percent of
the dischargers indicated as noncompliant in Table 3.6. In this table the data are for all "enterprises (jigyousho)" with flow rates greater than 10 m3 /day. The enterprises include many dischargers, including animal waste treatment centers and hotels, which tend to have more violations than manufacturers. A relatively high percentage of violations can be expected in the groupof manufacturers with flows less than 30 m 3 /day because they were not regulated until 1997. In
conclusion, phosphorus violations exist for the group of manufacturers over 30 m3 /day, but they
are a mere handful a year (Ishiguro 1998).
Yet Figures 3.3, 3.4, and 3.5 show more than a handful of annual violations. Why is there a
discrepancy? It may be that the government is reluctant to find noncompliance based only on the
spot inspection results. Reportedly, there is a written administrative procedure for determining
compliance and steps to take for noncompliance, but it is not public information. However, Fukada(1998) has shed some light on the process. If the results of the spot inspection reveal a violation of
the standard, the regulators and the suspected violator meet, and the discharger has an opportunity to explain the reasons for noncompliance. The self-monitoring data may be used in this caseto explain that the spot inspection data are nonrepresentative. If the violation is minor, a "lightwarning" is issued. If the violation is serious, a strong warning is issued along with suggestions
for process improvements. These two administrative actions are not based on any legal authority
and are, therefore, nonbinding. In Japan, however, such "administrative guidance" is usually
heeded by companies. If the warnings are ignored for several years (for nontoxic items like phosphorus), then "administrative measures" based on the authority given in the Eutrophication Prevention Ordinance are taken. An improvement order is given, and if ignored, a stoppage order isissued. This rarely happens for phosphorus discharge violations.
NONREGULATORY CONSTRAINTS ON DISCHARGERS' BEHAVIOR. Why are most of the dischargers
well below their allowed phosphorus concentrations (see Figures 3.3,3.4, and 3.5)? Following areseveral possible reasons:* Because of variability in process efficiency, dischargers include a safety factor in their abatement processes in order to meet the maximum concentration level.
* Some dischargers, because of the nature of their industry, do not produce large amounts ofphosphorus effluent.

Table 3.6 Compliance with Phosphorusand Nitrogen Effluent Standards, 1997
Item
Number of inspected dischargers
Number not in compliance
Administrative actions

Flow over 50
cubic meters per day

Flow between 10 and 50
cubic meters per day

939
41

409
9

"Measures"

Stoppage Order
Improvement Order

0
0

0
0

"Guidance"

Strong Warning

17

3

Lighit 1\woimiii

21

9

Note: More than one administrative action can be taken against a noncompliant discharger.
Source: Shiga Prefectural Government (1998).

Water Managemtentt Standards and Environmental Compliance in Japan at the National and Prefectural Levels

65* Some dischargers have bought equipment that provides overcontrol.
* Some dischargers have planned ahead and made larger than necessary investments in equipment, thereby achieving better abatement than permitted effluent levels.
*Effluent levels specified in pollution control agreements may be stricter than Shiga's standards (discussed below).
* Companies with ISO 14001 certification are continually trying to minimize their environmental impact (discussed below).
* Some companies feel a sense of good will and voluntarily reduce their effluent levels without outside pressure.
Figure 3.6 shows a hypothetical example of monthly self-inspection results for a typical foodindustry with a flow rate of 50 m3 /day. Both legal and extralegal constraints that influence theindustry's effluent levels are shown. The national standards will not be binding for companies in
Shiga. In addition, there may be a pollution control agreement that is stricter than the prefectural
standard. (These issues are explored in detail in Chapter 4.)
POLLUTION CONTROL AGREEMENTS. Pollution control agreements made in a mayor's office
between dischargers and local citizens are a unique characteristic of environmental policy inJapan and an effective means of reducing pollution. PCAs for water pollution in Shiga exist between many large dischargers and local citizens. Because these agreements came after the environmental laws and regulations, their importance is less than the agreements of the 1960s, butthey do contain some interesting provisions. The mayor's office in Otsu, the largest city in Shiga,
has eighteen pollution control agreements on record and approximately half of them include
phosphorus as an item. There are explicit load-based and concentration-based levels incorporated into the agreements. Shiga did not implement load-based standards until 1996, so the loadbased levels in the PCAs for major dischargers were a way of balancing the goal of environmental
protection with the goal of economic growth of existing firms in the prefecture.

ISO 14001. Certification of environmental management systems, such as ISO 14001, is proceeding rapidly in Japan.' The Shiga Prefecture is leading the country in the percentage of

Figure 3.6 Legal and Extralegal Constraintson Discharge
Effluent phosphorus (mg/i)
1614National uniform standard (no more than 16 mg/i)

12
10
8

Level specified in Pollution Control Agreement

6

040

1

O

1

O e A

'h

lf
2

3

i

e
4

5

6

9
1
1
1
Actual effluent 8 ality of
hypotheticalindustry

Time (months)
Souirce: Authors' hvpothetical food industry case.

7

8

9

10

11

12

66

Local Approaches to Environmental Complianice

dischargers certified. While ISO 14001 does not specify a specific effluent quality, it does require amember to implement an environmental management system. This means that the impacts of corporate activities on the environment must be assessed and actions taken to continually minimize
such impacts (Whitelaw 1997). Overall, the impact of ISO 14001 on effluent quality is positive, butdischargers receiving certification are usually large exporters with already low phosphorus effluent concentrations. The interaction of ISO 14001 with formal regulations and pollution control
agreements is not clear.
Conclusion
This chapter has underscored the importance of social pressure in convincing dischargers to control pollution. Although the environmental laws and regulations of Japan have certainly had apositive effect on effluent quality, the gains in pollution abatement would have been far less inthe cases examined if it were not for the strong social pressure on polluters to make them address
the problems they created.
Because local government authorities have the most immediate responsibility for environmental management at the local level, their capacity (institutional, technical, and financial) must
be developed. Local authorities should have legal powers to implement and enforce environmental laws. It is also necessary to develop support mechanisms at the local level through which
victims of environmental pollution can seek redress. Victims need assistance from persons with
scientific and legal expertise.
Today many developing countries are faced with the challenge of harmonizing the dual goalsof development and environmental conservation. The lessons learned from Japan's experiencenamely that public awareness and public participation are essential in the resolution of environmental problems-can be of real value to developing countries in their own pollution control
efforts.
Note
1. ISO is the name of the International Organization for Standardization. Because the name would havedifferent abbreviations in different languages (for example, IOS in English, OIN in French for Organisationinternationale de normalization), the founding countries decided to use a word derived from the Greek
isos, meaning "equal."
The ISO 14000 set of standards is primarily concerned with "environmental management." This term
refers to what the organization does to minimize the harmful effects on the environment caused by its
activities and to achieve continual improvement of its environmental performance.
There are other sets of standards. For example, the ISO 9000 family is primarily concerned with "quality
management." This term refers to what the organization does to fulfill the customer's quality requirements
and applicable regulatory requirements, while enhancing customer satisfaction and achieving continual
improvement of its performance in pursuit of these objectives.
References
Aoyama, Shunsuke, et al. 1993. Japan's Experience in Urban En2vironmental Management. Washington, D.C.:
World Bank.
Cruz, Wilfrido, Kazuhiko Takemoto, and Jeremy Warford, eds. 1998. Urban and Industrial Management in
Developing Countries: Lessons from the Japanese Experience. EDI Leaming Resources Series. Washington,
D.C.: World Bank.
Fukada, Fumio. 1984. "Lake Biwa's Problems and Shiga's Ordinance (Biwako mondai to Shigaken jorei)." In
OrdinancesforLake Water Quality Protection (Kosho shuishitsu hozen jorei), edited by Masashi Kaneko and
Tetsuo Seki. Tokyo: Hokki Publishers.

Water Managenment Standards and Environrmental Compliance in Japan at the National and Prefectural Levels

67. 1998. Telephone interview on 15 December.
Imura, Hidefumi. 1998. The Use of Voluntary Approaches in Japan:An Initial Survey. OECD: Paris.
Ishiguro, Minoru. 1998. Personal interview on 15 December.
Kagatsume, Toshiaki. 1998. Personal interview on 15 December.
Matsui, S. 1993. "Pollution Control in Japan: A Historical Perspective." In EnvironmentalPollution Control:The
Japanese Experience. Papers presented at the United Nations University International Symposium on
Eco-Restructuring, 5-7 July 1993, Tokyo, Japan.
Ministry of Environment (Japan). 2000. White Paperon the Environment (in Japanese). Tokyo.
Ministry of Public Management, Home Affairs, Posts and Telecommunications (Japan). 2002. http://
www.stat.go.jp/english/data/kokusei/2000/kihonl/00/01.htm Accessed on April 28.
OECD (Organization for Economic Cooperation and Development). 1977. Environmental Policies in Japan.
Paris.
Ohkubo, Takuya. 2000. "Lake Biwa." In Water Pollution Control Policy and Management: The Japanese Experie'nce, edited by M. Okada and S. Peterson. Tokyo: Gyosei.
Oka, Toshihiro. 1995. "Command and Control Approach for Water Pollution Control in Japan: The Experience of Lake Biwa Nutrient Control." In Proceedings from Environmental Economics Forum on Lake Bizva
Eutrophication Control. Shiga: Lake Biwa Research Institute.

.1997. "Direct Regulation (Chokusetsu kisei)." In The Economics of Environmental Policiy (Kankyo seisaku
no keizaigaku), edited by Kazuhiro Ueta et al. Tokyo: Nihon Hyoronsha.
Okada, M., and S. Peterson, eds. 2000. Water Pollution Control Policy and Management: The Japanese Experience. Tokyo: Gyosei..
Shichiri, Shoichi. 1998. Personal interview on 15 December.
Shiga Prefectural Government. 1998. White Paper on Environment (in Japanese). Otsu, Japan.
Tsuru, Shigeto. 1993. Japan's Capitalism: Creative Defeat and Beyond. Cambridge, England: Cambridge University Press..
United Nations. 2000. World PopulationProspects. New York.
Whitelaw, Ken. 1997. ISO 14001 Environmental System Handbook. Oxford: Butterworth-Heinemann.

--4Local Efforts to Control Water Pollution:
Case Study of a Metal-PlatingIndustry
in the Shiga Prefecture
Victor S. Muhandiki, Thomas J. Ballatore, and Masahisa Nakamura

In Chapter 3 we examined reasons for the compliance of numerous dischargers in the Shiga
Prefecture with phosphorus effluent regulations. This chapter focuses on an individual company,
RK Excel, and explores how this metal-plating firm in Shiga has managed its effluent quality
since the start of its plating operations in 1951. Surprisingly, formal laws and regulations appear
to have been less important in inducing good environmental performance by the firm than community pressure. Indeed, the most important factor influencing RK Excel's decisions to lower theconcentration of pollutants it discharges into the environment has been community pressure,within the context of changing environmental values throughout Japan and expanding markets
for pollution control equipment. Finally, the chapter examines the company's chromium contamination of groundwater and how pollution accidents are handled in Japan.'
Taken in proper context, Japan's experience with controlling pollution holds many valuablelessons, particularly for countries currently struggling with the perceived "growth versus environment" dilemma. Those lessons are summarized in the conclusion of this chapter.
The History of Pollution Control at RK Excel
RK Excel Co., Ltd., is a metal-plating company that produces automobile and motorcycle parts.
The current company was founded in 1989 as a result of a merger between Takasago Chain Co.,
Ltd., and Takasago Manufacturing Co., Ltd. The company has its head office in Tokyo, and it has
two factories: one in the Shiga Prefecture (located in the town of Yagura, Kusatsu City) and theother in the Saitama Prefecture. The Shiga factory, which is the subject of this chapter and isreferred to here as RK Excel, has been in operation since 1943. RK Excel mainly produces motorcycle rims and automobile wheels. It employs 123 persons, has an annual operating capital of
4.24 billion yen, and holds 60 percent of the world's market share in rims.
The company uses chromium in its metal-plating operations. The main toxic substance of concern is hexavalent chromium (Crs*). If released into the environment and ingested, it has severe
toxic and carcinogenic effects. RK Excel also uses and discharges less toxic metals such as reduced chromium (Cr3+), copper, and nickel. Variable pH that results from both production andpollution control methods is another major concern. Table 4.1 shows a complete list of pollutants
for which RK Excel is being regulated.

We thank Akira Yamamoto of RK Excel Co., Ltd., for providing extensive information for this casestudy. We also thank him for facilitating site visits at the factory.

69

Local Approaches to Environmental Compliance

70

Table 4.1 RK Excel's Wastewater Quality and Effluent Standards

SymbolWater quality
PostPretreatment
treatment

COD
SS
Oil
Fe3+
Cu2 *
Ni2 ,
T-Cr
Cr 6
CN
pH

77.8
3.62
1.00
6.45
1.8
95
12.5
12.5
0.0015
3.0

4.71
0.58
1.05
0.58
0.103
0.217
0.0092ND
0.00027.0

National(1970)

Effluent standard
Prefectural Municipal Neighborhood(1976)(1978)(1972)

160
200
5
10
3
NA
2
0.5
1
5.8 to 8.6

50
70
5
10
1
NA
0.1
0.05
0.1
6.0 to 8.5

50
70
5
10
1
1
0.1
0.05
0.1
6.0 to 8.5

30
30
3
10
0.1
1
0.1
0.05
NA
6.0 to 8.0

NA Not applicable (no standard exists).
ND Not detectable below 0.001 mg/I.
Note: All figures in mg/i.
Source: Unpublished data from RK Excel.

Since the start of its plating operations in 1951, RK Excel has implemented various methods
to control its effluent quality. For the period from 1951 to 1970, there was no legal requirement
to abate pollution, yet the company took pollution control actions. Therefore, nonregulatory
factors must be considered as well as regulations when explaining RK Excel's pollution abatement decisions.
The basic methods used by RK Excel to control the quality of its effluent have not changed
since 1951:
1. Reduction of Cr 6 + to Cr3 +2. Coagulation-sedimentation
3. pH neutralization.
What have changed are the extent and quality of these methods over time. It is possible todivide pollution control at RK Excel into four phases: 1951-58,1959-69,1970-72, and 1973-present.
Each phase and the reasons behind the efforts to control pollution are explored below. Figures 4.1
and 4.2 give an overview of the control methods used in each phase.
Phase 1: 1951 to 1958
Although there were no formal environmental regulations during Phase 1 from 1951 to 1958, RK
Excel nevertheless carried out pollution control activities. Their main purpose was lowering thedischarge of Cr6+. Its toxic effects were well known at the time, and it would have been unthinkable for the company to allow raw discharge of hexavalent chromium into the environment. In
this early period, RK Excel used simple earthen pits as reactors for each pollution control process.
These pits may seem primitive by today's standards, but they were commonly used at the time.
The pits were lined with what the company thought was clay but what turned out to be a moreporous soil. Seepage of pollutants from the pits into the soil and groundwater was possible, yet it
was never discovered, and there were no complaints from the local community. Through thissystem, RK Excel controlled its Cr6+ effluent. It is assumed here that the other pollutants indicatedin Figure 4.1 were also reduced, although no data exist to confirm this.

Local Efforts to Control Water Pollution: Case Study of a Metal-Plating Industry in the Shiga Prefecture

71

Figure4.1 Phases I through 3 of Pollution Control at RK Excel (1951 to 1972)
RK Excel Property
Cr6 + and H2 SO4

Outside RK Excel

Ni2+ ad Ca(OH)2-

Phase I
Coagulation and pH

Reduction Basin

Sedimentation

Fish Pond

Rice Fields

Sedimentation

Fish Pond

Rice Fields

adjustment
Cr 6+ a\d H2SO4

Phase221:
Improved coagulationand pH adjustment

Reduction Basin
Cr6 +

\ ,;
\

H,SO,

Phase 3 ___Ni2+ Coaglation and pH__

Separate Acid Dosing
and Reduction Basinsr ~~~adjustment

.

,_

_

with pH_

Adjustment
Stabilization Basin

Fish Pond

Rice Fields

Source: Unpublished charts of RK Excel.

Phase 2: 1959 to 1969
In the late 1950s concern grew in the local community about the effects of RK Excel's effluent onreceiving waters and rice fields. Farmers began to notice a decrease in rice production in fields
using water drawn from a pond that received significant inflows of RK Excel's effluent. In addition, there were suspicions that the effluent was damaging fish in the pond. The farmers believed
the problem was caused by wide variations in the pH of the effluent. In response to these complaints, RK Excel introduced a more reliable lime-dosing and pH neutralization system in 1959
(see Figure 4.1). In addition, it agreed to pay damages to the rice farmers affected as well as to theowner of the pond for damages to the fish. The first payment occurred in 1959, and payments
continued until 1974.
The main motivation for RK Excel to make the process improvements and damage payments
was to maintain good relations with the neighboring community. Most companies in Japan arequite sensitive to complaints from people living nearby. One reason is that, in Japan, changing thelocation of the factory is usually not a viable option; therefore, in order to carry out business in apositive atmosphere, companies must make sure that local communities are not angry with them.
Many of the workers at RK Excel live close to the factory. In Japan maintaining one's social status
in the local community is of utmost importance. Additionally, people are associated strongly
with the companies they work for. Therefore, if RK Excel caused a problem and did not takeappropriate action to resolve it, many of its workers would have been ostracized by people living
nearby who were not employed by the company. There is even a word in Japanese (mnurahachibu)that describes people put into "exile" in their own communities for unacceptable actions. For

74

Local Approaches to Environmental Complianceof effluent control solely in the regulations. Indeed, the company itself claims that its pollution
control efforts have been undertaken to maintain the best practices at the time.
To achieve the effluent quality shown in Table 4.1, RK Excel initially spent approximately 300
million yen on construction costs. The cost for operation and maintenance is approximately 20
million yen per year. The company's annual production cost is around 460 million yen. Therefore,
operation and maintenance of pollution control equipment alone is around 4.3 percent of annual
production costs. These costs do not include the costs for the groundwater remediation actions
described below.

Groundwater Contamination and Remediation by RK Excel
This section describes the contamination of groundwater by hexavalent chromium caused by RK
Excel and the measures taken by the company to improve water quality (see Appendix 4.1). The
pollution was discovered in 1976 when residents using groundwater from household wells within
1 kilometer of the factory site complained of itchy skin and yellow well water. In response, theShiga Prefectural Government carried out investigations and established that the groundwaterin three household wells within the complaint area was contaminated. A leak of hexavalent chromium from the concrete floor of a chrome-plating tank in the factory was discovered.
An out-of-court settlement between the residents and RK Excel was reached, and compensation was paid to the affected residents. The Shiga Prefectural Government required the factory toconstruct new plating facilities, to treat all contaminated soil within its compound, and to pumpand treat the contaminated groundwater until the concentration of hexavalent chromium met thedrinking water standard. To date, the factory continues to undertake the pump-and-treat operation, and it is expected that it will take a few more years before the drinking water standard ismet. The restoration of the contaminated groundwater is a costly undertaking for the factory.
Chromium Toxicity
Chromium is a heavy metal that is used in leather tanning, pigments and textile dyeing, andmetal plating, for example. Chromium is used in metal plating because of its resistance to corrosion and abrasion and its pleasing appearance as well as durability. Chromium is released into
the environment in its two most common oxidation states-namely, the hexavalent and trivalent
forms. Both forms of chromium are very toxic and carcinogenic, with the hexavalent form being
the most hazardous. Symptoms of acute dermal exposure to chromium include irritated skin andmucous membranes. Chronic exposure by inhalation can produce deep perforating nasal ulcers(known as chrome holes), bronchitis, decreased pulmonary function, pneumonia, and other respiratory problems. Ingestion can cause death. The drinking water standard for chromium in Japan is 0.05 milligrams per liter (mg/l).
Discovery of Contamination and Initial Response
During the early 1970s, the mass media in Japan widelv reported contamination of soil and groundwater with heavy metals, especially at abandoned factory yards (Matsui 1993). These cases andpollution cases publicized earlier (for example, illness from Minamata and Itai Itai diseases)
alarmed the Japanese people. The general public became aware of the negative effects of pollution on human health and began protesting against pollution.
Toward the end of March 1976, some residents of Yagura town (located in Kusatsu City) who
were using groundwater from wells within 1 kilometer of the Shiga factory of RK Excel (thenTakasago Manufacturing Co., Ltd.) began to speak out. As noted earlier, they complained that

Local Efforts to Control Water Pollution: Case Study of a Metal-Plating Industry in the Shiga Prefecture

75

they had been suffering from skin itchiness for a period of more than one year and that the colorof their well water had turned yellow. (At that time 83 percent of the 300 households in Yagura
town used well water, although 97 percent of the population of Kusatsu City used piped water.)
Because of the wide publicity given to pollution instances in Japan at the time, it was suspectedthat the groundwater was contaminated. The residents therefore requested a private company tocheck the quality of their well water. The analytical results revealed a concentration of hexavalentchromium of 8.2 mg/l in the well water, which was much higher than the drinking water standard of 0.05 mg/I. The results were reported to the Pollution Control Department of the Shiga
Prefectural Government on March 31,1976. The Shiga Prefectural Government immediately dispatched investigators to analyze the groundwater in six household wells within the complaintarea. Concentrations of hexavalent chromium between 1.1 and 7.5 mg/l were found in the waterof three of the six wells investigated-wells YG, Y, and T (Shiga Prefectural Government 1977).
This confirmed the analytical results reported earlier by the residents. At a later date, water quality tests were done for all the household wells within Yagura town. Except in the three household
wells already identified as being contaminated, no hexavalent chromium was detected.
On April 1, 1976, the Shiga Prefectural Government and Kusatsu City organized emergency
meetings and launched an investigation. A "hexavalent chromium task force" was set up andcharged with the following responsibilities:* Provision of water supply to affected residents (Kusatsu City in charge)* Water quality monitoring (Kusatsu City, the Kusatsu Public Health Center, and the Shiga
Prefectural Environment Center in charge)* Health check for residents (Shiga Prefectural Government and Kusatsu City in charge)* Investigation into the cause and extent of pollution (Shiga Prefectural Government in charge,
with assistance from Kusatsu City)* Communication of information to the residents (Kusatsu City in charge).
Residents' Response
On April 3, 1976, soon after the groundwater pollution was detected, the residents of Yagura
town set up a Pollution Prevention Committee to represent their interests in the investigation andmitigation of the pollution. The Pollution Prevention Committee was responsible for negotiations between the residents and RK Excel after the latter was officially identified as the source ofpollution. An out-of-court settlement was reached between the residents and RK Excel; the residents acknowledged that the pollution was accidental and expressed their willingness to cooperate with RK Excel in its efforts to mitigate the problem. (RK Excel was required to perform continuous monitoring, and several residents were involved in collecting water samples from wells
for analysis at the factory.)
Investigationsinto the Source of Pollution
The Shiga factory of RK Excel was suspected of being the polluter because it was known to beusing hexavalent chromium, and it was located at a high elevation and within 1 kilometer fromthe polluted household wells. The Shiga Prefectural Government's investigation confirmed aleakage of hexavalent chromium from the concrete floor of a chrome-plating tank in the Shiga
factory Chromium was also detected in the soil below the tank. The factory was immediately
instructed by the Shiga Prefectural Government to terminate its chrome- and nickel-plating operations and to replace the chrome-plating tanks. The company was also instructed to treat all thepolluted soil within its compound.

76

Local Approaches to Environmenital Compliance

The Shiga Prefectural Government investigated sixteen other factories in the area that wereusing hexavalent chromium. One of them was found to have a minor leakage of hexavalent chromium, but no contamination of the soil beneath the tank was detected. Therefore, further investigations on the source of the groundwater pollution centered on the RK Excel factory.
On April 12, 1976, the Shiga Prefectural Government started boring investigations at six locations near the RK Excel Shiga factory (wells BI to B6), and at the three polluted household wells(wells YG, Y, and T), in order to establish the relationship between the observed leakage ofhexavalent chromium at the factory and the pollution at the three household wells (see Figure4.3). At the same time, electric probe investigations were undertaken at several locations. Basedon the results of the boring and electric probe tests (also shown in Figure 4.3). RK Excel was
officially identified as the source of groundwater contamination on May 28, 1976.
To determine the extent of the area of polluted groundwater, the Shiga Prefectural Government and RK Excel conducted additional electric probe investigations and boring tests (wells B7
to B13 and Ti to T6 in Figure 4.3). On September 24, 1976, the extent of the pollution was established as covering an area of 115,000 square meters.
Counterneasures by RK Excel
After the leak in the plating tank at the Shiga factory was confirmed, RK Excel, on April 5,1976, set
up a committee to investigate the accident. At the same time, the company obeyed the Shiga Prefectural Government's order to close down its nickel- and chromium-plating operations. In order toestablish the extent of soil and groundwater contamination within the factory site, the company
carried out boring investigations within the factory and in the neighborhood of the factory (wells
Ti to T6 in Figure 4.3). As it was required to do by the Shiga Prefectural Government, the company
got rid of all of the contaminated soil.
RK Excel also was required to pump-and-treat the contaminated groundwater from six wells:
the three polluted household wells (YG, Y,and T) and three boring investigation wells (B7, Ti,
and T6) shown in Figure 4.3. These six wells had the highest concentrations of hexavalent chromium. The groundwater pumped from them was transported to the factory by trucks and thentreated at the factory. RK Excel also had to monitor the quality of groundwater at five "observation wells" (B8 to B12). The treatment and monitoring of groundwater are to continue until theconcentration of hexavalent chromium in the groundwater meets the drinking water quality standard of 0.05 mg/l. To meet the treatment requirement for polluted groundwater, the company
expanded the capacity of its wastewater treatment facilities.
Within three months from the discovery of the hexavalent chromium pollution, RK Excel relocated its plating operations to a newly constructed facility adjacent to the old factory. It could
relocate so quickly because at the time the accident was discovered, the company had alreadybegun construction of the new facility.
EFFORTS TO PROTECT DRINKING WATER. After the contamination of three household wellswith hexavalent chromium was confirmed, Kusatsu City immediately set up temporary watersupply stations for the residents of Yagura town. In addition, the Kusatsu City Public HealthCenter and the Shiga Prefectural Environment Center tested the water quality of 126 household wells in the area. No hexavalent chromium was detected in the water from the tested
wells, but it was found that more than 30 percent of the wells did not meet the other twelve
general standards for drinking water quality. (These problems were not caused by RK Excel.)
Kusatsu City encouraged the residents in the area to switch from using groundwater to pipedwater. RK Excel met the cost of switching to piped water for the three households whose well
water was contaminated.

ii ., to Conitrol Water Pollutiont: Case Studty of a Metal-PlatirigInidiustry in the :,

Local

77

Prefectlure

Figure4.3 Locationi of Boring Investigationz Wells and Extent of Pollluted Area

ij;

-,%1
P;Iuid

~

~

V

.

,,.

-

'z~~~~~~~~~~~~~~~~~~~~~e'Houieho*d
Nk I.'IIuid.

~~~~~~~~I'-4! o i'.e
-

1

*

%Int

*re1'"lue

r'-

--

5

4'-.S

i';

"l"'"''s
I',illut"d/ni,& I i.-

g(q,&-r;'r,

M6 W, !LN$

--

.

_
77
i

I;

*I

~ -;;

trtl.Iue

I

77Isuhrl -*

S

.

9,

*

_

-

AD

*

I

I

~~~,r-

1 3
uehdN\ls
9ezl

h

r _.

tJ/V.''L~~~~~~~~~~~~~~~~~~~~~~~~~7^l)r>-il
nt.rlundzzaer;1 ( rKI f 1I)aetled

1

j

A--

I~~~

4D
D
Ii,UriI

.

i-tI,
l

~ _t~ .
~~_ _rnaa

ihIedIn

ttadi )-InutILdtiii

Pr-,he lnt i

\

t-

.eIR

V,onw
%%ln

olH

_
___i'_ '%--Iai ~r DU
O'V
- r'
0 r

'.S

- l'llin'hFniu

S(I)-ce: Unptiblished charts of Shiga l'refectural Government (197,n1978).

i~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'IunShga
Govenment(1977,1978)
Unpubishedchartsof
SourcePreecturl. __ _

_ _.

--

_

-.,i!

78

Local Approaches to Environmental Compliance

MEDICAL EXAMINATION. Immediately after the groundwater in Yagura town was confirmed tobe contaminated with hexavalent chromium, the Shiga Prefectural Government and Kusatsu City
instituted a medical examination and health survey of the residents. Six residents were certified
to be suffering from allergic and chronic dermatitis (skin disease) caused by hexavalent chromium. This was the first confirmed case in Japan of hexavalent chromium pollution. RK Excel
met the costs of regular medical observation and treatment of the patients.
COMPENSATION. Negotiations concerning compensation to victims took place between the
Yagura Town Pollution Prevention Committee and RK Excel under the mediation of Kusatsu
City. An out-of-court settlement was reached on September 16, 1976, and the company compensated the three affected households and the Yagura town community. A total of 34 million yen
was paid as compensation. In addition, RK Excel paid 11.7 million yen for the provision of pipedwater to the three households with contaminated well water.

Pollution ControlAgreement
On November 22,1976, a voluntary pollution control agreement was reached between the Yagura
residents and RK Excel (see text of the agreement in Appendix 4.2). In this voluntary agreement
RK Excel agreed to protect residents' health and the living environment by preventing pollution
from its activities. Having acknowledged its social obligation to prevent pollution, the company
promised to abide by all national and local laws and regulations concerning pollution control.
The PCA requires RK Excel to regularly check the quality of its effluent and make the results
available to Yagura residents upon request. Representatives of the residents are allowed to visit thefactory and investigate its operations. To enable residents to assess easily the quality of the effluent
from the factory, the factory is required to maintain a fish-rearing pond using the effluent.
If an accident appears likely or takes place, RK Excel must undertake emergency measuresand report the situation to the residents. If pollution occurs as a result of the company's activities,
the company is required to take responsibility and compensate affected persons. In such a situation, the residents shall accept a fair settlement.
In addition, RK Excel is required to monitor the quality of groundwater within the polluted
area and to pump-and-treat the contaminated groundwater until the concentration of hexavalentchromium meets the standard of less than 0.05 mg/l for drinking water. This operation is continuing to date.
The Battlefor Recovery
TREATMENT OF CONTAMINATED SOIL AND GROUNDWATER. Polluted soil within the factory covered 240 square meters. The pollution was between 5 and 5.4 meters deep. This soil was treatedby the company and discharged into the sea, a legal practice at that time. The total quantity of soil
treated was 2,068 tons. RK Excel also treated the concrete floor below the leaking chromiumplating tank.
Figure 4.4 shows the quantity of water pumped from the three polluted household wells (YG,
Y, and T) and the three bored wells (B7, Ti, and T6). For each of these six wells, the time period of
the pumping operation and the concentration of hexavalent chromium are shown in Table 4.2.
The pump-and-treat operation continues at four wells (YG, Y,T, and B7), but it has been discontinued at the other two wells after the concentration of hexavalent chromium in the well waterreached nondetectable levels.
Figure 4.5 shows a gradual decrease in the hexavalent chromium concentration in recent
years. Figure 4.6 indicates the quality of water pumped from monitoring and observation wells.

Local Efforts to Control Water Pollutiotn: Case Study of a Metal-Plating Industry in tlhe Slhiga Prefccture

79

Figure4.4 Quiantity of Water Puimpedfrom Pumping Wells
3

Cumulative amount, mWell TI

Annual amount, m3

100,000

10,0008,0()0

Annual80 000-+--Cumulative

6,0()00_

60,00040,000_4,)000

I-

2,010

1991

1986

1981

1976

Punlpinc *l-,-r'r.-1 in 1994

2001

1996

3

Cumulative amount, m
100,000

Well T6

Annual amount, m'
10,00(-20,000

8,000

80-000

Annual+Cumulative--

60,0006,000

40,000_4,000
2,001)--

0-20,000

- ---

-

1986

1981

1976

3

0

--

2001

1996

1991

3

Cumulative amount, m
100,000

Well B7

Annual amount, m
10,(008,000-

Pumping stopped in 1992
(Cr6' conc. < 0.05 me/I .),-80,000-\It I_

6,000

inUIIII.

4,000

I- 60,000-

20,0000

2,0001976

1981

1986

3

1991

1996

Cumulative amount, ml
.

,A

.

.

100,000

80,000_8,00() 6,0(0)

~

-

2,000
02o

2001

Household Wells Y, YG, T

Annual amount, m
10,0004,000

40,000

- ~

] 976

1]J

J.-f
a

t

n FIEnn- n nri ° n . ri-=. n n

~

1981

1986

1991

1996

u Ii I-

60,00040,00020,00040,0n.

L.,I........................
A_J

2001

Souirce: Unpublished data of RK Excel.

Monitoring at wells B8 to B12 and observation at wells T2 and K4 have been going on since 1976.
Hexavalent chromium concentrations in wells T2 and K4 reached levels below the drinking water standard of 0.05 mg/l in 1996. Except for well B8 (which adjoins the initially polluted well B7),
no hexavalent chromium has been detected in the other monitoring wells (B9 to B12).
In 1989 observation of water quality began at several other household wells downstream of
the three polluted household wells and outside the extent of the polluted area established in
1976. (The position of the wells is shown in Figure 4.3.) Data on the quality of water from two of80

Local Approaches to Environmental Compliance

Figure4.5 Quality of Water Pumpedfrom Pumping Wells
pH

Well T1

Cr" concentration, mg/L

*100

8
67

-*.
+*-*+
Cr't

10~ ~> . .

-

1
54

4

~~~~~~~~~~~~~~~~~~~---------------------------------------------~ ~ ~~~~~-;~-;. - ----------------------------------------

3

0.01
1976

1981

1986

1991

pH

1996

2001
Cr6" concentration, mg/L

Well T6

8

100

76

Cr

F.

101

5-

3

,
1991

*.

1976

1981

1986

pH

,

l

0.01
1996

2001
Cr 6 l concentration, mg/L

Well B7

Q100
Cr'*

4

1
10

_

3

=Xo

_

0.1

m

I

0.01

1976

1981

1986

pH

1991

1996

2001
Cr6 + concentration, mg/L

Household Well YG

8

100
Cr6

. 10

5-p
4

0

3-

0.01
1976

1981

1986

pH

1991

1996

2001
Cr 6 , concentration, mg/L

Household Well Y

8

100

67

Cr6

*

4O
'4

.

10

654

I

I

I

.

3

01.
0.01

1976

1981

Source: Unpublished data of RK Excel.

1986

1991

1996

2001

Local Efforts to Control Water Pollution: Case Study of a Metal-Plating Industry in the Shiga Prefecture

81

Figure4.6 Quality of Water Pumpedfrom Monitoring and Observation Wells
pH8

Cr6 + concentration, mg/L
100

Well B8

3
1976
6-

1981

1986

1991

pH
8

Well B9

1996

2001
Cr 6

p

0.01

concentration, mg/L
100
10

5-

0.01

3

7

1976

1981

pH

1986

1991

pH
8
s

1976

'|

;.*.

1981

1986

,

,

,

,

,

,8

4
6- 1976H0e_ 0.0 1

Cr + concentration, mg/L
100

.*

.,

-,/1

p

.
1981

1986

3

1991

001

1996

2001

Cr 6 + concentration, mg/L
0.1.--- ---- ----- '-'----- < 100
>

1981

1986

1991

1996

Source: Unpublished data of RK Excel.

6

1986

1991

0.01

2001 1n
6

Household Well F23-~~~~~~~~~~~~~~~~~C

1981

10

,

+

1976

;

2001

pH-_

pH
8
4

;

6

pH
Household Well F1
8 -- - -- - -- - -- - -- - -- - -- - - -- - -- - -- - -- - --.

7-1
56-p1976;

1996

Well K4

6-.

5

,

1991

pH
8

2001 10

Cr 6 + concentration, mg/L
100

Well 12

3

10

1996

Cr + concentration, mg/L
100
0.01

r6

1996

2001

82

Local Approaches to Environmental Compliance

Table 4.2 Condition of Wells Where Polluted Groundwater Was Pumped
3 Polluited household wells
YG
Pumping

T

April 6, 1976

Start

B7

T6

TI

June 5,1976

April 25,
1976

June 12,
1976

Continues
to dateContinues
to dateContinues
to dateContinues
to date

1992

1994

3.84 mg/l
At Startof pumping

4.02 mg/l

1.09 mg/l

54 mg/l17.65 mg/I

74.65 mg/i

January
1997< 1 mg/i

October1997< 1 mg/l

April
1997
< 1 mg/l

October1997< 1 mg/l

May
1983
ND

1984

December
1999

0.625 mg/I

0.84mg/l

0.78mg/l

0.96mg/l

Abandoned

ND

December
2001

0.40 mg/l

0.40 mg/l

0.40 mg/l

0.50 mg/l

Abandoned

ND

End

Water quality(Cr6* conc.)

Y

Progress

ND

ND Not detectable.
Source: Unpublished data from RK Excel.

these wells (Fl and F2) are shown in Figure 4.6, which indicates a general increase in the concentration of hexavalent chromium to levels above the drinking water standard of 0.05 mg/I. (Theconcentration in all these wells when the accident was discovered was below the drinking water
standard.) This implies that there has been an expansion in the extent of the polluted area downstream and/or a change in the pollution pathway.
Groundwater quality is not expected to meet the drinking water quality standard for a few
more years. Until this standard is met, RK Excel has an obligation to continue treating the contaminated groundwater, particularly because a few households in the area still use groundwater.
COST OF REMEDIATION. It is estimated that the company has spent between 300 million and 400
million yen in the treatment and monitoring of the groundwater since 1976. This amount is comparable to the 300 million yen incurred by the company in the construction of its current pollution control system. These costs, and the cost of treating the contaminated soil and compensating
residents, has been borne solely by the company. This is an expensive undertaking for the company, particularly during the current economic recession in Japan.
Conclusion
This chapter, like Chapter 3, has focused on the importance of social pressure in influencing
dischargers to control pollution. Although the environmental laws and regulations of Japan have
had an unmistakably positive effect on effluent quality, strong social pressure and the fear of
being ostracized by the community have motivated polluting industries to address the problems
they have caused.
This case study of groundwater pollution caused by RK Excel suggests a valuable lesson: pollition prevention is easier and less expensive than pollution remediation. It also is clear that adverse
pollution impacts do not necessarily have to be mitigated in the most cost-effective way. Some
residents are still using groundwater and are not willing to change to piped water even thoughLocal Efforts to Control Water Pollution: Case Study of a Metal-Plating Induistry in the Shiga Prefecture

83

they would be adequately compensated for making the switch. RK Excel is required to continue
treating the contaminated groundwater until the concentration of hexavalent chromium meetsthe drinking water standard, irrespective of whether the groundwater is used for domestic purposes or not.
Certainly, it may be argued that remedial measures for pollution should be evaluated based on a
cost-benefit analysis. But in this case and in many pollution cases in Japan, remedial actions havebeen taken in response to social and/or political pressure, or as a response to accidents. Lessconsideration has been given to the monetary costs involved. Like Japan in the 1970s, many developing countries today are beginning to face the challenge of harmonizing development and environmental conservation. The Japanese pollution control experience holds a valuable lesson forthese countries-namely, that in the long term it costs more to clean up pollution than to prevent it.

Appendix 4.1
Chronology of Events Related to Contaminationof Groundwater by RK Excel, 1976
Initial Actions
End of March

March 31

April 1

April 3

Some residents of Yagura town complained of itchy skin and yellow well water.
They hired a private company to analyze the water. The results revealed ahexavalent chromium concentration of 8.2 mg/l. (The drinking water standard
is 0.05 mg/l.)
Results of the water quality analysis were reported to the Pollution Control Department of the Shiga Prefectural Government.
Kusatsu City and the Shiga Prefecture collected groundwater samples from six
household wells. Water in three of them was found to be contaminated withhexavalent chromium at concentrations of between 1.1 and 7.5 mg/l.
The Shiga Prefectural Government and Kusatsu City organized emergency meetings and launched an investigation. A "hexavalent chromium task force" was set
up and charged with the following responsibilities: provision of water supply,
monitoring of water quality, health check for residents, investigation into thecause and extent of pollution, and communication of information to residents.
Residents set up a Pollution Prevention Committee.

Water Supply Actions
April 1
April 1-4
April 6-9

Kusatsu City set up water supply stations for residents.
Groundwater analysis for 126 household wells within Yagura town was carriedout. Hexavalent chromium was detected in only three household wells.
Tap water was provided to the three affected households.

Investigation into Pollution Source
April 1-4

April 12
May 28
Sept. 24

Investigations were conducted at the Shiga factory of RK Excel. A leak was foundunder the area where chrome plating was being carried out. The factory wasordered to stop its plating operations.
Boring investigations and electric probe investigations began.
RK Excel was officially identified as the source of groundwater contamination
based on the results of the boring and electric probe tests.
The extent of the polluted area was established as 115,000 square meters.

84

Local Approachies to Envirotnmental Comnpliance

RKExcel's Response
April 5
April 6

June 6End of June
Nov. 18
Nov. 8The factory established a committee to investigate the accident.
Treatment of contaminated soil within the factory began; the factory disposed of
all contaminated soil.
Treatment of groundwater from the three contaminated household wells began.
(Hexavalent chromium concentrations were 8.08, 5.46, and 0.36 mg/l at the startof the treatment.) The water was pumped and then transported by trucks fortreatment at the factory. The treated water was returned to the wells. (This treatment continues to date.)
In a letter to the mayor of Kusatsu City, the factory admitted responsibility andapologized for the pollution of soil in some of the investigated sites.
RK Excel began nickel- and chromium-plating operations at a newly built facility.
The factory submitted its wastewater treatment plan to the Shiga Prefectural
Government.
Treatment of contaminated soil within the former factory site was completed.

Medical Examination
April 2
April 8
April 28
May 14June-July
August 28

Medical examination of the residents of Yagura town was performed. (Thirteen
persons were examined.)
Health survey for the residents was done. (Fifteen additional people weresurveyed.)First close medical examination of victims (that is, of the residents with the contaminated wells) was performed. (Four persons were examined.)
Four persons were certified as having allergic and chronic dermatitis (skin disease). For the residents who had been exposed to hexavalent chromium for morethan one year, a cause-effect relationship was established between the pollution
and their illness.
Second close medical examination was carried out. (Nine persons were examined.)
Two more persons were certified as having allergic and chronic dermatitis.

Compensation
July 27

Sept. 6

Yagura Town Pollution Prevention Committee asked Takasago (the former nameof RK Excel) for compensation and provision of piped water to affected households. Takasago paid 11.7 million yen for provision of piped water supply to thethree affected households.
An out-of-court settlement was reached. RK Excel paid 34 million yen to theaffected families.

Voluntary Pollution ControlAgreement
Nov. 22

Yagura town community and RK Excel signed a voluntary pollution control agreement (see Appendix 4.2).

Local Efforts to Control Water Pollutioni: Case Study of a Metal-Plating Induistry in the Shiga Prefecture85

Appendix 4.2
Pollution Control Agreement
The Yagura Neighborhood Association of Kusatsu City and RK Excel, Co., Ltd. (formerly known
as Takasago, Inc.), in order to control pollution caused by the latter, collaborated on the following
pollution control agreement.
(Purpose)
Article 1. In order to preserve the health of local inhabitants as well as the natural environment,
the purpose of this agreement shall be to control the occurrence of pollution generated by theactivities of RK Excel.
(Background)
Article 2. RK Excel, recognizing its social responsibility for the pollution resulting from its activities, shall make the best efforts to control the pollution.
Paragraph 2. Based on the previous paragraph, RK Excel shall obey the various pollution control laws and ordinances as well as the administrative guidance of Shiga Prefecture and Kusatsu
City and it shall positively cooperate with the request of the Yagura Neighborhood Association.
Paragraph 3. The Yagura Neighborhood Association shall positively cooperate with RK Excel
on Paragraph 1, Article 2.
(Implemnentation of pollution control measures)
Article 3. RK Excel shall observe the standards (mentioned at the end of this document) given in
Chapter 2 of the Pollution Control Agreement on Paragraph 2, Article 1. Also, RK Excel shall
examine and control its facilities with meticulous care.
(Monitoring and reporting)
Article 4. RK Excel shall monitor the air and water discharged from its facilities and report theresult to the Yagura Neighborhood Association upon request.
(Spot inspections)
Article 5. RK Excel, notified beforehand, shall allow and cooperate with spot inspections withinnecessary limits carried out by a designated Pollution Inspector chosen by the Yagura Neighborhood Association.
Paragraph 2. The supervisors shall comply with guidance provided by RK Excel staff for security reasons during inspection.
(Measucres to be undertaken during an accident)
Article 6. In the event of equipment breakdown or occurrence of an accident, RK Excel shall takeemergency measures and immediately make efforts to restore proper operation. Any incident shallbe immediately reported to the Yagura Neighborhood Association.

86

Local Approaches to Environmental Compliance(Trouble-shootingand compensation)
Article 7. When the residents in the area complain of pollution due to RK Excel or RK Exceldamages the residents, RK Excel shall immediately take appropriate countermeasures and settle
the problem with sincerity. Also RK Excel shall compensate damages and the Yagura Neighborhood Association shall cooperate to reach a settlement.
(Obligationforthe inspection of monitoringwells and groundwater)
Article 8. As the groundwater of the Yagura area has been polluted with Chromium (VI), RK
Excel shall carry out sampling of Chromium (VI) concentrations at five monitoring wells (No. 8,
9, 10,11, and 12) and of groundwater for groundwater users until the concentration of Chromium(VI) meets the drinking water quality standard of 0.05 mg/l.
(Establishment of monitoringpool)
Article 9. RK Excel shall make a pool in its factory area to pour all the discharge within three
years and stock the pool with fish so that the Yagura Neighborhood Association can easily judge
whether the discharge from RK Excel is harmless or not.
(Information Disclosure)
Article 10. RK Excel shall disclose the condition of its pollution control measures when requestedby the Yagura Neighborhood Association.
(Others)
Article 11. When the matters which are not determined in this agreement or any doubt about theinterpretation of this agreement arise, the Yagura Neighborhood Association and RK Excel shallconfer and decide.
To certify this agreement, both Parties shall sign in duplicate and retain one copy.
(Table of Standards)
Air pollution control
K value
Soot
Sulfur contained in fuelChromium and Nickel in soot
Water pollution control
pH
BOD
COD
SS
Oil (Mineral Oil)
Chromium (VI)
NickelCu and Zn
Offensive odor control
Odor Intensity*

Less than 5Less than 0.2g/Nm3
Less than 1.8%
Not detected
6.0 - 8.0
Less than 30 ppm
Less than 30 ppm
Less than 30 ppm
Less than 3ppm
Less than 0.05ppm
Less than lppm
Less than 0.1ppm
Less than 2.5*Levels of Odor Intensity between 2.5 and 3.5, according to Japan's Ministry of the Environment, are levels at which
the majority of residents do not feel uncomfortable. See Environment Ministry (www.env.go.sp/en/lar/regulation/
odor.html#2-2).

Local Efforts to Control Water Pollution: Case Study of a Metal-Plating

Industry in tlhe Shiiga Prefecture

87

Authorized and signed by:
Seiichi Yoshikawa
Chairman
The Yagura Neighborhood Association
Tetsuo Tanaka
Representative Director
RK ExcelHigashida
Witness
Chief
Kusatsu City Transport and Pollution Control Division(Memorandum of Understanding)
Neighborhood Association
Based on the Article 8 in Pollution Control Agreement, the Yagura
and RK Excel agree as follows:
groundwater. The Yagura
RK Excel shall bear the cost for inspection of monitoring wells andNeighborhood Association shall be present at inspections and cooperate.
above mentioned as
RK Excel shall pay 1,500 yen per person for one time to witnesses
paid before the end of thecooperation fee. The fee will be calculated every six months andseventh month.
fee above mentioned
When both parties recognize that the amount of the cooperation
cause, both parties
unexpectedorfluctuationofhas become markedly unsuitable because
shall discuss an amendment.
one copy.
To certify this MOU, both parties shall sign in duplicate and retain
November 22, 1976

Note
1. Most of the information in the chapter comes from unpublishedCo., Ltd.

data provided by RK Excel

References
In Environmental Pollution Control:
Matsui, S. 1993. "Pollution Control in Japan: A Historical Perspective."on Eco-Restructuring,Symposium
International
UNUJ
the
The Japanese Experience. Papers presented at
University.
Nations
UnitedThe
July 5-7, 1993. Tokyo, Japan:
by Hexavalent Chromium" (in JapaShiga Prefectural Government. 1977. "Groundwater Contamination
Govemment.
nese). In White Paperon Environment. Otsu, Japan: Shiga Prefectural
Shiga Prefectural Govern. 1978. Hexavalent Chromium Pollution Record (in Japanese).Kusatsu, Japan:
ment, Kusatsu Public Health Center.

.

Table 5.1 Environmental Soft Loans bkiSpecialized Public FinancialInstitutionis
Loan agency
Japan Environment
Corporation

Japan Development
Bank

Japan Financial
Corporation for
Small Business

People's FinanceCorporation

Japan Small BusinessCorporation

Loan customer(borrower)
Big business, small
business, local
government

Big business

Small business

Small business

Small business

Mainfacilityfor loan

Loan ratioa

Loan interest rateb

Redemption periodc

Joint pollution
control facility
Individual pollution
control facility
Industrial waste
disposal facility
Pollution control
facility
Waste recycling
facility
Moving of polluting
facility
Industrialization of
new technologyd
Pollution control
facility
Moving of polluting
facility
Industrialization of
new technologyd
Pollution control
facility
Moving of polluting
facility
Industrialization of
new technologyd
Joint pollution
control facility
Collective factory
Lease of pollution
control facility

Big business: 70%,
others: 80%
Big business: 50%,
others: 80%
Same as above

Big business: 8.2%,
others: 5.0%
Big business: 8.2%,
others: 6.3%
4.5%-8.7 %Machinery: 15 years,
others: 20 years
Within 15 years

None

Within 15 years

None

50%

8.7%

About 10 years

None

50%

9.9%

About 10 years

None

50%

9.0%

Within 15 years

None

50%

8.0%

10-15 years

None

None

7.5%

Within 15 years

150 million yen

None

8.4%-9.4%

Within 15 years

150 million yen

None

8.5%

Within 15 years

150 million yen

None

7.5%

Within 15 years

18 million yen

None

8.4%-9.4%

Within 15 years

18 million yen

None

8.5%

Within 15 years

18 million yen

80%

No interest

Within 20 years

None

65%
65%

2.7%
2.7%

Within 20 years
Within 12 years

None
None

Loan ceilingNone

a. The ratio of the loan to the total investment cost.
b. Loan criteria were as of the end of March 1997. Loan interest criteria were as of the end of March 1975, when the environmental soft loans were provided most actively. Currently, mostlending rates from public financial institutions are about 3 percent.
c. Including a grace period of one to three years.
d. Loan to promote dissemination of new technology.
Source: Lee (1999).

Economic Incentives to Promote Compliance: Japan's Environmental Soft Loan Program

91

Table 5.2 Lending and Borrowing Rates of the Environmental Soft Loan Program(percent)

Year

Borrowing
ratefrom
Long-term
Fiscalpreferential Investment
interest and Loan
Programrate

Rates of JEC's Individual
Pollution Control Facility
JDB
rate

Big
business

Small
Local
business government

JFCSB
rate

Rates of
Japan
Small
Business
Corporation

1965

8.3

6.5

7.5

7.5

7.0

7.0

0-2.7

1966

8.0

6.5

7.0

7.5

7.0

7.0

0-2.7

1967

7.9

6.5

7.0

7.0

6.5

7.0

0-2.7

1968

7.9

6.5

7.0

7.0

6.5

7.0

0-2.7

1969

8.1

6.5

7.0

7.0

6.0

7.0

0-2.7

1970

8.2

6.5

7.0

7.0

6.0

7.0

0-2.7

1971

8.5

6.5

7.0

7.0

6.0

7.0

0-2.7

1972

8.5

6.5

7.0

7.0

6.0

7.0

0-2.7

1973

7.7

6.2

7.2

6.7

5.5

6.7

0-2.7

1974

9.4

7.5

8.2

7.7

6.0

7.2

0-2.7

1975

9.9

8.0

8.7

8.2

6.3

7.5

0-2.7

1976

9.2

7.5

8.2

7.7

6.0

7.2

0-2.7

1977

9.2

7.5

8.2

7.7

6.0

7.2

0-2.7

1978

7.6

6.5

7.2

6.7

5.75

7.0

0-2.7

1979

7.1

6.05

6.75

6.25

5.75

6.55

0-2.7

1980

8.8

8.0

8.7

7.35

6.5

8.3

0-2.7

1981

8.8

8.0

8.7

8.2

7.35

8.5

0-2.7

1982

8.4

7.3

8.0

7.5

6.65

7.8

0-2.7

1983

8.4

7.3

8.0

7.5

6.65

7.8

0-2.7

1984

7.9

7.1

7.8

7.3

6.45

7.6

0-2.7

1985

7.4

7.1

7.3

7.2

6.45

5.45

7.6

0-2.7

1986

6.4

6.05

6.3

6.2

5.65

5.15

6.3

0-2.7

1987

5.2

5.2

5.2

5.2

4.85

4.65

5.2

0-2.7

1988

5.5

5.0

5.4

5.2

4.6

4.5

5.4

0-2.7

1989

5.7

4.85

5.55

5.05

4.55

4.4

5.35

0-2.7

1990

7.5

6.2

6.9

6.4

5.65

5.3

6.7

0-2.7

1991

7.5

6.6

7.3

6.8

6.0

5.55

7.1

0-2.7

1992

6.0

5.5

5.9

5.8

5.15

4.75

5.9

0-2.7

1993

4.9

4.4

4.8

4.7

4.3

4.3

4.8

0-2.7

1994

4.4

4.3

4.4

4.4

4.2

4.2

4.35

0-2.7

1995

4.5

4.65

4.2

4.65

4.45

4.45

4.2

0-2.7

1996

3.2

3.4

3.4

3.4

3.4

3.4

3.4

0-2.7

Note: The rates are the standard rates at the end of March (the end of the fiscal year in Japan). The loan rate forinvestment in pollution control facilities was, for the first two to three years, 0.1 to 0.5 percentage point lower than therate shown in the table. The interest rate of JEC loans to local govermnent is for industrial waste treatment facilities. The
2.7 interest rate of JSBC is for lease business funds for pollution control facilities.
Soirces: Ministry of Finance (1975-96) and public financial institutions.

92

Local Approaches to Environmental Comnpliaice

JFCSB was usually higher than the borrowing rate. On the other hand, the Japan Environment
Corporation (JEC) and the Japan Small Business Corporation set a lending rate lower than the
borrowing rate to reduce the financial cost for SMEs.

The Subsidy Effect of the Preferential Interest Rate
As already mentioned, soft loans by public financial institutions can be made at a preferential
interest rate. Usually, the floating interest rate is applied for loans from private banks in any loan
period, while a fixed rate is set for loans from public financial institutions throughout the repayment period. Consequently, the effect of the preferential interest rate is the present value of thedifference between the fixed preferential rates of public financial institutions (prime rate) and thefloating market rates of private banks throughout the repayment period.
The difference, DPk (the effect of preferential interest rate in k-period), can be calculated, according to Matsuno (1997), as(l)

DP, = (1 -t)

I e [I1- (k - 1/l1i] (i -i#),where t is corporation tax rate, I is the firm's pollution abatement investment, e is the loan ratio of
the soft loan, i is the open market rate, i# is the preferential interest rate of the soft loan, and m is
the repayment period.
With discount rate j, the discount factor r is described as r = 1/ (1 +j). Thus, the total sum ofpresent value DP for the preferential interest rate can be calculated,(2)

DP= (1 -t) -I- e- (i-i#) - s(I -(k-1)/m) rk= (1 - t) *I *e *(i - i#) [r /(1 - r)] {I1 - r/ (I - r) [(1 - rm)/m])

Because estimation of the open market rate (i) from the time of the loan until the repayment
period is very difficult, the effect of the preferential interest rate for soft loans is calculated withequation 1 for every period (k), from the time of the loan until the repayment period, and thenadded up by fiscal year.
With borrowing from public financial institutions, the taxable profit usually increases becauseof the reduction in interest expense, and therefore the tax liability increases. This influence, however, is not considered in our calculation (that is, t = 0). Concerning firms' pollution abatement
investment (I) and loan ratio (e), we use the amount of soft loan (I e), as the total amount. As forthe open market rate, we adopt the long-term prime rate of private banks. In addition, we use thestandard rate as of the end of March (the end of the Japanese fiscal year) and suppose that the
open market rate does not vary during the year. We also assume that soft loans are provided at
the end of March and are repaid by an equal amount over ten years. All data are calculated withcurrent value.
The subsidy effect of the preferential interest rate was JPY 80.6 billion during 1965-79 and
JPY 22 billion in 1975 alone (see Table 5.3). It amounted to more than 5 percent of the environmental soft loan provided in 1975. The amount of subsidization was largest in JEC, about JPY 54 billion during 1965-79, followed by JDB and JFCSB. JDB provided an environmental soft loan morethan twice the amount of JEC's loan. This was possible because of a lower lending rate.
Since the late 1970s, however, the effect of the preferential interest rate has become negative:that is, firms should pay more than they borrowed, which is what usually happens with loans
from private financial institutions. The amount of negative subsidization was largest in JDBJPY 3.8 billion throughout the period from 1965 to 1995. JEC also provided negative subsidizationfrom 1986 to 1989 and from 1993 to 1995 (see Table 5.3).
Although this contradicts the conventional wisdom, a soft loan does not always provide a
subsidy to borrowers. Many of the loans were made in the 1960s when private interest rates wereEconomic Incentives to Promote Compliance: Japan's Environmental Soft Loan Program

93

Table 5.3 The Cumulative Effect of tlhe PreferentialInterest Ratefor Soft Loans,by Public FinancialInstittution(100 million yen)Japan
Development
Bank

Japan Financial
Corporationfor
Small Business

Year

Total

Japan
Environment
Corporation

1965
1966

0.2
0.6

0.1
0.4

0.1
0.2

-

1967
1968

1.4
2.4

1.2
2.0

0.2
0.4

-

5.7

4.3

1.4

10.3

8.0

2.3

1970

11.0

9.1

1.7

0.2

1971

24.8

18.6

5.2

1.0

1972

40.6

1973

37.4

26.1
25.7

11.1
8.8

3.4
2.9

1974
1975
1976
1977
1978
1979
Subtotal

139.3
219.9
184.7
178.1
4.9
-34.6
806.1

75.9
118.5
104.4
105.2
35.3
17.3
536.1

48.0
80.3
62.3
54.0
-34.8
-52.5
184.1

15.4
21.1
18.0
18.9
4.4
0.6
85.9

1980
1981
1982
1983
1984
1985
1986
1987

157.3
135.0
86.1
79.4
27.3
-19.6
-92.7
-154.9

86.1
78.1
59.0
55.2
33.6
10.0
-19.4
-40.6

56.5
44.6
20.2
17.9
-7.3
-26.8
-64.1
-99.8

14.7
12.3
6.9
6.3
1.0
-2.8
-9.2
-14.5

1988
1989

-92.6
-53.4

-22.2
-5.1

-60.9
-43.0

-9.5
-5.3

71.9

234.7

-162.7

-0.1

1990
1991
1992

96.8
104.0
1.7

60.1
59.6
11.8

24.8
32.9
-7.8

11.9
11.5
-2.3

1993
1994
1995
Subtotal

-72.3
-88.1
-60.2
-18.1

-21.1
-32.1
-20.4
57.9

-41.7
-41.1
-28.6
-61.5

-9.5
-14.9
-11.2
-14.5

Total

870.2

836.7

-37.8

71.3

1969

Subtotal

Subtotal

Source: Lee (1999).

94

Local Approaches to Environmental Compliancehigher. Since many firms had locked in to fixed rates, they often did not have the option to restructure or refinance when private rates fell in the later periods. After the 1990s, an increasing numberof borrowing firms tried to make early repayment of their loans because of the financial cost burdencaused by the negative effect of the preferential interest rate.'

The Impact of Soft Loans on Pollution Abatement Investment
In this section we try to evaluate quantitatively the incentive effect of soft loans on pollution abatement investments. The amount of the soft loans provided and the preferential interest rates are
explanatory variables. The difference between the long-term prime rate used by private banks andthe Japan Development Bank's lending rate is included in the equation as a proxy for preference.
We also add the reductions in national tax revenues caused by the special taxation measures sincethese measures play an important role in encouraging pollution abatement investments. 2 The
estimation period is 1968 to 1993, and the investment function is specified in logarithmic form sothat the coefficients show the elasticity of investment with respect to each independent variable. We
adjust the variables using the gross domestic product (GDP) deflator. The function for pollution
abatement investment can be expressed(3)

Ln(X/P) = a + bLn(M/P) + gLn (T/P) + dLn (r - i),where X is the total amount of investment for pollution control facilities by big business in 100
million yen (current price). This amount is based on research by the Ministry of Economy, Trade,and Industry (METI), formerly the Ministry of International Trade and Industry. In Equation 3, P
is the GDP deflator (index: 1995 = 100), M is the total amount of soft loans to big business (in 100
million yen, current price), T is the estimated decrease in tax revenues brought about by the
special taxation measures for pollution control facilities (in 100 million yen, current price), r is
the long-term prime interest rate per year, and i is the annual lending rate for pollution control
offered by JDB.
The calculated results are shown in Equation 4. The t-values for the coefficients are shown inparentheses.
(4)

Ln(X/P) = 4.622 + 0.521Ln(M/P) + 0.057Ln(T/P) + 0.126Ln(r - i),(5.665) (3.892)(0.557)(2.238)r = 0.7283
DW = 1.990
R2 = 0.985

The amount of soft loans is significant at the 1 percent level, and the preferential interest rate issignificant at the 5 percent level. The coefficients of both variables are positive, which indicatesthat they had a positive impact on pollution abatement investments. The influence of the special
taxation measures was not significant. In addition, the coefficient of the amount of the loan (0.521)
is bigger than that of the special tax reduction (0.057) and that of the preferential interest rate
(0.126). The incentive effect of the soft loan, among the independent variables, proved to be thegreatest. As a long-term, stable financial resource, the soft loan has enabled firms to invest in
pollution abatement and thus comply with tightening environmental regulations (see Figure 5.1).
Although statistically significant, the effect of a preferential interest rate, which is said to be an
economic advantage of environmental soft loans, was not as high as expected. It should be noted,
however, that preferential interest rates for SMEs are not reflected in Equation 4: the effect of thepreferential interest rate for them may be bigger than indicated in this estimation.

Economic Incentives to Promote Compliance: Japan's Environmental Soft Loan Program

95

Figure 5.1 Relation between Pollution Abatement Investment by Big Businesses
and Environmental Soft Loans, 1968-93
Billion Japanese yen
1,000

Pollution abatement
investment by big businesses
800-

600-

400 -

200/,- 200
0

...

1968

Envirorunental soft loan

_' -.
4- 1

1I

'

1

1973

'

'I

I'

'

-

I

'

1983

1978

1988

1993

Year
Source: The amount of pollution abatement investment by big business is based on research by the Ministry of
Economy, Trade, and Industry (formerly the Ministry of International Trade and Industry). The amount ofenvironmental soft loans to big businesses by public financial institutions is also based on research by METI.

Features of Japan's Environmental Soft Loan Program
Loans to Reduce Investment Costs
Environmental soft loans followed the establishment of new environmental regulations and stricter
standards (see Table 5.4). For example, soft loans were provided in 1968 after the K-value regulation of sulfur dioxide 3 and in 1974 after the introduction of total emission load control. The loans
enabled firms complying with the tightened regulations to reduce their investment costs. Implementing environmental regulations in close connection to affordable loans as one "package" isthe first feature of Japan's environmental soft loan program.
Japanese firms faced fierce opposition from local residents who were upset about worsening
pollution and the construction of factories. To maintain economic growth, the government had
no choice but to set new regulations and tighten standards so that local residents would be convinced that pollution reduction could be achieved rapidly. Firms, however, were required to makehuge investments in order to comply with the new regulations to control pollution. The environmental soft loan program lowered the financial costs for firms to invest in pollution abatement.
The program would not have been implemented had it not matched the firms' investment needs,
and the investments would not have been made rapidly if the supply of loan funds had fallen
short of demand. Therefore, the Ministry of Economy, Trade, and Industry designed the environmental soft loan program based on information on demand that was supplied by specialized
public financial institutions.4
The regulation-soft loan connection or "package" (see Table 5.4) and the government-businessinformation sharing system facilitated a quick response by companies to regulations. Pollution

96

Local Approaclhes to Environmental Compliance

Table 5.4 The Regulation-Loan Connection
Publicfitnancial

Year

Regulation

1958

Regulations for water pollution
control enacted

Associated environmental soft loan

institution

Loan offered for sewage treatment
facility

JDB

1963

Loan offered for smoke control
facility

JDB

1965

Environmental low-interest loans
offered

JEC

1960
1962

Smoke Control Law enacted

1968

Air Pollution Control Law enacted
K-value regulation for SO,
Noise Regulation Law enacted

Loan offered for the fuel conversion
to crude oil with low-sulfur
content and for the constructionof a desulfurization plant

JDB

1970

Water Pollution Control Law
enacted; Waste Disposal andPublic Cleansing Law enacted

Loan offered for flue gas
desulfurization

JDB

1971

Regulations for toxic metal,
BOD, COD, SS

Setting a credit line for pollution
control loan, as a targeted loan item

JDB

1974

Introduction of total emission load
control for SO,

Loan offered for industrial waste
disposal

JEC

1981

Introduction of total emission load
control for NO,

1983

Septic tank regulation enacted

Loan offered for energy saving

JFCSB

Joint treatment septic tank (for groupsof factories) added as loan target

JEC

Loan offered for joint service of industrial waste treatment facility
and founding of green district

JEC

1988
1991

Law for energy saving andrecycling enacted

Source: Lee (1999).

rapidly declined. It is noteworthy that the soft loan program began in response to the rapid indus-

trialization of the 1960s and its devastating effect upon the environment. Since then loans havebeen offered whenever the government has directed its focus to pollution abatement.
Loansfor Investment in "Standardized" Technology
Environmental soft loans are provided to firms to invest in a designated "pollution abatement"
technology; a firm's pollution reduction performance is not considered. This is the second featureof Japan's environmental soft loan program.
Lending decisions proceed as follows. METI evaluates the performance of a particular technology. (Earlier METI had either contracted out to develop this pollution abatement technology, or thetechnology had been developed directly by private firms.) If the technology is found to reduceEconomic Incentives to Promote Compliance: lapan's Environmental Soft Loan Program

97

pollution significantly, METI then designates the technology as "standardized." Public financial
institutions provide soft loans to firms applying for loans to finance investments in standardized
technology.
ADVANTAGES. A soft loan program for standardized technology has numerous advantages. It
enables firms to comply with regulations. It also enables the govemment to disseminate to firms,
especially small and medium-size enterprises, information on pollution abatement technologies
and their performance. If they have sound information in advance, firms can avoid losses frominvesting in technologies that are cost ineffective or underdeveloped.
A soft loan program also promotes the development of a pollution abatement technology industry. Demand for the abatement technology inevitably grows once it is designated as a standard, and a soft loan is available for investing in it. This will enable the industry to expand production and become competitive, enhancing its technological and financial standing.
Another advantage of the soft loan program is that it eases the loan appraisal process for
public financial institutions with limited capacity to appraise environmental technology. JDB
and JFCSB do not employ personnel with special expertise for appraising the technologicalaspects of investment. JEC, on the other hand, employs people with expertise to appraise thetechnology. JDB and JFCSB appraise the technology only in reference to a list of technical standards. 5 These two institutions participate in the environmental soft loan program because they
benefit from the detailed environmental technology assessments made by other institutions in
the program, such as JEC.
DISADVANTAGES. The soft loan program for the standardized technology also has some disad-vantages. End-of-pipe technology tends to be designated as a technical standard because firms
can employ it relatively easily. Indeed, firms tend not to invest in production process adjustments
and in a clean production technology right at the outset, although this technology may actuallyentail a lower abatement cost than that of a standardized technology. As a result, most firms haveundertaken pollution abatement investments twice: first, they invest in the standardized technology to obtain the soft loan and to comply with the environmental regulations; second, they invest
in the production change to reduce the operation and maintenance cost for pollution abatement(Mori 2002).
Such duplication of investments should be considered in the context of the times. Firms werestrongly obliged to control pollution. Japan's serious pollution had ruined the environment aswell as many people's health, and the public outcry against these wrongs was strong. Fierce legal
battles were waged against polluters. In light of the severity of the pollution levels, firms and thegovernment had limited time to conduct research or to develop cost-effective pollution abatement technologies. Production process changes and clean production technology required aneven longer research period than end-of-pipe technology because of their firm-specific nature.
We do not mean to suggest that no investments were made in clean production technology atthat time. METI had established some standardized clean production technologies for adoption
nationwide. One example is fuel conversion. To reduce sulfur dioxide, METI first required theuse of crude oil with a low sulfur content and then liquid natural gas as a technical standard. But
firms would not change fuels unless they could obtain a sufficient supply. METI negotiated with
exporting countries to secure a supply that was adequate.
Since most clean production technologies are firm- or industry-specific in nature, a standard isdifficult to establish. When it came to the reduction of mercury in wastewater from caustic-soda
plants, METI designated the use of a technology called a diaphragm cell for producing caustic soda
(instead of another technology, a mercury cell) as the technical standard, and a soft loan wasprovided for changing the production process. Despite the availability of soft loans, however, most

98

Local Approaches to Environmental Complianceof the firms did not readily change their system of production because of the high investment andoperational costs involved. Once the mercury cell technology for producing caustic soda became
available for use, firms readily adopted this new technology because of its cost advantage. Thosefirms that had employed the diaphragm cell had to invest twice in making a production change:
once for the diaphragm cell technology and later for the mercury cell technology. They did notreceive any compensation for METI's "misjudgment" concerning the appropriate technology.
Monitoringand EnvironmentalCompliance
The dependence of the environmental soft loan program on the banking system should not be
overlooked. The program will not have any beneficial impact on pollution unless the banking
system can offer soft loans to the targeted polluters. Therefore, any financial institution, including public ones, should appraise the profitability of borrowers, analyze their cash flow, and evaluate
collateral to ensure loan repayment.
Here there can be important differences in priorities. Loan repayment may weigh more thanpollution prevention and vice versa. For instance, JDB and JFCSB attached more importance torepayment, while JEC emphasized pollution prevention. After providing the loan, JEC checked
the firm's operational manual and the performance of the installed technology. None of the public financial institutions offering loans for pollution abatement investments monitored actual
pollution levels.
Pollution, however, was reduced by a huge amount in Japan largely because of local governments' monitoring of discharges. Supported by residents, local governments enforced environmental regulations strictly, and sometimes they enacted ordinances that imposed more severe
controls that those required by the central government. Moreover, a wider range of industrial
plants was regulated. Firms had no choice but to comply with local governments' demands ifthey wanted to continue production in the same geographic area. In addition, there was a close
collaboration between local governments and JEC: firms had to obtain approval from the prefectural government on their need to invest in the technology before applying for soft loans fromJEC (Konishi 1996). Thus, strict enforcement by local governments prohibited firms from diverting the loan funds to other uses.
FinancialResourcesfor the Environmental Soft Loan Program
The fourth feature of Japan's environmental soft loan program is its financing by the Fiscal Investment and Loan Program. When the government started pollution control, loan provisions
were limited to certain types of industries located in the "heavily polluted area." As the pollution
problem worsened in Japan in the 1960s and spread nationwide, and as more substances wereidentified as pollutants, the types of industries eligible for soft loans increased, and the area
covered by environmental soft loan provisions widened. When a strict regulation was enacted
and applied to all the industries in Japan, it created a huge demand for environmental soft loans.
Without these loans, firms might delay the investment in pollution abatement because of the
difficulty in obtaining financial resources. The Fiscal Investment and Loan Program enabled the
public financial institutions to provide loans to meet the growing demand.
Every year public financial institutions can adjust the amount they borrow from the Fiscal
Investment and Loan Program. They reduce their borrowing, for example, in years when the
demand for soft loans declines. This has enabled the institutions to adjust to the fluctuations indemand without worsening their financial position.
The low-risk advantage gained by public financial institutions was nearly lost, however, whenthe market rate fell lower than the borrowing rate from the Fiscal Investment and Loan Program.

Economtic Incentives to Promote Comiplianzce: Japan's

Environmental Soft Loan Programi99

atfrom the Fiscal Investment and Loan Program
Public financial institutions are usually financed
period, but they can extend loans with a repaya fixed interest rate with a fifteen-year repayment
them to use the money from repaid loans toment period of five to twenty years. This has enabled
when the market rate is higher than the insticover additional soft loans. The system works only
6
and financial problems in the private
tutions' borrowing rate. But with financial deregulation
became lower than the borrowing rate. Public
sector, the market rate starting in the mid-1980stheloans decline. In principle, redemption before
financial institutions saw the demand for soft
made the institutions' financial position worse.
scheduled repayment period was forbidden, which
recycling laws, demand for soft loans by waste
After the enactment of waste management anddemand was high because commercial banks
disposal and recycling industries increased. The
especially the small ones without much collatwere reluctant to provide loans to these industries,
high and the probability of default great. As aeral. The business risk in such industries can beachieve a balance between financial healthinessresult, they are constrained in their attempt toand pollution abatement.

Conclusion

the strict environmental regulations and theWe have already emphasized the connection between"package," the technology needed to implement
provision of soft loans. However, even with thishave been available had it not been for the scienpollution reduction measures would simply not
the rapid industrialization of the 1960s and earlytific and technical capacity in place in Japan after
available at the time provided the basis for
1970s. Engineering personnel and scientific know-how
In the case of developing countries, acquisition
technological breakthroughs in pollution control.
be essential, and related costs would have to beof this engineering and scientific capability would
taken into account.
implementation. In the case of Japan,
Monitoring plays a vital role in achieving successfulanrole very effectively. In developing countries,
local governments carry out this monitoringwith environmental regulations and enimportant question to be resolved concerns complianceoffice would need to be responsible for carrying
forcement of them. A government ministry orout the monitoring and enforcement function.
the "polluter pays principle"and has two shortIn general, the soft loan package conflicts with
control should be shouldered by the polluter.
comings. Firstly, it is inefficient. The cost of pollution
to take sole responsibility for pollution abatement.
Secondly, from a moral aspect, the polluter oughtlevels, soft loans are an effective means of achievHowever, when pollution has reached outrageous
ing pollution reduction rapidly.
program is a major question in developing
Lastly, how to raise funds to finance a soft loan
financial resources to fund environmental
countries. Japan has been fortunate to have sufficientcountries. Recent trends show that environmenincentives, but this is not the case in developingused for this purpose in some countries.
tal taxes and/or charges are increasingly being

Noteslarge firms, but it was sometimes possible for1. Early repayment of soft loans was not an option forsmall and medium-size enterprises.
abatement investments, environmental regula2. Although it may influence decisions about pollutionof technical difficulty in quantifying the
becauseisThistion is not included as an explanatory variable.
result in collinearity problems with the soft loan
regulation standard and also because its inclusion may
variable.
dioxide concentration according to the height
3. The K-value regulation controlled above-ground sulfurK-value regulation was revised seven times in
theof the chimney. Between its enactment in 1968 and 1976,
control.
order to strengthen pollution

.

102

Local Approachies to Environmental Compliance

The Waste Problem in Nagoya City
The need in Nagoya City of final disposal sites for urban wastes ("general waste" in terms of law)it
has a long history, but the waste disposal problem did not become pronounced until 1992. Then,thewas not until the late 1990s that waste disposal was recognized as a citywide problem. By 1996
amount of wastes generated in Nagoya City had become alarmingly high: one million tons per year
compared with approximately 840,000 tons in 1985.
Today domestic refuse makes up 70 percent of the total amount of wastes generated in Nagoya.
As lifestyles changed, domestic refuse grew to include not only kitchen wastes but also disposinable goods, plastic containers, and packaging materials, making the disposal of the wastes
creasingly difficult.
Wastes generated in Nagoya are either combustible (general waste) or noncombustible (sourcesegregated refuse that is collected). The combustible refuse is incinerated at four incineration
plants in the city. Most of the noncombustible wastes are recycled or compacted to reduce volume at waste processing plants.
For the incineration ash generated in Nagoya City, the city constructed a final disposal site in
The
Tajimi City in the Gifu Prefecture. After that, little landfill capacity in the area remained.
Waste Disposal and Public Cleaning Law affirmed the "Principle of Disposal of Refuse within the
Boundaries of Each Ward." Therefore, Nagoya City had to locate the next final disposal site for its
wastes within its owIn borders.

The Fujimae tidal flat, a territorial sea of Fujimae, Minato-ku, at West One in Nagoya Port, wasproposed as the next large-scale site. However, the Fujimae tidal flat is famous both domesticallyand internationally for being a habitat for migratory birds. (The area recently became a registeredwetlands under the Ramsar Convention.) Nagoya City was publicly criticized for its plan to use
a tidal flat as a landfill without first making efforts to reduce wastes. Local residents and environmental conservation groups protested. In the end, Nagoya City abandoned its plan to build a
new waste disposal facility in the Fujimae tidal flat.
In February 1999 Nagoya City declared a state of emergency for waste disposal and presented
a concrete plan to reduce waste by 200,000 tons or 20 percent in two years. With the support oflocal residents, the city expanded the area for collecting cans and bottles from nine wards to all
sixteen wards in the city. Citizens who voluntarily collected wastes received a subsidy. In order tomake each citizen more aware of the waste he or she generated, the city changed its collection
policies. Collection by container at each apartment complex was abolished. Waste service companies stopped accepting industrial wastes (such as used papers, cans, and bottles) for disposal inmunicipal facilities. Instead they started charging a dumping fee.
Waste Reduction in Nagoya City
Figure 6.1 shows the amount of waste disposed of in municipal facilities in Nagoya City in fiscal
toyears 1998, 1999, and 2000. In fiscal year 2000, the amount of disposed wastes was adjusted
exclude the disaster refuse generated by the Tokai torrential rains.
Figure 6.2 classifies the waste disposed of in Nagoya City by type: combustible refuse, noncombustible refuse, bulky wastes collected by the city, wastes collected by beautification camof
paign workers, recyclable wastes, and garbage voluntarily collected by citizens. The amountstrictofBecause2000.
tocombustible refuse drastically decreased in Nagoya City from 1998
controls on separate collection, waste formerly disposed of as combustible refuse was collected
as recyclable waste.
In fiscal year 1998 the amount of recyclable waste collected in Nagoya City was only 18,001
tons; by 2000 this amount had tripled to 56,594 tons (see Figure 6.3). Recyclable wastes include
collected bottles, cans, plastic containers, and paper cartons. Recyclable wastes that are collected

The Link betweeni Compliance at the Local Level and Global Environmental Goals

103

Figure 6.1 Waste Disposal Amount in Nagoya City
1,000 tons

1,200
1,000

I .e

8006004002001

0

1998

1999
Fiscal year

2000

Sonirce: Unpublished Nagoya City data compiled by the author.

later at the time of intermediate processing are not included in Figure 6.3. (If bulky waste andnoncombustible waste after the intermediate processing are collected as recyclable waste, thetotal amount of collected recyclable waste would increase from 280,000 tons in 19981 to 380,000
tons in 1999 and 650,000 tons in 2000, or an increase of 40 percent and 70 percent, respectively.)
Recyclable waste collected voluntarily and solely by citizens (see Figure 6.4) is primarily waste
paper in three general categories: (1) newspapers and fliers; (2) magazines, books, notebooks,

Figure 6.2 Amouint of Waste Disposal in Nagoya City, by Type of Waste
Tons
700,000
600,000 -Combustible waste

500,000 400,000 300,000
200,000
100,000
0

Waste

collected
duringbeautification
campaign
1998

Citi7en-' .olintarv carrv-;nNoncombustible waste
Recyclable waste
1999

'-.le

Bulkywaste

._._.

2000

_ _ ._

Fiscal year
Note: The category "Citizens' voluntary carry-in waste" includes all types of waste brought in voluntarily by
citizens' groups.
Sourcc: Unpublished Nagoya City data compiled by the author.

Local Approacihes to Environmenttal Compliance

104

Figure 6.3 Resource Recovery in Nagoya City
Tons
60,00050,00040,000-30,000-20,000 10,000 _

l

o 0

1998

1999
Fiscal year

2000

Source: Unpublished Nagoya City data compiled by the author.

catalogues, calendars, paper files, copy papers, memo pads, and envelopes; and (3) cardboards. In
Japan waste paper is collected by Parent-Teacher Association groups, children's groups, citizens'groups that bring the waste paper to recycling centers, and private carriers who bring waste paper
in to their factories. In 2000 a new method of group collection of waste paper was begun-the"school district consultation method." This method is really a citizens' cooperative approachorganized by school districts. News distributors and private carriers were also asked to assist.

Figure 6.4 Amount of Recyclable Waste Collected by Citizens Voluntarily in Nagoya City
Tons
120,000

100,000_

80,000-60,00040,00020,000
0

1998

1999
Fiscal year

Source: Unpublished Nagoya City data compiled by the author.

2000

The Link between Compliance at the Local Lezvel and Global Environllmelntal Goals

105

Although the activities are regarded as citizens' voluntary waste collection, they can also be valued
as administrative efforts for resource recovery, since the city of Nagoya gives subsidies for the groupcollection and the collection at recycle stations.
The amount of landfill (including incineration ash and noncombustibles) decreased by halffrom 280,000 tons in 1998 to 120,000 tons in 2000. Additionally, there were 30,000 tons of incineration ash reclaimed by private companies in 2000. This raised the total to 150,000 tons, which still
is approximately half of the amount reclaimed in 1998.
Several factors contributed to the reduction in final waste disposal shown in Figure 6.5: anincrease in recyclable kitchen waste, intensified voluntary collection, promotion of industrial waste
recycling, and a tolling system for industrial refuse. (General wastes in Japan are classified aseither domestic wastes from households or industry refuse other than the refuse specified asindustrial solid wastes generated by business establishments, such as retail stores.) Industry refuse
declined by 23 percent from 435,000 tons in 1998 to 335,000 tons in 2000. This contributed greatly
to the reduction of the final disposal amount.
Nagoya City succeeded in achieving a large-scale reduction of wastes. The process of waste
disposal in the city changed remarkably after the declaration of a state of emergency in 1999 (seeFigures 6.6 and 6.7). Particularly noteworthy is the improved collection of separate wastes in
Nagoya City.

Types of Waste and the Treatment Process
Currently in Nagoya, combustibles are collected twice a week at every door, and noncombustibles
are collected once a week at collection stations (see Table 6.1). Both kinds of waste are put intransparent garbage bags designated by the city. Recyclable wastes (such as bottles and cans) thatwere not collected separately are now collected once a week at the stations. Plastic bottles, containers, and packaging materials (both in paper and plastic) are collected separately and reclassified after the intermediate processing.

Figure 6.5 Final Waste Disposal in Nagoya City, Inicliuding Citizens' Voluntary Collection
Tons
1,400,000

Incineration disposal

1,400,000

II1,200,000

Noncombustible landfill
Incineration ash landfill_o_a1,000,000
800,000
600,000
400,000
200,000
0
1998

1999

Fiscal year
Source: Unpublished Nagoya City data compiled by the author.

2000

106

Local Approaches to Environmental Compliance

Figure 6.6 Treatment of General Waste in Nagoya City, 1998
(tons)

Total waste collected by the city
Combustible waste
Bulky waste
Noncombustible waste
Waste collected during
beautification campaign
waste

750,61
578,591
19,241
128,585

Citizens' voluntary
carry-in waste

R
cecte

6,199
18,001l~~~~~~~

v

by citizens

299,690

aril
48,797lIntermediate processing
Large-scale shredding
Compression
Small-scale shredding

J

4,Incineration disposal

Resource recovery
PapersScrap tires
Metal materials

883,158{

Landfill disposal
Landfill ash
Noncombustibles

Spray cans

Other279,804
139,189
140,615

Source: Unpublished Nagoya City data compiled by the author.

Separate collection began in 2000. The result is a 20 percent decrease in waste disposal, athreefold increase in the amount of recyclables collected, and a 50 percent reduction in the amountof final landfill disposal. The capacity of Aigi landfill in Tajimi was 580,000 tons at the end of fiscal
year 2000, and there is a plan to prepare additional space for 590,000 tons. Nagoya City succeeded in fulfilling its original objective to save the tidal flat. Now let us consider what effectthese local improvements in waste disposal have had on global warming.

Waste Reduction and Reduction of Greenhouse Gases
Quantificationof Greenhouse Gas Emissions
Attempts have been made to quantify greenhouse gas emissions, especially carbon dioxide emis-

sions. In a lifecycle assessment (LCA) of a solid waste management system, CO, emissions arecalculated as part of the system's environmental load. It is theoretically possible to quantify theamount of CO 2 emitted at each stage of waste disposal (that is, waste collection, intermediate
processing, incineration disposal, recycling, and landfill disposal).
Local governments as well as individual firms conduct lifecycle assessments. Considerable ambiguities arise in efforts to evaluate carbon dioxide emissions. For instance, recyclable waste collection and intermediate processing are conducted both by Nagoya City and by private companies,

The Link betweetn Compliance at the Local Level anid Global Environmental Goals

107

Figure 6.7 Treatment of General Waste in Nagoya City, 2000
(tons)
Total waste collected by the city
Combustible waste
Bulky waste
Noncombustible waste
Waste collected during
beautification campaign
Recyclable waste

Citizens' voluntary
carry-in waste

594,292
440,763
14,08377,884le wastecollected voluntarily
113,235
by citizens

4,968
56,594

Resource recovery
PapersScrap tires
Metal materials
Spray cans
Other

Intermediate processing
Large-scale shredding
Compression
Small-scale shredding

Incineration disposal

257,552

737,408

Entrusting landfill ash disposal
Private landfill
Ash dissolution

40,01428,19011,824

Landfill disposal
Landfill ash
Noncombustibles

119,957
70,19649,761

Sontrce: Unpublished Nagoya City data compiled by the author.

but the city government does not keep track of the results of private sector efforts to recycle. Evenin cases when the city government does know the amount of waste recycled by private companies, city officials do not have the data to calculate the amount of CO2 emitted by the recyclable
wastes generated within Nagoya City. This is because the private companies also collect recyclablesfrom outside the city.
Given the difficulty of making correct assessments, this chapter attempts to quantify the amountof CO, emissions by relying only on information disclosed by Nagoya City. It assesses (1) theamount of CO, emitted in the "public process of waste disposal" and (2) the amount of CO2
emissions reduced through waste reduction measures. "Public process of waste disposal" basically refers to the wastes collected by the city. As for the wastes brought in voluntarily by citizens,

only the greenhouse gas emissions (GHGs) from intermediate processing, incineration disposal,and landfill disposal are included in the calculation; GHGs generated in transportation of wastes
collected by citizens are not included.
Energy Consumption Necessaryfor a Ton of Waste Disposal
The amount of energy consumed to dispose of one ton of waste is calculated by quantifying theCO2 emissions generated in the process. Figure 6.8 compares data for 1998, when separated

108

Local Approaches to Environmental Compliance

Table 6.1 Waste Collection in Nagoya City, by Waste Category
Category
WastesCombustibles
Noncombustibles
Bulky wastes

1998

1999

2000

6 Twice a week
+ Once a week
4 Once a month(on applicationbasis, charged)

2

Twice a week
Once a week
. Once a month(on applicationbasis, charged)

4 Twice a week
> Once a week
Once a month(on applicationbasis, charged)
Once a week

Once a week
(9 wards)* Once a week
(9 wards)
300 points + elementary and junior highschools
300 points + elementary and junior highschools

Once a week(whole city)
Once a week(whole city)- 300 points + elementary and junior highschools
300 points + elementary and junior highschools

Once a week(whole city)
Once a week(whole city)" 300 points + elementary and junior highschools. Once in every two
weeks

Spray cansResources

Cans
Bottles
Paper cartons

PET bottles

Paper containers
Plastic containers
Button type batteries-

200 points + elementary and junior highschools-. 200 points + elementary and junior highschools

Once in every two
weeks
Once in every two
weeks
200 points + elementary and junior highschools-' Collection at every door (station collection in some areas).
4

Station collection (local dumping place, one in 50-60 households).

Collection at designated points (collection boxes set at grocery stores and public facilities).
Source: Unpublished Nagoya City data compiled by the author.

collection had not yet been introduced, to data for 2000, after separated collection had begun. The
amount of CO2 emissions is smaller for all categories of waste: combustible waste, noncombustible waste, bulky waste, waste collected during the beautification campaign, citizens' voluntary
carry-in waste, and resource recovery waste.
The more intermediate processing is conducted, the more energy is required for transportation, shredding, and compaction of wastes. After the declaration of a "garbage emergency" in
Nagoya City, the city began serious efforts to reduce the amount of waste for final disposal as
landfill. Its reforms increased the amount of energy used per ton of waste disposal because separated collection and intermediate processing expended more energy. The total amount of energy
consumed in the whole process of waste disposal declined, however, because Nagoya City succeeded in reducing by half the total amount of waste that was generated.
Figure 6.9 shows the amount of CO 2 emissions generated in six stages of waste disposal: collection, transportation, separation, shredding, landfill disposal, and dissolution of incinerator
ash. CO2 emissions generated by incineration are shown in Figure 6.10. These emissions are incredibly large compared to emissions from collection, transportation, separation, shredding, landfill
disposal, and dissolution. The total amount of CO2 emissions generated by the waste disposal
process from start to finish is shown in Figure 6.11.

109

The Link betweeni Compliance at the Local Level and Global Environmillenital Goals

Figure6.8 Energy Contsumed to Dispose of a Ton of Waste in Nagoya City
Kilograms of carbon dioxide per one ton of waste
60

50

40-

7

30

20

10

0

1998

2000

1998

2000

Combustibles

Noncombustibles_ Gas_ Water =Cl Electric

1998

2000

Bulky
waste

1998

2000

Waste
collected
duringbeautification
campaign

Heavy oil = Light oil

Source: Unpublished Nagoya City data compiled by the author.

1998

2000

Citizens'
voluntary
carry-inwaste_ Gasoline_ Coke1998

2000

Resource
recovery= Collectedamount110

Local Approaches to Environmenital Compliance

Figure6.9 CO2 Emissions per Ton of Waste, by Disposal Process in Nagoya City
(excluding incineration process)CO2 emissions in tons

6,000
1998

i

1999

2000

5,000
4,000
3,000
2,000
1,000

(0

1
Collection

Transportation.
*I
Separation

Shredding*Landfill
disposal

Dissolution ofincinerator ash

Source: Unpublished Nagoya City data compiled by the author.

Nagoya City's drastic measures for waste reduction increased the amount of CO, emissions
associated with the process of waste collection and processing described above by approximately
1,500 tons annually (6,000 tons per year if dissolution is included) within two years (1998-2000).
However, as the city significantly lowered the amount of wastes for incineration through waste
reduction measures, CO 2 emitted during the incineration process decreased by more than 60,000

Figure6.10 CO2 Emissions in IncinerationProcess
Tons
350,000
300,000

250,000 _X113ll||! *Sa11
200,000
150,000
100,000

50,0
1998

1999

Year
Source: Unpublished Nagoya City data compiled by the author.

2000

Thle Link betweetn Compliance at the Local Level and Global Environozental Goals

17I

Figure 6.11 Total Amount of CO2 Emissions Generated by Waste Disposal Process in Nagoya City
Tons
350,000
300,000-

250,000200,000
150,000
100,000

50,000L
1998

1999

2000

Year
Note: Total emissions from 1998 to 2000 declined by about 55,000 tons.
Source: Unpublished Nagoya City data compiled by the author.

tons per year, as shown in Figure 6.10. (Incineration accounts for the largest share of CO, emissions
for the entire waste disposal process.) Consequently, the amount CO 2 emissions for the wholeprocess of waste disposal was reduced by 55,000 tons (see Figure 6.11).
The delay in building a new final disposal site (a delay made possible by Nagoya City's waste
reduction measures) "saved" CO2 emissions. Carbon dioxide would have been released in theprocess of building the site. If this effect is included, the waste reduction measures would havelowered emissions even more, further mitigating global warming.

Costs of Waste Disposal
Nagoya City calculates the cost of waste disposal per ton. First, it determines the cost accounting
period on an account year basis. Total departmental expenditures during the cost accounting
period are compiled based on the settlement of accounts of annual spending on environmental
projects. Next, departmental costs on the waste disposal process are computed. Finally, the aggregated costs of public collection and voluntary collection are separately determined.
The Annual Report, 2000 released by Nagoya City's Environmental Affairs Bureau classifies
waste disposal costs in several categories. Personnel costs include wages, benefits for employees
other than retirement benefits, and mutual aid money, all of which are included in the annual
budget.
Nonpersonal expenditures do not include depreciation costs and the interest paid on bondissues. The costs for land acquisition also are not included. Costs that are inappropriate for annual expenditure, such as expenditure on outsourcing the design of new facilities, are deferred asa cost element to the next fiscal year.
Depreciation costs are calculated separately for buildings, facilities, work pieces, and vehicles.
The cost elements are the construction fee recognized as capital expenditure, and the equipment
costs necessary for purchasing vehicles. The depreciation period is fifty years for reinforced concrete

112

Local Approaclies to Environ7nenital Comlpliancebuildings, thirty years for wooden structures, fifteen years for facilities and work pieces, and five
years for vehicles, in accordance with the straight-line method of depreciation. The interest on bondissues includes the interest payments for the bonds issued to raise funds for building facilities.
Figure 6.12 shows the costs of waste disposal in Nagoya City in 1998,1999, and 2000. Expenditures in 2000 were bigger than in the previous two years. One reason is nonrecurring expenditure
items, such as construction and maintenance of waste disposal facilities and landfill sites. They
are included in Figure 6.13 as facility expenses for environmental projects.

Cost-Effectiveness of Waste Reduction Measures
As noted at the beginning of the chapter, there is a synergistic relationship between local measures to reduce carbon dioxide emissions and the global environment. Specifically, waste reduction at the local level mitigates global warming. Figure 6.14 depicts this synergistic relationshipby tracking three factors from 1998 to 2000: waste reduction in Nagoya City as a result of local
policy measures; the costs of implementing the local policy measures; and the reduction of CO,
emissions as a consequence of local policy. The total amount of waste disposal (as shown in
Figure 6.1) decreased by 20 percent from 1,050,307 tons in 1998 to 851,844 tons in 2000. Although
the cost of waste disposal increased from 43.4 billion yen in 1998 to 47.4 billion yen in 2000, CO,emissions declined by 55,000 tons. The costs of waste reduction in 2000 would have been muchhigher if the time and effort required for waste separation had been valuated and included in the
total (an undertaking beyond the scope of this chapter).

Figure 6.12 Costs of Waste Disposal in Nagoya City
Total cost in 10,000 yen
5,000,000
4,000,000
3,000,000

2,000,000

1,000,000

.-.

.

2.

X

1998

1999

2000-a2000-bYear
Waste carried in voluntarily by citizens
I~-

1Waste collected by municipal government

Total

Note: The graph for 2000-a shows the cost of waste disposal excluding 56,594 tons of collected recyclables. The
2000-b graph includes the 56,594 tons. The 2000-b data are also used for analyzing policy cost-effectiveness, sincewaste recycling can be regarded as a municipal policy measure for waste reduction.
Source: Unpublished Nagoya City data compiled by the author.

The Link between Compliance at the Local Level and Global Environmental Goals

113

Figure6.13 Annuial Costsfor Environmental Projects in Nagoya City
Cost in 1,000 yen
60,000,000
50,000,000 _
40,000,000_

30,000,000 20,000,000 -10,000,000
0
1998

1999

2000

Year
Cost for facility maintenance
LIII Cost for waste disposal
General administrative expenses
Total

Sonurce: Unpublished Nagoya City data compiled by the author.

Figure 6.14 Synergistic Relationship between Local and Global Effects
Tons of CO2 emissions
350,000------------

Cost in billion yen- - ---

48

Total CO2 emissions (t)300,000
250,000

Total cost for

200,000 150,000

45

/i\o/

- 44

-

\

43

4241
50,000
0

|

40
---

,39

1998

1999

2000-aYear

W 1 Total waste generation (lOt)
Note: See Figure 6.12 for an explanation of the year 2000 data.
Source: Unpublished Nagoya City data compiled by the author.

2000-b

114

Local Approaclhes to Environimental Compliance

Since the additional 4 billion yen resulted in the reduction of 198,463 tons of wastes, the cost ofwaste reduction can be estimated as 20,200 yen per ton. If the total cost of waste disposal is
divided by the amount of disposed wastes, the unit cost is about 41,800 yen per ton for the year
1998 and about 55,600 yen per ton for 2000.
A carbon tax is being considered in Japan. The monetary value of the reduced 55,000 tons of
CO 2 emissions can be calculated with reference to this proposed tax. The benefits of CO2 emissions reduction would be about 165 million yen if the price of one ton of CO2 is 3,000 yen. Assuming that Nagoya City implemented waste reduction measures to reduce CO2 emissions, the costbenefit ratio between the costs required for waste reduction measures (CR) and the benefits of theabatement of CO 2 emissions (BA) would be approximately 0.41. This means that BA - CR < 0, andthe measures would not be worth implementing.
The starting point of Nagoya City's waste reduction efforts was its inability to secure a newsite for final disposal of its wastes. If the landfill site had been constructed, the costs would havebeen approximately 25 billion yen. The city may still need to construct this site, but such a necessity has clearly been postponed by its efforts to reduce waste. Assuming that the life of a waste
disposal facility is forty years and the amount of final waste disposal can be reduced by 20 percent through waste reduction measures, 6.25 billion yen can be cut from the costs of constructing
the waste disposal facility.
Therefore, since the benefit of postponing the construction of a disposal site by waste reduction (BD) can be estimated at 6.25 billion yen, the benefit-cost ratio (BD/CR) is approximately 1.56.
This means that B0 - CR > 0, and implementation of the measures is economically justified.
In and of themselves, Nagoya City's waste reduction measures are rewarding. If their ancillary benefits are considered (that is, the benefits of reducing CO 2 emissions), the benefit-cost ratio((B, + BA)/CR) increases to 1.98. This suggests that measures to conserve the local environment
can mitigate global warming to an important extent. Priority should be given to implementing
waste reduction measures that benefit the local environment, have a high benefit-cost ratio, andreduce CO, emissions. Even if the benefit-cost ratio (BD/CR) of a measure or project for local
environment conservation is smaller than 1, the total benefit-cost ratio if ancillary benefits (BA)are included ((BD + BA)/CR) may be larger than 1; therefore the measure should be implemented.
However, the ancillary benefits would not belong to the agents that implement the measures or
projects. In other words, the benefits would be global not local. Therefore, the measures or projects
would not be implemented without some kind of inducement. The global community needs to
explore certain institutions in order to fill this gap.
The benefits of waste reduction in Nagoya City are not limited to postponement of the construction of a final disposal site. Because the Fujimae tidal flat was spared when the city gave up
its plans to construct a landfill site, an ecologically important tidal flat was saved.

Note
1. The 280,000 tons is the total of all recycled waste. This includes "first level" recycling (that is, sortedout bottles, cans, plastic bottles, paper) and "second level" recycling (for example, pulverized large plastic
materials and scrap metal for re-use). To help readers better understand waste processing, a few generalcomments follow. The municipal waste stream includes waste that can be recycled. Wastes that cannot berecycled go either to the incinerator or to the landfill. Most combustibles are incinerated. Regarding therecyclable waste stream, this includes waste items that are collected and separated early in the waste processing/disposal cycle (the first level of recycling referred to above). At a later stage of processing, a greater
amount of recyclables are recovered (for example, large items of disposed materials, such as scrap metal,
construction wood and boards, wood and plastic furniture).

7
Conclusion: Lessons Learned on
the Importance of Local Initiatives
Adriana Bianchi, Wilfrido Cruz, and Masahisa Nakamura
Although many developing countries recognize the severity of their environmental problems,
they have had difficulty designing environmental regulations and ensuring their compliance.
The underlying theme of this book is the catalytic role local initiatives can play in these efforts.
Local initiatives include actions by local governments, community groups, and private industry,
and they form an important complement to environmental management efforts that may otherwise emphasize only the role of the central government and environmental agencies.
During the reconstruction period after the Second World War and the rapid industrial growthin the 1960s and 1970s, a wide range of local initiatives was successfully applied to the serious
pollution problems in Japanese communities. The case studies highlight relevant examples fordeveloping countries, including the development of air and water pollution management approaches and the supporting role that can be played by economic incentives and global environmental goals.

The Main Components of Local Approaches in Japan
Environmental regulation and compliance in Japan have been described in this book in terms ofspecific local pollution problems and specific responses by communities and factories to address
them. Contributing to effective environmental regulation and compliance are the following components of the Japanese experience:* the sustained involvement of local authorities in determining environmental regulations
and ensuring compliance* the influence of community-based constituencies and the willingness of private industry tocooperate with local management efforts* the availability of technology and the strengthening of management capacity to respond to
specific environmental problems* the presence of favorable economic conditions and financial support to industry for pollution abatement activities.
The process of developing local regulations and enforcement mechanisms in the 1960s and1970s was begun as a result of several factors. The most important were an increase in awarenessby community residents of the seriousness of the local pollution problem and the subsequent
responsiveness of local government units (LGUs). The development of pollution control regulations and their effective implementation were aided by the business or industry culture in Japan:
firms identify closely with the communities in which they are located. Lastly, financial incentives
and favorable economic conditions were instrumental, especially in helping private industry invest in more efficient (waste-reducing) technology in general and in pollution control equipmentin particular.

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Local Approachzes to Environmenital Compliance

The Relevance of Japan's Experience to Developing Countries:
Local and National Implications
At first sight, Japan's experience with pollution control may not appear relevant to countries witha very different history, not only in terms of industrial development and income levels, but also interms of social and cultural characteristics. However, many of the changes occurring now indeveloping countries mirror changes that occurred in Japan in the period of rapid reconstruction
and re-industrialization during the 1960s and 1970s.
The case studies from Japan are relevant to developing countries because they present practical alternatives to traditional approaches that rely heavily on central government interventions.
The case studies describe local approaches that involve local businesses and community organizations as well as city governments in efforts to control pollution. Japan's experience also is relevant in terms of the social and informal factors that improved factories' compliance with environmental regulations. The Japanese experience could be valuable as a model for using similar (ifless potent) factors in developing countries where formal enforcement methods are often undermined by governmental inefficiency or political interference.
Developing-country reviewers noted significant differences between Japan and developing countries in Asia with regard to the timing of industrial growth and the capacities and practices ofindustries. (Please refer to the Introduction and Appendix for the summary of reviews.) Nevertheless, the reviewers recognized the efficacy of promoting local approaches to pollution management
in developing countries. Useful models from Japan could help improve local initiatives elsewhere.
The wide range of air and water pollution problems presented in the case studies was consideredespecially instructive. The varied circumstances that are described can help developing-country
officials and leaders in the private sector recognize the potential of specific approaches, depending
on community conditions and existing partnerships. Since local approaches must be tailored closely
to local conditions, it is particularly important that developing-country officials and local leaders
be flexible and receptive to local factors that may be unique in their communities.
In Japan local approaches to environmental compliance vary by community, depending on its
level of awareness of local pollution problems and the types of local partnerships that can beformed. For example, the use of pollution control agreements (PCAs) is now widespread in Japan,
with thousands currently in force. However, in the early period of pollution management, Japanese cities took somewhat different approaches. In Yokohama, pollution control agreements between industries and the local government played the key role in determining pollution management targets and in setting up systems of monitoring and enforcement. By contrast, in Kitakyushu,
a more direct approach was taken; the local government developed pollution regulations primarily through informal but effective "administrative guidance" of industry's environmental practices. In between these two examples is the case of Osaka. In Osaka traditional cooperation between the city government and local businesses made a partnership approach to pollution reduction
the logical and practical one.
By developing a solid constituency for environmental management, local initiatives can also
provide a more solid foundation for national policies. In Japan local governments built a broad
constituency for pollution control that later spurred changes in environmental policy at thenational level. The process was gradual. After the Second World War a national antipollution
law was effectively blocked from being introduced into the Diet by business interests. Later, whena national law was eventually passed in 1967, its impact was undermined by explicit requirements to preserve "harmony" between industrial growth and pollution control. However, by the1970s, support had grown for strong national legislation on pollution control. Communities
and local governments had won such broad endorsement for antipollution programs thateven political processes at the national level were significantly affected. Favorable court deci-

Conclusioni: Lessons Learned on tne Importance of Local Initiativtes

117

sions on pollution-related cases added momentum to the drive to pass a national bill. Traditional politicians recognized that they could lose voters to other parties supporting pollution
control platforms, and this led to changes in their policy positions. In time a strong national
pollution control law was passed.
The Role of Social Responsibility
As the case studies indicate, social responsibility or social pressure to help the public good plays asignificant role in Japan. Of course, businesses in Japan want to increase their profitability, andsome businesses have strongly opposed pollution regulations. In general, however, Japanesebusinesses appear to be very mindful of their social role in the community. One example is RK
Excel, a metal-plating company that produces automobile and motorcycle parts. As the case study
makes clear, cultural factors played an important role in convincing the company to reduce waterpollution. Once its responsibility for the local chemical problem was established, RK Excel went
to great lengths to ameliorate it.
RK Excel's environmental program was mainly motivated by a desire to maintain the company's
good standing in Yagura town. The pollution control program adopted by RK Excel was far more
stringent than the basic pollution control requirements of the 1970 law. Indeed, RK Excel's pollution control agreement is far stricter than most PCAs. Environmental management represents
more than 4 percent of the company's annual production budget.
Pollution control efforts in Lake Biwa also illustrate how social responsibility has influenced
compliance with environmental regulations by Japanese businesses. When the Shiga prefecture
imposed restrictions on water pollutants, there was general cooperation at the local level. Nevertheless, cases of noncompliance with discharge regulations occurred. In addressing the problem
of noncompliance, the local government approached the enforcement of regulations governing
toxic and nontoxic pollutants differently. If effluents contained toxic pollutants, there was very
strict and direct regulation by the local government. However, more flexibility was allowed withregard to nontoxic pollutants, and the approach depended more on social pressure.
The local pollution authorities undertook regular spot inspections as a means of monitoring
noncompliance. When noncompliance was spotted, a light warning was usually issued to theoffending party. Often this approach worked because the business would respond to the informalsocial pressure to change its polluting practices and clean up the environment. Light warnings,
however, did not resolve all problems. In some cases a stern warning was required, and if thatwent unheeded there was the potential use of administrative actions. This means of enforcement
was rarely needed to ensure compliance.
As noted by the developing country reviewers, polluting companies' sense of social responsibility may be less in developing countries than in Japan. The model of using social pressures toachieve compliance might be adapted in these countries by increasing the visibility of polluters,
thereby increasing the social pressures that could be applied. By advertising the polluting activities
of individual factories and thus increasing public awareness, developing countries could increase
the potential for action.
In Indonesia the national government helped to determine the responsibility of individual factories for pollution. Indonesia's Program for Pollution Control, Evaluation, and Rating (PROPER)
called for the assignment of pollution "colors" to polluters. The worst polluters were classified as"black," while those complying with environmental regulations or exceeding those requirements
were elevated to a "gold" classification. In between the extremes of "black" and "gold" were different levels of pollution classified in a variety of colors. Similar attempts have been made in othercountries in the region, and they appear to have effectively increased the visibility of polluters'
actions and concomitantly the social pressures on them to reduce pollution.

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Local Approaches to Environmental Compliance

Although this approach was not directly part of the Japanese experience, it depends on social
responsibility and local perceptions to increase compliance with environmental regulations. Thus,
this "color-coding" system could be useful elsewhere if it is incorporated within a program ofpromoting compliance through local government and community action, and in partnership withthe specific industries.
The Role of Special Financing
In Japan soft loans help businesses invest in measures to remediate pollution and introduce cleaner
processes. Just as Japanese businesses appear to be more willing than businesses in developing
countries to accept social responsibility to protect the environment, public institutions in Japan
appear to be more willing to provide incentives to soften the financial burden of compliance withenvironmental regulations.
The introduction of the soft loan program was linked to the enactment of pollution control
legislation. Before the 1970s, polluters were not fully aware of the social cost of pollution, andtherefore soft loans were a needed incentive. A later stage of the incentive program linked soft
loans to the standardization of cleaner technology. The program helped companies meet the standards, and it helped in the development of a new clean-technology industry.
In the early days, special financing for investment in environmental protection was noteworthy not only because of the subsidized rate (although the rate was a significant incentive), but
because it made financing for the new priorities available for many businesses that otherwise
would not have been able to get such financing from traditional sources, such as local banks. At
that time investments in efforts to control pollution would not have been particularly "bankable"
since the investments did not lead directly to immediate improvements in revenues.
When discussing the relevance to developing countries of Japan's financial incentives approach,developing country reviewers highlighted three issues: how the approach would fit in with current
views on the Polluter Pays Principle (PPP); how local initiatives could enhance financial incentives; and lastly how financing to improve the global environment could assist local initiatives.
The use of special financing to control pollution in Japan predated discussions of the PPP, a
key principle associated with environmental management incentives. As the reviewers noted, thesoft loan or financing approach used in Japan appears to run counter to the Polluter Pays Principle.
In recent years the PPP has gained increasing acceptance among both national and international
environmental agencies. The value of PPP is that the social cost of pollution is clearly assigned tothe source. In fact, the cost of cleanup or prevention is viewed as the responsibility of the source, sothat in general subsidized financing for anti-pollution investment is not appropriate. However, thereviewers als recognized the need for a proactive approach to specific pollution control problems.
The main concern was how to respond quickly to serious pollution problems. Thus, the practical
test for an approach was whether it could provide timely help to control these special problems,
could be well targeted, and the need for incentives would decline over time.
The distinctive implementation feature of the soft loan program in Japan was its close tie to many
local initiatives. Thus, the burden of monitoring the productivity of the loan for the financing
agencies was greatly reduced by LGU oversight. Especially in the early period, there was very close
cooperation between the financing agencies (such as the Japan Environment Corporation, theJapan Development Bank, and the Japan Financial Corporation for Small Business) and local
government units. For their part, the LGUs were very supportive of the soft loan program because it
made possible immediate compliance with the new pollution control agreements. This feature of
special financing in Japan (namely, the close ties to local initiatives) could be useful to many
developing countries in their efforts to improve the efficiency of their financial incentive programs.
Lastly, the example of solid waste management in Nagoya City demonstrated the link between local initiatives and global environmental goals. Financial incentives not only promote

Conclusion: Lessons Learned on the Importance of Local Initiatives

119

local and national efforts to reduce pollution. They may also support local initiatives that contribute to the achievement of global goals. The high visibility of global environmental issues in Japanfollowed the climate change meeting in Kyoto in 1997. Local actions to reduce pollution can haveancillary benefits, as the case study on solid waste management in Nagoya City explains.
Congested metropolitan areas in the region are producing levels of solid waste that are rapidly
multiplying. Landfill areas are becoming limited, and incineration of solid waste may become
more common, with negative implications for greenhouse gas emissions. In addition, the need toopen up new landfills may also affect wetland habitats and coastal marine resources aroundmany large cities in the region. This could lead to increased impact on biodiversity and international water resources.

Improved Cooperation with Local Industry and Government Agencies:
A Look to the FutureThis book has focused on the role of community actions and local governments in Japan and thepotential for implementing similar initiatives in developing countries. Two related aspects contributing to effective enforcement and compliance approaches were also mentioned as part of theJapanese experience, namely the close cooperation of private industry and government agencies
with environmental management efforts at the community or municipal level. These aspects have
not received as much attention in developing countries, and they would be useful components inthe agenda for future environmental action.
In Japan it is clear that local communities, including municipal governments and community
organizations, were able to work closely with individual industries and industry associations to
identify environmental regulation targets that were practical for local conditions and to cooperate in monitoring and enforcement activities. Of course, Japanese industries tried to avoid responsibility for pollution in the early phase of rapid industrial growth and during the introduction of environmental regulation. However, once regulations were imposed or consensus on theneed to control pollution was reached with local government and community organizations, there
was close cooperation between communities and local industry.
In developing countries in East Asia, important steps in this direction are the national government projects on pollution information disclosure. By revealing the air, water, and solid waste
pollution records of individual factories, some of these projects have motivated industry to adopt
pollution abatement programs. For example, this approach was highlighted in the discussion ofIndonesian and Philippine experiences. An important next step would be to develop specificpollution abatement programs directly with the industries involved. Japan's experience in theuse of community-oriented pollution control agreements with concerned industries may contribute to developing specific and effective programs for detailed environmental regulation and monitoring and compliance methods.
The development of interagency cooperation is the second aspect of Japanese approaches thatneeds more attention in developing countries. As was the case in industries' adoption of environmental programs, sectoral agencies in Japan resisted early efforts to involve them in environmental
management. For example, agencies related to transportation or to industrial investment generally ignored environmental management coordination efforts proposed by the Japan Environment Agency. However, when political consensus was reached on the need for pollution control,
both local and national agencies cooperated to support pollution monitoring and abatement programs. Among many other industrial countries and in developing countries especially, administrative and jurisdiction issues remain as constraints to effective interagency environmental programs. The lack of a "culture" of interagency cooperation is a traditional problem, and it willcontinue to be a major challenge for developing countries in the region to create a working systemof consensus-building and coordinated action among government agencies.

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Appendix A. Summaries of Reviewsof JapaneseCase Studies

Case Study on Air PollutionControl in Japanand the Relevance to Developing Countriesin EastAsia
Indonesia
Reviewer: Rosa Vivien Ratnawati
Head, Divisionfor Environmental Legislation Analysis
Ministry of the Environmienit, Indonesia
The review highlighted the key similarities and main differences in the experiences of Japan andIndonesia in their efforts to address air pollution.
Similarities in Experiences
The two countries had similar experiences in terms of the link between industrialization andenvironmental pollution. Japan's rapid industrial development in the 1960s had resulted in serious air pollution problems in several of its major cities. Indonesia experienced major environmental pollution in the 1970s due to the dramatic growth of its industry sector. Total industrial
output since 1970 has increased eightfold. Leading industrial nonoil goods manufactured forexports include textiles, garments, plywood and other wood products, electrical goods, footwear,
and paper products. Pollution in Indonesia is predicted to increase substantially in the years
ahead. By the year 2020, biological oxygen demand (BOD) is estimated to increase tenfold; suspended particulates, fifteenfold; and metal/lead discharges, nineteenfold. In Jakarta the industrial sector presently accounts for about 15 percent of total suspended particulates, 16 percent of
nitrogen oxide, and 63 percent of sulfur oxide.
In its efforts to deal with the environmental deterioration of its major cities, Japan changed thefocus of national policies from "economic development" through industrial expansion to "pollution control." In a somewhat similar nature, Indonesia set up the "Blue Sky Program" to achieveclean air (particularly in heavily populated urban areas) and to comply with public health standards. The program includes the introduction of unleaded gasoline, gas, and bio-fuels, as well as
signed formal agreements between the Ministry of the Environment and industries to reduce
emissions. The compliance of industries and state-owned enterprises with environmental standards is sought through enforcement of legislative regulations and the application of nonlegal
instruments. For example, industries are rated based on their environmental performance. Clean
industries are rated green, while those with the worst environmental performance are rated black.

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Local Approaches to Environmental Compliance

The Japanese experience demonstrated that good governance is consequential in achieving aclean, healthy environment. Similarly, Indonesia acknowledges that good governance is importantin attaining its environmental goals. The Ministry of the Environment has introduced a "Good
Environmental Governance Program." The program's objective is to strengthen local government capacities to enforce regulations with sound environmental considerations and with active
participation by the local people.
Japan's overall approach to promoting industries' compliance with environmental standards
was based on the concept of "deterrence" or "command and control." The effectiveness of thisapproach depended not only on the motivation of industries to comply, but also on public environmental awareness and the willingness of people to cooperate and get involved in finding asolution to environmental problems. In Indonesia the Environmental Management Act of 1997
(EMA 1997) is also based on the "deterrence" approach. This act includes provisions for soft
loans to assist industries in undertaking pollution abatement investments.
In Indonesia, like in Japan, public pressure has proven to be an effective strategy to settle
environmental disputes. A good example is the case of the pulp and paper factory located in
Northern Sumatra. Local residents complained that the factory had polluted rivers and caused
deforestation. They also complained about the foul odor coming from the factory. Under strongpressure from the local community and nongovernmental organizations, the local government
was forced to order the factory to close down.
Differences in Experiences
The above-mentioned similarities between Japan and Indonesia have clear and direct implications for Indonesian efforts to control air pollution. Discussed below are the main differences
between these two countries. While differences in situations and experiences are points of deviation and may suggest limits to the applicability of Japan's experience in pollution control to Indonesia, clearly there are important lessons to be learned from these differences.
The Japanese experience showed the importance of political will in addressing pollution concerns. For instance, because of citizens' protests and fear of being voted out of office in favor ofleftist politicians, incumbent local government officials had no choice but to enforce stringent
emission reduction targets. Indonesia's experience has been quite the opposite. Political will wasinadequate at the time when "sustainable development programs" were being implemented,
and environmental pollution was never an important political issue. The Ministry of the Environment coordinates various environmental activities in the country. Nonetheless, decisionmaking
on environmental issues has not been fully transparent across relevant government agencies, andit often lacks the participation of stakeholders.
According to the case study, once legislative regulations were established in Japan, they were
enforced by all relevant government agencies. Such integration of environmental regulations
with sectoral department policies would be extremely difficult to implement in Indonesia. Forestry, mining, fisheries, agriculture, and industry are sectors with strong economic interests, andthey implement programs without coordination among themselves or with national ministries
and local official agencies. Because sectoral policies have not taken into account environmental
policies, and vice versa, regulatory enforcement and compliance are weak in Indonesia.
In Japan local government authority to establish and enforce environmental laws, and thecapabilities of local officials to do their jobs, were factors that contributed significantly to thecontrol of urban air pollution. In Indonesia major development decisions were made at the central government level; local governments often had little room to make development plans basedon local potential and local needs. In recent years Act No. 22/1999 has enabled local governments
to formulate their own development plans with input from the local population. In addition, Act No.

Appendix A. Worksihop Participants' Reviews of Japanese Case Studies

123

25 / 1999 on Fiscal Balance provides local governments and communities with financial resources
and authority to manage their own natural resources for economic development. However, after
decades of centralization, there is still an urgent need to strengthen local capacity in order to gain
the potential benefits of these laws.
Thailand
Reviewer: Supat Wangwongwatana
Depity Director-General,Pollution Control Department
Ministry of Science, Technology, and Environment, Bangkok, Thailand
The review evaluated the case study on air pollution control in Japan according to its relevance toThailand's experience and environmental problems. Considerable similarities were noted between Japan's experience and Thailand's experience in air pollution control management. Certain deviations from the Japanese experience were also mentioned. The salient points raised in
the review are as follows:* The present situation in Thailand with regard to air pollution control is comparable to Japan's
experience during the 1950s, when Japan went through the reconstruction of the country afterWorld War II. Thailand today is still recovering from the economic crisis that took place in1997. Both public and private sector investments in pollution control are less than before thecrisis when Thailand was more prosperous. There is concern that imposing pollution control
measures on the business community may hinder economic recovery. The demands of dailyliving are still the major concern for most of the Thai people. Economic development is given
a higher priority by the government than pollution control. The latter tends to be accepted
only if it complements economic development (for example, eco-tourism).
* Similar to Japan's experience during its early stage of environmental management, the authority for pollution control in Thailand has been contained in numerous laws and dispersed among several governmental ministries for implementation. There are also conflictsof interest between some of the agencies with responsibility for environmental issues. The
situation has not improved considerably, even with the enactment in 1992 of the Enhanicement and Conservation of the National Environmental Quality Act. The act is comparable to
Japan's Basic Lawfor Pollution Control. Thailand's law, however, has been weakly enforced,
and factories sometimes do not operate their pollution control equipment in order to save
operating costs.
* Japan's Soot and Smoke Control Law of 1962 and its Basic Law for Pollution Control of 1967,
which stipulated the need to "undertake living environmental management in harmony
with sound industrial development," have similarities with legislation passed in Thailand.
Article 32 of the Enhancement and Conservation of the National Environmental Quality Act of1992 gives power to the National Environment Board to prescribe environmental quality
standards, including ambient air quality standards. Standards are based not only upon scientific knowledge and principles, but also according to the practicability of such standards
from the viewpoint of economic, social, and technological considerations. In Thailand, however, setting stringent standards is not regarded as practicable and realistic.
* Thailand's air pollution problems resemble the air pollution problems in major Japanesecities. Two cases in Thailand are described below.
Thte case of the petrochemical complex in the Map Ta Pud District. Thailand's largest petrochemical complex is located in the Map Ta Pud District of Rayong Province. In 1997, when
the factories in the complex started full operations, the community situated downwind from

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Local Approaches to Enviroiznmental Conplianicethe complex began to complain about an offensive odor caused by various volatile organic
compounds (VOCs). Six major factories, including two refineries, were identified to be thesources of VOCs emissions. Children attending the community school located about one
kilometer from the petrochemical complex suffered from respiratory illnesses. This problem is similar to the air pollution problem that occurred in Yokkaichi City, Japan, in 1955.
The Thai experience is also similar to the case of Kitakyushu City, Japan, in 1970. In Thailand a committee consisting of representatives from national and local government agencies, Thai industries, and the local community was established to implement and monitor
air pollution control measures.
The case of a thermal power plant in tile Mae Moh District. In 1992 Thailand experienced air
pollution caused by sulfur dioxide emissions from the lignite-fired thermal power plant
located in the Mae Moh District of Lampang Province. The power plant, with its present
installed capacity of 2,625 megawatts, uses lignite with a high sulfur content (3 percent
on average), and emissions of sulfur dioxide are not controlled. The average averagesulfur dioxide concentration often exceeds 1 part per million (ppm) during the coolmonths. More than 30 million baths were paid as compensation to the surrounding
communities.
The Pollution Control Department in Thailand worked closely with the power plant and thecommunity to conduct a comprehensive study to develop, as an administrative guidance, costeffective strategies for reducing sulfur dioxide. These actions are similar to the pollution control
efforts in Kitakyusha City. The power plant in the Mae Moh District was then required to switch
to low-sulfur lignite, to install flue gas desulfurization with 98 percent control efficiency, and to
reduce generating load as necessary. The observed sulfur dioxide concentration is now less than
0.15 ppm. A community fund was established by the power plant to improve the quality of life in
the community. Nonetheless, three lawsuits have been filed against the power plant, demanding
payment of 306 million baths as compensation to pollution victims for accumulated health damages. The outcome of these lawsuits will definitely influence future responses of the businesssector to pollution control management.
* In addition to command and control measures, economic incentives similar to those used inJapan are employed in Thailand. Examples are tax reduction to promote investments inpollution control and monitoring equipment, and tax differentiation to promote cleaner
technologies. Reduction of personal income tax and corporate tax has never been used.
Low-interest loans for pollution control investments are provided to large, medium, andsmall industries through the Environmental Fund, which is managed by the Industrial Finance Corporation of Thailand. However, low-cost loans are still not very attractive sincepollution control enforcement is weak, and the preferential interest rate is not much lower
than the commercial rate.
* The involvement of local governments in pollution control is somewhat different in Thailand than in Japan. In Thailand their involvement is quite limited. This is not only becauseof a lack of authority but also because of a lack of money, expertise, and technical capability.
Complaints about air pollution were handled by the national government directly or sometimes indirectly through provincial administration. It was not until the Constitution of 1997
that administrative management and budgetary authority for pollution control started to
be delegated from the national government to the local governments. However, lack ofexpertise and technical capability at the local level is still a major obstacle to decentralized
decisionmaking. Environmental engineers in Thailand have not yet been accorded a highstatus in industrial companies. This is because pollution control measures are usually perceived to affect a company's profitability only indirectly.

Appendix A. Workshiop Participants' Reviewos of Japanese Case Studies

125* A program to disclose to the public information on industries' pollution control performanceis being established in Thailand. The purpose of the program is to raise public awareness of,and public pressure on, polluting industries. As the case of Yokohama City also showed, increased public awareness of environmental problems will induce industries, as well as thegovernment, to improve their performance on pollution control and management.
* In sum, there are a number of similarities between Thailand and Japan with regard to air
pollution control management. Thailand has benefited from other countries' experiences,
especially Japan's, in dealing with air pollution problems. Thailand has also benefited frominternational cooperation in improving and speeding up its pollution control program.
Vietnam
Reviewer: Nam Thang Do
EnvironmentalSpecialist
Planniniganid InternationialRelations Division
National Environmenet Agency
Differences in Experiences
There is a tremendous difference in the time periods when Japan and Vietnam initiated major
environmental management activities. Japan paid attention to urban air pollution problems evenprior to the 1950s. Citizens' antipollution movements and growing awareness among tocal residents and the mass media concerning environmental issues had forced governments at the national and local levels to establish pollution control measures and set up ambient environmental
quality standards (EQSs). In contrast, environmental pollution was not high on Vietnam's agenda
until the early 1990s. Air pollution management in Vietnam came about after the promulgation of
the Law on Environmental Protection and the establishment of the Ministry of Science, Technology, and Environment (MOSTE) in 1993.
Dust, predominantly from industrial uses and construction activities, is the most important air
pollutant in Vietnam. In the period from 1995 to 2001, monitoring results showed that most urban
areas in Vietnam were heavily polluted by dusts. In residential areas close to factories or near
major roads, the dust concentration was often two or three times higher than the standards. For
instance, the places with the highest levels of dust pollution are residential areas near the Hai
Phong cement plant, the VICASA plant in Bien Hoa Province, the Tan Binh industrial zone in Ho
Chi Minh City, and the Hon Gai coal plant in Ha Long City.
The industry, transportation, and construction sectors are the major sources of air pollution in
Vietnam. Old industries (built before 1975) and especially small and medium-size industries withold production technologies are the worst emitters of air pollutants. Very few of these facilities
have scrubber equipment. Most of the old industries ended up within the confines of urban centers during the process of urban expansion. For example, Ho Chi Minh City has about 700 factories; 500 of them are located in urban areas. In Hanoi 200 out of 300 factories in the country's
capital are located in urban areas.
With urban and industrial expansion the number of motor vehicles has increased sharply in
Vietnam's major cities. Before the 1980s, 80 percent to 90 percent of urban residents used bicycles.
Today 80 percent of urban residents use motorcycles. The number of registered motorcycles inVietnam has increased at an annual rate of 15 percent to 18 percent. Vehicle emissions are particularly troublesome in large cities such as Hanoi, Ho Chi Minh City, Hai Phong, and Da Nang.
Construction activities, which are taking place everywhere and particularly in the urban centers, have generated serious dust pollution. Monitoring results show that 60 percent to 70 percent
of dust volume in urban air is from construction.

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Vietnam has inadequate enforcement capacity, especially at the local level. Its environmental
inspection service was established in 1994, and now sixty out of sixty-one provinces in the country have an environmental inspection division under the Department of Science, Technology, andEnvironment or DOSTE. (The Ministry of Science, Technology, and Environment is at the national level; DOSTE is a department within each province.) These inspection divisions, however,are understaffed, which makes it difficult for them to undertake the tasks of monitoring andenforcing environmental compliance. Thus many environmental violations have been reported
by residents in nearby factories and not by the inspection service.
Similaritiesin Experiences
Traditional cooperation between the local government, local residents, and the business community played a key role in controlling pollution in Japan's Osaka City. Vietnam also attaches importance to cooperative relationships, and its experience in dealing successfully with pollution problems caused by the Phailai thermal power plant has similarities with Osaka City's experience.
A state-owned enterprise, the Phailai plant was established in 1960 to supply electricity to eightprovinces in the Red River Delta in North Vietnam. Its facilities were outdated and inefficient, andalthough the plant was causing serious air pollution in the area, its continued operation wasneeded to meet the growing demand for electricity. In the mid-1990s, citizens' complaints aboutplant emissions became more frequent and vocal. Citizens asked DOSTE and the National Environment Agency (NEA) to take action and close down the plant. In response to these protests, NEA
conducted plant inspections, collected data on the environmental and health consequences ofplant emissions, and organized negotiations based on a "participatory approach" that involved
local residents, power sector personnel, government officials, and the mass media. Through these
efforts, power plant officials agreed to (a) comply with the Law on Environmental Protection; (b)invest 12 billion VND in new dust precipitators; and (c) pay 900 million VND to affected people. In
Vietnam, as in Japan, three factors working together resulted in effective control of pollution: publicpressure and cooperation, the political will to enforce regulations, and the commitment of enterprise to comply with environmental regulations.
Scientific knowledge and monitoring data are crucial aspects of enforcing environmental compliance. Vietnam now has twenty environmental monitoring stations nationwide. Yokohama City
successfully resolved its pollution problems largely through pollution control agreements.
Vietnam's experience in controlling urban air pollution is largely based on compliance with Environmental Impact Assessment (EIA) requirements. As stipulated in Vietnam's Law of Environmental Protection, both new and old facilities are required to submit EIA reports for review andapproval by the Department of Science, Technology, and Environment. EIA reports should include (1) an assessment of the facilities' potential environmental impacts and (2) proposed measures to mitigate adverse effects. All proposed mitigation measures should be undertaken upon
approval of the EIA reports.
The "EIA tool," which closely resembles the "command and control" approach to pollution
control used in Japan, has been successful in abating pollution in many industrial facilities inVietnam. A good example is the case of the Ninhbinh thermal power plant, which uses coal. In
December 1995, MOSTE chaired a public meeting to discuss means to solve the air pollution
problems caused by the plant. It was agreed during the meeting that by the first quarter of 1996, theplant would submit an EIA report. On April 1996 another meeting took place to review the plant's
EIA report, and the following agreements were reached:* Pollution mitigation measures would be implemented within an eighteen-month period.
* During the implementation process, the plant would identify and carry out priority measures
as approved by Ninhbinh's Department of Science, Technology, and Environment.

Appendix A. Workshop Participants' Reviews of Japanese Case Studies

127

The plant would be permitted to continue operations, subject to adequate implementation of
approved pollution mitigation measures.
The Ministry of Industry approved a budget of 75 billion VND in order to raise the emission
stacks in the plant to 140 meters and to install a dust precipitator with an efficiency of 98 to 99
percent. These actions decreased remarkably the level of dust pollution in the town of Ninhbinhfrom twenty times higher than the standards to permissible levels.
Like Japan, Vietnam has experienced great difficulties in dealing with the worst polluters. In
1999 Vietnam's prime minister directed MOSTE to establish a national program to deal with theworst polluters in a "radical" manner. Two years later MOSTE submitted a proposed programthat would reduce pollution considerably by the year 2010, and it identified the top 4,295 polluters in the country. The program would be implemented in two phases. Phase I, covering the 20012005 period, would involve regulation of the 465 most serious polluters: 292 production facilities,
87 hospitals, 16 pesticide storage houses, and 3 warfare chemical contaminated sites. Regulationof the production facilities would mostly entail technological improvements and installation ofwaste treatment systems; other facilities would be required to relocate or close down. Phase II,
covering the period from 2006 to 2010, would apply similar regulations to 3,830 facilities nationwide causing pollution to a lesser degree. However, because of the complexity of the matter, theprime minister had still not approved the program by early 2003.
Conclusion
Despite certain differences in how they manage air pollution, Vietnam and Japan have had experiences that share these common features: cooperation among the local governments, businesses,
and local citizens on environmental concerns; use of pollution control agreements, and special
methods for dealing with serious polluters. Pollution control and environmental management
are challenging tasks that require commitments from all sectors of society. Experience should beexchanged between countries to improve pollution control management and thereby contributeto a better environment for all people.

Case Study on Water Pollution Control and Standardsin Japanand the Relevance to Developing Countriesin East Asia
Indonesia
Reviewer: Indra Mufardi Roesli
HeadCity of Bogor EnvironmentalManagement Office
Bogor, Indonesia
Industrial pollution control in Japan was assessed in terms of its similarity and relevance to Indonesia. The highlights of the review are as follows:* Japan has had a long history of industrialization and environmental management. In Indonesia, however, controlling industrial pollution became an important concern only in the
1990s. It was during that decade that several of Indonesia's environmental regulations wereenacted. In particular, a comprehensive environmental law was issued in 1997 to deal withindustrial pollution at the national level.
* During the late 1990s, the Indonesian political system was transformed from a centralized
form of government to a decentralized form of government. Based on the 1997 environmental

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Local Approaches to Environrnental Compliancelaw, local governments were granted authority to carry out their own environmental management plans. In addition, the mass media and nongovernmental organizations attained increased freedom to get involved with industrial pollution control issues at the local level.
Environmental compliance by industries to control pollution became an important subject ofpublic interest.
* Indonesia's and Japan's experiences with groundwater pollution are vaguely similar. In
1999 the governor of West Java issued an industrial effluent standard that was more stringent than the national standard. Several industries are located in West Java, and the province is one of the most densely populated in the whole country. The concentration of industries and people in West Java resulted in a high degree of pollution of the Citarum River andnecessitated stringent measures.
* Pollution control at the provincial level in Indonesia has been conducted by the Provincial
Environmental Management Office since 2000. It involves the big Citarum River, whichflows from the Bandung region to the Java Sea. This pollution control activity is mainly
limited to monitoring the degree of water pollution along the river basin. Monitoring results showed that pollution was significant, and industries were the major polluters. It has
been difficult to apprehend and punish polluters because of weak law enforcement.
* West Java had a case of groundwater contamination. Petrol was accidentally spilled when aground tank in a petrol station in Bogor was being filled. The groundwater contamination
lasted for several months. The local community received compensation payments from thepetrol industry. This case is similar to the case of RK Excel, a metal-plating industry in Japanthat compensated victims. Unlike RK Excel, however, the petrol industry in Bogor was not
required by law to undertake clean-up measures. Perhaps this was because the petrol contamination was relatively less significant in scale.
* Japan's experience in industrial pollution control has potentially useful applications to Indonesia. The case study of RK Excel in the Shiga Prefecture underlines the importance ofmonitoring, quick response, and technology adoption in pollution control.
Philippines
Reviewer: Ruben D. Almendras
Chairman of the Board
Metropolitan Cebu Water District
Cebu City, Philippines
The review evaluated the relevance of Japan's experience in industrial pollution control to developing countries. It reached these two general conclusions:* Environmental consciousness is directly related to the economic and educational status of
the general public. Consequently, in poor countries with low per capita income, government intervention in pollution control and strict enforcement of environmental standards
are needed.
* Developing countries generally assign a low priority to environmental management becauseof limited financial resources. Therefore, it is important that industrial countries require theirindustries operating in poor countries to comply with environmental standards similar to
those implemented in industrial countries.
The main points raised in the review concerning the relevance of industrial pollution control inJapan to the Philippines are as follows:Appendix A. Workshlop Participants' Reviewvs of Japaniese Case Stndies

129* Rapid economic and population growth, along with significant changes in land and resource utilization, came to the Province of Cebu in the mid-1980s and put tremendous pressure on the local environment. Population pressures contributed to organic pollution, andindustrialization contributed to toxic pollution of water bodies.
* Organic pollution had become irreversible in the downtown area of Cebu. The Metropolitan Cebu Water District (MCWD) wells in the midtown areas that were slightly affected
were auto-chlorinated for bacterial contamination. Extremely affected wells were abandoned,
and new wells in the upper areas were developed. Cebu's experience, as well as Japan's lessthan successful efforts to handle organic pollution, indicate the need to address organic
pollution of water bodies in terms of population dispersal.
* The Province of Cebu experienced toxic contamination of groundwater involving hexavalentchromium caused by a metal-plating industry. This case resembles the case of RK Excel in
the Shiga Prefecture. In the Cebu case, however, the provincial water company (MCWD)
discovered the toxic pollution of one of its production wells quite soon, while the degree ofpollution was still relatively minor. Thus, the water standard (0.05 milligrams per liter) was
restored within a year's time.
* This toxic contamination incident in the Philippines was brought to the attention of government agencies, local governments, local businesses, and the mass media. The polluting company was forced to comply with environmental regulations and treat its chromium discharge because of pressures from the government and community as a whole. The Cebu
Metal Treatment Facility that was built in response to the problem was constructed withfunding from the government of Germany.
* MCWD has been continuously monitoring all of its productions wells for contamination.
The polluting company has been required by law to relocate to a place about 25 kilometers
away from its original location.
* Except for water pollution standards, enforcement of environmental standards and regulations in the Philippines is quite irregular. Inspection, monitoring, and enforcement are spotty,
and done only when there are complaints from the public.
* Local governments have limited authority to enforce environmental laws. Consequently,
the mass media play a key role in exerting pressure on polluting companies to comply withlegislative regulations.

Case Study on Japan'sEnvironmental Soft Loan Program
and the Relevance to Developing Countries in East Asia
Indonesia
Reviewer: Budi Widianarko
Professor, Head of GraduateProgramon Environrmenitand Urbanl Stuldies
SoegijaparanataCatholic University (UNIKA)
Semarang, Indonesia
The review identified (a) the important features of Japan's environmental soft loan program that
may be relevant to developing countries; (b) the conditions that have influenced the success ofJapan's environmental soft loan program; and (c) the potential applicability of soft loan programs
to developing countries. The perspective of developing countries was discussed in the context ofIndonesia.
The Japanese experience is a special case because of factors inherent within its society. Environmental soft loan programs can clearly help developing countries achieve pollution reductions at
reduced costs. However, there are certain preconditions that developing countries need to meet

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Local Approaches to Environmental Compliance

before an environmental soft loan program can be implemented successfully. The review identified
the differences between Japan and developing countries and the implications of those differences
for achieving a successful soft loan program.
Featuresof Japan'sProgram and their Relevance to Developing Countries
In Japan large sums are available for environmental soft loans from domestic sources, such as
postal savings and pension funds. In Indonesia, funding for environmental soft loan programs
comes from foreign financial institutions like OECF (in Japan) and KfW (in Germany).
Major public financial institutions are engaged in the execution of Japan's environmental soft
loan program. The Japan Development Bank (JDB) lends to big businesses; the Japan Financial
Corporation for Small Business UFCSB) and the Japan Environment Corporation (JEC) extend
soft loans largely to small and medium-size enterprises. In contrast, Indonesia has a less organized and less focused system for executing its environmental soft loan programs. Indonesia
does not have a specific financial institution that is designated to lend soft loan funds. Instead,the Central Bank will ask banks to distribute soft loans when funds become available from abroad,or, in the case of environmental loan funds from KfW, provincial development banks and commercial banks are appointed as executing institutions.
In Japan soft loans are intended to cover only the capital expenditures of pollution abatement
investments. In developing countries soft loan programs may cover operation and maintenanceexpenses. In addition, environmental training of industry personnel will be important to build
capacities for dealing with environmental concerns in poor countries.
To the extent that Japan's environmental soft loans are technology based rather than performance based, investments in "standard" technologies are oriented toward "end-of-pipe technologies." At the time when Japan's environmental soft loan program was initially launched,public outcry demanded a quick solution to local pollution problems. End-of-pipe technologies
satisfied the immediate needs of the time. Developing clean production technologies would havetaken longer to respond to the public's demands for a cleaner environment. From the viewpointof developing countries today, investments in clean production technologies are more favoredthan end-of-pipe technologies. This preference reduces the possibility that obsolete pollution control technologies already abandoned in developed countries will find their way to developing
countries through technical assistance lending programs financed by foreign capital.
Conditions Contributingto the Success of Japan'sProgram
Increased public awareness of the quality of the environment forced the Japanese government totake necessary measures to combat industrial pollution. In developing countries, where large
numbers of people are preoccupied with their economic survival, environmental quality is less ofa priority. The public's awareness of environmental issues is yet to grow in these countries.
Japan introduced its environmental soft loan program after setting up new regulations andtightening standards. The program was designed as a means to reduce companies' financial burdenin complying with the new regulations. Indeed, the implementation of the soft loan program waspart of an integrated environmental policy.
Effective monitoring is probably the most important condition for ensuring a successful environmental soft loan program. In Japan local governments have been very effective in carrying out
monitoring tasks to determine if industries are actually in compliance with the local environmental regulations. Local governments in Japan are also involved in approving soft loan proposals by
evaluating if the investment is, in fact, needed. In many developing countries, however, good environmental governance is still at a discussion stage. Accountability is one of the most importantAppendix A. Workshop Participants' Reviews of Japanese Case Studies

131

components of good environmental governance. Without accountability, monitoring of industries'
compliance with regulations is difficult to conduct.
Potential Applicability of Environmental Soft Loan Programs to Developing Countries
Strict enforcement of environmental regulations by the local and national governments, together
with strong public support for a clean environment, are the key reasons for Japan's tremendous
improvements in environmental quality over time. In many developing countries, however, theopposite actually holds: the public lacks awareness of the need for pollution control, and regulatory enforcement mechanisms are generally weak. It is thus unlikely that the implementation ofenvironmental management measures, such as an environmental soft loan program, can be successful in the absence of strong enforcement. The lack of public environmental awareness is a
primary reason for the weak enforcement of environmental regulations.
Successful implementation of an environmental soft loan program requires access to pollution
technology; both engineeringknow-how and trainedpersonnel are needed. Gaining access to new pollution technology represents a great challenge for developing countries. There is a shortage of locallydeveloped pollution control or clean production technologies. Therefore, developing countries mustbear the costs of importing these technologies. This may ultimately lead to a very expensive program.
Environmental monitoring plays a key role in achieving a successful soft loan program. In Japan
monitoring is the responsibility of local governments, and it is being carried out with the generous
support of local communities. For this to take place elsewhere, monitoring capacities and regulatory enforcement at the local level of government should be established, citizens' participation inenvironmental management should be promoted, and accountability should be built into the system. Developing countries have much to learn from the Japanese experience.
China
Reviewer: Jianyu Zhang
Program Manager
Environmental Defense China Program
Beijing, China
The review listed similarities and differences between environmental management in Japan (forexample, its soft loan program) and China. They are as follows:* Both the Japanese and Chinese governments realize that a financial mechanism to support
environmental improvement projects is important in addition to public awareness of environmental issues, legislative regulation, and enforcement.
* Unlike Japan's soft loan program that is funded through long-term and low-interest loans,
China's environmental funds are partly derived from fees collected from polluters. In otherwords, the Chinese system (PLS) is based on the "Polluter Pays Principle." Japan's soft loan
program is not based on this principle and therefore may not achieve an economically efficient solution to environmental concerns.
* Both the Japanese and Chinese systems do not establish a strong linkage between finance andenvironmental performance.
* Unlike Japan, China does not have designated financial institutions to implement an environmental soft loan program.
* Japan's soft loan program was established as a quick solution to address environmental
pollution, and it was socially necessary at the time. Although the program could be stable

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Local Approacihes to Environmental Conmplianceover the long run, if the market interest rate dropped, the program could be limited in providing assistance to industries. In China reform of its PLS system, including increased pollution
charges, will be implemented soon. There are other new initiatives that are being considered(for example, emissions trading, environmental taxes, discount), and coordination may be a
problem.
* There should be a balance between efficiency and a framework to get things done. The key
is enforcement and noncompliance penalties. Japan has chosen a results-oriented approach,and it works. But what about the other East Asian countries? Can they follow Japan's path?
For China, the answer is probably no.

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