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Japan: improve the environment to boost economic growth, says OECD

Mon, 11/15/2010 - 10:26pm
OECD

Japan should do more to fight climate change and protect biodiversity, according to a new OECD review of its environment. Tackling these two problems would improve the environment and help boost long-term growth.

OECD Secretary-General Angel Gurrìa commends Japan for addressing environment as part of the response to the economic and financial crisis. Japan has already allocated USD 28 billion – about 16% of the anti-crisis package – to environment related measures.

However, OECD’s Environmental Performance Review of Japan says the stimulus package includes support for agriculture and for the car industry which could have negative effects on the environment and distort competition. In addition, though the use of water and waste charges has been extended and new green taxes have been introduced - , there is a continuing overreliance on subsidies and negotiated agreements with industry.

Reforming the environmental policy mix is necessary, said Mr. Gurría: “In its 2011 tax reform Japan should make more use of market- based instruments, such as environmental taxes, that apply to the economy as a whole: we believe they would provide a more cost-effective way of providing incentives for achieving environmental policy objectives, reduce pressure on the public budget, and further promote eco innovation.”

Japan is the world leader in green technologies and employment in environment-related businesses has doubled in the past decade. To encourage further innovation, the OECD review recommends expanding public investment in green technologies, with the government sharing the risks presently borne by the private sector.

Japan’s industries are among the most energy efficient in the world. And, thanks to new technologies and rise in global oil prices, greenhouse gases emitted by the transport sector dropped 12% over the past decade. Despite this success, Japan is far from its Kyoto Protocol targets. Only 3% of Japan’s energy is from renewable sources and electricity consumption in homes and businesses has been growing steadily.  The OECD review says more must be done to reduce reliance on fossil fuels and to achieve Japan’s climate targets more efficiently. The review recommends putting a consistent price on carbon through a mandatory cap-and-trade scheme in combination with a carbon tax.

Japan is one of the least ‘material intensive’ economies in the OECD. By reducing, reusing and recycling, it has reduced the amount of landfill waste in spite of a rise in consumption.  Expanding pay-for-waste schemes and making manufacturers responsible for disposal of end-of-life products could further improve waste management.

The review also recommends that Japan increase the forest and marine areas dedicated to nature conservation and biodiversity. More than one-third of freshwater fish and a quarter of mammals face extinction.  Though Japan has designated 24% of its land are as ‘protected’, very little of that conforms to international standards and financing for nature conservation is low. Agricultural land could play an important part, balancing farm production with conservation of biodiversity and improved ecosystems, if the government links agricultural subsidies to environmental benefits. 

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