The Pollution Release and Transfer Register System in the U.S. and Japan: An Analysis of Productivity

This study analyzes productivity in the context of environmental regulations on the provision and dissemination of environmental information. Our study measures total factor productivity (TFP) by considering the emission of toxic chemical substances in the U.S. and Japan and the two countries’ corresponding policies. We apply the directional distance function to measure the Luenberger productivity indicator to estimate TFP. The data for U.S. and Japanese manufacturing firms include 386 firms over 1999 and 2007 and 466 firms over 2001 to 2008, respectively. This paper focuses on nine industries with highest pollution intensity: rubber and plastic, chemicals and allied products, paper and pulp, steel and non-ferrous metal, fabricated metal, industrial machinery, electric products, transportation equipment, and precision instruments. These nine sectors are categorized into two industry groups: the basic materials group and the processing and assembly group. The results show that productivity improved in all industrial sectors in the U.S. and Japan from 2001 to 2007. In particular, the electric product industry improved rapidly after 2002 for both countries. The enforcement of RoHS and the REACH directive in Europe might be one of the reasons for these increases. These stringent restrictions on toxic chemical substances give U.S. companies that export to the European market a strong incentive to treat their toxic chemical substances.