The Recycled Content of Plastic Products: Estimating the
Impact of Japan’s Container and Packaging Recycling Law
Hirotaka Kumamaru
Kenji Takeuchi
July , 2021
Discussion Paper No.2119

GRADUATE SCHOOL OF ECONOMICS
KOBE UNIVERSITYROKKO, KOBE, JAPANThe Recycled Content of Plastic Products:
Estimating the Impact of Japan’s Container and Packaging Recycling Law

Hirotaka Kumamaru*
Kenji Takeuchi†

Abstract
This study investigates the impact of Japan’s recycling legislation on the usage ofrecycled materials in the production process of primary plastic products. By employing a
difference-in-differences approach, we examine whether the recycled content of primary
plastic products increased after the implementation of the Container and Packaging
Recycling Law (CPR Law) in Japan. The results suggest that the usage of recycledplastics doubled and the usage of recycled plastics per plastic product increased by 1%
after the implementation of the law. Meanwhile, the use of virgin plastic materials, suchas polyethylene, polypropylene, and vinyl chloride, per plastic product decreased by 3%
on average. These results suggest that the CPR Law helped shift inputs from virginplastics to recycled plastic materials, although the size of the impact is small. To promote
the use of recycled plastic materials further, policy interventions should directly
incentivize producers to increase recycled content.

*

Graduate School of Economics, Kobe University. E-mail: kumamaru12@stu.kobe-u.ac.jp†

Graduate School of Economics, Kobe University. E-mail: takeuchi@econ.kobe-u.ac.jp1

1.

Introduction

The global production of plastics increased from 2 million tons in 1950 to 380 million
tons in 2015, and the cumulative generation of plastic waste amounted to 6.3 billion tons
during this period (Geyer et al., 2017). The vast amount of plastic waste poses a serious
threat to the environment, including marine litter and pollution (Carney Almroth andEggert, 2019).
The generation of plastic waste in Japan increased from 3.26 million tons in 1980 tomore than 8.91 million tons in 2018 (Plastic Waste Management Institute, 2020a).
Meanwhile, the mechanical recycling of the plastic waste in Japan increased from 1.39
million tons in 2000 to 2.08 million tons in 2018. One of the driving forces behind thisincrease is the Container and Packaging Recycling Law (CPR Law) enacted in 1995 andenforced in 1997. 1 The CPR Law aims to reduce household waste by collecting
containers and packaging waste for recycling. It mandates consumers to separate
packaging waste from garbage, municipalities to collect recyclable materials, andproducers of packaging and packaged goods to pay the cost of recycling. Producers takepartial financial responsibility for recycling by paying a recycling fee to the Japan
Containers and Packaging Recycling Association that contracts with recyclers.
Although plastic recycling in Japan has advanced during the last two decades, somecaveats exist. First, while mechanical recycling has increased, thermal recycling, or
energy recovery by incineration has also increased, specifically, from 3.12 million tons in

1

Nakatani et al. (2020) estimated that the domestic demand for plastics for containers and packaging was

4.1 million tons, and it accounted for 40% of the total demand for plastics in 2015.

2

2000 to 5.02 million tons in 2018 (Plastic Waste Management Institute, 2020a).2 In termsof greenhouse gas emissions, mechanical recycling is preferred to energy recovery(Nakatani et al., 2010).3 Second, materially recycled plastics are not necessarily used in
the domestic production of new plastic products. A substantial proportion of them isexported to other countries or disposed of as residuals during the recycling process.
According to the Plastic Waste Management Institute (2020a), the amount of materiallyrecycled plastics was 2.08 million tons in 2018, of which more than half (1.29 million
tons) was exported. Exported plastic waste is not always managed properly, which causes
pollution in destination countries (Kellenberg, 2012; Jambeck et al., 2015). Thus, it isrelevant to examine the extent to which the use of recycled plastics in domestic production
increased after the implementation of the CPR Law.
This study focuses on the production of primary plastic products that use virgin or
recycled materials. Figure 1 shows several steps taken to produce plastic goods. First,
virgin plastic materials are typically made from crude oil. Then, these materials andrecycled plastics are processed to produce primary plastic products, such as film, sheets,
plates, and containers. These primary products are used as intermediate goods to makesecondary plastic products that are consumed, disposed of, and recycled. As the CPR Law
increases the collection of recyclable plastics, we expect that producers of primary
2

The Japanese Ministry of the Environment categorizes recycling methods into material recycling,

thermal recycling, and chemical recycling. Material recycling corresponds to mechanical recycling, a
process that uses waste materials for new products. Thermal recycling is generally referred to as energy
recovery. Materials are burned in incinerators while generating electricity and heat. Chemical recycling iscalled feedstock recycling, in which waste is broken down into its constituent components and thenrecombined to produce new materials.
3

Gradus et al. (2017) investigated the cost-effectiveness of incineration and recycling of household

plastic waste in the Netherlands. The result suggests that the implicit CO2 price in the case of plastic
recycling is much higher than that for other viable opportunities.

3

products find more opportunities to shift their input mix toward used plastics and toincrease the recycled content of products. For example, Hosoda (2004) documented that
manufacturers began to increase the use of recycled plastics as inputs for various products
after the law. Although the CPR Law does not directly require producers to use recycledplastics, it indirectly affects the producer behavior by increasing the supply of recycledplastics.
Our study empirically evaluates the effect of the CPR Law on the change in the input
mix by utilizing data from the Monthly Report of Current Production Statistics Survey
published by Japan’s Ministry of Economy, Trade, and Industry. The report provides dataon the monthly production of various categories of plastic products and the amounts of
inputs used for their production. This allows us to investigate the changes in the input
share of recycled plastics according to product category. Consequently, we examine
whether the recycling law had any impact on the use of recycled plastics in the domestic
production process.

<Figure 1>

This study is related to several strands of literature on waste management. First, there
are numerous empirical studies on the economics of recycling. Specifically, scholars haveinvestigated the impact of recycling programs on households (Ek and Miliute-Plepiene,
2018), professional recyclers (Ashenmiller, 2009), municipalities (Dijkgraaf and Gradus,
2017, 2020; Ferreira et al., 2017), and technological innovation (Nicolli et al., 2012). This
study differs from these works by focusing on producer behavior. As the supply side plays
a substantial role in determining the total amount of material used in an economy, our4study has significant implications for policies to establish a sustainable production
process with lower environmental impacts. Second, while several studies havetheoretically investigated the impact of various policies on extended producer
responsibility (Calcott and Walls, 2000; Ino, 2011; Matsueda and Nagase, 2012),
empirical investigation of actual recycling programs remains scant (Kaffine and O’Reilly,2015). This study fills this research gap and contributes to the literature by quantitatively
examining the impact of recycling law on the change in inputs in the production process.
Japan’s CPR Law provides a unique opportunity to examine the potential impact of
the recycling policy on the supply side of the economy. The separate collection of PET
bottles increased from 21,000 tons in 1997 to 298,000 tons in 2016 (Ministry of theEnvironment, 2018). The separate collection of plastic containers and packaging
increased from 101,000 tons in 2000 to 739,000 in 2016. Yamakawa (2004) reported thatthe implementation of the CPR Law has led to a weight reduction of plastic containers
and packaging and increased recycling of PET bottles, but has not promoted the use of
returnable containers. According to the Council for PET Bottle Recycling (2001, 2011,2020), the collection rate of PET bottles increased from 9.8% in 1997 to 34.5% in 2000
and 93% in 2019, and the recycling rate of PET bottles increased from 75% in 2006 to
86% in 2019. Meanwhile, the total production volume of PET bottles increased from
124,000 tons in 1993 to 593,000 tons in 2019, and waste volumes were larger than before
the law’s enforcement (Yasuda, 2001; Council for PET Bottle Recycling, 2020). While
this anecdotal evidence suggests a potential effect of the CPR Law on the production
process, a thorough empirical analysis has not been conducted to date.
Our estimation results indicate that the usage of recycled plastics doubled and recycledcontent increased by 1% after the enforcement of the CPR Law in 1997. The results
5

suggest that the CPR Law indirectly affected both the amount and percentage of recycledplastics used as inputs. However, the stark contrast of the impact suggests that the increasein the total production of plastic products outweighs the increase in the number ofrecycled plastics used as inputs. Regarding product category, the use of recycled plastics
for plastic film and sheets as well as plastic containers significantly increased after 1997.
Furthermore, the use of virgin plastic materials, such as polyethylene (PE), polypropylene(PP), and vinyl chloride (VC), has significantly decreased since 1997. Irrespective of thesmall size of the impact, it implies that recycled plastics replaced virgin plastic materials.
The remainder of this paper is organized as follows. Section 2 describes the data andour empirical model.

Section 3 explains the main results. Section 4 discusses anextension of the results. Section 5 concludes.

2.

Data and Empirical Analysis

2.1 Data
We use a panel of monthly data for 11 categories of plastic products in Japan fromJanuary 1989 to July 2019.4 Data on the amounts of materials used in plastic products
were obtained from the Monthly Report of Current Production Statistics Survey (Ministryof Economy Trade, and Industry, 1989–2019), which covers all establishments of plastic
products employing more than 50 people. We collect the total amount of various plastic
products and inputs used in these productions monthly.5

4

Refer to Table 3 for the categories of plastic products.

5

The disaggregated data at the firm level are not available.

6

<Table 1>

Table 1 reports the descriptive statistics. On average, recycled plastics used for plastic
products amount to 1,223 tons per month per category. The data reveal that, in 2018, thetotal amount of recycled plastics used in our sample establishments was approximately
235,725 tons.6 This is smaller than the total amount of recycled plastics used in domestic
production (760,000 tons in 2018), as reported by the Plastic Waste Management Institute(2020a). This gap can be attributed to the coverage of the dataset. First, our data do notinclude establishments with fewer than 50 employees. These establishments comprise
91% of the total number of establishments and account for 47% of the total number of
employees. Second, recycled plastics refer to those purchased or provided by other firms
and offices of the company and are directly used in the manufacturing process. This does
not include plastic waste generated during the manufacturing process within theestablishment.
As a measure of the material used in the production process, we define the input shareof recycled plastics as follows:

𝑆!"# =

6

𝐼𝑛𝑝𝑢𝑡!"#,
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛"#

These recycled plastics include emissions from the municipal sector and the industrial sector. Because

the CPR Law matters only for the container and packaging waste emitted by the municipal sector, we may
overestimate the impact of the law. However, an estimate by the Plastic Waste Management Institute(1996, 2020) indicates that mechanically recycled plastic waste emitted by the industrial sector increased
marginally from 1.01 million tons in 1996 to 1.16 million tons in 2018, while that emitted from themunicipal sector increased substantially from 0.02 million tons in 1996 to 0.7 million tons in 2018. Thus,
the change during the treatment period can mostly be attributed to the increase in the municipal sector.

7

where 𝑆!"# represents the input share of material k used as the input for manufacturing
product i in period t. In the context of recycled material, the input share is often calledrecycled content. It is calculated by dividing the input of recycled plastics by the
production of plastic products. For example, if 1 ton of recycled plastic is used as an input
for 100 tons of plastic products, the recycled content is 1%. The input share of recycledplastics in our sample is 2.2% on average and 8.5% at the highest. This is much lower
than the input share of virgin plastic materials, as the average input share of PE is 14.8%,that of PP is 12.8%, that of polystyrene (PS) is 10.7%, and that of VC is 21.7%.
Table 2 summarizes the characteristics of plastic materials used for production. PE, PP,
PS, and VC are representative plastic materials made from crude oil. PE and PP are widelyused in plastic products, such as plastic bags, plastic wraps, and product packaging. They
are lighter than water, soft, water-resistant, oil, and chemicals, and excellent as electricalinsulation. PS is hard plastic and is used to produce rigid products, such as food packaging
and disposable cutlery. It can also be converted into a foam material used to protect
packaging, such as single-use food containers. VC is the precursor to polyvinyl chloride(PVC), which is typically used in plastic products in the construction and automotive
industries.

<Table 2>

The CPR Law was enacted in 1995 and enforced in 1997 for glass and PET bottles,
and expanded its scope in 2000 to include containers and packages made of paper andplastics. To capture the stepwise impact of the CPR Law, the following dummy variables
8

are introduced in this study: After1997, After2000, After2018, and three dummy variables
that indicate the period between these timelines (1995–1997, 1997–2000, and 2000–2017).7 The dummy variable 1995–1997 represents the announcement effect of the CPR
Law. After1997 and After2000 represent the partial and full enforcement of the Law,
respectively. After2018 is used to capture the impact of China’s import ban on waste
plastics in December 2017. Before the ban, more than 50% of plastic waste exports fromJapan were directed to China.8 After the import ban, the amount of domestically recycledplastics was expected to increase. We use WTI crude oil prices to control the effect of oil
prices on the usage of recyclables and other plastic materials. The data are from the WorldBank Commodity Price Data (Pink Sheet) and adjusted from nominal prices to real prices
in 2015 using the consumer price index.

2.2 Empirical methodology
This subsection describes the empirical method used to investigate the effect of the
CPR Law on input share. The estimated model is expressed as follows:

𝑆!"# = 𝛽$ 𝑇𝑟𝑒𝑎𝑡𝑚𝑒𝑛𝑡" ∗ 𝑃𝑜𝑠𝑡# + 𝛽% 𝑂𝑖𝑙𝑃𝑟𝑖𝑐𝑒# + 𝛿" + 𝜆# + 𝜀"# ⋯ (1)7Specifically, 1995–1997 is a dummy variable that equals 1 from June 1995 to March 1997, or 0

otherwise. After1997 is a dummy variable that equals 1 from April 1997 to July 2019, or 0 otherwise.
Furthermore, 1997–2000 is a dummy variable that equals 1 from April 1997 to March 2000, or 0
otherwise. After2000 is a dummy variable that equals 1 from April 2000 to July 2019, or 0 otherwise.
2000–2017 is a dummy variable that equals 1 from April 2000 to December 2017, or 0 otherwise.
After2018 is a dummy variable that equals 1 from January 2018 to July 2019, or 0 otherwise.
8

Trade Statistics of Japan (http://www.customs.go.jp/toukei/info/index.htm)

9where 𝑆!"# represents the input share of material 𝑘 used for plastic product 𝑖 in periodt. 𝑇𝑟𝑒𝑎𝑡𝑚𝑒𝑛𝑡" ∗ 𝑃𝑜𝑠𝑡# represents the interaction term to measure the impact of the CPR
Law, where 𝑇𝑟𝑒𝑎𝑡𝑚𝑒𝑛𝑡" is the dummy variable for the product category that is strongly
affected by the CPR law (see the next paragraph for details), and 𝑃𝑜𝑠𝑡# is a dummy
variable representing the implementation of the CPR Law, as defined in the previous
subsection. 𝑂𝑖𝑙𝑃𝑟𝑖𝑐𝑒# denotes the logged oil prices in period t, 𝛿" represents thecategory fixed effects, 𝜆# denotes the year-by-month or year and month fixed effects, and𝜀"# represents the error term.
This study uses a difference-in-differences (DID) method to examine the effect of the
CPR Law on the use of recycled plastics in primary plastic products. We divide the 11
categories of plastic products into treatment groups or control groups. Table 3 presents
the classification of the product categories. We hypothesize that the effect of the law on
the product mix is stronger in the treatment group because of the difference in productcharacteristics. Although the CPR Law might affect all categories of plastic products, theimpact is expected to be heterogeneous among the categories because of the technicaldifficulty in increasing inputs of recycled plastics.
The treatment group comprises the following five product categories: film and sheets,
products for machine tools and parts, pipes and joints, containers, and other products.
According to the Council for PET Bottle Recycling (2020), collected PET bottles havebeen used domestically to produce PET bottles (24.3%), film and sheets (43.5%),
synthetic fibers (20.7%), and products for logistics, construction, and offices (2.3%). The
control group contains the other product categories: plates, building materials, synthetic
leathers, products for general goods, foam products, and reinforced products. In general,
it is more difficult to use recycled plastic materials in these product categories because of10their durability and stability. Plastic plates are hard plastic products made of VC, acrylic
resin, and other materials. Plastic products for building materials, such as rain gutters andfloor tiles, are typically made of VC. Plastic synthetic leathers are mainly made of VC
and nylon. Plastic products for general goods, such as tableware and lunch boxes, aremainly made of melamine resin. Plastic foam products are mainly made of PS. Plastic
reinforced products are formed by adding glass and carbon fibers to plastic materials.
Figure 2 illustrates the share of the production amount of primary plastic products in thetreatment and control group. The treatment group accounts for nearly 80% of the total
amount of primary plastic products.

<Table 3><Figure 2>

Figure 3 depicts the amount of recycled plastics used as inputs in the treatment andcontrol groups during the study period. It suggests that recycled plastics used as inputs
for the treatment group began to increase in the late 1990s, while that for the control groupremained relatively stable. Throughout the study period, the total monthly usage ofrecycled plastics was 11,263 tons on average for the treatment group and 2,193 tons on
average for the control group.

<Figure 3>

11

Figure 4 depicts the recycled contents of the treatment and control groups. When we
divide the amount of recycled plastics by the total amount of production, the contrast
between the treatment and control groups becomes less clear. Nevertheless, Figure 4
suggests that the recycled contents in the treatment group increased in the late 1990s. The
average recycled content before the enforcement of CPR law was 2% for the treatmentgroup and 1.5% for the control group. After the enforcement, the average recycled content
was 3.1% for the treatment group and 2.3% for the control group.

<Figure 4>

We also investigate the change in input share of virgin plastic materials after the
implementation of the CPR Law. For this purpose, we use the input share of virgin plastic
materials as the dependent variable. Owing to the substitutability between recycledplastics and virgin plastic materials, the increase in the input share of recycled plastics is
expected to reduce the input share of virgin materials.

3.

Main Results

3.1 Effect of CPR Law on recycled plastics
We begin our analysis by using the number of recycled plastics as the dependent
variable in the model (1). Table 4 reports the estimation results. Columns (1) to (3) present
the models with year-by-month fixed effects, while columns (4) to (6) present the models
that contain year and month fixed effects independently. Overall, the interaction terms
between the treatment group dummy and the CPR Law dummy are positive and12statistically significant. The results suggest there was an increase of recycled plastic
materials in the production process after the implementation of the CPR Law. Specifically,in column (3), the coefficient for Treatment*1995–1997 implies that the announcement
effect of the CPR Law is as much as 657 tons. The same model suggests that the effect of
the law was estimated as 882 tons between 1997 and 2000 and 1,324 tons between 2000
and 2017. The results suggest that firms substantially increased their inputs of recycledplastics in the treatment group after both the partial and full implementation of the CPR
Law. Furthermore, the interaction term between the treatment group and After2018(Treatment*After2018) is positive and statistically significant. This implies that the useof recycled plastics in the treatment group increased by approximately 2,300 tons after
China’s import ban on waste plastics. Indeed, the estimated impact is double that of the
CPR Law.
In summary, the CPR Law substantially impacted the amount of recycled plastics used
as inputs for primary plastic products. The usage of recycled plastics increased by 1,336
tons after the implementation of the CPR Law. As the average monthly usage of recycledplastics in the treatment group before 1997 was 1,315 tons, the result implies that theusage of recycled plastics doubled from before the implementation of the law. However,
the estimated impact of the law was less than the increase after China’s import ban.
Moreover, the analysis does not consider the increase in the total amount of plastic
products.

<Table 4>

3.2 Effect of CPR Law on recycled content
13

The analysis in the previous subsection does not consider the increase in the total
amount of plastic products. The increase in the amount of recycled materials used for
production after the implementation of the CPR Law may be attributed to the increase in
the total amount of plastic production. Thus, this subsection focuses on the change in the
input share of recycled plastics after the implementation of the CPR Law.

<Table 5>

Table 5 reports the estimation results for the recycled content. The interaction term
between the treatment group and all policy dummies is positive and statisticallysignificant. The results suggest that the recycled content increased after the
implementation of the CPR Law. The size of the coefficient implies that the recycledcontent increased by approximately 1% after the implementation of the Law. The
estimated impact of the CPR Law is small: taking column (3) in Table 5 as an example,
the impact is 1.08% after the initial enforcement in 1997 and 0.99% after the complete
enforcement in 2000. Contrary to the result found in the previous subsection, the impact
of initial enforcement is similar to the full enforcement in this model. Finally, the effectof China’s import ban is positive and statistically significant, as suggested by theinteraction term between the treatment group and After2018 (Treatment*After2018). The
impact is estimated to be 1.2%, which is almost the same as the effect of the initial
enforcement of the CPR Law.
These results imply that the CPR Law caused a small increase in the recycled content
in the production process (about 1%). In contrast, the impact of the law on the amount ofrecycled plastics is substantial. This implies that although the amount of recycled plastics
14

used as inputs increased, the increase in the total production of plastic products
outweighed the effect.
To confirm the parallel trend during the baseline years, we also estimate a model that
includes the interaction term between the treatment group dummy and year dummy,
taking 1994 as the baseline year. Figure 5 presents the coefficients of the interaction termusing DID analysis. The results indicate that all coefficients before 1995 have 95%
confidence intervals that overlap with zero. Therefore, we can assume that the trends ofrecycled content are similar between the treatment and control groups before theenactment of the CPR Law. The figure also shows that many coefficients after 1995 arepositive and statistically significant, suggesting an increase in the amount of recycledcontent in the treatment group particularly after the implementation of the CPR Law.

<Figure 5>

4.

Extensions

4.1 Heterogeneous effects among product categories
In this subsection, we investigate the heterogeneous effects of the CPR Law amongproduct categories. We divide the treatment group into the following five categories: film
and sheets, products for machine tools and parts, pipes and joints, containers, and otherproducts. By comparing the impact among categories, we can analyze the different
impacts on the recycled content in more detail and identify the most affected categories.

<Table 6>15

Table 6 presents the estimation results. First, DID indicators are positive andstatistically significant for many product categories. This indicates that the recycledcontent of the categories increased after the implementation of the CPR Law. Particularly,
the change in the amount of recycled content for containers and other products is larger
than that of the remaining three product categories. The estimated impact of the law on
containers is 1.4%, and that on other products is 1.6%. A similar effect is observed for
China’s import ban in 2018. Treatment*After2018 is positive and statistically significant
in the case of film and sheets, products for machine tools and parts, and containers. Thus,
we interpret this to meant that recycled plastics are particularly used to manufacture film
and sheets, containers, and other products.

4.2 Effect of CPR Law on virgin plastic materials
This subsection investigates the impact of CPR Law on the input share of virgin plastic
materials. To consider potential substitution, we focus on five materials: PE, PP, PS, VC,
and other materials.9 Table 7 presents the estimation results for the input shares of theseplastic materials.

<Table 7>

In the case of PE, PP, and VC, the interaction between the treatment group and 1997–
2000 (Treatment*1997–2000) is negative and statistically significant. This finding
suggests that the input shares of these materials decreased after the initial implementation

9

According to the Plastic Waste Management Institute (2020a), the share of plastic materials in total

plastic waste is 33% for PE, 22% for PP, and 12% for PS.

16

of the CPR Law in 1997. The impact is also significantly negative after 2000. Thus, theinput shares of these materials decreased after the implementation of the CPR Law, whilethat of recycled content increased. However, we must be cautious about assuming thatrecycled materials perfectly substitute petroleum-derived plastic materials, because thecoefficients of these materials are larger than those of recycled plastics.
Furthermore, notably, the use of VC might be driven by reasons other than the recycling
policy. VC is considered a primary source of dioxin contamination and has beenhighlighted as a serious environmental issue in Japan in the late 1990s (Sekine, 1997;
Sakamoto, 2020). This concern coupled with social pressure, such as the Act on Special
Measures against Dioxins, on the producers during the period may lead to a reduction in
the usage of the material, regardless of the CPR law (Sakai, 2007).

5.

Conclusions
This study investigated the impact of the CPR Law on the input share of recycledplastics. The findings are summarized as follows. First, the recycled content of plastic
products increased after the implementation of the law. This implies that the use of plastic
waste for plastic production was promoted after law enforcement. Thus, we conclude that
the CPR Law has affected not only the collection of recyclables but also the production
process of plastics. Second, the estimated impact on recycled plastic product content was
small. This is attributable to the fact that the CPR Law does not directly incentivize
producers to use recycled plastics but instead affects them indirectly through the increased
supply of recycled plastics. When we analyzed the treatment group in more detail, theimpact of the CPR Law was found to be higher in such categories as plastic film andsheets, and plastic containers. Third, the usage of PE, PP, and VC decreased after the17

implementation of the CPR Law. However, evidence suggests that the decrease of theseplastic materials was far greater than the increase in recycled plastics.
To promote the use of recycled plastics further in Japan’s production process, decisionmakers should consider policies that directly affect it, such as recycled content standards.
For example, the EU approved a single-use plastic product directive in 2019, which
determined that plastic bottles must contain 25% recycled plastic by 2025 and 30% by2030. Japan has also pledged to reduce single-use plastics by 25% by 2030 through the
Plastic Material Cycle Strategy. Our results for the input share of plastic materials suggestthat there is weak substitutability between recycled plastics and other plastic materials.
Additional measures are required to facilitate the shift of inputs from virgin to recycledmaterials or other materials with a lower carbon footprint, such as biomass plastics.
A limitation of this study is that our dataset does not consider the increase in the use of
biomass and biodegradable plastics in the production process. These newly developed
plastic materials are derived from biomass and can be decomposed by microorganisms.
Therefore, future research should address the use of these new materials as input for
primary plastic products. Furthermore, two other recycling laws implemented during the
2000s (the Building Material and Home Appliance Recycling Law) might have impacted
the use of recycled plastics.10 However, we could not separate these impacts owing todata availability and the limits of our empirical framework. Examining the effects of thesepolicies on the production process of plastic goods remains for further study.

10

An estimate by the Plastic Waste Management Institute (2020b) suggests that mechanically recycledplastics are mainly sourced from container and packaging waste: among the 1.86 million tons ofmechanically recycled plastics in Japan, 0.51 million tons are sourced from PET bottles, 0.24 million tons
from packaging film, 0.22 million tons from home appliances, and 0.04 million tons from automobile
parts.

18

Acknowledgments
This research was supported by the Sompo Japan Nipponkoa Environment Foundation(Grant Program for Doctoral Course Students) and the Environment Research andTechnology Development Fund (S-19-2: JPMEERF21S11920) of the Environmental
Restoration and Conservation Agency of Japan. An earlier version of this manuscript
was presented at the 25th Annual Conference of the Society for Environmental
Economics and Policy Studies. The authors acknowledge helpful comments from Yuichi
Ishimura, Masashi Yamamoto, and Daisuke Ichinose.

19

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23

data.

URL:

Table 1: Descriptive statistics
Variables

Obs

Mean

Std.
Dev.

Min

Max

Unit

Recycled Plastics

4037

1223

1849

0

13521

t

Input Share of Recycled
Plastics (Recycled Content)

4037

2.24

1.64

0

8.5

%

Input Share of Polystyrene

4037

10.74

11.57

0

47.6

%

Input Share of Polyethylene

4037

14.88

16.48

0

63.8

%

Input Share of Polypropylene

4037

12.83

18.73

0

73.5

%

Input Share of Vinyl Chloride

4037

21.79

25.67

0

92.6

%

Input Share of Other

4037

12.74

13.12

0.12

63.4

%
Yen
per
gallonOil Price

4037

5055

2780

1326

14519

1995–1997

4037

0.03

0.16

0

1

After1997

4037

0.73

0.44

0

1

-

1997–2000

4037

0.01

0.3

0

1

-

After2000

4037

0.63

0.48

0

1

-

2000–2017

4037

0.58

0.49

0

1

-

After2018

4037

0.05

0.22

0

1

-

24

Table 2: Characteristics of plastic materials
Materials

Characteristics

References

Polyethylene(PE)

The attractive features of PE include its
low price, excellent electrical insulation

Patel (2016)
Ronca (2017)

over a wide range of frequencies, excellent
chemical resistance, good processability,
toughness, flexibility, and—in thin films ofcertain grades—transparency. The ability
to manufacture several variations allows
producers to tailor resins for specificapplications, such as packaging films, rigid
containers, drums, and pipes.
Polypropylene
Polypropylene has excellent strength, low(PP)surface energy, low gas, and liquidpermeability, and the relative ease ofprocessing makes it an attractive option foruse in multilayer films. Polypropylene may
be used to manufacture single-layer films
or as a component in multilayer films via
both cast and blown film processing.
Polystyrene (PS) Polystyrene is the simplest plastic based on
styrene. Polystyrene is used as a packaging
material for food and non-foodapplications, casings in theelectric/electronic and communicationindustry, building insulation and liners in
the refrigeration industry, and disposable
medical ware.
Vinyl chloride
Vinyl chloride is used primarily to(VC)
manufacture polyvinyl chloride (PVC)
resin, a common plastic used in the
fabrication of pipes, packaging materials,
and insulation. The worldwide productionof PVC is extensive, estimated at 59
billion pounds in 2002.

25

Calhoun (2016)

McKeen (2014)
Niessner andGausepohl (2003)

Gospe (2009)Table 3: Treatment and control groups
Treatment Group

Control Group••

Plastic film and sheets
Plastic products for machine tools
and parts••

Plastic plates
Plastic products for building
materials•••

Plastic pipes and joints
Plastic containers
Other plastic products

•
•
•
•

Plastic synthetic leathers
Plastic products for general goods
Plastic foam products
Plastic reinforced products

Source:Monthly Report of Current Production Statistics Survey (Ministry of Economy, Trade,and Industry, 1989–2019).

26

Table 4: Effect of CPR Law on the amount of recycled plastic usage
Recycled Plastics
(3)
(4)

(1)

(2)

(5)

(6)

Treatment

657.0024***657.0024***657.0024***616.4561***586.3174***

586.0445****1995–1997[115.8466][115.2700][114.0619][101.5542][101.1374][100.0758]

Treatment

1336.7306***

1311.4900****After1997[61.9611][58.9093]

Treatment

882.8152***

882.8152***

874.3914***870.4771****1997–2000[96.2716][95.2626][89.1534][88.2187]

Treatment

1407.1658***

1383.6641****After2000[62.7112][59.6467]

Treatment

1324.9979***

1301.7971****2000–2017[62.7399][59.6779]

Treatment

2328.3106***

2308.3479****After2018[120.8629][115.9174]

Oil Price

67.0887

53.6268

53.572[88.3830][87.9522][87.0291]

676.6364***676.6364***676.6364***

126.986

233.9757

233.5009[238.6109][237.4233][234.9350][700.9551][697.5395][690.2181]

YES

YES

YES

NO

NO

NO

NO

NO

NO

YES

YES

YES

Category FE

YES

YES

YES

YES

YES

YES

R-squared

0.25520.26280.27840.24990.25780.2735

Adj-R-

0.17820.18640.20330.23980.2476

0.2633

4037

4037

4037

4037

4037

4037

Constant
Year-byMonth FE
Year FE +Month FEsquaredN* p<0.1, ** p<0.05, *** p<0.01, standard error in parentheses

27

Table 4: Effect of CPR Law on the amount of recycled plastic usage (robust)
Recycled Plastics
(3)
(4)

(1)

(2)

(5)

(6)

Treatment

657.0**

657.0**

657.0**

616.5***

586.3***

586.0****1995–1997[207.5][207.5][207.6][187.8][181.7][181.6]

Treatment

1336.7*1311.5**After1997[677.1][640.4]Treatment

882.8**

882.8**

874.4**

870.5***1997–2000[376.8][376.8][359.3][356.3]Treatment

1407.2*1383.7**After2000[731.8][693.8]Treatment

1325.0*1301.8**2000–2017[647.6][613.4]Treatment

2328.32308.3*After2018[1708.1][1633.2]

Oil Price

67.1**

53.6**

53.6**[26.8][22.2][22.1]

676.6**

676.6**

676.6**

127

234

233.5

[265.0][265.1][265.1][390.6][307.0][307.1]

YES

YES

YES

NO

NO

NO

NO

NO

NO

YES

YES

YES

R-squared

0.25520.26280.27840.24990.25780.2735

Adj-R-

0.17820.18640.20330.23980.2476

0.2633

4037

4037

4037

4037

4037

4037

Constant
Year-byMonth FE
Year FE +Month FEsquaredN

28

Table 5: Effect of CPR Law on recycled content
Recycled Content
(3)
(4)

(1)

(2)

(5)

(6)

Treatment

0.0112***0.0112***0.0112***0.0096***0.0096***0.0096****1995–1997[0.0014][0.0014][0.0014][0.0012][0.0012][0.0012]Treatment

0.0101***0.0099****After1997[0.0008][0.0007]

Treatment

0.0108***0.0108***0.0105***0.0105****1997–2000[0.0012][0.0012][0.0011][0.0011]

Treatment

0.0100***0.0097****After2000[0.0008][0.0007]

Treatment

0.0099***0.0096****2000–2017[0.0008][0.0007]

Treatment

0.0119***0.0116****After2018[0.0015][0.0014]

Oil Price-0.0008-0.0007-0.0007[0.0011][0.0011][0.0011]0.0187***0.0187***0.0187***0.0255***0.0254***0.0254***[0.0029][0.0029][0.0029][0.0086][0.0086][0.0086]

YES

YES

YES

NO

NO

NO

NO

NO

NO

YES

YES

YES

Category FE

YES

YES

YES

YES

YES

YES

R-squared

0.20940.20950.21

0.1984

0.1985

0.1989squared0.12770.12760.12790.18750.18740.1877

N

4037

4037

4037

4037

4037

4037

Constant
Year-byMonth FE
Year FE +Month FE

Adj-R-* p<0.1, ** p<0.05, *** p<0.01, standard errors in parentheses

29

Table 6: Heterogeneous effects among product categories
Category
Film and Sheets*1997–2000

0.0082***[0.0020]

Film and Sheets*2000–2017

0.0080***[0.0012]Film and Sheets*After2018

0.0308***[0.0025]

Pipe*1997–2000

0.0051***[0.0020]

Pipe*2000–2017

0.0014[0.0012]

Pipe*After2018

0.0013[0.0025]

Machine*1997–2000-0.0019[0.0020]

Machine*2000–2017

0.0081***[0.0012]

Machine*After2018

0.0080***[0.0025]

Container*1997–2000

0.0140***[0.0020]

Container*2000-2017

0.0080***[0.0012]

Container*After2018

0.0219***[0.0025]

Others*1997–2000

0.0161***[0.0020]

Others*2000–2017

0.0114***[0.0012]

Others*After2018-0.0148***[0.0025]

Oil Price

0.002[0.0022]

Constant

0.0031[0.0195]

Year-by-Month FE

YESCategory FE

YES

R-squared

0.2733

Adj-R-squared

0.1953N4037* p<0.1, ** p<0.05, *** p<0.01, standard errors in parentheses.
30

Table 7: Effect of CPR Law on input share of virgin plastic materials
Vinyl

Polystyrene

Polyethylene

Polypropylene

(PS)

(PE)

(PP)

Treatment

0.0057-0.0130***-0.0310***-0.00820.0017*1995–1997[0.0049][0.0042][0.0049][0.0063][0.0061]

Treatment

0.0041-0.0212***-0.0365***-0.0126**

0.0216****1997–2000[0.0041][0.0035][0.0041][0.0053][0.0051]

Treatment-0.0158***-0.0405***-0.0098***-0.0214***0.0524****2000–2017[0.0027][0.0023][0.0027][0.0035][0.0034]

Treatment-0.0450***-0.0337***0.0112**-0.0384***

0.0583****After2018[0.0051][0.0044][0.0052][0.0067][0.0065]-0.0137*-0.0030.0218***-0.0234**

0.0238**[0.0080][0.0069][0.0080][0.0104][0.0100]

0.2616***0.1429**-0.0494

0.4417***-0.1015[0.0697][0.0601][0.0701][0.0909][0.0877]

YES

YES

YES

YES

YES

Category FE

YES

YES

YES

YES

YES

R-squared

0.21190.15840.29480.23770.28340.13

0.07090.22150.15850.2089

4037

4037

4037

4037

4037

Oil Price
Constant
Year-byMonth FE

Adj-RsquaredN* p<0.1, ** p<0.05, *** p<0.01, standard errors in parentheses

31

chloride
(VC)

Other
materials

Figure 1: Production and recycling of plastic products

32

Figure 2: Share of primary plastic products

Treatment group

Control group

Source:Monthly Report of Current Production Statistics Survey (Ministry of Economy, Trade,and Industry, 1989–2019).

33

34

Figure 3: Amount of recycled plastics used as inputs

35

Figure 4: Recycled contents of plastic products

Figure 5: Testing the parallel trend during the baseline years

Note: Dots represent the estimated coefficients for the interaction term between thetreatment group and each year. The dashed lines indicate 95% confidence intervals forthese coefficients.

36