Cost benefit analysis of the sulfur dioxide emissions control policy in Japan

This study attempted to examine the economic efficiency of the sulfur dioxide (SO₂) emissions control policy in Japan using a cost-benefit analysis (CBA). The SO₂ emissions control policy is divided into three stages by epochal policy decisions. Reducing the incidence of chronic bronchitis and asthma are the two main policy benefits considered in this study, and they are estimated mainly based on the cost of illness approach. Policy costs have been derived from private sector investments for pollution control to meet the pollution standards under command and control (CAC) regulations. The estimated results, using a social discount rate of 2.5%, indicate a cost-benefit ratio of 5.39 in stage 1 (1968-1973), 1.18 in stage 2 (1974-1983), and 0.41 in stage 3 (1984-1993). This result indicates that the CAC in Japan used to have strong efficiency but that this efficiency has decreased over time. Our paper suggests that it is necessary to reconsider policy approaches in light of policy efficiency and in moving from SO₂ to new target priority pollutants.