Modern Economy, 2012, 3, 23-31
http://dx.doi.org/10.4236/me.2012.31004 Published Online January 2012 (http://www.SciRP.org/journal/me) 23
SOX Emissions Reduction Policy and Economic
Development: A Case of Yokkaichi
Sachiyo Asahi1, Akira Yakita2
1Mie Univer sity, Kurimamachiya-cho, Tsu, Japa n
2Nagoya City University, Yamanohata, Mizuho-ku, Nagoya, Japan
Received October 10, 2011; revised November 16, 2011; accepted December 13, 2011
ABSTRACT
We find an inverted U-shape relationship between local income and emissions, i.e., the so-called environmental
Kuznets curve, in the Yokkaichi area. It is then shown (1) that the income level at the peak of the curve is fairly low
relative to those reported for countries an d/or the world in the literature, and (2) that the drastic decline in emis-
sions after the peak of the inverted U-shape was brought about by technical progress in cleaning up the environment but
not by the declining output levels, despite increases in output level. It should be noted that the local residents’ cam-
paigns moved and backed up the local governments, in contrast to the reductions in developed economies in
1980 pushed by the international agreements, i.e. Sulphur Protocols. The administrative agencies supported by local
residents’ campaigns, rather than decreasing returns in production technology, played a critical role even at such a low
income level.
X
SO
X
SO
X
SO
Keywords: Environmental Kuznets Curve; Environmental Policy; Yokkaichi Area
1. Introduction
1.1. Background
Since References [1,2] found an inverted U-shape rela-
tionship between income and pollution emissions, many
empirical studies have explicated such a curve, i.e. the
so-called environmental Kuznets curve. The purpose of
the present paper is to observe the relationship between
income and pollution emissions in the Yokkaichi area,
one of the regions which had a larger-scale petrochemi-
cal complex in Japan even at the beginning of the high-
growth era, and then to examine and characterize the fac-
tors for the improvement of the environmental quality
even at rather low income levels in Yokkaichi. Since it is
well known that X causes regional and local envi-
ronmental problem, we will focus on pollution in the
form of emissions.
SO
X
Reference [3] illustrated the empirical result for X
emissions supporting the inverted U-shape of [1], al-
though their estimated income level of the turning point
was US$8000 using cross countries data, which is con-
siderably higher than US$4053 (in 1985 U.S. dollars) in
[2]. Reference [4] also obtained an inverted U-shape be-
tween income and pollution emissions for X whose
peak was US$3670. Reference [5] showed inverted U-
shape curves for Latin America, Asia and Africa, using
deforestation data, but their predicted income level at the
turning point was also much higher than the observed
income levels. Reference [6] obtained an inverted U-
shape for 2 emissions, using the world panel data,
and their estimated income level at the turning point was
US$8million, which is also higher than the observed in-
come levels. On the other hand, [7] re-examined the re-
sult of [2] by extending the estimation periods, and show-
ed that the inverted U-shape may not be obtained robustly.1
SO SO
SO
CO
In order to explain the inverted U-shape, theoretical mo-
dels are proposed, which may be categorized into three
types.2 In the first type, although pollution emissions
increase as the economy inclined toward polluting indus-
tries along with economic development, they decrease af-
ter being sufficiently developed as the industry structure
changes from polluting and heavy industries to clean and
service industries. See, for example, References [14,15]
for this type.3 As for the second type, one assumes that
there exists a threshold level of economic activity below
1For a survey on emissions environmental Kuznets curve studies
X
SO
see also [8,9]. Reference [10] suggested that the coverage of sample
countries or regions affects the result, while [11] showed that the result
may depend on t he choice of econometric method.
2See [12,13].
3Reference [16] showed that the United States has imported less-pol-
luting goods since the 1970s, that is, it has not exported pollution.
Contrastingly, [17] asserted that reductions in emissions in the
1980s were not a burden to the economies which export most of their
X
SO
p
ollution. See also the survey by [18].
C
opyright © 2012 SciRes. ME

S. ASAHI ET AL.
24
which the economy can tolerate pollution with no con-
trols. But after the threshold has been breached, environ-
mental policy is implemented and starts to bind. Refer-
ences [19-21] showed the relationship to be inverted V-
shape under such controls. Finally, Reference [12] show-
ed that if the abatement function is increasing-to-scale in
polluting activities and abatement spending, we may have
an inverted U-shape, without any externalities and any
policies.4
The present study examine the relationship between
residents’ per capita income and X emissions in the
Yokkaichi area during the period from the latter half of
the 1960s to 1990s, during which air pollution caused a
serious health problem, which is well known as “Yok-
kaichi Zensoku (asthma).” Since it is also well known
that sulfurous acid gases (2
SO ) and/or sulfurous acid
mists (3
SO ) caused this Yokkaichi Zensoku, we concern
ourselves with X emissions from the factories of the
petrochemical complexes in this region.5 Comparing the
environmental Kuznets curve in the Yokkaichi area with
those discussed in the literature, the present stud y aims to
characterize the process of improving the environmental
quality in this region.
SO
SO
1.2. Historical Review—Operations of the
Yokkaichi Petrochemical Complex6
The No. 2 Navy Fu el Depot (Kaigu n Dai-n i Nenryo Sho)
and other private oil factories, for example, Ishihara
Sangyo and Daikyo Oil (Daikyo Sekiyu), were destroyed
by the heavy bombings of the Allied Forces in July of
1945. After World War II, the No. 2 Navy Fuel Depot site
in the Shiohama area was first sold to Mitsubishi Petro-
chemical (Mitsubishi Yuka), and one of the largest pet-
rochemical complexes in Japan was then scheduled for
construction in order to realize the Petrochemical Growth
Action Project (Sekiyu-kagaku Ikusei Taisaku) which
was a part of the “First Stage Plan for the Petrochemical
Industry (Sekiyu-kagaku Dai-ichi-ki Keikaku)” drawn up
by the Hatoyama Cabinet. The oil plant of Showa-Yok-
kaichi Oil (Showa-Yokkaichi-Sekiyu) was built in 1956,
and the ethylene production facility of Mitsubishi Petro-
chemical was constructed. The No. 1 complex (called the
Shiohama complex) began full-scale operations in 1959.
The No. 1 complex consisted of 10 main companies, which
was then expanded westward beyond the former No. 2
Navy Fuel Depot site. As a consequence, factories of the
complex came up against residential housing nearby.
The construction of the No. 2 petrochemical complex
(which is called the Umaokoshi complex) started in 1961,
and the complex went on strea m in 1963. The Yokkaichi
area has since developed into one of the greatest petro-
chemical industrial cities in Japan. The No. 3 complex (cal-
led the Kasumi complex) started operations in 1972.
On the other hand, although the sea near Yokkaichi was
a good fishing spot because of the meeting of the Kiso,
Nagara and Ibi Rivers, the fish caught there around 1958
reeked of petroleum. The sea range where fish smelled of
petroleum then expanded to about 4 km from the coast of
Yokkaichi in about 1960 wh en the first pe trochemical com-
plex began operations. This situation caused fishermen
and other persons involved along with local residents to
launch an appeal to Mie Pref ectural Authorities. The Mie
Prefectural Office responded by organizing the Promo-
tional Council on Water Pollution Prevention in Ise Bay
(Ise Wan Osui Taisaku Suishin Kyogikai), headed by Pro-
fessor Yoshida of Mie Prefectural University (at present,
Mie University). The Council concluded that the foul
petroleum smell of fish was caused by their absorption of
the liquid waste discharged by the petrochemical com-
plex. In 1960, a grass roots campaign by local residents
turned the pollution problem in Yokkaichi into a public
issue, so-called “Yokkaichi Pollution (Yokkaichi Kogai).”
As the Yokkaichi City Authority was requested to take
the measures to improve the situation by the residents
near the No. 1 petrochemical complex, the Authority or-
ganized an Air Pollution Prevention Council (Yokkaichi
Kogai Boshi Taisaku Iinkai). The Council reported that
the sulfurous acid gases mainly caused the air pollution
in the Yokkaichi area. In th e meanwhile, malodorou s sul-
furous-chemical compounds from the complex became a
problem in the Shiohama area.
The damage caused by asthma in the Isozu area mean-
while became serious about 1961. Moreover, the sulfur
oxide air concentration and the amount of soot and dust
drops began to be measured at 11 sites in Yokkaichi City.
The fact that sulfurous acid gases affect the human body
was proved by the Pollution Control Panel of Yokkaichi,
led by Professor Yoshida at the Department of Medicine
at Mie University in 1962.
Two points should be noted about the Yokkaichi ex-
perience: First, both research and investigation of malo-
dorous fish and measurement of air pollution and the
amount of soot and dust drops had never been done, at
least, in Japan before; second, in response to the damage
outcry by its residents, Yokkaichi City investigated the
problem at an earlier stage and Mie Prefecture took mea-
sures to improve the situation (i.e. The Regulations on
Total Discharge Amount (Soryo Kisei) in 1972). In Japan
as a whole, the public sector embraced an industrializa-
tion policy aimed to expand national production and in-
come, and due care might not be given to preserving the
nation’s living environment.7 Even in such a situation, it
4See also [22-24]. For an empirical and theoretical survey, see, for exam-
p
le, [25].
5Factories of the petrochemical complex are considered as the factories
(e.g. Mitsubishi Petrochemical) which are supplied fuel oil by oil re-
fining companies (e.g. Showa-Yokkaichi Oil).
6We are greatly indebted to [26] for this and the next subsections.

S. ASAHI ET AL. 25
should not be overlooked that Yokkaichi City and the
Mie Prefectural Authority adopted aggressive measures
against pollution emissions and/or medical damage, whi-
ch were reflected in the basis for the measures later taken
by the Japanese government. In 1964, before the rest of
the country, Yokkaichi City started to publicly bear the
medical costs of patients who suffered from the pollution.
It was 5 years after Yokkaichi acted alone that the central
government enforced the Law Concerning Special Mea-
sure for the Relief of Pollution Victims (Pollution Vic-
tims Relief Law) in 1970 ( see [26, p. 52]) , while The Re-
gulations on Total Discharge Amount, adopted initially
by the Mie Prefectural Authority, was also introduced
into the A ir-Po llut ion Pr event ion Ac t by the centr al gov ern-
ment of Japan in 1974.8
2. SOX Emissions and per Capita Income in
the Yokkaichi Area—Environmental
Kuznets Curve
2.1. Growth and Environmental
Problem—Environmental Kuznets Curve
Now we examine the relationship between X emis-
sions and per capita income in Yokkaichi City from the
second half of the 1960s to the 1990s.9 The Environ-
mental Conservation Division of Yokkaichi City has pub-
lished data for X in the Yokkaichi area since 1972,
while per capita income in Yokkaichi has been publish ed
by the Mie Prefectural Office.10 First, making use of the
data on fuel-oil inputs in naphtha production available
since 1972 and the Survey on the Evaluation of Devel-
opment and Environment (1994), we can estimate X
emissions before 1971, and using the data on per capita
income since 1972, we can also estimate the relevant da-
ta before 1971.11
SO
SO
SO
The relationship between per capita income and per
capita X emissions in Yokkaichi is illustrated in Fig-
ure 1. In this study we are interested in the period from
the mid-1960s (when pollution caused by X
SO emis-
sions was recognized as an environmental problem) to
the beginning of the 1990s (when the emission in-
tensity of became fairly low).12
SO
SO X
SO
X
Per capita income in Yokkaichi increased for most of
the period from 1964 to 1991, i.e. just before the so-
called ‘bubble’ burst, while X emissions almost mo-
notonically decreased except for 1966. However, the de-
creases in X emissions were not brought about by
reductions in the activity level of the petrochemical com-
plex. The magnitude of fuel input reflects the activity
level of the complex and corresponds to the production
level of naphtha and other products. In fact, Figure 2
illustrates that though fuel-oil inputs increased, the amount
of X emissions decreased from 1967 to 1973. How-
ever, Table 1 shows that the fuel-oil inputs (and there-
fore the activity level of the complex) increased at higher
rates than GDP during the period from 1965 to 1972 ex-
cept for 1971. Thus, the fuel-oil production in this area
did not plausibly decrease relative to those in other re-
gions of Japan. In this sense, Yokkaichi did not export
pollution.13 In fact, the No. 3 complex began full-scale op-
erations in 1972. As anecdotal evidence, a construction
plan of Mishima-Numazu petrochemical complex was
subject to vigorous residents’ campaigns, influenced by
those in Yokkaichi, and eventually the plan
SO
SO
SO
7A period from 1955 to 973 is called the high growth er a, whose ave rage
economic growth rate was ov er 10%. In 1968, the level of GDP in Japan
became No. 2 in the world.
8The pollution prevention measures undertaken by Mie Prefectural
Authority will be surveyed in the next section. Reference [27, p. 203]
emphasized that the Compensation Act on Pollution-Caused Health
Damages (Kogai Kenko Higai Hosho Ho) included compensation for
the loss of ability to work, and the surcharge system for financing the
compensation costs played an important role in reducing emis-
sions as the strongest surcharge system in the world. The system im-
X
SO
p
osed surcharges on companies depending on their respective
emissions.
X
SO
9Given the availability of the data, we use variables for Yokkaichi in
fiscal years in the present paper.
10Although the per capita income data have been published since 1972,
they did not reflect various changes in estimation methods. However,
we use these data without corrections or revisions in spite of the prob-
lems.
11These calculations will be explained in Section 3. The survey was
carried out in August 1994 as a part of the research for [28]. For details
see [28,29].
Figure 1. Real per capita income and SOX emissions.
12Reference [30] stated that it overcame the pollution problem through
reducing intensity below the national standard in 1976, whereupon
the city received th e Global 500 Award from the UNEP (United Nations
Environment Program) in 1995. Reference [27] also mentioned that the
“Yokkaichi Kogai (pollution)” was nearing a solution in the second hal
X
SO
f
of the 1970s. The incidence rate of new asthma patients in the polluted
area became as low as those in other areas in 1981, and the difference in
mortality from chronic bronchitis between the two areas disappeared in
1980 (see [27, p. 201]). Reference [31], on the other hand, asserted that
the problem has still not been resolved, as can be seen from the p roblem
of stock pollution such as ferro-silt buried by Ishihara Sangyo.
13Population in the coastal area had decreased by 20 thousand during
the period from 1965 to 1975 (see [27, p. 95; 31, p. 39]). Residents
mostly moved to the hilly areas on the west side of the city or other
cities and towns. In this sense people were crowded out of the area.

S. ASAHI ET AL.
26
Figure 2. Fuel input and SOX emissions.
Table 1. Rates of changes in fuel inputs and GDP (FY1965-
FY1972).
Fiscal Year Rate of Changes in Fuel Inputs Growth Rate of GDP
1965 28.24 11.07
1966 29.39 11.05
1967 27.98 12.32
1968 30.07 12.04
1969 25.90 8.32
1970 6.90 5.13
1971 3.62 9.26
1972 11.56 5.01
Real GDP: 63SNA (Ministry of International Affairs and Communication
“Long-term Statistics Series in Japan”)
had to be abandoned around 1964 (see [27,32]). This fact
implies the difficulty of relocating petrochemical produc-
tion elsewhere in Japan even in the early 1960s.
Next, we look at the relationship between X emis-
sions and per capita income. Since pollution by X
emissions has strong local characteristics, and the pollu-
tion prevention measures were undertaken in this area by
the local government, we take per capita income as a pro-
xy reflecting the economic condition in the Yokkaichi
area. Per capita income in terms of the 1985 US dollar is
calculated as follows: Per capita income in each year is
converted to US currency using the current exchange
rates (i.e. the basic exchange rate until 1972 and then
spot rates), and then converting them into 1985 US dol-
lars by deflating nominal per capita income by the GDP
deflator in the US (based on 2005 prices).14 Thus, we
obtain the relation between per capita income and per
capita X emissions, i.e. the environmental Kuznets
curve in Yokkaichi. The relationship is depicted in Fig-
ure 3, where, following the literature, the ordinate meas-
ures per capita emissions of X, and per capita real
income in the 1985 dollars is measured on the abscissa.
SO SO
SO
SO
Although we cannot see the inverted U-shape because
of the data availability, one can expect that the emission
level is on the abscissa at zero output and that the level
increases as income rises.15 If so, th e peak of th e inver ted
U-shape curve seems to lie at a rather low per capita in-
come level in 1967 or earlier.16 If the peak is 1967, the
per capita income level was US$2729.3 at the 1985
price.17 This level of per capita income is fairly low rela-
tive to US $4000 and accoun ted fo r only about 70 % of it,
although [2] showed that the income level turning point
for X emissions for the United States and Canada
was about US$4035 at 1985 PPP prices. Reference [33]
suggested from various empirical studies that the income
level of turning-point ranged from $3000 to $10,000 at
1985 PPP prices, while [8] summarized that the turning
points in the 2 emission studies for sample domi-
nated by OECD countries ranged from $8200 to $10,600
at 1990 PPP prices.18 It should be noted that the p er cap-
ita X emissions level had al-ready passed the peak of
the environmental Kuznets curve in Yokkaichi at US
$4000 and that per capita X emissions became only
60% of the 1967 level at the income level of $4015 in
1985 US dollars in 1969. The literature concluded that
the inclusion of no-urban regions and/or developing
countries leads to a much higher estimated income level
(and often levels above the observed incomes) at the
peaks of the inverted U-shape curves (e.g. [3,4,6,8,33,
SO
SO
SO
SO
15Most of the empirical literature found an inverted U-shape or a mo-
notonically increasing curve. Reference [7], for example, showed the
possibility of the inverted U-shape, while mentioning that a U shape is
impossible since pollution emissions are zero when th e income and pro-
duction level are zero. Although the datum of per capita income and
emissions for the period fro m the end of World War II to the d ate of the
operation of the No. 1 petrochemical complex, the production facilities
are destroyed and t he production level was plaus ibly expected to be near
zero at th e end of t he War. In f act , the output of ethylene in J apan du ring
1963-1974 were as follow:
(output: 1000 ton)
Year 196319641965196619671968196919701971197219731974
output 345505772105513581793240030973537385141714176
Source: Japan Petrochemical Industry Association (http://www.jpca.or.jp/4stat/03histry/history
.
htm: cited on 10 June 2011).
16Reference [7] also reported that SO2 concentrations in Canada and
the United States have declined over time at ever decreasing rates.
Reference [10] derived a linear relationship from the sulphur emissions
data of a world sample of 73 countries and the inverted U-shape from
samples of high-income economies for 1960 to 1990. Reference [26]
reported that boththe ratios of areas polluted by 0.5 mg/day and 0.1
mg/d ay o f S O Xin the Yokkaichi region were the highest in 1971, since
the polluted area expanded to the west regions, for example, by taller
chimneys.
17The US GDP deflators are obtained from the website of the US Com-
merce Department. The basic year is 2005. www.bea.gov/national/nipa-
web/Tableview-asp?SelectedTable=4&View Se ies =N O &Java =no&Requ-
est3Place=N&3Place=N&FromView=YES&Freq=Year&FirstYear=1960
& LastYear1995.
18Most of the literature represented the income levels in terms of
1985PPP$, so we cannot precisely compare our level with those in the
literature. We translate the current-dollar income levels to those in
dollars in 1985 prices in a rather loose way, since it would be difficult
to obtain the exact income levels in Yokkaichi in 1985 U. S. PPP dol-
lar terms. It should be noted that although the data in the most for-
egoing literature are panel data, we compare the time-series income
levels in Yokkaichi with those in the literature.
14The exchange rate in each year is the simple average over the monthly
rates.

S. ASAHI ET AL. 27
Figure 3. Relationship between SOX emissions and real in-
come.
34]). In light of these results, it is surprising that well
before pollution problems had been seriously confronted
worldwide, Yokkaichi City and the Mie Prefectural Of-
fice had already undertaken pollution emissions control
measures and/or controlled emissions even with
such a low income level. X
SO
It should be noted that the local residents’ campaigns
pushed the authorities to take the plunge by directly ap-
pealing to authority and/or appealing to the courts indi-
rectly and that the “pollution patrol” organized by Yok-
kaichi City in 1963, for example, exerted pressure on the
factories to change their attitudes (e.g. [27, p. 58]). Fur-
thermore, it should be also noted that the speed of decline
in X emissions was considerably high. Such a rapid
decline may well have been affected by the fact that the
complex factories were contiguous to residents’ houses.
In fact, the resident’s houses, a primary school and the
complex factories stand across a municipal road, and more
than 30,000 people reside within about 2 km of the com-
plex. On the other hand, per capita X at the peak in
the Yokkaichi area was 0.983 tons in 1967, which was
quite high, for example, in comparison to the peak of 0.1453
tons per capita emissions in the United States in
1973 (see [35]).19
SO
SO
2
SO
Given the heavy emissions together with the high
population density, the damage to the inhabitants of the
areas must have been very severe, thus requiring swift,
sure measures. In fact, Reference [26] reported that many
companies had also continued to “strive to prevent the
environment of Yokkaichi from becoming worse” even
before 19 66.20 This contrasts with the case referred to by
[33] that significant declines in X emissions in the
developed economies in the 1980s were induced only by
the drastic policies backed up by the international agree-
ments.21
SO
Defining the emission intensity as the ratio of X
emissions/fuel-oil inputs, and setting it in 1965 as equal
to 100, the time path of the pollution in tensity is dep icted
in Figure 4.22 Before the public counter measures were
undertaken, and more importantly, even at the peak of
the environmental Kuznets curve in 1967, the pollution
intensity continued to be on the downward trend.23 There-
fore, we may say that private companies adopted some
environmental measures before the peak of the environ-
mental Kuznets curve. This downward trend in pollution
intensity is consistent with the illustration of the US data
in [35], who argue that, given a constant rate of envi-
ronmental technology progress, large increases in output
due to the decreasing marginal productivity may cause
the inverted U-shape at earlier stages of development at
low income levels (and eventually tech nical progress will
dominate the output effect). However, Figure 2 shows
that the pollution intensity did not rise even when output
levels evidenced a large increase, for example, in the
1970s and the 1990s; and Figure 4 shows that the pollu-
tion intensity decreased rapidly, especially around 1970.24
Thus, the argument by [35] falls to fact.
SO
This point may be explained as follows. An Environ-
mental Pollution Control Department (Kogai Taisaku-
shitsu) was established in the Mie Prefectural Office in
1963, and then The Smoke and Soot Regulation Law was
Figure 4. Emission intensity (:= SOX/Fuel).
21Twenty countries agreed on the First Sulphur Protocol in Helsinki in
1985, and 27 countries, including European countries, the US and Canada
p
articipated in the Second Sulphur Protocol in Oslo in 1994.
22It should be recalled that the relationship between fuel input and
naphtha output was used in the calculation of SOX emissions.
23The close relationship between fuel inputs and output is already as-
sumed in the calculation of fuel inputs.
24According to [35], the peak of the total flow of SOX emissions in the
United States was 1973, while the pollution intensity (:= total emis-
sions of SOX/output) had decreased from 25 years ago. Per capita GDP
of the United States in 1973 is US$14739 at the 1985 world price (Penn
World Table 5.6, http://dc1.chass.utront.ca/cgi-bin/pwt/format/?s=USA/
RGDPC). The peak is slightly different from that calculated in Section
2.2 because of different historical data.
19Reference [27] mentioned that the SOXdens ity in I soz u ar ea h a d r ea c he d
2.5 ppm, while the safe level was said to be about 0.018 ppm/ hour. The
geographic and meteorological conditions might make the situation worse
Yokkaichi is a narrow area hemmed in by the Ise Bay from the wes t and
the Suzuka mountains from the west. Reference [32] mentioned that the
area is not a su it abl e si te for petrochemical complexes. For th e map of the
complex area, see, for example, [36].
20According to [26], anti-pollution facilities equipped in Yokkaichi by
1966 amounted to 6380 million (the cost of preventing air pollution in-
cluding desulphurization was 2986 million). The total income in Yok-
kaichi in 1966 was 56,991 million.

S. ASAHI ET AL.
28
passed. The policy authorities thereby tightened the pol-
lution controls for the complex companies. However,
decisive technologies to reduce X emissions had not
been developed at that stage. Therefore, companies could
only make chimneys higher at most, thus diffusing and
diluting polluting gases, or reduce their operation levels
as their pollution pr evention measures. Around 1967 , the
heavy-oil desulfurization equipment went on stream, and,
together with the h igher chimneys, th e X levels were
drastically reduced in the area surrounding the complex.
Some companies converted to low sulfide oil imported
from Indonesia or Southeast Asian countries, or input
naphtha as a fuel. Then, flue-gas desulfurization techno-
logy, which removes sulfur from flue gases, was devel-
oped and went into practical use around 1974. Production
facilities with that technology began operations the fol-
lowing year. With equipment in full-scale operation, the
total X emissions were decisively reduced far below
the level called for by the 1976 standard. Such equipment
served to reduce 25 125 tons of X emissions per year.
The amount emitted into air was 2290 tons, one-ten th the
level before the equipment came into use. The important
point is that the development of emissions-reducing tech-
nologies was triggered by the public environmental meas-
ures vociferously dema nded by l ocal residents’ campaigns.
SO
SO
SO
SO
2.2. Environmental Measures and Pollution
Prevention Investment
Needless to say, environmental quality does not auto-
matically improve as the income level rises. As explained
in the previous section, public pollution prevention con-
trol measures forcefully promoted by local residents’
campaigns played a key role. The Regulations on Total
Discharge A mount w er e adop ted on Augu st 15 , 1972 , six
months ahead of the scheduled date in response to plain-
tiff citizens’ win in the civil suit. These regulations were
decisive in reducing X emissions in Yokkaichi. The
regulations are as follows: 1) By 1975, the X pollu-
tion density in Yokkaichi should be reduced to 0.025
ppm from 0.05 ppm of the national standard, and eventu-
ally reduced to 0.017 ppm as the final goal (i.e. the an-
nual average density which achieves 99% of the thresh-
old intensity set by the City Life Council of Yokkaichi
City from the past data in Yokkaichi): 2) The allowable
total emissions in each region are to be determined, and
the outlet of each factory should be controlled corre-
spondingly. This regulation is expected to reduce 38.5
million tons of total fuels and about 70% of 0.1 million
tons of X emissions, respectively, annually: 3) Sul-
fide in fuel gases should be controlled more strictly as
the fuel inputs increases.
SO SO
SO
Such regulations were expected to require huge costs
for countermeasures of the complex companies. Figure 5
Figure 5. Investment in abatement.
depicts the time path of the esti mated total (nominal) a m-
ount of environmental or pollution prevention investment,
i.e. investment in abatement.25 It is notable that invest-
ment in abatement did not increase largely until 1967,
but thereafter it increased rapidly toward the peak in
1974, even if the peak of the inverted U-shape was reach-
ed in 1967.26 This is in con trast to the featur es of th e time-
evolution in environmental or pollution prevention in-
vestment, for example, of the US illustrated in [35].27 As
shown earlier, total X emissions began to decline in
Yokkaichi in spite of the technological constraints in the
latter half of the 1960s. However, a huge amount was
then invested in abatement. Around 1965, environ mental
or pollution prevention investments were mainly those of
heightening chimney stacks. The Air Pollution Control
Law (1968) included the K-value regulation which set
the allowable volume of X emissions in proportion
to the square number of the height of the chimneys. Respon-
ding to the Regulations on Total Discharge Amount in
1972 and tighten ing them in the years to follow, desulfu-
rization equipment was developed and installed, rapidly
increasing the costs of investments and reducing X SO
emissions (see Figure 3). Following the regulation many
firms introduced and installed desulfurization equ ipments
with desulfurization rates of 90% and more in 1973 and
1974.28 Increases in the latter 1980s were explained as
those undertaken in the name of Third and Fourth Re-
gional Environmental Pollution Control Program for ur-
ban and city life.
SO
SO
24The time path of the real amount of pollution inv est ment has qualitative
p
roperties similar to those of a nominal one, although the real one was
about half of the nominal one around 1990.
25For calculation of investment in abatement, see the next section.
26Reference [35] showed that investment in abatement increased largely
around the peak of the total emissions around 1973, asserting that the
return rate on capital exceeded the rate of environmental technology
p
rogress, resulting in the inverted U-shape environmental Kuznets cur-
ve and that the same situations could also be observed in Europe.
27The Regulations on Total Discharge Amount, introduced by Mie
Prefecture in 1972, was: the amount should be 5865 Nm3/hour after 21
April 1972; 4789 Nm3/hour after 15 August 1972; 3723.2 Nm3/hour
after 1 April 1973; and 2695.7Nm3/hour after 1 July 1974.

S. ASAHI ET AL. 29
3. Data and Calculation29
3.1. Calculation of per Capita Income in
Yokkaichi
The Mie Prefectural Office estimates the municipal resi-
dents’ income from the Mie Prefectural Income Account
data. Although the Mie Prefectural Income Account has
been estimated since 1950, the Mie Prefectural Office
published only the net municipal product (factor income)
as the municipal residents’ incomes from 1955 to 1969,
and both net municipal product (factor income) and mu-
nicipal residents’ income (distributed income) since 1972.
Thus, first estimating the correlation between net muni-
cipal product (factor income) and municipal residents’
income (distributed income), we estimated municipal re-
sidents’ incomes from the net municipal product for the
period before 1971.
3.2. Calculation of SOX Emissions before 1971
Since the emission of is expected to be highly re-
lated to the observed X pollution intensity, we esti-
mated the average emissions in Yokkaichi before 1971
from the estimated equation of the observed X den-
sity in the Isogo region. The pollution density in
the Isogo area and the average X pollution density in
Yokkaichi have been published in “Environmental Con-
servation in Yokkaichi (Yokkaichi no Kankyo-Hozen),”
respectively. Since the measures for heightening chim-
neys to lower the X pollution density had been in
place since 1965, a strong correlation between X emis-
sions and the pollution density in the air could be ex-
pected.
X
SO
SO
SO
SO
X
SO
SO
SO
Although the data on fuel inputs are available after
1972, the data of the ratio of sulphur content in the fuel
input are not. So, we estimated the ratio by using the
calculation of the average percentage constituent of sul-
phur in the “Survey on the Evaluation of Development
and Environment (1994)” (data after 1959 are available).
We also calculated the fuel-oil inputs before 1971 from
the equation estimated by the activity level of the com-
plex and the relative prices of fuels.
Given the restricted availability of data, the activity
level of the complex is substituted by the national pro-
duction level of naphtha as a proxy, which is considered
to have a strong correlation, and the relative price is de-
fined as the ratio of the import price of oil (on yen basis)/
the wholesale prices of petroleum and coal products.
Making use of the estimated equation, we calculated
the fuel-oil inputs before 1971 and connected to the data
after 1972. Multiplying the estimated fuel inputs by the
average percentage constituent of sulphur in the “Survey
on the Evaluation of Development and Environment”
(1994) for each year and converting to the weight,
we obtain the weight in the fuel inputs. X
SO
X
SO
3.3. Calculation of Investment in Abatement
We estimated the total private investment in abatement
as follows: The amount of investment in abatement has
been published in The Regional Environmental Pollution
Control Program in Yokkaichi (Yokkaichi Kogai-Boshi
Keikaku) since 1971. This includes investments in aba-
tement both by the public and the private sector in the
Yokkaichi area. However, there are some reservations.
First, since public investment includes not only invest-
ments against industrial pollution but also those against
pollution from urban and city life, we must take away the
latter for our purpose. Second, although the investment
by the private companies are those in Yokkaichi, some
investments by the public sector, e.g. the Mie Prefecture
and local governments of surrounding districts, may be
done outside of Yokkaichi. We must also take away these
except for investments financed by subsidies from other
governments to Yokkaichi.
Finally, there remains a problem in estimating invest-
ments in abatement before The Regional Environmental
Pollution Control Program in Yokkaichi. Even before the
Plan, investments such as heightening chimneys were
undertaken since the Yokkaichi petrochemical complex
had operated since 1957. Invest ments in river-basin sew -
erage systems; installation of public sewerage systems;
installation of waste-disposal plants; investments in in-
dustrial waterworks which the Mie Prefecture alone un-
dertook are excluded. For pollution prevention invest-
ments of private companies, we used the data from “Sur-
vey on the Evaluation of Development and Environment”
(1994). Since the capturing rate of this data is about
60.9% on average for the period after the Regional En-
vironmental Pollutio n Control Program in Yokkaichi (i.e.
from 1971 to 1993) and is steady, we used this rate to
allocate investment between Yokkaichi and other gov-
ernments. We obtained the data on sundry expenses in-
volved in pollution prevention investments from the bud-
gets of Yokkaichi City after 1960. Since the amount of
sundry expenses underestimates pollution prevention in-
vesttments undertaken by Yokkaichi City, we estimated
the public investment of the period from 1960 to 1970 by
allocating with the average capturing rate of the sundry
expenses on pollution prevention investment (15.7%) for
the period of The Regional Environmental Pollution Con-
trol Program in Yokkaichi (i.e. from 1971 to 1993).
4. Conclusions
We may conclude the analysis as follows: (1) The Yok-
kaichi area has succeeded in reducing X emissions
even at a relatively low income level, and (2) the inverted
SO
29Calculation Results are available from the authors upon request.

S. ASAHI ET AL.
30
U-shape was brought about by technical progress in clea-
ning up the environment but not by the declining output
levels, despite increases in output level. The technical
progress acceleration was made possible by local resi-
dents’ campaigns and administrative environmental mea-
sures backed up by the campaigns. The environmental
measures of the Yokkaichi City and the Mie Prefecture
government, backed up by the local residents’ campaign,
played critical roles in encouraging environmental tech-
nical progress and thereby improving the quality of the
environment of the area, while the national environmen-
tal regulations followed those region al policies. It should
be noted that the local residents’ campaigns moved and
backed up the local governments, in contrast to the X
reductions in developed economies in 1980 pushed by
the international agreements, i.e. Sulphur Protocols (see
[33]). This is the reason for using local income as the
explanatory variable, instead of per capita GDP.30 The
fact that the pollution intensity decreased before the en-
vironmental Kuznets curve reached its peak means that
the environmental technology of companies could still
not catch up with the regulations, not that the regulation
was ineffective.31
SO
If rapid economic development is not possible for de-
veloping economies without heavy industrial sectors as
suggested in [38,39], the pressure on appropriate envi-
ronmental policies will become greater. Although the si-
tuation facing developing economies may differ from that
was in Yokkaichi as the pollution prevention technolo-
gies have already been developed sufficiently, the expe-
rience of Yokkaichi may have important implications for
other, especially developing, economies. In fact, Refer-
ence [28] showed that three-year-earlier introduction of
the total discharge amount regulation would substantially
decrease human damage in Yokkaichi by a simulation
analysis, while [27, p. 110] introduced the grave concern
of the Japanese central government that a heavy toll of
pollution victims could deal a fatal blow to the industri-
alization in Japan in the mid-high-growth era.
5. Acknowledgements
The authors are greatly indebted to Daisuke Ikazaki and
an anonymous referee for their helpful comments and sug-
gestions. The earlier version was presented at the 2010
Autumn Meeting of the Japan Association of Applied
Economics. The financial support from the Institute of
Economic Research of Nagoya City University is grate-
fully acknowledged.
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