Political economy of voluntary approaches: A lesson from environmental policies in Japan

In this paper, we attempt to identify the reasons behind the differences in environmental policy between Japan and other developed countries, particularly the US. Japan's environmental policy is unique in that voluntary approaches have been taken to reduce total emissions. This strategy is quite different from the traditional approach of heavy-handed regulation. In Japan, voluntary approaches are conducted through negotiations with polluters. The idea behind this type of voluntary approaches is that the government can induce polluters to abate emissions voluntarily by using light-handed regulations and the threat of heavy-handed regulations. The light-handed regulation is quite effective especially when it is costly to introduce heavy-handed regulations, although the negotiations are difficult to conduct when the number of stakeholders is large. To strengthen our analysis, we provide some examples of Japanese environmental policies which are successful and the ones that are not.