Does industrial waste taxation contribute to reduction of landfilled waste? Dynamic panel analysis considering industrial waste category in Japan.

Waste taxes, such as landfill and incineration taxes, have emerged as a popular option in developed countries to promote the 3Rs (reduce, reuse, and recycle). However, few studies have examined the effectiveness of waste taxes. In addition, quite a few studies have considered both dynamic relationships among dependent variables and unobserved individual heterogeneity among the jurisdictions. If dependent variables are persistent, omitted variables cause a bias, or common characteristics exist across the jurisdictions that have introduced waste taxes, the standard fixed effects model may lead to biased estimation results and misunderstood causal relationships. In addition, most existing studies have examined waste in terms of total amounts rather than by categories. Even if significant reductions in total waste amounts are not observed, some reduction within each category may, nevertheless, become evident. Therefore, this study analyzes the effects of industrial waste taxation on quantities of waste in landfill in Japan by applying the bias-corrected least-squares dummy variable (LSDVC) estimators; the general method of moments (difference GMM); and the system GMM. In addition, the study investigates effect differences attributable to industrial waste categories and taxation types. This paper shows that industrial waste taxes in Japan have minimal, significant effects on the reduction of final disposal amounts thus far, considering dynamic relationships and waste categories.