Governance for a Sustainable Future : The State of the Art in Japan [1 ed.] 9789819947706, 9789819947713

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Yukio Adachi Makoto Usami Editors

Governance for a Sustainable Future The State of the Art in Japan

Governance for a Sustainable Future

Yukio Adachi · Makoto Usami Editors

Governance for a Sustainable Future The State of the Art in Japan

Editors Yukio Adachi Graduate School of Human and Environmental Studies Kyoto University Sakyo-ku, Kyoto, Japan

Makoto Usami Graduate School of Global Environmental Studies Kyoto University Sakyo-ku, Kyoto, Japan

ISBN 978-981-99-4770-6 ISBN 978-981-99-4771-3 (eBook) https://doi.org/10.1007/978-981-99-4771-3 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

Although the expression “responsibility to future generations” is firmly established in public and political vocabulary, its operational meaning and practice are inadequately understood and yet to be systematically evaluated. Moreover, the term has not been successfully translated into viable ethical and theoretical concepts that can guide public policies and actions. How can the modes of governance and established policy priorities become compatible with the well-being of future generations? The primary objective of this book is to identify the conditions of and obstacles to governance for a sustainable future, or future-regarding governance. Governance concerns steering a society over extended periods of time, not responding to particular policy issues. The ideas and strategies proposed by contributors in this book to establish future-regarding governance are based on the theoretical and empirical analyses of the major long-term problems facing advanced democracies in general, and Japan in particular. Japan is an interesting case indeed. Relatively poor climate policy, rapidly decreasing birthrate, aging population, extensive public debt, prolonged economic recession, healthcare and pension systems that urgently require redesigning, hollowing-out of industries and subsequent loss of jobs, deteriorating infrastructures, increasing nuclear waste, and intensifying social polarization have caused a decline in people’s trust in the government and democratic processes. Currently, Japanese citizens are widely circulating their doubts about the social system’s sustainability. This book comprises two parts. In Part I, authors from various disciplinary backgrounds examine the idea of governance for a sustainable future from theoretical perspectives. This part discusses issues associated with future-regarding governance that are wicked in nature, such as the philosophical/ethical foundation on which to base the idea of governance for a sustainable future, major impediments to the development of future-regarding governance, and the modes of thinking and action required by leaders and citizens to realize such governance. Chapters in Part II largely focus on the state of long-term governance in Japan. This part uses empirical and in-depth analyses with cross-sectoral and cross-national policy perspectives to identify the state of future-regarding governance in various policy fields and major sectors or organizations mainly in Japan, while also examining v

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strategies and measures to improve their performance. From this perspective, Western democracies and weak democratic regimes elsewhere will be provided with valuable lessons to avoid fatal policy mistakes, thereby improving future-oriented governance worldwide. By combining theoretical discussions on far-reaching issues and empirical analyses of Japanese cases, the book will shed a new light on governance for a sustainable future. We thank Yumiko Takemae for helping us conduct face-to-face and online meetings with the contributors of this book during the COVID-19 pandemic and collect chapter manuscripts at different stages of our project. Our thanks are also due to Usami’s research assistant, Tshering Ongmu Sherpa, for her assistance in reformatting final chapter manuscripts. Further, we express our gratitude to the reviewers of our book proposal for their valuable comments and suggestions. Finally, we are grateful to Yutaka Hirachi and Dharaneeswaran Sundaramurthy of Springer Publishing Company for their meticulous technical support. Sakyo-ku, Japan

Yukio Adachi Makoto Usami

Contents

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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yukio Adachi and Makoto Usami

Part I 2

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Principles for Sustainability

Role of Legislators in Creating and Sustaining Governance for a Sustainable Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yukio Adachi

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Another Boundary Problem: Democracy, Future Generations, and the All-Affected Principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Akira Inoue

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Another Reason for Caring About Future Generations . . . . . . . . . . . Susumu Morimura

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Responding to Existential Risks: Grounds, Targets, and Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Makoto Usami

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Trade-Off Between Repugnant and Sadistic Conclusions Under the Separability of People’s Lives . . . . . . . . . . . . . . . . . . . . . . . . . Susumu Cato

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Dealing with “Wickedness” in Long-Term Problem-Solving . . . . . . . 109 Hisashi Okuda

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Governing Long-Term Structural Changes in Socio-Technological Systems and Their Difficulties: What Do Sustainability Transition Studies Have to Address? . . . . . . 129 Kazumasu Aoki

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Contents

The Politics of Eco-nomics: A Critical Investigation of ‘the Governance for a Sustainable Future’ from the Perspective of Heterodox Economics . . . . . . . . . . . . . . . . . . . . 157 Shu Shimizu

Part II

Strategies for Futurity

10 Tokyo’s Linked CO2 Cap-and-Trade Program: A Blueprint for Cooperative Market-Based Megacity Climate Policy? . . . . . . . . . 183 Sven Rudolph and Takeshi Kawakatsu 11 Multidimensional Policy Analysis of the Energy System Transition in Japan: Case Studies of Local Energy Systems and Lessons to Improve Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . 203 Shunsaku Komatsuzaki 12 Climate Change Adaptation for Futurity: Public–Private Partnerships in the Japanese Insurance Sector . . . . . . . . . . . . . . . . . . . 223 Yumiko Takemae 13 Keeping Your Fossil-Fuel Cake While Eating It? Comparing the Decarbonization Approach of BP, Chevron, ExxonMobil and Shell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 Gregory Trencher 14 Decarbonization and Critical Raw Materials . . . . . . . . . . . . . . . . . . . . . 279 Andrew DeWit 15 The Politics of Evidence in Japan: Struggling Between Efficiency and Effectiveness and Beyond . . . . . . . . . . . . . . . . . . . . . . . . . 299 Kazuya Sugitani 16 Governance Under Uncertainties for the COVID-19 Pandemic: Policy Lessons Learned in Japan from Resilience Perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 Mika Shimizu 17 The Challenges for Health Systems and Policies: Growing Medicalization and Global Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335 Monika Steffen

Chapter 1

Introduction Yukio Adachi

and Makoto Usami

Abstract A notable feature of the contemporary world is that some human practices and natural events have long-lasting impacts on future generations, as illustrated by anthropogenic climate change and the COVID-19 pandemic. An increase in citizens’ awareness of such impacts has encouraged a growing number of governments to create institutions to protect the interests of posterity. Philosophers have long studied moral grounds for futurity concerns and democratic governance for sustainability, while social scientists have examined a variety of policies with long-term effects, such as climate change mitigation and adaptation and healthcare. However, the development of the two bodies of literature in separate paths has hindered the collaboration between philosophical thinkers and social scientists. Also, many empirical studies have largely focused on Europe and North America, while paying scant attention to Japan, a society faced by daunting challenges in terms of human security and social sustainability. Remedying these limitations of previous studies is what the current volume aims to do. This chapter begins by pointing out the significance of future-regarding governance and policy. Next, it briefly reviews some philosophical and social scientific studies, identifying their shortcomings. Finally, it sets forth this book’s purpose and summarizes the following chapters. Keywords Governance · Public policy · Future generations · Climate change · COVID-19

Y. Adachi (B) · M. Usami Kyoto University, Kyoto, Japan e-mail: [email protected] M. Usami e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_1

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1.1 Long-Term Effects of Policies A noticeable feature of the contemporary world is that many human practices and natural events have long-lasting impacts on future people. A widely known example is anthropogenic climate change. Our globe is hotter today than before: the current global average temperature is 1.15 °C higher than the pre-industrial level. If the total worldwide greenhouse gas (GHG) emissions continue to increase at a similar pace to the pace they have shown, then our descendants will predictably experience more extreme weather events than we do, including heat waves, droughts, and cyclones/ hurricanes/typhoons. For example, the number of cyclones/hurricanes/typhoons in Category 5 is predicted to increase between 25 and 30% for every 1 °C rise in the global average temperature. Posterity will also suffer from sea level rise and ocean acidification for decades and even centuries. Other forms of environmental degradation, such as nuclear waste, desertification, and biodiversity loss, will similarly have significant impacts on future generations, including remote generations; the same applies to natural resource depletion. A different type of long-term threats to humanity is epidemics, as grimly illustrated by the COVID-19 outbreak in 2020. Historically, epidemics have had substantial impacts on the human population. In the mid-fourteenth century, black death (plague) killed one third of Europeans and one tenth of the world’s population. Following the first arrival and settlement of Europeans in the Americas, smallpox, measles, and other infectious diseases, brought to the region by the settlers, caused the high mortality of Native Americans, subsequently reducing the total population by up to 90%. From 1918 to 1920, the Great Influenza, also known as the Spanish flu, was responsible for a devastating death toll (3 to 5% of the global population), which was higher than the total number of deaths caused by World War I and World War II. The COVID-19 pandemic has killed less than 0.087% of the current world population as of March 2023. However, pandemics are expected to occur occasionally in the coming years due to the increasing probability of contact between humans and animals and to greater mobility on a global scale. Impacts of “three Cs” on human security and safety have been recently discussed in the international community: climate change, COVID-19, and a fierce armed conflict that broke out between Russia and Ukraine in 2022. The third C—Russia’s invasion of Ukraine—reminded us that wars have long-lasting impacts on conflicting states. On battlefields and in affected areas, soldiers and noncombatants are killed, survivors traumatized, cities ruined, and economies destroyed, as currently observed in Ukraine. Both international and civil wars have serious physical, economic, and psychological effects on people for years and even decades. These and many other events with enduring consequences highlight the long-term effects that some types of public policy have. If large GHG emitters, such as China, the United States, India, Russia, and Japan, implement effective mitigation policies, then these policies will benefit peoples around the world in decades or even centuries. A similar result will occur if economically affluent and technologically advanced countries provide emerging economies and less developed countries with financial

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and technological assistances to promote decarbonization. In regard to epidemics, COVID-19 made us realize that health sector is crucial in protecting people from infectious diseases. Well-functioning medical services and public health systems can save an enormous number of human lives over many years. For the purpose of deterring wars, political regimes arguably play a significant role. True, the proposition of democratic peace that democratic states do not wage any war with each other is unverified due to a few counterexamples. But a lot of historical and contemporary cases of warfare indicate that the more democratic a country’s regime, the lesser the probability of its waging a war with another democracy. Moreover, democracy works not merely for establishing peace but for protecting human rights and enhancing the rule of law. As distinct from policies that respond to specific public problems, governance steers a society as a whole, shaping and supporting the policies. Due to its extensive and enduring effects, democratic governance is critical to the creation of a sustainable future. A cause of recent concerns, however, is the worldwide trend for democratic regression observed in the past few decades. The rise of populism, deterioration of political polarization, and growth of disparity in incomes and assets caused democratic backsliding in many societies, and the COVID-19 pandemic strengthened this tendency. A growing number of governments have created institutions to protect the interests of not-yet-born citizens. These institutions include constitutional clauses, ombudspersons, and electoral mechanisms (González-Ricoy & Gosseries, 2016; Linehan & Lawrence, 2021: Part III). A remarkable example is the Well-being of Future Generations Act enacted in Wales in 2015. At the global level, the United Nations General Assembly decided to hold the Summit of the Future in 2024, purposing to issue the action-oriented agreement, Pact for the Future. The General Assembly’s decision indicates that more than three decades after the Report of the World Commission on Environment and Development (Brundtland Report) was published in 1987 and the United Nations Conference on Environment and Development (Earth Summit) took place in 1992, the international community took a further monumental step toward meeting its responsibility for future humans.

1.2 Literature Review Long before policymakers in various societies started recognizing the idea of the present generation’s responsibility for future generations, moral and political philosophers had analyzed and discussed it. Since the beginning of the 1970s, numerous studies have been made on current people’s moral duty toward future people (e.g., Dobson, 1999; Gardiner, 2021; Gosseries & Meyer, 2009; Kumar, 2018; Partridge, 1981; Sikora & Barry, 1978; for an overview, see Usami forthcoming). This scholarship was called the obligation to future generations or the responsibility for future generations in the early days but is recently termed intergenerational justice. One primary point of debate therein is how to justify the duty that we supposedly bear

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toward our descendants. Among proposed arguments are the rights of future generations, the application of ideas created by John Rawls (1999) such as an original position and the difference principle, the notion of transgenerational community, and consequentialist theories. Another debated topic is a theoretical difficulty faced by some arguments for posterity concerns, namely the non-identity problem raised by Derek Parfit (1984). The non-identity problem refers to the paradox that a person cannot be harmed by any action that brings the person into existence even if the action is responsible for the person’s substantially low level of well-being. Other issues include distributive ideals (equality, priority, or sufficiency) and the currency or metrics of justice (welfare, resource, or capability) in the context of intergenerational relationship. Another research area related to our actions and policies that affect our offspring is the size and well-being of future populations. A seminal observation is the repugnant conclusion, suggested by Parfit (1984). The repugnant conclusion maintains that in total utilitarian account, for any large population with very high positive welfare, there is a larger population that would be better even if the latter’s life is barely worth living. Inspired by this conclusion, analytical moral and political philosophers, as well as economic theorists, have developed axiological population ethics, in which hypothetical populations with different well-being levels are compared in terms of goodness (e.g., Arrhenius et al., 2022; for an overview, see Greaves, 2017). By contrast with these theory-oriented scholars, practice-oriented writers propose new forms of democracy that can effectively protect the interests of future people (Linehan & Lawrence, 2021: Parts I and II; Smith, 2021). On the other hand, social and natural scientists have examined a great variety of specific laws and policies with long-term effects on posterity. For instance, an enormous number of works have been published about climate policies and projects. Some focus on mitigation (e.g., Reins & Verschuuren, 2022; Yamin, 2005); others look at adaptation (e.g., Verschuuren, 2022); and still others cover both (e.g., Carlarne et al., 2016; Farber & Peeters, 2016; Lackner et al., 2022). Also, governance for sustainability in the context of environmental and energy issues has also been much studied (e.g., Jaria i Manzano et al., 2016; Kanie & Biermann, 2017; Martin et al., 2012; Mauerhofer, 2021; Russel & Kirsop-Taylor, 2022). Inspired by COVID-19, several authors discuss policy-related and other issues concerning pandemics (e.g., Cowan & Mumford, 2021; Wagenaar & Prainsack, 2021). It is noteworthy that most empirical researchers on climate policy, healthcare, and many other topics have long been centered on Western societies, while paying less attention to other parts of the world. Recently, a few emerging economies with huge populations, such as China and India, have attracted the interest of some researchers; however, many other countries in Asia and Africa continue to receive scant attention. One feature of the scholarship on policy and governance with lasting effects is that two bodies of literature have separately grown: philosophical discussions on theoretical questions and empirical analyses of particular policies. Such a strict demarcation between philosophy and science adheres to the tradition of academic specialization. However, this demarcation has hindered researchers from benefiting through

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a collaboration between philosophical thinkers and social scientists. Such a multidisciplinary collaboration may shed new light on both basic principles and policy measures. Another limitation of previous studies is that only limited efforts have been made to provide the systematic explication, causal explanation, and normative evaluation of Japanese long-term policies and practices. Today, the Japanese society is faced by a number of daunting challenges in terms of ensuring human security and social sustainability, such as per capita GHG emissions remaining high, accumulated nuclear waste, aging society and depopulation, continuously stagnant economy, and astronomical amount of public debt. The Japanese society’s attempts to address these challenges deserve scrutiny from the perspective of comparative public policy. In addition, some of the problems facing this country, such as large per capita GHG emissions and aging society, are phenomena found in some other countries as well. Accordingly, policymakers in these countries can obtain practical lessons from observations on the Japanese case.

1.3 Principles for Sustainability Against the backdrop previously described, the current volume has twofold purpose. First, it provides philosophical discussions on theoretical issues surrounding our moral responsibility that stems from the long-lasting impacts of social practices and public institutions on the one hand, and presents empirical findings concerning particular long-term policies on the other hand, paying attention to the interface between the two. Philosophical speculations can be informed about their practical applications by empirical studies, and the latter group of works can obtain insights as to their theoretical basis from the former. Second, this book offers the detailed description and explanation of two broad categories of contemporary Japanese policies and practices characterized by long-term effects: the first category includes climate change mitigation and adaptation, and the second is healthcare. In addition, some chapters adopt a comparative perspective in describing and evaluating the Japanese case, and others deal with the events and institutions found outside of Japan, which have impacts and implications on the society. The in-depth analyses of Japanese policies and practices, as well as external factors influencing on them, do not merely help understand this society. But they also provide insights and lessons for researchers working on the societies that share some characteristics with Japan. This book consists of two parts: Part I explicates general theoretical issues in relation to the long-term consequences of public policy and democratic governance, and Part II largely discusses climate change policies and healthcare in Japan. The first part begins with Chapter 2 written by Yukio Adachi. His aim is to offer a promising way to establish governance for a sustainable future. Governance for a sustainable future means a mode of governance in which policies to tackle pressing problems are enacted and implemented according to a prudential examination of their impacts on long-term societal goals with care about the well-being of future generations as an integral part. To establish such future-regarding governance, he

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first characterizes a conspicuous feature of contemporary democracies as democratic myopia. Possible measures to overcome such shortsightedness can be divided into two categories. One comprises measures to enhance general citizens’ long-termism and public-mindedness by encouraging them to participate in political processes or by developing mini-publics mechanisms. Measures in the other category devise futureconcerning institutions, including constitutional provisions, parliamentary commissions, and independent executive agencies. After assessing the two approaches, Adachi discusses the abilities that legislators should display to develop a futureconsidering mindset. He argues that the legislators should be able to carry out the informed and evidence-based cost-effectiveness analysis, while adapting to changes in the policy environment as well as newly acquired facts, and conducting systemic thinking. The chapter then considers the institutional and theoretical implications of future-regarding legislative deliberation. In Chapter 3, Akira Inoue addresses a fundamental issue concerning democracy—the boundary problem. This issue is the question of who should be included in a demos when political decisions are made. Considering international connectedness in the globalizing world, some authors advocate the all-affected principle, according to which all those affected by political decisions in a state should be included in the demos that govern them. By expanding the principle, Inoue advances the intergenerational all-affected principle. After elaborating the all-affected principle presented in the literature, he identifies three virtues of its temporally expanded version: a reasonable change in the scope of demos, the achievement of political equality, and the existence of applicable measures to realize the principle. Then, he responds to three objections to this version: over-inclusiveness of the proposed demos, asymmetry between the positive and negative impacts of a decision, and implausible satisfaction of political equality. Further, he notes that the transgenerational all-affected principle can avoid the non-identity problem if the wide person affecting view is adopted. This view maintains that one act is worse than another if the former act would make people in general, rather than a person in question, worse off than the latter would. Chapter 4, authored by Susumu Morimura, is centered on Samuel Scheffler’s argument for caring about future generations. Most authors on intergenerational justice have long developed and discussed ethical reasons for futurity concerns, while several others have put forth prudential reasons. Along the latter line of thought, Scheffler argued in his recent lecture that what matters to us considerably depends on the afterlife, namely people who will live after our deaths. After summarizing Scheffler’s thought experiments and central claim, Morimura defends the claim against the criticisms raised by commentators on the lecture. Then, he considers what implications the afterlife argument might have on climate policy. Based on Seana Shiffrin’s view that preserving the practice of valuing should be prioritized over preserving particular things valued, he suggests that adaptation is preferable to mitigation. In Chapter 5, Makoto Usami discusses existential risk (X-risk), which refers to the peril that threatens the destruction of humanity’s potential for the development of civilization. He starts by offering a refined definition of X-risk and presenting a new conceptual map of risks at large. Total utilitarianism, on which leading X-risk thinkers rely, leads to the repugnant conclusion, whereas average utilitarianism and

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critical-level utilitarianism imply another problem uncovered in population ethics— the sadistic conclusion. The sadistic conclusion states that when the addition of people does not affect the welfare of original people, it would be better to add those who have negative welfare than those with positive welfare. As utilitarian views have these problems, Usami turns to three nonutilitarian distributive theories to form the solid basis for existential risk studies (ERS): egalitarianism, prioritarianism, and sufficientarianism. He unpacks various difficulties faced by egalitarianism and prioritarianism, as well as the primary versions of sufficientarianism, and proposes a new version of sufficientarianism. Furthermore, he identifies the three problematic properties of an approach widely adopted in ERS: singularism, restrictivism, and preventivism. To address these properties, he advocates expanding the scope of target risks and designing stages that might follow the stage of attempted prevention. Closely linked with the contents of Chapter 5, Chapter 6 is dedicated to the axiological treatment of repugnant and sadistic conclusions. The point of departure in Susumu Cato’s analysis is a theorem proved by Charles Blackorby, Walter Bossert, and David Davidson, who advance critical-level utilitarianism. The theorem posits that if utilitarianism is employed for any population of the same size and a one-person society is not better than a larger population society (minimal one-person trade-off), then the repugnant or sadistic conclusion holds. Cato demonstrates that not only utilitarianism but also prioritarianism fails to avoid both of these conclusions simultaneously. He also observes what consequences occur when the axiom of minimal one-person trade-off is dropped. By doing these, he shows that the trade-off between repugnant and sadistic conclusions applies to a larger class than utilitarianism. As utilitarianism and prioritarianism share the additive separability of individuals’ wellbeing, he concludes by underlining the need for examining non-separable principles. His analysis uses some mathematical formulae but can be understood by those who are unfamiliar with mathematics. Although the analysis is made in an atemporal framework, following the standard methodology of population axiology, its results have crucial implications in considering the size and well-being of posterity. While Adachi in Chapter 2 discusses the abilities that political leaders should show to establish governance for sustainability, Hisashi Okuda in Chapter 7 tries to reach a similar destination through a different avenue. Okuda seeks to offer a theory of policy design that can successfully address long-term wicked problems. A wicked problem is a problem that is ill-defined and resists any agreed solutions. As a result of reviewing policy design studies, he finds that Steven Linder and B. Guy Peters disregard goal settings as opposed to instrument selections. It is also observed that Michael Howlett and his colleagues downplay some stakeholders’ loss caused by policies. To remedy these drawbacks, Okuda moves into wicked problem studies, where authors recommend collaborations between stakeholders. For instance, Davis Bobrow and John Dryzek propose hermeneutic policy analysis, whereby they argue that policy designers should interview stakeholders from a neutral standpoint, build consensus among the stakeholders, and decide on policies in accordance with the consensus. When classifying the types of wicked problems, John Alford and Brian Head present a contingency framework, in which they distinguish between the wickedness of a problem and that of stakeholder relations. By using their framework, Okuda discusses

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gradual policy improvements and system change in the perspective of long-term problem solving. System change is scrutinized in great detail by Kazumasu Aoki in Chapter 8. He describes the current situation of sustainability transition (ST) studies, applies the widely used ST framework to a Japanese case, and discusses the challenges to and possibilities of long-term policies for transition. He first reviews the ST scholarship and its core framework—the multi-level perspective (MLP). The MLP is a model of transition dynamics at three levels: the macrolevel of landscape (exogenous context), mesolevel of regime (the system’s dominant function), and microlevel of niches (experimenting innovations). Changes in landscape influence a socio-technological regime, while prompting niches to grow, which in turn bring about changes within the regime. Next, he depicts recent developments of MLP, particularly the fourphased spatial scheme consisting of local, inter-local, trans-local, and national/global phases. This scheme is applied to the case of the Japanese electricity system reforms that occurred after the Fukushima Daiichi Nuclear Power Plant accident in 2011. Moreover, he discusses uncertainties and open-ended processes as well as a conflict between short-term contextuality and long-term sustainability. Finally, he mentions the reflexive action framework. This chapter primarily discusses the general model of MLP and its developments, while foreshadowing chapters in Part II, which mainly study Japanese cases. Focusing on environmental issues, Shu Shimizu in Chapter 9 discusses marginalized heterodox economists in the discourse of environmental sustainability. His farreaching background question is: why are radical thoughts and actions marginalized in the contemporary discourse of environmental politics? To answer this question, he first notes that orthodox economists’ understanding of environmental problems is based on market mechanisms. He then turns to prominent heterodox economists, notably Tony Lawson and Herman Daly, who object to unrealistic assumptions, mathematical formalism, monist perspectives, and economic growthism, all of which are found in the orthodoxy. Richard Smith asserts that heterodox economists are excluded from mainstream discourse because of the structural constraints of capitalism. He advocates moving from capitalism to eco-socialist economy, assuming that once the true resolution—an exit from the structure—was politically proposed, people would get out of it. Yet Shimizu finds Smith’s proposal untenable since it fails to answer the question of why one truth is considered absolute, whereas others are excluded. Employing Michel Foucault’s idea of power/knowledge and referring to Foucauldian case studies, he argues that once a particular discourse becomes dominant as the truth, it marginalizes other discourses. In such realities, he notes, critiques not only question the legitimacy of a hegemonic truth but also suggest another possible truth.

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1.4 Strategies for Futurity Part II explicates the Japanese policies and practices concerning climate change and the COVID-19 pandemic, while studying some overseas phenomena that have significant influences or implications on the society. The first two chapters scrutinize notable local mitigation cases. In Chapter 10, Sven Rudolph and Takeshi Kawakatsu focus on the Tokyo Metropolitan Government’s Cap-and-Trade Program (TMG CaT), which is linked with one of its neighboring prefectures, Saitama. They evaluate the TMG CaT policy design in terms of GHG coverage, total amount of cap, and allocation method, among others, finding that it only partly meets the Sustainable Model Rule proposed in Rudoph’s previous book. In spite of its design flaws, they note, the program achieved major emission reductions and low abatement costs. Two questions then arise. What factors contributed to TMG CaT’s success? How was it successfully linked with Saitama despite theoretical barriers predicted in the field of public choice? To answer the first question, Rudolph and Kawakatsu identify success factors, including participatory decision-making procedure, motivated environmental administration, well-informed environmental organizations, and the 2020 Olympics that functioned as an incentive to launch internationally recognized climate policies. As for the second question, they attribute the successful Tokyo– Saitama linkage to strong economic ties between the two regions, political leadership of each jurisdiction, and Saitama’s tendency of following Tokyo’s policies. In Chapter 11, Shunsaku Komatsuzaki analyzes the independent and decentralized energy system that arguably promotes sustainability transition, by closely examining three frontrunner municipalities: Higashi-Matsushima, Nakanojo, and Odawara. In doing so, he employs the multidimensional policy analysis devised by Frank Fischer, which involves social and context levels. At the social level, Komatsuzaki investigates the political processes that led to the enactment of the 2011 Special Renewable Energy Act. Before the Fukushima accident occurred, the initial policy design granted significant decision-making power concerning feed-in tariff to the Ministry of Economy, Trade and Industry, which had long promoted nuclear energy. The accident dramatically changed the political situation by inducing many citizens to champion renewable energy as an alternative to nuclear energy. Subsequently, the 2011 Act was enacted to rapidly expand renewable energy production. At the context level, he reveals details of the formation process of each renewable energy project in the three municipalities. He then compares the government-led type (HigashiMatsushima and Nakanojo) and the industry-led type (Odawara) by using multiple criteria, such as economic benefits, citizen participation, and autonomous sustainability. Synthesizing his findings at the two levels, he concludes that measures to enhance project sustainability were restricted by the policy design intended for the rapid expansion of renewables. Chapter 12, written by Yumiko Takemae, studies climate change adaptation, singling out a recent case of public–private partnership (PPP) in the insurance sector. Considering the limited availability of financial and human resources for their projects, governments occasionally have good reason to collaborate with private

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companies, which have been increasingly concerned about the negative impacts of global warming and about pressure from climate-sensitive consumers and investors. Among these companies, insurers are peculiar in that climate risks might hurt their operations on the one hand, but provide them business opportunities on the other. Takemae focuses on a project carried out by the large casualty insurance company in Japan, Tokio Marine & Nichido Fire Insurance. After extensively reviewing the PPP literature, she documents the company’s mangrove planting project and weather insurance at great length, by distinguishing between input, throughput, output, and outcome and by adopting the viewpoints of efficiency and effectiveness. The mangrove project is a multi-stakeholder partnership based on corporate social responsibility, while the weather insurance is a PPP project. By comparing the two projects, she reports some interesting commonalities and differences. While governments play a fundamental role in the process of decarbonization, as illustrated by the case studies in Chapters 10 and 11, the actions of private businesses are undoubtedly pivotal to the process. As an example, more than half of the global industrial emissions between 1988 and 2015 can be traced to just 25 corporations and state-owned entities, mainly fossil fuel companies. Under growing pressure from environmental nongovernmental organizations, the media, and some states, oil and gas majors currently claim to be transitioning to net zero emissions; however, their obstructive actions have long been reported. The question then is: are oil and gas majors truly advancing toward the zero-emission goal? Chapter 13 gives an answer to this question. Gregory Trencher inspects the decarbonization targets and strategies of four majors: BP, Shell, Chevron, and ExxonMobil. Regarding their targets, American majors (Chevron and Exxon Mobil) are not as serious about decarbonization as their European counterparts (BP and Shell). As for their strategies, a distinction is made between transition and business-as-usual pathways. To unpack the realities of each major, Trencher prepares several indicators: the downscaling of oil/gas production and oil/gas sales and the use of offsets for the 2030/ 2050 targets. By applying these indicators, he finds: BP pursues both of the two paths, Shell follows the business-as-usual path, and the American majors even more definitively keep this path. Then, he reveals the four majors’ offset measures, including afforestation, renewable energy, and carbon capture. They engage in offsetting activities not only as a decarbonization strategy but also as a means of profiting from the sales of carbon credits. A highly controversial example of offsets is the rapidly developing “carbon neutral” hydrocarbon market, where main importers include Japanese trading companies and gas utilities. Further, he mentions a number of problems with reliance on offsets, including aged credits that reflect emission reduction activities done several years ago, nature-based offsets that do not lower emissions in the short term and require vast land, and moral hazards that weaken transition efforts. These problems cast serious doubt on the business-as-usual pathway adopted by Japanese companies. On the other hand, serious obstacles lie on the transition pathway requiring the swift diffusion of renewable energy generation technologies. One of the formidable challenges to rapid energy transition efforts concerns critical raw materials (CRMs), such as copper, graphite, lithium, rare earths, and zinc. Global CRM issues form

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the subject of Chapter 14. Utilizing the latest data, Andrew DeWit describes how heavily renewable energy technologies, including wind, solar, bioenergy, geothermal, and hydropower, rely on CRMs. On that score, nuclear energy is not a promising alternative to fossil fuels since the former energy is more dependent on CRMs than the latter. Besides, electric vehicles and battery storage facilities showcase even higher CRM densities. The high CRM reliance of renewables implies that the transition to green energy would require unprecedented volumes of such materials. Also, growing CRM demand would increase geopolitical risks for consumer countries. These and other risks, along with the capital-intensive nature of CRM industry, make mining firms in the industry reluctant to invest enough. Some experts advance recycling and substitution strategies in a circular economy, whereas others do not expect these strategies to be effective in at least a few decades. In conclusion, DeWit suggests the need for good governance through comprehensive and collaborative public policies, while warning that even if such governance is established, it will take a long time to secure abundant CRM supply at acceptable financial and environmental costs. The question may be left with the reader: how can Japan institute a new governance system to address CRM challenges? To effectively and efficiently achieve their ultimate policy goals including sustainability, whatever it means in a specific context, policymakers are advised to rely on the data rigorously collected and analyzed. Against this background, the term “evidencebased policy making” (EBPM) emerged in the 1990s, deriving from evidence-based medicine that uses randomized control test (RCT). EBPM has been widely employed in the United Kingdom, United States, and some other societies in the past few decades. What about Japan? Do Japanese policymakers mention EBPM? If they do, does the term have the same meaning as what their Western counterparts intend to say? How have they conducted such policymaking? In Chapter 15, Kazuya Sugitani seeks to uncover realities of EBPM processes in Japan. The three distinct streams that have occurred since the late 2010s are officially called the Three Arrows of EBPM. The First Arrow refers to the application of Key Performance Indicators to policy outcomes under the initiative of Cabinet Office, as illustrated by the Empirical Research on Education Policy made from 2016 to 2021. The Second Arrow means the evaluation of several projects that was carried out by the Ministry of Internal Affairs and Communications. This evaluation is in contrast with its American and British counterparts in three ways: it was an ex-post, not exante, project evaluation; it was performed by the ministry, not external organizations; and the primary agents were bureaucrats rather than researchers or consultants. In the process of the Third Arrow, a number of projects were inspected by Cabinet Secretariat. The secretariat used a logic model, which is a graphic depiction that typically represents relationships between inputs, activities, outputs, outcomes, and impacts. While evaluating the Second Arrow higher than the others, Sugitani points out three problems with Japan’s EBPM attempts. First, the policy evaluations were largely made from the perspective of budget cuts, which gave rise to a confusion between effectiveness and efficiency. Second, the government remains in an early stage of data availability enhancement. Finally, only a small number of think tanks and research institutes are capable of implementing RCT or social experiments.

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The last two chapters deal with policy measures against COVID-19 and healthcare more broadly. Chapter 16, authored by Mika Shimizu, seeks to draw lessons from Japan’s COVID-19 policy processes at national and local levels in the perspective of resilience. She argues that to address uncertainties created by the pandemic, the policy paradigm should shift from a reactive approach to a proactive, adaptive, and learning approach, which characterizes the resilience perspective. Next, she applies the three pillars of resilience-based public policy to the COVID-19 context: continuum, boundary, and coproduction of knowledge. Then, she picks up several anecdotes: the campaign to avoid Three Cs (closed space, crowded space, and close contact), the government’s request to citizens for voluntary self-restraint with no legal penalty, and the delayed introduction of polymerase chain reaction tests. To evaluate the management of policy resources, she deals with the national government’s distribution of two masks among all households as well as vaccination and waste vaccines. As to information sharing and risk communication, she assesses several infection surveillance systems, the national government’s public relations mechanisms, and press releases from Novel Coronavirus Expert Meeting. As a local best practice, she mentions the three-plus-one policy in Wakayama Prefecture, which combines early detection, early isolation, and a comprehensive survey of action history with the integration of health centers and public administration. Finally, she suggests a few lessons learned from policy experiences in the country. In Chapter 17, Monika Steffen applies a system-based approach to long-term health protection, comparing the systems and situations in Japan and those in other societies. She first identifies four challenges to the long-term policies that protect the health of future generations: securing financial and workforce resources, shifting a policy goal from individual health to the population’s health, linking health policy with other policies that cover major health risks, and strengthening international health governance. Next, she offers an extensive comparative review of health sectors in Japan, European countries, and the United States, as well as some new economies such as China, India, and Russia. Then, she points out the limitations of traditional medicalization, while mentioning the impacts of the COVID-19 pandemic on the health sector of each country. In this connection, she says that preventive measures against health risks are helpful, while having their own risks. Further, given the transboundary dynamics of health risks, major international organizations have advanced the idea of One Health. Also, considering the transdisciplinary nature of such risks, exposomes and epigenetics have been developed beyond the boundaries of biology, virology, medicine, and public health. The contemporary world requires the transnational, trans-sectorial, and multi-level coordination and collaboration among relevant agencies and professionals, as exemplified by COVID-19. She concludes that it is crucial to enhance political leadership in order to effectively control health risks seen as wicked problems. As indicated by the summaries of the following chapters, this volume combines theoretical discussions on moral foundations for posterity concerns and on futureregarding democratic governance with social scientific studies on long-term policies and practices in Japan and beyond, exhibiting a great diversity of disciplines, subjects,

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and approaches. Throughout the book, the reader will recognize that various theoretical and empirical issues are closely and complexly connected. Hopefully, the book will facilitate cutting-edge discussions on governance for a sustainable future by providing normative analyses and empirical observations on the latest policies and practices in Japan.

References Arrhenius, G., Bykvist, K., Campbell, T., & Finneron-Burns, E. (Eds.). (2022). The Oxford handbook of population ethics. Oxford University Press. Carlarne, C. P., Gray, K. R., & Tarasofsky, R. G. (Eds.). (2016). The Oxford handbook of international climate change law. Oxford University Press. Cowan, D., & Mumford, A. (Eds.). (2021). Pandemic legalities: Legal responses to COVID-19— Justice and social responsibility. Bristol University Press. Dobson, A. (Ed.). (1999). Fairness and futurity: Essays on environmental sustainability and social justice. Oxford University Press. Farber, D. A., & Peeters, M. (Eds.). (2016). Climate change law. Edward Elgar. Gardiner, S. M. (Ed.). (2021). The Oxford handbook of intergenerational ethics. Oxford University Press. Greaves, H. (2017). Population axiology. Philosophy. Compass, 12(11), e12442. González-Ricoy, I., & Gosseries, A. (Eds.). (2016). Institutions for future generations. Oxford University Press. Gosseries, A., & Meyer, L. H. (Eds.). (2009). Intergenerational justice. Oxford University Press. Jaria i Manzano, J., Chalifour, N., & Kotzé, L. J. (Ed.). (2016). Energy, governance and sustainability. Edward Elgar. Kanie, N., & Biermann, F. (Eds.). (2017). Governing through goals: Sustainable development goals as governance innovation. MIT Press. Kumar, R. (Ed.). (2018). Ethics and future generations. Routledge. Lackner, M., Sajjadi, B., & Chen, W. Y. (Eds.). (2022). Handbook of climate change mitigation and adaptation (3rd ed.). Springer. Linehan, J., & Lawrence, P. (Eds.). (2021). Giving future generations a voice: Normative frameworks, institutions and practice. Edward Elgar. Martin, P., Li, Z., Qin, T., Du Plessis, A., & Le Bouthillier, Y. (Eds.). (2012). Environmental governance and sustainability. Edward Elgar. Mauerhofer, V. (Ed.). (2021). The role of law in governing sustainability. Routledge. Parfit, D. (1984). Reasons and persons. Oxford University Press. Partridge, E. (Ed.). (1981). Responsibilities to future generations: Environmental ethics. Prometheus Books. Rawls, J. (1999). A theory of justice (Rev). Harvard University Press. Reins, L., & Verschuuren, J. (Eds.). (2022). Research handbook on climate change mitigation law (2nd ed.). Edward Elgar. Russel, D., & Kirsop-Taylor, N. (Eds.). (2022). Handbook on the governance of sustainable development. Edward Elgar. Sikora, R. I., & Barry, B. (Eds.). (1978). Obligations to future generations. Temple University Press. Smith, G. (2021). Can democracy safeguard the future? Polity. Tremmel, J. C. (Ed.). (2006). Handbook of intergenerational justice. Edward Elgar. Usami, M. (forthcoming). Intergenerational Justice. In M. Sellers and S. Kirste (Eds.), Encyclopedia of the philosophy of law and social philosophy. Dordrecht: Springer. Verschuuren, J. (Ed.). (2022). Research handbook on climate change adaptation law (2nd ed.). Edward Elgar.

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Wagenaar, H., & Prainsack, B. (2021). The pandemic within: Policy making for a better world. Policy Press. Yamin, F. (Ed.). (2005). Climate change and carbon markets: A handbook of emission reduction mechanisms. Earthscan.

Part I

Principles for Sustainability

Chapter 2

Role of Legislators in Creating and Sustaining Governance for a Sustainable Future Yukio Adachi

Abstract Legislators in democracies should be able and determined to show leadership in creating governance for a sustainable future (future-regarding governance). Governance is about steering society over extended time periods, not about policies. Future-regarding governance refers to the mode of governance in which policies for tackling pressing problems are made and implemented based on a prudential examination of their impacts, be they positive or negative, on long-term societal goals with utmost care about the well-being of future generations as an integral part. Its principal institutional agent is the legislature and its elected members, legislators. The first section illustrates the present state of governance in democracies in general and Japan in particular and characterizes it as “democratic myopia.” Advanced democracies today are beset by a set of complex long-term problems that can be effectively tackled only through well-organized future-regarding governance. Measures for decreasing short-sighted policies are examined in the second (need for fostering public-minded and future-regarding citizens) and the third sections (institutional arrangements for limiting or curtailing the power of the legislature to make short-sighted policies). The fourth section discusses the future-shaping will and capacities of legislators and the final (fifth) section discusses the normative consideration of the deliberation in the legislative assemblies. Keywords Future-regarding governance · Long-term problems · Democratic myopia · Democratic leadership · Legislative debaters

Y. Adachi (B) Kyoto University, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_2

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2.1 Democratic Myopia1 Notwithstanding the urgent need to adopt radical and far-reaching measures commensurate with the seriousness of various “long-term problems,”2 the majority of democracies in all continents have failed to do so. As vividly illustrated by Frank Fischer, “as scientists offer additional evidence that shows the accelerating pace of the crisis, coupled with growing criticisms of democracy’s failure to come to grips with these realities, more and more people are losing faith in the hope of avoiding tragedy” (Fischer, 2016: 2). In the same vein, also taking climate change as an example, Peter Burnell argues that “frustration at the apparent inability of elected leaders to rise to the challenge of making an appropriate response to climate change, if or when the consequences of delaying action raise high alarm, could dent confidence in the political system and weaken attachment to democracy” (Burnell, 2012: 820). Legislators as well as governments in democracies are normally well aware of the catastrophic consequences accruing from their failures to immediately take appropriate actions to effectively deal with long-term problems. Why, then, have they repeatedly failed to do so? The answer lies in the short-sighted nature of the political process of democracy, which makes it highly difficult or risky for them to endorse future-regarding policies that are deemed to be damaging to voters’ short-term interests. Political actors in democracies attempt to push forward the diversity of interests in the political process. Democracy as a political idea and as a system encourages, even demands, the organization and politicization of interests, resulting in an escalation of political maneuverings and more intense checks and balances among organizations. When organizations find themselves engaged not in a one-shot game but rather in an iterated game, they will eventually learn that, in the long run, their best interests are served by keeping their selfish demands reasonably in check. As a result, attempts at domination and flagrant abuses by privileged “subgovernments”3 will significantly 1

This section is partly based on Adachi (2014). Following Sprinz, I define “long-term policy problems” as “public policy issues that last at least one human generation, exhibit deep uncertainty exasperated by the depth of time, and engender public goods aspects both at the stage of problem generation as well as at the response stage” (Sprinz, 2009 :1). Examples are, to mention just a few, climate change, loss of biodiversity, microplastics, pandemics, deteriorated infrastructures, huge financial debt, unsustainable healthcare and pension systems, hollowing-out of industries and subsequent job loss, land devastation (rapidly increasing deserted croplands and forests going unkempt), decreasing birth-rate coupled with population aging, increasing nuclear wastes, refugee influx, terrorist attacks, and intensifying social polarization. 3 Subgovernment refers to a relatively closed and autonomous alliance of political actors operating in a particular specialized policy area, consisting of a relevant regulatory (executive) agency, its clientele groups, and legislators (mainly leading members of the legislative committee overseeing programs administered by the agency). Japan’s “nuclear village” will be probably its most notorious example for Japan politics watchers. This is the term “commonly used in Japan to refer to the institutional and individual pro-nuclear advocates who comprise the utilities, nuclear vendors, bureaucracy, Diet (Japan’s parliament), financial sector, media, and academia. This is a village without boundaries or residence cards, an imagined collective bound by solidarity over promoting nuclear energy” (Kingston, 2012). 2

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decrease. American political scientist Charles E. Lindblom terms this mechanism “partisan mutual adjustment” (Lindblom, 1965). Frankly, however, I cannot be so optimistic as to believe in the “intelligence of democracy.”4 It rather seems to me that, when more and more citizens become aware of and informed about political initiatives, and the more they participate actively in the political process—that is, the more democracy “matures”—the more legislators endowed with the formal authority to make decisions will come to fear accusations of being self-serving. They naturally hope to avoid to the best of their ability being labeled as a “politician in the pocket of special interests.” Of course, this in itself is not that problematic; the problem is in the tactics they resort to for balancing and resolving competing stakeholders. By far, the easiest way for them to accomplish this is to secure maximum returns for their client groups on whom they rely for financial backing and votes, on the one hand, and to give the “leftovers” to non-client groups, on the other, all while charming as many voters as possible with copious lip service. Legislators in democracies can hardly ignore the fact that support from their constituents—or rather, their popularity—is the ultimate basis for legitimizing their power. The vast majority of legislators will, then, regularly resort to exploiting this maneuvering whenever possible. However, a direct consequence of this is grossly inflated public expenditures. Their harm will not be overwhelming, as long as legislators cling to the overarching principle of making the main beneficiaries of policies (normally voters) pay the lion’s share of the cost, never shifting it to future others. When this principle should be reduced to the status of a false pledge, as is the case with Japan for well more than three decades, however, democracy unceremoniously lapses into “interest group liberalism” (Lowi, 1979) or “bargaining democracy” (Hayek, 1960), resulting in repeated myopic decision-making that may lead us down a path to self-destruction. Democracy, then, is not necessarily in agreement with the concept of a “sustainable future.” Given that “only present interests make themselves heard and felt, and enforce their consideration” (Jonas, 1984: 22) in democracies, we have good reason to be skeptical about the compatibility of the politics of democracy with the futureregarding ethics of responsibility to future generations. In democracies, the loudest tend to profit and those who do not fight for their rights or, as is the case with future generations and fetuses, who have no means to fight, are prone to be mistreated. Wild animals, natural landscapes, cultural heritages, and historic landmarks are in a similar “adversity.” The short-sighted legislators will undoubtedly support policies deemed to enhance their and their supporters’ welfare—richer, safer, and more comfortable life for them—at a cost to such vulnerable “entities.” Such a pessimistic perspective is clearly reflected in the Report of the World Commission on Environment and Development: Our Common Future submitted to the General Assembly of the United Nations on December 11, 1987. The report conveyed the message that the democratic character of our political system is the main cause of the neglect of future generations. “We act as we do because we can 4

The Intelligence of Democracy is the title of Lindblom’s (1965) book, in which he proposed and defended the concept of “partisan mutual adjustment.”.

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get away with it. Future generations do not vote; they have no political or financial power; they cannot challenge our decision” (WCED, 1987: 8). Even with such apparent defects in democracy, it does not follow that undemocratic, authoritarian systems should take the place of democratic political systems; it makes no sense to construct a frame that tries to make across-the-board comparisons between democratic political systems and authoritarian political regimes, at least in advanced liberal democracies. What we should question is not which of the two conflicting political systems should be adopted but rather how we can monitor and correct democratic myopia.

2.2 Public-Oriented and Future-Regarding Citizens 2.2.1 Participation as a Civic Virtue In democracies, the preferences of the citizenry ultimately determine the direction in which society should move. A great majority of citizens have normally, except when there is a sudden and unexpected incident inducing them to do otherwise, taken on an extremely myopic mentality in their role as voters. As long as voters continue to prioritize their short-term private interests over the long-term public interests, even over their own long-term interests, politicians may find it too risky to opt for a futureregarding policy-package; they understandably tend to hesitate to take the initiative to introduce future-regarding policies because of fear of a voter backlash, even when they fully acknowledge the urgent need to do so. Given that there is probably no stronger incentive than pressing (short-term) selfinterests, it is no simple matter to change people’s preferences in the direction of long-termism and public-mindedness. Even admitting that only one act or incident may have a great impact on people’s preferences, leading to a dramatic change in public opinion,5 this is rarely the case. Therefore, prudence requires policymakers to always bear in mind that, for the time being, people’s current sense of self-interest is rather resistant to change; thus, utmost care must be taken in designing institutions

5

Privatization of the postal service had not been the top issue in Japan until 2005. According to the census conducted in January 2005, voters’ top issue was pension/welfare system reforms, postal privatization being only eighth in the ranking. As soon as Jun-ichiro Koizumi was elected as leader of the leading party, Liberal Democratic Party (LDP), and became Prime Minister, the cabinet led by him proposed the postal privatization bills. The bills were rejected by the House of Councilors in August 2005, not only members of parliament (MPs) from opposition parties but also a substantial number of MPs from the leading LDP said “NO” to these bills. Koizumi then unexpectedly dissolved the House of Representatives and called for a general election, focusing entirely on the postal privatization. He subsequently won a landslide victory by a far greater margin than expected, which testifies to the fact that public opinion can change so drastically in only a few weeks.

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and policies that require them to ensure that people’s acting in accordance with their own sense of self-interest will bring about the desired social outcomes.6 Such design strategy—making “public use of private interests” (Schulze, 1977)— however is not free from flaws. Calculating the level of people’s self-centeredness to assume when designing a policy or institution is by no means a simple task. Even when applying the familiar policy measures of taxation and subsidy, if policymakers miscalculate the degree of people’s self-centeredness, the aims of the policy will not be realized. Either it fails to induce a sufficient number of policy targets to react in the way policymakers expect, or it would end up sweetening the pot too much, thereby leading in the long run to the aggrandizing of the people’s egoistic mentality and their state-dependence mentality. People’s political and economic preferences are not fixed; they can be changed, though often with considerable difficulty. Everywhere in the world, there are many citizens who may not, or may not be able to, carefully examine and reflect on the consequences of their political actions and non-actions from a broader and long-term perspective. Under a democratic political system, only through active participation in the policy process of democracy, especially at the local level, will they be able to reevaluate their sense of self-interest, making it a more enlightened one, and act like “citizens” in the proper sense of the word. The top priority, then, should be given to fully exploring the possibility of making democracy more substantive and engaging, if decreasing short-sighted policies is our ultimate goal. Specifically, attempts need to be made to remove, to the greatest extent possible, factors that may inhibit the proper functioning of the mechanism of partisan mutual adjustment. Enhanced participation of the citizenry in the political process of democracy is an essential prerequisite for the proper functioning of partisan mutual adjustment. To the extent that citizens do not actively participate in a series of policy processes consisting of policy analysis, deliberation, decisionmaking, implementation, and evaluation, their true nature will remain unknown to them, making it impossible for them to have any impact on these processes. Only through active participation in the political processes of democracy can we acquire the knowledge, abilities, skills, and virtues to change the existing state of affairs in politics, economy, and society for the better, in accordance with democratic rules and procedures. Neither will we be able to critically reflect on, and accordingly transform, our preferences. Participation in the political process of democracy itself, however, will not necessarily lead to the adoption and implementation of far-sighted policies. This is why every opportunity to “launder” the political preferences of the constituents, and accordingly change them to more public-minded and future-regarding ones, should be pursued. When the preferences of the citizenry become the embodiment of an ethics of responsibility to future generations, legislators as well as bureaucrats, business communities, laborers, and journalists will accordingly become more favorable—at least not that hostile—to future-regarding causes. As a result, the possibility

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Such is the basic philosophy underlying “nudge theory” and its application to public policy designs.

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to achieve future-regarding governance will increase. Conversely, as long as comparatively rich people living in Organization for Economic Cooperation and Development (OECD) member countries as well as in authoritarian regimes continue to hang onto their current lifestyle and preferences, long-term problems of various sorts, be they globally shared or nation-specific, are more likely to remain unresolved. Knowing about something is different from taking action about it. A great majority of citizens living in advanced liberal democracies do know, at least in theory, that we should take the well-being of future generations more seriously, and this knowledge is a prerequisite for achieving future-regarding governance. Yet, we find it extremely difficult, if not impossible, in reality, to make sacrifices for future others, of whom we know virtually nothing—their identities, preferences, values, and even their existence. When there is deep uncertainty regarding the future consequences of a collective action we take to deal with a pressing or mid-term problem, we are naturally more likely to give more weight to current benefits and losses in comparison with those materializing in the distant future. As long as we perceive the harsh “destiny” future others are forced to abide by only in abstract terms, we will not be willing to make sacrifices for future others. How can we translate the ethical/political principle of responsibility to future generations into a viable ethic that amounts to more than mere words? What measures are needed to enhance our willingness to make sacrifices to ensure the well-being of future generations, who are the ultimate others for us contemporaries? First, our willingness to make sacrifices for future others will be enhanced, when we become fully aware of formidable power that we contemporaries hold in our hands over the life and death of future others. It is no exaggeration to say that the well-being of future others rests solely on our good faith toward them. No matter how they may suffer at our hands, they have no means, other than in a rhetorical sense, by which to raise an outcry against us. We contemporaries and they future generations are in an extremely unfair relationship. Herein lies the ultimate rationale for the ethics our responsibility to future generations. Second, our willingness to make sacrifices for future others will be enhanced, when we fully understand and vividly imagine the catastrophic long-term consequences of our inappropriate actions and non-actions. Repeatedly failing to face an “inconvenient truth” (Gore, 2006) and to make effective and efficient policy interventions for tackling the climate crisis, for example, will make our descendants’ lives awfully harsh. Becoming able to vividly imagine how harsh it will be may probably motivate us contemporaries to acquiesce, albeit reluctantly, to make sacrifices for future others. Third, our willingness to make sacrifices for future others will be enhanced, when we learn through direct experience that we can change the world for the better—that is, being “more future-regarding” with regard to the primary theme of this book— by, for example, voting for future-regarding politicians or participating in a political rally aiming at the adoption and implementation of a draconian policy-package for tackling climate crisis.

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2.2.2 Cognitive Biases The above-mentioned three related capacities—capacity to fully acknowledge the tremendous power we hold in our hands over the life and death of future others, capacity to adequately estimate and face inconvenient, even catastrophic, long-term consequences of our inappropriate actions and non-actions, and capacity to “weave a sustainable future” (Dror, 2001)—however can be and are hampered to a great extent, by the constraints of “bounded rationality” (Simon, 1997) and” “cognitive biases” (Kahneman, 2011). Most of us normally behave as cognitive misers, seeking to economize on the mental effort we need to exert by simplifying the choices we face. We tend to satisfice rather than optimize. In the words of Jonathan Boston, Various deeply rooted traits or characteristics, whether learned or hard-wired via evolutionary processes, affect individuals’ cognition, motivations, reasoning, problem-solving and judgement. They affect how people make decisions and behave in all their myriad roles, whether as citizens, voters, workers, partners, parents, advisers, or policymakers. Moreover, they do so in ways that generate observable patterns, including systematic errors or cognitive biases. (Boston, 2017: 73)

It follows that, no matter how much evidence-based information is given regarding long-term problems, we would not necessarily take the information at its face value. On the contrary, we often pay little attention to, even ignore, information that is critical for the human-like life of future generations as well as of ourselves, mainly due to cognitive biases distorting our judgments and behaviors. We see what we want to see, and hear what we want to hear. Inconvenient truths we do not want to acknowledge go in one ear and out the other. Nothing stays in the mind. Major cognitive biases deemed to hamper or delay the development of reasoned or evidence-based judgments and actions regarding long-term problems are listed below. a. Blindspot bias: A mindset in which we tend to consistently overlook something that is presently happening either intentionally or, more likely, unconsciously, and distort reality. b. Confirmation bias: An emotional bias to embrace information that confirms the view we have formed while ignoring or rejecting information that casts doubt on it, thereby preventing us from perceiving circumstances objectively. c. Endowment bias: An emotional bias to place higher value on an object that we already have (or an object we are asked to give up) than on a similar or even a little better object that we might be able to obtain. d. Framing bias: A cognitive bias in which the same facts framed or presented by influential political actors in two different ways, either with positive connotations or with negative connotations, can lead citizens to make different judgments or decisions. e. Loss aversion: A mindset in which we feel that the pain of losing something is greater than the pleasure that we feel by gaining something equivalent. (This bias partly overlaps with endowment bias.) f. Negativity bias: A mindset in which negative events and experiences not only imprint more quickly, but also linger longer than positive ones, often leading to

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an irrational choice not to take necessary and appropriate actions out of fear of failure. Normalcy bias: A tendency to underestimate both the possibility of a disaster occurring and its possible effects, often resulting in the failure to adequately prepare for a disaster. Optimism bias: A cognitive bias that causes us to overestimate the probability of positive events and underestimate the probability of negative events, leading us to irrationally believe that we are less likely to experience negative events. Pessimism bias: A cognitive predisposition to overestimate the probabilities and harmful effects of negative future events; it often works as a defense mechanism against disappointment. Status quo bias: An emotional predisposition to prefer the current state of affairs (status quo) to stay the same, reflected in doing nothing or sticking with a decision made previously, even when the costs involved in changing the status quo or reviewing the previous decisions are negligibly small.

2.2.3 Mini-Publics How can we correctly perceive and overcome cognitive biases preventing us from developing into public-minded and future-regarding citizens? Participation in the political process of democracy is an answer. Major measures for encouraging substantial participation are: (i) the institutionalization of quality citizenship education like the one introduced by UK government led by Tony Blair in 2002 based on the final report of the Advisory Group on Citizenship chaired by political scientist Bernard Crick, Education for Citizenship and the Teaching of Democracy in Schools, submitted on September 12, 1998 (Advisory Group on Citizenship, 1998); (ii) joining in civic groups (organizations) for future-regarding causes such as climate justice and the protection of biodiversity; and (iii) providing opportunities for intensive deliberation in randomly selected mini-publics. Democratic deliberation can be understood as an intersubjective process of argumentation and persuasion among a diverse group of citizens or their representatives. Previous empirical literature based on experiments designed and conducted by governmental bodies as well as independent researchers (Himmelroos et al., 2020; Kulha et al., 2021; Luskin et al., 2002; Mackenzie, 2016, 2021; Setälä et al., 2010, 2018) clearly shows that participation in democratic deliberation focusing on longterm problems can help increase citizens’ sense of intergenerational fairness. More specifically, participation in a well-designed mini-public, where diverse citizens are selected randomly to deliberate cooperatively about a specific issue of public concern with relevant expert advice, will help imagine and consider the impacts of public policies on future others, thereby increasing participants’ willingness to make sacrifices for future generations. A deliberative process in mini-publics entails learning and understanding relevant information, especially on the causal effects of different

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policy choices. This should help deliberators consider the possible positive and/or negative consequences that public policies might have in the future. Even granting that citizens’ participation in democratic deliberation in general and well-designed mini-publics, in particular, can help increase participants’ sense of intergenerational fairness, deliberation is a relatively rare form of communication, and it is difficult to achieve and sustain over time. As vividly illustrated by devoted advocates of mini-publics Katariina Kulha and her colleagues, “each moment of a deliberative encounter raises significant obstacles in the path to stimulating greater intentional reflection on public issues” (Kulha et al., 2021).

2.3 Future-Regarding Institutions7 We cannot emphasize too much the vital need to make democracy more substantive and engaging by encouraging citizens’ participation in the political process of democracy in general and randomly selected mini-publics in specific coupled with the institutionalization of quality citizenship education. This, however, is not enough to forge future-regarding democratic governance. Further, lest democracy should degenerate into the sheer tyranny of a myopic majority, (i) the institutional design (and redesign) to discourage short-sighted policymaking by legislators (2.3), (ii) publicminded and far-sighted leadership (2.4), and (iii) quality legislative deliberation (2.5) are required. In addition to various measures other than the one discussed in 2.2 to make democracy more substantive and engaging,8 the idea of introducing several self-restraint mechanisms built into democracy itself is also required. There are many things in the world that are of tremendous value—that is, too valuable to be easily overridden or suspended by a simple majority rule, the most vital of which are, to mention just a few, rule of law, constitutionalism, respect for fundamental human rights, independent courts, and independent career civil servants. Furthermore, there is a diversity of institutional mechanisms aimed at monitoring and checking democratic myopia, thereby protecting the long-term interests of society as a whole in general and the well-being of future generations in particular.

7

This section is partly based on Adachi (2019). Of special importance in this regard are enhancing transparency in policy-making and implementation processes, information disclosure, accountability, decentralization of authority based on the subsidiary principle, and reducing situations where economic disparity leads to disparity in political power.

8

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2.3.1 Constitutional Protection of Future Generations Many nations and subnational states and provinces have incorporated explicit protection for future generations in their constitutions. In addition, many constitutions with implicit references to future generations place the responsibility on the relevant government to preserve cultural heritage and/or the natural environment. According to Glazebrook (2011), over 100 constitutions had recognized the protection of the environment as a goal by 2007, with most of these charging the government with preventing environmental harm. Most of the explicit references to future generations, however, are made only in preambles of constitutions and are normally non-binding. The same is true of constitutions with substantive provisions regarding future generations, such as those of Bolivia, Cuba, Ecuador, France, Germany, Poland, South Africa, Sweden, and Japan. We have no robust data testifying to the substantial change either in governmental policies or in judicial decisions due to the establishment of such constitutional provisions. Realistically speaking, the introduction of constitutional provisions designed to embed various future-oriented principles and values does not necessarily guarantee that legislators in democracies will place much weight on such considerations (Tremmel, 2006). Given that relevant provisions are normally too vague to provide sufficient guidance for judges in cases brought before the courts, and that there are other provisions in the constitution that sanction competing interests or rights, judges are naturally reluctant to commit themselves to an activist stance, “believing that the task of balancing conflicting intertemporal interests is best left to the democratic process” (Boston, 2017: 210).

2.3.2 Bicameral System A proposal has been made by several thoughtful observers of the performance of democratic institutions, such as Hayek (1960), Stein (1998), Dror (2001, 2014, 2017), and Tonn and Hogan (2006), to establish a high-quality and therefore non-representative second chamber. This would be endowed with significant but secondary power to monitor and check, from a broader and long-term perspective, the decisions made by the first chamber and implemented either directly by governmental agencies or indirectly by non-governmental or non-profit organizations to solve pressing—or, mid-term at the longest—problems. This second chamber would vet decisions to ensure that they do not cause irreversible damages to the long-term interests of society as a whole, with the well-being of future generations as an integral aspect. Such a proposal deserves much more serious consideration.9 9

Although the Japanese House of Councilors was initially founded based on such an institutional design philosophy, and did play the role institutionally expected of it—that is, to monitor and check the deliberations and decisions made in the lower chamber (House of Representatives), it has

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2.3.3 Transferring Part of Authority of Sovereign States to Relevant Local, Regional, or Global Bodies Low and Gleeson (1998) proposed the establishment of the International Court of the Environment vested with the authority to review national legislatures’ decisions. Judging from an extremely tough negotiation, for example, in the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP), this proposal, though very attractive, is most unlikely to be realized, at least in the foreseeable future. In contrast, at the regional level, we undoubtedly have a greater chance of reaching an agreement to establish a supranational entity or a regional leviathan. The enforcement of a substantial and diverse range of environmental regulations by the European Union aimed at improving environmental quality for present and future European citizens does attest to this possibility.

2.3.4 Parliamentary Commission for Future Generations When the delegates from Malta first proposed the creation of a “Guardian for Future Generations” at the United Nations Conference on Environment and Development in 1992, the international community’s response was rather lukewarm. This idea failed to secure political commitment and consensus. However, it did spark many ideas about how the interests or rights of future generations might be protected. In Hungary, Canada, New Zealand, and Israel, governments established ministerial portfolios or parliamentary commissioners for future generations. In Finland, a Committee for the future was put in place. All have the aim of bringing a long-term perspective into the short-term political cycle. However, given that several parliamentary commissions that were created for this purpose do not appear to be in full operation in reality, utmost care must be taken lest we overestimate its effectiveness in protecting the well-being of future generations. There is much to learn from the miserable failure of the Knesset (Israeli Parliament) Commission for Future Generations, which was established in 2001 and lasted for only one term of office until 2006. The Commission had a specific focus on the practices of the Knesset. It was empowered to examine any parliamentary bill and secondary legislation where it judged potential harm on future generations and to express opinions during legislative committee deliberations or as an attachment…While the Commission had extensive rights to information and participation in the workings of the Knesset, perhaps the most significant power it possessed was of delay. (Foundation for Democracy and Sustainable Development, 2017)

gradually but steadily become unable to fulfill its original mission partly as a result of a series of electoral system reforms since 1982. The reality of its performance is now far behind its founding ideal.

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The Commission, however, was abolished due to the cost of its operations and MPs’ feelings that the Commission received too much authority to interfere in their work (Teschner, 2013).

2.3.5 Independent Executive Agency for Future Generations Creating a relatively independent executive office commissioned to review all regulations that may have a significant impact on future generations is also an attractive idea. According to American constitutional scholar Bradford Mank, neither Congress nor the Executive Office of the President is well suited to protect future generations because each is primarily interested in representing today’s voters. We cannot expect of the courts to be functioning as a guardian for future generations either, although they are institutionally expected to serve and have traditionally taken pride in serving a counter-majoritarian function in the United States. This is even more true with other ministerial departments and agencies. They generally focus on short-term problems because of statutory deadlines and a lack of adequate resources to address long-term problems and are not guaranteed enough independence from either Congress or the Executive Office of the President (Mank, 1996: 453–472). In sharp contrast with these ministerial departments and agencies, “the Superagency is expected to help future generations simply by putting their concerns high on the regulatory agenda” (Mank, 1996: 447). Although it might occasionally use its paternalistic discretion to act in a counter-majoritarian way, “it would primarily try to promote democratic deliberation and participation regarding issues involving future generations” (Mank, 1996: 447). However, as long as the Superagency is after all one of the governmental agencies, it remains doubtful if and to what extent its alleged autonomy—that is, independence from the Executive Office of the President in the United States—can be substantiated. It is often the case with governmental departments and agencies that their alleged autonomy degenerates into a nominal one. To take an example, considerable efforts have been made in Japan since the early 1990s to effect administrative reforms that can strengthen the authority of the Prime Minister’s Office, mainly through attempts to reduce bureaucrats’ power. These attempts resulted in the inauguration of a system of senior vice-ministers and vice-ministers (parliamentary secretaries) in 2001, and the legislation of the Basic Act on Reform of National Public Service in June 2008. The main aim of the Act was a fully understandable one; to provide for the government-wide management of senior-level public servants by the Cabinet thereby correcting “sectionalism” (too strong an autonomy) among ministerial units and furthering the cross-ministerial and cross-departmental collaboration to tackle vexing problems facing the government. The enforcement of the Act, however, is accompanied by serious side effects. Senior-level bureaucrats, in general, have been induced, if not forced, to somehow read the unexpressed intention or political preferences of the Prime Minister and the Chief Cabinet Secretary, who now have the legal/institutional authority to intervene in the operations of senior public service

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personnel, and act accordingly, thereby making the alleged autonomy of governmental departments and agencies nothing more than a purely nominal one (Adachi, 2017b).

2.3.6 Reserved Seats in the Legislature for Representatives of Future Generations The idea of reserving a certain number of seats in the legislative assembly for representatives of future generations was first proposed, as far as I know, by a devoted deepecologist Andrew Dobson (1996). It has been endorsed and sophisticated since then by several political theorists and activists, of whom the most influential is Norwegian political philosopher Kristian Skagen Ekeli. He argues, According to the extended franchise model that I will propose, some seats in the legislative assembly (for instance 5%) should be reserved for future generation representatives (hereafter F-representatives). The F-representatives should be assigned lawmaking competence, and they should be democratically elected in much the same way as present generation representatives (hereafter P-representatives). This means that all citizens who have the right to vote would have two votes each. In this way, the electorate would have the opportunity to vote on two sets of representatives. During election campaigns, the future generations candidates could present the ends and means they will advocate in the legislative assembly so that the electorate would have the opportunity to consider their political programs. (Ekeli, 2005: 434)

2.4 Public-Minded and Future-Regarding Leadership10 Fostering public-minded and future-regarding citizens (2.2) and the institutional design (and redesign) to discourage short-sighted policymaking by legislators (2.3) discussed in the preceding two sections will significantly decrease democratic myopia, thereby enhancing the potential for future-regarding governance. This potential, however, will become a reality only when they are endorsed, strongly backed up, and complemented by the robust will and capacities of the legislators to take appropriate actions to tackle long-term problems, which constitute the core of futureregarding democratic leadership. Legislators are the principal agents for forging and managing future-regarding governance. Constraining legislators’ myopic behaviors is not enough. Leadership matters!

10

This section is partly based on Adachi (2015, 2021).

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2.4.1 The Will of Legislators to Adequately Deal with Long-Term Problems What does it mean for political actors in general and legislators, in particular, to have a strong will to do something? What requirements are they to meet in order to justifiably claim that they do have this will? Leading legislators, specifically those in the second chamber, who are morally and institutionally expected to undertake the higher-order tasks of governance in addition to the ordinary tasks, must be, first, ready and able to closely examine whether government actions taken to deal with pressing (short-term) or mid-term problems are in line with the nation’s long-term goals, and to ensure that each of the government’s actions helps to bring a better future. Given that long-term societal goals can be achieved only through a continuous effort to flexibly and appropriately deal with each problem at a given time, policy modifications need to be made promptly whenever necessary. The political and economic systems and procedures of democracies, however, are generally designed only to deal with short-term or, at best, mid-term policy issues. They are not well suited to the development, formulation, and execution of long-term societal goals. Even when organizations are established to address long-term goals—be they governmental agencies, parliamentary committees, councils, think tanks, or whatever else—they rarely serve the functions institutionally expected of them. Neither are they attentively listened to by elected and non-elected government officials, even when their counsels are worthy of serious consideration. This is why the determined resolution on the part of legislators to challenge long-term problems, thus forging and managing future-regarding governance, with support from conscientious and highly talented policy advisers, becomes all the more important. Second, future-regarding legislators should have the perseverance (relentlessness) to engage in future-weaving activities and to be ready and willing to act as guardians of the long-term interests and values of the society as a whole. Short-termism is inappropriate. Perseverance is an indispensable component of the strong will to do anything of long-lasting importance. Third, future-regarding legislators are urged to have an unshakable belief that the task to effectively tackle long-term problems should not be totally entrusted either to the market mechanism or to the consensus (compromise)-building mechanism of democracy, but that it primarily rests with them, and to act accordingly. This, however, never implies that they do not have to care much about either the market mechanism or democratic consensus-building. On the contrary, legislators are strongly advised to make the most use of the market mechanism, and to encourage the citizenry to actively participate in the political process of democracy, to the best of their ability. Fourth, future-regarding legislators should be determined and ready to take the initiative in persuading a wide range of political actors, including politicians and highranking bureaucrats, to support government actions to effectively tackle long-term problems. It is quite understandable that ordinary politicians in democracies, who find the ultimate basis for the legitimacy of power in the wide support of electorates,

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tend to favor incrementalism as a guide to policymaking. They naturally hesitate to take the initiative in steering society by their own initiative and take responsibility for the outcome of their choice; they are normally concerned only with searching for the least risky options for their career. Only senior legislators with a stable and strong support base may not hesitate to take the initiative in radically changing the direction of society into a more future-regarding one, thereby protecting the wellbeing of future generations. Rank and file politicians, however, should be encouraged to sincerely engage in deliberations (and debates) with far-sighted fellow legislators. Fifth, future-regarding legislators should be determined and ready to invest a sufficient mass of critical resources and efforts to influence the future in the desired direction. For example, limiting a global temperature rise this century below 1.5 degrees Celsius above pre-industrial levels to prevent the worst-case scenario for future generations from arising requires us contemporaries to continue to invest extensive resources and efforts into the cause. Unless legislators as governance leaders and managers are determined to do so and somehow successfully persuade citizens that each person should pay his/her fair share of the policy cost, they cannot justifiably claim that they have the will to weave a sustainable future.

2.4.2 Capacities to Appropriately Tackle Long-Term Problems 2.4.2.1

Capacity for More Informed and Evidence-Based Cost-Effectiveness Analysis

For legislators (and bureaucrats) to be able to invest a critical mass of resources—be they human, physical, financial, or natural (ecological)—sufficient to appropriately perform higher-order tasks of governance such as “influencing the future, intervening in history, and setting trajectories into time” (Dror, 2001: 64), they cannot waste resources in performing ordinary tasks of governance such as “satisfying the needs and wishes of citizens, a service delivery, maintaining public order, and making transfer payments” (Dror, 2001: 63). The total amount of resources available to any nation at any given time is strictly limited, which should lead legislators and bureaucrats to search for possibly the most cost-effective option for dealing with problems in each policy field, thereby minimizing the total cost for performing the ordinary tasks of governance. Few things can be obtained for free in this world. To gain possession of something precious, one needs to be ready to sacrifice other things that are no less precious to them, be they money, time, amenities, amusements, or whatever else. A policy is no exception. Several things can be gained from implementing a policy, but a great number of things are also lost in return. Resources required for a specific policy are not easily transferable to another policy issue. Governments generally operate under severe resource constraints and normally must compete with the private sector, including not only businesses but also non-profit organizations,

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for resources. Excessive resource consumption by the former can interfere with the activities of the latter, causing negative impacts on the economy in the long run.11 Of course, accurately predicting the cost and benefit (effectiveness) of a policy is extremely difficult even for the most accomplished analysts with the latest information and analytical tools. Predictions, therefore, need to be made with maximum caution to minimize errors, especially if there is a high probability of a policy causing serious and long-lasting impacts on people’s lives. Fatal prediction errors must be avoided at all costs. It is, at times, necessary to anticipate the worst-case scenario, in which the benefits (positive effects) remain minimal and the costs (a sum of policy expenses and negative effects) reach the maximum of what was predicted. In many democracies including Japan, however, many policies have been formulated, adopted, and implemented based on an optimistic prediction that estimates benefits as higher and costs as lower, resulting in enormous social damage. Legislators and bureaucrats should avoid such fatal prediction errors to the best of their ability, with the support of conscientious and highly talented policy analysts/advisers.

2.4.2.2

Capacity to Adapt to Changes in the Policy Environment and Newly Discovered Facts

If the policy environment has changed significantly, or new facts have been found or scientific discoveries made, prompt and appropriate actions should be taken accordingly. However, both legislators and bureaucrats in democracies tend to be resistant to reviewing, let alone discontinuing, the policies they themselves initiated and/or endorsed. As a result, existing policies often take on a life of their own in the name of commitment to legal continuity or consistency. To make things worse, ministers’ requests for a mid-course adjustment or cancelation of policies can often be sabotaged by bureaucrats, when they have a substantial number of legislators resisting policy changes proposed by ministers (Curtice, 2002: 3–5). Moreover, regulatory agencies are often “captured” by the very organizations they are supposed to be regulating (Stigler, 1971). In such cases, legislators, who are institutionally expected to supervise and monitor both the executive branch and bureaucrats, should take the initiative to make adequate policy changes. In reality, however, legislators rather tend to be reluctant to do so arguably for fear of forfeiting sunk cost, which should be ignored when deciding whether a project or program should be continued or discontinued. Psychological resistance to publicly admitting their original mistake of having approved the policy remains a guiding force.

11

Given that politicians, policy researchers trained mainly in political science and public administration, and policy practitioners and activists serving in a particular specialized policy area tend to be committed to, unlike economists, the maximum realization of a specific public value at any cost, we cannot emphasize too much the vital importance of the concept of “opportunity cost” in governance studies. Governance researchers are strongly recommended to carefully read Roads (1985) and Boardman AE et al. (2018).

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Capacity for Systemic Thinking

Any issue in a specific policy field to be dealt with by public policy is closely and intricately linked to other issues in the same or different policy fields through issue linkages or networks. Thus, challenging any public issue, regardless of its subject matter, requires systemic analytical skills. No policymaker lacking such skills should be expected to design a truly appropriate policy alternative. The essence of systemic policy thinking is in analyzing and predicting the consequences of implementing a policy from a systemic or holistic perspective. When implementing a certain policy in a certain field to achieve a certain objective, its positive and negative impacts will reach various fields. Serious impacts can take complex paths and unexpectedly reveal themselves where least expected. The quality of policy proposals is heavily dependent upon how thoroughly legislators and their policy advisors are able to predict the various types of consequences that the implementation of the policy-package in question may bring to various stakeholders. Of special importance in this regard is to take effective measures in advance to mitigate, to the greatest extent possible, the seriousness of negative impacts likely to be incurred by various stakeholders. However, it is often the case that some stakeholders will still be forced to bear high costs—even a deterioration in their standard of living—especially when the government and a majority of legislators are determined to introduce drastic policy changes. In such a case, they must endeavor to persuade these people to accept or at least acquiesce to paying the cost for the longterm interests of society as a whole and the well-being of succeeding generations. Whether and to what extent they succeed in this enterprise largely depends on the extent to which they are trusted by the people.

2.4.2.4

Preeminent Capacity to Argue and Persuade

Achieving long-term goals is an extension of dealing with short- and mid-term problems. Policy design to achieve long-term societal goals, therefore, is destined to fall under the same constraints as the task of designing a policy-package for tackling the pressing problems at hand. Contemporary advanced democracies in general and Japan in specific are characterized by three related features: policies as the product of democratic politics, rivalry of values often leading to a “tragic choice,”12 and complexities. We must take on board these features as preconditions or constraints when attempting to achieve long-term goals. If public issues are “wicked” (ill-structured) in nature, as persuasively argued by Rittel and Weber (1973) in their seminal article on policy design, we cannot expect answers (appropriate policies) to be forthcoming directly from science. The domain of science is the analysis of events in all their forms; science breaks down complex events into elementary parts, subjects each element to precise analysis and, in so 12

“Tragic Choices” is the title of an epoch-making book written by Guido Calabresi and Philip Bobbitt in 1978.

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doing, forms a recognition and understanding of the event as a whole. What it does not do is formulate a prescription for solving the wicked-type problems at hand. Conflicts in values and interests coupled with complexities vexing contemporary democracies can only be tamed or handled through democratic discussions and debates in the public forum in general and deliberation in legislative assemblies in particular. Even when “wise” governance leaders and their expert advisers firmly believe that they have found the right answer to a problem at hand, they are not allowed in democracies to resort to force or threats in order to win support or acquiescence from the citizenry.

2.5 The Vital Need to Enhance the Quality of Deliberation in the Legislature 2.5.1 Legislative Leadership Programs No policy idea or strategy, however desirable in terms of the long-term interests of society as a whole, is materialized and put into practice, unless and until it is authorized (provided a legal basis) by legislators through the legitimate process of legislative deliberation; hence, the vital need to foster and increase the number of future-regarding legislators endowed with the robust will and a high level of capacities delineated in the previous section. It is a sine qua non for creating and sustaining resilient governance for a sustainable future. There are two complementary approaches or action plans for fostering and increasing the number of legislators determined to devote themselves to futureregarding causes: first, encouraging (or, obliging if necessary) legislators—especially first-term legislators—and the next generation of legislators to attend to legislative leadership programs, and second, drastically improving the quality of deliberation in the legislature. Although there are many university-based or thinktank-based leadership programs in Japan, most of them focus on the instruction of knowledge, skills, and ethics either for business administration or for public administration. We have neither wellorganized legislative leadership programs nor public leadership programs with the training and retraining of legislators as well as would-be legislators as an integral part, that are on a par with, to mention just a few, Michigan State University’s Legislative Leadership Program, various legislative programs provided by the Asian Pacific American Institute for Congressional Studies), Leadership Programs run by The State Leadership Foundation, Public Leadership Program of Harvard Kennedy School, and intensive training programs provided by the Institute National Du Service Public. To be precise, we have two marginal legislative leadership programs: the JapanUS Leadership Program (JUSLP), and the Matsushita Institute of Government and Management’s graduate-level leadership program. The JUSLP, supported by the Japanese Ministry of Foreign Affairs and the US Embassy, was created in 2020,

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providing an intensive one-week executive education program on a full scholarship that includes seminars at The George Washington University’s Elliot School of International Affairs, and other meetings in Washington, Grand Rapids, and Michigan that allow participants to exchange views with US politicians and policymakers, academic experts, business executives, and community leaders. According to the “Mission and Purpose” stated on the JUSLP Official Homepage, the Program aims to foster a continuing dialogue among future leaders in a broad variety of professions. It starts this process by bringing some 20 young leaders together from each country for two intensive week-long conferences over two years, with discussions revolving around historical and current issues in bilateral relations, as well as issues reaching beyond the two countries. Through serious conversation as well as recreation and shared cultural activities it seeks to nurture lifelong friendships.

Given that JSULP’s primary mission is exclusively to prepare the next generation of Japanese leaders to serve as bridges between the two countries, it is not appropriate to classify the Program into the category of a “legislative leadership program.” The latter was established as a public interest incorporated foundation in 1979 by Konosuke Matsushita, the founder of Matsushita Corporation (now Panasonic Corporation), with the aim to develop future leaders in politics, business, social entrepreneurship, education, and academia. Judging from the description of the Institute’s mission statement: Even if such a noble philosophy for the nation that focuses on true prosperity for the people, prosperity that is both material and spiritual were articulated, it would come to nothing in the absence of leaders, especially in government and politics, with the vision and the will to implement such high ideals, and the fact that a substantial number of the Institute’s graduates (approximately 43% as of May 2010) have chosen to enter politics, establishing, or endeavoring to establish, themselves as members of national or local assemblies, the Institute could be arguably regarded as having provided influential public leadership programs with the legislative leadership as an integral part.

However, even granting that, I still wonder if it is appropriate to regard the Institute’s two-year (or four-year) program of training and research as a legislative leadership program comparable to seemingly similar programs being run in other advanced democracies. There are four related reasons. First, documents released by the Institute do not—or, dare not—refer to the need to foster argumentative capacities (argumentbuilding, persuasion, deliberation, and debate), which is normally taken as one of the essential goals of legislative leadership education. Second, although the Institute’s documents appear to acknowledge the need for an “international perspective,” a “broad international viewpoint,” and “peace, happiness, and prosperity, not only for Japan but for each and every country of the world,” much more space is spared for traditional Japanese virtues and lifestyles such as “deep love of our country,” “a deep sense of responsibility,” “heightened intuition and insight,” and “a healthy body capable of initiating and sustaining unremitting effort.” Third, a great majority of the Institute’s graduates that entered politics have established their careers in the leading Liberal Democratic Party, which has been notorious for its presentism tendency (short-sighted orientation). Fourth, the Institute has no full-time professors, even instructors; its curriculum is not well-organized, either.

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Whether to accord the title “legislative leadership program,” which I believe is required in being public-minded and future-regarding, to each of the self-styled public leadership programs or not depends on how we define this title; its reasonable definition can be reached only through in-depth comparative analysis. A cross-states comparative study of legislative leadership programs, even a comparative study of the programs provided by different institutions in a state, however, is still in its early stage of development. Let me, then, move to the second problem concerning how to improve the quality of legislative deliberation, reserving detailed comparative analysis of legislative leadership programs for another occasion.

2.5.2 Quality of Legislative Deliberation Examining critically short-sighted or myopic tendencies vexing contemporary democracies never implies that democracy as a political ideal as well as a political system should be replaced either by authoritarianism or technocracy. Worth emphasizing here is that the concept of democracy has not always been conceptualized as a sheer rule by popular will. Deliberation also has been taken, at least among liberal democrats, to constitute an integral part of democratic governance. It is now common understanding among political theorists that there are two different conceptions or models of democracy; aggregative and deliberative. The aggregative model refers to the kind of democratic governance, in which critical collective decisions are made following a simple aggregation of individual preferences, without any deliberation or rhetorical interaction among those whose preferences are aggregated. For proponents of this model, democracy is simply a mechanism by which to aggregate citizens’ preferences, usually through voting, and not a process that also shapes and influences citizens’ preferences. In contrast, deliberative model of democracy refers to the kind of democratic governance in which the deliberative process, not the decisive vote at the end, appeals to reason rather than aggregated will or emotion. The deliberative model presupposes the legitimacy of deliberation as a prerequisite for the just lawmaking. In the words of Iris Marion Young, “most proponents of deliberative democracy emphasize that this model conceptualizes the process of democratic discussion as not merely expressing and registering, but as transforming the preferences, interests, beliefs, and judgments of participants” (Young, 2000: 26). While the aggregative concept of democracy normally expects, even demands, legislators to act in legislative assemblies as agents for specific constituents (stakeholders), the deliberative concept of democracy urges legislators to think and act like governance leaders as well, actively participating in the time-consuming process of legislative deliberation and making reasoned collective decisions (enacting laws) that are compatible with the long-term goals of society as a whole. An “ideal type” legislative deliberation is an intersubjective process of mutual justification among legislators. It can enhance foresight and consideration of the long-term consequences of public decisions. Thorough deliberation in the legislative

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assemblies normally entails serious consideration of relevant factual information on policy consequences, which is likely to enhance awareness of the long-term effects of different policies, including the effects on future generations. Quality deliberation in legislative assemblies, where self-serving arguments appealing merely to narrow, short-term interests should not, and are not allowed, to be influential, will also “benefit more collectivist and sustainable orientations toward public policy” (Kulha et al., 2021: 2). As a result, “generalizable arguments, including arguments referring to intergenerational justice, are likely to be brought up and sustained in the deliberative process” (Kulha et al., 2021: 2–3). There is understandably a huge gap between such an ideal type of legislative deliberation, on the one hand, and debates (or rather, altercation in real-world legislative assemblies, on the other. Under the ideal type of legislative deliberation, each legislator is supposed to let other fellow legislators speak in an unconstrained way, justify their arguments in a rational, logical and elaborate manner, refer their justifications to the common good, show respect for the arguments of other legislators, yield to the force of the better argument, and, most importantly, take the words uttered by others in the discussion as truthful. (Tschentscher et al., 2008: 11)

In contrast, in real-world legislative assemblies, legislators want to convince others, not to be convinced, which is more likely to turn this forum into a place for confrontation, and parliamentary debate into a persuasion game by means of discourses. In real-world legislative assemblies, unlike judicial deliberation aimed at reaching a reasoned decision, and a series of discussion forums in designed minipublics aimed at cooperatively deepening the understanding of a specific policy issue, participants (legislators). represent conflicting political options, which means that they face discussions with a competitive spirit that encourages the defense of one’s own statements and the attack on the opposite position. To this effect, “language, far from being a neutral vehicle, turns into a battlefield where contenders try to impose their conceptual frames. (Motos, CR 2019: 5)

As implied by Finlayson (2017) and Rasch (2017), among others, real-world deliberation, especially in plenary assemblies, and legislative committees to some extent, is strictly regulated by a set of institutions and (formal and informal) rules. While these institutions and rules were initially introduced to enhance the quality of legislative deliberation, they in fact do not seem to be functioning properly, tending to rather destroy the potential for true deliberation in the legislature. Consider the strict time-constraints facing legislators. Legislators, who normally face various serious problems to deal with simultaneously, ranging from defense to climate crisis and financial deficit, are allowed to spare very limited amounts of time for each specific policy problem. They simply do not have enough time to think over the problem at hand and reach a reasoned agreement or consensus. The same is true with the normative principle of publicity, which categorically demands the deliberation in legislative assemblies to be open to the media and the public. While the principle of publicity was initially introduced in order to substantiate the government’s accountability vis-à-vis the citizenry, on the one hand, and

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to decrease the opportunities of privileged interests being unduly prioritized, on the other, thereby safeguarding the public interest, in reality it often results in forcing legislators to become aware that their actions and inactions are always being monitored by an audience that goes beyond those in the chamber. Thus, ironically, publicity as a legislative principle brings about consequences that would contradict, in practice, one of the epistemic aims of deliberation, which is to search for the most reasonable decisions through Socratic dialogues (Chambers, 2004: 404; Motos, 2019: 6). Dialogical deliberation in legislative assemblies can be achieved more easily in reserved fora. Debates behind closed doors are more likely to encourage legislators to change their positions without fear of penalization (Chambers, 2005: 260; Elster, 1998: 109). Other than the time-constraints and the principle of publicity, there are several institutions and rules regulating discussions and debates in the legislative assemblies, which require of us to differentiate legislative deliberation from that in the judiciary system and that in mini-publics. Discussing this topic further is not possible due to word-limit requirements. Let me conclude this chapter by emphasizing that legislators in liberal democracies are in an awfully stressful position to successfully play the two arguably “incompatible” roles: representing the interests or preferences of their constituencies, on the one hand, and making reasoned, legitimate (justifiable), and future-regarding collective decisions as constituent members of a collegial body (legislator), on the other.

References Adachi, Y. (1999). Inefficiencies in public policies. Journal of Comparative Policy Analysis: Research and Practice, 1(2), 225–236. Adachi, Y. (2002). The limits of the economic approach to public policy studies. Seisaku-Kagaku (policy Sciences), 10(1), 1–9. Adachi, Y., et al. (2015). Conclusion: Future directions of the theory and practice of policy analysis in Japan. In Y. Adachi (Ed.), Policy Analysis in Japan (pp. 289–302). Policy Press. Adachi, Y., et al. (2017). The policy analysis profession. In M. Brans (Ed.), Routledge handbook of comparative policy analysis (pp. 27–42). Routledge. Adachi, Y. (2017b). The vital need for a mature policy market. Paper presented at the Plenary Session 3 (The Policy Advisory Systems and Political Regimes) of the 3rd International Conference on Public Policy (ICPP 3), University of Singapore, Singapore, 28–30 June 2017. Adachi, Y. (2019). How is it possible for democracies to effectively tackle long-term problems? Journal of Comparative Policy Analysis: Research and Practice. https://doi.org/10.1080/138 76988.2018.1548823 Adachi, Y. (2021). The urgent need for strengthening and upgrading the will and capacities of government to effectively tackle long-term policy issues. Academia Letters, Article 2587 (August). https://doi.org/10.20935/AL2587 Advisory Group on Citizenship. (1997). Education for citizenship and the teaching of democracy in schools. 98_3016_FC_BC (ioe.ac.uk) Boardman, A. E., et al. (2018). Cost benefit analysis: Concepts and practice (5th ed.). Cambridge University Press. Boston, J. (2017). Governing for the future: Designing democratic institutions for a better tomorrow. Bingley.

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Burnell, P. (2012). Democracy, democratization and climate change: Complex relationships. Democratization, 19(5), 813–842. Calabresi, G., & Bobbitt, P. (1978). Tragic choices. W.W. Norton and Co. Chambers, S. (2004). Behind closed doors: Publicity, secrecy, and the quality of deliberation. Journal of Political Philosophy, 12(4), 389–410. https://doi.org/10.1111/j.1467-9760.2004.00206.x Chambers, S. (2005). Measuring publicity’s effect: Reconciling empirical research and normative theory. Acta Politica, 40(2), 255–266. Available at ResearchGate. Curtice, G. L. (2002). Politicians and bureaucrats: What’s wrong and what’s to be done. In G.L. Curtice (Ed.), Policymaking in Japan: Defining the role of politicians (pp. 1–17). Tokyo: Japan Center for International Exchange. Dobson, A. (1996). Representative democracy and the environment. In W. Lafferty & J. Meadowcraft (Eds.), Democracy and the Environment (pp. 124–139). Edward Elger. Dror, Y. (2001). The capacity to govern: A report to the club of Rome. Frank Cass. Dror, Y. (2014). Avant-Garde politicians: Leaders for a new epoch. Westphalia Press. Dror, Y. (2017). For rulers: Priming political leaders for saving humanity from itself . Westphalia Press. Ekeli, K. S. (2005). Giving a voice to posterity: Deliberative democracy and representation of future people. Journal of Agricultural and Environmental Ethics, 18(5), 429–450. Elster, J. (1998). Deliberation and constitution making. In D. Democracy (Ed.), Elster, J (pp. 97– 122). Cambridge University Press. Finlayson, A. (2017). What is the point of parliamentary debate? Deliberation, oratory, opposition and spectacle in the British House of Commons. Redescriptions, 20(1), 11–31. https://doi.org/ 10.7227/R.20.1.2 Fischer, F. (2016). Climate crisis and the democratic prospect: Participatory governance in sustainable communities. Oxford University Press. Glazebrook, S., et al. (2011). Keeping it clean and green: The case for constitutional environmental rights. In C. Morris (Ed.), Reconstituting the Constitution (pp. 425–458). Springer. Gore, A. (2006). An inconvenient truth: The planetary emergency and what we can do about it. Emmaus: Dorale. Hayek, F. A. (1960). The constitution of liberty. University of Chicago Press. Himmelroos, S., & Christensen, H. S. (2020). The potential of deliberative reasoning: Patterns of attitude change and consistency in cross-cutting and like-minded deliberation. Acta Politica, 55, 135–155. https://doi.org/10.1057/s41269-018-0103-3 Jonas, H. (1984). The imperative of responsibility: In search of an ethics for the technological age (trans: Jonas, H. with the collaboration of Herr, D.). Chicago: University of Chicago Press. Kahneman, D. (2011). Thinking, fast and slow. Farrar. Kingston, J. (2012). Japan’s nuclear village. The Asia Pacific Journal, 10, 37–1. Article ID:3822. Japan’s Nuclear Village | The Asia-Pacific Journal: Japan Focus (apjjf.org) Knesset Commission for Future Generations. (2017). Foundation for democracy and sustainable development. http://www.fdsd.org/ideas/knesset-commission-future-generations/ Kulha, K. et al. (2021). For the sake of the future: Can democratic deliberation help thinking and caring about future generations? Sustainability, 13(5487). https://doi.org/10.3390/su13105487 Lindblom, C. E. (1965). The intelligence of democracy: Decision-makings through mutual adjustment. Free Press. Low, N., & Gleeson, B. (1998). Justice, society and nature. Routledge. Lowi, T. J. (1979). The end of liberalism: The second republic of the United States. W. W. Norton. Luskin, R. C., et al. (2002). Considered opinions: Deliberative polling in Britain. British Journal of Political Science, 32, 455–487. https://doi.org/10.1017/S0007123402000194 Mackenzie, M. A. (2016). General-purpose, randomly selected chamber. In A. Gosseries & I. González-Ricoy (Eds.), Political institutions for future generations (pp. 282–299). Oxford University Press. Mackenzie, M. A. (2021). Future publics: Democracy, deliberation, and future-regarding collective action. Oxford University Press.

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Mank, B. (1996). Protecting the environment for future generations: A proposal for a republican superagency. NYU Environmental Law Journal, 5(2), 445–516. Ophulus, W. (1977). Ecology and the politics of scarcity. Freeman. Motos, C. R. (2019). Deliberation in parliaments: A review of the empirical, rhetorical and systemic approaches. Revista De Sociologia e Politica. https://doi.org/10.1590/1678-987319277207 Rasch, B. E. (2017). Legislative debates and democratic debates in parliamentary systems. Redescriptions: Political Thought, Conceptual History and Feminist Theory, 20(1), 1–31. https:/ /doi.org/10.7227/R.20.1.2 Rittel, H. W. J., & Webber, M. M. (1973). Dilemmas in a general theory of planning. Policy Sciences, 4(1), 155–169. Roads, S. E. (1985). The economist’s view of the world: Government, markets, and public policy. Cambridge University Press. Setälä, M., et al. (2010). Citizen deliberation on nuclear power: A comparison of two decisionmaking methods. Political Studies, 58(10), 688–714. https://doi.org/10.1111/j.1467-9248.2010. 00822.x Setälä, M., & Smith, G. (2018). Mini-publics and deliberative democracy. In A. Bächtiger et al. (Eds.), The Oxford handbook of deliberative democracy. Oxford: Oxford University Press. Schulze, C. L. (1977). The public use of private interest. Brookings Institution Press. Simon, H. A. (1997). Models of bounded rationality volume 3: Empirically ground economic reason. Cambridge: MIT Press. Sprinz, D. F. (2009). Long-term environmental policy: Definition, knowledge, future research. Global Environmental Politics, 9(3), 1–8. Stein, T. (1998). Does the constitutional democratic system work? The ecological crisis as a challenge to the political order of constitutional democracy. Constellations, 4(3), 420–449. https:// doi.org/10.1111/1467-8675.00065 Stigler, G. J. (1971). The theory of economic regulation. Bell Journal of Economics and Management Science, 2(1), 3–21. Teschner, N. (2013). Official bodies that deal with the needs of future generations and sustainable development: Comparative review. The Knesset Information and Research Center: Jerusalem. Needs of Future Generations and Sust. Devt. (knesset.gov.il) The Matsushita Institute of Government and Management HP: The Matsushita Institute Government and Management (mskj.or.jp) Tonn, B., & Hogan, M. (2006). The house of lords: Guardians of future generations. Futures, 38(1), 115–119. Tremmel, J. (2006). Establishing intergenerational justice in national constitutions. In J. Tremmel (Ed.), Handbook of Intergenerational Justice (pp. 187–221). Cheltenham. Tschentscher, A. et al. (2009). Deliberation in parliament: Research objectives and preliminary results of the Bern Center for Interdisciplinary Deliberation Studies (BIDS). Legisprudence, 4(1). https://doi.org/10.1080/17521467.2010.11424699 WCED (World Commission on Environment and Development). (1987). Report of the World Commission on environment and development: Our common future. Young, I. M. (2000). Inclusion and democracy. Oxford University Press.

Chapter 3

Another Boundary Problem: Democracy, Future Generations, and the All-Affected Principle Akira Inoue

Abstract This paper shows that the all-affected principle is theoretically tenable and intuitively plausible in the intergenerational context. The all-affected principle has enjoyed a default status as the principle for solving the boundary problem—that is, the problem of deciding who should be included in a demos where political decisions are made. Indeed, the all-affected principle not only can avoid the circularity of a self-constituting people, but also can include future people in relevant ways that meet the requirement of political equality, namely, “one person, one vote.” In the first place, the all-affected principle is radical but plausibly inclusive if we consider the possibility that our policies could have such devastating effects on the planet that no future people could live any life at all. Nor does it dissolve normatively if we place the all-affected principle as pertaining to the normative domain relevant to political equality. Moreover, the actual exercise or delegation to current people of voting powers by future people and the individually specified contribution to political decisions are of little significance in terms of satisfying the requirement of political equality; the interests of future persons can reasonably be counted in the aggregate under the all-affected principle. Nor does the non-identity problem beset the all-affected principle if it is interpreted in ways compatible with the wide person-affecting view. We can thus employ the all-affected principle as the principle for constituting a demos involving future generations. Keywords All-affected principle · All-subjected principle · Future generations · Non-identity problem · Political equality

A. Inoue (B) University of Tokyo, Tokyo, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_3

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3.1 Introduction Democracy is a political concept involving the process of collective decision-making among all the people in a polity. As a political arrangement, democracy essentially comprises decisions that regulate legal, political, and social institutions in ways binding on all members of society. Notably, theorists of democracy tend to presume the set of individuals constituting a democratic society, that is, a “demos.” Who is enfranchised or disenfranchised is not fundamentally challenged by political theorists, except where the qualifications of political (or moral) incompetence are questioned in the debates over people’s voting rights under the ideal of political equality, i.e., “one person, one vote” (Beckman, 2009; Brennan, 2016; López-Guerra, 2014). Political theorists are inclined to take democratic boundaries that define each demos for granted. With the increasing impact of globalization, however, it has become difficult to treat each demos as given. We confront cases where political decisions in a given polity affect other countries, such as when the tax haven policies in one country adversely affect the budgetary revenue of other countries with higher taxation. Notably, when the effects in question are negative, our concern is more serious with regard to political equality. For example, the question arises whether the devastatingly affected in one country (e.g., the global poor) might fail to be treated as the political equals of people in another country (e.g., the rich and middle class) whose political decisions non-trivially affect both. Against this backdrop, some democratic theorists have taken seriously “the boundary problem,” that is, the problem of deciding who should be included in a demos where political decisions are made (Abizadeh, 2008; Dahl, 1989; Goodin, 2007; Miller, 2009; Whelan, 1983). What is a plausible solution to this problem in political theory? To address the problem, there is a need to present a reasonable principle for constituting a demos. In political theory, the all-affected principle has gained prima facie support. According to the all-affected principle, all (and only) those (possibly) affected by political decisions in a state should be included in the demos governing them. Why has the principle enjoyed a default status (if not that of an established standard) as the principle for constituting a demos? The reason is that this principle helps avoid the circularity of a self-constituting people, to which traditional democratic theories may be susceptible: in standard democratic theories, a people is given as an existing polity in responding to the question of who has the decision-making power. The all-affected principle does not take such people as given. What then makes the all-affected principle plausible? The answer is: not only does it ground who should get a vote, but also it requires polities to pay attention to the world’s most vulnerable individuals. For example, the all-affected principle requires large and powerful states to heed the voices of the vulnerable in small and weak countries who are affected negatively by their political decisions. It thus seems that the all-affected principle can reasonably deal with the boundary problem.

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However, the theoretical tenability and intuitive plausibility of the all-affected principle have been challenged. The criticism made of the all-affected principle can be illuminated by focusing attention on the intergenerational boundary problem, that is, the problem of whether and how future generations are to be included in a demos. Both proponents and opponents of the all-affected principle mainly target the international (geographical) boundary problem, that is, the boundary problem among contemporaries on the globe. The above-mentioned discussion about the tenability and plausibility of the all-affected principle is concerned with the international boundary problem. However, how we can draw the bounds relates not only to current generations in the world but also to future (and past) generations. The boundary problem becomes more acute when it concerns future people, particularly those in the far-distant future, because not only is the number of future individuals nearly infinite but also it can be changed by our policies. No doubt this is a challenge for the proponents of the all-affected principle. In this chapter, I examine whether the all-affected principle can cope with the intergenerational boundary problem. This chapter proceeds as follows. Section 3.2 examines what specifications should be used to make a proper judgment of affectedness when applying the all-affected principle. Section 3.3 reveals the three virtues of the all-affected principle that prima facie attest to its being a reasonable standard for resolving the intergenerational boundary problem. Section 3.4 considers the three challenges that the all-affected principle confronts mainly in the intergenerational context. Section 3.5 argues that the three challenges to the all-affected principle are not successful and, thus, the all-affected principle can reasonably be defended in the intergenerational context. Section 3.6 demonstrates that the tenability and plausibility of the all-affected principle are not vulnerable to the non-identity problem.

3.2 All-Affected Principle As seen above, the all-affected principle attracts attention as an intuitively plausible proposal for determining the boundary of a demos: All (and only) people who are (possibly) affected by a political decision should be entitled to a vote in making the decision. Before the all-affected principle can be applied, however, specifications are needed in order to make a proper judgment of affectedness.1 Three points should be considered in regard to the specifications in question. First, the all-affected principle depends on the measure of what is (possibly) affected by a decision to include anything that happens as a reasonable consequence of the decision. As some political theorists explicitly argue (Lagerspetz, 2015; Miklosi, 2012; Warren, 2017), interests are the most plausible metric; the effects of a decision can thereby be equally and neutrally measured. To see why, suppose, for example, the well-being of some citizens is weighted more than that of others with respect to 1

The parenthetical adverbs “only” and “possibly” make a huge difference to the all-affected principle. I will discuss this point below.

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a degree of kinship. This way of counting certain people’s well-being goes against the thrust of the all-affected principle; an exclusion of the others from the decisionmaking body seems incompatible with the ideal of the all-affected principle. In this context, two points must be noted. (i) Interests should be vital and meet a minimal requirement of reasonableness; for example, one’s vital interests should not be counted when their satisfaction is harmful to others. (ii) The outcomes of a decision may be weighed in light of the relevant considerations, even though people’s interests in and of themselves are equally and neutrally measured. These points, especially the second point, correspond to the two loosely separated stages first described by Arrhenius (2007: 13): a decision–choice stage and an outcome–effect stage. With these qualifications in hand, we can examine a particular stage in the application of the all-affected principle to political practice—namely, the stage involving the evaluation of outcomes, which, if successful, may render use of the all-affected principle in the intergenerational context more plausible (Goodin, 2007: 53–4; Owen, 2012: 131–3). Second, the all-affected principle is involved in the type of outcomes of a decision that are counted. There are mainly two ways of selecting a certain type of outcome: the actualist and the possibilist approach. While the actualist focuses on what the decision-making body actually does, the possibilist attends to possible outcomes of a political decision. According to Goodin (2007: 52), the actualist version of the all-affected principle cannot play an expected role for constituting a demos, since it allows the all-affected principle to determine who should have a vote based on the interests of currently affected populations; the determination of who is affected by actual consequences of a political decision depends on who actually makes the decision. This is incompatible with what the all-affected principle purports.2 At the very least, the actualist construal of the all-affected principle is underinclusive in such a way as to almost justify the current forms of polity in the world (Rosenberg, 2020: 849–54). The possibilist version is a more plausible version of the all-affected principle: a demos can be grounded by giving a say to anyone who can be affected by any possible outcome of a decision. Although this is indeed radical such that “[v]irtually (maybe literally) everyone in the world—and indeed everyone in all possible future worlds—should be entitled to vote on any proposal or any proposal for proposals,” this is the only legitimate way of constituting a demos under the all-affected principle (Goodin, 2007: 55; see also Tännsjö, 2007: 186–9), or so I will argue below.3 2

On this argument, if we focus on outcome rather than choice in terms of people’s decisions, this objection to actualism does not hold because, in the outcome interpretation, even one specific choice can be located in a decision space involving other choices in terms of all whose interests are affected. We can thereby claim that the actually affected cannot be specifically determined by who actually make a certain decision. For this, see Owen (2012: 132–3). Note that this may not circumvent the underinclusiveness objection to actualism. 3 The probabilist (or likeliest) version of the all-affected principle, which focuses on what the decision-making body is likely to do, can also be suggested. However, it is difficult to specify how likely such actions of the decision-making body are without any circularity of justification and without falling into counterintuitive judgments about who should be included (Goodin, 2007: 59– 62; Rosenberg, 2020: 860–1). Nor is it reasonable to countenance the restricted possibilist version,

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Third, the all-affected principle is construed differently in terms of what type of conditional statements the all-affected principle incorporates. The standard formulation of the all-affected principle is that all (and only) people who are possibly affected by a political decision should be entitled to a vote in making the decision. If the proponents employ only the “all” part—enfranchise all the affected—this will support substantial extension of existing demoi, but the “all” part is not applied in a restricted manner, because it allows for other ways of inclusion. If the “only” part— enfranchise only the affected—is added as a necessary condition for including certain people in the all-affected principle, this will have stringent implications as a principle for constituting a demos.4 This is because the “only” part enjoins that the all-affected principle excludes the non-affected in considering the constitution of a demos. To tackle the boundary problem, the “only” part is crucial because, otherwise, no demos can be grounded in a principled manner; this in turn may license an inclusion of those who are not affected even under the all-affected principle. Hence, the “only” part is important for specification of the all-affected principle as a principle for constituting a demos. Whether the implications of excluding the non-affected are acceptable or not is key to evaluating the plausibility of the all-affected principle, and that is true of the other principles for constituting a demos, such as the all-subjected principle, as will be discussed below.

3.3 Three Future-Oriented Virtues of the All-Affected Principle We have seen so far the relevant specifications of the all-affected principle: the interest-based, possibilist, and “all and only” construals of the all-affected principle. However, to defend the relevantly specified version of the all-affected principle, we need to provide a justificatory argument for it. This section does so by showing the three virtues of the all-affected principle that prima facie attest to its being a reasonable criterion for resolving the intergenerational boundary problem.

3.3.1 Reasonable Change The all-affected principle requires the drastic but plausible change of a decisionmaking body such that future people who may be affected by its decisions should be in which only (reasonably) foreseeable consequences of a political decision are counted. For defense of this version, see Owen (2012: 141) and Rosenberg (2020: 863–6). I will examine the restricted possibilist version later. 4 Some political theorists avoid the “only” part (i.e., the necessary condition part) because if the all-affected principle enfranchises all and only people who are affected, then it “would require a different constituency of voters or participants for every decision” (Whelan, 1983: 19). For this point, see Goodin (2007: 57–8).

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included in the body. The all-affected principle requires a polity to include all people who are disenfranchised but are possibly influenced by its decisions. Among them future others should also be included in the polity insofar as they are possibly affected by its political decisions. It seems evident that policy choices a governmental body makes can have huge impacts on future generations. For example, if no environmental protection policy were adopted, future people would, very likely, encounter climate crises such as global warming, depletion of the ozone layer, and deforestation. Of course, in the absence of time travel, future persons cannot vote on current policy decisions in a given polity. The all-affected principle, therefore, requires a polity to employ an alternative, more certain way of ensuring that the interests of future generations are not undermined. For example, relevant institutions for protecting their interests may reasonably be arranged to implement a global policy for reducing the environmental impacts on the planet under the all-affected principle. Notably, this does not imply that a standing arrangement that exacts such an environmental protection policy should have a nonsensical form such as a full-fledged world government where the executive branch can make global decisions in light of the affected, including borderlessly concerned future generations. We cannot disregard the limited capacities of any decision-making body even at the level of institutional conceptions (Owen, 2012: 134; Rosenberg, 2020: 862). On the other hand, the feasibility constraint should not allow for any possible harm to future generations through a depletion policy. Arguably, there are promising routes to protect the interests of future people: a larger federal system, or more specifically, an in-kind (or even monetary) compensatory scheme under the global fund for future others may be the second and third best ways of meeting the requirements of the all-affected principle.

3.3.2 Political Equality The all-affected principle meets the requirement of political equality—i.e., the requirement that all people should enjoy an equal voice—which triggers our motivation to construct a convincing principle for constituting a demos involving future people. To see this, let us compare the all-affected principle with a different and wellestablished principle, the all-subjected principle, which also concerns the boundary problem. According to the all-subjected principle, all and only people who are (possibly) subject to an enforceable law through a political decision should be entitled to a vote in making the decision (Abizadeh, 2008, 2012, 2021; Beckman, 2009; Inoue, forthcoming; López-Guerra, 2014; Miller, 2009; Owen, 2012). The all-subjected principle is proposed as an alternative to the all-affected principle in that the allsubjected principle supports a more restrictive approach to enfranchisement which may fit broadly within the conventional bounds (cf. Goodin, 2016). Although there are similarities between the all-affected principle and the allsubjected principle, there is also a significant difference. The difference concerns those who are excluded. As seen above, the determination of who is excluded hinges

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on the word “only” in both principles: while the all-affected principle excludes the non-affected, the all-subjected principle excludes the affected who are not (possibly) subject to a law, in considering the constitution of a demos. This difference illustrates that the all-subjected principle cannot license the merely affected to vote for or against a law even though they may be seriously affected (indirectly) by it; they are not necessarily subject to it. It goes without saying that (far) future others are those typically affected by, but not necessarily subject to, current legislative decisions (such as our environmental policies). The difference in treatment between the affected and the subjected is a problem in the intergenerational context, because the interests of future people, that is, those who are not the subjected, would be ignored under the all-subjected principle. We can thereby say that political equality does not intergenerationally hold under the scheme of the all-subjected principle. Since this problem does not beset the all-affected principle, the all-affected principle seems more plausible than the all-subjected principle with respect to the intergenerational boundary problem.

3.3.3 Appling Principles The all-affected principle can reasonably allow the application of principles to operate in the intergenerational context. The all-affected principle can be applied simply by expanding the franchise in such a way that there are no different voters on different decisions. As Goodin (2007: 58) says, “[t]he most reliable way of ensuring that no one who should be included is excluded is simply to include everyone.” This approach enables us to avoid epistemic difficulties in singling out who should be entitled to vote. However, it is indeed expansive and so may be infeasible under actual circumstances. This pushes us to adopt a more moderate manner of applying the all-affected principle therein. To illustrate, the requirement of the all-affected principle can be met by delimiting the decisional power of the demos. According to this approach, only those who are substantially affected are entitled to a vote in a polity; for example, the UK Parliament could have refrained from enacting taxes that apply to US citizens in the age of British colonization of the Americas (Goodin, 2007: 62–3). Perhaps more relevantly, we can apply the all-affected principle such that decisionmaking power is distributed proportionally according to the degree to which people are substantially affected (Brighouse & Fleurbaey, 2010). To avoid misunderstandings, note that the proportionality-based application of the all-affected principle does not strictly require that the more affected be morally prioritized over the less affected (cf. Angell & Huseby, 2020). Giving more voting powers to the more affected must be publicly defensible in actual circumstances, and thus the strict proportionality seems unconvincing in assessing the outcome-effect of a political decision in the interest-based manner. We should consider the distribution of voting powers in a more reasonable manner. For example, the more affected who are underrepresented or even not represented should be represented in the relevant system (Brighouse &

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Fleurbaey, 2010: 150–1).5 Undoubtedly, the more affected who are underrepresented, or not represented, are future people. This shows that the case for accommodating their interests to be represented by the electorate as a whole is compelling. Several proposals have been made for relevant representation systems for future people: (i) intergenerational provisions, i.e., constitutional clauses aimed at protecting the interests of future people by preserving the natural environment and preventing the government debt being a future burden (González Ricoy, 2016; Tremmel, 2006); (ii) randomly selected assemblies in charge of providing advice on the long-term condition of the elected government that is susceptible to the shortterm interests of the current generation (MacKenzie, 2016: 2021: 173–80); and (iii) posterity impact statements (issued by current sovereigns) that are attached to political decisions that possibly affect the interests of future sovereigns (Thompson, 2010, 2016). These proposals are currently dominant, but certainly not exhaustive. One might claim that the proportionality-sensitive application of the all-affected principle is incompatible with the demand of political equality, due to the unequal features of proportionality. But this is not so; we should take the ideal of political equality as requiring only that people ought to be entitled to equal voting power if they are equal in the relevant sense. In other words, there is no need to interpret political equality in a numerical manner (Rosenberg, 2019). We can thereby say that the proposed systems of representing future interests directly or indirectly meet the requirement of political equality. This implies that the all-affected principle can give proper intergenerational bounds.

3.4 Three Future-Oriented Challenges Against the All-Affected Principle In the foregoing, it seems that the all-affected principle can reasonably respond to the intergenerational boundary problem. At the very least, the all-affected principle can provide the rough groundwork for a democratic expansion that includes future people by allowing for suitable measures to meet their interests. However, the allaffected principle faces three challenges in relation to the boundary problem. These challenges arise or are reinforced if we try to include future generations.

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Brighouse and Fleurbaey (2010: 151) attempt to give a principled justification for this by appealing to prioritarianism, i.e., the worse off they are, the more priority we ought to give to them. However, prioritarianism is a principle of justice and it does not go hand-in-hand with what makes relevant the proportionality application of the all-affected principle for the distribution of voting power. This is because, for example, increased voting weights of the worse off do not always promote social justice (and can even undermine it) (Angell & Huseby, 2020: 374–6). We should detach the applying principle of the all-affected principle from the principle of justice, or so I will argue later on.

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3.4.1 Overinclusiveness The first challenge is simple: the all-affected principle is overinclusive. Evidently, the possibilist version of the all-affected principle is sufficiently expansive that a demos should include everyone in every decision, everywhere, at every time. Surely, there are intuitive cases for this expansiveness of the all-affected principle, because the all-affected principle can cover the interests of felons, people with severe disabilities, and even animals, who are downgraded in the current representational system. The all-affected principle plausibly requires each of these disadvantaged entities to be reflected in the relevant system. However, including people in the far-distant future seems unreasonable (at least in many cases), even though future people could be affected by our political decisions. Nonetheless, although they are too far distant from us, the inclusion of such future people is necessitated by virtue of “butterfly effects”—small changes that give rise to huge effects over time. This is because the all-affected principle requires an inclusion of the parties if a decision could be made such that it affects them in one nearest possible world (Rosenberg, 2020: 856).6 In the case of parties who are in the far-distant future, such a possible world could exist. There exist a myriad of potential paths of our possible decisions that affect future people at the outcome-effect level. Even if a possible world is very unlikely to become to fruition, the interests of the future people should be weighed in the same way as those in the current generation under the all-affected principle representation system. This may seem counterintuitive; indeed, it reduces the possibilist version of the all-affected principle to a reductio ad absurdum.7 One might suggest that the overinclusiveness of the all-affected principle can be diffused in two ways. First, the all-affected principle serves as a conceptual claim for defining democratic people, not as a normative requirement for the relevant distribution of voting rights. This is a way of restricting the all-affected principle to the definitional role of democratic people, which can be combined with a variety of normative conceptions of democracy to resolve the problem of current suffrage restrictions (Beckman, 2009: 51–52; cf. Bengton & Lippert-Rasmussen, 2021). Second, the allaffected principle is employed as a merely regulative ideal that directs a demos to include all those people affected by political decisions, setting aside how best to approach the ideal. Put differently, the all-affected principle gives normative advice to those who reconsider the constitution of demoi in a correct direction toward the ideal, 6

The “nearest” rider is important when considering the exercise of a voting capacity in the far distant future, because, otherwise, an absurdly large number of possible worlds should be taken into account. To put it another way, with the “nearest” restriction, the all-affected principle can focus on possible worlds that not only hold the laws of nature, but also involve no metaphysical free will. It is important to put the “nearest” rider; otherwise, the overinclusiveness objection is too simplistic (and that is true of Rosenberg’s original objection). I will discuss this point at more details below. 7 Note that the “only” part of the all-affected principle—enfranchise only the affected—underlines the problem of overinclusion. Recall that the “only” part confers to the all-affected principle the distinct feature of implying a certain exclusion of enfranchisement. This implies that the portion of the all-affected principle governed by the word “only” excludes other ways to include people that may mitigate the extremity of the all-affected principle.

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presented with a gap between the actual and ideal circumstances. However, these “strategic retreats” deprive the (normatively) independent force of the all-affected principle; other (moral) conceptions and (empirical) factors that are relevantly incorporated into a general theory of democracy may be (much) weightier than what the all-affected principle demands in determining the distribution of voting rights to people. Nor can the problem with democratic overinclusion in the all-affected principle itself be warded off by appealing to these two diffusion strategies.

3.4.2 Irrelevance as a Righteous Standard The second challenge: the all-affected principle is exaggerated as a righteous standard. To grasp this, we should first recall that the all-affected principle covers the interests of the affected who are not (possibly) subject to a coercive law (unlike the all-subjected principle). This entitles the global poor who are not (possibly) subject to the law in an affluent country to equal voices under the all-affected principle. This seems intuitively plausible. However, our intuition seems unstable if we consider the case of affectedness differing in positive and negative directions. While the positive effects of political decisions may not substantially matter to the affected non-residents as in the case of positive externalities, they would be seriously concerned with the negative effects by certain political decisions in a foreign country. Global poverty exemplifies this asymmetric judgment: while the destitute would like to raise their voice against certain tax arrangements on international trade by affluent states, they may welcome international aid from the same states without having an opportunity to give any outspoken objection thereupon. What is distinguishing about this asymmetry is not that only the negative effects of political decisions are relevant to the affected. Rather, the affected (e.g., the global destitute) in one country cannot be treated in an appropriate manner merely by granting them the right to vote on political decisions in the other countries (e.g., rich countries). Notably, this prompts us to examine the effects on future generations: meeting the interests of future generations with the aim of including them in a given polity cannot make up for the negative effects such as serious damage to or destruction or loss of ecosystems. In other words, achieving political equality is not a suitable substitute for answering the many righteous claims by the global poor and, more saliently, future others living on a seriously damaged planet. Nevertheless, the all-affected principle tends to equate the fulfillment of political equality with the satisfaction of justice claims in ways that the principle in question is proposed as a normative principle to reform the global order, for which, as seen above, world federalism and the relevant compensation scheme under the international court of justice are representative. In the intergenerational context, advocates of the all-affected principle seem to be mistaken about the implications of the all-affected principle. This is because the all-affected principle only demands a given polity to include future

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people in such a way as to meet their interests, not to satisfy what justice requires of them (Cabrera, 2014; Nili, 2017; Saunders, 2012).8

3.4.3 Implausible Satisfaction of Political Equality The third challenge: the all-affected principle cannot fully capture the normative significance of political equality. This is because it is based merely on the interests of the affected. To see this, recall that interests are construed neutrally and equally. This is true even when the all-affected principle is applied proportionally according to the degree to which people are affected: the more affected who are less or not represented should be represented in the relevant system. As seen above, the typically underrepresented are future people, and thus the case for accommodating their interests to be represented by the electorate seems compelling. Note, here, the interests of future people are not construed in any partial sense; proportionality comes in when the all-affected principle applies to a democratic system in ways that convert interest-based affectedness to proxy voting for future generations in the relevant system, such as a randomly selected chamber. A problem is posed by questioning the conversion at issue concerning the fundamental difference between meeting interests and guaranteeing democratic says. This difference can be signified in the following statement by Estlund (2008: 78): An individual vote is an intentional contribution to the procedure every bit as much as an individual shot fired by a member of a firing squad, even if the agent knows that the effects of her action might be overdetermined or preempted.

That said, the point of a democratic say is whether one can make an intentional contribution to the political decision-making process, not simply whether one can mold the decision-making body in such a way as to reflect their interests into political decisions or the system of representation. For political theorists who support this view of a democratic say, democracy arms people with voting rights such that they can appropriately challenge and chasten political power holders through electoral processes (Christiano, 2011: 149–51; Cabrera, 2014: 236; Kateb, 1992: Ch. 1). It thus seems that the all-affected principle cannot fully echo the normativity of an intentional contribution to a democratic procedure that enables us to alter the political authorities. This troubles the all-affected principle vis-à-vis the intergenerational boundary problem because political challenges of this kind cannot be exercised in the intergenerational context.

8

As the interests of an incorporated group may not be promoted in a decision for which they vote, protecting interests-based voting rights under the name of political equality might actually harm the entitled (Bengston & Lippert-Rasmussen, 2021: 577). Although this may not be true of the intergenerational cases, it poses a related objection to the all-affected principle.

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3.5 Defending the All-Affected Principle In this section, I argue that these challenges to the all-affected principle are not successful, and thus the all-affected principle is defensible in the intergenerational context. Let me show this by responding to the three challenges, respectively.

3.5.1 On Overinclusiveness The all-affected principle is not implausibly overinclusive. Surely, according to the possibilist version of the all-affected principle, people should be included in a given polity on grounds that they are affected by its political decisions in one nearest possible world. Cases of this kind obtain in the far-distant future, where there is a myriad of possible paths connecting a possible decision to its outcome effects. The objector thereby claims that the all-affected principle overly respects the interests of (far-distant) future generations. However, this allegation is not as convincing as it might seem. The existence of one nearest possible world where far-distant future people are substantially affected is enormously important if the possible effect is a big stake (e.g., their encountering an unsustainable planet). Or, even in cases where a stake is not very big (e.g., the depletion of certain resources), meeting the interests of far-distant future people is not implausible. Given that the interests of far-distant future people are vital, affectedness should count even when only one nearest possible world where far-distant future generations are affected exists. This reduces the counterintuitiveness of including future people even when the advent of the outcome-effect holds only in one nearest possible world. This counterargument is buttressed if we see the untenability of the proposed alternative to the possibilist version of the all-affected principle: the (reasonable) foreseeability version of the all-affected principle. According to the restricted possibilist version, the all-affected principle focuses not simply on the possible outcomes, but on the (reasonably) foreseeable consequences of possible decisions (Owen, 2012: 141; Rosenberg, 2020: 863–6). The (reasonable) foreseeable constraint is proposed as a means of circumventing the “butterfly effect” cases of initial choices with large effects at a later time.9 The key idea is that “we cannot in any meaningful sense have influence and control over consequences that are unforeseeable” (Rosenberg, 2020: 864). However, the (reasonable) foreseeability constraint cannot properly match our sense of influenceability over consequences of our political decisions if we consider their unforeseeable but devastating effects on people in the far-distant future, such as the possibility of their confronting an inhabitable world. In other words, the (reasonable) foreseeability version cannot take the interests of future generations seriously, and thus cannot resolve the international boundary problem. In the intergenerational 9

The (reasonable) foreseeability version has another advantage: that the all-affected principle can avoid the epistemic problem with identifying the consequences of political decisions (Rosenberg, 2020: 863).

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context, we should take seriously one nearest possible world where the planet is unlivable even though it cannot (even reasonably) be foreseen and that the possibilist version can uphold it. One might object that while, as I argue, the possibilist version may be more plausible than the (reasonably) foreseeable version in the intergenerational context, it still overincludes everyone in the contemporary world. My contention is this: the state of affairs in which political equality is met by the all-affected principle should not be equated with that in which the requirements of justice are met. We should neither overrate nor downrate the normativity of what the all-affected principle requires. If we estimate it properly, the overinclusiveness concern, I believe, dissipates. Or so I will argue below.

3.5.2 The Proper Place of the All-Affected Principle The all-affected principle can be viewed as a plausible principle in the intergenerational context as well as in the international one only insofar as it is placed in a relevant normative domain. The challenge to the all-affected principle delineated by the asymmetry between the positive and negative effects of political decisions is that the claims of the negatively affected (such as the global destitute and future people on an unhabitable Earth) cannot be satisfied in such a way as to include them in a (global) polity. Nevertheless, proponents of the all-affected principle treat the satisfaction of political equality as (partly) meeting the righteous standard of what justice demands. They appear to contend that giving equal votes to the negatively affected is the first best way to satisfy (partly) what justice requires: the global institutions (in the international context) and/or the relevant representation system (in the intergenerational context) are the second or third best way to (partly) meet the requirements of justice. This is because proponents of the all-affected principle mistake the achievement of political equality for satisfying what justice demands. This objection cannot be regarded as a fundamental challenge against the allaffected principle, however. The mistake that the advocates of the all-affected principle make is to equate the expansive requirements of political equality with what justice demands. What the advocates should do instead is to place the role of achieving political equality in a relevant normative domain. We should acknowledge that the all-affected principle does not fully satisfy the claims of the negatively affected in the international and intergenerational contexts; satisfying the equal voice-based interests of the negatively affected is not akin to satisfying their justice-based claims. The latter involves guaranteeing all people basic rights while the former is germane to political equality. Importantly, this idea based on the domain division and restriction does not deny the normative significance of political equality. The significance at stake does not obviate the importance of political equality that the all-affected principle meets. This is because the claims of the disenfranchised for their inclusion are morally salient, independently of what justice requires. This can be shown if we consider that achieving political equality is essentially important in specific contexts

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where the rule of one or the few holds in accordance with what justice enjoins. The excluded populations can reasonably claim the right for inclusion in that polity, even when their justice-based claims are met, and that claim can be relevantly covered by the all-affected principle (Wilson, 2022: 182–3). In sum, political equality achieved by the all-affected principle constitutes a normatively significant requirement. Surely, it cannot be a replacement for what justice demands. If political equality is utilized to reform the global international order with respect to the claim-satisfaction of justice, the ideal of political equality is misused. However, this does not disturb the supporters of the all-affected principle as long as they put the all-affected principle in a normative domain relevant to political equality, independently of what justice enjoins. As long as the domain division and restriction are preserved, the all-affected principle can operate as a relevant principle for the reformation and/or active operation of the international organizations. This proper use of the all-affected principle obtains in the intergenerational context.

3.5.3 Plausible Approximation to Political Equality The all-affected principle is a plausible approximation to the ideal of political equality in cases where certain people cannot make intentional contributions to the decisionmaking process and, thus, to the relevant body. To see this, let us focus on the intergenerational context that involves difficult cases for the all-affected principle. There are three problems with the all-affected principle in terms of the ideal of political equality. First, we cannot actually secure the voting rights of future generations. No future persons exist in the current polity, and we ourselves will have disappeared when they exercise any potential right to vote. This may lead us to claim that future generations cannot have voting rights, due to the lack of their actual exercisability. Second, although we can surely employ a pseudo-system to represent the manner in which future people exercise their right to vote, for which a randomly selected chamber is representative, this cannot be characterized even as a proxy voting in which the holders of voting rights (future people) delegate their powers to someone else on behalf of themselves. Third, the interests of future generations may be met collectively, but cannot be met individually. As seen above, the point of a democratic say appears to be an individual intentional contribution to the decision-making process, and such a contribution can never be guaranteed by any feasible scheme of representing future generations. In response to these three problems, we can state the following. First, there is no need to rule out the counterfactual possibility as a sufficient ground for the exercisability of voting rights by future generations through the representation of their interests in the relevant system. This relies on the idea of counterfactual dependence, according to which one’s exercise of a capacity to vote does not imply choosing alternatives in actual circumstances; nor does it involve any incompatibilist (or libertarian) theory of free will, according to which people have the ability to do otherwise in an indeterminist manner that may disrupt the laws of nature in order to find alternative

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ways to exercise their voting capacity. Given that they are able to think of the better outcomes of certain (past) decisions in the nearest possible worlds where the laws of nature are given, their voting obtains, even though they themselves cannot change the actual or past world in history (Lewis, 1986: 32–52; Renzo, 2014: 478; Smith, 1997: 299). Hence, we need not claim that the extant polity does not respect voting rights of future generations, as long as it takes their interests into consideration.10 On the second point, relatedly, some representation systems for future generations proposed by political theorists can be regarded as realizing a proxy voting on their behalf: such proxy voting does not necessitate the actual delegation of their powers to the represented parties, institutions, or statements (with proper riders). Indeed, the current systems of proxy voting for individuals with severe disabilities cannot hold if we presume that the application to vote by proxy holds only in the actual delegation. We can thereby see no problem with treating the proposed systems representing future people as the devices to vote by proxy for them. Next, we must consider the problem regarding the decision-making process by future people, even though they admittedly satisfy their interests in a collective way. My response is to question the equation of a democratic say with an individual contribution to the decision-making process and so the body. It is well-known that causal effects of voting on public outcomes are miniscule; to illustrate, “the probability of being decisive in a U.S. presidential election with an electorate of around 150 million voters is at most 1 in 12,500 and is almost certainly much smaller… [T]he voter would have to live for several thousand years in order to expect to have a fifty-fifty chance of actually choosing a president” (Brennan & Lomasky, 1993: 23; emphasis original). Notably, this need not imply that each vote is off the mark. Rather, this shows that voting powers are non-negligible when we take them collectively; the aggregate vote can certainly make a difference to the decision-making process, and, thus, to the polity. That said, collective counting of individual votes is the key to detecting the particular message that each individual vote sends.11 With this (and the idea of counterfactual dependence), there is no need to say that voting rights of future generations can never be ensured by any feasible scheme of representing future generations: the interests of future generations are met collectively in the relevant representation system and that does not belittle their voting (by the proxy voting of current generations on behalf of future generations) nor their contribution to the decision-making process and body. 10

Nor do we need to say that “[i]f representatives are to give reasons that could be accepted by future generations, they will have to take a different form from the reasons they give to electoral and even other moral constituents” (Gutmann and Thompson 1996: 155–6). With the idea of counterfactual dependence, we can reasonably claim that the status of reasons accepted by future generations is the same as that of the reasons given to the current constituents in the representation system, even though we cannot refer directly to the claims of future persons. 11 Given the extremely low chance that each person’s vote is decisive, Brennan and Lomasky (1985: 199) present an expressive account of voting behavior: “Voting, like speech, is an expressive activity providing an outlet for one’s moral sentiments. We suggest that it is the expressive return to a vote that frequently determines the behavior of individuals in large-number electorates.” As I see it, however, we need not take this controversial view because we can see the significance of votes that echo voters’ interests even after their votes are aggregated.

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3.6 Non-Identity Problem It seems that the all-affected principle can function in the face of the intergenerational boundary problem. The all-affected principle can reasonably claim that future people (even in the far-distant future) should be included in a polity, even if the effect of its decision obtains in one nearest possible world. The all-affected principle can do so insofar as the all-affected principle is properly placed in a normative domain relevant to political equality where the actual exercise or delegation of individual voting powers is not required to meet the ideal of political equality. A serious concern about the all-affected principle may remain in the intergenerational context, however: We can never identify future persons. The personal identity of future persons cannot be specified because of various factors that bear inextricably on our (possible) actions. This is the so-called non-identity problem (Parfit, 1984: Ch. 16). The non-identity problem seems to make the intergenerational boundary problem hard to resolve. Unlike the international boundary problem that involves only existing people on the globe, in the intergenerational boundary problem, future people do not (yet) exist. Notably, their identity is not only unsure, but also changed by choices of the current generation. The non-identity problem has a normatively significant implication illustrated in the following case: it is intuitively plausible to choose a Conservation policy over a Depletion one. However, which policy is chosen affects the identity of people, such that personal identities vary depending on the policy choice. Insofar as person-affectedness is concerned, we cannot deem that Conservation is better than Depletion because the identity of future people affected by each policy differs in significant ways (Parfit, 1984: 361–4). The non-identity problem may seem a serious challenge to the all-affected principle, for the all-affected principle apparently presumes the identification of future persons who are possibly affected by political decisions of the current generation. Unless the affected are identified, their interests cannot be counted such that the all-affected principle drives the existing polity to include the affected. However, this is not so, since there is no need to specify the individually affected under the all-affected principle. To grasp this, notice that the non-identity problem arises due to a narrow person-affecting view, according to which the exact identity of persons is requisite for evaluating (possible) states of affairs. The non-identity problem can be evaded if we employ a wide person-affecting view, according to which X (Depletion) is worse than Y (Conservation) if the occurrence of X would make people-in-general worse off than Y. Unlike the narrow view, the wide view is not concerned with the difference between people born by X and people born by Y, because it need not identify which persons are affected when evaluating (the outcomes of) the alternatives. In other words, the wide view enables us to claim the badness or unjustness of our actions that could undermine future people’s interests in clean or unpolluted water, whoever they are. The all-affected principle can adopt the wide person-affecting view. To this, Heyward (2008: 633) objects as follows:

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The all-affected principle says that decisions should be justifiable to all those persons who stand to be made worse off by it [sic]. It does not say that outcomes should be assessed for how they impact upon “people in general”. Hence it seems that something like the narrow person-affecting principle must underpin the all-affected principle.

We need not espouse Heyward’s view. This is because, as seen above, the allaffected principle necessitates neither the actual exercise or delegation of voting powers by future generations nor the individually specified contribution to the decision-making process and body. We can reasonably count the interests of future people as collectives under the all-affected principle. Hence, the all-affected principle is reasonably construed as an interest-based principle such that those individuals affected by a political decision can be counted in terms of their interests in the intergenerational context inevitably involving the non-identity problem.12

3.7 Conclusion This chapter has demonstrated that the all-affected principle is theoretically tenable and intuitively plausible in the intergenerational context. The all-affected principle has enjoyed a default status as a principle for solving the boundary problem. Indeed, the all-affected principle not only can avoid the circularity of a self-constituting people, but also can include future people in relevant ways that meet the requirement of political equality. In the first place, the all-affected principle is radical but plausibly inclusive if we consider the possibility that our policies could have such devastating effects on the planet that no future people could live any life at all. Nor does it dissolve normatively if we place the all-affected principle as pertaining to the normative domain relevant to political equality. Moreover, the actual exercise or delegation to current people of voting powers by future people and the individually specified contribution to political decisions are of little significance in terms of satisfying the requirement of political equality; the interests of future persons can reasonably be counted in the aggregate under the all-affected principle. Nor does the non-identity problem beset the all-affected principle if it is interpreted in ways compatible with 12

One might wonder if my wide view-based defense of the all-affected principle contradicts the wide dual person-affecting principle that Parfit (2017: 154) proposes: “One of two outcomes would be in one way better if this outcome would together benefit people more, and in another way better if this outcome would benefit each person more.” This principle is presented to avoid the repugnant conclusion that the existence of some much larger number of people whose lives are barely worth living is evaluated as better than that of many people whose quality of life is very high. The point of the wide dual person-affecting principle is its having an individualist component—that is, “one of two outcomes would be better if this outcome would benefit each person more.” My wide viewbased defense of the all-affected principle does not run counter to the wide dual person-affecting principle. This is because under the all-affected principle, the aggregated possible votes of future generations will not themselves undermine any interest of each person among them; each person’s vote reflecting his or her interest is solely almost non-influential. I am grateful to Makoto Usami for noting the importance of this point.

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the wide person-affecting view. We can thus employ the all-affected principle as the principle for constituting a demos involving future generations. This chapter does not deal with the practical questions. For example, this paper does not show what is the most relevant representation system for future people under the all-affected principle. Nor does it show what kinds of particular policies can be made to satisfy the practical conditions within the purview of the all-affected principle. These are tasks for another day. Acknowledgements I gratefully acknowledge the helpful comments and suggestions of Yukio Adachi, Makoto Usami, and Susumu Morimura. This work was partly supported by Japan Society for the Promotion of Science (JSPS) KAKENHI grants (nos. 20H01446 and 22H00598).

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Chapter 4

Another Reason for Caring About Future Generations Susumu Morimura

Abstract In this chapter, I examine Samuel Scheffler’s two books on our selfinterested (as contrasted with impartial, moral) reasons to care for future generations, and apply his ideas to environmental policies. The chapter consists of three sections. After rejecting Eric Posner’s claim that public agencies should ignore future generations (sec. 1), I present Scheffler’s original claim that our values in our activities, especially future-oriented ones, largely depend upon the existence of future people after our own deaths. In a sense their future existence can be more important to us than our continuing existence. He derives this claim from the reflections on the two imaginary cases: the Doomsday and the Infertility Scenarios, the latter being vividly imagined in P. D. James’ science-fiction novel The Children of Men (sec 2.(1)). We may qualify Scheffler’s claim to some degree in some respects, but the main points of his argument seem hard to rebut (sec. 2(2)). Though Scheffler’s arguments remain at the quite general level, I am inspired by Seana Schffrin’s distinction between preserving particular valued things and preserving the practice of valuing (and her preference for the latter) to apply Scheffler’s ideas to the problem of environmental policy in the last section (sec. 3). In this way, I offer some considerations in favor of adaptation policy rather than mitigation policy. Afterlife · Adaptation policy · Climate change

4.1 Introduction In a provocatively titled paper “Agencies Should Ignore Distant-Future Generations” (Posner, 2014), Eric Posner claims that public agencies should put no independent weight on the interests of distant future generations. Their interests are to be considered only to the extent present citizens want to fulfill them. According to Posner, officials should do what the actual electorate wants, not what is morally ideal, because S. Morimura (B) Hitotsubashi University, Kunitachi, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_4

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officials are entitled to do so by the legislature and because distant future Americans are quite unlike Americans alive now. Just as democratic governments should give priority to their own citizens’ interests over those of foreign peoples, they should also consider present citizens’ preferences alone, ignoring those of future citizens. In Posner’s memorable phrase, “Future is another country” (Posner, 2014: 74). Though some political realists may agree with Posner, I deeply disagree with him. Any policy that harms innocent people is prima facie wrong. And a policy that will certainly impose great disadvantage on future people can be properly said to harm them, whoever they will happen to be. Such a policy is morally wrong for a number of different reasons. They include, for example, consequentialist (especially utilitarian) aim-based considerations of optimizing future conditions, deontological constraints not to harm future people or impose large costs on them, and hypothetical contract with future people. Those consequentialist, deontological, and contractualist considerations all prohibit such a policy. I also suppose it is easy for supporters of virtue ethics to find a reason to condemn it, too, because such a policy shows a serious defect (e.g., insensitivity to others’ suffering) in its supporters’ characters. The possible or probable fact that the present electorate may favor some morally wrong policy would not justify it, whether it is implemented by democracy or not, and whether that policy harms foreign people or future people. In this paper, however, I want to claim that, independently of those purely moral reasons usually evoked in environmental ethics literature, even from our self-interested perspectives we have strong reasons to care about distant future generations. That is the meaning of my title.

4.2 Scheffler on the Dependence of Our Values on the Existence of Future People Since thoughts on this topic come from Samuel Scheffler’s original and penetrating book, it would be best for me to begin by summarizing his relevant arguments. (After writing my first draft, I came to know that a few writers offer lines of argument similar to Scheffler’s (e.g., Birnbacher, 2009). I do not mean to underestimate them at all, but I think Scheffler is most successful in using imaginative thought experiments to make us realize that not only venerable historical traditions but also our everyday activities such as enjoying arts and socializing depend for their value on the existence of future people.)

4.2.1 The Doomsday and the Infertility Scenarios In Lectures 1 and 2 of his Berkely Tanner Lectures Death and the Afterlife (Scheffler, 2013), Scheffler invites each of us to imagine what he calls the doomsday scenario in which the whole humankind will die out just shortly after one’s own death. If one

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recognizes this prospect, one will experience a profound dismay and find many of one’s own activities and pursuits having little or no meaning, because their significance will be lost, not by one’s own death but by the immediate disappearance of the humankind. If this conjecture is right, it means most of us value the survival of humankind as a whole, even if it occurs after our own deaths. This concern is compatible with that for our own offspring, but different from it: we want posterity in general to continue to flourish. We also hope to imagine ourselves to participate in a global future human society, just as we expect a party to continue after we leave it. In this way, we take part in activities and practices which are to be continued in future. Such participations derive not only from past-looking conservatism but also from the will to connect with the future after our deaths. In this sense, future will not be alien to us but be personalized. This hope would be certainly lost in the doomsday scenario. What matters here is the abstract idea of human civilization rather than the survival of particular people or communities. It is even clearer in the following thought experiment. Consider the infertility scenario, which Scheffler borrows from P. D. James’ science-fiction novel The Children of Men (James, 1992), where nobody will die earlier than in ordinary conditions but nobody will be born on the earth since now, either. Most people would find this prospect as nearly terrible as the doomsday scenario, and the society would be rife with fatal apathy and despair, even though all the living people can expect to live long as usual. Not only artistic and scientific pursuits that are intended to connect with future but also such everyday activities as eating and appreciating nature, which give instantaneous pleasure to us, would lose much of their appeal. The reason is persuasively described by Scheffler as follows: We normally understand such things as the appreciation of literature and the arts, the acquisition of knowledge and understanding of the world around us, and the enjoyment of the appetitive pleasures to be constituents of the good life. This means that we take a certain view about the place of these goods in a human life as a whole. But [….] our conception of “a human life as a whole” relies on an implicit understanding of such a life as itself occupying a place in an ongoing human history in a temporally extended chain of lives and generations. (Scheffler, 2013: 43)

This conjecture means that although the prospect of the ultimate deaths of all the living including us is no catastrophe yet that of the disappearance of humankind in a near future is intolerably horrible. It implies that our egoism is exaggerated and has certain limits. The infertility scenario is horrible even if all the last living people including us are expected to live materially comfortable lives. Thus, both the doomsday and the infertility scenarios lead to the conclusion that what matter to us greatly depends on the existence of the afterlife: the collective life of future generations after our deaths. Evaluating something is a diachronic phenomenon, both because it typically includes the desire to preserve the object and because evaluation seriously depends on the existence of future generations. The doomsday scenario and the infertility scenario also suggest that our individualism as well as egoism tend to be overestimated. Our concern about future

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generations after our deaths means that our evaluation has an implicit social dimension: we evaluate the survival of humankind as a whole rather than individual people’s welfare. But why are we usually so unaware that the existence of future generations after our deaths is so important to ourselves? On Scheffler’s view, it is partly because the existence of future generations has been taken for granted and partly because we tend to misunderstand the nature of human egoism. The importance of future people’s existence to us is a matter of our prudential values, and it should be distinguished from our moral obligation to them. On the one hand, future people causally depend upon us: their welfare, identity, or existence itself is affected by our conduct. On the other hand, our values depend upon future people to a great degree: many of our activities and practices would lose their significance without future generations. If we fully realize this situation, we will be less egoistic in a narrow sense and take much more care of future generations. Indeed, Scheffler supposes most of us would prefer our own death in this populated world to our lonely survival on the earth without any other people. After Death and the Afterlife, Scheffler published another short book Why Worry about Future Generations? (Scheffler, 2018), in which he further explores the nature and implications of our concern for future generations. In this paper, I put aside that book for the most part, because it does not retract any of his earlier claims. But I will mention one issue touched therein concerning the proper object of our activity of evaluation in the section 3.

4.2.2 Some Worries on Scheffler’s Arguments We may doubt the cogency of Scheffler’s arguments on some issues. First, we may suspect that Scheffler’s conjectures about people’s reactions to the doomsday and the infertility scenarios are too pessimistic. Some commentators suggest many mundane activities would continue to matter us there (Frankfurt, 2013: secs.2–4, 7; Wolf, 2013: sec.2). Those activities include those of comforting and caring other people as well as many sorts of artistic and intellectual ones, whose values are supposed to inhere in those activities and independent of the existence of future people. But I do not find this sort of criticism compelling. Of course, different people would respond to the prospect of human extinction in different ways. It is a matter of human psychology and ought to be subjected to experimental philosophy. But I, for one, am convinced of Scheffler’s conjectures overall. The conjectures offered by Scheffler’s critics seem to underestimate our implicit but deep-rooted conviction in the continuing existence of humankind in the future. Most of our creative, inventive, and preservative activities will lose their appeal if we recognize there will be nobody to appreciate them. Indeed, even Scheffler’s own conjectures, which owe a lot to P. D. James’s penetrating imagination, may seem rosy to many. If one reads Brian Aldiss’ earlier science-fiction novel Greybeard (Aldiss, 1964), in which a much more

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turbulent version of the infertility conditions is vividly depicted, one might expect more distressing reactions. Second, some commentators on Scheffler’s lectures doubt our concern for future generations is altruistic rather than egoistic (e.g., Frankfurt, 2013: sec.6; Wolf, 2013: sec.1; Kolodny, 2013: sec.4). Cannot those who care about far distant future people be said to be egoistic if they so only because they hope to realize their own values and aims in the future? But this problem is a largely terminological matter, as Scheffler points out in his reply (Scheffler, 2013: 177–81). An egoist in Scheffler’s sense is not a person whose “aims are largely or exclusively focused on himself or his own satisfaction or gratification,” but one whose “emotions are never or almost never directly affected by what happens to other people” (Ibid.: 178). Most people are not egoistic in this sense if they find the infertility scenario horrible. Just as our concern for our family and acquaintances is hardly egoistic if not altruistic, our concern of human posterity is not egoistic. Yet such concerns are partial to the extent that they are usually connected with our own well-being broadly conceived. So I am ready to admit that strictly speaking this kind of concern for future generations is not moral but self-interested or prudential, because it derives from our own values, not from such characteristically moral principles as impartial benevolence, deontological obligation, or hypothetical contractualist constraints. But since this concern is universally applicable, we may evaluate it much higher than familiar sorts of collective egoism such as prevalent nationalism, ethno-centrism, and nepotism. Still, this concern is far from temporal impartiality since we are usually biased in favor of nearer future in comparison with far future. I will return to this issue in the next section.

4.3 The Policy Implications of Scheffler’s Arguments Although Scheffler’s arguments have possible policy implications for intergenerational problems, he does not explicitly address them. I offer some tentative suggestions on this topic. Scheffler’s argument shows that most of us implicitly but greatly value the existence of future generations and that this concern mainly comes from our own personal values. I take it as a welcome news, because with this recognition in addition to moral motives we would be much more inclined to care about future generations. I do not suppose everyone shares such concerns, however. Certainly, there are some people who would not find the infertility scenario terrible. Indeed, some pessimists and anti-natalists such as David Benetar (Benetar, 2006) may find it attractive. But I suppose their negative views on human life are too implausible to convince most of us. After all, most people find life in normal circumstances worth living. There are also many people who do not find much importance in connecting with ongoing human activities and practices. Such people include, among others, those occupied with the pursuit of purely sensuous instantaneous comfort and pleasure alone, those who have no or little interest or knowledge in human history or culture, and those

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who are too busy in eking out scanty livings. Moreover, believers in eschatological religions might have no reason to be dismayed by the prospect of the extinction of humankind on the earth. I doubt those people would be persuaded of the importance of our having future generations by Sheffler’s arguments or, for that matter, anyone’s. After all, as Susan Wolf notes (Wolf, 2013: 124–5), Scheffler himself resists talking about how we should respond to the prospect of human extinction and sticks to conjectures about how we would respond instead. In other words, Scheffler’s arguments are not prescriptive but chiefly exploratory. Nor do I intend to moralize those people mentioned in the last paragraph about the importance of future generations. I only hope they are neither so numerous nor active as to impede probable general conversion into the view that the existence of future generations matters to us, and I am content to demonstrate that most of us have more reasons to care about future people than we usually suppose. But what kinds of policies does that concern require? Seana Shiffrin makes some important remarks concerning this problem. In her comment on Scheffler entitled “Preserving the Valued or Preserving Valuing?” [Shiffrin, 2013], Shiffrin distinguishes two ways of evaluating something: to want its preservation and sustenance, on the one hand, and to want the continuance of the practice of valuing, on the other. She claims that what is really horrible about the extinction of humankind is not the termination of the particular valued things per se, but their termination without good reasons and the end of the general practice of evaluating. Her another related claim is that we are less concerned with only being a part of human history and traditions than with being a part of ongoing future-directed practice of valuing. Though I find Shiffrin’s claims quite convincing, I suspect that to many of us the particular things they value matter more than the abstract and general practice of valuing Shiffrin finds so important. We usually value existing things rather than merely possible ones and ones in future, to say nothing of what we do not conceive of at all. And perhaps Shiffrin’s high appraisal of general abstract practice of evaluation in comparison with particular existing valued things may seem too ethereal and detached from our everyday experience to motivate us. Indeed, Scheffler himself responds to Shiffrin’s claims not by agreeing with her but by taking the intermediate position between Shiffrin’s and the purely particularistic position on valuing. He thinks both positions have some plausibility (Scheffler, 2013: 191–6). Moreover, in his later book, Scheffler responds to Shiffrin’s suggestion of the abstract practice of valuing by removing his focus from instantiated tokens of our values to their types (Scheffler, 2018: 69. Cf. also Scheffler, 2010: Chapters 10– 11, on the normative importance of culture and tradition), thus making his position less particularistic. Even then, however, he does not agree to Shiffrin’s claims; he examined G. A. Cohen’s cultural conservatism, as distinguished from and sometimes opposed to political (free market) conservatism, with much sympathy, and argues for our temporal bias in favor of the present and near future compared with far future (Scheffler, 2018: Chapter 5). It means Scheffler parts company with Parfitian axiology, which is now popular in population ethics. While Parfit seeks theory X that identifies the optimal future conditions in temporally neutral consequentialist terms, Scheffler’s approach is more akin to virtue ethics and commonsense morality

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in allowing temporal partiality in favor of near future. If our concern for future people justifiably includes not only moral considerations but also prudential ones, this kind of partiality which means temporal discounting cannot be dismissed. I already acknowledged my agreement with Shiffrin’s position. Though I for myself have some conservative temperament in private spheres such as everyday life, tastes, and hobbies, yet I believe we should take seriously the fact that future people may have very different values and practices from ours, which are and will be hardly conceivable for us, just as many of the very values we ourselves have would have been alien or even disagreeable to most of our ancestors. We are happy that they did not make impossible beforehand the appreciation and implementation of our values. We should make sure of the conditions necessary to future people’s flourishing activity of valuing; we should not impose our own values upon them. We may be justified in facilitating the preservation and sustenance of our values for self-interested or other reasons, but unjustified in prospectively precluding means by which future people develop or create their own values. But what are those necessary conditions for future people’s flourishing evaluation in the concrete? They would certainly include not only sufficient material, physical, and environmental living conditions but also cultural ones. And they do not necessarily preclude existing valued things, seemingly despite the argument above. For human activities seldom begin from nothing: they usually depend on present (and past) concrete practices, ideas, and traditions. In this way, conserving things and activities valued by us at present may help future generations to lead their good lives. But it may also tend to prevent them to do so, by interfering with their choice of, and experiment with, values. Hence, the policy of heavy-handed cultural conservatism is unjustifiable just as unsustainable policies are so, because both policies give undue priority to the interest of the present generation at the cost of future ones. Both from a temporally neutral impartial perspective and from the abovementioned somewhat self-interested yet abstract perspective emphasizing the importance of the practice of valuing in general, what really matters is not the continuation and sustenance of particular practices, folkways, cultures, and traditions but that of cultural works and activities in general. In human history, numberless cultures disappeared, whether by degrees or suddenly, while other numberless ones were born and had changed. If we regard the earth as a big living anthropological museum that preserves existing cultures and traditions, then different peoples would be bound to live in their different cultures into which they were born, and to hand down, make sense of, interpret, and develop their cultural identities. But the earth is to be regarded instead as a place for individual persons to live, create and enjoy their own lives across political and natural borders. Invention, experimentation, and interfertilization make culture prosper, that is the beauty of cultural globalization. In this view, certain cultural practices, say some ceremonies, customs, dances, songs, or even languages, may disappear with reasons, and it would not be a tragedy if those practices are properly registered, and the relevant people can lead good lives in other ways. Individual persons may have human rights to live culturally decent lives, but no culture has a

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right to survive. So I endorse a cosmopolitan understanding of flourishing culture as opposed to a communitarian one. Clare Heyward (Heyward, 2013) claims that, since climate change threatens those particular traditional lifestyles which are deeply rooted in fragile locality such as atolls, the governments should minimize such cultural losses by encouraging the emigrants therefrom to aggregate in some region, and that if this preservation policy proves impossible to implement, they should vindicate those cultural values by preserving and memorizing their material and immaterial products at least. Heyward finds the prospect of losses of local cultures by climate change tragic, but she does not think they are necessarily unjust. My observation in the last paragraph is compatible with her claims. But I do not mean to underestimate the importance of cultural conservation, because conserving particular things (both material and immaterial) is often the best way available to develop the general practice of evaluation itself, because many inventions and discoveries depend upon past works and ideas, and because conservation of past and present cultures simply contributes to historical and anthropological investigation and the enlightenment of public. One caveat. My argument in this section may make one suspect that I overestimate the value of culture; one may claim that physical conditions of future people’s lives are much more crucial than cultural ones. But I do not deny at all that physical conditions of future people are more crucial. Indeed, they are preconditions of any culture. Yet in this chapter, for argument’s sake I took them for granted in order to focus on the dependence of the present people’s values on cultural viability in the future. Suppose, shortly after our deaths humankind will live extremely scanty lives without any cultural opportunities or achievements: almost all cultural activities and inheritances will die out. If we know such future in advance, then we would lose much of our sense of value in our lives. We do not want future people to live mere primitive lives; we do not want them only to conserve our culture, either; we want them to inherit our culture and develop it in a way intelligible to us. We hope so for both their and our sakes. I conclude by applying the above arguments to the popular dichotomy of environmental policies into mitigation and adaptation. If we take Shiffrin’s position that gives priority to the continuation of human (or rational) culture in general over that of existing particular traditions and practices, then adaptation policy would be preferable to mitigation policy when the latter is impractical or too costly. For example, though it is obligatory to compensate those who are forced to emigrate by climate change, it may be optional to preserve their culture in the concrete.

References Aldiss, B. (1964). Greybeard. Faber and Faber. Benetar, D. (2006). Better never to have been: The harm of coming into existence. Oxford University Press.

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Birnbacher, D. (2009). What motivate us to care for the (distant) future?. In A. Gosseries and H. L. Meyer (Eds.), Intergenerational justice. Oxford University Press. Frankfurt, H. G. (2013). How the afterlife matters. In S. Scheffler (Ed.), Death and the afterlife (pp. 131–141). Oxford University Press. Heyward, C. (2014). Climate change as climate injustice. In T. Brooks (Ed.), New Waves in Global Justice (pp. 149–169). Palgrave Macmillan. James, P. D. (1992). The children of men. Faber and Faber. Kolodny, N. (2013). That I should die and others live. In S. Scheffler (Ed.), Death and the afterlife (pp. 159–173). Oxford University Press. Posner, E. (2014). Agencies should ignore distant-future generations. In A. Sarat (Ed.), Intergenerational justice (pp. 71–75). International Debate Education Association. Scheffler, S. (2010). Equality and tradition: Questions of value in moral and political theory. Oxford University Press. Scheffler, S. (2013). Death and the afterlife. Oxford University Press. Scheffler, S. (2018). Why worry about future generations? Oxford University Press. Shiffrin, S. V. (2013). Preserving the valued or preserving valuing? In S. Scheffler (Ed.), Death and the afterlife (pp. 143–158). Oxford University Press. Wolf, S. (2013). The significance of doomsday. In S. Scheffler (Ed.), Death and the afterlife (pp. 113– 129). Oxford University Press.

Chapter 5

Responding to Existential Risks: Grounds, Targets, and Strategies Makoto Usami

Abstract The past two decades have witnessed the growing literature on existential risk or X-risk, which refers to the peril that threatens the destruction of humanity’s potential for the development of civilization. One of the notable features of existential risk studies (ERS) is that leading theorists’ concerns for future generations are based on total utilitarianism. Since total utilitarianism is susceptible to a paradox known as the repugnant conclusion, an alternative argument for futurity concerns is needed. Another feature is what can be called the etiologic approach, whereby researchers explore the ways to prevent discrete annihilative hazards from occurring. However, this approach exhibits three controversial properties: singularism, restrictivism, and preventivism. To address the difficulties faced by these properties, the scope of ERS should be broadened in terms of both target risks and responsive strategies. On the other hand, the more inclusive the scope of the studies is, the more elusive their observations might be, unless conceptual devices are created to avoid such elusiveness. Against this backdrop, the present chapter aims to provide an alternative ground for caring about future people and to expand the scope of ERS beyond the boundaries set by singularism, restrictivism, and preventivism, while offering a refined definition of existential risk and a renovated conceptual map of risks. Keywords Existential risk studies · Global catastrophic risks · Utilitarianism · Sufficientarianism · Etiologic approach

5.1 Introduction The past two decades have witnessed a burgeoning body of literature on a novel idea: existential risk. Existential risk, or X-risk in abbreviated form, can be provisionally defined as the peril that threatens the destruction of humanity’s potential for development by annihilating the human race or by wrecking it in some other ways. Perils in this kind have been divided into two broad categories: the first is a group of M. Usami (B) Kyoto University, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_5

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natural risks ranging from supervolcanoes to asteroids and comets, and the second is a variety of anthropogenic risks including weapons of total destruction, climate change, engineered pandemics, lethal autonomous weapons systems, and unaligned artificial intelligence (AI). X-risks constitute a subset of global catastrophic risks (GCRs), which refer to the hazards that have the potential to cause the global-scale death and destruction of humanity. Distinct from religious doctrines of apocalypticism dating back to ancient times, secular speculation on human extinction, informed by scientific observations, emerged only in modern times (Moynihan, 2020). Classical thinkers who suggested the end of humanity include Baron de Montesquieu, Friedrich Nietzsche, and Arthur Schopenhauer. In the middle of the twentieth century, a number of scientists began to give the general public stark warnings as to specific global threats to human safety and survival. Some have foretold the global environmental degradation (Vogt, 1948) and worldwide famine (Ehrlich & Ehrlich, 1968), both allegedly caused by overpopulation. Others have sounded an alarm about the possibility of nuclear warfare, as illustrated by the Russell-Einstein Manifesto in 1955, the Doomsday Clock created in the Bulletin of the Atomic Scientists in 1957, and the hypothesis of nuclear winter put forward by several scientists, notably Carl Sagan (1983). In contrast with preceding academic works and political statements focusing on a few salient types of threat to humanity, the Doomsday argument, first suggested by Brandon Carter (1983) and then elaborated by John Leslie (1996), claims to predict earlier end dates for our species, assuming that we are probabilistically typical members of the group (cf. Gott, 1993). As opposed to alarming works on a few types of hazards and to speculative reasoning in the Doomsday argument, Nick Bostrom (2002) made an unprecedentedly comprehensive examination of real-world calamities, coining the term “existential risk.” Around the same time, Martin Rees (2003: 8) shocked the public by suggesting that the odds are “no better than fifty-fifty” that the present civilization will survive to the end of the twenty-first century without a serious setback. Inspired by Bostrom’s seminal paper, a growing number of researchers from astrophysics, biology, computer science, philosophy, risk analysis, and statistics, among others, have engaged in existential risk studies (ERS). In addition to numerous papers published in scholarly journals, introductory books largely intended for the general public (Häggström, 2016; Torres, 2017) have appeared. Toby Ord (2020) recently discussed existential risks from the perspective of effective altruism, the emerging philosophical and social movement that advocates using evidence and reason to figure out how to benefit others as much as possible and taking actions on that basis (cf. MacAskill, 2015: 222–242; Beckstead, 2019). In the face of right-wing populism arising in Europe, the United States, and some other parts of the world, the warning was issued that populism hinders effective responses to X-risks and constitutes one of such risks by itself (Leigh, 2021: 103–156). One of noticeable features of the current ERS is that leading theorists’ concerns for those who will live in the future are based on total utilitarianism, which recommends maximizing the total welfare of relevant humans. Offering an additional support for long-term concerns, effective altruism also relies on this tradition. Total utilitarianism

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assesses the value or goodness that a state of affairs has by calculating the sum of wellbeing of all persons existing in the state. Let V (x) denote the value of a state x, S(x) represent a set of individuals residing in x, and wi be the wellbeing of an individual i ∈ S(x). Total utilitarianism’s assessment of each state is given by Eq. 5.1: VT ot (x) =

∑

wi

(5.1)

i∈S(x)

Both Bostrom (2013: 18–19) and Ord (2020: 43) cite the thought experiment conducted by Derek Parfit (1984: 453–454), in which he asks the reader to compare three scenarios: (1) Peace (2) A nuclear war that kills 99% of the world’s existing population (3) A nuclear war that kills 100%. Most people supposedly think that the difference in goodness between (1) and (2) is larger than that between (2) and (3), but Parfit insists on the opposite: the latter difference is much larger than the former. As the earth will remain for at least another billion years, he argues, the past civilization for a few thousand years may be only a tiny fraction of the whole civilized human history if we do not destroy humanity. His argument evidently relies on the version of total utilitarianism that looks out over the entire human history, whether possible or actual.1 However, total utilitarianism is susceptible to a variety of criticisms including counterintuitive results, disregarded personal integrity, and arbitrary utility measurement, just to mention a few. I here single out the repugnant conclusion, which was posed by Parfit (1984: 388) himself and has since been admitted as a monumental observation in population axiology. The repugnant conclusion is the assertation that when a large population exists with a very high quality of life, there must be a much larger imaginable population whose existence, ceteris paribus, would be better even though its members have lives that are barely worth living (for a technical discussion, see Chapter 6 of this volume). Compare one state of affairs, in which each of 10 billion people has ten units of wellbeing, with another state, where each of 120 billion has only one unit: (4) 10 billion people: 10 (5) 120 billion people: 1. The total wellbeing in (4), 100 billion units, is smaller than that in (5), 120 billion. Therefore, total utilitarians must conclude that (5) is better than (4), presumably going against an intuition of most people. Taking seriously the implausible consequence of total utilitarianism, one should search for an alternative argument that justifies caring about posterity, which is a leitmotif for ERS. Despite the great importance 1

In addition to the tradition of total utilitarianism, Bostrom’s works also display two recent trends of thoughts: techno-utopianism and transhumanism. I here examine neither of them as they are not widely accepted by other X-risk scholars.

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of grounds for futurity concerns, theorists in ERS to date have failed to explore alternative justifications, implicitly counting on the total utilitarian orthodoxy. Another feature of the X-risk scholarship relates to its methodology: many researchers have inquired the ways to prevent discrete annihilative hazards from occurring. Call this the etiologic approach. The approach begins with the identification of distinct risks predictably encountered by humanity, while recognizing the possible ones that are still unknown to us. Under the above-mentioned dichotomy between natural and anthropogenic risks, different hazards are identified and investigated within each category. Next, scientists endeavor to estimate the probability of each target risk type by conducting mathematical modeling and trend extrapolation concerning natural calamities and by doing expert elicitation about various anthropogenic catastrophes. As a result of their accumulated estimations to date, they currently agree that the likelihood of every type of anthropogenic risks is much higher than that of any natural risk type, while diverging as to the exact probability of each. In the final stage of that approach, they examine how to respond to each disaster identified, assuming prevention as the only feasible response strategy. The idea of prevention as the sole responding measure seems to stem from the presupposition that each disaster recognized in the first stage, if it occurred, would cause an irreversible and irrecoverable consequence—human extinction. The etiologic approach appears pertinent, for any effective prevention of an extinctive hazard would require identifying the target hazard and estimating its probability in advance. Yet a closer look reveals that this appearance is misleading as the approach has three controversial properties. The first is what can be called singularism, which refers to the tendency for many X-risk experts, along with their predecessors focusing on individual dangers such as global environmental destruction, world-scale famine, and all-out nuclear war, to assume that one or another type of annihilative calamity might separately occur in the predictable future. What they miss here is the possibility that two or more types of calamities simultaneously happen, exacerbating or alleviating each other or one another. If a laboratory-made pandemic with high mortality rate broke out amid anthropogenic climate change underway, for instance, the combined threats to human health and safety could be fatal. The second characteristic of the etiological method may be named restrictivism, by which I mean that investigators tend to narrow their interest down to a limited range of the catastrophes that would permanently have devastative impacts on a global scale. This implies that less-than-disastrous, narrower-than-worldwide, and shorter-than-enduring risks evade their scrutiny, however likely it is that some of these risks may deteriorate into the existential ones in unfavorable circumstances. The dangers that are initially non-devastative, sub-global, or non-permanent but might grow into the existential ones can be christened quasi-existential risks. An example of quasi-existential risks is an armed conflict between two neighboring countries of geopolitical significance, which might trigger a full-fledged warfare between rival superpowers, resulting in the global nuclear war. The third feature, connected with the second, can be dubbed preventivism, according to which only the feasible strategy responding to any existential hazard is to prevent it from occurring in the first place. Preventivism seems to fail to answer

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the following questions posed in situations where quasi-existential hazards shock a substantial part of humanity. How should people mitigate such a hazard in order that it will not deteriorate into the existential one? How can they effectively recover from the serious loss and damage caused by it? In the etiologic procedure, singularism and restrictivism operate in the early stage of identifying target risks, whereas preventivism works in the later stage of exploring responses to the risks. Some recent studies on X-risks, as well as GCRs more broadly, provide the concepts and frameworks that can be used to remedy singularism, restrictivism, and preventivism. Employing these concepts and frameworks, as I will argue, one can recognize different correlations between various sorts of perils, cover quasiexistential hazards, and design possible phases that follow the occurrence of a catastrophe. On the other hand, the more inclusive the coverage of ERS is, the more elusive the observations made therein might be, unless conceptual devices are created to avoid such elusiveness. To widen one’s horizons in a rigorous manner, one needs an accurate definition of existential risk and a precise conceptual map of risks within which X-risks are aptly situated. To meet these challenges to the current ERS, this chapter first offers a refined definition of existential risk as well as a revised picture of risks at large in which both existential and quasi-existential perils can be properly located. It then pursues two aims: providing a new ground for concerns about future people and expanding the scope of ERS beyond the boundaries set by singularism, restrictivism, and preventivism. In the following sections, I launch by revising an influential definition of existential risk and by reconstructing a well-known map of risks in general (5.2). Next, turning to reasons for caring about posterity, I demonstrate that alternative versions of utilitarianism, while circumventing the repugnant conclusion, arrive at other counterintuitive results and fail to address distributive justice issues (5.3). Then, a non-utilitarian justification for future concerns is devised and developed, which is a form of sufficientarian theory of distributive ideals (5.4). Furthermore, I discuss how to broaden the scope of ERS by overcoming singularism, restrictivism, and preventivism with the help of the concepts and frameworks recently suggested in the literature on GCRs (5.5). The chapter concludes by noting how different arguments made in the preceding sections are interconnected (5.6).

5.2 The Definition and Location of Existential Risk As the idea of existential risk is novel, appearing in academia only in the early 2000s, the first step toward scrutinizing this category of risks may be to ask how to define it precisely.2 Bostrom (2002: 2) famously defined existential risk as the one “where an adverse outcome would either annihilate Earth-originating intelligent life or permanently and drastically curtail its potential.” He later refined the definition, articulating existential risk as the one “that threatens the premature extinction 2

This section is largely based on Usami, 2019a: 114–116.

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of Earth-originating intelligent life or the permanent and drastic destruction of its potential for desirable future development” (Bostrom, 2013: 15). However, the first part of this articulation is redundant because the extinction of the life of a certain species is a necessary condition for the destruction of its potential. This point is cogently recognized by Ord (2020: 37), who simply defines existential risk as the one “that threatens the destruction of humanity’s longterm potential.” Ord’s focus on the destruction of human potential rather than the extinction of human race seems pertinent. In most cases of a global catastrophe shocking humanity, I speculate that a situation in which thousands or tens of thousands of people are left behind somewhere in the world in the aftermath is much more likely to occur than the circumstance where all humans are swept away by the catastrophe at once. These people might survive with hunting and gathering or primitive agriculture for decades, centuries, or millennia. Call this situation the scenario of earth survivors. Even in this scenario, many of us are probably inclined to say that an existential disaster did happen. This illustrates that what we deem as existential is the collapse of human ability to sustain and develop civilization, not exclusively the annihilation of Homo sapiens. One can go further. Imagine another scenario: after thousands or tens of thousands of people begin to live in a huge spacecraft, a global calamity occurs, killing all humans across the world and making the globe uninhabitable. The spacecraft residents then decide not to go back to the earth but to stay in space, developing a highly civilized culture. Call this the scenario of space survivors. Many of us seem to think again that the calamity was an existential disaster, which indicates that what matters to us when we think about existential risks is whether the vast majority, rather than total, of the world population can hold the potential for developing civilization. Taking into account the two scenarios of survivors, on the earth and in space, I advance a refined version of Ord’s definition: an existential risk is the one that threatens the permanent destruction of the vast majority of humans’ potential for the development of civilization. Some might ask me what the vast majority exactly means, 90%, 99%, or 99.9%, for example. I can safely leave this question open since it would be difficult, if not impossible, to conceive of the risk that endangers 90% of the world population, but not 99%. The next step in my preliminary consideration is to seek to provide a complete picture of risks at large in which X-risks can be aptly situated. My point of departure is the oft-cited typology presented by Bostrom (2002: 2), which consists of three dimensions: scope, severity, and probability. Scope refers to the size of a group of those who are at risk; severity means the degree of how badly each member of the group would be affected; and probability is the best subjective estimate of the probability of the adverse outcome. In the scope axis, he separates three layers: personal, local, and global; on the severity axis, he distinguishes between endurable and terminal levels. Within this map, existential risks are characterized as global and terminal. Bostrom (2013: 16–17) later expanded the map in two ways: in the scope dimension, trans-generational and pan-generational perils are added, respectively; in the severity dimension, two existing categories are supplemented with that of imperceptible risks, and “terminal” is replaced with “crushing.” The scope and severity

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axes of his new map appear in Fig. 5.1, in which X-risks are now counted as the pan-generational and crushing ones (Bostrom, 2013: 17). It seems that Bostrom’s expanded map of risks requires revisions in three respects. First and foremost, he places local and global risks as well as trans-generational and pan-generational risks in the same dimension, focusing on the size of the population possibly affected. In doing so, he fails to make a distinction between temporal and spatial dimensions, which is arguably helpful in recognizing various perils affecting different parts of humanity in separate periods of time. Consider the fact that 40% of 6,700 languages spoken in the world, many of which are used by Indigenous peoples, are currently in danger of disappearing. It is obviously a pan-generational damage at a local level for an Indigenous tribe to lose its inherited language, which is supposedly connected to the members’ identities, customs, and values. On the other hand, the COVID-19 outbreak in 2020 happened on a global scale but cannot go beyond the lifetime of one generation. Bostrom’s unidimensional placement of heterogenous perils obscures two distinct types of human suffering: pan-generational/local and temporary/global. The second shortcoming of his extended typology, linked with the first one, is that it does not provide a separate category for the possible disasters whose global impacts disappear in a relatively short time, such as natural pandemics that typically end within several years. Known as the Spanish Flu, the Great Influenza Scope (cosmic) Destruction of cultural heritage

X

Biodiversity reduced by one species of beetle

Dark Age

Aging

Global warming by 0.01 ºC

Thinning of ozone layer

Ephemeral global tyranny

local

Congestion from one extra vehicle

Recession in one country

Genocide

personal

Loss of one hair

Car is stolen

Fatal car crash

pan-generational

One original Picasso painting destroyed

trans-generational

global

existential risk

global catastrophic risk

Severity imperceptible

Fig. 5.1 Two-dimensional map of risks

endurable

crushing

(hellish)

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temporary Space

continual perpetual

global

existential risk

local

personal Time

Severity negligible

endurable

devastative

Fig. 5.2 Three-dimensional map of risks

broke out in 1918, killing an estimated 50 million to 100 million people worldwide; however, it almost ended in 1920. The third problem is that it is misleading to use the adjective “imperceptible” in referring to minor threats since some existential risks posed by new technologies, notably biotechnology and nanotechnology, are formidable partly because they are difficult to recognize. To remedy the limitations of Bostrom’s three-dimensional typology of risks, I shall propose a new typology comprizing four dimensions: space, time, severity, and probability. I distinguish between personal, local, and global hazards in the space dimension, following Bostrom’s initial and expanded pictures. In the temporal aspect, dangers fall into three new categories: temporary, continual, and perpetual. With regard to severity, perils are divided into negligible, endurable, and devastative groups. These dimensions are shown in Fig. 5.2, in which existential risks fall under a global, perpetual, and devastative type (dark gray area), and GCRs include some other types as well (light gray area). A shaded area will be briefly mentioned in 5.5. Using this typology, I will discuss grounds for concerns about future people as well as strategies for cognizing and confronting X-risks in the following sections.

5.3 Utilitarian Views Examined Total utilitarianism, implicitly embraced by many X-risk thinkers including Bostrom and Ord, is notoriously susceptible to the repugnant conclusion, as previously noted. To circumvent this conclusion, some utilitarians have put forward average utilitarianism instead, which assesses the value of a state of affairs by measuring the average

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wellbeing of individuals therein. Its assessment of a state’s value is given by Eq. 5.2: V Ave (x) =

∑

wi / N (x)

(5.2)

i∈S(x)

where N(x) denotes the number of individuals included in S(x). More succinctly, the assessment can be reformulated as follows: V Ave (x) = X

(5.3)

where X is the average wellbeing in x. While avoiding the repugnant conclusion, average utilitarianism leads to what Gustaf Arrhenius (2000: 251, cf. 261) names the sadistic conclusion, recognized as a significant observation in population axiology. The sadistic conclusion holds that when adding people without affecting the welfare of original people, it can be better to add those who have negative welfare rather than those with positive welfare (see Chapter 6 of this volume). What does negative welfare mean? In the standard philosophical account, a person’s welfare throughout her lifetime is negative when the person’s life is worse than her nonexistence. As an illustration of the sadistic conclusion, compare three states of affairs: (6) 1 billion people: 5 (7) 1 billion people: 5; 1 billion people: 1 (8) 1 billion people: 5; 10 million people: –10. The average welfare in (7) is 3, which is smaller than that in (8), 4.85. Therefore, average utilitarianism must proclaim that (8) is better than (7) even though numerous people in (8) suffer from life that is much worse than nonexistence. Average utilitarianism and many other forms of this tradition, except for G. E. Moore’s ideal utilitarianism, are included in the type of welfarism that renders a person’s wellbeing as the cardinal and interpersonally comparable psychological state of the person, for instance, his pleasure and pain. In welfarist terms, it makes sense to mention a negative level of wellbeing. However, in a debate over what kind of good should be distributed, there are two other camps than welfarism. Resourcism interprets an individual’s wellbeing as a set of external means to her good life, such as private goods and income. The capability approach reads it as her capabilities, which refer to the doings and beings that she can achieve if she chooses. Since mentioning a negative level of resources or capabilities does not make sense, the sadistic conclusion applies to neither resourcism nor the capability approach. Yet a weaker conclusion in the same vein arguably applies to both positions. To underline an extensive range of results resembling the sadistic conclusion, I elsewhere offered the idea of the revolting conclusion (Usami, 2019b: 199). Such conclusions can be divided into two categories. The strong revolting conclusion stipulates that, when both a population with a high level of wellbeing (PS ) and a population with a lower but positive level (PT ) exist in one state of affairs, there must be another state that would be better, in which PS and a smaller population with a

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negative wellbeing level (PU ) reside. That is essentially identical with the sadistic conclusion. The weak revolting conclusion states that, compared with the state where PS and PT exist, there must be another state that would be better, in which PS and a smaller population with zero level (PV ) live. Consider (7) and (8) above as well as (9) below: (9) 1 billion people: 5; 10 million people: 0. The average wellbeing of original and additional people is 3 in (7), 4.85 in (8), and 4.95 in (9), respectively. Therefore, average utilitarianism, which works in welfarist terms, deems (8) more desirable than (7), endorsing the strong revolting conclusion. It a fortiori assesses (9) as better than (7), reaching the weak revolting conclusion. If one entertained average resourcism, this position would arrive at the weak revolting conclusion, while escaping the strong one. That is because it does not make sense to say that a person holds a negative level of resources. For a similar reason, the average capability approach would get to the weak revolting conclusion, but not the strong one. By contrast, total utilitarianism is evidently immune from both sorts of revolting conclusion, and the same would be the case with the totalist version of resourcism and capability approach. Critical-level utilitarianism (Blackorby et al., 1995, 1997, 2005) addresses the repugnant conclusion in a different way from average utilitarianism. It is formulated by Eq. 5.4: VC LU (x) = N (x)(X − λ)

(5.4)

Here λ is a positive constant defined as follows: V CLU (x) increases if an additional individual’s welfare exceeds λ, and it decreases if the individual’s welfare falls short of λ. This variant of utilitarianism keeps away from the repugnant conclusion when the average welfare of a larger group of people is lower than λ. True, it bears results seemingly resembling the repugnant conclusion when the group’s average welfare is higher than λ. As far as λ is reasonably high, however, the result is not repugnant, for the group’s life on the average is then substantially better than barely worth living. A problem with critical-level utilitarianism is that it fails to prevent strong and weak forms of the revolting conclusion (Usami, 2019b: 201–202). In the previous example of (7), (8), and (9), if λ is 2, the value of each state of affairs is calculated as follows: (7´) (3–2) × 2,000,000,000. (8´) (4.85–2) × 1,010,000,000. (9´) (4.95–2) × 1,010,000,000. The value of (7´), 2,000,000,000, is smaller than that of (8´), 2,878,500,000, which is in turn smaller than that of (9´), 2,979,500,000. Hence critical-level utilitarianism concludes that (9´) is the most desirable, followed by (8´), and (7´) is the least, which expresses both strong and weak versions of the revolting conclusion. The criticallevel type of resourcism and capability approach, as we can conceive, would imply the weak, but not strong, revolting conclusion.

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In addition to the general observation that total, average, and critical-level forms of utilitarianism can produce counterintuitive results, there are reasons why these are particularly problematic in the context of existential risk. Utilitarian X-risk writers tend to stress long-lasting loss caused by an existential catastrophe, meaning that it hinders countless individuals from coming into existence. The loss is undoubtedly enormous. When highlighting the risk that hinders possible people from existing, however, they pay scant attention to two crucial issues. First, if an existential disaster occurred, the last generation of humanity—or many generations following the disaster in cases of human potential destroyed in any other ways than annihilation— would suffer from severe damage to their health and safety. Their serious sufferings, which would be very different in nature from the hindrance of the following possible generations’ existence, deserve special consideration in ERS. Nonetheless, it is difficult for total, average, and critical-level utilitarianism to take into particular account the sufferings of the last generation(s). Unlike these schools, negative utilitarianism can take the last people’s special hardship into full consideration. As opposed to positive utilitarianism, which demands both the maximization of people’s pleasure and the minimization of their pain, negative utilitarianism concentrates on the pain minimization. The second issue disregarded by utilitarians at large stems from the well-founded prediction that some groups within a single generation will suffer more severely than others if a calamity hits humanity. Take anthropogenic climate change as an example. As demonstrated by numerous scientific findings, the vast majority of those who live in the Global South are much more vulnerable to adverse impacts of climate change than citizens in the Global North. Also, it has been increasingly recognized that low-income households, women, racial minorities, and Indigenous peoples are particularly subject to these impacts. The same arguably applies to many other types of risk, including nuclear winter and engineered pandemic. One can find the disparity of loss and damage, caused by the same disaster, between sectors in a single society or between societies. Distributive justice matters here. Utilitarian views, including total, average, critical-level, and negative ones, fail to respond to the issue of distributive injustices due to their aggregational tenet. To take into consideration the predictable disparity of suffering between haves and have-nots, majority and minority, or the advantaged and the disadvantaged, one should build up a nonaggregative and distribution-sensitive argument for futurity concerns, going beyond the utilitarian tradition. That is what the next section tries to do.3

3

Some critics (Schuster & Woods, 2021: 9, 32) object to the whole ERS by complaining that authors in the field fail to consider marginalized peoples as well as colonized experiences. They also condemn the authors for downplaying the question of how effects of a catastrophe are unevenly distributed among groups of people and between nations. However, it would be premature to assert that any possible approach to X-risks neglects the unequal distribution of sufferings at national and global levels. A distribution-sensitive view developed in the following section will present a rejoinder to their objection.

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5.4 Equality, Priority, or Sufficiency In a controversy over the question of what the distribution of benefits and burdens should aim at, there are three camps: egalitarianism, prioritarianism, and sufficientarianism. The term “egalitarianism” is used in various senses in different contexts, but egalitarianism as a theory of distributional ideal has been occasionally articulated as the claim that the smaller disparity of wellbeing between individuals exists, the larger goodness has the state of affairs where the individuals reside. Yet egalitarianism articulated in this way is unsound because it implies that the goodness of the state where everyone equally holds zero wellbeing is infinitely large. A more plausible articulation describes egalitarianism as a doctrine of anti-inegalitarianism (Persson, 2017: 172–174, 194–195), which maintains that the larger disparity of wellbeing between individuals exists, the smaller goodness has the state where the individuals stay.4 Having been discussed by several theorists (e.g., Temkin, 1993: 245–255) in different names, prioritarianism is famously defined by Parfit (2000: 101) as the claim that “benefiting people matters more the worse off these people are.” The problem with this definition, however, is that it does not indicate that prioritarianism, like utilitarianism, summates the wellbeing of each person. A more accurate definition is: the moral value that a state of affairs has is given by the sum of weighted wellbeing of persons existing in the state when the weights are determined by a monotonically ascending and strictly concave function (for the rigorous definition and defense of prioritarianism, see Adler, 2022). One of such functions, widely adopted among prioritarians, stipulates that the value of a state of affairs is given by the sum of square root of each person’s wellbeing: V Pri (x) =

∑ √ wi

(5.5)

i∈S(x)

As for sufficientarianism, the characterization offered by a critic (Casal, 2007: 297–299) has been accepted by many proponents. The critic insists that sufficientarianism consists of two theses: the positive thesis that it matters for everyone to reach a threshold of wellbeing and the negative thesis that distributive justice concerns do not arise above the threshold. There are two notable views covered by the theses. One is known as the head count view, suggested by a pioneer of sufficientarianism Harry Frankfurt (1988: 144–146), who advocates maximizing the number of persons who stay at or above a threshold. The other is posited by Roger Crisp (2003: 758), who holds that, from the perspective of impartial spectator devised by Adam Smith, absolute priority is to be given to benefits to those who stay below a threshold. Crisp argues that below the threshold, benefiting people matters more the worse off they are, the more of these people exist, and the greater the size of the benefits in question is. In his account, no priority should be given above the threshold or in cases 4

Ingmar Persson (2017: 172-182) himself proposes a different form of anti-inegalitarianism.

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regarding only trivial benefits below the threshold. Call his position the weighted wellbeing view.5 Among the three camps on distributive aims, it is easy to see that prioritarianism, like total utilitarianism, reaches the repugnant conclusion due to its aggregative strand. Compare two situations: (10) 10 billion people: 25 (11) 60 billion people: 1 The value of (10) is 50 billion, and that of (11) reaches 60 billion; hence, prioritarianism deems (11) more desirable than (10). It is noteworthy here that prioritarianism leads to an even stronger version of the repugnant conclusion than that implied by total utilitarianism. When a large population exists with a very high quality of life, there must be a much larger imaginable population whose existence, ceteris paribus, would be better even though its members have lives that are barely worth living and even though the former population has a greater total sum of wellbeing than the latter. Call this version the very repugnant conclusion.6 In the above example, the total sum of wellbeing in (10) amounts to 250 billion, whereas that in (11) is only 60 billion. The susceptibility of prioritarianism to the very repugnant conclusion suggests that it is not qualified as the basis of concerns for posterity. Egalitarianism, while keeping away from the repugnant conclusion, is susceptible to the levelling down objection. The objection was suggested by a few philosophers (e.g., Temkin, 1993: 247–248) and then popularized by Parfit (2000: 98–99). The levelling down objection is that from at least one viewpoint, it is intrinsically good to make the better-off worse off without making the worse-off better off. Compare three situations where two persons have varied levels of wellbeing: (12) {10, 4} (13) {4, 4} (14) {2, 2} If these persons move from (12) to (13), they eliminate a disparity between them by lowering the better-off’s wellbeing while leaving the worse-off’s intact. Egalitarians, by definition, have to consider (13) as more desirable than (12) from the perspective of equality, even if they eventually come down to the opposite evaluation as a result of taking account of some other considerations, such as the maximization of total wellbeing. A criticism against making the better-off worse off while leaving the 5

Some proponents of sufficientarianism reject a combination of the positive and negative theses, advancing alternative characterizations of their tenet. Notably, a sufficientarian (Shields, 2016: 28, 30) replaces the negative thesis with what he names the shift thesis, which says that once people have secured enough, there is a discontinuity in the rate of change of the marginal weight of our reasons to benefit further. He also rearticulates the positive thesis as the claim that we have weighty noninstrumental reasons to secure at least enough of some good(s). The juxtaposition of the shift thesis and the modified positive thesis can be called the reason shift view. This view allows sufficientarians to embrace egalitarianism or prioritarianism above the enough level. 6 For a comparison between prioritarianism and total utilitarianism in the perspective of variations of the repugnant conclusion, see Holtug, 2010: 254-259.

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worse-off intact may be baptized the local levelling down objection. Objections can be even more intense. By shifting their situation from (12) to (14), the two individuals erase a discrepancy between them, lowering the wellbeing of both. Egalitarians must again regard (14) as better than (12) in the equality perspective, exposing themselves to what can be called the global levelling down objection. As egalitarianism is vulnerable to local and even global versions of the levelling down objection, it does not seem to provide the solid basis of future concerns.7 Can sufficientarianism provide a more promising argument for caring about futurity than its two rivals? At first glance, the answer appears negative, for primary forms of sufficientarianism have implausible characteristics and conclusions. In cases of fixed population, for instance, the head count view proposed by Frankfurt does not accord with strong Pareto, which postulates that a situation is improved if and only if at least one person is strictly better off and no one is worse off. If two persons move from (13) to (12), a strong Pareto improvement is made. However, when the threshold is 11 in the above example, the head count approach does not endorse this improvement, considering (12) as bad as (13) since no one exists above the threshold in these states. Another drawback of this approach is that it utterly disregards the extent to which people are well off beyond a threshold. If the threshold is 1, it proclaims (14) to be as good as (13), which is implausible. Where distributive justice concerns do not arise, it may be reasonable for sufficientarians to look at the sum of wellbeing, as total and average utilitarians do. In cases of varied populations, a variation of the head count view arrives at the revolting conclusion. Maximizing the number of persons who reside at or above a threshold equates with minimizing the number of those staying below the threshold in the context of fixed population, whereas the two differ in that of varied population. Accordingly, in the latter context, one can conceive of the negational head count view that demands minimizing the number of sub-threshold individuals. This view reaches the revolting conclusion. Return to the situations of (7), (8), and (9). If the threshold is 2, the negational head count view prefers (8) to (7) when it operates in welfarist terms, exhibiting the strong revolting conclusion. When working in terms of resources or capabilities, it favors (9) over (7), showing the weak revolting conclusion. The weighted wellbeing view advanced by Crisp can be seen as a combination of prioritarianism below a threshold and the negative thesis above the threshold. Consequently, it partly shares its strengths and weaknesses with prioritarianism. On the one hand, it accords with strong Pareto when all individuals stay below a threshold in fixed population settings. On the other hand, the weighted wellbeing approach implies the very repugnant conclusion. In the previous case of (10) versus 7

Several attempts have been made by egalitarians to rebut the levelling down objection. A widely known counterargument is the idea of proportional justice advanced by Larry Temkin (2000: 138139). He asserts that if the sinners’ quality of life was significantly higher than the saints’ in afterlife, most people would regard it morally good to level down the former even when the latter cannot be leveled up. While it appears plausible, his attempted rejoinder fails to refute the levelling down objection, which states that making the well-off worse off is treated as desirable in at least one viewpoint. Proportional justice, essentially equivalent to what moral and political philosophers call justice as desert, is a distinct idea from equality.

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(11), it deems (10) less desirable than (11), provided that the square root function is adopted below the threshold of 26, for instance.8 Distinct from both the head count view and the weighted wellbeing view, a notable axiological variant of sufficientarianism (Hirose, 2017: 55–62) aggregates the weighted disvalue of each person’s wellbeing below a threshold, while measuring the unweighted sum of everyone’s wellbeing above the threshold. Call this the weighted disvalue view. Let τ denote the threshold of sufficiency and L(x) be the number of individuals staying below the threshold. The weighted disvalue view maintains that one state of affairs x is strictly better than another state y if and only if either of the following conditions is met: ∑

f (τ − wi )


∑

(5.6) wj

j∈N (y)\L(y)

where f () is a monotonously increasing and strictly convex function. In cases of varied populations, this view bears a result that is logically similar to the repugnant conclusion: when a large population exists with a very high quality of life, there must be a much larger imaginable population whose existence, ceteris paribus, would be better even though its members have lives that are barely above a threshold. In fact, this result is not repugnant as the life of the larger population remains above the threshold. A real difficulty with the weighted disvalue view is that it reaches the strong revolting conclusion in terms of welfare (65–66) and the weak revolting conclusion in those of resource or capability. To provide the grounds for caring about future people in such a way that can solve the problems facing egalitarianism, prioritarianism, and the three versions of sufficientarianism, I shall put forward a new version that involves a non-aggregational principle: leximin. Leximin is an extended form of maximin, which requires maximizing only the wellbeing of the worst-off, namely the minimum wellbeing. It lexicographically expands maximin by looking at the second lowest wellbeing level if the lowest levels tie, at the third lowest level if the second lowest levels also tie, and so forth. While adopting leximin below a threshold, I suggest maximizing the unweighted sum of wellbeing above the threshold, as total utilitarians do. My view adheres to strong Pareto because both leximin and total utilitarianism satisfy this postulate. Also, its leximin strand avoids strong and weak versions of the revolting 8

Regarding the reason shift view (n.5), some observations concerning egalitarianism and prioritarianism apply to it. If this view accommodates egalitarianism in the area extending above a threshold, it is vulnerable to the global and local versions of the levelling down objection. Alternatively, if it endorses prioritarianism in that area, it reaches the very repugnant conclusion. It is worth noting, however, that these consequences of the reason shift view are generally less counterintuitive than those of egalitarianism and prioritarianism, respectively, since the former consequences can arise only above the threshold.

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conclusion, which can be implied only by aggregational principles. In the context of GCRs, if a serious disaster befell a substantial part of humanity, the leximin view would seek to improve the wellbeing of the least advantaged within the affected population, that of the second least advantaged if the wellbeing of the least advantaged tie, and so on. By virtue of its non-aggregational character, this novel form of sufficientarianism can provide the robust and reasonable basis for long-term concerns.

5.5 Prevention, Mitigation, and Rehabilitation A dominant methodology in the current ERS is the etiologic approach involving the three problematic properties previously described: singularism, restrictivism, and preventivism. Regarding singularism, Ord (2020: 173–174) can be said to take a first step to grapple with it when he makes a conceptual distinction as to patterns of relationships between risks. Suppose that there are only two risks across the entire future of humanity: a 10% risk and a 20% risk. The first type of a relationship between the two is perfect anticorrelation, thereby he means that the 10% catastrophe occurs only if the 20% one does not, implying that the total risk is the sum of the two, 30%. The second is perfect correlation, which refers to the case where the 10% calamity happens only when the 20% one also does, entailing that the total risk equals the larger of the two, 20%. The last type is independence, where the 10% and 20% hazards are statistically independent of each other, indicating the total risk of 28% (1—0.9 × 0.8). Ord’s typology of risk relationships helps to realize that it is not always appropriate to sum up the risks separately identified because one of them might be correlated with another or independent of still other. Nonetheless, the reality is presumably much more complicated than the typology depicts: one risk seems to occasionally correlate with the others to different degrees. For instance, when a tension between two superpowers grew, it could not only raise the probability of a global warfare with nuclear weapons, but it might also provide both sides with an incentive to develop bioweapons by employing synthetic biological techniques behind closed doors even under an international agreement of prohibition against bioweapons, increasing the probability of laboratory-bred pandemic. It is thus reasonable to think that the probability of nuclear war is substantially, but not completely, correlated to that of engineered pandemic. Moreover, the tension between the superpowers would arguably impede multilateral cooperation in confronting global challenges, such as anthropogenic climate change. These suggest that the risk of climate change can be said to correlate more or less with those of nuclear war and engineered pandemic, respectively. The question then is: what is the exact correlation between the three hazards in different scenarios? Only after carefully explicating correlations between various risks, we can obtain a theory that successfully deals with the multidirectional interplay of X-risks, going beyond singularism.

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As for the second characteristic of the etiological method, namely restrictivism, a recently posited dichotomy of sexy and unsexy GCRs provides a departure point toward addressing it. A commentator (Kuhlemann, 2019) asserts that the risks that researchers have treated as existential are sexy GCRs, featured by a low probability of crystallization but the highest possible severity and magnitude. Sexy risks have three properties. First, these risks are epistemically neat, which means that it is easy to identify which disciplines are best suited for studying them (e.g., asteroid impacts and pandemics). Second, they have a sudden onset in the sense that they crystallize abruptly, with obviously catastrophic outcomes from as little as a few hours to a few years. Last, technology is involved in that the perils have a close relationship with the flattering ideas of human ingenuity and intellectual prowess (e.g., nuclear war and deadly AI). By contrast with sexy GCRs well studied, the argument goes, X-risk scholars have paid scant attention to the unsexy ones, characterized by a low probability of existential outcome but a high probability of sub-existential result. Unsexy hazards include climate change, biodiversity loss, freshwater scarcity, mass unemployment, fiscal unsustainability, and overpopulation. Their features offer a striking contrast to those of sexy hazards in three respects. The first is epistemic messiness, according to which they do not map well onto traditional disciplines or institutional loci of governance. The second is creepiness or gradual buildup, which refers to the boiling frog phenomena that play out in slow motion, or at least as perceived by humans. The third is behavioral and attitudinal drivers, meaning that they are driven primarily by the procreative and livelihood-seeking behaviors constitutive of economic and population growth. Unsexy GCRs have been downplayed in ERS, notwithstanding their calling for the active engagement by experts with those in other disciplines, policymakers, and the public. As a remedy for alleged gaps in the literature, the commentator proposes overpopulation as the primary research topic, claiming “[v]irtually any unsexy GCR can be reinterpreted as overpopulation” (Kuhlemann, 2019: 10). There is some truth in the sexy/unsexy argument: many X-risk authors to date have failed to pay enough attention to the perils that might bring about less-thandevastating impacts on humanity or hit a substantial part of the world population. In short, their restrictivism has overlooked quasi-existential risks. An example is the possible armed conflict in geopolitically important region previously mentioned, which might result in a global nuclear war between superpowers under unfavorable conditions. This and many other hazards that might be initially non-catastrophic, sub-global, or transitory but later become existential catastrophes do deserve scrutiny. Nevertheless, a simplistic dichotomy of sexy and unsexy GCRs, while being sexy itself, fails to raise a fair and forceful criticism against the X-risk scholarship. First of all, anthropogenic climate change, which is counted among unsexy risks in the dichotomy, has been in fact much discussed in the literature (e.g., Rees, 2003: 108– 113; Torres, 2017: 76–87; Ord, 2020: 102–113; Leigh, 2021: 35–56). The same applies to biodiversity loss, another risk categorized into the unsexy group. The second drawback of the dichotomous framework is that some of the features attributed to sexy risks are not always found with X-risks. The threat of unaligned AI is not epistemically neat at all: as smart machines have been already utilized in various

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aspects of our social life and will be used in even more aspects in the near future, a variety of disciplines—not merely computer science but also economics, political science, risk analysis, and many others—may well be relevant to the issue of AI control. The third problem has to do with the proposal that overpopulation should be focused on as the primary topic. In patriarchal societies scattered around the Global South, reproductive rights of women have been occasionally violated or threatened under the name of population control. Considering such gendered realities in these societies, I fear that an advocated focus on overpopulation might provide traditional governments and communities with indulgences for sexist policies and practices of antinatalism. To broaden our horizons to quasi-existential risks in such a way that is immune from the three difficulties lying in the oversimplified sexy/unsexy dichotomy, I shall advance a new principle of responses to existential risks. I term the principle defense in width, making an analogy to the idea of defense in depth. Defense in width claims that the scope of analytical inquiry and policy recommendation in ERS should extend to non-devastative, sub-global, and impermanent risks, respectively. Its coverage is shown as a dark gray area (X-risks), a light gray area (non-existential GCRs), and a shaded area (local devastative and endurable risks) in Fig. 5.2. To deal with these risks, preventive measures should be taken at international, regional, and national levels. The question then arises: should we fail to prevent quasi-existential risks from occurring, what could we do next to avoid existential results? This question brings us to investigating the third feature of the etiologic approach: preventivism. In recent years, a handful of writers on X-risks and GCRs more broadly have extended the scope of their analyses by discussing the phases that might follow that of risk prevention. One team of researchers (Avin et al., 2018) objects that GCR scenarios have tended to be centered on tracing a causal pathway from a catastrophic event to the global loss of life. To explore the disregarded interplay between many critical systems and threats, they make a distinction between three components of the scenarios: (i) a critical system or systems whose safety boundaries can be breached by a potential threat, (ii) the mechanisms by which this threat might globally spread and affect the majority of the human population, and (iii) the way in which we might fail to prevent or mitigate both (i) and (ii). Focusing on the risk of human extinction, another team (Cotton-Barratt et al., 2020) distinguishes between three layers of possible interventions to confront it: the prevention of a catastrophe from occurring, responses to the catastrophe by reducing or mitigating its impacts before it reaches a global scale, and a small number of survivors’ resilience against the extinction even in the face of the global catastrophe. These defense layers, each of which can allow humanity to escape annihilation, constitute the model of defense in depth, as these authors call it. The two multiphase frameworks sketched above indicate the same essential point: instead of concentrating on the prevention of hazards, we need to expand our perspective so as to design phases that might follow in case the prevention fails. How can the subsequent steps be conceptualized? It seems reasonable to characterize the second phase immediately following preventive attempts as mitigation. Even if humans

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living around the world are exposed to a global hazard despite their attempted prevention, they might have opportunities to strive to reduce its impact. Alternatively, if people in a substantial part of the world encounter a regional catastrophic hazard, these and other people might have a chance to limit affected areas. What about the third phase? The model of prevention, response, and resilience depicts it as the circumstance in which a small number of isolated people struggle for survival, assuming only the risk of human extinction. The depicted situation is essentially the same as the scenario of earth survivors I suggested. Remember that my definition of existential risk is the one that threatens the permanent destruction of the vast majority of humans’ potential for the development of civilization. Given this definition, humanity had already suffered from an existential disaster if in the aftermath, only a handful of survivors existed who struggled to survive without any civilization potentialities. Instead, one can conceive of the possibility that the majority of human beings recover from a global catastrophic disaster. Even after the disaster hits most humans living in the world, they can be said to circumvent an existential calamity if they successfully recover, although such a case may be infrequent. This situation can be characterized as the phase of humanity’s rehabilitation. Employing the definition of existential risk as the collapse of human potential for civilization rather than as the extinction of Homo sapiens, the three-phase model comprizing prevention, mitigation, and rehabilitation can stand up as a fortitudinous framework for defense in depth.

5.6 Conclusion If an existential disaster occurred, or if a non-existential disaster grew into the existential one, humanity would suffer enormous impacts. The ERS is thus of great significance. However, many studies to date have displayed severe limitations in respect to the conceptualization of X-risks and other risks, to the moral grounds for concerns about future people, and to recognitional and responsive approaches to existential and quasi-existential risks. Remedying those limitations is what this chapter has sought to do. To begin with, I revised Ord’s definition of existential risk and restructured Bostrom’s map of risks at large, considering a wide range of scenarios in which the human potential for civilization development might collapse. Next, noting that total utilitarianism underlying long-term concerns in ERS leads to the repugnant conclusion, I investigated its cousins including average, critical-level, and negative forms of utilitarianism. The two former versions of utilitarianism arrive at strong and weak forms of the revolting conclusion; besides, all of the three, based on aggregationism, pay scant attention to distributive justice issues stemming from the disparity of sufferings among sectors of a single country and between countries. Then, I turned to the examination of egalitarianism, prioritarianism, and major forms of sufficientarianism on distributive ideals, observing their implausible characteristics and conclusions. To address the challenges to primary types of utilitarianism as well as egalitarianism,

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prioritarianism, and variants of sufficientarianism, I posited a leximin-incorporated version of sufficientarianism as a new ground for futurity concerns. Furthermore, it was discussed how to remedy the three problematic features of the etiologic approach extensively adopted in ERS: singularism, restrictivism, and preventivism. The observations were: we need to explicate correlations in varying degrees between multiple risks, going beyond singularism; contra restrictivism, the scope of target hazards should be expanded so as to cover global endurable risks as well as local devastative and endurable risks; and the multiphase model of prevention, mitigation, and rehabilitation can overcome the narrowness of preventivism. It deserves special emphasis that different components of my argument in the previous sections are closely interconnected. A non-aggregationist, leximinincorporated sufficientarianism as the basis for posterity concerns accommodates distributive justice issues surrounding the international and intranational allocation of sufferings in the aftermath of a catastrophe, which cannot be adequately dealt with by any utilitarian views. These issues are more likely to arise in cases of nonexistential GCRs as well as local devastative and endurable risks, only covered by defense in width, than cases of X-risks supposedly sweeping away all humans at once. Also, the question of unequal distribution of sufferings among individuals and societies would be more serious in mitigative and rehabilitative phases, set by defense in depth, than the preventive phase on which authors have focused. What we should develop in ERS is a distribution-sensitive theory intended for the wide and deep defense against not merely existential but quasi-existential risks. Acknowledgements I am grateful to Susumu Cato for his informative and inspiring comments on an earlier version of this chapter. My thanks are also due to Yukio Adachi, Tomohiro Akiyama, Tatsuyoshi Saijo, Kazuya Sugitani, Masato Taniguchi, Juichi Yamagiwa, and Tetsuzo Yasunari for their illuminating comments on my early speech about existential risk. I had technical help from Kumie Hattori when creating figures presented in the chapter. This study was supported by the JST-RISTEX grant (JPMJRX21J1) and the JSPS Grants-in-Aid for Scientific Research (21H03667).

References Adler, M. D. (2022). Theory of prioritarianism. In M. D. Adler & O. F. Norheim (Eds.), Prioritarianism in practice (pp. 37–127). Cambridge University Press. Arrhenius, G. (2000). An impossibility theorem for welfarist axiologies. Economics and Philosophy, 16(2), 247–266. Avin, S., Wintle, B. C., Weitzdörfer, J., Ó hÉigeartaigh, S. S., Sutherland, W. J., & Rees, M. J. (2018). Classifying global catastrophic risks. Futures, 102, 20–26. Beckstead, N. (2019). A brief argument for the overwhelming importance of shaping the far future. In H. Greaves & T. Pummer (Eds.), Effective altruism: Philosophical issues (pp. 80–98). Oxford University Press. Blackorby, C., Bossert, W., & Donaldson, D. (1995). Intertemporal population ethics: Critical-level utilitarian principles. Econometrica, 63(6), 1303–1320. Blackorby, C., Bossert, W., & Donaldson, D. (1997). Critical-level utilitarianism and the population ethics dilemma. Economics and Philosophy, 13(2), 197–230.

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Blackorby, C., Bossert, W., & Donaldson, D. (2005). Population issues in social choice theory, welfare economics, and ethics. Cambridge University Press. Bostrom, N. (2002). Existential risks: Analyzing human extinction scenarios and related hazards. Journal of Evolution and Technology, 9(1), 1–30. Bostrom, N. (2013). Existential risk prevention as global priority. Global Policy, 4(1), 15–31. Carter, B. (1983). The anthropic principle and its implications for biological evolution. Philosophical Transactions of the Royal Society of London A, 310, 347–363. Casal, P. (2007). Why sufficiency is not enough. Ethics, 117(2), 296–327. Cotton-Barratt, O., Daniel, M., & Sandberg, A. (2020). Defense in depth against human extinction: Prevention, response, resilience, and why they all matter. Global Policy, 11(3), 271–282. Crisp, R. (2003). Equality, priority, and compassion. Ethics, 113(4), 745–763. Ehrlich, P. R., & Ehrlich, A. (1968). The population bomb. Ballantine Books. Frankfurt, H. (1988). The importance of what we care about: Philosophical essays. Cambridge University Press. Gott, J. R., III. (1993). Implications of the Copernican principle for our future prospects. Nature, 363, 315–319. Häggström, O. (2016). Here be dragons: Science, technology and the future of humanity. Oxford University Press. Hirose, I. (2017). Axiological sufficientarianism. In C. Fourie & A. Rid (Eds.), What is enough? Sufficiency, justice, and health (pp. 51–68). Oxford University Press. Holtug, N. (2010). Persons, interests, and justice. Oxford University Press. Kuhlemann, K. (2019). Complexity, creeping normalcy and conceit: Sexy and unsexy catastrophic risks. Foresight, 21(1), 35–52. Leigh, A. (2021). What’s the worst that could happen? Existential risk and extreme politics. The MIT Press. Leslie, J. (1996). The end of the world: The science and ethics of human extinction. Routledge. MacAskill, W. (2015). Doing good better: Effective altruism and a radical new way to make a difference. Guardian Books. Moynihan, T. (2020). X-risk: How humanity discovered its own extinction. Urbanomic. Ord, T. (2020). The precipice: Existential risk and the future of humanity. Hachette Books. Parfit, D. (1984). Reasons and persons. Oxford University Press. Parfit, D. (2000). Equality or priority? In M. Clayton & A. Williams (Eds.), The ideal of equality (pp. 81–125). Palgrave Macmillan. Persson, I. (2017). Inclusive ethics: Extending beneficence and egalitarian justice. Oxford University Press. Rees, M. (2003). Our final century: Will civilisation survive the twenty-first century? Arrow Books. Sagan, C. (1983). Nuclear war and climatic catastrophe: Some policy implications. Foreign Affairs, 62(2), 257–292. Schuster, J., & Woods, D. (2021). Calamity theory: Three critiques of existential risk. University of Minnesota Press. Shields, L. (2016). Just enough: Sufficiency as a demand of justice. Edinburgh University Press. Temkin, L. (1993). Inequality. Oxford University Press. Temkin, L. (2000). Equality, priority, and the levelling down objection. In M. Clayton & A. Williams (Eds.), The ideal of equality (pp. 126–161). Palgrave Macmillan. Torres, P. (2017). Morality, foresight, and human flourishing: An introduction to existential risks. Pitchstone. Usami, M. (2019a). Existential risk and public policy. Journal of Public Policy Studies, 21, 111–123. (in Japanese). Usami, M. (2019b). Intergenerational fairness and population ethics. In M. Matsumoto & A. Inoue (Eds.), Justice and population (pp. 188–210). Sekaishisosha (in Japanese). Vogt, W. (1948). Road to survival. William Sloane Associates.

Chapter 6

Trade-Off Between Repugnant and Sadistic Conclusions Under the Separability of People’s Lives Susumu Cato

Abstract Population axiology includes two major arguments. The first is the repugnant conclusion, which was originally formulated by Derek Parfit to criticize total utilitarianism. The second is the sadistic conclusion. In this study, I demonstrate that no additively separable principle can avoid both repugnant and sadistic conclusions if individual moral values have no upper bound. This impossibility holds not only for utilitarian principles but also for any population principles that guarantee the separability of people’s well-being. I emphasize the importance of examining non-separable principles in population ethics. Keywords Prioritarianism · Repugnant conclusion · Sadistic conclusion · Separability · Future generation · Population ethics

6.1 Introduction This study is concerned with population axiology, which has developed since Parfit’s seminal contribution.1 The fundamental problem in this field is as follows: How can we compare two utility distributions with different population sizes? Parfit (1976, 1982, 1984) illustrated the difficulty of total utilitarianism; it is known as the repugnant conclusion, which originally states the following: Repugnant conclusion: “For any possible population of at least ten billion people, all with a very high quality of life, there must be some much larger imaginable population whose existence, if other things are equal, would be better even though its members have lives that are barely worth living.” (Parfit, 1984, p. 388)

S. Cato (B) University of Tokyo, Tokyo, Japan e-mail: [email protected] 1

Narveson (1967) also provided an important perspective on this issue by discussing the implication for utilitarianism of having a new person with a low utility level. © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_6

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Since Parfit’s work, various possible resolutions have been proposed, two of which are more prominent. The first is critical-level utilitarianism, which utilizes a positive, constant utility level as the value of the existence of each additional person; this constant utility level is called the “critical-level” (Blackorby & Donaldson, 1984; Blackorby et al., 1997, 2005; Broome, 2004).2 Critical-level utilitarianism forms moral judgments based on the total value of differences between utility levels and the critical-level. The second resolution is the variable-value principle, called number-dampened utilitarianism (Hurka, 1983; Ng, 1989).3 This principle utilizes a function that yields the value of the population size, typically assuming that this value is decreasing. With this assumption, the variable-value principle provides moral judgments according to the product of the value of the population size and average utility. As I demonstrate later in this study, these two classes of population principles avoid the repugnant conclusion if certain plausible assumptions are satisfied; see Bossert, Cato, and Kamaga (2022) for a synthesized class of principles, which are called generalized variable-value principles.4 However, variable-value principles and critical utilitarianism necessarily yield a sadistic conclusion, which is stated as follows: Sadistic conclusion: “When adding people without affecting the original people’s welfare, it can be better to add people with negative welfare rather than positive welfare.” (Arrhenius, 2000, p. 251)

Avoiding the sadistic conclusion is a reasonable requirement for a plausible population principle. However, proposals for avoiding the repugnant conclusion yield this second conclusion (Arrhenius, 2000; Greaves, 2017). Thus, my question is as follows: Is there any population principle that simultaneously avoids both the repugnant and sadistic conclusions? My answer is negative, in a certain way. To be precise, I illustrate that no separable population principle can simultaneously avoid these two conclusions.5 My formulation of separability poses a very mild restriction on population principles—it requires that the moral significance of a person’s well-being be separately counted in moral judgments. The question above has been partially examined in the literature. In particular, Arrhenius (forthcoming) provided several impossibility theorems that are related to a variant of the repugnant and sadistic conclusions; see Thomas (2018) for discussions on the significance of his results. In particular, Theorems 3, 4, and 6 of Arrhenius 2

Critical utilitarianism is also called “threshold utilitarianism” in the literature. The class of variable value principles is a collection of population principles under which the value of population size is variable in a certain way. It includes not only number-dampened utilitarianism but also Sider’s (1991) geometric principle. 4 As shown by Bossert, Cato, and Kamaga (2022), generalized variable-value principles include not only critical-level utilitarian/number-dampened utilitarian principles but also non-separable principles, such as the rank-dependent utilitarian principle. 5 Other axioms have been examined in the literature on population ethics. Mere addition is the most commonly used axiom, according to which, adding a person with a positive utility is better than adding no one. This axiom is examined by Carlson (1998) and Sider (1991). In particular, Sider (1991) provides a “geometric” principle that satisfies mere addition and avoids the repugnant conclusion. 3

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(forthcoming) include certain forms of the two conclusions. Although Arrhenius’s argument helps understand the nature of population axiology, his theorems strongly rely on a wide variety of normative axioms for population changes. In this study, I attempt to extend a theorem established by Blackorby et al. (2005), who offer various characterization results in population axiology. In their Theorem 5.4 (Blackorby et al., 2005, p. 164), it is shown that if utilitarianism is employed for any population of the same size and the one-person society is not better than some larger population (“minimal one-person trade-off”), then the repugnant conclusion or sadistic conclusion holds. I believe that this theorem clarifies a fundamental trade-off between repugnant and sadistic conclusions. Unfortunately, this point is not well-recognized, perhaps because Theorem 5.4 of Blackorby et al. (2005) uses utilitarianism for samenumber comparisons.6 Although utilitarianism is one of the dominating normative/ ethical theories, this assumption is axiologically too strong.7 Thus, the utilitarianism assumption can be regarded as a limitation of their results. The aim of this study is twofold. First, I attempt to strengthen the Blackorby– Bossert–Donaldson theorem by relaxing the utilitarianism assumption. In particular, I demonstrate that not only utilitarianism but also prioritarianism is allowed to be used; I document an impossibility result that can even allow principles to be antiegalitarian. That is, the logic of the Blackorby–Bossert–Donaldson theorem is valid for a substantially larger class of normative/ethical theories. Moreover, I also drop the axiom of “minimal one-person trade-off” by revisiting the definition of the repugnant conclusion. As an essential property shared by utilitarianism and prioritarianism is the separability of people’s lives, my extension illustrates that the trade-off between the repugnant and sadistic conclusions is closely associated with the separability of people’s lives.8 Second, I argue the role of separability and the axiom of no-blisspoint of the moral value, which requires that the moral value achieved by each person is unlimited. My argument for proving the extended theorem is crucially dependent on these axioms. Although these are not logically weak, I believe that the extended theorem presented in this study provides one of the tightest trade-offs in population axiology, which must be resolved (if possible).

6.2 Framework and Interpretations of the Two Conclusions I start by discussing utility, or welfare. I assume that a population consists of a finite number of people. The life of each person is measured by their welfare, or utility level. Throughout this paper, a person’s utility level represents their prudential goodness. 6

Blackorby, Bossert, and Donaldson (2005) call this assumption “utilitarian same-number subprinciples.”. 7 Sen (1988) clarifies the fundamental axiological basis of utilitarianism. 8 A possible direction for resolving this trade-off is known. If a band of critical levels is introduced, the two negative conclusions can be easily resolved. This introduction necessarily entails incompleteness in moral judgments. See Gustafsson (2020) for a detailed examination of this issue. In this study, I do not allow moral judgments to be incomplete.

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Therefore, the “high quality of life” in Parfit’s repugnant conclusion corresponds to a high utility level in this study. A person i’s utility level is denoted by u i . I assume that the utility level can be any real number, and thus, can be either positive or negative. This requirement is not restrictive because it is ultimately a matter of normalization. The key to normalization is the zero-utility level. I assume that zero always represents life without experience (see Broome [1993] for an interpretation of the zero level). A positive utility value represents a life worth living. Thus, a life that is “barely worth living” indicates a small positive utility level. Notably, I assume that the cardinality of utility is meaningful. This assumption is necessary for setting the terms, such as “barely worth living” or, in general, “worthiness of living,” to be incorporated into moral judgments. I also assume that this cardinality of utility can be interpersonally comparable. This assumption is crucial for utilitarianism or commonly used theories of distributive justice, such as prioritarianism, egalitarianism, and sufficientarianism (see Parfit, [1997]; Crisp, [2003]; Hirose, [2014]; Adler, [2018]; Adler & Holtug, [2019]; Bossert et al., [2021] for fundamental arguments for these distributive justice principles). In addition, I ignore people’s identities in this study. That is, current policies or choices might affect the identities of future generations. However, I assume that the utilities of persons can be compared among the resulting outcomes of the policies or choices. In particular, a betterness relation is assumed to be transitive and complete; see Cato (2016) for the implications of transitivity and completeness. Now, I consider interpretations of the repugnant and sadistic conclusions, starting with Parfit’s repugnant conclusion. In his formulation, a life that is “barely worth living” is not well defined. From his argument, it must be a very small number. Typically, a small number can be represented by ε. By using this, one can consider the following version, which is plausible: Repugnant conclusion*: For any possible population of at least ten billion people, all with a very high quality of life, and for any small positive value ε, there must be a much larger imaginable population size m such that a population where all m people obtain ε is better than the original population of at least ten billion people.

In this version, the conclusion is required to be valid for any ε. I note that the repugnant conclusion is avoided if and only if its negation is correct. By using the negation of the repugnant conclusion, one can obtain the following statement: For some possible population of at least ten billion people, all with a very high quality of life, and for some small positive value ε, there is no imaginable population size m such that a population where all m people obtain ε is better than the original population of at least ten billion people.

We need to clarify the existential quantifiers. “For some possible population of at least ten billion people, all with a very high quality of life, and for some small positive value ε” can be rephrased as follows: “there exist at least one population size n ≥ 109 (10 billion) and one distribution (u 1 , ..., u n ) such that each u i is very high, and at least one small number ε such that….” This condition can be called the “avoidance of the repugnant conclusion” and can be restated as follows:

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Avoidance of the repugnant conclusion: For some possible population of at least ten billion people, all with a very high quality of life, and for some small positive value ε, a population where all m people obtain ε is not better than the original population of at least ten billion people, for any population size m.

I will utilize this statement in a later argument. Compared to the repugnant conclusion, the sadistic conclusion can be easily interpreted. The essence of the sadistic conclusion is that under a variable population principle, there exists a population such that adding people with negative welfare is better than adding people with positive welfare. Here, if the negative welfare of the added people is sufficiently low, then adding people with positive welfare is obviously better. According to the sadistic conclusion, the difficulty is caused by the existence of a situation in which adding people with negative welfare is better than adding people with positive welfare. Note that the negation of “it can be better to add people with negative welfare rather than positive welfare” (Arrhenius, [2000]) is “it cannot be better to add people with negative welfare rather than positive welfare.” Thus, to avoid the sadistic conclusion, the following must be correct: Avoidance of the sadistic conclusion: For all possible populations, adding people with positive welfare is not worse than adding people with negative welfare.

In Sect. 3, I illustrate what happens if one imposes these avoidance statements on repugnant and sadistic conclusions. I explain my claim with subsequent explanations of my presumptions on population principles. Before that, I briefly review Theorem 5.4 of Blackorby et al. (2005). As mentioned earlier, they employ the following assumption. Same-number utilitarianism: For any two distributions (u 1 , ..., u n ) and (v 1 , ..., vn ) with the same population size n, (u 1 , ..., u n ) is morally better than (v 1 , ..., vn ) if and only if  n n u > v . i i i=1 i=1

That is, if distributions have the same size, moral judgments are formed based on the total sum of individual utilities. Although utilitarianism is one of the most prominent theories, it is quite strong because someone’s loss is always canceled out by the same amount of another individual’s gain, independently of their wellbeing levels. Utilitarianism is not against anti-egalitarianism, but it does not favor egalitarian concerns. Blackorby et al. (2005) also imposed the following. Minimal one-person trade-off : For any one-person distribution u, there exists a distribution v such that v is at least as good as u and v includes more than two individuals.

The formal statement of Theorem 5.4 of Blackorby et al. (2005) is given as follows. If a population principle satisfies same-number utilitarianism and minimum one-person trade-off, it cannot avoid both the repugnant and sadistic conclusions.

We offer an extension of this result in Sect. 3.

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6.3 Impossibility and Axioms My claim is as follows: No population principle satisfies additive separability and avoids both the repugnant and sadistic conclusions as long as the axiom of no-bliss-point of the moral value is satisfied.

As I demonstrate later, additive separability established a larger class of principles than that based on same-number utilitarianism. Moreover, it should be stressed that the axiom of no-bliss-point of the moral value is satisfied if same-number utilitarianism is satisfied. Further, note that the minimal one-person trade-off is dropped; see the Appendix for this point. In sum, this is substantially stronger than the original statement. Here, I focus on a class of population principles that morally satisfy three plausible properties: strong Pareto, impartiality, and continuity.9 First, the strong Pareto is a property that restricts monotonic changes in utility levels. For any two distributions with the same population, if the utility of each individual in the first distribution is not lower than that in the second, and in addition, there is an individual whose utility in the first is strictly higher than that in the second, then the former is morally better than the latter. This property is a version of the person-affecting view (see Parfit [1997]). Second, impartiality is a property known as anonymity in the field of social choice. Moral judgments are invariant for any permutations in utility distributions within a population. Third, continuity is a property that requires a small change in utility distribution not yielding a drastic change in moral judgments. If the three aforementioned properties are satisfied, then there exists a monotonic and symmetric numerical function that can be used to compare distributions within each population. With these three properties, I additionally consider the following separability property on moral values: Separability: For any two distributions within the same population, adding one person to each of the two distributions with the same utility level does not influence a moral judgment over the two.

More formally, I consider the following version of separability: for any two distributions (u 1 , ..., u n ) and (v 1 , ..., vn ) and for any utility level w, (u 1 , ..., u n ) is morally better than (v 1 , ..., vn ) if and only if (u 1 , ..., u n , w) is morally better than (v 1 , ..., vn , w). Under this separability property, there must exist some function g that “transforms” prudential goodness into the moral value counted in moral judgments. That is, if a person’s utility is a, then the corresponding moral value is yielded by the function g; its value is g(a). This function can be called a transformation function. As the assumption that the moral value is monotonically associated with prudential goodness is natural, g is considered to be increasing. 9

Here, my presentation of the class of population principles follows the axiomatic approach, which is commonly used in social choice theory and welfare economics. This approach can be found in Broome (1991) and Blackorby, Bossert, and Donaldson (2005). Adler and Holtug (2019) nicely explain the axiomatic nature of prioritarianism. Hirose’s (2014) arguments on egalitarianism and prioritarianism naturally accommodate the axiomatic analysis in social choice.

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In sum, I consider a population principle that forms moral judgments in the following manner: Additive separability (of people): There exists an increasing and continuous transformation function g such that, for any two distributions (u 1 , ..., u n ) and (v 1 , ..., vn ) with n the same population size n, (u , ..., u ) is morally better than (v , ..., v ) if and only if n n 1 1 i=1 g(u i ) > n i=1 g(vi ).

Notably, a wide range of moral judgments is consistent with this requirement. For instance, any type of utilitarianism is a particular example. That is, total utilitarianism, average utilitarianism, variable-value principles, and critical-level utilitarianism— each represents one such particular case. In addition, prioritarianism is within the scope of this type of population principle.10 Most prioritarians use g(x) = x α as a tractable form of prioritarianism, where α is smaller than one and larger than zero; under this restriction of α, g is concave, that is, it certainly guarantees the diminishing 11 The most common specific form is marginal moral value of prudential goodness. √ the case where α = 1/2, that is, g(x) = x. Notably, g is only required to be increasing and continuous; thus, it is allowed to be convex; when one considers g(x) = x α , this implies that α can be larger than one or equal to zero.12 The convexity of g corresponds to the equality aversion property. This implies that inequality aversion is not required in my argument. I believe that equality aversion is not a plausible property, although requiring inequality aversion globally is a very strong condition. Thus, the argument being independent of the inequality aversion property guarantees a wide range of applicability. For the class of population principles that satisfy separability, I also assume the following requirement for the transformation function g: No-bliss-point of the moral value: For any positive real number, there exists some utility level under which the transformed moral value coincides with the positive real number.

This property requires no upper bound on the moral value. First, prioritarians typically use transformation functions. As mentioned above, x α is taken as a transformation function. Verifying that this function guarantees that the no-bliss point condition is satisfied for any parameter α larger than zero is easy. Moreover, I contend that this class of transformation functions is very reasonable because of its homotheticity, which requires that, for any positive number k, if (u 1 , ..., u n ) is morally better than (v 1 , ..., vn ), then (k ∗ u 1 , ..., k ∗ u n ) is morally better than (k ∗ v 1 , ..., k ∗ v n ). Second, if the moral value has an upper bound, its fundamental property becomes very similar to that of sufficientarianism. In Sect. 4, I will show that there exists no population principle that satisfies the additive separability of people and avoids both the repugnant and sadistic conclusions if the no-bliss-point condition is satisfied.

10

See Brown (2007) for a population axiology examination for prioritarianism. Mathematically, the concavity of g corresponds to the negativity of its second derivative. 12 When g(x) = x, a necessary and sufficient condition for g to be concave is that is lower than one. 11

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6.4 Repugnant and Sadistic Conclusions Under Separability I now prove my claim. By way of contradiction, suppose that there is a population principle that satisfies additive separability and avoids the repugnant and sadistic conclusions.13 As the repugnant conclusion is avoided, there exists a population size n ≥ 109 (10 billion) and a distribution (u 1 , ..., u n ) such that each u i is very high, and, for any positive v smaller than the minimum value in (u 1 , ..., u n ) and for any large number m > 109 , the original population with n persons is morally at least as good as another population with m persons who all obtain v.

Now, I denote “P” as the distribution with n persons, that is, “P” is (u 1 , ..., u n ). Notably, the population size of “P” is at least 109 . Taking a negative utility value, s < 0, one can find a positive utility level, a > 0, such that. “P” is morally indifferent to a population in which one person’s utility level is s and the other n − 1 persons’ utility levels are a.

I can simply write this in the following manner: (s, a, a, ..., a) is morally indifferent to (u 1 , ..., u n ). Notably, the existence of a and s achieving this is guaranteed by the “no-bliss-point of the moral value” axiom. In the next step, I consider a similar operation for a population where m persons obtain v. This population is denoted by “Q.” Notably, the population size of “Q” is larger than that of “P” (m > n). Then, one can consider a distribution with m people, where n − 1 people obtain a units of utility in population “Q.” For a sufficiently large population size m, one can find a positive utility value t under which the following is correct: “Q” is morally indifferent to a population with the same size in which n − 1 persons’ utility levels are a, and all the others obtain t (>0).

I can simply write this in the following manner: (t, ..., t, a, ..., a) is indifferent to (v, v, ..., v). The correctness of this statement is not obvious. Its derivation depends on the additive separability property. To illustrate this point, I consider the total moral values associated with (t, ..., t, a, ..., a). As m – n + 1 persons obtain t and n − 1 persons obtain a, the value is given as follows: (m − n + 1)g(t) + (n − 1)g(a). As the total number of moral values under (v, v, ..., v) is mg(v), (t, ..., t, a, ..., a) is indifferent to (v, v, ..., v) if and only if (m − n + 1)g(t) + (n − 1)g(a) = mg(v). By rearranging this equality, one can obtain the following: g(t) = 13

n−1 m g(v) + g(a). m−n+1 m−n+1

(6.1)

As mentioned in Sect. 3, the additive separability of people holds if and only if transitivity, completeness, impartiality, the Pareto principle (monotonicity), continuity, and separability are satisfied. I use these properties induced from additive separability in my argument.

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If m becomes very large, the first term on the right-hand side approaches g(v), while the second term will be zero; overall, the right-hand side approaches g(v). This implies that t and v are very close numbers if m is sufficiently large. Moreover, as v is a positive number, a number close to it must be positive; consequently, t is positive. Thus, the existence of a positive value t is guaranteed. Given the population size m and the positive value t, let “R” be a population such that n − 1 persons obtain a and (m − n + 1) persons obtain t. Notably, there exists a positive utility level t that is slightly smaller than t. By the monotonicity of the population principle, the following statement is correct. “R” is morally better than a population with the same size in which n − 1 persons’ utility levels are a, and all the others obtain t.

I can simply write this in the following manner: (t, ..., t, a, ..., a) is morally better than (t, ..., t, a, ..., a). The last step in my argument employs transitivity. Based on the previous steps, the following points are asserted: • • • •

(u 1 , ..., u n ) is morally at least as good as (v, v, ..., v); (s, a, ..., a) is morally indifferent to (u 1 , ..., u n ); (t, ..., t, a, ..., a) is morally indifferent to (v, v, ..., v); (t, ..., t, a, ..., a) is morally better than (t, ..., t, a, ..., a)

First, transitivity implies that (s, a, ..., a) is morally at least as good as (v, v, ..., v) because (s, a, ..., a) is morally indifferent to (u 1 , ..., u n ) and (u 1 , ..., u n ) is morally at least as good as (v, v, ..., v). Second, transitivity indicates that (s, a, ..., a) is morally at least as good as (t, ..., t, a, ..., a) because (s, a, ..., a) is morally at least as good as (v, v, ..., v) and (t, ..., t, a, ..., a) is morally indifferent to (v, v, ..., v). Third, as (s, a, ..., a) is morally at least as good as (t, ..., t, a, ..., a) and (t, ..., t, a, ..., a) is morally better than (t, ..., t, a, ..., a), transitivity implies that (s, a, ..., a) is morally at least as good as (t, ..., t, a, ..., a). As s is negative and t is positive, this contradicts the sadistic conclusion. Therefore, my argument is complete.

6.5 Separability Problem Additive separability was the key to the impossibility theorem presented in Sect. 4. I now discuss the relevance of this axiom. To begin with, I should mention that separability is not always a plausible assumption. In some contexts, a change in someone’s prudential goodness may affect the marginal moral value of another person’s goodness. However, as implicitly or explicitly imposed in the works of prioritarianism and related theories of distributive justice, it is indeed a commonly used assumption in this field. For instance, in his explanation of prioritarianism, Parfit (1997) wrote: “People at higher altitudes find it harder to breathe. Is this because they are higher up than other people? In one sense, yes. But they would find it just as hard to breathe even if there were no other people who were lower down. In the same way, on the Priority View, benefits

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to the worse off matter more, but that is only because these people are at a lower absolute level. It is irrelevant that these people are worse off than others. Benefits to them would matter just as much even if there were no others who were better off.” (Parfit, 1997, p. 214)

If a person’s moral value is dependent only on their absolute value, separability should be satisfied. Once non-separable principles are allowed, the problem becomes different. Notably, the violation of separability introduces a certain complication in moral judgments because it necessarily incorporates the interconnectedness of moral values among persons. In a sense, moral judgments become relational under nonseparability; the moral significance of one unit of someone’s utility is dependent on their relative position among other people. That is, a plausible candidate among non-separable moral judgments is something that I can call relational prioritarianism, under which, the moral weight of someone’s well-being relies not only on the absolute level of their well-being but also on a relative ranking among the entire population. For example, one can consider a case in which a moral value from someone’s well-being is as follows:14 moral value from individual i =

i  s ranking g(u i ). the population size

(6.2)

Here, the ranking of a person with the highest utility is one, the ranking of a person with the second-highest utility is two, and so on. While this formulation is reasonable, it does not overcome the trade-off of population ethics established in this study. Another example of a principle with non-separability is Sider’s (1991) geometrism, and indeed, his principle can avoid both repugnant and sadistic conclusions. In this respect, it overcomes the fundamental difficulty in population ethics. Instead, the principle reflects “equality aversion,” which essentially implies that a transfer from a poor person to a rich person is regarded as a morally good change (Arrhenius, [2000]). This property is not plausible for the principles of justice, and this principle cannot be referred to as relational prioritarianism.15 Various principles with inequality aversion exist but one of the reasonable candidates is the maximin principle, which forms moral judgments using the minimum utility value among the entire population; although the maximin principle is extreme because of its strong preference for inequality aversion, it satisfies plausible normative properties; see, for example, Bossert (1990). Connecting it to our study, I emphasize that the maximin principle is non-separable. Under this principle, an increase in someone’s utility is morally significant if and only if the person is the worst-off among the population. Thus, if their relative ranking is different, the increase does not lead to a moral gain. Therefore, it is relational and common in nature with prioritarianism. The maximin 14

Asheim and Zuber (2014) examined a variant of this relational prioritarianism; their principle is called “rank-discounted generalized utilitarianism.” This principle is, in a sense, a hybrid of Sider’s (1991) geometrism and the one I proposed here. Asheim and Zuber (2014) offered an axiomatic characterization of the rank-discounted generalized utilitarianism. 15 One may call it “relational anti-prioritarianism.”.

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principle can avoid both repugnant and sadistic conclusions; see Zuber (2018) for a comprehensive analysis. This suggests that incorporating non-separability might be a plausible direction for avoiding the fundamental trade-off established in this study. However, a class of non-separable principles that can avoid the trade-off is not completely identified. Related to this point, Bossert, Cato, and Kamaga (2022) establish a general impossibility theorem that partly includes non-separable principles. Their gain-based variable principles compare two populations as follows: for all profiles (u 1 , ..., u n ) and (v 1 , ..., vm ) such that u i = u j for all i and j, and vi = v j for all i and j, (u 1 , ..., u n ) is better than (v 1 , ..., vm ) if and only if f (n)

n m   [g(u i ) − g(α)] > f (m) [g(vi ) − g(α)]. i=1

i=1

This principle appears to be separable. However, as this class imposes only over constant profiles (profiles where all individuals obtain the same well-being level), it indeed includes non-separable principles. To observe this point, I adopt the moral weight based on rankings that were previously discussed. One can observe the following: i  s ranking i  s ranking g(u i ) = g(u i ). the population size n

(6.3)

If u i = u j for all i and j, the assignment of rankings is irrelevant, and thus, one can obtain the following: n 1 + 2+, . . . + n  g(u i ). n i=1

(6.4)

Thus, this principle is included in the class of gain-based variable principles. Moreover, the maximin principle is a special case of gain-based variable principles. Therefore, this class applies to a wide range of population principles. Bossert, Cato, and Kamaga (2022) demonstrate that the impossibility holds for this class as long as a certain property is satisfied; the property does not hold for the maximin principle, of course. This implies that the trade-off can be valid even for some non-separable principles. This study and the work of Bossert, Cato, and Kamaga (2022) suggest that examining necessary conditions on non-separable principles for the incompatibility between the two conclusions is a substantial issue. Let us briefly discuss the no-bliss point axiom, according to which, the moral value gradually approaches the bliss point as the value of prudential goodness increases, and for a sufficiently large value of prudential goodness, the change in moral values becomes almost flat. What is the implication and meaning of the flatness of the transformation function? Roughly speaking, it implies that a moral judgment approximately has a common property with sufficientarianism, which was developed by Frankfurt (1987) and Crisp (2003). If losses are enormous, say 1,000,000, for very

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rich persons and tiny gains, say 0.01, for the very poor, the negative impact of the former on moral judgments can be extremely small, whereas the positive impact is not. Consequently, an immense sacrifice of very rich persons is morally approved. This is almost the same as the “threshold objection” to sufficientarianism, under which, an enormous gain of people above the threshold is overridden by a tiny gain of a person below the threshold (see Casal, [2007]). Now, I explain one method to derive the no-bliss-point axiom. The axiom follows from the conjunction of separability and another plausible property of moral judgments. Let us consider two different distributions within a population. Assume that one, say A, is morally better than the other, say B. Now, two other distributions can be considered within the same population by proportionally changing all utility levels in the two original distributions. By representing the resulting two distributions as kA and kB (where k represents a proportional change applied to A and B), they can be compared. Given the proportionality of changes, one can expect kA to be morally better than kB. Indeed, there is no strong normative reason to reject this homotheticity property, which requires that if A is morally better than B, then kA is morally better than kB. If this property is accepted, its conjunction with additive separability leads to a specific form of the transformation function, g(x) = x α . Indeed, many prioritarians apply this functional form to argue the implications of prioritarianism. In a sense, they explicitly or implicitly accept the homotheticity property of moral judgments. Notably, this function is unbounded as long as parameter α is positive; the assumption that α is positive is undeniable. Therefore, the no-bliss-point axiom follows from the homotheticity property.16

6.6 Concluding Remarks In this study, I established a fundamental trade-off between repugnant and sadistic conclusions. Additive separability and no-bliss-point were my key assumptions. Theoretically, two remaining questions are important. First, as mentioned in Sect. 5, non-separable principles must be carefully examined. In particular, identifying a class of normatively attractive non-separable principles that avoid the two conclusions is of interest. Second, examining if the no-bliss-point assumption is necessary for the impossibility result in this study is important. The impossibility may be valid for a larger class of separable principles. Given these investigations, one can carefully consider how the two conclusions must be avoided. Of course, the trade-off can be viewed differently, which is revealed in this study. Although I believe the two conclusions are serious issues for normative matters on population changes, some suggest accepting the repugnant conclusion or sadistic 16

Here, I must emphasize that homotheticity is a reasonable requirement without additive separability. That is, the plausibility of homotheticity can stand alone. Indeed, various moral judgments are homothetic but non-separable. For instance, Sider (1991) as well as Asheim and Zuber (2014) can be shown to be homothetic.

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conclusion.17 For example, one may simply reject imagining a hypothetical population of enormous size to compare it with the current population. Even if this were true despite my belief, examining what types of trade-offs are faced by human beings is still important. Indeed, the quality-quantity issue, which is the main point of the repugnant conclusion, is valid even when only reasonably small changes in population sizes are assumed to be possible. This implies that the result demonstrated in this study may use some extreme sizes of the population in its argument, but the normative implication of the trade-off itself is still plausible. Finally, I provide a remark on the applicability of the argument of this study or population axiology in general. Akin to most studies on population ethics, the current framework does not include the time structure. However, considering time and the future(s) is crucial because a population change needs a certain amount of time; most problems of governance include consideration of time. I note that incorporating the time structure into our framework is not very difficult. Let us consider two periods (t = 0 and t = 1) and n 0 and n 1 be the population sizes of periods zero and one, respectively. One can simply use the simple sum: n0 n1       g u i0 + g u i1 i=1

i=1

or, the discounted sum: n0 n1       g u i0 + δ g u i1 , i=1

i=1

where u it is individual i in period t and δ is a discount factor that is larger than zero and smaller than one. Assuming that n 0 is fixed and n 1 is variable might be reasonable. By using these principles, one can obtain almost the same result. This shows that my argument can apply to the tension between the present and future generations. One has to be cautious to derive implications from impossibility theorems in population ethics, but these theorems have significance for public policies and governance issues. Indeed, investigating trade-offs and impossibility/possibility results is a plausible method to find axiological principles for governing social arrangements and allocations across time. Acknowledgment I thank Akira Inoue, Shu Ishida, and two editors of this volume for helpful comments. I also thank Editage for their editing service. This paper was financially supported by KAKENHI (JP18H05204, JP20H01446, JP22K01387, JP22H05083, JP22H05086) and the Mitsubishi Foundation (ID201920011). This paper is prepared with support from the Institute of Social Science, University of Tokyo, and its institute-wide joint research project, “Methodology of Social Sciences: How to Measure Phenomena and Values.”

17

See, for instance, Huemer (2008) and Tännsjö (2020) for related issues. See also Zuber et al. (2021).

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Appendix As mentioned earlier, our impossibility result does not rely on the minimal oneperson trade-off. In this section, I illustrate that this is related to the definition of the repugnant conclusion. Blackorby et al., (2005; hereafter BBD) use the following version of the repugnant conclusion; see also Bossert, Cato, and Kamaga (2022, 2023) for the application of this version. BBD’s repugnant conclusion: For all natural numbers n, a positive number ζ > 0, and a positive number ε > 0 smaller than ζ , there exists a natural number m larger than n such that the m-individual distribution where all the people obtain ε is morally better than the n-individual distribution where all the people obtain ζ .

First, this BBD version focuses on distributions where all individuals obtain the same well-being level. By contrast, a “population of at least ten billion people” (1984, p. 388) does not have to be egalitarian. Second, more importantly, unlike Parfit’s version, n does not have to be at least ten billion. Note that the n-individual distribution where all the people obtain ζ corresponds to “population of at least ten billion people, all with a very high quality of life” (Parfit, 1984, p. 388). The BBD version of the avoidance of repugnant conclusion becomes the following (Blackorby et al., 2005, p. 162): BBD’s avoidance of repugnant conclusion: There exist a natural number n, a positive number ζ > 0, and a positive number ε > 0 smaller than ζ such that, for all natural numbers m larger than n, the m-individual distribution where all the people obtain ε is not morally better than the n-individual distribution where all the people obtain ζ .

If we use this version in the main theorem with additive separability, the minimal one-person trade-off needs to be added. To observe this point, let us consider the following principle: For any two distributions, (u 1 , ..., u n ) and (v 1 , ..., vm ),

(i) if n = m = 1, the one with a higher utility level is morally better than the other (with a lower utility level); (ii) if n = 1 and m = 1, u 1 is morally better than (v 1 , ..., vm ); (iii) if n = 1 and m = 1, v1 is morally better than (u 1 , ..., u n ); (iv) if n= 1 and m = 1, (u 1 , ..., u n ) is morally better than (v 1 , ..., vm ) if and only n m g(u i ) > i=1 g(vi ), where g is an increasing and concave function if i=1 with no upper bound and g(0) = 0. This principle appears artificial but satisfies additive separability and the nobliss-point of the moral value axiom, and avoids both BBD’s repugnant and sadistic conclusions. Notably, this does not avoid Parfit’s version of the repugnant conclusion. The argument in this section illustrates that the formulation of the repugnant conclusion can matter.

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Chapter 7

Dealing with “Wickedness” in Long-Term Problem-Solving Hisashi Okuda

Abstract This chapter formulates strategies to long-term problems by referring to policy design studies and wicked problem studies. Policy design research already has a series of suggestions for long-term problems, but it predominantly focuses on how to make policies consistent and efficient. This chapter draws on the discussion of stakeholder relations and their knowledge utilization by referring to wicked problem research. Simultaneously, it attempts to capture and reflect the advantages of current policy design theory to improve strategies for addressing wicked problems: to break down various characteristics of the problems and to find how and to what extent they are wicked. Finally, it explores clues for long-term policy design and emphasizes the possibility of gradual policy improvement to address long-term wicked problems. Keywords Policy design · Policy instruments · Long-term problems · Wicked problem · Wickedness · Stakeholder relationships

7.1 Introduction There are many public problems that will threaten humankind over the long-term, including global climate change and the unsustainability of the welfare system. These problems take a long time to solve, often over several generations. This chapter aims to develop a theory of policy design to deal with such long-term wicked problems. The policy design study attempts to develop policy design theory as a guideline for policy actors and provide an advisory guideline for policymakers and advisors, suggesting how to overcome political and technical obstacles. In order to further develop policy design research, it is important to consider how to address long-term policy issues. “Long-term policies” are problems that require at least more than a generation to solve (Sprinz, 2009). This means that the policy-related actors in the current generation will not be able to solve or alleviate the problem in their lifetime. Likewise, they may not be harmed even if the problem is not H. Okuda (B) Kanazawa University, Kanazawa, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_7

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ameliorated. Considering long-term wicked problems will lead us to examine effective problem-solving and the various elements required in policy design, including political aspects of policymaking, importance of political institutions, and prudential policy interventions. This chapter primarily deals with the question: “What kind of policy design theory can successfully conceptualize strategies to address long-term wicked problems?” In response, I will address the several following sub-questions. First, what advantages and weaknesses does mainstream policy design research have in addressing wicked problems? Second, what alternative approaches could conceptualize dealing with wicked problems without sacrificing advantages of mainstream proposals? And third, what implications does the long-term nature of problems have for the task of addressing the wicked problem rationally? In Sect. 7.2, I will answer the first sub-question. The section examines the advantages and weaknesses of the various proposals for policy design. Policy design research characterizes policy tools from a goal-oriented perspective. In recent years, there has been significant discussion about policy tools that help persuade policy actors and build consensus. Such proposals have an important advantage which breaks complex situations into smaller pieces to make problem understanding and solving easier. However, the section also shows that mainstream policy design research has difficulties with conceptualizing goal settings and stakeholder consensus building over the long term. In Sect. 7.3, I argue that deliberative policy design is more suited to the demands of a strategy to address wicked problems. Section 7.4 will examine the second sub-question on wicked problem research. I will first highlight the problems with wicked problem research and deliberative policy design. Many wicked problem studies understand the wicked problem concept too holistically. Consequently, the concept is ineffective for problem-solving. Therefore, the section argues that such weaknesses can be overcome by incorporating mainstream policy design research. Namely, I will adopt the approach of analyzing policy situations by breaking them down into smaller elements. Section 7.5 analyzes the third subquestion, how the long-term nature of problems has implications to the discussions above. I argue that the breakdown approach to the wicked problems is advantageous given long-term nature of the problems. This strategy will have positive implications on gradual policy improvement as an approach to long-term problems. Finally, this chapter mentions the implications of historical institutionalism on policy design.

7.2 Policy Design Strategies This section focuses on policy design research. It will examine advantages and weaknesses of it to wicked problems.

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7.2.1 Policy Design as Instrumental Choice Policy design research aims to provide a guideline for policymakers and policy advisors. In this chapter, I assume that policymakers and advisors try to improve policy interventions, but only with limited rationality and capacity. Their power of influence is limited and their policies may be overturned by future election results or the rotation of administrative posts. With these assumptions, policy design research has made important contributions to conceptualizing public problem-solving. Policy design studies try to provide an advisory guideline for policymakers and advisors who try to solve public problems, suggesting how to overcome political and technical obstacles. It began as an attempt for policy typology in the 1960s (Siddiki, 2018: 3–4). In the 1980s, Steven Linder and B. Guy Peters advocated an approach that evaluates a policy instrumental choice on the basis of whether it achieved or will achieve a policy goal (Linder & Peters, 1984, 1989). Linder and Peters characterized policy design as having three models: causality, evaluation, and intervention (Linder & Peters, 1984: 241). First, causality concerns causal explanations on problems and policy effects. The model of causality provides policy designers with worldviews including what kind of cause-and-effect reasoning is plausible, including knowledge of natural and social sciences. Next, evaluation is concerned with the appropriateness of the intervention. In evaluating policies, ideally, it is necessary to evaluate both the desirability of policy goals and whether or not the selected instruments are fit for purpose. However, Linder and Peters argued that policy design activities should focus on fitness for purpose (ibid.: 249–250). In the model of intervention, they proposed to analyze and categorize instruments used in policy design and to accumulate knowledge resources for policy intervention (ibid.: 250–254). Two issues are important to this chapter. The first one is about significance to focus on policy instruments. Linder and Peters’ proposal made a breakthrough in policy design research with its emphasis on analysis and typology of policy instruments (Howlett & Mukherjee, 2017: 142). It provided a concrete approach to accumulate analysis of policy instruments where there had been ambiguity as to how to proceed with “policy design” research. Generally, it is difficult to directly examine what a desirable policy design is. This is because there can be a myriad of conditions for a good policy. Furthermore, many policy practices are one-time events, and it can be disputed whether it is even possible to compare policy design activities. In contrast, it is relatively easy to study the characteristics of policy instruments. In addition, the knowledge gained in this way is suitable for comparison and accumulation. For example, their study drew on Christopher Hood’s work on policy tools (Hood, 1986; Linder & Peters, 1989). In addition, Hood’s framework composed of “organization, finance, authority, and information” was frequently mentioned in later studies (Howlett, 2019a). Thus, it is useful for analyzing and improving policies themselves. Linder and Peters proposed to enrich analytical resources in policy design by accumulating knowledge about policy instruments (Linder & Peters, 1989).

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The second is about policy goal setting, and how they restrained from discussing it. Linder and Peters characterized evaluation in policy design only in terms of suitability for purpose and did not include desirability of policy goals (Linder & Peters, 1984: 250). Namely, they characterized instrumental choices regarding instrumental rationality. In their policy design theory, the policy goals were given for policy designers, determined by politicians and pluralistic political processes (ibid.: 249). They endorsed policy advisor’s self-restraint as non-elected policy actors. In setting policy goals, they regard that voters and stakeholders’ demands are important. Thus, they suggested that policy designers should avoid committing those activities. Therefore, Linder and Peters conceptualized a policy design framework in which policy designers restrain themselves from making normative judgments. Linder and Peters offered a valuable proposal that focuses on policy instruments. The proposal attempts to generate solid analysis and intellectual resources for policy improvement. Simultaneously, their proposal separated politics from policy design, namely goal setting from instrument selection, and they focused on the latter. The setting and evaluating policy goals that they did not conceptualize will be a central issue in later discussion. Next, I will review how the current mainstream policy design theory deals with those issues.

7.2.2 “Smart Patching” Approach Linder and Peters’ research agenda was further developed by Michael Howlett and his colleagues. Howlett developed a more detailed classification and characterization of policy tools and how to use them. He offers various suggestions for characteristics of policy instruments and policy mixes for effective problem-solving (2019a). In this chapter, three issues are particularly important. First, he highlights “procedural policy instrument” that can help persuade and build consensus among policy actors and stakeholders. The second is the detailed characterization of policy instruments and policy contexts for sophisticated policy interventions. The third is the intervention strategies to ensure the effectiveness and efficiency of policies. First, consensus building and policy instruments to intervene in policy processes are important. One of Howlett’s theoretical contributions is to highlight procedural policy instruments. He argues that government can use “procedural policy instruments” that influence actors in the policy process and promote consensus on policy (Howlett, 2000, 2019a). These are instruments that facilitate goal setting and policy formulation. He points to the situation of “hollow states” where globalization and networking have weakened state’s policy influences. According to Howlett, procedural policy instruments achieve effective policy interventions by influencing policy actors even in the “hollow state.” The classification of procedural policy instruments is also based on Hood’s typology of policy tools. For example, reorganizing government structures to concentrate resources on important policies is a procedural organizational policy instrument, and funding interest groups sympathetic to such policies can be characterized as a procedural financial policy instrument. Thus,

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based on the four categories proposed by Hood, Howlett proposed eight categories of instruments: those that affect society and those that affect policy process (Table 7.1; Howlett, 2019a: 150). This detailed categorization of policy instruments is involved in the second feature of Howlett’s proposal. He developed a new research area of “policy mix”: the optimal combination of multiple instruments. In conducting the optimal policy mix, he proposed a framework called the “policy portfolio (Howlett & del Rio, 2015: 1236–1237).” This is a framework that uses the three criteria of “multilevel,” “multipolicy,” and “multi-goal” to allow analysts to examine whether multiple policies are mutually consistent and whether they have mutually reinforcing relations (Table 7.2). Based on this framework, policy design researchers can analyze complex policy situations and study areas that require improvement. This analytical framework is a feature of mainstream policy design research (ibid.). This strategy has the advantage of enriching intellectual resources based on frameworks for key considerations. Following the trajectory of Linder and Peters, this policy design theory provides even more specific guidelines. Such a strategy is a significant characteristic of the contemporary policy design approach. Finally, I address to the intervention strategy. While policy design research began as a characterization of instruments, the discussion on how to use instruments inevitably has normative implications on policy practice. Regarding procedural policy instruments, it is a matter of under what principles he and his colleagues believe that stakeholder consensus buildings should be undertaken. They suggest that policy designers promote consensus from stakeholders at the policy formulation stage to ensure that a policy instrument is effective and multiple instruments work in mutually reinforcing manners (Howlett, 2000; Howlett et al., 2017). Therefore, Howlett differs from Linder and Peters in terms of how to use procedural policy instruments. This is because Linder and Peters regarded goal setting and stakeholder relations as given, and considered that policy design is an activity within that constraint. In contrast, Howlett’s proposal involves stakeholder consensus building with procedural policy instruments. This is an intervention in the goal-setting process. What form does their proposal take in creating and improving long-term policies? It is a “smart patching” approach. Regarding long-term policies, Nair and Howlett (2016) highlighted that policy goals and instruments become unmatched over time. When addressing long-term problems, obstacles such as policy inconsistencies and Table 7.1 Taxonomy of substantive and procedural instruments (Howlett 2019a: 150) Governing resource Purpose

Information

Authority

Treasure

Organization

Substantive

Public information campaign

Independent regulatory agencies

Subsidies and grants

Public Enterprises

Procedural

Official Secret Act

Administrative advisory committees

Interest-group funding

Government reorganizations

Yes

Complex single-level instrument mix

No

No

Simple single-level instrument mix

Multi-policy

Multi-goal

No

No

No

Multilevel

II

I

Dimension

Types

Table 7.2 Policy portfolio (Howlett del Rio 2015: 1237)

Simple single-level policy mix

No

Yes

No

III

Complex single-level policy mix

Yes

Yes

No

IV

Yes

No

Yes

VI

Simple multilevel Complex instrument mix multilevel instrument mix

No

No

Yes

V

Simple multilevel policy mix

No

Yes

Yes

VII

Complex multilevel policy mix

Yes

Yes

Yes

VIII

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institutional stickiness typically emerge. This is because individual policy modifications result in inconsistency among policy instruments over time. Moreover, institutions that facilitate policy implementation at policy introduction may later function as obstacles. Therefore, they proposed “smart patching” to mitigate the divergence between goals and instruments and inconsistency among instruments (ibid.: 913–914). “Smart patching” refers to checking for consistency among policy goals, policies, and levels of policies. Therefore, it supervises policy mixes to ensure consistency when policy content or context changes over time (Howlett & del Rio, 2015; Howlett & Rayner, 2007; Rayner & Howlett, 2013). The guideline encourages policymakers to choose policy goals and policies that are consistent and mutually complementary (Howlett & del Rio, 2015). However, proponents for the above policy advice seem to fail to consider people/ groups who are consciously engaged in political resistance to the policies. This is because it primarily addresses the issue of the temporal misalignment of policies and policy goals, and proposes to technically fill the misalignment. Even worse, this overemphasis may result in significant losses to groups harmed by the policies. The guideline for smart patching can be seen as a policy instrument that implicitly hinders the re-setting of policy goals and the resistance of opponents to existing policies. I argue that consistency of various policies is not the only requirement for policymaking. Indeed, there are cases where policymakers ensure stakeholder acceptability or avoid severe losses to particular groups with sacrificing policy efficiency and consistency. Although policies contradict each other, it is a possible option to leave the contradiction unresolved to satisfy stakeholders. Similarly, governments sometimes set compromised policy goals or pay compensation to stakeholders who suffer losses. According to Yehezkel Dror, a policy configuration in which policies mutually complement each other is called a “pure mega-policy” (Dror, 1971: 73). In contrast, there can be another type of policy configuration, “mixed mega-policy,” in which contradictions are left out for redundancy or risk hedging (ibid.). Without making those efforts, it might cause distributive and democratic problems and frustrate stakeholders. In addition, it might finally fail policy itself (McConnell, 2017; Schneider & Ingram, 1997). Howlett recommends that multiple goals be placed mutually complementary by using procedural policy instruments. However, it is not the only guiding principle to pursue consistency among multiple policy goals and instruments in policymaking. This chapter proposes to incorporate elements of mixed mega-policy into policy design theory. The task here is to formulate consensus building and compromise with stakeholders, without losing the policy rationality which Howlett peruses. Therefore, the following section refers to wicked problem studies, primarily those dealing with consensus building.

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7.3 Wicked Problem and Deliberative Policy Design 7.3.1 Wicked Problems and Stakeholder Relation The problem with smart patching is that it overemphasizes the “policy aspect” of policymaking and ignores the “political aspect.” I will refer to wicked problem studies in order to incorporate goal setting and stakeholder acceptability into policy design. This is because these studies have long discussed how to address problems where stakeholder diversity makes it difficult to set policy goals. The wicked problem concept was proposed as a criticism to rational-technical or engineering problem-solving concepts for complex social problems (Alford & Head, 2017: 398; Rittel & Webber, 1973). The most famous study by Rittel and Webber formulated “wicked problems” as those that are ill-defined and resistant to an agreed solution. The study argued that political judgment is required to tackle the problems. The Australian Public Service Commission defines “wicked problems” as those that are differently recognized and evaluated among stakeholders; have an interconnectedness among problems; and those with a time constraint to solve (Australian Public Service Commission, 2007: 3–5). According to existing research, the essence of the problem is that it is not technically solved and requires political negotiation. According to Allan McConnell (2017), politicians must consider “the impact on political reputations, control of agendas, and promotion of ideological/governance trajectories” (McConnell, 2017: 165). Therefore, governments want to enhance their own political reputation and move toward their own political success by addressing wicked problems. They also do not want to lose their ability to control the agenda by delaying action on the problems (ibid.). Finally, they have a larger vision related to ideology and governance, and they want to ensure that their policies to deal with problems will be consistent with the vision. Therefore, politicians may have an incentive to only superficially deal with it for political appeal (ibid.). Stakeholders may stop supporting politicians if they adopt policies harmful to their interests and values. Especially in the case of long-term policies, which are likely to be implemented for more than one generation, certain stakeholder groups may suffer lifelong losses. This will harm the political reputation of the politicians. Similarly, because some voters may sympathize with a politician’s ideology or governance visions, it is difficult for a politician to abandon their broader visions, even for the sake of policy efficiency. Therefore, there are sufficient reasons for politicians to resist policy designs that pursue efficiency alone. Dealing with wicked problems might often involve proposing an inconsistent policy mix in order to gain broad political support. In addition, it is also necessary to continue incremental interventions over a long period of time. This is because the quality of the solution must consider the success of the politician and the interests of the stakeholders.

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7.3.2 Strategies to Deal with Wicked Problems This chapter assumes that collaboration with stakeholders is important to address wicked problems. There are three strategies for dealing with wicked problems. The first is the “authoritative strategy” (Roberts, 2000: 4–5). This is an approach in which a few policymakers have knowledge and authority, and it advocates solving the problem under their initiative. The second is a “competitive strategy” (ibid.: 5–6). This encourages groups or companies to compete with each other and adopt solutions that survive through the competition. The third is the “collaborative strategy” (ibid.: 6–7). This is a strategy that unites multiple stakeholders to collaborate and establish their own knowledge, worldview, and solutions. Nancy Roberts focused on a coping strategy based on stakeholder collaboration and suggested how promising that strategy is (ibid.: 13–16). According to her, it is important to encourage stakeholders to meet and learn from each other, and policy experts are expected to facilitate that process. Similar strategies were also proposed in the context of policy design. Among the policy design theories, approaches that incorporate deliberative elements will successfully conceptualize policy design involving consensus building. Davis Bobrow and John S. Dryzek proposed a proposal called “hermeneutic policy analysis.” In their proposal, policy designers are expected to conduct interviews among various policy actors to identify policy context from a neutral standpoint in order to choose an intellectual framework and to select appropriate policy tools (Bobrow & Dryzek, 1987: 200–211). According to them, policy designers should act as neutral intermediaries among stakeholders, by listening to policy objectives and building consensus. Because each stakeholder has his or her own expertise and ideas, interviewing them provides an opportunity to obtain and use the knowledge for policy design. In their proposal, policy designers first interview various stakeholders about their interests and values, and then, the designers re-arrange policy contents. Here, they reflect the stakeholder demands while keeping the policy contents consistent and purposeful. Therefore, their policy design theory has both bottom-up information gathering and top-down rearrangement of policy contents. The former activity helps consensus building, and the latter contributes to ensuring policy coherence and consistency. Bobrow and Dryzek suggest that the policy designer should be a neutral facilitator among stakeholders. However, I believe that those designers can exercise greater power, despite their intention. In doing so, they strive to ensure the policy rationality by selecting a proper cognitive frame of reference. Because it is equipped with consensus building support among stakeholders and using fragmented knowledge held by various actors, the deliberation-based policy design meets the requirements to deal with wicked problems. Therefore, in their version of policy design activities, designers are allowed a great deal of flexibility and are simultaneously expected to have sufficient prudence. Therefore, strategies for policy design must pursue both policy effectiveness and political compromise.

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Based on the suggestions made in the wicked problem research, I have presented a policy design theory that could satisfy the demands described earlier. Bobrow and Dryzek’s hermeneutic policy analysis, which builds consensus and maintain policy consistency, has the potential to address public problems that cannot be well defined. Recently, there have also been proposals updating Bobrow and Dryzek’s proposal. Paul Cairney and Christopher Weible (2017) recommend that policy expertise should refer to the findings of cognitive science, in the relation to stakeholder persuasion and political survival. This is because it is useful for effectively persuading policy actors and stakeholders in policymaking processes. Their aim is to help policy analysts become more politically active and successful in influencing policy decisions. This chapter supports the idea of Bobrow and Dryzek (1987) and Cairney and Weible (2017) because it helps the policy analysts maximize their influence on politics and solve problems effectively within a variety of constraints. Such proposals cover the weaknesses of the contemporary policy design research.

7.4 Analysis of Wicked Problems and Wickedness This section attempts to improve deliberative policy analysis through discussing how their weaknesses can be covered. It also examines how strength of mainstream policy design theory—the detailed analytical framework—can be introduced in those areas. In addition, this section proposes that deliberative policy design and wicked problem studies incorporate mainstream policy design strategy approaches to analyze problems and contexts.

7.4.1 Challenges of Wicked Problem-Solving Previously, I advocated a deliberation-based policy design theory to complement the weaknesses of the smart patching approach. Nevertheless, it is not enough to give policy advisors a free hand and expect them to exercise prudent judgment to tackle wicked problems. In this section, I will first identify the tasks to be addressed and subsequently offer suggestions. Strategies for deliberative policy design give large discretionary power to designers. Consequently, the success or failure of the policy design depends on the competence of each policymaker. This strategy can be described as asking for “prudence” or “phronesis” to consider solutions. Prudence means identifying wickedness of a problem and choosing effective ways to deal with it. This is exactly what Bobrow and Dryzek want policy designers to do. Although the discussion in the previous section complements the weaknesses of Howlett’s theory of policy design, it fails to capture its advantages, detailed categorization of policy contents, and context.

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The proposed hermeneutic policy analysis can be regarded as a policy design theory formulation of a strategy for dealing with wicked problems. In this framework, the policy designer must act as a neutral facilitator, synthesizing the interests and preferred values of politicians and stakeholders, and must finally propose appropriate cognitive frames and solutions. At this point, Bobrow and Dryzek assume the contested nature of the public problem definition and require policy advisors to overcome it by persuading stakeholders and creating effective policy proposals. As such, deliberative policy analysis leaves a significant amount of discretion to policy analysts. Regarding the discretionary nature of the issue, the same can be said of the wicked problem study, especially regarding the definition of the problem. Horst Rittel and Melvin Webber formulated the wicked problem as “ill-defined and therefore resistant to an agreed solution,” and therefore, “political judgments rather than scientific certitudes” are needed (Alford & Head, 2017: 398–399; Rittel & Webber, 1973: 160). This perception of wicked problem is widely accepted. However, several criticisms have been raised in response to this view. John Alford and Brian Head argue that it is too broad to be analytically useful (Alford & Head, 2017). This is because the majority of studies on wicked problems understand the problem too holistically. Such formulation promotes too totalizing understandings of “wicked problems” and may consider too many problems as “wicked (ibid.: 399– 400).” Indeed, there is a variety of public problems that are referred to as wicked problems (Australia Public Service Commission 2007: 1–2). In addition, Alford and Head argue that a holistic understanding typically masks the approach of grasping the degree of “wickedness” and discourages analysts from considering the wickedness of the problem at hand (Alford & Head, 2017: 400). Consequently, the concept is not useful as a cue to create proper definitions and solutions. Thus, if we adopt the idea that “wicked problems” are types of problem whose definition is controversial, such a concept does not make problem-solving easier. This is because it does not inform how and to what extent the problem is wicked. Although various aspects make a problem wicked, not every public problem has all of them. Policy researchers must be aware of the type and degree of wickedness to solve problems. They must understand which aspects of the problem are simple and do not require emphasis, which parts are overly difficult and should be given up on at that time, and which parts are difficult but have the potential to make progress and must be addressed. To find out, clues or frameworks are required as to how and to what extent each public issue is wicked. At this point, the approach of mainstream policy design theory provides a useful guide. I argue that deliberative policy design and wicked problem studies must incorporate that approach and refine their analytical framework. In recent wicked problem research, Joshua Newman and Head’s study provides clues for these aims. They clarify the definition of wicked problem by dividing the wickedness of the problems into three categories (Newman & Head, 2017: 415–417). According to them, wicked problems are those that meet all three of the following conditions. First, it is complex, has changing boundaries and moving parts, and has extensive and cascading negative externalities. Second, it has limited available

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information. There is uncertainty about the impact on society, who the stakeholders are, and what the consequences of a particular strategy will be. Third, there is a high degree of disagreement among stakeholders, and consensus or even compromise is unlikely. Although most public problems are often considered to be wicked, the above three conditions do not always apply to all public problems. In considering policy practice, the wickedness of the same problem may vary depending on the times and jurisdictions. A problem on which stakeholders cannot reach consensus at one time may be easily agreed upon during another period. It is useful to formulate such a view to policy contexts. Such a framework would also work for deliberative policy design. A number of similar efforts have been proposed by Howlett and his colleagues. I suggest that these ideas ought to be applied for effective policy design and for problem-setting and consensus building with stakeholders. The deliberative policy design incorporated goal setting and consensus building into policy design. This could improve on mainstream policy design strategies that have weaknesses in setting policy goals. However, it may sacrifice the advantages of the smart patching approach, which is to provide effective policy advice through precise policy content and policy context analysis. Therefore, a detailed framework identifying the wickedness of public problems is essential. This is an attempt to apply mainstream policy design theory’s framework to analyzing problem and stakeholder situations.

7.4.2 Breakdown Approach to “Wicked Problem” This chapter will search for an approach that breaks down wicked problems into their component parts to assist in formulating a response, therefore making “wickedness” simpler and easier to follow. The breakdown of wicked problems into more specific issues and characteristics makes it easier to determine which aspects can be formulated into a framework and which aspects are left to the discretion of the policy designers. It will also provide us with an idea of the kind of discretion and prudence required of policy designers. Furthermore, it allows policy advisors to examine solutions: what elements contribute to addressing long-term wicked policy issues. The approach assists designers by presenting a framework that provides clues to their analysis. Alford and Head call their approach a “contingency framework” for wicked problems (Alford & Head, 2017). Their framework classifies a problem in a matrix and then characterizes the extent to which and how wicked a certain problem is (Table 7.3). They first segment a wicked problem into characteristics of the problem itself and characteristics of the stakeholder situation surrounding the problem. The former is called the “policy aspect” of wicked problems, while the latter is the “political aspect.” Their matrix positions policy problems along two axes: the analysis of the problem itself and the analysis of stakeholder situation. The matrix has three levels of criteria to measure the wickedness of each of the two (ibid.).

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Table 7.3 Framework to break down wicked problems (Simplified based on Alford and Head 2017: 402)

The wickedness of the problem is represented on the horizontal axis and can be categorized as follows. First, at the simplest level, the nature of problem and the solution are both clear for policymakers. The next intermediate level is the situation where the nature and cause of the problem are known, but the solution is not. Finally, the most difficult to resolve, is the situation where the policymaker knows neither the nature and causes of the problem nor the possible solutions (ibid.: 403). Next, they introduce wickedness in stakeholder relations and a classification on the vertical axis (ibid.: 403–404). Since the degree of wickedness cannot be measured by a single criterion, questions are posed on three issues. The first is about the locus of important knowledge. The question is about whether the knowledge is held by policy managers or held in a fragmented manner by multiple stakeholders. The second is the question of how divergent or conflicting the interests of the stakeholders are. Third, who has relatively larger power, the policymakers or the stakeholders (ibid.)? Subsequently, policy advisors can classify wickedness on stakeholder situations into three levels. If a problem meets none of the three conditions, it is classified as least wicked; if it meets one or two, it is classified as middle level; and if it meets all three conditions, it is classified as most wicked. The simplest case is the situation in which policymakers and stakeholders share knowledge and interests, and neither has a power advantage. The second is a medium state, in which knowledge is shared among the various policy actors, but there is general agreement or absence of intense conflict about the nature of the problem and its solution. Third, and most difficult, is a situation in which knowledge and interests are both held separately among the various policy actors. Due to the conflicting interests, actors perceive each other as potential rivals and are reluctant to share knowledge (ibid.). This framework may allow us to find the non-wicked aspects in some problems. In particular, it is useful that the framework highlights problems with middle level wickedness and identifies which aspects are wicked and how. How does this proposal require policy designers to behave? This framework does not automatically provide a definitive answer to these questions, but rather allows

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analysts to make observations and judgments at their discretion. Alford and Head’s framework attempts to build an understanding of the policy problem through iterative reflection between the problem at hand and the framework (ibid.: 403). The above framework is merely a clue to facilitate the understanding of wicked problems, and the analysts are required to conduct an appropriate analysis to the problem. Such a suggestion for discretionary analyses is the “contingency framework” they propose. This is a strategy similar to Bobrow and Dryzek’s framework, where the problem is understood and solutions are proposed through a cyclical process. Although they differ in their focus on analyzing problems or on proposing solutions, both approaches regard the analyst’s discretion as indispensable and attempt to assist them. More precisely, the contingency framework is influential in making the problem design more transparent. Using the framework, the deliberation-based policy design can be examined and supported in further detail. Hermeneutic policy analysis has allowed policy designers to determine characteristics of the problem and to propose solutions. This framework is not necessarily against that strategy. Rather, the framework provides clues to help analyze characteristics of the problem and the stakeholder situation. These clues facilitate the work of the policy designer and provide a common ground for other analysts to evaluate. In addition, they occasionally offer constructive criticism of the policy design activity. For example, when one analyst considers an aspect of a problem to be not so wicked, other analysis teams may find that views among stakeholders are tacitly different. This can highlight what we must focus on regarding the wickedness of the issue and the stakeholder situation. Consequently, the considerations in this section are well suited to support the hermeneutic policy analysis. The following section highlights how this proposal has significant implications for long-term problem-solving through gradual policy improvements.

7.5 Implications on Long-Term Problem-Solving The “contingency framework,” which breaks down wicked characteristics of a problem and provides clues for coping strategies, was promising. Then, how does the framework work for public issues with long-term nature? This chapter argues that the long-term nature of the problem may make this approach even more useful.

7.5.1 Gradual Policy Improvement and “Wait-and-See” Option What does the framework provide for policy interventions that include a temporal perspective, i.e., long-term problem-solving? This is the question in Sect. 7.5.

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The typology of wickedness of a public problem helps determine how to solve the problem or otherwise whether the solution of a particular aspect of the problem should be postponed. This aim, regarding the choice between a pure mega-policy and a mixed mega-policy (Dror, 1971), can be described as follows. Howlett’s smart patching approach, described in Sect. 7.2, is a pure mega-policy. It is a strategy that avoids compromises with stakeholders and is vulnerable to intentional noncompliance by policy contenders. By contrast, a mixed mega-policy cannot deliver effective policies on its own. Compromise-filled political decisions that focus only on stakeholders’ agreement cannot contribute to effective solutions to problems. The choice between the mega-policies forces policy researchers to make difficult tradeoffs in general. The proposal in the previous section, based on Alford and Head’s argument, was to break down various aspects of wicked problems and identify their characteristics. This approach has two advantages over traditional strategies. First, it facilitates policy designers in prioritizing the aspects that need to be addressed on the basis of their human, time, and financial resources. Consequently, their capacity to address easyto-address aspects and middle level wicked aspects would be improved. In addition, it is also important to identify the most wicked aspects and then concentrate resources on them. Therefore, it is not a simple trade-off between a pure mega-policy of smart patching and a mere compromise. The contingency framework attempts to achieve the advantages of both mega-policies in the current generation. Nevertheless, amelioration of the most wicked aspects is often extremely difficult and may require postponement. This brings us to the second advantage of the approach: the advantage of identifying the most wicked aspects of a problem, even if it cannot be solved. Identifying those aspects contributes to setting policy agenda that the current generation avoids direct solving actions, and that instead tries to make it easier to address for future generations. This proposal allows explicit examination of such decision. The purpose here is to make a proposal that avoids either making policies consistent by ignoring political circumstances or sacrificing policy rationality due to political compromises. This suggestion is not to say that problem-solving may be completely neglected. Wickedness of a problem and the ease of dealing with it change over time. Wickedness of problems varies by society, culture, and time period despite these problems having similar characteristics (Newman & Head, 2017: 422–424). Therefore, a problem that is presently too wicked and difficult to tackle may be less wicked in the future. Such a framework calls for prudence as a well-timed response that makes necessary interventions when “window of opportunity” opens. In addition, the contingency framework provides the tools to measure wickedness at the right time to determine when that timing is right. The second advantage of the proposal also implies that such a “wait-and-see” perspective should be properly evaluated for long-term policy design. This view is compatible with Alford and Head’s concern for the wicked problem research and their suggestions for it. According to Alford and Head, the existing definition of wicked problems typically demands solutions to policymakers that are too quick and dynamic. They also state that wicked problem studies typically see problems as apocalyptic and therefore overemphasize transformative policy reforms.

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This results in a dichotomous argument between the policy success through fundamental reforms and policy failure through slow responses (Alford & Head, 2017: 399). Therefore, the traditional understanding of wicked problems tends to reject solutions through gradual policy improvement. However, gradual improvements and partial problem-solving are both possible and beneficial.

7.5.2 Gradual Policy Improvement and Institutional Change Finally, I will apply the above discussion to how policy design strategies deal with institutional change analysis and explain its implications. One reason is that the debate on institutional change is important for long-term policy. Moreover, that examination will help us understand the implications of this chapter, from prudent policy advice to gradual policy improvement. This argument may seem to contradict the lessons of historical institutionalism. However, it is compatible with recent findings in the field, and it suggests the long-term implications of gradual policy improvements. In considering long-term problems, it is necessary to consider the ways in which policies are created and continue to affect our society after they have been implemented. As Adachi (2019) highlights, there are time constraints on the activities of policy actors. Policymakers in each generation must attempt to create institutions and policies that contribute to reducing future threats in advance. In considering institutional development and institutional change, policy researchers often refer to debates in historical institutionalism. Historical institutionalism provides an explanation for why institutions and policies become “sticky.” It is one variation of the institutionalism that focuses on people’s collective actions under institutions. Historical institutionalism emphasizes that earlier events influence later events, and it explains the stability of certain institutions. A typical theory is path dependency, in which prior historical events influence later occurrences (Mahoney, 2000). In particular, the institutional change literature provides insight into how certain policies can have long-term effects and be resilient to future policy pressures (Mahoney & Thelen, 2010; Pierson, 2004; Streeck & Thelen, 2005). In general, explanations for institutional change are often based on exogenous shocks especially that in critical junctures (Pierson, 2004). As for policy design theorists, path dependency provides insights on prudential well-timed interventions. This is because historical institutional theory seems to have difficulty explaining institutional change in endogenous ways, and thus, policy designers must observe policy context with prudence and intervene in institutions with proper instruments at the right moment. For instance, Howlett has incorporated insights of historical institutionalism into his policy design research (Howlett, 2019b). He discusses two implications of historical institutionalism for policy design (Howlett, 2019b; Mahoney, 2000). First, decisions made early in the trajectory are critical (Howlett, 2019b: 32). Second, it is important to know the reasons for “turning points” or “conjunctures” that

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change trajectories (ibid.). Subsequently, he argues that the both insights are useful to predict turning points of change and to prevent change. Thus, historical institutionalism basically explains why institutions do not change. It generally implies that exogenous shocks cause major changes in institutions that would otherwise be difficult to change. Regardless of historical institutionalist’s intention, policy design theorists try to draw lessons from the explanation to take advantage of the shocks. Such an analysis would seem to call for a preparation for extraneous shocks and well-timed responses. These policy actions are difficult. Historical institutionalism describes changes that have happened and has difficulty predicting future changes (Peters, 2005). Therefore, despite drawing on this study, policy design studies cannot help but expect designers’ prudential judgment. However, the discussion in this chapter favored gradual policy improvement that advances addressing the easy-to-solve aspects of problems and acknowledges necessity of choosing to postpone particularly wicked aspects. In addition to explanations by large extraneous shocks, institutional change occurs by a series of small changes. This phenomenon is called “gradual transformation” (Mahoney & Thelen, 2010; Streeck & Thelen, 2005). This is the phenomenon of institutional discontinuity caused by incremental change (Streeck & Thelen, 2005). At the process level, small and insignificant changes accumulate. When these changes cross a tipping point, they result in major and discontinuous changes. Such findings imply that incremental policy interventions can also produce transformative policy results in the long run. If so, in addition to taking advantage of critical junctures, the accumulation of small changes in situations where the window of opportunity is closed also contributes to solving huge problems. In another field, there are proposals to use these mechanisms of incremental institutional innovation to realize specific policy objectives. Georgina Waylen, a feminist institutionalist, focuses on the interaction between formal and informal institutions and discusses how to promote policy improvement by exploiting institutional ambiguity and gaps between formal and informal institutions (Waylen, 2014). When existing formal institutions are problematic, causing gender inequality, a gender-equitable interpretation of informal institutions may gradually create momentum for change. Conversely, if the formal institutions are already gender equitable, there could be a strategy to ensure gender equality by excluding room for ambiguous interpretations that would undermine equality (ibid.). These prospects suggest that the development of policy design theory incorporating incremental transformation is promising too.

7.6 Conclusion In this chapter, I have attempted to formulate a strategy to deal with the long-term problem by referring to the findings of policy design studies and wicked problem studies. In addition, I have examined what theoretical contributions can be made to policy design and wicked problem research.

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Policy design studies have already offered various suggestions for long-term problems. However, they have over emphasized rationalizing the policy mix and paid limited attention to political aspects of problem-solving. By referring to stakeholder relationship building and knowledge utilization in wicked problem research, I have developed policy design research so that the political aspect can be considered without sacrificing rational problem-solving. However, wicked problem research has the difficulty of overestimating wickedness of the problem and making unnecessarily high demands for policy improvement. Prior researchers introduced an approach that breaks down wicked problem into an analysis of problem itself and that of stakeholder relations. Subsequently, on the framework, they examine characteristics and degree of wickedness of the problem in detail. This chapter combines important elements of the policy designer’s discretion and a breakdown framework of policy situations. Of course, in situations where goal setting and stakeholder relations are settled, the smart patching approach will also contribute greatly to alleviating public problems. Finally, this chapter explores clues for long-term policy designing. I have attempted to progress both policy theory and practice by emphasizing on gradual policy change. An important implication of this discussion is that even without extraneous shocks occurring, there are opportunities for incremental reforms to address long-term wicked problems. Therefore, deliberative policy design, incorporating a breakdown approach, is compatible with such long-term solution processes. Acknowledgements This work was supported by JSPS KAKENHI (21K13226) and Kanazawa University “HOZUMINE” project.

References Adachi, Y. (2019). How is it possible for democracies to effectively tackle long-term problems? Journal of Comparative Policy Analysis: Research and Practice, 21(1), 116–129. Alford, J., & Head, B. W. (2017). Wicked and less wicked problems: A typology and a contingency framework. Policy and Society, 36(3), 397–413. Australian Public Service Commission. (2007). Tackling with wicked problems: A public policy perspective. Bobrow, D. B. (2006). Policy design: Ubiquitous, necessary and difficult. In B. G. Peters & J. Pierre (Eds.), Handbook of public policy (pp. 75–96). Sage. Bobrow, D. B., & Dryzek, J. S. (1987). Policy analysis by design. University of Pittsburg Press. Cairney, P., & Weible, C. M. (2017). The new policy sciences: Combining the cognitive science of choice, multiple theories of context, and basic and applied analysis. Policy Sciences, 50, 619–627. Dror, Y. (1971). Design for policy sciences. American Elsevier. Hacker, J. (2005). Policy drift: The hidden politics of U.S. welfare state retrenchment. In W. Streeck & K. Thelen (Eds.), Beyond continuity: Institutional change in advanced political economies (pp. 40–82). Oxford University Press. Head, B. W. (2019). Forty years of wicked problems literature: Forging closer links to policy studies. Policy and Society, 38(2), 180–197.

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Hood, C. C. (1986). The tools of government. Chatham House Publishers. Howlett, M. (2000). Managing the “hollow state”: Procedural policy instruments and modern governance. Canadian Public Administration, 43(4), 412–431. Howlett, M. (2019a). Designing public policies: Principles and instruments (2nd ed.). Routledge. Howlett, M. (2019b). Procedural policy tools and the temporal dimensions of policy design. International Review of Public Policy, 1(1), 27–45. Howlett, M., & del Rio, P. (2015). The parameters of policy portfolios: Verticality and horizontality in design spaces and their consequences for policy mix formulation. Environment and Planning C: Government and Policy, 33(5), 1233–1245. Howlett, M., & Mukherjee, I. (2017). Policy design: From tools to patches. Canadian Public Administration/Administration publique du Canada, 60(1), 140–144. Howlett, M., & Rayner, J. (2007). Design principles for policy mixes: Cohesion and coherence in ‘new governance arrangement’. Policy and Society, 26(4), 1–18. Howlett, M., Vince, J., & del Rio, P. (2017). Policy integration and multi-level governance: Dealing with the vertical dimension of policy mix designs. Politics and Governance, 5(2), 69–78. Linder, S. H., & Peters, B. G. (1984). From social theory to policy design. Journal of Public Policy, 4(3), 237–259. Linder, S. H., & Peters, B. G. (1989). Instruments of government: Perceptions and contexts. Journal of Public Policy, 9(1), 35–58. Mahoney, J. (2000). Path dependence in historical sociology. Theory and Society, 29(4), 507–548. Mahoney, J., & Thelen, K. (2010). A theory of gradual institutional change. In J. Mahoney & K. Thelen (Eds.), Explaining institutional change: Ambiguity, agency, and power in historical institutionalism (pp. 1–37). Cambridge University Press. McConnell, A. (2017). Rethinking wicked problems as political problems and policy problems. Policy and Politics, 46(1), 165–180. Nair, S., & Howlett, M. (2016). From robustness to resilience: Avoiding policy traps in the long term. Sustainability Science, 11(6), 909–917. Newman, J., & Head, B. (2017). The national context of wicked problems: Comparing policies on gun violence in the US, Canada, and Australia. Journal of Comparative Policy Analysis: Research and Practice, 19(1), 40–53. Peters, B.G. (2005). Institutional theory in political science. Continuum. Pierson, P. (2004). Politics in time: History, institutions, and social analysis. Princeton University Press. Rayner, J., & Howlett, M. (2013). Patching vs packaging in policy formulation: Assessing policy portfolio design. Politics and Governance, 1(2), 170–182. Rittel, H. W. J., & Webber, M. M. (1973). Dilemmas in a general theory of planning. Policy Sciences, 4(2), 155–169. Roberts, N. (2000). Wicked problems and network approaches to resolution. International Public Management Review, 1(1), 1–19. Schneider, A. L., & Ingram, H. (1997). Policy design for democracy. University Press of Kansas. Siddiki, S. (2018). Understanding and analyzing public policy design. Cambridge University Press. Sprinz, D. (2009). Long-term policy: Definition, origin, and responses. In F. Wayman, P. Williamson, & B. Bueno de Mesquita (Eds.), Breakthrough in science, markets, and politics. The University of Michigan Press. Streeck, W., & Thelen, K. (2005). Introduction: Institutional change in advanced political economies. In W. Streeck & K. Thelen (Eds.), Beyond continuity: Institutional change in advanced political economies (pp. 3–39). Oxford University Press. Waylen, G. (2014). Informal institutions, institutional change, and gender equality. Political Research Quarterly, 67(1), 212–223.

Chapter 8

Governing Long-Term Structural Changes in Socio-Technological Systems and Their Difficulties: What Do Sustainability Transition Studies Have to Address? Kazumasu Aoki

Abstract The body of sustainability transition studies has developed an approach for analyzing the long-term and complex non-linear dynamics towards a sustainable society. The analytical focus has provided unique insights into multilayered processes that can fundamentally change (unsustainable) socio-technological systems. At the core of its theoretical framework, the literature shares a multi-level perspective (MLP) to analyze system innovation by accommodating both radical change and dynamic stability in various contexts. Based on the current literature aimed at deepening the MLP, this chapter first offers an integrated model and explores its analytical potential. The model conceptualizes a multi-scalar spatial viewpoint of agency to better capture the trajectories between local sustainability initiatives and multi-dimensional institutions of the systems. The chapter then discusses how such endeavors relate to designing innovation policies and governing their processes, thereby clarifying uncertainties and open-ended policy/political processes characteristic of transition dynamics as well as the ambivalence between short-term contextuality and long-term sustainability orientation. How the dynamics and processes employing the MLP can manage and govern the impossibilities of ex-ante outcome evaluation is also discussed. Finally, this chapter concludes by critically evaluating the notion of a reflexive action framework proposed to navigate policy actors to find and gain desirable transformative change as trajectories continue to move forward. Keywords Sustainability transitions · System innovation · Multi-level perspective (MLP) · Co-evolutionary processes · Reflexive action framework · Transformative change

K. Aoki (B) University of Toyama, Toyama, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_8

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8.1 What Are Sustainability Transition Studies? Since the 2000s, a series of academic studies concerning “sustainability transitions” has emerged and rapidly grown into a well-referred, extensive discipline, mainly in European countries (Köhler et al., 2019; Markard et al., 2012). The disciplinary significance of the literature has now been proven through rigorous application in other regions, including Asia, Africa, and North and South America. The studies have developed an approach to analyze the long-term (e.g., 25–50 years) and complex dynamics towards a more sustainable economy and society. The analytical focus has provided unique and important insights into multi-layered, multi-dimensional processes that can fundamentally change (unsustainable) sociotechnological systems (energy, food, mobility, and welfare) and their societal functions (Geels & Schot, 2010; Grin et al., 2010; Loorbach, 2007; Rotmans & Loorbach, 2010). Originally, the core theoretical arguments of sustainability transition (ST) literature were rooted in science and technology studies (STS), complexity theory,1 (sociological) neo-institutionalism, and evolutionary economics. In recent decades, the body of ST studies has expanded, placing it at the intersection of various other academic fields such as governance for sustainability development, political science, economic geography, actor-network theory, discourse theory, and sustainability science (Avelino et al., 2016; Geels, 2020; Geels & Johnson, 2018; Geels & Schot, 2007, 2010; Loorbach, 2007; Pel, 2016; Raven et al., 2012; Smith et al., 2010). Despite its diversified trans-disciplinary nature, ST studies share a defining issue in that the current problems we face are caused by “system failure.” To address this, ST researchers argue that we must radically transform the dominant structural configurations of the system and that such change is only achieved with “system innovation” (Hoogma et al., 2002; Smith et al., 2010: 439). Problems and solutions can be defined by relying on heuristic frameworks deeply reflected and embedded in the ongoing socio-technological system; however, instead of solving the problems, this can result in a more aggravated reproduction. These problems are persistent and wicked2 (Grin et al., 2010). Therefore, ST researchers intend system innovation to be a concept that differs from the innovation often made to goods and services, which focuses on parts, as compared to the socio-technological system as a whole. The changes they seek must be more than incremental—they must fundamentally disrupt how the system defines and operates its societal functions (Smith et al., 2010).

1

The literature’s early development and arguments are based fundamentally on complexity theory, and such relevant works are collectively referred to as Transition Management, which now forms an essential element of ST literature. In Ueta and Adachi (2014), Transition Management is discussed from a multi-level environmental governance perspective. See also infra note 17. 2 Wicked and long-term policy problems are extensively discussed using policy design theory and a neo-institutionalist perspective in H. Okuda’s Chapter 7 of this book.

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Fig. 8.1 A MLP depicting transition processes. Source Adapted from Geels and Schot (2007: 402; Fig. 1), modified by the author4

This issue-framing in the ST literature has led researchers to develop a more holistic analytical perspective3 that accommodates both the production (supply) and consumption (demand) sides of the system. This endeavor also clarifies the change dynamics occurring across the multi-structured dimensions of the system, including technology, science, industry, market/users, culture, and policy/regulation (see Fig. 8.1). In more concrete terms, factors such as networked supply chains, supporting technological infrastructure, user choice preferences, industrial product standards, and governmental policies and their regulatory implementations are necessary components when considering whether and how such system innovation can occur (Geels & Schot, 2010; Meadowcroft, 2009). Thus, given the idea of system failure and innovation, ST researchers have attempted to capture these interrelated composite dimensions and propose an integrated perspective by analyzing their future evolution (Frantzeskaki et al., 2012; Geels & Schot, 2010). In so doing, they found that transitioning to a new system is possible when solving a trade-off between incremental interactions (inherently

3

The need for a holistic and multi-dimensional perspective to analyze sustainability transitions is also acknowledged and elaborated in empirical studies on the Japanese policies and related projects for electricity system reforms in S. Komatsuzaki’s Chapter 11 of this book. 4 See also Aoki (2023a) (in Japanese).

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maintaining the status quo due to persistent and wicked problems) and transformative outcomes (expected to be more radical and disruptive) (Grin et al., 2010; Kemp & Rotmans, 2005: 54).

8.2 MLP as the Underlying Theoretical Framework At the core of its theoretical framework, the ST literature shares the multi-level perspective (MLP) to analyze transitions by accommodating both radical change and dynamic stability with influences from broader contexts surrounding sociotechnological systems (Genus & Coles, 2008). This conceptualization is based on STS’s historical empirical analyses of technological innovation. Thus, it has been inductively drawn from detailed descriptions of how technical novelties can alter the dominant configurations of a system (Geels, 2005). The MLP has also employed its theoretical base in sociological neo-institutionalism and evolutionary economics, rendering it with a somewhat hybrid posture that is understood from its artifacts’ standpoint and the relevant industrial organizations whose operations and management are performed by regulatory rules (Geels & Schot, 2007, 2010). For example, in an electricity system, the performance of power plants and transmission grids is determined not only by installed technologies, but also by the institutionalized mechanisms of utilities, retail, and capacity markets. Similarly, roads and automobiles cannot function without automobile insurance and traffic rules structured into a coherent system. The MLP presupposes that such established socio-technological systems are unlikely to change due to a high degree of structuralization caused and maintained by interrelated elements of physical-artifactual infrastructures, interdependent relationships among incumbent actors, and their vested stakes and interests. As shown in Fig. 8.1, the MLP visualizes transitioning dynamics as coevolutionary processes that develop across three levels (i.e., landscape, regime, and niche) (Geels & Schot, 2007, 2010). At the macro-level, landscape refers to the external surroundings of a system and forms an exogenous context that cannot be influenced in the short term (Geels & Kemp, 2007). Landscape factors progress relatively slowly and develop highly autonomously. Van Driel and Schot (2005: 54) classified these factors into three types: (1) trends that do not change or change slowly (climate and demographic trends), (2) long-term changes (German industrialization in the late nineteenth century), and (3) rapid external shocks (wars, natural disasters, or fluctuations in oil prices) (Geels, 2011). Regimes and niches are placed within a broader landscape, involving both material/physical and social/institutional factors. Changes in the landscape are the source of selection pressures that influence the regime level, prompting reactions and responses within the regime—this in turn allows niches to grow (Smith et al., 2010). The meso-level of the MLP is conceptualized as a socio-technological regime (Geels & Kemp, 2007) which can operate on a national or broader (global) scale. It is described as a structural and institutional element, defining the dominant rules that

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Table 8.1 Three types of institutions constituting a rule-set Regulative

Normative

Cognitive

Basis of compliance

Expedience

Social obligation

Taken-for-grantedness, shared understanding

Mechanisms

Coercive, sanctions, incentives

Normative pressure Mimetic, learning, imitation (social sanctions such as “shaming”)

Basis of legitimacy

Legally sanctioned

Morally governed

Culturally supported, conceptually correct

Examples

Laws, regulations, product standards, procedures, incentive structures, governance systems

Roles, values, ideals, responsibilities, codes of conduct, behavioral norms

Belief systems, models of reality, categories, guiding principles, goals, innovation agendas, search heuristic

Source Scott (1995: 52) in Geels and Schot (2010: 20–21) and Geels (2020: 8; Table 1)

configure the societal functions of an existing system.5 The elements of the regime are formed from the co-evolutionary aggregation and alignment of objects, infrastructure, resources, knowledge, framing, discourses, and norms, spanning both production and consumption. This explains the multi-dimensionality of the regime and its inflexibility; thus, changes occurring within the regime are inevitably incremental and path-dependent (Smith et al., 2010). Building on neo-institutional theory, Geels and Schot (2010: 20–21) propose three types of regime rules: regulative, normative, and cognitive (see Table 8.1). These three types constitute a “rule-set” shared by various actors, groups, and organizations in society, such as communities of engineers, consumers, interest groups, and policymakers (Geels & Kemp, 2007: 443; Rip & Kemp, 1998: 340). These entities interact to form interdependent networks; this mutual group coordination is a significant source of lock-in that maintains the status quo. However, misalignments and realignments within the regime in response to landscape developments, which provide windows of opportunity, can increase the possibility of niche alternatives competing for attention, influence, and funding (Smith et al., 2010). Technological niches correspond to the micro-level, where experimental projects conduct radical innovations. Niches are sources of transformative ideas and capabilities as opposed to elaborated blueprints. Initially, such novelties and ideas were only unstable configurations providing low performance for society (Geels & Schot, 2007) and operating outside or at the periphery of the dominant regime (Nykvist & Whitmarsh, 2008). Geographically, niches are formed on a smaller local or community scale. Niche actors such as fringe actors or entrepreneurs experiment with radical innovations in “protected spaces,” which are shielded from mainstream selection pressures imposed by the regime. Such spaces entail small market niches, research 5

For discourse-analytic arguments on how the dominance of a socio-economic regime can be earned, configured, and reproduced on its own while making a more radically transformative view on environmental issues marginalized, see S. Shimizu’s Chapter 9 (esp. 9.4) of this book.

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and development laboratory programs, and governmentally subsidized projects (Geels & Kemp, 2007). With the prospect that innovations are eventually diffused, upscaled, and used in the regime or to replace conventional products, technologies, or methods, niche actors must overcome the constraining influence of the regime. They also need to expand, link with broader processes, and embed changes in regime configurations over the long term (Smith et al., 2010). Many lock-in mechanisms stabilize the existing regime, which challenges further development and structuralization. Nonetheless, these niches can thrive if expectations become more mature and broadly accepted in society. This involves learning processes and networks through which the alignment of knowledge, institutions, infrastructure, framing, and narratives is vitally important, as it results in more stable development that is better configured and institutionalized to achieve niche innovation (Geels, 2011).

8.3 Deepening MLP6 8.3.1 Reflecting on the Current Penetration of MLP in Practice As a procedural framework, the MLP depicts that actors, groups, and organizations enact transitions by creating linkages between processes at different cognitive and activity levels and socio-economically constructing the dynamics. In addition, Geels (2005: 453) stated that the MLP identifies that transitions are “emergent outcomes” of interactions among these entities with boundedly rational viewpoints and divergent capabilities, resources, and interests. Thus, they attempt to navigate a transition via searching for and learning how to interact with social conflicts and controversies. This implies that the underlying MLP is a more micro and local aspect of the immediate interactions that create short- and mid-term development patterns. However, until recently, such a model has remained underdeveloped and maintained at a rudimentary stage (Geels, 2020; Köhler et al., 2019). The MLP has since become a middle-range theory that provides “a big picture” (Geels, 2020: 2) as a relatively abstract analytical framework for identifying the relationships between general theoretical mechanisms and dynamic processes (Geels & Schot, 2010). The MLP does not necessarily explore the specific mechanisms of immediate processes and interactions. To provide detailed explanations of these substantive relationships in terms of micro and local decisions, activities, events, or ideas of particular developments and processes, the MLP must be complemented with more specific theories and concepts. Therefore, the ST literature of the past

6

For more extensive works (in Japanese) on the current state of the art in the literature, see Aoki (2023a, 2023b, 2022).

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10–15 years has expanded the MLP to a somewhat more multi-dimensional or multiscalar spatial viewpoint of agency (Geels, 2019; Markard & Truffer, 2008; Raven et al., 2012; Smith & Stirling, 2010). This advancement has occurred by basing arguments on a series of empirical findings accumulated in practice to which corresponding in-depth analyses are performed. The call for innovations to enable sustainability transitions has increased in official reports and programs launched by entities such as the European Environmental Agency, German Advisory Council on Global Change, United Nations Convention on Biodiversity, and OECD. In these policy documents, the premise of the ST literature and MLP is underpinned by their core arguments that acknowledge that concerns for persistent and wicked problems (such as loss of biodiversity, resource depletion, and climate change) demand systemic change towards sustainability transitions (EEA, 2019; Rogge, 2017, WBGU, 2011).

8.3.2 Proposing an Integrated Model for a More Spatially-Sensitive MLP7 Considering recent arguments in the literature to deepen the MLP, this section tentatively provides an integrated model with reference to the four-phased spatial developments proposed by Geels (2020) and Geels and Johnson (2018). The model provides multi-scale dimensions in which events, activities, and practices in spatial diffusion are characterized by varied multiple interactions between and across local and national (or global) levels. The essence of the model stems from crossovers between different ontological standpoints: evolutionary economics, STS, neo-institutional theory, and economic geography (Raven et al., 2012). Each of these is construed as offering micro-foundations to the MLP in a complementary manner. In doing so, a more spatially sensitive perspective of the model emerges and enables relational and procedural (recursive) conceptualization of agency to better capture the ongoing dynamics and processes between local developments and multi-dimensional structures (institutions) as transition trajectories move forward (see Fig. 8.2). The four-phased spatial developments are discussed below. (1) In the first (local) phase, niche actors nurture innovations in technologies that respond to local problems. Here, such novel developments occur in one or more local locations where the installed practices varied and are independent, and the geographical scale of their activities and events is smaller. Ideas, knowledge, and experiences were created for practical problem-solving purposes; however, intellectual assets based on these ideas, knowledge, and experience tend not to be shared with others. For example, meetings, forums, or conferences, where actors can interact with one another and exchange assets, do not occur. Thus, there is no dedicated intellectual mechanism or infrastructure for knowledge circulation (Geels & Deuten, 2006). 7

The section is partly based on Aoki (2020) (in Japanese).

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The degree of independence and variation/plurality of local practices depends on what Geels (2020: 9) called “structural conditioning,” which is the “downward” influence imposed by regime institutions on niche actors and their activities. This influence weakens when landscape development (e.g., changes in macro-trends and sudden shocks) induces opportunities. In such cases, niches are better able to present innovations as the regime tumbles and deteriorates. In addition, the downward influence of structural conditioning is not deterministic ex-ante. The degree of selection pressure from the regime’s institutionalized functions requires interpretation that differs depending on the actor’s viewpoint or position, causing (some) differentiation in local practices (Geels, 2020: 9). Despite such interpretive flexibility, selection pressures are not entirely malleable because existing regime institutions “may privilege some actors, some identities, some strategies, some spatial and temporal horizons, some actions over others” (Jessop, 2001: 1223). Thus, maintaining the variation developed in these processes requires shielding of niches which creates conditions and requirements for niche innovations to grow, separating them from exposure to the vested interests of incumbents and amounting to economic, institutional, and political pressures. According to Ghosh et al. (2021: 746), the first phase also refers to replication, which is the geographical expansion of niches by re-creating similar niche locations with new socio-spatial and cultural contexts. Although the expected output of replication is not geographically connected, niches similar to one another emerge with various shielding and nurturing strategies in their own contexts8 (Turnheim et al., 2018). (2) In the second (inter-local) phase, local actors gradually become aware of each other’s activities and practices, leading to some degree of interaction and increased circulation of assets (e.g., ideas, knowledge, and experiences). Circulation is characterized by the exchange of relevant documents, manuals, papers, and actors between local practices. This phase involves increasing technological knowledge and experience and their circulation within formed networks. Typically, some businesses attempt to establish networks to support their technological visions. Others may form different networks to compete with, for example, technical designs (Geels & Deuten, 2006; Raven et al., 2012). The second phase involves “social interaction” (Geels, 2020: 9), which refers to movements and counter-movements by actors who become oriented towards one another. These interactions can be routinized, whereby they maintain the status quo by staying close to scripts or logic configured by regime institutions. Alternatively, interactions can be more deliberate or strategic (Fligstein & McAdam, 2012). As shown in Table 8.1, regulatory rules (institutions), such as laws and regulations, can strategize the games the actors play, while the cognitive rules partly constitute their interests. Similarly, normative rules form the beliefs and norms of actors (Geels & Schot, 2010: 20–21). This institutionalistic understanding resonates with the relational viewpoint of agency, whereby actors hold varied positions and standpoints (e.g., central,

8

Replication of bike-sharing niches is an example. It emerges in various cities worldwide while making different approaches to protecting the niches (van Waes et al., 2020).

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middle, and peripheral) in the system’s environment, thus generating different interpretations, capacities, resources, and interests. Such plurality/heterogeneity allows the settings to be characterized by interactions, exchanges, debates, struggles, and position-jockeying, resulting in a degree of variation and innovation (Geels, 2020). Thus, niche actors seeking increased creativity and discretion can deviate from regime institutions to gain advantage. However, such variation may also take place unintentionally when niches respond to local conditions or improvise spontaneously (Lounsbury & Crumley, 2007). Even in stabilized settings, interactions become game-playing taking the form of maneuvering for positions,9 which tends to result in incremental changes. When transformative scripts or logics question incumbent ideals or objectives, more foundational controversies may occur leading to more notable changes (Fligstein & McAdam, 2012). Actors are led to varying interpretations and diversified actions when facing tensions between institutions or conflicting institutional logics (Purdy & Gray, 2009). Activities in the second phase may lead to the learning and aggregation of more generalized values, ideas, products, knowledge, and experiences. This learning process can further enhance expectations and circulation. Circulating and replicating assets formed in one location can be more transformative if they simultaneously enhance niche expansion at various locations. These processes require a degree of de-contextualization of certain local problem-solving practices. Connecting divergent niches that emerge from various spatial contexts can be beneficial and instrumental, leading to a broader expansion of the national (or global) niche (Geels & Deuten, 2006; Gosens et al., 2020; Raven et al., 2012). Moreover, this type of niche circulation can be accelerated through trans-local interactions, particularly when nationally, globally, or virtually connected users share consumer preferences. Such users are geographically dispersed, yet they serve as a centralized knowledge archive (Meelen et al., 2019), enabling the re-contextualization of generalized knowledge and experiences in various local contexts. Kivimaa et al. (2019) found that “intermediaries”10 can accelerate circulation and replication by moving assets from different local experiments to national niches. In addition, intermediaries may bridge niche actors and incumbent regime actors and act as facilitators while the processes progress over time. These specialized actors can assure that elements and assets of specific niche practices and developments are circulating and replicating via de- and re-contextualization of locally varied sociospatial and cultural contexts (Ghosh et al., 2021: 746; Sovacool et al., 2020). 9

“There is constant jockeying going on in fields as a result of their contentious nature. Actors make moves and other actors have to interpret them, consider their options, and act in response. (…) Even in settled fields, constant low-level contention and incremental change are the norm rather than the image of routine reproduction” (Fligstein and McAdam 2012: 12). 10 Kivimaa et al. (2019: 1072) define intermediaries as “actors and platforms that positively influence sustainability transition processes by linking actors and activities, and their related skills and resources, or by connecting transition visions and demands of networks of actors with existing regimes in order to create momentum for socio technical system change, to create new collaborations within and across niche technologies, ideas and markets, and to disrupt dominant unsustainable socio technical configurations.”

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(3) The third (trans-local) phase relates to increasingly “upward” developments and a move more from the niche to the regime level. Explicit comparisons or selections are involved in expanding local practices to formulate more generalized learning for the system as a whole. This phase can be of pivotal importance because: “While idiosyncratic deviations from scripts (institutions)11 occur, perhaps even with some frequency, such random deviations are apt to have only passing impact on social arrangements” (Barley & Tolbert, 1997: 102). The production and circulation of knowledge and experiences are increased not for specific local practices, but for society in general. Actors such as industry associations, think tanks, NGOs, and standardization organizations can play a role in such aggregation activities. Cognitive and intellectual efforts are distributed among local and national (or global and virtual) knowledge activities. A notable part of generating this knowledge-based asset must be disembedded from locally specified practices and their idiosyncratic contexts (Geels & Deuten, 2006: 268). Businesses may recognize collective interests in creating, maintaining, and distributing collectively refined standardization efforts; therefore, they have set up research conferences or professional associations to speak for and represent the newly formed field at the national (or global) level. Moreover, the circulation of activities and experiences is enhanced by creating a national (or global) knowledge infrastructure such as dedicated journals or articles. National (global)-level work towards stabilizing generalized knowledge allows for market penetration nationwide (globally) and, in turn, rational calculations among mainstream consumers because they12 can be assured of reliable performance and safety standards. Rational calculations may also involve large businesses that use more formal rules and procedures to guide investment decisions (Geels & Johnson, 2018: 141). Aggregation in this phase is more likely to produce collective goods (generalized knowledge and experience) that can be utilized by other actors. Participation in the aggregation process is not self-evident, because free-rider problems may occur. There must be incentive structures or proper arrangements if actors contribute to sharing knowledge and experiences with others. This is the case even when competitors are involved. Otherwise, collective goods are not provided optimally. Intermediary actors may aggregate if they perceive themselves as part of a group or community with mutual interests and stakes. When this occurs, the perceived benefits of providing collective goods may outweigh the perceived costs (Geels & Deuten, 2006: 267). Geels (2020: 9) referred to these processes as “structural elaboration,” through which upscaled collective activities either reproduce existing institutions or transform them. Committed actors such as intermediaries may advance local initiatives to directly influence the regime with “institutional entrepreneurship,” which includes problem framing, persuasive discourse, resource mobilization, and alliance building 11

The parentheses are added by the author. Mainstream mass users outside of niche markets expect high-performance standards in terms of safety, reliability, and interoperability, implying that systematically gathered experimental data must underpin quality standards and safety regulations. Intermediaries help define and articulate best working practices, form guiding principles, and accumulate and coordinate scientific researches (Geels & Deuten 2006: 268).

12

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Fig. 8.2 Integrated four-phase model. Source Adapted from Smith and Raven (2012: 1029; Fig. 1) and modified by the author13

(Garud et al., 2007; van Doren et al., 2020). However, anchoring local initiatives to the system level may induce resistance from the incumbent’s “defensive institutional work” (Maguire & Hardy, 2009). (4) The fourth (national/global) phase occurs when institutionalization and standardization establish dominant rules and practices through system-wide acceptance and retention of changes. Changes shared in niches stabilize through the broader endorsement of new rules formalized into routines, obligations, and legal rights. Knowledge and experience are standardized in handbooks, textbooks, and codes, thereby creating a shared asset container (Streeck & Thelen, 2005). Institutionalization can be achieved by building consensus and consolidating legitimacy of shared definitions, narratives, interpretations, and behaviors. Legitimizing innovations with affiliated structural reforms in a broader socio-spatial and institutional context requires considerable mobilization of political power, resources, and capabilities. This requires that relevant actors, such as government/policy actors or intermediaries, commit themselves to political processes by achieving collective actions or coalitions via network webs (Avelino & Rotmans, 2009; Avelino et al., 2016; Smith et al., 2005). This fourth phase also relates to “reversal” because institutionalization and standardization stabilize rules and guide and constrain local-level activities and practices. Interactions become stabilized as a constitutive component of a national (or global) socio-technical regime, from which it is difficult to deviate. At this point, a new system begins to provide societal functioning (Geels & Johnson, 2018: 141). Figure 8.2 schematically represents the aforementioned four-phase dynamics in sequence. A single cycle, composed of phases (1) to (4) in Fig. 8.2, can be analyzed as one round of processes representing events. The core research question is how the processes maintain/reproduce or change/alternate regime institutions. A pathway and trajectory can then be conceptually understood as a sequence of cycles transitioning towards system-level event chains. 13

See also Aoki (2020: 14; Fig. 4) (in Japanese).

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8.3.3 Exploring Japanese Electricity System Reforms as an Example This more spatially sensitive model can be explored, as it applies to Japanese electricity system reforms. Since 3.11 (the Great East Japan earthquake and severe TEPCO14 Fukushima nuclear power plant incident in 2011), the system’s landscape has changed, bringing reforms to address the exposed vulnerabilities (e.g., blackouts, energy loss from long-distance transmission, and dependence on large-scale fossil fuel generation) nationwide. As a socio-technical regime, the system established a dominant function through vertically integrated, highly centralized configurations sustained by a small number (nine–ten) of large incumbent electricity utilities. Relevant policies and programs have been pursued to transform this system into a small scale, dispersed, and decentralized form. Factors such as feed-in tariffs for renewables, freeing of the entire retail market, and decomposition of the sectoral form of electricity utilities (splitting between generation and transmission) were implemented. As a result, more than 600 new entrants called “new electricity utilities (sin denryoku)” have emerged. Some of these (approximately 50) were sponsored by local businesses and governments (primarily municipalities) and called “local new electricity utilities (chiiki sin denryoku)” or “local governmental new electricity utilities (jichitai sin denryoku).” The relevant local actors act as niches and favor conversion to renewable energy (particularly photovoltaic power and onshore wind power) as local natural endowments and establishing locally owned energy management systems (EMS) (e.g., micro-grids independent of the commercial grid), which would achieve “local production and local consumption.” Changes in the system can bring sustainability and resilience to the sector, as well as new profits, jobs, and tax revenues exclusively to local areas. The latter is possible because consumers (primarily households) no longer pay their bills and give their labor to incumbent utilities whose operations are widespread and whose headquarters are located outside the local area. Therefore, the reforms they seek consider institutionalizing new rules for redistribution to revitalize the socio-economy of the area. Conventional MLP has limited consideration of geographically defined characteristics when capturing transitioning trajectories or pathways, enabling or hindering the capabilities, resources, and assets required to nurture such reforms. However, a deepened MLP provides a heuristic framework for conceptualizing spatial scales and levels. These can be used to analyze and determine how pluralities/heterogeneities (found in the interpretations of actors towards “structural conditioning,” “social interactions,” networking, and problem framing) emerge through multiple geographical and spatial dimensions (note that these are vertically and horizontally nested) such as prefectures, municipalities, cities, and neighborhoods. For example, for “local new electricity utilities” and local EMS to become monetized and operational, their 14

3.11 severely damaged the TEPCO (the most dominant incumbent in the Japanese electricity utility industry) management and operation. It considerably weakened the regime, resulting in more sweeping liberalization of the market.

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spatial reach is critical. Supposedly, this chance becomes more prominent as the geographical scale increases, which also involves a higher level of local government. How differences in these dynamics and processes change the redistribution game between local stakeholders and incumbents can now be analyzed more systematically. This is a considerable improvement in understanding how exactly transitions towards a more decentralized system unfold. The current MLP also conceptualizes the second (inter-local) and third (translocal) phases in a temporally sequential manner. This provides a more nuanced understanding of the roles of cities and local governments. These can now be understood as loci that strategically form and connect networks between and across multiple spatial scales and levels, reaching beyond territorial boundaries. Spatial dynamics and interactions (even virtually) emerging via inter- and trans-local networks can affect the circulation, replication, and upscaling of niche innovation. We should then ask questions about how such impacts, derived from spatial dynamics and interactions, can contribute to the de- and re-contextualization of local specificities by generating and aligning the conditions and requirements of socio-technical experiments for innovations that can accelerate the selection for “structural elaboration.”15 In the Japanese scenario, local stakeholders advocate the quest for “local production and local consumption” as a counter-discourse to the incumbent utilities and large businesses as offshore capital, seeking to realize self-governance or democratization of the electricity system. Thus, its regime must undergo radical transformation via de-and-re-configuration of the system’s structures (including the commercial grid) from the standpoint of local households as an integral component of a more sustainable form of management and governance. Increased socio-technical innovations can enable these households to participate as prosumers in the redefining process and to become primary governing agents. Determining how and the extent to which such a vision or narrative can make its way through the fourth (national/global) phase of institutionalization requires answering the aforementioned questions. As a coherently schematized framework conceptualizing multiple scales and levels in terms of structure, time, and space (see Fig. 8.2), a deepened MLP and its application in practical cases would enable the broadening and accumulation of verifiable findings and understandings that would generate meaningful arguments. This, in turn, would create intellectual assets that can induce feedback and reflection to further improve the current MLP.

15

For a more elaborate discussion of the issue, see Aoki (2023b) (in Japanese).

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8.4 Discussion: Difficulties and Possibilities in Designing and Governing Long-Term Policies for Sustainability Transitions How can we design policies and govern processes when strategies require policy development and implementation to radically change critical societal structures and institutions?

8.4.1 Uncertainties and Open-Ended Processes Characteristic of Sustainability Transitions The ST literature implies that a set of long-term policies is required whose goals and outcomes achieve “system innovation.” This means radically transforming sociotechnical systems as opposed to optimizing and correcting incumbent regimes in a marginal fashion. Thus, the ST literature differs from economics whose studies and analyses on long-term policy design question the optimal modeling or conditions to incentivize long-term investments or ways to discount uncertainties of future payoffs to calculate current assets. Instead, the ST literature questions the dynamics of policy processes that are empirically observable. Policies must interact with longterm transformative changes as they unfold and evolve. Thus, the design of longterm innovation policies has to have adaptive and flexible qualities (Voß et al., 2009: 278). As such, it must address the uncertainties of the pathways or trajectories that take form in non-linear, open-ended processes.16 This feature also demands longterm policy design to induce reflexive learning processes. Without assuming fixed goals and means ex-ante, policy design efforts should focus on utilizing interactive processes where varied actors reveal and reflect by articulating visions and conditions of social experiments with novelties, thereby finding pathways to those visions. Moreover, such actors are distributed over the processes and must be aligned to deliver and mobilize the processes towards achieving the policy goals. Each actor (facing a collective action problem) cannot do so on its own, and a few powerful actors (e.g., regime actors) already in an established network may be better equipped to use their capacities and resources to hinder the envisioned transformative processes and developments (Smith & Raven, 2012). How can we resolve this issue? The essential (and earlier) argument17 in the literature somehow presupposes that “evolution” can be an alternative to this difficult process and decision. The evolutionary process was depicted as a neutral 16

Addressing uncertainties and complexities associated with conditions or boundaries of the socioeconomic systems, M. Shimizu’s Chapter 16 (esp. 16.2) of this book proposes the idea of resiliencebased public policy. 17 Significant elements of this literature’s earlier argument are derived from a body of work called Transition Management. See also supra note 1.

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device that would enable the generation and coordination of socio-technical developments towards sustainability. Nevertheless, as Meadowcroft (2009) showed, concerns regarding redistributional, zero-sum game impacts that may negatively change the disposition and vested interests of regime actors in the industry could induce them to intervene and compromise the processes strategically. Thus, implementing selections, comparisons, and evaluations of experimental innovations to explore pathways towards a sustainable future remains a political challenge. In contrast to what might have been implied in the literature, the conceptualization of evolutionary processes as neutral, open, and participatory per se cannot mask politics in prioritizing socio-technical options and paths (Scrase & Smith, 2009; Stirling, 2006).

8.4.2 Addressing What the ST Literature Cites as an Ambivalence The (current) literature indicates that sustainability transitions do not require the suppression of diversity, but the nurturing of bottom-up spontaneous experiments open to political conflict while retaining adaptability towards complex transformative dynamics. Coordination and alignment are simultaneously required to reduce uncertainty and consolidate long-term policy goals aimed at achieving system innovation. As such, the MLP conceptually breaks down this ambivalence by combining bottom-up and top-down dynamics and processes into scale and time designs for reflexive learning (see Fig. 8.1). However, as related works employing the MLP acknowledge, governing such complex non-linear dynamics and processes is not easy (Ghosh et al., 2021; Loorbach et al., 2020; Molas-Gallart et al., 2021). Illustrating the difficulties from the empowerment and governance perspectives, Smith and Raven (2012: 1030) argued the following: An innovation that is originally perceived as potentially path-breaking becomes incremental in terms of its broader socio-technical implications. This is not a problem on narrow socioeconomic terms, because the cumulative economic impact of incremental innovations is considered large, if not larger than more disrupting forms of innovation (…) First, ironically, the processes in protective spaces that empower innovations to become more competitive in conventional regime terms, such as improved alignment with existing industrial norms or structures, can actually be quite disempowering in terms of sustainability.

They also warned that pressure exists for innovations to earn competitiveness on the narrower technological, organizational, and socio-economic criteria and preferences of existing markets or consumers, rather than the broader sustainability values and goals that might have otherwise incentivized more radical innovative efforts.18

18

In addition, even if cost declines are realized while achieving and sustaining improvements in sustainability performance, aggregated rebounding effects and economic growth can, in the long-run, neutralize such relative improvements (Smith & Raven 2012: 1030).

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Avoiding the unfolding of this unsustainable pathway may require other change processes (outside niches) in broader economic and socio-political contexts. For example, empowering niches may come from a range of advocates (e.g., social or grassroots activists, NGOs, associations, political parties, policy elites or frontrunners, and investors) who influence political processes in which policies and programs such as fiscal, procurement, or regulatory measures are formed and governed. The question then becomes: how can we analytically grasp these emergent dynamics as processes constantly move forward? In Sect. 8.3, recent arguments deepening the MLP accommodate the challenges by showing more spatial sensitivity, leading to a more multi-scale, multi-dimensional analytic framework (see Fig. 8.2). This implies that transition elements and dynamics (such as activities, actors, knowledge, experiences, and resources) are analyzed by location-based conditions and requirements that could enhance or impede change processes. Thus, the possibilities of transformative innovations should be viewed and demonstrated in different socio-spatial contexts while addressing context-specific structural and institutional conditions and requirements (Hansen & Coenen, 2015). More importantly, this multi-scale spatial dimension is conceptualized as evolving as transition processes proceed over time. Initially, when niches emerge, relevant processes can be observed in geographically specified locations. In terms of expanding and upscaling niches, such confinement to local contexts fades. Instead, the dynamics and interactions should be dispersed, circulated, and replicated over distinct geographies and scales. Networks across local, regional, and national (or global and even virtual) levels must support processes in which knowledge and experience from several locations are mobilized to enrich and legitimize locally implemented innovation experiments on a much broader scale. In this regard, “intermediaries” can design interactions between entities across multiple locations. Some are recognized as having structural capabilities that may bring about transformative outcomes institutionalized from the niche to regime levels (Kivimaa et al., 2019). Nevertheless, it is critical to note that circulation and replication are often unstructured and may be unintended or unplanned. To address this uncertainty, it is necessary to determine how such outcomes can be diffused and upscaled to form a new (more sustainability driven) rule-set (see Table 8.1). In other words, how can socio-technological novelties be embedded in a pre-existing configuration via alignment between innovations and broader scalar contexts? (Geels & Johnson, 2018: 142). Such processes and dynamics that change and alternate ongoing regime institutions are well founded in the more spatially sensitive MLP (see Fig. 8.2). Exploring this question, Mylan et al. (2019) unearthed another finding that may be called wicked. As a result of an analysis of the UK food system, they argued that trajectories proceed along with a bi-directionally symmetric embedding occurring within the regime’s multi-dimensionality. In concrete terms, while the culture and market/user dimensions are radically transformed as expected, the technology and policy/regulation dimensions are captured and stagnated, reproducing the current regime’s dominance (see Fig. 8.2). This could imply that niche development accelerating embedment in one set of regime dimensions might cause separation from the other set. Thus, governing such trajectories requires interactions and dynamics

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between and across the regime and niche levels to be approached from a somewhat “dialectical” perspective. These empirical findings offer valuable insight for the case analyses of the Japanese electricity system reforms (see Sect. 8.3.3), which may encounter the same type of transition trajectories and embedding undergone by the UK food system. During the decade after 3.11, Japan experienced large-scale blackouts due to typhoons or earthquake. This means that landscape changes continued in Japan, making systemic reforms more important and imminent. In response, many policies and programs seeking changes towards a small-scale dispersed system were enacted. The policy agenda for “local production and local consumption” has been firmly embedded in practice at the national and local government levels. As niche experiments, multiple feasibility study projects have been launched in many local areas with the assistance of subsidies from various ministries (e.g., the Ministry of Environment; Ministry of Economy, Trade and Industry; and Ministry of Internal Affairs and Communications). This national financial support provided shielding and incentives to local actors (such as local businesses, local governments, and community organizations) to nurture their interests in decarbonizing, resilienting, and revitalizing their society and economy. As a result, the use of small-scale renewables has increased as carbon-free dispersed sources, and storage batteries, demand response techniques, and power-sharing or interchanging methods for load control to match demand and supply are innovated and installed. These technological developments have the potential to enable locally owned EMS to function as a decentralized governing device for “local production and local consumption.” Indeed, many intermediaries (e.g., NGOs, environmental consultants, think tanks, specialized firms, and researchers) work on such potential by committing themselves to implement the intended reforms and changes to run a local energy system in an operationalized or monetized manner. Nevertheless, it is not yet assured whether or to what extent a series of such local practices would live up to their potential to transform or alternate incumbent regime institutions. Similar to the methods and forms of transitioning the UK food system found in Mylan et al. (2019), the Japanese electricity system may also undergo a similar bi-directional embedding. The policy/regulation and technology dimensions thereof are already radically and rather rapidly transformed, but conversely, the industry and market/users dimensions are stagnated. It can be argued that the current industrial composition of the Japanese electricity business is not accompanied by embedded changes towards a bottom-up, locally oriented structure, which can be managed and governed by smaller-scale agents such as local businesses or households. Since liberalization, the market dimension has undoubtedly accelerated competition among retailers (including “new electricity utilities (sin denryoku)”) beyond the areas that once were monopolized by the large incumbent utilities. However, it is yet to emerge as reorienting and reconfiguring the rule settings, thereby enabling and institutionalizing the internalization of transactions redistributed within each area. Consumers and households, by and large, do not self-consciously support such transformations as collectively autonomously minded units (McLellan et al., 2016).

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To address and alter the ongoing trajectories, we can now ask better-equipped questions under the current MLP, as follows. How can reflexive learning processes be adopted to enhance the circulation and replication of emerging transformative elements and innovative assets? How can networking across multiple spatial levels and scales contribute to upscaling such dynamics and interactions and aligning their effects to a greater extent?

8.4.3 Forming a Framework Considering an Impossible Ex-Ante Outcome Evaluation19 The above discussions highlight the difficulties in long-term policy design with respect to making and governing transitions that lead to system innovation. First, specific tasks in such a new type of policy design must be developed and implemented as part of daily street-level practices with certain regulatory styles (Kagan & Axelrad, 2000; Lipsky, 1980). Policies can operate independently while interacting with the ongoing dynamics in various local contexts. Thus, any patterns drawn from these highly fluid interactions are difficult to anticipate by applying theoretically generalized models. The irony of design is that policies can be designed as neatly as possible; yet, it is still almost impossible to precisely predict their performance and outcomes (Voß et al., 2009). Second, Pel (2016) and others (Avelino et al., 2016; Hendriks, 2009; Kern & Howlett, 2009; Meadowcroft, 2009) argue that capturing niche innovations by incumbents withholding the status quo is another example of design irony. Technocratic and expert self-understanding undermines deliberation and collective learning in transition processes. However, this resulted from policies designed to empower outsiders and newcomers, making such participants dependent on technocratic expertise to become empowered. This, in turn, results in an unreflective assumption of what benefits all parties when a policy goal for radical system-wide transformation is compromised and exchanged for technology advancement sought to meet the mandate of global competitiveness, economic efficiency, and growth (see Sect. 8.4.2). Therefore, the policy issue here is how uncertainty centered on adaptability and reflexivity can be governed and designed to evaluate policy options and make committed engagements. Part of the uncertainty we face comes from the diverse and contingent contexts in which the systems function. Thus, we must ensure that while long-term policy designs remain adaptive and reflective of these very contexts, they must also adhere to the original policy goals in adaptive and reflective ways while avoiding distraction from events occurring over time. This, in turn, makes dependence on the status of unfolding transformations inevitable when evaluating and prioritizing policy options and engagements.

19

For more extensive work (in Japanese) on the impossibility of ex-ante outcome evaluation concerning policy engagements seeking system innovation, see Aoki (2023a).

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Table 8.2 How policy engagements contribute to achieving outcomes in the processes A. Building and nurturing niches20 A.1.

Shielding: Offering protection for niche experiments and normalizing these protection measures Broadening: Identifying, testing, and developing strategies to protect niches covering multiple system dimensions, encompassing a wide range of experiments and more diverse alternatives Deepening: Align various shielding measures, across system dimensions and across geographies

A.2.

Learning: Induces first- and second-order learning in niche experiments. First-order learning focuses on improving what actors are doing, while second-order learning questions frames and assumptions of structures and activities Broadening: Including more dimensions of the system in first- and second-order learning processes and incorporating different forms of knowledge (e.g., beyond technical knowledge from a single discipline), involving multiple actors (diversity and trust), and aspects of sustainability Deepening: Creating opportunities for challenging assumptions (about preferred solutions, problem definitions, and whether and how they contribute to sustainability)

A.3.

Networking: Create high-quality opportunities for collaboration between actors and strengthen their networks Broadening: Convening joint activities with enough flexibility around which multiple actors can congregate, mobilize, and acknowledge diverse beliefs, values, and concerns Deepening: Enhancing the mobilizing power, mutual trust, and coordination among the actors involved in niches, ensuring the stability of actor-networks over a longer period

A.4.

Navigating expectations: Create spaces to articulate expectations about societal challenges and appraise these expectations to enhance their credibility (among niche actors), quality (providing more evidence), and stability (expectations are no longer questioned) Broadening: Allowing divergent actors to voice their expectations about landscape challenges, regime ability to respond, and the promise of niches to provide solutions. Requires accepting and making explicit tensions and conflicts of interest among expectations Deepening: Developing credible expectations by aligning the landscape, regime, and niche expectations of niche and regime actors and supporting this alignment with concrete evidence

B. Expanding and mainstreaming niches B.1.

Upscaling: Increasing adoption by users of the new emerging system; this is not only about the adoption of a new set of user preferences and technologies but also the wider adoption of policy measures, industry strategies, and cultural meanings and symbols (continued)

20

For each outcome, Ghosh et al. (2021: 6) distinguish between broadening and deepening. The former relates to expanding the scope, and the latter relates to improving the quality and directionality of the process.

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Table 8.2 (continued) B.2.

Replicating: Intentionally facilitating the replication of specific niche experiments in other contexts

B.3.

Circulating: Identifying and promoting the circulation of ideas, people, blueprints, and technologies between niches on a more continuous basis

B.4.

Institutionalizing: Mainstream the rules of the niche (behavior, beliefs, and values) among existing and new niche actors

C. Opening up and unlocking regimes C.1.

De-aligning and destabilizing: Facilitating the development of disruptive policy frameworks and governance arrangements (such as organizational and administrative reforms) that challenge existing systems

C.2.

Unlearning and deep learning in regimes: Facilitating unlearning and deep learning among regime actors, helping them reassess regime rules in comparison with new alternative rules for solving systemic problems

C.3.

Strengthening regime–niche interactions: Creating linkages between niche and regime actors and their ideas and resources with the aim of empowering niches and making them more competitive

C.4.

Changing perceptions of landscape pressures: Facilitating processes to challenge individual and collective perceptions of landscape pressures of diverse groups of regime actors: policymakers, producers, and businesses

Source Adopted from Ghosh et al. (2021: 742–743; Table 1)

Given these complexities, we must assume that objectively assessing this status ex-ante is unfeasible. Therefore, Ghosh et al., (2021: 752) explored the idea that policy outcomes earned ex-post “serve as a process-oriented heuristic with which to interrogate transformation processes (…) in order to support and improve the transformational efforts of current and future” participants. In this regard, it is essential to identify which policy outcomes are relevant in specific contexts and how to test the quality of the outcomes and extend and reform ongoing activities to achieve further outcomes. With this unique conceptualization, Ghosh et al., (2021: 742–743) laid out a schematic understanding that enables the assessment of the processes whereby specific policy engagements implemented as experiments would contribute to transformative outcomes (see Table 8.2). Using MLP, they described three spatially bounded processes (building and nurturing niches, expanding and mainstreaming niches, and opening up and unlocking regimes) that constitute their scheme from a macro-viewpoint (see Fig. 8.1). Drawing on recent findings in the literature (see Sects. 8.2 and 8.3), they offer a set of policy outcomes (see Fig. 8.1 and Table 8.2) that can be obtained via experimental engagements with each of these processes, thereby exemplifying its applicability with more granularity to evaluate transition trajectories. Explaining the practical merits of this argument, Ghosh et al. (2021) stated that policymakers seeking to achieve these outcomes via engagements or interventions as experiments can contribute to removing obstacles to systemic transformation. This can be achieved by navigating directionality, thinking and acting reflexively,

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improving policy coordination and inclusion, and articulating policy demands and market expectations (Weber & Rohracher, 2012). Thus, outcomes are conceptualized as those to be achieved by policy engagements or interventions that enable and enhance continuous monitoring and assessment of the behaviors of agents towards structurally transformative change. Ghosh et al. (2021: 9) argued that these systemic changes can be induced by referring to the outcome as “a reflexive action framework” as opposed to a concrete step-by-step prescription.

8.5 Conclusion: Significance and Implications for Further Study21 Since its emergence, the ST literature has focused on the impossibility of the current incremental policy strategies, implemented under the conventional understanding of planning and management, to change course and directionality. As discussed in Sect. 8.2, one of the central issues is that policies intended to bring about innovation are focused towards optimizing the ongoing regime. Moreover, many studies in the ST literature have found that politics constantly unfold in processes where inconsistencies between intended innovation and policies almost inevitably emerge (Alkemade et al., 2011). Thus, the critical issue is the extent to which innovation is captured and loses its radical edge owing to policies that are meant to realize innovation. With this novelty quashed, innovation now contributes to the maintenance and reproduction of the current regime as opposed to its replacement. Therefore, the problems intended to be addressed could worsen and thus become wicked, with motivations and intentions compromised accordingly (Avelino et al., 2016; Pel, 2016). The deepened MLP (see Sect. 8.3) presupposes that innovation that potentially enables the effective management of such problems tends to be nurtured as a locally implemented sustainability initiative. It is a type of initiative that attempts to enhance and mobilize alternatives, such as a low-consumption lifestyle, regional sustainable food systems, a green and just local economy, democratic (local production and local consumption) and renewable energy, and nature-friendly living and building. As Loorbach et al. (2020) indicate, these local sustainability initiatives are rooted and incentivized in geographically spatial contexts and unique cultures and customs. They are likely to be implemented by engaged citizens or local entrepreneurs who take advantage of opportunities provided in particular environments. They also intersect and connect with other similar initiatives and form trans-local networks through which ideas, objectives, and activities are learned, exchanged, translated, and diffused. Networking, in which multiple initiatives and experiences are shared and grown as a whole, can make socio-technological innovation structurally more transformative. Shared visions, narratives, and practices that emerge and are embedded (institutionalized) in a broader society can also contribute to solving problems systemically (Geels, 2020; Geels & Deuten, 2006; Geels & Johnson, 2018). 21

For more extensive arguments (in Japanese) on this issue, see Aoki (2023a, 2022).

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Thus, this understanding of the current literature has prioritized the question of how socio-institutional contexts are affected when multi-spatial and multi-scalar processes co-evolve to bring about technological innovation, and how these developments can be governed (Kivimaa & Kern, 2016; Schot & Kanger, 2018). These research interests highlight and give direction to the current arguments that seek to refine the big picture of MLP from a more micro-analytic perspective. These arguments also identify a conceptual gap between “innovation” and “systemic transformative change.” Therefore, transformation accompanied by innovation cannot be taken as a “given” and can only be “gained” in processes that can be characterized as dialectical, highly political, and intrinsically paradoxical (Avelino et al., 2016; Loorbach et al., 2020: 3; Mylan et al., 2019; Pel et al., 2020; Pel, 2016). How can it be possible to approach the processes or methods governing this ambivalence of innovation and the responses and accommodation of agencies? Loorbach et al., (2020: 4) addressed this question as follows: (…) we do not see such innovations as ‘the solution’ or ‘means to an end’ but rather as emerging experimental processes that generate insights into desired transition pathways and the barriers to these transitions. The extent to which such emergent innovation is transformative can only be assessed in hindsight as they are interacting with institutional contexts in ‘transformations in the making.’

Thus, with more attention paid to crossovers between the ST and reflexive governance literature, we should seek to build a conceptually coherent perspective or framework for assessing whether initiatives and engagements are successful and how transformative the quality of their performance is. Considering this background research inquiry, the proposal of Ghosh et al. (2021) for a reflexive action framework is of considerable importance to the literature (see Table 8.2). Operationalizing key insights drawn from the literature deepening the MLP, their framework of 12 outcomes represents a manner of observation that better evaluates and explains developments triggered by policy interventions and engagements. With the resulting insights fed back, it may also enable navigation of the direction of the processes with reflexivity and the contemplation of how we should continue moving forward by offering a new synthesized perspective accessible to policy actors to guide their practices towards making transformations (Ghosh et al., 2021: 14). While implementing the outcomes in practice, it is not required to make a qualitative judgment as to whether one is a right or wrong sequence. Nor is it required to judge whether one outcome is more desirable than another. In contrast, policy actors seeking innovation should commit to a portfolio of outcomes that can further accelerate ongoing processes towards transformation. Understanding which outcomes to target and in what sequence through policy interventions and engagements is always contingent on socio-material capacities, resources, and activities that vary in contexts (Ghosh et al., 2021: 5). In addition, the evaluation of policy outcomes is an interactive endeavor embedded in the contexts it seeks to change and reconfigure. As such, evaluation is part of the ongoing process and should be included in every aspect. These characteristics require specific policies, implementations, and evaluations to

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be consistent with the stated experiment and policy objectives regarding directionality, visions and goals, and systemic impacts. Thus, evaluation plays a strategic role in designing and implementing policies that seek to enable system innovation (Molas-Gallart et al., 2021: 6). These overall arguments may lead us to foresee a research inquiry that ST literature should explore in the future. Based on the recent findings and understandings discussed in this chapter, we may begin to understand that the “tranformativity” we desire is not and cannot be a given but rather something we earn over time. Policy interventions or engagements seeking to make their outcomes beneficially innovative and transformative must be designed, implemented, evaluated, and reflected, along with concurring developments constantly heading forward. Thus, the relevant conceptualizations can only be dynamic and uncertain. The institutionalization of such fluidity must be accompanied by long-term temporal continuity. How is this possible in practice? As the deepened MLP depicts, the reconfiguration we seek for structural change owing to this institutionalization is made out of multi-scale spatially nested processes mobilized across local and national (or global) levels. How and by whom can this be governed in practice? Acknowledging the extreme difficulty of addressing these questions might require a radical transformation of the processes in which designing and implementing policy engagements are engineered (Voß et al., 2009: 291–292), implying that the means, per se, demand as much innovation as the end to achieve sustainability transitions. Acknowledgements I would like to express my deep gratitude to Profs. Y. Adachi and M. Usami for having me in this book project. The work is much indebted to Profs. Y. Adachi, M. Usami, S. Komatsuzaki, H. Okuda, S. Shimizu, G. Trencher, and M. Steffen for their thoughtful and insightful comments and suggestions. The Grants-in-Aid (20K12296) from the Japan Society for the Promotion of Science supported this study.

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Chapter 9

The Politics of Eco-nomics: A Critical Investigation of ‘the Governance for a Sustainable Future’ from the Perspective of Heterodox Economics Shu Shimizu

Abstract When talking about environmental issues, economics is one of the essential topics. Indeed, many would say that contemporary environmental degradations are the cost we have to pay for the economic growth we now enjoy. As policy responds to environmental issues, several economic policies have been introduced in the past half-century. However, are those economic policies sufficient to tackle contemporary environmental issues? Do they promise a sustainable future? The answer to these questions differs among economists. While most orthodox economists would say yes, those so-called heterodox economists would say no and claim that more radical actions are necessary. This chapter takes this divergence between economists seriously and considers how radical thoughts and activities are marginalized from contemporary economic discourse and environmental politics. Finally, I would like to consider ‘the governance for a sustainable future’ critically from the perspective of heterodox economics. Keywords Eco-nomics · Heterodox economics · Foucault · Politics of truth · Politics of economics

9.1 Introduction In this chapter, I am supposed to talk about ‘the governance for a sustainable future’ from the perspective of heterodox economics. However, the problem with this task is that, as its name indicates, heterodox economics itself is not-so-popular in contemporary academic studies. It is true that some heterodox economists take contemporary environmental issues seriously and provide great insights into a ‘sustainable S. Shimizu (B) Miyazaki Municipal University, Miyazaki, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_9

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future’. Nevertheless, again, they are still treated as minor opinions in contemporary economic studies and in environmental discourse. This dilemma faced by heterodox economists is what I would like to critically engage within this chapter. Namely, even though heterodox economics does provide several interesting insights and radical proposals, they are marginalized in contemporary environmental politics. But why? This is the question I would like to take seriously. More specifically, the main question this chapter asks is why radical thoughts and actions on environmental issues are marginalized from the contemporary discourse of economics and environmental politics. To this question, I will contend that, in order to understand such marginalization, we have to examine the politics of truth among economics and how and why particular economics are regarded as true while others are marginalized. Finally, through a critical investigation of the politics of truth, I will argue that thinking about the governance for a sustainable future from a heterodox economic perspective is to think about how to challenge the existing politics of truth and to think toward a new politics of eco-nomics. For the task above, this essay has to start with critical revisions of contemporary economic studies on environmental issues. First, I will demonstrate how modern orthodox economics views environmental issues. While there are several ways to review the thoughts of orthodox economics on environmental issues, I will stick to their basic ideas. The best way to do this is to refer to their textbooks. As Robert Skidelsky (2009) cynically claims, the basic thoughts of modern economics are amazingly standardized through textbooks. Therefore, one can see how modern economists view environmental issues by referring to some popular textbooks, such as Gregory Mankiw’s Principles of Economics (2021)—the world’s best-selling textbook. With reference to these textbooks,1 I will demonstrate how modern orthodox economists understand environmental issues based on the market mechanism. This introduction to modern orthodox economics will be followed by an intensive review of heterodox economics. While it is generally said that there is no clear commonality among heterodox economists, except the denial of the orthodox (i.e., negative commonality), I will try to provide a somewhat positive commonality among them. That is, heterodox economists try to widen the analytical perspective of economics so that they provide a more realistic understanding of environmental issues and radical policy proposals. However, recognizing the importance of heterodox economics’ perspective, I will also pose a critical question to heterodox economics in the last section: even though heterodox economists propose more realistic and radical understandings of economy and environmental issues, why are they still marginalized from the major discourse of economics and environmental politics? I will address this question with reference to Richard Smith’s analysis of structural constraints and Michel Foucault’s theory of the politics of truth. Finally, drawing on Foucault, I will thoroughly consider how a new eco-nomics, where economics and environmental issues are articulated radically differently from the existing manner, is possible. Through

1

For a critical review of general textbooks of modern economics on environmental issues from a heterodox economic perspective, see Fullbrook (2019).

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this critical consideration of radical possibility, I will discuss ‘the governance for a sustainable future’ from the perspective of heterodox economics.

9.2 Modern Economics and Environmental Issues How does modern economics view environmental issues? Sometimes, economists are blamed for not being concerned about environmental issues and focusing only on economic growth, which primarily causes environmental degradation. Perhaps this was the case half a century ago. Regarding the scale of contemporary environmental issues, modern economists do take these issues seriously. Their basic thoughts on the issues can be demonstrated from micro- and macro-economic perspectives.

9.2.1 Basics of Micro-Economics on Environmental Issues In micro-economics, environmental issues are considered to be externalities. According to modern economics, the price of goods is determined through the dynamics of the market mechanism, in which suppliers of goods sell and buyers of the goods purchase at the price they are happy with. So, modern economists say that because both sides of the market are happy, the utility of the market is maximized. Nonetheless, externalities prevent the economists from ending the story happily. An externality indicates that there are those who are affected by market activities. One well-known case of an externality is pollution. For example, the market mechanism says that one automobile is sold because there are a seller and a buyer who are happy with its price; but it does not account for how the gas emissions of the automobile cause a negative effect, such as air pollution. So, externalities are an inconvenient case for modern economics; although any market price is made through the economic activities of independent sellers and buyers ideally, there are those who are affected by their activities in reality.2 In order to solve this externality problem modern economists propose the internalization of externalities. Internalization of externalities means letting those who generate externalities pay their unpaid costs. In practice, modern economists propose two different methods of internalization: permission and taxation (see Mankiw, 2021, pp. 189–205). One wellknown method of permission is the so-called cap-and-trade regime. For example, with setting certain limits on the use of fossil fuels, political institutions issue tradable permits so that companies that want to use more fossil fuels than they are allocated can purchase the permits of others who use less. Put simply, permission makes externalities tradable, thereby internalizing the externalities. On the other hand, taxation internalizes externalities by setting economic penalties. Such taxation is generally 2

It should be noted that externality is not necessarily negative effects. There are positive externalities which cause positive effects.

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called a Pigouvian tax, named after its proposer, Arthur Pigou. For example, if automobiles cause air pollution, public institutions such as central or local governments can respond by imposing a new tax on the automobiles. While it is simply imposing tax on pollution, modern economists claim it not only penalizes those who cause pollution, but also incentivizes them not to undertake environmentally negative activities. This is because, if the use of fossil fuels increases the cost of their production, industries will be motivated to decrease the use of them. Indeed, based on this logic, the current carbon tax has been introduced across the world as a policy approach to let ‘dirty industries’ shoulder their pollution burden and also encourage them to decarbonize and to be ‘clean’. These two methods represent modern economists’ basic ideas on environmental issues. In sum, by internalizing externalities through either ‘pricing’ or ‘penalizing’ pollution, modern economists make environmental issues manageable in their micro-economic model. In other words, the greatest concern about environmental issues in micro-economics is their tradability in a market. In this sense, the internalization of externalities means internalizing externalities into the market mechanism. Nevertheless, what if the goods tradable were limited or exhausted due to severe environmental degradations? That is another issue mainly addressed in macro-economics.

9.2.2 Basics of Macro-Economics on Environmental Issues Environmental limitations matter in macro-economics. This is because the availability of material resources largely affects the productivity of the whole economy and may limit future economic growth. However, interestingly, serious concern about environmental issues in macro-economics was rather limited until William Nordhaus won the Bank of Sweden Prize (a.k.a. Nobel Prize). Indeed, while most textbooks, such as Gregory Mankiw’s, discuss environmental issues in micro-economics, they are hardly mentioned in macro-economics. One exception is David Romer’s Advanced Macro Economics (2006) (which is also the best-selling textbook in English speaking zones). With reference to Nordhaus’ early works, Romer examines two possible scenarios based on the Cobb–Douglas production function model (Romer, 2006, pp. 37–44). The first scenario is a ‘simple base line case’ in which the availability of land and material resources is limited and gradually declines. As their availability declines, they would eventually be ‘drags on growth’ (ibid., p. 40). However, according to Romer, even though growth may be suspended, it would be spurred by technological progress. This means if productivity declines due to a limitation of material resources, but a new technology makes use of the materials more efficiently, growth can be sustained in the long run. Thus, as to the first scenario, Romer claims that the impact of environmental limitations on economic growth is not trivial, but not so critical. Nevertheless, what if the impact is huge and becomes a severe constraint on growth? This is the second scenario. In such a scenario, the basic resources to sustain economic growth are scarce. However, Romer says, even such a situation does not mean the

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beginning of the end of economic growth. That is because, according to him, material resources and land are not exclusive factors in generating economic growth. There are many substitutions. For example, Romer points out the case of information storage from ‘oral tradition’ to ‘disks’ (ibid., p. 44). What he indicates regarding this case is that, historically, the methods of economic activities have transformed from one to another. Even if people face a serious scarcity of some materials, they substitute them with other materials or switch their main products to another. Indeed, transformations have been made in response to a shortage of resource materials throughout human history so that economic growth has been constantly generated in the long run. Hence, even if materials have been seriously scarce, the way to maintain economic growth can be substituted by different materials and other products. Thus, even when taking the second scenario seriously, Romer concludes that a serious scarcity of resources can be overcome. In sum, while it is possible to consider environmental issues in macro-economics, according to modern economists, they will be overcome through technological innovations or industrial transformations in the long run. Thus, for the time being, what matters is how to control the scale of pollution through either pricing or penalizing it (i.e., market mechanism). This is the basic thought of modern economics on environmental issues. Now, demonstrating how modern orthodox economics views environmental issues, it can be said that they take the issues seriously in their models. Indeed, their policy approaches, such as carbon taxes or cap-and-trade regimes, have been widely applied across the world. Nonetheless, on the other hand, while recognizing the importance of modern economics, their thoughts are rather contentious. For example, many critiques question whether it is possible to price environmental degradations. Also, some question whether it is sufficient or even appropriate to consider environmental issues simply based on the market mechanism. While orthodox economists are not bothered by those questions, heterodox economists try to take them seriously so that they provide rather radical thoughts on contemporary economic studies and environmental issues.

9.3 Heterodox Economics and Environmental Issues What is heterodox economics? This is not an easy question to answer. Heterodox economists are more like a group of self-stated scholars. Most of them would acknowledge the fact that there is no decisive definition of it. However, the lack of any clear definition does not mean the absence of any commonality. In fact, they share a common claim that contemporary economic studies are dominated by orthodox economics. Orthodox economics means the modern economics introduced in the previous section. It is what is now mainly taught in departments of economics all over the world. According to heterodox economists, what is so problematic about this global prevalence or dominance of modern economics is that such dominance excludes other possible understandings of economics. This is also true regarding

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environmental issues. Thus, they commonly argue that economic studies need to be radically reoriented. However, the point about how to reorient economic studies is contentious and sparks off intensive disputes among heterodox economists.

9.3.1 Heterodox Economics and Their Basic Arguments and Disputes One of the key figures of heterodox economics, Tony Lawson (1997, 2003, 2008), contends that contemporary economists so blindly believe in the utility of mathematical formalism that they fall into epistemic fallacy and provide unrealistic understandings of the economy. Epistemic fallacy means taking epistemology of being to be the same as ontology of being. It is a concept developed from a branch of philosophy, Critical Realism, on which Lawson’s arguments are based. The founder of Critical Realism, Roy Bhasker (2008), claims that western philosophy has long been trapped in this epistemic fallacy; namely, the thinkable can be always counted as knowledge of reality. As one thought is not always the same as reality, epistemology of being cannot be necessarily the same as ontology of being. They thus claim that it is vital to critically examine which knowledge fits to ontological reality. With such an ontological test, it is possible to grasp correct knowledge. Without the ontological test, anything goes so that any knowledge can be regarded as correct, even if that is unrealistic. Based on those arguments by Critical Realism, Lawson claims that contemporary economic studies are entrapped in the same problem. Even though economic reality is not the same as mathematical models presume, as long as economists use mathematical formulas properly, their findings are regarded as correct economic knowledge. However, as reality and the presumptions are far too different, such economic knowledge is unrealistic and wrong; thus Lawson argues, it should be replaced with more realistic and ontologically correct knowledge. Lawson’s Critical Realist arguments gained wide support among heterodox economists and became iconic in heterodox studies. Indeed, what the majority of heterodox economists feel dissatisfied within orthodox economics is that their studies are heavily reliant on mathematics and unrealistic presumptions. Corresponding to such dissatisfaction, Lawson clearly describes and points out the root cause of the problem. Nevertheless, on the other hand, some heterodox economists feel that Lawson’s claims are too strong and may spoil the original aim of heterodox economics. This skepticism of Lawson’s Critical Realism can be found in pro-pluralist scholars. As noted above, the common claim among heterodox economists against orthodox economists is that orthodox economics dominates contemporary economic studies, whereby other possible understandings of economy are excluded. Indeed, the founder of real-world economics review, which is an iconic academic journal of heterodox economics, Edward Fullbrook, claims that the ultimate aim of heterodox economics

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is ‘the transformation of economics into a genuinely pluralistic enterprise wishing to contribute to, rather than subvert, democratic processes’ (Fullbrook, 2007 p. 24; see also Courvisanos et al., 2016, p. 1). With such a pro-pluralist democratic stance, some claim Lawson’s critical realism tries to subvert the relationship between heterodox economics and orthodox economics so that it can merely end up with the rise of ‘new monism’ (e.g., Sent, 2007; Van Bouwel, 2005). Drawing on those critical reviews of Lawson’s arguments, another key figure of heterodox economists, Sheila Dow (2001, 2004, 2018), claims that even if the studies of orthodox economics sound unrealistic, it is wrong to argue against them with hostility and attempt to exclude them. Dow’s pro-pluralist argument is based on Thomas Kuhn’s theory of paradigm (Kuhn, 1970). Interestingly, she agrees with the case of epistemic fallacy; epistemology of being and ontology of being are not necessarily the same. However, she also insists that we can never know the true ontology of being. That is why any knowledge may be wrong but equally right. Such judgments are made by paradigms rather than ontology. For this reason, Dow eventually contends that, rather than abusing each other, economists should mutually recognize their differences and aim for democratic and more open research environments. In sum, heterodox economists commonly regard the dominance of orthodox economics as a crucial problem in contemporary economic studies. However, the point in what sense it is problematic diverges. Some, such as Lawson, see the problem in the mathematical formalism of orthodox economics. Although mathematical formalism is unrealistic, it has become dominant in contemporary economic studies whereby it has excluded the possibilities of more realistic studies. Hence, a radical reorientation to make economics more realistic is urgently required. On the other hand, others like Dow, argue, as it is not possible to know absolute truth; so all the economists should accept more open and pluralist ethics and make research environments more democratic. Such democratic pluralist ethos is claimed to be more realistic. In a nutshell, they dispute in what sense economics should be realistic.3 Interestingly, mostly the same lines of argumentation can be found among heterodox economists on environmental issues.

9.3.2 Ecological Economics and Its Critique of Orthodox Economics What is so wrong about modern economics on environmental issues? As was introduced above, modern economics has been concerned with them, not ignoring them. Their policy approaches, notably a carbon tax, have been widely applied across the world. In fact, most heterodox economists would not disagree with a carbon tax per se, or attempts to reduce pollution, but with the presumptions behind them. Heterodox

3

For a more intensive review of the disputes between Critical Realism and pro-pluralists, see Shu Shimizu (2021).

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economists claim that orthodox economists are viewing environmental issues based on unrealistic presumptions so that they fail to consider the issues correctly. One of the key figures of heterodox economics on environmental issues, and a pioneer of (contemporary) ecological economics, Herman Daly, claims that although human economy is a part of the ecosystem, modern economists presume it the other way around so that the ecosystem is regarded as a part of human economy. Due to such an unrealistic presumption, modern economists fail to grasp the true nature of the ecosystem and economy—that material resources of the ecological system and economic growth are finite. In order to account for this point clearly, Daly introduces the concepts of ‘empty world’ and ‘full world’ (Daly, 2015). According to Daly, modern economics was originally developed in the era of empty world, in which the ecosystem had abundant room and resources for human economy. In such a world, the ecosystem can be regarded as a mere means for human economy, as the latter is a small part of the former. Nevertheless, once human economy expands, it reaches the limits of the ecosystem, whereby the world becomes full. We now live in a full world. Daly describes the difference between them as ‘in the past the fish catch was limited by number of fishing boats and fishermen. Now, it is limited by number of fish and their capacity to reproduce. More fishing does not result in more caught fish’ (ibid., p. 5). This case clearly exemplifies Daly’s argument that the human economy is part of a finite ecosystem. Also, it tells why ever-continuing growth is impossible and why technological innovation can never be a radical solution to overcome the full world. Even if technology increases efficiency, as Romer says, it does not create materials per se (ibid., pp. 30–33). Therefore, the lack of the notion of fundamental limits of the ecosystem and economic growth that is itself unrealistic ends up with another unrealistic presumption: that economic growth can continue forever. Daly’s claim is reminiscent of Lawson’s Critical Realism. Indeed, their basic criticism of orthodox economics is analogous. Drawing on Lawson, Daly’s claims can be rephrased that, due to ontological deficiencies, orthodox economics is entrapped in an epistemic fallacy that material resources and economic growth are infinite. Moreover, as with Lawson, Daly contends that those unrealistic presumptions have to be replaced with more realistic presumptions so that we can have more realistic economics.4 In this line of thought, Daly eventually proposes an anti-growthist approach with the theory of ‘steady state economy’.

9.3.3 Growthism and Steady State Economy Theory According to Daly, the reason why orthodox economists believe in unrealistic presumptions, such as ever-continuing growth, is that they treat economic growth, especially of GDP, as the summum bonum (ibid., p. 26; Daly, 2019, p. 11). Against this growthism, he proposes an anti-growthist approach. 4

Lawson may not favor Daly’s use of the mathematical logic, however.

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Daly points out that the most important factor for modern economists concerning any issue is economic growth. In fact, what is crucial for modern economists in proposing environmental policy, is how much it harms economic growth. Balancing these factors is the most vital concern for them. Indeed, on this point, for example, Mankiw is eloquent in stating that there is always a trade-off between growth and pollution, claiming that the elimination of pollution means killing growth so that we have to give up our contemporary high standard lifestyles (Mankiw, 2021, p. 205; See also Romer, 2006, pp. 43–44). Thus, for modern economists, economic growth is treated as the most sacred principle that must be defended at any cost because economic growth guarantees our comfortable lives. Nevertheless, Daly criticizes modern economists’ argument as growthism, claiming that their arguments are made from serious misunderstandings of the relationship between economic growth and human living. According to Daly, while modern economists presume that an increase in economic growth or economic development indicates an increase in the standard of living, it is not necessarily so. He explains this point with reference to John Ruskin’s concept of ‘illth’ (Daly, 2015, p. 42). ‘Illth’ is the total amount of ‘bads’ generated by economic growth. While economic growth brings about useful goods and products that contribute to the increase of our living standards and wealth, it also generates a lot of bads and ‘illth’, such as pollutions. Despite this fact, illth has never been taken seriously in the studies of modern economics. That is because growth is usually measured by GDP (Gross Domestic Product), which only counts economic growth, but not illth. For this lack of the notion of illth, Daly claims that modern economics misunderstands the relationship between economic growth and the development of human life. Regarding the illth, an increase in GDP does not necessarily indicate an increase in standard of living. Indeed, economic growth in one industry this year does not necessarily mean an increase in the living standard of workers in the industry since last year. Perhaps the growth may be made by longer working time at the expense of workers’ health. If so, the workers’ living standards or quality of life obviously decreases. Thus, in order to measure the social utility generated by economic growth correctly, Daly insists that both ‘goods/wealth’ and ‘bads/illth’ should be considered equally. Then, taking both of them into account, Daly claims that our economy now carries on ‘uneconomic growth’ where illth exceeds wealth. As such an uneconomic growth economy is unsustainable, Daly proposes that we have to put our economy back to the steady state where ‘goods/wealth’ and ‘bads/illth’ are equal (ibid., pp. 43–44; Daly, 2019, pp. 18–20). In order to achieve a steady state economy, Daly provides some unique policy proposals. For example, he proposes a population control policy which is somewhat politically controversial (Daly, 2019, pp. 25–29). The reason for this challenging proposal is that, according to Daly, the contemporary world demography shows the tendency of overpopulation. Overpopulation leads to overconsumption and overproduction, which consequently leads to environmental degradations. In other words, overpopulation makes the world full and economy uneconomic. That is why, in order to solve those problems, population must be maintained at a constant level where the population meets a constant stock of environmental resources.

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Also, in relation to population policy, Daly suggests restructuring the growthdriven globalism (Daly, 2015, pp. 45–47; 2019, pp. 11–17). In the past half-century, globalism was rapidly advanced under a free trade regime. In order to pursue working opportunities, mass migrants moved from developing countries to developed countries. On the other hand, many industries in developed countries moved to developing countries to pursue cheaper resources. According to modern economics, those economic activities are supposed to bring about the whole growth of the world economy. Nevertheless, Daly claims that it now turns out to be uneconomic growth as more illth is produced than wealth. For example, mass migration has caused overpopulation in many developed countries. Such overpopulation leads to excessive competition within a country that may result in downward pressure on wages. Likewise, industrial offshoring also accelerates the excessive competition among nations that usually ends with a race to the bottom. Consequently, the growth of industries with multi-corporations may increase. However, the increase of their growth does not mean an increase in the living standard of ordinary people as the growth is usually shared within a limited scope of people. Thus, Daly emphasizes that contemporary globalism just contributes to global and national inequality. Although globalization is expected to unite people and countries, as long as that is driven by growthism, it disintegrates people and nations. That is why Daly proposes that the world economic order should be restructured as international relations where each nation maintains the quality and quantity of its people’s lives sustainably, while keeping the mutual benefit of international trade. Perhaps Daly’s theory of steady state economy and his policy proposals may sound too radical. However, the crucial point is that the contemporary growth-driven economy is now reaching its limits and at an uneconomic status so we have to consider ‘real’ alternative economics and solutions seriously in order to put our economy back to the steady state. This is what Daly mainly emphasizes through the theory of steady state economy.

9.3.4 Pluralist Critique of Monism on Environmental Issues Daly’s project is now widely accepted by many heterodox economists and developed as part of the ‘degrowth’ movement. Indeed, when real-world economics review published a special edition of ecological economics, the editors of the journal, Jamie Morgan and Edward Fullbrook (2019), express their arguments against growthism and for degrowth largely drawing on Daly. Also, several scholars provide unique arguments for degrowth along with Daly’s (e.g., Hickel, 2019; Koch, 2019; Nørgård & Xue, 2017). However, as is the case with popular arguments, Daly’s degrowth theory also invites several critiques. One of the notable critiques is made by Peter Söderbaum. His critique of Daly shares some commonalities with the pro-pluralist critique of Lawson. For Söderbaum (2012, 2018, 2019), regarding environmental issues, the problem of modern economics is not its unrealistic presumptions but its dominance and

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monistic view of the world. He claims that, although they try to understand environmental issues based on a Cost–Benefit Approach (i.e., utility calculation in monetary sense), the issues and related factors cannot be reduced to a monetary sense alone. Put simply, Söderbaum takes seriously the general question of whether it is possible to price environmental degradations such as pollution or global warming. Again, usually modern economists are not concerned with such a question. Indeed, toward those questions, economists such as Mankiw clearly state that ‘economists have little sympathy with this type of argument’ (Mankiw, 2021, p. 200), claiming that as long as there is a demand it can be priced. So, if people demand clean air, pollution, which makes use of the air, can be priced. However, Söderbaum (2018) claims such pricing is a process of monetary reductionism which monistically converts the value of things into a monetary sense alone. Such monetary reductionism does not fit in contemporary democratic society. To clarify this point, he introduces the concept of ideology. While acknowledging the fact that the concept of ideology is essentially contested, Söderbaum defines it in terms of ‘value’ and ‘world view’, with reference to Douglass North and Gunnar Myrdal (Söderbaum, 2018, pp. 27–29, 85–87; 2019, p. 139). It means, an ideology is a value with which people live by and make judgments, but also a worldview that makes people see how the world works and how it should be. With this concept of ideology, Söderbaum proposes to recognize monetary reductionism as one ideology modern economics envisages and embraces. With that ideology, modern economists see the world in a specific way; for example, seeing people as homo economicus, those who can be only motivated by economic reasons that are based on monetary calculations. However, regarding monetary reductionism as one ideology, Söderbaum also claims taking such a view alone is wrong, and thus needs to be reoriented. Here, it should be noted that Söderbaum does not intend to deny the monetary reductionism of modern economics per se. Rather, what he claims is that through recognizing it as one specific ideology, modern economists should accept other ideologies. For the same reason, Söderbaum emphasizes that this is even true in discussing environmental issues. As the issues concern multiple stakeholders who have multiple interests and values, including monetary, it is in nature impossible to understand them in a monistic manner. That is why Söderbaum eventually proposes reorienting modern economics to be more pluralistic in order to understand environmental issues in more complex ways. Söderbaum’s pluralist arguments correspond to Dow’s as Daly reminds of Lawson’s Critical Realism. Indeed, with reference to Kuhn and some contemporary democratic theories, Söderbaum emphasizes the importance of accepting multiple views of economics in terms of ‘paradigm co-existence’ (Söderbaum, 2000, pp. 29– 30). Drawing on this pluralist stance, Söderbaum also criticizes Daly, claiming that Daly’s arguments against orthodox economics are too monistic. In particular, Söderbaum refuses Daly’s emphasis on the real alternative and thorough denial of the growthism of orthodox economics as unintelligible and incompatible with the liberal democratic reality, which respects a plurality of values (Söderbaum, 2019, pp. 190– 194). Namely, while Daly calls for a reorientation of modern economists’ unrealistic understanding of environmental issues to a more realistic one, Söderbaum insists

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that the reorientation required is not toward a more realistic monist one, but toward a democratic pluralist one. Therefore, as is reviewed in the disputes between Lawson and Dow, the disputes on environmental issues among heterodox economics also turn out to be about in what sense economics should be realistic.

9.3.5 ‘What is Heterodox Economics’ Revisited Reviewing the basics of heterodox economics, it would be meaningful to reconsider the question ‘what is heterodox economics?’. Of course, it is still not easy to answer. However, drawing on the review of their basic arguments and disputes, it can be at least said that heterodox economists try to understand economy and relevant issues more broadly than orthodox economics do. Indeed, whereas Lawson and Daly aim to widen the analytical perspective of economics by introducing ontological concerns, Dow and Söderbaum do so by introducing normative concerns such as pluralism and a liberal democratic ethos. These claims commonly recognize the closure of orthodox economics as the factor that limits and narrows down their analytical perspective. In other words, it is mathematical formalism, growthism and monetary reductionism that limits the analytical perspective. As a more substantive case, for example, this is embodied by the ‘internalization of externalities’. As stated above, externality itself is an inconvenient issue for orthodox economics. In order to deal with it, they convert it into monetary sense and make it manageable in their model. While they claim that it is to internalize externalities into a market mechanism, that is a theoretical operation (internalization) of real beings (externalities). The concern of whether such a theoretical operation is right or wrong causes the basic disputes among heterodox economists. However, apart from them, it can be said that heterodox economists still commonly claim that managing environmental issues through such theoretical operations alone is wrong; thus the understanding of the issues should be widened. Furthermore, recognizing the call for a wider perspective of economic studies as one commonality among heterodox economists, it also becomes possible to reconsider what heterodox economists call ‘realistic’. For Lawson and Daly, ‘realistic’ means ontologically fit or not. However, for both of them, it also means that economic studies should be made with a much wider perspective (i.e., incorporating ontological concerns). Highlighting this point makes their arguments not so incompatible with their opponents’ arguments, such as Dow’s and Söderbaum’s, as they also call for a wider perspective. Rather, what they argue over is what Lawson and Daly mean by ‘realistic’ in the first sense (i.e., ontological test). Therefore, for all of them, as economic reality is much wider than orthodox economists presume, they complain that the closure of orthodox economics has to be dissolved. In other words, heterodox economists are those who argue for a much wider understanding of economy to try to make economic studies more realistic. Now, reviewing the basic arguments and disputes of heterodox economics, it is clear that heterodox economics indeed provides great insights into environmental

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issues. They bring up the issues that are often neglected in orthodox economics, but are vital in concerning actual issues, such as environmental issues. Nonetheless, while recognizing the importance of heterodox economics, here arises a critical question: although they provide great insights in trying to make economic studies more realistic than orthodox economics, why are they still marginalized in contemporary economic discourses?

9.4 The Marginalization of the Radicals and the Politics of Eco-nomics Why are heterodox economics marginalized in contemporary economic discourses? This is a critical question for heterodox economists, but also equally a crucial question concerning contemporary environmental politics. This is because, if heterodox economists rather radically and realistically examine environmental issues, the exclusion and marginalization of them indicate that any radical thoughts are also marginalized and excluded from contemporary environmental politics. Indeed, it is a common view among heterodox economists that radical environmental policies proposed by heterodox economists have never been implemented in contemporary environmental politics. However, despite such a common view, analysis about their marginalization is rather limited. Hence, if heterodox economists wish to reform the existing environmental politics, it would be vital to understand how they are marginalized and how to overcome such a situation.

9.4.1 Structural Constraints of the Radicals Why is heterodox economics still excluded from the mainstream environmental discourse? Toward this question, Eco-Socialist Richard Smith (2019) argues that it is because of the structure of contemporary political economy, i.e., capitalism. As long as capitalism continues, Smith claims, any serious attempts to deal with environmental issues are structurally marginalized, or practically doomed to fail. Smith’s eco-socialism is one of the most radical thoughts among heterodox economists. However, his arguments and proposals are rather simple and straightforward. He clearly reveals crucial limits to both orthodox economics and heterodox economics. On orthodox economics, Smith claims that, although it has long argued for the possibility of Green Capitalism—that economic growth and environmental protections can go together—this is actually impossible. The reason for this is because any environmental policies have to be introduced in inherent conflict with the economic interests of capitalism. For example, as introduced in the first section, a carbon tax is generally proposed as one of the best policy approaches to environmental degradation by orthodox economists. Indeed, it has now been introduced

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across the world. However, such a tax can never usually be set at a sufficient level to deal with environmental issues seriously. Rather, according to Smith, it is set at a level not harmful to contemporary economic growth, as setting the carbon tax too high or cutting CO2 emissions too much can lead to downscaling the economy. Any downscaling of the economy leads to a loss of job opportunities and an increase in unemployment rates, which are politically highly unfavorable. This point Smith summarizes as: Global warming may kill us in the long run but economic collapse will kill us in the short run. This is the ultimate contradiction of capitalism: We have to destroy our children’s tomorrows to hang onto our jobs today. (Smith, 2019, p. 152)

Thus, whatever environmental policies are proposed by orthodox economists, as long as they are implemented in capitalism, they are doomed to fail or end up with naught at best. The same can be said for heterodox theories, such as degrowth. Smith claims that, although degrowth theorists (represented by Daly) propose steady state economy, they misunderstand the point that growthism is not simply a matter of ‘subjective belief’, but is objectively structured in capitalism (Smith, 2010, pp. 29–30). For example, he accounts for, even if one CEO of a company believes some radical actions toward environmental issues have to be taken, their actions are immanently restricted by the ‘iron rule of Capitalism’, i.e., profit-maximization. Whatever the CEO thinks about the issues, s/he always has to make a choice to maximize the profits of his or her company because ‘under capitalism, CEOs and corporate boards are not responsible to society; they’re responsible to private shareholders’ (Smith, 2014, 2015, pp. 63–64). Therefore, even if one demands a radical change under capitalism, such as the subversion of growthism, such a radical change has been immanently prevented by the capitalist structure. Smith’s critique of environmental policies in capitalism exposes the crucial limits of contemporary economic studies on environmental issues. It clearly accounts for why any serious attempts to deal with contemporary environmental issues do not work in capitalism. Here, it should be noted that Smith does not refuse the degrowth theory per se (Smith, 2010, p. 42). Rather, it is just practically impossible due to the structural constraints of capitalism. Likewise, Smith does not see a carbon tax as wrong but stresses its practical inefficiency in a capitalist structure. More technically speaking, what Smith addresses is the structural constraints of capitalist reality where economic growth is prioritized over everything. Such supremacy of growth is reminiscent of Daly’s claim that economic growth is summum bonum for the orthodox. However, while Daly claims that growthism is the unrealistic doctrine of the orthodox, Smith argues that it has been actually realized in capitalist reality. Hence, even if heterodox economists’ thoughts and proposals are more realistic, they can never be realized in the order of capitalism. Likewise, even if the orthodox believe that environmental policies can go together with economic growth, as long as economic growth is prioritized in the preference orders of capitalism, those policies end up with naught. So, as long as there is a possibility to harm economic growth, any serious attempts toward environmental issues are structurally marginalized and doomed to fail.

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Smith’s emphasis on structural constraints gives great insight into the marginalization and exclusion of radicals in contemporary environmental discourse. As long as we live in capitalism, not only radical thought, such as heterodox economics, but also any serious attempts to deal with environmental issues, become impossible. Here again, Smith makes the analytical perspective wider, like other heterodox economists. He brings up the actual contexts where economists discuss environmental issues in order to account for the difficulty to think and respond radically to environmental issues. Taking the structural constraints of capitalism, Smith eventually calls for the subversion of capitalism and moving to a democratically planned eco-socialist economy (Smith, 2010, p. 42; 2019, pp. 169–180). In order to achieve this goal, he claims that we have to first let the government work for social goods. For example, Smith explains that the government can guarantee full employment, monopolize energy resources and encourage people to live environmentally right so that people can get out from the conflicts of capitalism. This is the basic idea of a Green New Deal (GND). Smith recognizes the possibility of the radical transformation of a GND, expecting that young eco-socialist-minded politicians, such as Alexandria Ocasio-Cortez, would bring it into real politics. Nevertheless, taking the rigid structural constraints of capitalism thoroughly, is such a revolutionary movement ever possible? While Smith acknowledges practical difficulties, he emphasizes the possibility that, once a true exit from the structure is proposed in the political arena, people will be ready to get out of it. Here, it should be noted that the structural constraints Smith presumes are at least material. People know capitalism is wrong, but they are structurally forced to reproduce the structure. That is why, once they know the true exit, which is eco-socialism, they can be liberated from the structure. Nevertheless, how do people know eco-socialism is the true exit? Here, it seems he falls into a kind of truism that, because socialism is true, the truth will come out in the end. However, still, what if eco-socialism eventually did not occur? Would that mean eco-socialism is wrong and capitalism is right? Here, what becomes vital is not which is true or not, but even though there is an absolute truth, why a particular truth is regarded as truth among people in the existing political economic structure. In other words, what Smith’s analysis lacks is a concern of how knowledge or people’s knowing truth is constrained structurally. This point would also be vital regarding contemporary environmental discourse in general. On environmental issues, thousands of scholars, not only natural scientists but also philosophers, discuss ‘true’ knowledge about environments, ‘true’ evidence of environmental degradations and ‘true’ policy responses to them. Indeed, the main disputes among heterodox economists and orthodox economists can be seen in those issues. However, as the case of heterodox economics shows, while some are taken seriously, others are simply excluded and marginalized, despite their ‘truth’-claim. Why? Here, taking structural constraints seriously and more thoroughly, what is vital is to analyze how and why a particular knowledge or ‘truth’ is regarded as absolute truth with others marginalized. Here, we have to turn to the politics of truth.

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9.4.2 The Politics of Truth It was Michel Foucault who first theorized the politics of truth (Foucault, 1977=1980, 2007, 2009). The theory has now been widely applied to contemporary social studies. Studies on environmental issues are not exceptional. In fact, several scholars have applied Foucault’s theories to understanding contemporary environmental discourse.5 What is unique about Foucauldian studies is that, unlike other studies, their studies begin by refusing absolute truth or knowledge. Instead, they understand truth in a relativistic way and claim that any truth or knowledge is constructed artificially. Following this line of thought, they emphasize that there is no such thing as absolute truth or knowledge about environments (Goldman, 2001; Luke, 1995; Malette, 2009; See also McCarthy & Prudham, 2004). In other words, for them, what is counted as ‘environments’ and what is meant by ‘nature’ are necessarily constructed. With that constructed truth or knowledge, particular understandings and specific problematizations of environmental issues are articulated as an environmental discourse. Thus, they claim that there is no such thing as taken-for-granted facts about environmental issues and that multiple environmental discourses are possible. A Foucauldian understanding of truth may be reminiscent of pro-pluralist theorists such as Dow or Söderbaum. Indeed, Söderbaum accounts for how environmental issues can be understood in multiple ways based on one’s ideology or ‘worldview’, claiming that to acknowledge the plurality of views on environmental issues is liberal democratic ethos. In this line of thought, he also argues that even radical thought, such as Richard Smith’s eco-socialism, should also be respected as one ideology and opinion. Likewise, Foucauldians would see Smith’s eco-socialism as one environmental discourse. Hence it can be said that they share pluralist understandings of truth. However, despite their commonality, the crucial difference between them is that while the pro-pluralists eventually argue for the normative legitimacy of the democratic ethos, Foucauldian scholars point out the difficulty of such a normative claim. In doing so, they introduce the theory of governmentality to understand contemporary environmental politics. Governmentality itself is a concept Foucault introduced to describe the modality of the contemporary governance of political economy (Foucault 1978c, 2008, 2009; See also Gordon, 1991). According to Foucault, the distinctive feature of contemporary governance is that it governs political economy through a regime of truth. Proliferating one particular discourse as a truth, political institutions attempt to justify their activities. More technically, drawing on Foucault’s other concept of power/ knowledge, it can also be said that power tries to justify the knowledge that can make its exercise possible. However, for Foucault, what is vital about governmentality is that it does not only concern how contemporary political institutions justify 5

Here it should be noted that, while Foucault has never worked on environmental issues, he has mentioned the ‘ecology movement’ in relation to the politics of truth briefly. He regards ecological study or the ecology movement as a discourse which is based on particular knowledge about nature (Foucault, 1984, p. 15).

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their power but also how they construct subjects. Indeed, Foucault says, for successful governance, political institutions need subjects to believe in their legitimacy. For this need, they introduce knowledge. The knowledge introduced functions as a regime of truth for the subjects—as the criteria of right or wrong. In other words, subjects are normalized through particular knowledge, or a regime of truth. Such a normalization process is the subjectivization of subjects. This means, through the normalization process, subjects are ‘subject to’ particular knowledge whereby they become able to act correctly. However, subjects’ correct actions do not simply mean that they can act as they like. It is, rather, based on a self-governing system in which subjects are subjectivized to work for a ‘public cause’, which is, of course, (pre-)given by political institutions based on the regime of truth. The concept of governmentality may sound somewhat statist, implying that political institutions such as government are almighty. Indeed, in introducing governmentality, Foucault has acknowledged the priority of political institutions over other institutions or agents in political economy (Foucault, 1977=1980, p. 122; See also, Jessop, 2008, pp. 152–153). Nevertheless, here, it should be re-emphasized that political institutions can be powerful and that their priority is sustained because their legitimacy is recognized by their citizens. So, the power of governors also comes from below. This is the well-known bottom-up system of power (Foucault, 1978b=1990; See also Foucault, 1973=1994, pp. 64–67 and Foucault, 2003). Thus, there is a topdown power relationship, but that is based on the bottom-up relationship and vice versa. Also, remember, in order for political institutions to maintain these relationships they have to follow the truth regime, like their subjects, in order to justify their power. Here, state or political institutions function as mere apparatuses to maintain the regime of truth and prioritize particular truths over others (Foucault, 1977=1980). Therefore, political institutions are not a priori powerful but can be so only in their relationship with the regime of truth. This political economic system of truth is what Foucault describes in his theory of governmentality. Put simply, it concerns how a particular truth is articulated by political projects so that it becomes powerful and dominant within a political economy. Drawing on these theories of the politics of truth and governmentality, several Foucauldian scholars analyze contemporary environmental politics. For example, Timothy Luke (1995) analyzes how Al Gore’s discourse of economics, which suggests that environmental protections and economic growth can go together, was proliferated by global and local political institutions and constructed a new type of governmentality: ‘Green Governmentality’. He reveals how environmental policies are eventually converted into economic policies through this new governmentality. Also, another scholar, Michael Goldman (2001), investigates how certain environmental protection policies introduced by the World Bank are used as a neo-colonial method to exploit the natural resources of the third world such as the Mekong River in Laos. Goldman points out that these new environmental policies are based on specific environmental discourses that justify the protection policies of developed countries while marginalizing the traditional environmental policies of local governments. These Foucauldian theories and analyses demonstrate that even though multiple discourses on environmental issues are possible, once a particular

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discourse is articulated into political projects, it becomes dominant and powerful, marginalizing others. Although power and politics, put simply ‘power politics’, have been less considered by heterodox economists, it is now clear that such power politics is vital to understand why the orthodox is dominant and the heterodox is marginalized in contemporary economic studies and environmental politics. Perhaps introducing the term ‘power politics’ is somewhat misleading as Foucault himself did not use it. Indeed, it should be highlighted that power politics here does not mean that there is an absolute power and there is struggle for it. Rather, what power politics means here is that there is a balance of power among discourses and that their relationship is in struggle so that one discourse becomes dominant over others through this struggle (Foucault, 2003). This notion of power politics can give great insights into why heterodox economics is still marginalized from contemporary environmental politics. According to pro-pluralists, as democratic ethos indicates the quality of science, emphasis on this ethos would make the contemporary economic discourse more plural. However, regarding the power balance between heterodox and orthodox economists, there is no clear incentive for orthodox economists to listen to heterodox economists, those who are in an inferior position. Indeed, this point is best represented by Nordhaus. In his Climate Casino, Daly is mentioned only once as an iconic scholar who proposes an inappropriate policy approach to climate change (Nordhaus, 2013, pp. 82 and 335). On climate skepticism, he gently claims that we should accept opposite views though. However, this is the power politics between orthodox and heterodox economics. There is no reason for the orthodox, which is in a dominant position, to take the heterodox, which is in an inferior position, seriously. Furthermore, this power politics continues in real politics as usually the environmental issues task force in political institutions is composed of orthodox economists so that any other views are simply marginalized. Therefore, regarding the power politics in economics, even though a democratic ethos is ideally preferable and desirable, its practicability is confined. Put differently, what matters is not what is ideal, rather, what matters is what is dominantly regarded as truth and the power politics behind the dominant truth that makes the ideal impossible and marginalizes other possible truths. Thus, while pro-pluralists and Foucauldians both insist on the possibility of multiple environmental discourses, Foucauldians claim that there is a politics that makes a particular discourse dominant, with others marginalized. Now, clarifying the difference between pro-pluralist and Foucauldian stances, the Foucauldian stance may give the impression that it corresponds to Richard Smith’s claim for structural constraints. Indeed, in terms of constraints, Foucauldian analyses account for discursive constraints that would enhance Smith’s account of structural constraints. However, on the other hand, one may also feel that Foucault’s theory of governmentality implies rather stronger constraints than Smith proposes. In fact, for Smith, while structural constraints indicate at least material constraints, the mentality of subjects was supposed not to be governed so much. On the other hand, for Foucault, mentality is governed so that subjects are subjectivized. Hence, the issue of constraints seems more problematic for Foucault to consider the possibility of reforming existing politics, or the possibility of resisting dominant discourse.

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Regarding such a possibility, however, Foucault argues that as long as there is governance, there is always the possibility of not being governed, the possibility of resisting the dominant discourse or the possibility to reform politics.

9.4.3 Toward a New Politics of Eco-nomics As introduced above, for Foucault, the rise of governmentality indicates the rise of subjects who accept a particular truth. However, according to Foucault, while this governmentality means governability, which is a mere possibility of governance, the possibility of governance also indicates its impossibility and the possibility where subjects are not governed in the current manner. This point is represented by his wellknown saying that ‘power is everywhere’, thus, ‘resistance is possible everywhere’. While this sentence is sometimes accused of post-modernism, meaning that any resistance is justified,6 Foucault also claims the importance of a particular type of resistance in the politics of truth; that is ‘critique’. As is the case of governmentality, to be governed is to accept the dominance of a particular truth. Foucault argues that critique challenges, problematizes and puts the legitimacy of such dominance into question. Taking this negative feature of critique, Foucault argues that critique is ‘the art of not being governed quite so much’ (Foucault, 1978a=1990, p. 45). However, Foucault also claims that critique is not simply refusing governance itself. Rather, to critique is also to reconsider another possibility of governance; herein Foucault sees the possibility of another politics of truth. Thus, if there is dominance and governance, their existence also indicates otherwise. As the possibility of the other, critique challenges such dominance and governance. However, such a critical challenge is also toward articulating a new dominance and governance. Here, Foucault sees the possibility to reform the politics of truth. This is why Foucault sees critique as a specific form of resistance to the politics of truth and why Foucault’s argument for critique can be applied to heterodox economics. In a Foucauldian sense, heterodox economics can be regarded as a critique of the dominance of orthodox economics and the anti-thesis of being governed through the orthodox manner of viewing economy and other relevant issues, such as environmental issues. Hence, what heterodox economics represents is the mere possibility of another economics and another politics of truth. In this sense, it would not be an exaggeration to say that the mere existence of heterodox economics indicates the possibility of another economics and another politics of truth. Thus, heterodox economics can be regarded as what Foucault calls ‘critique’. Its mere existence demonstrates the possibility of resistance. It is a challenge to the dominant truth but also the beginning of a new governance. Nevertheless, in seeing the possibility of reorientation and reformation in heterodox economics, it should also be noted that 6

Indeed, he mentions ‘a kid nose-picking at the dinner table’ as one example of resistance (Foucault, 1977, pp. 421–422).

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their mere existence does not guarantee their realization. While the arguments for the ethical or theoretical legitimacy of another economics are indeed to exhibit the possibilities, this exhibition is not enough to change the current status of politics. As noted above, what heterodox economists have to face is the power that shuts down those possibilities. For this challenge against power, Foucault eventually proposes the concept of ‘meta-power’ and the struggle for it. In accounting for how a particular truth or discourse becomes dominant, Foucault proposes the concept of governmentality, which mainly (not exclusively) focuses on the role of states or political institutions. Nevertheless, regarding the role of those political institutions, he eventually claims that it is merely a part of ‘meta-power’ (Foucault, 1977=1980, p. 122). With this concept of meta-power, what Foucault highlights is the point that what makes a particular truth so powerful and dominant is not only political institutions but also economic and social institutions. This type of thought is similar to the Marxist concept of ‘hegemony’. Indeed, in talking about ‘meta-power’ he introduces it as interchangeable with ‘hegemony’ (ibid., p. 133). However, in contrast to a Marxist understanding of hegemony, this hegemony is not simply constructed and reproduced through economic class struggles but is ‘dispersed and pervasive’ through the social system as a whole (Gevanta, 2003; See also Smart, 1986). That is why, for Foucault, resistance against meta-power becomes about how to detach ‘the power of truth from the forms of hegemony, social, economic, and cultural, within which it operates at the present time’ (Foucault, 1977=1980, p. 133). This is, in other words, the hegemonic struggle for meta-power. Now, regarding the possibility of hegemonic struggle, how would that struggle be possible practically? While Foucault has not given any clear direction, if it starts from understanding how meta-power is maintained and reproduced, what becomes vital for heterodox economists is to widen the scope of their analyses. This means, as noted above, that to claim the theoretical or ethical legitimacy of their arguments is not enough. In addition, they should also incorporate analyses of the factors that keep particular economics or environmental discourses dominant with others marginalized. Such analyses would include describing the relationships between orthodox economics and the media, political institutions, daily business, academia, think tanks, etc. and how the nexus among these groups is made and how these relationships make the dominant relationship between environmental politics and a particular economics, i.e., a certain eco-nomics, possible. Through these critical analyses, it would become possible to consider how marginalized possibilities can be articulated as counter-hegemonic projects. Such projects would challenge and destabilize the contemporary governance of political economy and hence pose some critical attitudes concerning the sustainability of the existing political economy. In other words, it would bring about a discursive discontinuity regarding what ‘sustainability’ and ‘environments’ mean in the current dominant discourse. It means practicing the ‘governance for a sustainable future’ in a different manner from contemporary environmental politics and to make the relationship between ecology and economics in a radically different way. Here lies the possibility of a new politics of eco-nomics that is based on the reorientation of economics and the reformation of the environmental politics that heterodox economics claims.

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9.5 Conclusion In this chapter, through a critical investigation of the contemporary discourse of economics on environmental issues, I tried to critically engage with the main topic of this book, ‘the governance for a sustainable future’. First, I demonstrated how modern economics understands environmental issues. This was followed by an extensive review of heterodox economics. Through this process, I eventually revealed that, while orthodox economics tries to narrow down environmental issues within their theoretical model, heterodox economics attempts to overcome such closure and provide a more realistic and radical understanding of economy and environmental issues. Nevertheless, despite their claims, heterodox economics has still been marginalized and excluded from contemporary economic studies and environmental politics. The last section critically investigated this point. According to Richard Smith, it is because of the structural constraints of capitalism. In capitalist reality, any radical thoughts and serious attempts to deal with environmental issues which would possibly harm economic growth are structurally prohibited. That is why, in order to overcome such structural constraints, Smith calls for the subversion of capitalism based on an eco-socialist revolution. Smith’s arguments are strong and plausible enough. However, on the other hand, I also pointed out that Smith’s call for an eco-socialist revolution is not compatible with his analysis of structural constraints. Even if the eco-socialist revolution is an absolutely true option, what matters is what is regarded as truth in the existing structure of political economy. Here, I introduced Michel Foucault’s theory of the politics of truth. The uniqueness of a Foucauldian understanding of truth is that, while it recognizes the multiplicity of truth like propluralists, it eventually highlights the political aspects of truth whereby it considers how a particular truth becomes dominant and powerful in relation to political projects. Drawing on this Foucauldian theory of truth, I claimed that what causes the marginalization of heterodox economics is the power politics among economic discourses. As long as heterodox economics is in an inferior position in politics, there is no incentive for the orthodox to listen to the heterodox. Based on this power politics, orthodox economics is dominantly articulated into environmental politics, whereby heterodox economics is marginalized. Finally, regarding this power politics, I briefly considered how heterodox economics can resist the dominance of orthodox economics and reform contemporary environmental politics with reference to Foucault’s theory of critique and meta-power. While heterodox economists tend to claim the theoretical or normative legitimacy of their arguments, I contended that those claims are not enough to resist meta-power. They represent the possibility of other politics of truth and the possibility to reorient the existing economic discourse and reform environmental politics. However, the point is why these possibilities are not actualized. Taking this point seriously, I eventually claimed that, for heterodox economists, what matters is understanding the politics of truth that makes a particular discourse dominant. In doing so, they need to widen their analytical scope. Here is the possibility of a new politics of eco-nomics that is based on the new relationship between economics and environmental politics.

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For the sake of the topic of this book and the chapter, while I mainly made my argument in relation to heterodox economics and environmental politics, it is not limited to them. It can be, of course, applied to the other cases—another politics of leadership, another politics of evidence, another politics of ethics. In order to realize and actualize those possibilities, what matters is the politics of truth. Here lies the possibility for thinking radically about the governance for a sustainable future. Acknowledgements I would like to express appreciation to the editors of the book, Prof. Adachi and Prof. Usami, who gave me such a great opportunity to write this chapter. Also, I would like to thank Prof. Aoki, Dr. Sugitani, Nene M., Ayami K. and Shiryu Y. who gave me some productive comments in writing this piece and Rachel B. who concisely proofread this piece.

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Part II

Strategies for Futurity

Chapter 10

Tokyo’s Linked CO2 Cap-and-Trade Program: A Blueprint for Cooperative Market-Based Megacity Climate Policy? Sven Rudolph and Takeshi Kawakatsu

Abstract Megacities play a key role in climate policy. In this regard, Tokyo—the world’s biggest metropolis—leads the world with respect to the use of local carbon pricing, having implemented a cap-and-trade program more than a decade ago. Over the past 20 years, cap-and-trade schemes have proliferated across the world and at different levels of governance, due to their merits of environmental effectiveness and economic efficiency. Against this background, in this chapter we describe the design of the domestically linked Tokyo Metropolitan Government Cap-and-Trade Program; evaluate it based on ambitious sustainability criteria; and analyze its results using the latest performance data. We also take a closer look at the underlying politics that made this innovative approach to local climate policy possible. In doing so, we show that, despite some design flaws, Tokyo’s linked carbon market has performed well— particularly with respect to emission reductions—and can thus act as a blueprint for sustainable climate policy from the bottom up. Keywords Cap-and-trade · Sustainable Model Rule (SMR) · Linking · Linked carbon market · Local climate governance

This chapter largely builds on research published in Rudolph and Aydos (2021), Rudolph and Morotomi (2016), and Rudolph and Kawakatsu (2013, 2019). S. Rudolph (B) Institute for Church and Society, Protestant Church of Westphalia, Bielefeld, Germany e-mail: [email protected] T. Kawakatsu Kyoto Prefectural University, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_10

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10.1 Introduction Despite notable achievements at COP26, the world is still not on track to achieve the Paris Agreement’s 1.5 °C target (UNEP, 2021). Further, the most recent 2022 contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) warns in its B.6 Headline Statement that: ‘Global GHG emissions in 2030 associated with the implementation of nationally determined contributions (NDCs) announced prior to COP26 … would make it likely that warming will exceed 1.5 °C during the twenty-first century’ (IPCC, 2022). This alarming reality raises the question of the efficacy and political feasibility of topdown approaches to greenhouse gas (GHG) mitigation between competing global powers. Cities, on the other hand, already account for around two-thirds of global energy consumption and 70% of global energy-related carbon dioxide (CO2 ) emissions (World Bank, 2010). By 2010, half of the world’s population already lived in cities and this number is expected to rise to 70% by 2050, in turn increasing the climate impact of cities. On the other hand, cities also have above-average potential for cost-efficient emission reductions. In addition, as international and sometimes even national climate negotiations are often slow and occasionally temporally deadlocked, local initiatives can act as policy laboratories, tailoring policies to the preferences of residents and to specific infrastructural needs, and thus acting as an effective supplement to global and national environmental policy regimes (Betsill & Bulkeley, 2007; Oates, 2004). GHG cap-and-trade schemes (CaTs) offer a set of advantages over alternative instruments such as traditional command-and-control measures or even carbon taxes. GHG CaTs: • can achieve pre-set emission reduction targets accurately at minimum cost to society (Endres, 2011); • can be designed in a sustainable way so that they fulfill economic, environmental and justice criteria (Rudolph & Aydos, 2021); • can differentiate and prioritize scale, distribution and allocation decisions in society beyond quantitative economic growth (Daly, 2018); • have been an integral part of the international climate regime, currently under Article 6 of the Paris Agreement (UN, 2015); and • have been proliferating across the globe and across governance levels from local (e.g., Tokyo) to supranational (EU) level, and now cover 17% of global GHG emissions (ICAP, 2022). Furthermore, a truly sustainable design—accounting not only for environmental effectiveness and economic efficiency, but also for social justice—is possible and could even facilitate societal acceptance of GHG CaTs. In an earlier contribution to the literature, we used respective criteria in order to create a normative framework for design evaluation: the Sustainable Model Rule (SMR) (Rudolph & Aydos, 2021, Ch 2). The SMR is presented in Table 10.2, column 2, and is used to evaluate

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the Tokyo Metropolitan Government (TMG) CaT design. Building on an advanced political economy framework—embedded public choice (ePC), which frames the traditional individualistic actor-centered approach of public choice within a set of policy analysis-based holistic systemic and external conditions—we also identify the institutional barriers to implementing sustainable GHG CaTs (Rudolph & Aydos, 2021, Ch 12). In addition, combining independent domestic GHG CaTs through a joint market makes even well-designed domestic schemes more sustainable (Rudolph et al., 2017). While there is a vast literature on the merits of so-called linking (Marschinski et al., 2012)—which includes studies on success factors (ICAP, 2018; Ranson & Stavins, 2016); political barriers (Gulbrandsen et al., 2018); case studies (Tuerk & Gubina, 2016); and the prospect of linking under the Paris Agreement (Bodansky et al., 2016)—the Tokyo-Saitama link in Japan has been studied only to a limited extent (Dellatte & Rudolph, 2022; Rudolph et al., 2020; Rudolph & Kawakatsu, 2019). With respect to economic efficiency, linking further reduces total target compliance costs by exploiting bigger differences in marginal abatement costs. Market liquidity increases, while price volatility, administrative costs and transaction costs all decrease. With respect to environmental effectiveness, carbon leakage can be further limited and coverage increased. In addition, regarding the often-neglected justice implications of GHG CaTs, by generating extra cost savings, linking relieves current generations from unnecessarily high cost burdens of achieving a specified target and hence serves the interests of intergenerational justice. Additional efficiency gains also offer a bigger margin for redistributional measures such as supporting developing countries in climate adaptation, thus fostering intragenerational international justice; or compensating poor households and communities for possible regressive effects of carbon pricing, thus serving intragenerational national justice. Eliminating price differences between previously separate GHG CaTs also reduces competitive distortions between polluters regulated under a previously more stringent domestic scheme on the one hand and those previously faced with a less stringent domestic cap on the other, thus serving the equality criterion of justice. In addition, price harmonization between jurisdictions with ex ante low and ex ante high allowance prices is aligned with the polluter pays principle and the interests of intragenerational justice, because the new average price in the linked system burdens the laggards and disburdens the pioneers. However, the empirical evidence on the efficacy—and particularly on practice-based success and failure factors—of linking domestic GHG CaTs is limited. Hence, in this chapter, we also provide some insights into how and why Tokyo has linked its domestic scheme to that of the neighboring prefecture of Saitama and what has helped this link succeed. While the most prominent carbon market is still the supranational EU Emissions Trading System (ETS), recent initiatives have increasingly targeted the subnational level. Examples include the US Obama administration’s Clean Power Plan Model Rule on state-level CaTs (US EPA, 2015) and the Trudeau administration’s carbon pricing benchmark as part of the Pan-Canadian Framework on Clean Growth and Climate Change (CAN Gov’t, 2016/2018). Similarly, while Japan has been reluctant to use GHG CaTs at the national level (Rudolph & Schneider, 2013), in 2007, the

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Japanese capital adopted its own Climate Change Strategy (TMG, 2007a), with a local CaT scheme as one of the major initiatives (Rudolph & Kawakatsu, 2013; Rudolph & Morotomi, 2016; TMG, 2010). Tokyo is the world’s biggest metropolis in terms of population (13 million) and gross domestic product (GDP) ($868 billion), and is the 15th largest economy in the world. In 2006, Tokyo accounted for emissions of 59.63 million tons, placing it between Sweden and Norway in the international rankings. Energy-related CO2 emissions accounted for 56.67 million tons, representing 95% of Tokyo’s GHG emissions. However, per capita CO2 emissions were 4.89 tons, less than half of Japan’s national average. Tokyo’s carbon intensity was 146 kilotons of CO2 per billion dollars—among the best of the world’s big cities. Still, total energy-related CO2 emissions increased by 6.2% between 1990 and 2006 (TMG, 2006, 2010, 2011). In 2007, 22% of CO2 emissions originated from transportation, 27% from households and 49% from economic activities. The major part of the latter originated from commercial activities (40%) and industrial production (9%), whereas while industry emissions had decreased since 1990, commercial sector emissions had increased. Some 40% of emissions from economic activities stem from large facilities and 60% from small and medium-sized facilities. In terms of energy type, electricity accounts for 50% of Tokyo’s CO2 emissions, followed by oil (28%) and city gas (17%). While city gas emissions grew rapidly between 1990 and 2006 (+43.5%), electricity emissions also increased (+14.5%); but oil, coal and liquefied petroleum gas emissions decreased (−20%). In environmental policy, Tokyo has been a leader for the Japanese government in many fields (Morotomi, 2012; Roppongi et al., 2016). For example, it introduced factory pollution controls in 1949, preceding national regulations by almost 20 years. Utilizing the opportunity given to municipalities by Japan’s 1999 Omnibus Decentralization Act to adopt their own environmental policies (Sugiyama & Takeuchi, 2008), Tokyo reacted to emission trends in the early 2000s by developing its own approach to GHG mitigation. However, early programs implemented in the first half of the 2000s—such as the CO2 Emission Reduction Program and the Tokyo Green Building Program—were not very successful in realizing emission reductions. These programs apply a mixture of voluntary, regulatory and market-based instruments in order to target all sectors. Despite the lack of emission reductions, the CO2 Emission Reduction Program in particular represents an important forerunner of Tokyo’s carbon market. From April 2002 onward, all major sources were required to provide the Tokyo government with detailed information on GHG emissions and abatement technologies, and an energy rating and labeling system was added later. However, emission reductions nonetheless remained voluntary. While gathering information was of utmost importance in establishing Tokyo’s carbon market, the CO2 Emission Reduction Program only accounted for a 2% emission decrease between 2002 and 2005 (TMG, 2007b). As a consequence, the 2007 Climate Change Strategy set more specific targets and built on a mandatory carbon pricing instrument. Targets were derived from the 2006 Big Change—the 10-Year Plan—and set a 25% greenhouse gas emission reduction target for 2020 from 2000 levels. A 2030 reduction target of 30% and a 2050 net zero emissions target were added in December 2019 in the city’s Zero Emission Tokyo

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Strategy (TMG, 2019). Given the particular shares and trends of sector emissions in the early 2000s outlined above, introducing a CaT for large business emitters was one of the most prominent policies in the 2007 Climate Change Strategy. The TMG CaT began operating on April 1, 2010. At the time, it pioneered climate policy in at least three ways (Roppongi et al., 2016): it was the first city-level CaT scheme in the world; the first demand-side focused program to target the end use of energy in existing buildings; and the first mandatory CaT program in Japan. Against this background, in our chapter we describe and evaluate the TMG CaT design including its linkage to that of the neighboring prefecture, Saitama. We also examine the political and institutional factors that made the linked TMG CaT possible. In order to do so, we apply elaborated sustainability and political economy frameworks—the SMR and ePC—and show that, despite some design flaws that can easily be corrected, Tokyo’s linked carbon market has performed well—particularly with respect to emission reductions—and can thus act as a blueprint for sustainable climate policy from the bottom up.

10.2 The Linked TMG CaT: A Sustainable Local Carbon Pricing Instrument? The TMG CaT strongly builds on the 2002 mandatory Carbon Reduction Reporting Program and is mainly aimed at local internal CO2 emission reductions in existing large buildings in the Tokyo Metropolitan Area. Due to these peculiarities, the design of the TMG CaT outlined in detail below is unique in several respects (Nishida & Hua, 2011; TMG, 2010, 2015). But does this design also fulfill ambitious sustainability criteria? And how does the design reflect on the outcome?

10.2.1 Design Evaluation In principle, the TMG CaT covers all seven GHGs (CO2 , methane, nitrous oxide, perfluorocarbons, hydrofluorocarbons, sulfur hexafluoride and nitrogen trifluoride). However, only CO2 emissions from the end use of energy are subject to surrendering obligations, while all other GHGs are subject only to annual reporting. Participation in the program is mandatory for all large commercial buildings and factories that consume energy of more than 1,500 kl of crude oil equivalent per year; the program is thus strictly downstream. New buildings are included if they exceed the energy use threshold in three executive years. The TMG CaT hence targets around 1,200 facilities, only 200 of which are direct-emitting factories, and covers roughly 20% of Tokyo’s total GHG emissions. As the SMR requires mandatory participation and full coverage of polluters and pollutants, the TMG CaT complies with these requirements

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Table 10.1 TMG CaT reduction targets (TMG, 2010, 2019)

Reduction target (%) from 2002 to 2007 base-year emissions 2010–2014 (Compliance Period I) Factories

6

Buildings

8

2015–2019 (Compliance Period II) Factories

15

Buildings

17

2020–2024 (Compliance Period III) Factories

27

Buildings

25

2025–2029 (Compliance Period IV) Average

35

only with respect to mandatory participation and not with respect to polluter and pollutant coverage. The TMG CaT cap is set via a mixed top-down and bottom-up approach. Top down, emission reduction targets—or compliance factors—are set by the TMG. Table 10.1 sets out the increasingly ambitious reduction targets for the four phases from 2010 to 2029. If, however, a facility is approved by the TMG as a ‘Near Top-level Facility’ or a ‘Top-level Facility’ with outstanding energy-efficiency equipment or performance, these targets can be reduced by 25% or 50%, respectively, which incentivizes early energy savings outside of the TMG CaT. At the end of Compliance Period I, about 100 facilities had been certified as ‘Near Top’ or ‘Top-level Facilities’ after passing a highly demanding certification process. Bottom up, these targets are then multiplied by facilities’ base-year emissions and the number of years in a compliance period. Facilities can choose a period of three executive years between 2002 and 2007 from which average emissions per year are calculated, which then form base-year emissions. Base periods can even be revised by facilities if major changes such as floor size or building usage occur, or earlier years can be chosen in case of early emission reduction action. The allowance calculation for new buildings is based either on emission intensity standards or, if facilities have already implemented climate protection measures, on past emissions, again multiplied by the respective compliance factors and compliance period years. For Compliance Period III, the compliance factors for new buildings and factories are fixed at 17% and 15%, respectively. The Tokyo-wide absolute volume cap is then calculated by adding up all individual facility-level allowances. Hence, the TMG CaT only complies with the SMR with respect to the gradually decreasing absolute volume cap. But while the SMR also requires GHG emission reductions of 25–40% by 2020 from 1990 levels and 50–65% by 2030, the TMG CaT targets are far less ambitious.

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The initial allocation of emission allowances in the TMG CaT follows an unconventional approach. While facility-level allowances for a given compliance period are calculated as described above, these allowances are not handed out to facilities as fully-fledged property rights that can be transferred at will. Instead, the TMG only issues free-of-charge excess reduction credits (ERCs)—that is, credits for emission reductions that go beyond the targets—upon application by facilities. In addition to offset and linking credits (see below), ERCs are then made transferable among covered facilities. On the secondary market, in principle, credit trading of all credit types (ERCs, offset credits, Saitama linking credits) is allowed for any legal entity. However, trading only happens on a bilateral basis among facilities, as no trading platform has been established. Instead, in order to facilitate trading, the TMG publishes facilities’ annual emissions, reductions and credit data on its ‘Information Disclosure’ webpage and holds several demand–supply matching fairs per year in order to allow prospective sellers and buyers to meet. Trading periods are six and a half years long and follow compliance plus adjustments periods (see below). The SMR requires the initial allocation of emission rights via 100% auctioning at frequent and non-discriminatory auctions, and allows trading on a secondary market that is equally accessible to all interested parties. The TMG CaT fails to comply with these requirements, with the exception of using the unit size of one ton of CO2 . Due to its particular approach to initial allocation, no revenues are generated for the TMG. Instead, the TMG only allocates emission allowances based on reduction targets and base-year emissions free of cost. Credits such as ERCs and offset credits are not granted by the TMG as fully-fledged emissions rights from below the cap, but are generated by facilities and are thus issued free of charge. As a consequence, the TMG CaT does not comply with the SMR for revenue use, which call for revenueneutral recycling of proceeds as an equal per capita climate dividend and targeted support for low-income households. The TMG allows limited use of flexibility mechanisms such as banking, borrowing and offsets. Banking of credits is allowed between consecutive periods only, while borrowing of credits has been prohibited entirely since the start of the system. With respect to offsets, while credits from current and former offset programs of the national Japanese government as well as credits from the Kyoto Protocol Flexible Mechanism are excluded from use in the TMG CaT, credits from the following three offset programs are accepted for compliance. All offset credits must undergo verification by external entities authorized by the TMG: • Small and Mid-size Facility Credits: Credits from energy-saving measures in small or medium-sized facilities in Tokyo not covered by the TMG CaT. No quantitative restrictions apply. • Renewable Energy Credits: Credits from solar (heat, electricity), wind, geothermal, small hydro (less than 1,000 kW) at a value of 1.5 times the standard credit value in Compliance Periods I and III, but only 1.0 times the value from Compliance Period III onward; and from biomass (biomass rate ≥ 95%) at a value of 1.0 times the value. No quantitative restrictions apply

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• Outside Tokyo Credits: Credits from energy-saving measures in large facilities (i.e., annual energy consumption of more than 1,500 kl of crude oil equivalent and emissions of 150,000 tons or less) outside of Tokyo but within Japan. Credits can only be used for compliance for up to one-third of facilities’ reduction obligations. Therefore, the TMG CaT fully complies with the SMR for flexibility mechanisms such as unlimited banking, no borrowing and offset use restricted to sustainable projects. While the TMG is closely observing price developments, thus far neither a price ceiling and floor nor a price containment reserve has been implemented for price management in the case of sudden surges or drops. However, internal discussions indicate that the TMG is well prepared for these events—for example, by considering the sale of government-owned offset credits. As a result, the TMG CaT fails to comply with the SMR for price management, which calls for a price floor of a level at least equal to the social cost of CO2 (SC-CO2 ), currently estimated to be $50, and a price ceiling of no lower than $200—the approximate cost of compliance with the Paris Agreement. Because international standards, such as those of the International Organization for Standardization, were considered insufficient for the specific design of the TMG CaT, the program uses a custom-tailored measuring, reporting and verification (MRV) methodology. Compliance responsibility is primarily assigned to facility owners; but large tenants with a floor size above 5,000 m2 or over 6 million kWh of electricity use per year must submit their own emission reports in collaboration with building owners. Covered facilities had to submit a base-year emissions report for all seven major GHGs by September 2010 to the TMG. Since then, by the end of November each year, they must submit emission reduction plans which include both the GHG emissions data of the previous year and a reduction plan for achieving compliance in the future. Emissions data must be verified by third parties using a TMG-licensed auditing system. The TMG has registered 30 external verifiers, which are in charge of external verification of both base-period and subsequent annual emission reports. Emissions data—that is, base-year emissions, reduction obligations and current emissions—is registered in a compliance account. Facilities that want to trade credits must open a second account, the trading account, to record credit transfers. In principle, compliance periods follow the Japanese fiscal year starting from 1 April and last five years—that is: • 2010–2014 (Period I); • 2015–2019 (Period II); and • 2020–2024 (Period III). Added to the compliance periods are 18-month-long adjustment periods. By the end of the adjustment periods, on 30 September of the respective year at the latest, facilities must comply with their reduction obligations through one or a combination of the below options: • self-reduction (by implementing energy-efficiency measures or, from Compliance Period III onward, the utilization of renewable energy);

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• emissions trading by buying ERC, offset or linking credits on the secondary market); and • banking (by surrendering banked credits from the preceding compliance period). In case of non-compliance or failure to submit the reports, facilities are faced with a two-step enforcement process. In the first stage, the Tokyo governor orders the facility to reduce emissions by 1.3 times the amount of excess emissions. In the second stage, the names of non-compliant facilities are published, and facilities are subject to a fine of up to JPY 500,000 for breaching the law and to a surcharge that covers the TMG’s costs for buying the 1.3-fold number of emission credits from the secondary market. Hence, the TMG CaT fully complies with the SMR for compliance aspects such as compliance periods of no more than five years, a reliable MRV system and a deterrent set of fines plus ex post compensation of excess emissions. The TMG has made efforts to link its scheme to jurisdictions both inside and outside Japan. However, the only successful linkage so far has been established with Tokyo’s northern neighbor, the prefecture of Saitama (ICAP, 2022; SG, 2019, 2020a, 2020b). In Saitama Prefecture, just as in Tokyo, the Saitama Emissions Trading System (S ETS) is part of a broader climate strategy: the Saitama Prefecture Global Warming Strategy Promotion Ordinance. Saitama Prefecture, with just below 37 million tons of GHG emissions in 2016, intends to lower emissions by 21% below 2005 levels by 2020 and by 26% below 2013 levels by 2030. The S ETS commenced operation just one year after the TMG CaT, on April 1, 2011, and was immediately linked to its neighbor’s program. The main motivations for linking were their geographic proximity; close economic ties between the two jurisdictions; and the shared climate policy interest of the local governors at the time. With a few minor exceptions and one major exception, the design of the S ETS has been aligned with the TMG CaT design from the beginning—the reasons being not only the intended linking, but also the lack of administrative capacity in the Saitama Prefecture government. The S ETS hence covers 18% of the prefecture’s total GHG emissions from around 600 facilities, but with a significantly larger share of factories (75% of covered facilities) than Tokyo. The reduction targets for Compliance Periods II and III were set slightly lower in Saitama Prefecture, at 13/15% for factories/buildings in Period II and 20/22% in Period III, respectively. In addition to the offsets accepted by the TMG, Saitama Prefecture accepts Forest Absorption Credits from forestry within the prefecture at 1.5 times the regular value and from other forests at the standard credit value. Unlike Tokyo, Saitama does not impose non-compliance penalties, except for publication of respective facilities’ names. Hence, the TMG CaT complies with the SMR for linking. In sum, the TMG CaT only partially complies with the sustainable design requirements outlined in the SMR. Table 10.2 provides an overview of its evaluation against the SMR.

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Table 10.2 TMG CaT as evaluated against the SMR SMR

TMG CaT

Coverage

Mandatory participation All GHGs (based on CO2 -e) All polluters

● ◯ ◯

Cap

−25 to 40% by 2020; −50 to 65% by 2030, −70 to 85% by 2040 (base 1990) (CBDR) Absolute volume cap (‘Budget Approach’) Gradual cap reduction (‘Contraction and Convergence’)

◯ ● ●

Allocation

Initial allocation by 100% auctioning Primary/secondary market equally accessible to all parties Frequent auctions, well-established secondary market platform

◯ ● ◯

Revenue use

100% revenue recycling ◯ Earmarked to compensation of poorest, equal per capita distribution ◯ of rest

Flexibility mechanisms

Banking permitted (unlimited) Borrowing prohibited Offsets limited to sustainable projects (‘Gold Standard’)

● ● ●

Price management

Price floor (auction) (≥ SC−CO2 —i.e., $50/60 per ton in 2020/ 2030) Price ceiling (PA-CP—i.e., $80/100 per ton in 2020/2030)

◯ ◯

Compliance

Control periods of no more than three years or interim holdings requirements Continuous MRV or annual third-party verified reporting Discouraging fines for non-compliance (> allowance price) Full compensation of excess emissions

● ● ● ●

Linking

Multilateral direct linking

●

Note A (●) sign is attributed to a TMG CaT design feature that fully complies with a respective design recommendation of the SMR, while a (◯) sign represents lack of compliance. Partial compliance would be represented by a (O) sign, which is attributed to those cases where the ETS is predominantly in compliance with the SMR

10.2.2 Program Performance The results of the TMG CaT are largely positive with respect to environmental performance (Nishida et al., 2016; Rudolph & Kawakatsu, 2013; Rudolph & Morotomi, 2016). This is particularly true considering that Tokyo’s GDP has been relatively stable over the past decade, and that the floor area of covered buildings even increased by 4% between 2005 and 2014. Since 2010, the TMG CaT has experienced almost 100% compliance with the preset targets and achieved emission reductions that have far exceeded the respective compliance period targets (TMG, 2014, 2022). Comparable national data indicates that facilities covered under the TMG CaT have outrun their counterparts outside of Tokyo with respect to emission reductions. Furthermore, the linked S ETS has seen

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similar emission reductions beyond targets (SG, 2019). In 2020, emission reductions from the TMG CaT were calculated at 33% of base-year levels, thus already exceeding Compliance Period III targets (25–27%) in the first compliance year. While there was a steep decline in emissions from 2010 to 2011, subsequent years have seen more moderate additional emission reductions. However, due to the opportunity to choose the base period, facilities may have chosen three consecutive years between 2002 and 2007 with particularly high emissions. Wakabayashi and Kimura (2018) thus argue that Compliance Period I emission reductions of facilities continuously covered by the program during this period only account for 14% over 2009 levels—the last year before the start of the program. Questions have also been raised in terms of the isolated environmental effects of the TMG CaT. Wakabayashi and Kimura (2018) argue that in Compliance Period I, factors other than the TMG CaT itself were more influential, namely: • the energy-saving measures after the Great Tohoku Eastern Japan Earthquake in 2011; • the advisory features of the TMG CaT; • the end of the lifecycle of 1970s–1980s heating technology; and • the global technology revolution of light-emitting diode (LED) lighting. Indeed, with respect to individual measures, most emission reductions have come from the installation of high-efficiency heating and air conditioning or lighting equipment. There has been a measurable technology shift from conventional lighting to LED, with high-efficiency lighting other than LED having almost entirely disappeared. Operational low or no-cost measures such as optimizing air conditioning times have also been used in a large number of covered facilities. However, the following arguments support a major role of the TMG CaT (Nishida & Hua, 2011; Nishida et al., 2016; Roppongi et al., 2016): • Significant emission reductions even beyond the Compliance Period I targets had already been realized before the 2011 earthquake hit and were also maintained after the energy crisis; • Many of the advisory features of the TMG CaT had already been part of the preceding mandatory reporting system since 2002. However, due to the voluntary nature of emission reductions under this program, the environmental effect was negligible; and • Imposing a mandatory cap on emissions and generating a positive carbon price, even if low, generate further incentives to use more efficient technology earlier. These arguments are further supported by an econometric ex post study on emission reductions in universities covered by the TMG CaT. According to Abe and Arimura (2021), even in Compliance Period I, the TMG CaT reduced the CO2 emissions of regulated universities by approximately 3–5% on average between 2009 and 2014 independent of other factors, while particular power-saving measures after the 2011 earthquake reduced emissions by approximately 5–7% on average in Compliance Period I.

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The allowance prices for the TMG CaT are not publicly available, due to the lack of a multilateral trading platform. However, prices estimated based on data from surveys among covered entities have steadily decreased over time without any remarkable fluctuations (TMG, 2017, 2018, 2021). Starting at a level of around JPY 10,000 in 2011, the end of Compliance Period I in 2014 saw an ERC price level of just JPY 1,500, which dropped further to JPY 200–900 in 2020. The main reason for this was the huge surplus of credits created by emission reductions beyond targets. At the end of Compliance Period I, this surplus amounted to about 9 million tons worth of credits, the biggest part of which was banked to Compliance Period II. Survey results among covered facilities indicate that willingness to sell credits at prices below JPY 3,000 is very low, as trading profits would only represent a very small share of the facilities’ main businesses. For the foreseeable future, while September 2021 saw the end of Compliance Period II’s adjustment period and thus the cancelation of all banked Compliance Period I credits, continuing excess reductions in Compliance Period II suggest that even in Compliance Period III, there will be a significant credit surplus and prices will remain low. Low prices, however, limit covered entities’ incentives to invest into up-to-date emission reduction technology and innovation. The opportunity offered to facilities to minimize compliance costs by trading was increasingly used toward the end of Compliance Period I. Trading data suggests that by the end of 2018, a total of more than 713,000 credits had been transferred in 249 individual transactions. With a steady increase from 2011, the most active year of trading was 2016, when the period for surrendering Compliance Period I credits finally ended. Still, by the end of Compliance Period II, 85% of covered facilities fulfilled their obligations through their own measures and only 15% via credit use. In addition, 60% of the credit trading has been realized between facilities within the same corporation or group, indicating that the limitation to bilateral trading and the lack of a well-functioning trading platform remain significant impediments to cost-efficient credit trading. Still, 89% of the credits used for compliance were ERCs. In sum, despite the design flaws, the linked TMG CaT has achieved major emissions reductions and increasingly low abatement costs. Nonetheless, program performance would benefit significantly from design improvements such as: • phasing in the auctioning of fully-fledged emissions rights in order to make polluters pay and raise revenues for redistribution; and • allowing the transfer of all allowances and using an established stock exchange in order to facilitate market trading and cost minimization.

10.3 The Linked TMG CaT: An Example for Successful Local Climate Governance? While Japan has been reluctant to introduce a GHG CaT at the national level (Rudolph & Schneider, 2013), Tokyo successfully implemented its own local scheme in 2010. But what exactly were the political success factors and how could the TMG

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CaT be successfully linked with Saitama against all theoretical barriers predicted by public choice theory (Kirchgässner & Schneider, 2003)?

10.3.1 The Local Political Economy of the TMG CaT Despite the national-level indifference of voters and the skepticism of the public choice theory toward voters’ interest in, and influence on, market-based climate policy, at the local level in Tokyo, citizens generally supported the vision of a lowcarbon city in the application process for the 2020 Olympics (Nishida & Hua, 2011; TMG, 2012). While there were no particular policy instrument interests, leading the way through innovative policy application ahead of the national government was a sentiment widely shared by Tokyo citizens. This sentiment was voiced in several stakeholder meetings held in 2007 and 2008 after the government invited 200 representatives of the general public to attend the meetings. Public attendance at the meetings and surveillance of the negotiations significantly limited opposing industry’s room for political maneuvering based on unproven claims. Against public choice predictions, led by the Worldwide Fund for Nature Japan, local representatives of major climate organizations in Tokyo also voiced strong support for the TMG CaT (Kiko Network, 2012; Nishida & Hua, 2011; WWF, 2012). In addition to the advantages of an absolute emissions limit and a price on carbon that makes polluters pay, environmental organizations hoped to move beyond voluntary emission reduction targets for Tokyo businesses, and that an ambitious local scheme in the Japanese capital would advance the CaT discussion at the national level. Against the national trend, local environmental organizations largely benefited from well-established contacts with the TMG Bureau of Environment (TMG BoE), which—unlike the national Ministry of the Environment (MoE)—considered environmental organizations as valuable partners. This also resulted in the representation of environmental organizations in the stakeholder meetings held in 2007 and 2008 by the TMG BoE. The political backing of ambitious climate targets and innovative policy strategies ahead of the national government by former Tokyo Governor Shintaro Ishihara and the general public provided further support for environmental organizations. In contrast to environmental organizations, the local branches of major business associations in Tokyo—including Keidanren, Japan’s most influential industry association—opposed the TMG CaT (Nishida & Hua, 2011; Researchers, 2012). Mirroring the arguments of their national partners, they emphasized the growthlimiting nature of the cap; potential allowance price fluctuations; and the possibility of an unfair initial distribution of emission rights. They also pointed to the already high energy efficiency of businesses in Tokyo and the success of the local Carbon Reduction Reporting Program, which called only for voluntary emission reductions. This position was also initially backed by the Tokyo Chamber of Commerce, representing small and medium-sized businesses; but the chamber subsequently changed its position, mainly due the Small and Mid-size Facility Credits offset provision and

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subsidies promised to these businesses for energy efficiency and renewable energy projects. This split in the local business sectors significantly weakened opposition to the TMG CaT. In addition, contradicting both predictions of public choice and the national trend, Keidanren’s political influence at the local level in Tokyo—usually determined by major utilities such as TEPCO and big energy-intensive manufacturers such as Nippon Steel—was further reduced by the rather small contribution of energy-intensive industries to Tokyo’s local GDP and the exclusive location of power generators outside of the Tokyo Metropolitan Area. Furthermore, stakeholder meetings were held publicly and with the continuous participation of environmental organizations, which limited room for political maneuvering by industry. Not least, based on the information provided by businesses under the Carbon Reduction Reporting Program, the TMG environmental bureaucracy was well prepared to counter industry’s arguments. Against the hypothesis of public choice, but in line with the national-level MoE, the TMG BoE supported a local GHG CaT (Nishida & Hua, 2011; TMG, 2012; WWF, 2012). Officials not only hoped to strengthen their position in the competition between local administrations, but also aimed to support Tokyo on the path to becoming a low-carbon city through a cost-efficient, environmentally effective instrument and moving beyond the rather ineffective local Carbon Reduction Reporting Program. In addition, TMG BoE officials aimed to make Tokyo a pioneer in the international C40 Cities Climate Leadership Group and to influence the shaping of regional climate policy, particularly in neighboring Northeast and Southeast Asian countries. Close collaboration with well-informed representatives of local environmental organizations and proactive environmental economists provided TMG BoE staff with specific knowledge and skills on the functioning and implementation of GHG CaTs. This was further enhanced by international cooperation with likeminded colleagues in jurisdictions such as the EU and the US, as well as by Tokyo’s membership of the International Carbon Action Partnership (ICAP), which aims to promote the use of GHG CaTs around the world. Adding to its influence, the TMG BoE had been in charge of the Tokyo Climate Strategy and the Carbon Reduction Reporting Program, which provided it with detailed company-level data on emissions and abatement strategies. In addition, the TMG BoE was well equipped with staff and financial resources, and in charge of facilitating stakeholder consultations on the TMG CaT. Former Governor Ishihara’s strong support for Tokyo’s climate strategy also limited opposition from other offices in the Tokyo administration. Finally, among politicians, local climate politics in Tokyo were dominated by former Governor Ishihara, who was known for his decisive character and confrontations with the national government (Nishida & Hua, 2011; TMG, 2012). Ishihara— although traditionally conservative and right-wing leaning—aimed to transform Tokyo into a low-carbon city, not least as a strategy to support its application for the 2020 Olympics. By establishing a local CaT, he hoped that Tokyo would achieve ambitious GHG reductions goals and at the same time pre-empt and later co-shape a national GHG CaT. Ishihara’s strong support of the TMG CaT and his personal political will and skill were decisive factors for the political success of the program—a fact that contradicts not only national-level climate politics, but also the hypotheses

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of public choice on politicians’ interest in, and influence on, market-based climate policy. In sum, bucking the national trend and also largely contradicting the predictions of public choice, the particular power balance, political actors’ interests and external circumstances provided a window of opportunity for the implementation of the TMG CaT. Particularly favorable conditions included: • the 2020 Olympics as an incentive to implement internationally recognized climate action; • an inclusive decision-making process that facilitated broad stakeholder participation; • political support from the local head of government; • a highly motivated and cooperative environmental administration; • well-informed environmental organizations’ access to decision-making institutions; • a split and weakened business lobby; and • supportive public opinion.

10.3.2 Institutional Success Factors for the Tokyo-Saitama CaT Link As a concrete example, faced with political deadlock over the implementation of a GHG CaT at the national level in Japan, Tokyo and the neighboring prefecture of Saitama implemented their own independent subnational schemes in the early 2010s and pioneered a working CaT link at the subnational level that was preceded only by the Regional Greenhouse Gas Initiative (RGGI) in the Northeast US (Rudolph et al., 2020). In addition to their geographic proximity, both jurisdictions have had close economic ties for decades. The implementation and subsequent linking of their CaTs were driven by the foresight and political leadership of the then ruling prefectural governors, Shintaro Ishihara of Tokyo and Kiyoshi Ueda of Saitama. Due to a lack of comparable resources, Saitama’s environmental administration closely collaborated with the TMG BoE in designing its scheme. In each jurisdiction, the GHG CaT is part of a broader climate strategy with specified reduction targets for 2020 and 2030. Implementation was coordinated from a very early stage, with the S ETS closely aligned to the TMG CaT (ICAP, 2022). The main reasons for this were the lack of comparable administrative resources in Saitama and the decision to link with Tokyo from the beginning. Hence, the S ETS commenced operation in 2011, just one year after the TMG CaT, and was immediately linked to the TMG CaT with only minor design differences. With respect to coverage, Saitama followed Tokyo’s example of including both office buildings and industry, although the manufacturing sector played a significantly larger role in Saitama (70% of covered facilities). The S ETS covered around 600 facilities—less than half the number covered by the TMG CaT. Also, only 18%

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of total GHG emissions were brought under the cap. Saitama’s reduction targets were the same as those in the TMG CaT for Compliance Period I, but slightly less ambitious for Compliance Period II (−13% for factories and −15% for office buildings) and Compliance Period III (−20% for factories and −2% for office buildings). While Saitama has largely followed Tokyo’s lead—for example, with respect to flexibility measures such as banking, borrowing and offsets—Saitama additionally allows Forest Absorption Credits. Both jurisdictions use reliable MRV schemes and publish non-compliant companies’ names; but while Tokyo applies fines of up to JPY 500,000 and a 1.3 times ex post surrender of excess emissions in case of non-compliance, there are no penalties for non-compliance in Saitama. Hence, if evaluated based on the SMR, the S ETS appears slightly less ambitious than the TMG CaT. Similar to the TMG CaT, the performance results for Saitama are comparably positive with respect to environmental effectiveness (SG, 2020a, 2020b). The S ETS realized almost 100% compliance and CO2 emissions were reduced beyond the actual targets by 28% in 2016 compared to base-period emissions. The total trading volume in Saitama in the first compliance period was 200,000 credits executed by 66 facilities, with the vast majority of transfers in the range of between 100 and 3,000 credits. However, by 2016, inter-prefectural trading was limited to just six cases of transfers from Saitama to Tokyo and nine cases in the other direction. By 2020, credits purchased by Tokyo from Saitama via the established linkage accounted for just 5% of compliance fulfilled with credits (15% of total compliance). Inter-prefectural trading thus has not played a major role in program compliance. In sum, despite the domestic design flaws, the linked subnational carbon market of Tokyo and Saitama has delivered significant GHG emission reductions at decreasing prices, but at relatively low levels of trading activity—particularly across borders. However, this low level of trading activities can mainly be attributed to the absence of an easily accessible, well-established trading platform, which is an institutional prerequisite for multilateral trading. The domestic TMG CaT and S ETS linkage has benefited from six major success factors (TMG/SG, 2019): • • • • • •

the geographic proximity of the jurisdictions; strong economic ties between the jurisdictions; the political leadership of the respective governors; similar overall GHG reduction targets; guidance by the institutionally best-equipped partner; and far-reaching early design alignments.

Interestingly, this link has been successful despite the differences in economic structures between the two jurisdictions. Other neighboring prefectures such as Kanagawa and Chiba, however, have been reluctant to link with Tokyo, partly due to their strong industry sector, but mainly due to a lack of political will of the prefectural government to overcome industries’ political resistance. Other Japanese prefectures such as Kyoto have been more open to the idea of establishing local cap-and-trade schemes, but they have emphasized their lack of institutional capacity.

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10.4 Conclusions Despite setbacks in climate policy at the national level in Japan, Tokyo has been a frontrunner in terms of subnational carbon pricing application. In 2010, Tokyo introduced the first mandatory scheme in Asia and the first worldwide with a focus on the end use of energy in buildings in megacities. The TMG CaT builds on previous policies and has an explicit focus on local, internal emission reductions in covered facilities, rather than on cost efficiency. Tokyo also linked its TMG CaT to that of the neighboring prefecture, Saitama. The TMG CaT design features some sustainable elements, such as a steadily declining absolute volume cap; a quality-based offset program; a reliable MRV system; and even a functioning link with Saitama’s S ETS. However, the TMG CaT fulfills the ambitious criteria outlined in the SMR only to a limited extent. In particular, the limited coverage, the rather generous cap, the free initial allocation of emission rights and the lack of a widely accessible trading platform to facilitate multilateral trading deserve criticism. Given the political barriers in Japan, however, the implementation of the only mandatory CaT scheme in this Northeast Asian island nation should be considered a major success; as should the subnational GHG CaT link. This success was due to the specific political power balance in Tokyo and a set of favorable societal circumstances, including: • the 2020 Olympics as an incentive to implement internationally recognized climate action; • an inclusive decision-making process that allowed for broad stakeholder participation; • political support from the local head of government; • a highly motivated and cooperative environmental administration; • well-informed environmental organizations’ access to decision-making institutions; • a split and weakened business lobby; and • supportive public opinion. Despite its success, the TMG CaT would benefit significantly from a more sustainable design that included reforms such as: • expanding its scope (e.g., to the transport and household sectors) and tightening the cap to a target level of −40 to 60% by 2030 based on 2010 levels in order to increase the positive climate protection effect; • phasing in the auctioning of fully-fledged emissions rights in order to make polluters pay and raise revenues for redistribution; and • allowing the transfer of all allowances and using an established stock exchange in order to facilitate market trading and cost minimization. Particularly noteworthy is the fact that, at a very early stage, the TMG CaT established a local linkage with the neighboring prefecture of Saitama, despite significant

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differences in their economic structures. This link was made possible, among other things, by: • • • • • •

the geographic proximity of the jurisdictions; strong economic ties between the jurisdictions; the political leadership of the respective governors; guidance by the institutionally best-equipped partner; similar overall GHG reduction targets; and far-reaching early design alignments.

Overall, despite some design flaws, the linked TMG CaT can be perceived as a milestone in market-based climate policy, particularly at the local level, and can most certainly act as a blueprint for other megacities around the globe. This commendation is strongly supported by the fact that New York City has already used the TMG CaT for guidance on its own city-wide carbon market proposal (Guarini Center et al., 2021a, 2021b). The fact that there is no national-level carbon pricing scheme in place in the US, while two subnational interstate carbon markets already exist (i.e., RGGI in the Northeast and the Western Climate Initiative, comprising California and the Canadian province of Quebec), gives rise to hopes that interlinked city GHG CaTs following the Tokyo-Saitama example could act as an important promoter of market-based climate policy from the bottom up.

References Abe, T., & Arimura, T. H. (2021). An empirical study of the Tokyo emissions trading scheme—An ex post analysis of emissions from university buildings. In T.H. Arimura & S. Matsumoto (Eds.), Carbon pricing in Japan (pp. 97–116). Springer. https://doi.org/10.1007/978-981-15-6964-7 Betsill, M., & Bulkeley, H. (2007). Looking back and thinking ahead: A decade of cities and climate change research. Local Environment, 12(5), 447–456. Bodansky, D. M., Hoedl, S. A., Metcalf, G. E., & Stavins, N. R. (2016). Facilitating linkage of climate policies through the Paris outcome. Climate Policy, 16(8), 956–972. CAN Gov’t. (2016/2018). Pan-Canadian framework on clean growth and climate change and greenhouse gas pollution pricing act. CAN Gov’t. Daly, H. E. (2018). Top 10 policies for a steady-state economy. https://steadystate.org/top-10-pol icies-for-a-steady-state-economy/ Dellatte, J., & Rudolph, S. (2022). Understanding barriers to linking heterogeneous ETS—Evidence from and lessons for Northeast Asia. Environmental Politics. https://doi.org/10.1080/09644016. 2022.2061776 Endres, A. (2011). Environmental economics—Theory and policy. Cambridge University Press. Guarini Center, et al. (2021a). Carbon trading for New York City’s building sector—Report of the local law 97 carbon trading study group to the New York City Mayor’s Office of Climate & Sustainability. Guarini Center. Guarini Center, et al. (2021b). Carbon trading for New York City’s building sector—Implementation plan. Guarini Center. Gulbrandsen, H., Wettestad, J., Victor, D., & Underdal, A. (2018). The political roots of divergence in carbon market design: Implication for linking. Climate Policy, 19, 427–438. ICAP. (2018). A guide to linking emissions trading schemes. ICAP. ICAP. (2022). Emissions trading worldwide: Status report 2022. ICAP.

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IPCC. (2022). Climate change 2022—Mitigation of climate change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press. https://doi.org/10.1017/9781009157926 Kiko Network. (2012, March 30). Personal interview by the authors with climate policy staff . Kirchgässner, G., & Schneider, F. (2003). On the political economy of environmental policy. Public Choice, 115(3), 369–396. Marschinski, R., Flachsland, C., & Jakob, M. (2012). Sectorial linking of carbon markets: A tradetheory analysis. Resource and Energy Economics, 34, 584–606. Morotomi, T. (2012). Climate change policy from the bottom up (Discussion Paper). Kyoto University. Nishida, Y., & Hua, Y. (2011). Motivating stakeholders to deliver change—Tokyo’s cap-and-trade program. Building Research & Information, 39(5), 518–533. Nishida, Y., Hua, Y., & Okamoto, N. (2016). Alternative building emission-reduction measure— Outcomes from the Tokyo cap-and-trade program. Building Research & Information, 44(5–6), 644–659. Oates, W. E. (2004). Environmental policy and fiscal federalism. Edward Elgar. Ranson, M., & Stavins, R. (2016). Linkage of greenhouse gas emissions trading systems: Learning from experience. Climate Policy, 16, 284–300. Researchers. (2012, April 2). Personal interviews with two anonymous researchers. Roppongi, H., Suwa, A., & Puppim de Oliveira, J. A. (2016). Innovating in sub-national climate policy—The mandatory emissions reduction scheme in Tokyo. Climate Policy, 17(4), 516–532. Rudolph, S., & Aydos, E. (2021). Carbon markets around the globe—Sustainability and political feasibility. Edward Elgar. Rudolph, S., Aydos, E., Kawakatsu, T., Lerch, A., & Dellatte, J. (2020). May link prevail! or: A comparative analysis of lessons learnt from (not) linking carbon markets in Japan and Oceania. In T. Zachariadis, J. Milne, M. S. Andersen, & H. Ashiabor (Eds.), Economic instruments for a low-carbon future—Critical issues in environmental taxation (Vol. XXII, pp. 98–113). Edward Elgar. Rudolph, S., & Kawakatsu, T. (2013). Tokyo’s greenhouse gas emissions trading scheme—A model for sustainable megacity carbon markets? In L. Kreiser et al. (Eds.), Market-based instruments— National experiences in environmental sustainability—Critical issues in environmental taxation (Vol. XIII, pp. 77–93). Edward Elgar. Rudolph, S., & Kawakatsu, T. (2019). The Tokyo-Saitama emissions trading scheme—An example for successful linking. Carbon & Climate Law Review, 13(3), 217–220. Rudolph, S., Lerch, A., & Kawakatsu, T., et al. (2017). Developing the North American carbon market—Prospects for sustainable linking. In S. Weishaar (Ed.), The green market transition: Carbon taxes, energy subsidies and smart instrument mixes—Critical issues in environmental taxation (Vol. XIX, pp. 209–230). Edward Elgar. Rudolph, S., & Morotomi, T. (2016). Acting local! An evaluation of the first compliance period of Tokyo’s carbon market. Carbon & Climate Law Review, 10(1), 75–78. Rudolph, S., & Schneider, F. (2013). Political barriers of implementing carbon markets in Japan— A public choice analysis and the empirical evidence before and after the Fukushima nuclear disaster. Environmental Economics and Policy Studies, 15(2), 211–235. SG. (2019). Emissions trading system in Saitama—Target setting emissions trading system (Unpublished emission reduction result sheet, provided to the authors by the Saitama government on 26 March 2019). SG. (2020a). Saitama Prefecture global warming countermeasures action plan (Phase 2) (in Japanese). www.pref.saitama.lg.jp/a0502/ontaikeikaku.html SG. (2020b). Target setting emissions trading (in Japanese). www.pref.saitama.lg.jp/a0502/torihi kiseido.html Sugiyama, N., & Takeuchi, T. (2008). Local policies for climate change in Japan. Journal of Environment Development, 17, 425–441. TMG. (2006). Environmental White Paper 2006. TMG.

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Chapter 11

Multidimensional Policy Analysis of the Energy System Transition in Japan: Case Studies of Local Energy Systems and Lessons to Improve Sustainability Shunsaku Komatsuzaki

Abstract Sustainability transitions can be promoted by policies pursuing long-term social benefits. However, such goals are often disregarded in policymaking due to the myopia of democracy. This chapter conducts a multidimensional policy analysis to derive useful insights on policy design and the political process to achieve long-term social value, that is, sustainability. A multidimensional policy analysis is practiced on independent decentralized energy systems and the Special Renewable Energy Act 2011, which fostered its development. The analysis includes a policy process analysis at the social level, case studies at the context level on the projects in Higashi-Matsushima (Miyagi), Nakanojo (Gunma), and Odawara (Kanagawa), and a synthesis of the analyses at both levels. The analysis at the context level conceptualized factors contributing to the sustainability of the project that includes a reciprocal relationship among stakeholders, which enhances autonomy as a business, and measures to secure stakeholders’ continuous commitment to the project goals. Based on the analyses at the two levels, it could be suggested that measures to enhance the project sustainability were restricted due to the policy design primarily aiming for rapid quantitative expansion of renewable energy production. Keywords Decentralized energy systems · Multidimensional policy analysis · Sustainability transitions · Local public–private collaboration · Agenda-setting

S. Komatsuzaki (B) Hiroshima University, Higashi-Hiroshima, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_11

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11.1 Policy Analysis Toward Sustainability Transitions The “sustainability transitions” (Grin, 2010; Rotmans et al., 2001), as seen in the Sustainable Development Goals, are a fundamental challenge facing humanity in the present century. The Great East Japan Earthquake of 2011 and the subsequent accident at the Fukushima Daiichi Nuclear Power Station have been the most significant events in Japan’s energy system history that have greatly influenced the debate and policy formation regarding sustainability transitions in Japan. Not enough progress has been made in terms of the nationwide development of independent and decentralized energy systems. Holistic policy analyses are necessary to identify institutional and political barriers to the development of decentralized energy projects, even under the energy policy reform following the disasters in 2011. It would be useful for policy entrepreneurs, both at the national and local levels, to understand factors that influence the formation and implementation of decentralized energy projects based on the policy analyses of limited early practices in the Japanese context. As Fischer (2016) mentions, despite promising initiatives at the local level, there are indications regarding the limitations of democracy in addressing the challenge of the global crisis caused by climate change. Adachi (2019), while considering democracy as a basic premise, calls for non-representative self-regulatory mechanisms to overcome the myopic nature of democracy and argues that contextual considerations and insights are important in their design and implementation. In the context of evidence-based policymaking, Adachi and Sugitani (2020: 85) argue that in order for policymakers and administrators to utilize evidence to dramatically improve the quality of policies, “the emergence or presence of competent and public-minded leaders with both an eye to diverse factors and a deep insight into the immediate context” is essential. These presumably suggest that the significance of policy analysis lies not in following the will of the people, but in attracting change in public opinion, based on deep insights into the context, in order to realize policies that contribute to the long-term values of society (Adachi, 2016: 60). In other words, the goal of policy analysis with regard to sustainability transitions is to create knowledge that goes beyond public opinion and encompasses pathways for designing and implementing policies that contribute to long-term values. This chapter thus aims to conduct a holistic policy analysis directed specifically toward the realization of long-term social value, namely, sustainability, and offers lessons for future project development. In order to understand the structural barriers to the development of decentralized energy projects in Japan, the multidimensional policy analysis framework by Fischer (1980, 1995, 2003) is a useful method. It consists of a first-stage analysis at the specific context level and a second-stage analysis at the social level and then provides a better understanding of the interrelationship between the two levels and the social values behind debates at both levels. As Fischer (2003) suggests, this multidimensional analysis would create insights into “solutions” to agree upon and realize a social goal based on a structural and holistic analysis of value conflicts, political drivers/barriers, and project incentives/ difficulties.

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11.2 Multidimensional Policy Analysis for Independent and Decentralized Energy Systems This chapter focuses on the cases of independent and decentralized energy systems that are important for advancing sustainability transitions and the “Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities (Special Renewable Energy Act 2011),” which is closely related to these cases. This chapter aims to conduct a multidimensional policy analysis inspired by Fischer’s framework and to propose ideas on the design and implementation of policies that contribute to the long-term value of society, namely sustainability (Table 11.1). First, at the social level, the political process of the formation and implementation of the Special Renewable Energy Act 2011 is analyzed, mainly through a literature review, to estimate how the pioneering policy that led to the expansion of decentralized energy systems in Japan either contributed or failed to contribute to sustainability (Asano, 2020). The minutes of the Committee on Economy, Trade, and Industry and the Budget Committee at the House of Representatives, as well as newspaper reports, are used in describing the political process, and existing studies are also reviewed and utilized in interpreting the information on the political process. Second, at the context level, three cases with different governance structures were selected (Higashi-Matsushima, Miyagi; Nakanojo, Gunma; and Odawara, Kanagawa). As Lowitzsch et al. (2020) argue, governance patterns involving organizational, institutional, legal, political, and cultural factors influence the successful creation of the local energy system. Akasaka (2021) proposes four types of local energy systems governance based on the financial and institutional relationship between local government, local businesses, and national/global companies. These Table 11.1 Multidimensional policy analysis toward the sustainability Process

Research issues

Social choice

The goal of analysis, pursuing long-term social values (e.g., sustainability), is set by an analyst

Social level

Does the target policy address sustainability as a policy goal? Does the policy contribute to the sustainability of society? Are there any unforeseen or unintentional impacts? • Political process analysis of the formation and implementation of the Special Renewable Energy Act 2011

Context level

How is the sustainability of individual projects achieved? In what way is the project’s sustainability realized in consideration of the needs and values of stakeholders? Does the policy contribute to the sustainability of individual projects? • Case studies and interviews with stakeholders

Synthesis

What are the essential elements of sustainability? What are the key elements, structures, and/or concepts that contribute to the diffusion of various initiatives which advance sustainability at the local level? Based on these insights, recommendations are formulated for public policy at the social level and its formation and implementation process

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are (1) local government-led cases, (2) local community-led cases, (3) local industryled cases, and (4) national/global business-led cases. Local energy systems led by local stakeholders would be essential in promoting sustainability transitions by cultivating a public mindset toward sustainability and developing the local circular economy (Inagaki et al., 2021; Koirala et al., 2016). There have been few local community-led cases with limited power production in Japan. Hence, case studies (Gerring, 2004) have been conducted on (1) local government-led cases and (3) local industry-led cases. In order to better understand the projects’ driving or hindering factors in relation to the national policy movements, the first cases in the above two types are chosen for the case study. Among 74 local energy systems in Japan (Inagaki et al., 2021), the first to be established, following the enactment of the Special Renewable Energy Act 2011, was the Higashimatsushima Organization for Progress and Economy, Education, Energy (HOPE). HOPE was established in October 2012 and began its power retail business in March 2016. It is also the first microgrid project in Japan, as described in the later section. The local energy system of HOPE does not receive public sponsorship but has strong support from the municipal government, including some subsidies. The first registered case after 2011 was the Nakanojo Power in Nakanojo, Gunma, which is financially supported by the municipal government. Nakanojo Electric Power General Foundation, a parent company of Nakanojo Power, was established in August 2013 and registered for the retail business in October 2013. Likewise, the first registered case after 2011 that had no public sponsorship was Shonan Power in Odawara, Kanagawa. It was established in September 2014 and registered for the retail business in February 2016. Higashi-Matsushima (the first establishment case) and Nakanojo (the first registered case) are chosen as samples of the local government-led cases, while Odawara is selected as a sample of the local industry-led cases. Interviews with stakeholders were conducted to clarify the mechanisms through which the projects pursue sustainability. In the case of Higashi-Matsushima, interviews with the local government and the operator of the local energy projects were conducted from June 2018 to December 2018 (Komikado et al., 2019). In the case of Nakanojo, interviews with an ex-mayor, local council members, a manager of the project operator, and experts were conducted from October 2019 to December 2019 (Asano, 2020). In the case of Odawara, interviews with local government officials, managers of the project operators, managers of the new initiative born from the local energy projects, and experts were conducted from July 2020 to November 2020 (Akasaka, 2021). Finally, the two levels of analyses were integrated to extract the essential elements for achieving sustainability. Some discussion of the issues in policy formation and implementation, as well as elements, structures, and concepts that should be considered in policy design, is offered for future policymaking in order to advance sustainability transitions while taking into account the multidimensional nature and unique contexts.

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11.3 Political Process Analysis on the Special Renewable Energy Act 2011 A political process analysis at the social level focuses on the Special Renewable Energy Act 2011—which is the basis for the implementation of renewable energy projects in Japan—to clarify how stakeholders’ intentions clashed with each other and how they converged. The analysis is conducted based on Diet committee minutes, newspaper articles, and existing studies (Iida, 2002; International Environment and Economy Institute, 2016; Kikkawa, 2011; Nagayama, 2012, 2020). Since the Great East Japan Earthquake caused a fundamental change in the formation process of the Special Renewable Energy Act 2011, the analysis was divided into two phases, before and after the Great East Japan Earthquake.

11.3.1 Political Process Before the Great East Japan Earthquake (March 11, 2011) The first time a feed-in tariff scheme was discussed in Japan was around 2000 when the Diet Members Caucus for Renewable Energy Promotion proposed the “Renewable Energy Promotion Law.” However, the Ministry of Economy, Trade and Industry (METI), the electric power industry, and diet members backed by energy policy interests fiercely opposed the bill, and the “Act on Special Measures Concerning New Energy Use by Electricity Providers” (the RPS Law) was enacted instead. The low target set by the METI, which obligated electric utilities to introduce new energy to 1.63% of total electricity by 2014, eventually caused the RPS Law to hinder the spread of renewable energy rather than promote it (Doman, 2013). On the other hand, Japan had been focusing on the diffusion of solar power generation in order to prioritize energy security by establishing a subsidy program for the installation of solar cells in houses in 1994 and investing a total of 134 billion yen over twelve years. However, this program was terminated in FY2005, and Japan fell behind in the booming solar energy market, while the market in Europe was expanding rapidly, mainly driven by the introduction of feed-in tariffs in Germany and Spain during the same period. Under these circumstances, Prime Minister Yasuo Fukuda announced the “Fukuda Vision” in 2008, and the “Global Warming Prevention Headquarters” of the Liberal Democratic Party (LDP) discussed the feed-in tariff scheme. In addition, the Ministry of the Environment set up a committee to examine the effects of feed-in tariffs, while the METI was reluctant to adopt a feed-in tariff scheme. The METI, as the main agency in charge of energy policy, was “pushed” to come up with its own renewable energy policy and announced a surplus electricity purchasing system ahead of others. Later, the largest opposition party, the Democratic Party of Japan (DPJ), opposed the

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LDP’s energy policy and stated in its 2009 manifesto that it would introduce a feedin tariff system for the entire amount of electricity generated. With the subsequent change of government, the feed-in tariff system began moving toward realization. However, the government’s original proposal, approved by Cabinet prior to the Great East Japan Earthquake, called for the purchase of all energy sources, except solar power, at a uniform price regardless of their capacity, intending to concentrate on the most economically rational renewable energy sources. The purchase price was to be determined by the Minister of Economy, Trade and Industry after hearing the opinions of the METI’s Advisory Committee on Natural Resources and Energy, and no reduction or exemption measures were provided for industries with high electricity consumption. In this way, the system was designed to allow the METI to exert strong control over the introduction of only a limited number of renewable energy sources by making them compete with each other. Furthermore, the capacity of energy source development could be manipulated depending on the purchase price set by the METI. However, the Great East Japan Earthquake drastically altered this situation.

11.3.2 Political Process After the Great East Japan Earthquake The Great East Japan Earthquake of March 11, 2011, and the subsequent accident at the Fukushima Daiichi Nuclear Power Station forced a major reconsideration of the Special Renewable Energy Act’s institutional design. Nuclear power plants, as well as thermal ones in coastal areas, were shut down immediately in the aftermath of the disaster. This led to skepticism about the entire energy system that had relied on nuclear and thermal power generation and the emergence of renewable energy as an alternative source of energy. As the influence of the advocates of renewable energy grew, the Diet began legislative discussions on the Special Renewable Energy Act. The Diet mainly discussed “the burden to be borne by industries, including electricityintensive ones, and the public through levies,” “ensuring the transparency of the entity that determines the purchase price,” “the pros and cons of setting a uniform purchase price,” “the future of nuclear power plants,” and “problems associated with connecting renewable energy sources to the national power grid.” In addition, at a joint meeting of the House of Representatives’ Committee on Economy, Trade and Industry, Committee on Agriculture, Forestry, and Fisheries, and the Committee on the Environment held on August 10, 2011, issues related to the Special Renewable Energy Act and local revitalization were also discussed. However, only a change of the purchase price was made from a uniform one to one based on power type and size. Dominant stakeholders in the political process included environmental groups, private companies expecting to enter the renewable energy business, and the nonpartisan Diet Members Caucus aiming to promote renewable energy. One of the most

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influential stakeholders was President Masayoshi Son of Softbank Group, one of the new renewable energy providers. He launched the “East Japan Solar Belt Initiative” and established the “Renewable Energy Council” with 35 prefectures, thereby increasing his influence in the renewable energy industry. The nonpartisan Diet Members Caucus was also influential, and a proposal calling for early debate and enactment of the Special Renewable Energy Act was submitted to Prime Minister Naoto Kan on June 14, 2011, with the support of over 200 Diet members. Prime Minister Kan was strongly motivated to promote renewable energy policies, as evidenced by his statement in a meeting of environmental groups, including Masayoshi Son, and the nonpartisan Diet Members Caucus: “I would suggest this bill should be passed as soon as possible if my resignation is wanted in the Diet.” He also cited the enactment of the Special Renewable Energy Act as one of the conditions for his resignation. The “Special Mission Committee for Comprehensive Energy Policy” established by the LDP, the largest opposition party at the time, also greatly influenced the draft of the Special Renewable Energy Act. The LDP’s policy was to exclude from the special committee those who had been involved in the LDP’s energy policymaking in the past or had close ties to the industry. In addition to reflecting on past LDP energy policies, one of the important tasks of the committee was to determine the LDP’s stance on the feed-in tariff system. The accident at the Fukushima Daiichi Nuclear Power Station prompted a fundamental review of Japan’s energy policy, and it was reaffirmed that renewable energy sources such as solar and wind power must be promoted even more than before. On August 12, 2011, the three-party agreement between the DPJ, LDP, and Komeito led to the approval of an amended bill of the Special Renewable Energy Act. The Procurement Price Calculation Committee, which determines the purchase price, set a particularly high purchase price for solar power generation, partly to prioritize the Act’s objective of achieving a rapid expansion of renewable energy power generation capacity. As a result, private companies began to develop megasolar businesses, which led to the substantial development of the solar power industry in a significantly short period.

11.3.3 A Synthesis of the Political Process Analysis The above analysis of the political process shows that the influence of the advocates of renewable energy increased after the Great East Japan Earthquake amidst the conflicting intentions of various stakeholders, which resulted in the system being designed in a biased manner. The Special Renewable Energy Act was discussed at the initiative of the government following the change of government to the DPJ in 2009. At that time, nuclear power took priority over renewable energy as a main source of electricity. However, after the Great East Japan Earthquake and the subsequent Fukushima Daiichi Nuclear Power Station accident, expectations for renewable energy rose sharply in the context

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of a stable energy supply and higher energy self-sufficiency. The institutional design and the drafting of the amended bill were moved forward very, or perhaps, too quickly, in part due to the strong will of then-Prime Minister Kan. A dominant perception emerged that renewable energy would replace nuclear power as a new key source. A policy goal was thus set to rapidly expand the capacity of renewable energy sources from a short-term to a medium-to-long-term perspective. It was illustrated from the political process analysis that the policy and high purchase price were formulated specifically for a short-term goal to strongly encourage private companies to enter. The analysis also reveals that the contents of the policy were discussed in a very short period, reflecting conflicts between interest groups. These included the nonpartisan Diet Members Caucus and environmental groups aiming to rapidly expand renewable energy capacities, private companies focused on big business opportunities, Prime Minister Kan, whose sole purpose became to pass the policy, the industry rejecting the policy because of the levy burden, diet members with close ties to the energy industry wanting to keep nuclear power as the core power source, and the LDP that submitted an amended bill based on the three-party agreement as a countermeasure against the DPJ. As the political momentum to expand renewable energy power capacity grew in the wake of the Great East Japan Earthquake, the influence of the renewable energy advocates gradually increased, and the LDP also took the lead in expanding renewable energy, which led to the debate’s conclusion. The policy was designed with the quantitative expansion of renewable energy capacity in a short period as the primary goal, without sufficient discussion regarding the “qualitative perspective” on how to expand renewable energy capacity. It became clear from this political process analysis that not enough discussion took place on how to take advantage of the characteristics of renewable energy, such as its small scale, decentralized nature, and the fact that it is a resource that exists in many regions when designing governance structures and the role of local governments.

11.4 Case Studies of Decentralized Energy Systems 11.4.1 Case Study of Higashi-Matsushima, Miyagi Higashi-Matsushima has developed Japan’s first microgrid project and a new local energy company in the wake of the recovery from the Great East Japan Earthquake in 2011. These projects are not operated directly by the local government but by HOPE, established on October 1, 2012, by the city of Higashi-Matsushima as an intermediary organization between the city and the private sector to promote reconstruction projects. HOPE’s members are from the city hall, the local chamber of commerce and industry, and the social welfare council (at the time of its establishment), and the city does not invest in HOPE but subsidizes its management and operation costs.

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Hideo Abe, the former mayor of Higashi-Matsushima, had been involved in the city’s administration with an awareness of issues such as “infrastructure development independent from the national government” and “city planning in collaboration with citizens” since the Miyagi earthquakes in 2003. During the Great East Japan Earthquake, energy supply as a lifeline became a major issue in the days immediately following the disaster, and the “Smart Disaster Prevention Eco-Town Project” was considered in the reconstruction public housing plan, utilizing a promotion policy by the Ministry of the Environment. This was a technology verification project by Higashi-Matsushima and Sekisui House, Ltd. “Smart City Planning,” a city planning firm jointly funded by 25 major companies, as a consultant involved in the “Smart Disaster Prevention Eco-Town Project” supported by the Ministry of the Environment and the METI. In 2014, the Local Good Creation Promotion Organization was established under the leadership of Smart City Planning and offered professional training and advisory on energy business to HOPE. The city council had been opposed to the project particularly because the city would bear about one-fourth of the total 500-million-yen construction cost. With comprehensive communication by former Mayor Abe on a detailed investment recovery plan, however, the city council finally approved the project. The microgrid project was launched in June 2016, and the new local energy company, HOPE-no-denki, was launched in April of the same year. In the process of forming these projects, they faced various challenges, including the huge initial investment, opposition from the city council, and lack of knowhow. Figure 11.1 depicts the structure of the challenges in the project formation and the factors addressing these challenges, which were identified through the interview survey. This analysis suggests that significant influential factors in the project formation were the mayor’s leadership, agenda-setting due to the Great East Japan Earthquake, and active support from external private companies such as the Local Good Creation Promotion Organization. It could also be inferred that government subsidies and policies, as well as citizen participation efforts prior to the Great East Japan Earthquake, acted as supportive factors. In terms of the sustainability of the project, the following issues were identified: dependence on the mayor’s leadership, lack of investment funds, and declining interest of citizens in energy issues and policies. The leadership of former Mayor Abe, who strongly promoted the project in the beginning, and Mayor Iwao Atsumi, who inherited the initiatives, promoted the formation and expansion of the novel project. Conversely, the tension with the city council continues, and it cannot be denied that politics may have various, sometimes adverse, effects on the efforts toward sustainability transitions. In addition, the lack of investment funds, and uncertainty about the project’s financial sustainability, are issues that have cropped up since its inception. HOPE was able to obtain subsidies through the reconstruction and various promotion policies for the project formation, but there is no clear path to achieving the large investment required for the expansion of the microgrid business, expansion of customers for the new local energy company (especially the start of retail sales to ordinary households), and improvement of profitability through the development of power sources owned by HOPE. The interview survey also revealed that this is due to a lack of human resources in the region. Furthermore, although the Great East Japan

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Fig. 11.1 Formation process of the microgrid project in Higashi-Matsushima

Earthquake triggered increased public interest in energy projects and set the agenda to promote pioneering efforts, interest has declined significantly over time. An annual questionnaire survey on city planning conducted by the city hall for residents shows that interest in energy conservation and promotion of renewable energy utilization has declined sharply since around 2015, after a sharp increase in 2011. In the face of declining interest, there is a sense of uncertainty about the continued participation of citizens in the project, whether as energy project operators, customers, or entrepreneurs. In contrast, Higashi-Matsushima’s decentralized energy system is a very early example in Japan, the mechanisms to ensure its sustainability are not yet fully in place. Even if the political commitment, investment, human resource supply, and interest of citizens are overcome, at least during the project formation phase, an autonomous mechanism to ensure sustainability over the medium-to-long term must be established.

11.4.2 Case Study of Nakanojo, Gunma Not many local governments are currently working on the development of regional circular economies that utilize the valuable renewable energy resources in the regions and the establishment of new regional power companies for this purpose. However, a few municipalities have established local energy systems where electricity is produced within the local regions from renewable sources, sold through

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local power companies, and consumed by local residents and organizations. One of these is Nakanojo Power, based in Nakanojo, Gunma. Nakanojo owns several mega-solar farms and sells the electricity generated to Nakanojo Power, a wholly owned subsidiary of Nakanojo Electric Power General Foundation, in which the local government has a 60% stake. Nakanojo Power mainly retails electricity to institutional consumers in Nakanojo, creating a model of local production for local consumption. Nakanojo Power is the first local power company in Japan to be launched and run by the local government. In the case of Nakanojo, the leadership of the mayor, Ken’ichiro Orita—who became mayor in 2012 and had served as local secretary to former Prime Minister Keizo Obuchi and his daughter, Yuko Obuchi, a member of the House of Representatives, for more than 30 years—was also critical in the formation of the project. During a study tour to Minami-Sanriku, Miyagi, in the summer of 2011, as he described in our interview, Mr. Orita found that nuclear power would not be able to survive and had come to the conclusion that renewable energy would become more important as global warming progresses. One of his promises, when he became mayor, was to develop a town utilizing renewable energy. He was extremely proactive in promoting this policy, and six months after his inauguration established the “Special Office for Energy Policies,” which is exclusively in charge of renewable energy projects. Mr. Masao Yamamoto, who was in charge of the Special Office when it was established, currently serves as the president of Nakanojo Power and has been consistently involved in the municipal energy policy in Nakanojo. In 2013, three mega-solar farms were completed (one was operated by a private company on the land leased from the town, and two were owned by the town and leased to private companies). Nakanojo Electric Power General Foundation was established in August 2013 to develop a framework for local production and consumption of electricity. In the fall of 2014, Mayor Orita resigned due to a political funding scandal surrounding Yuko Obuchi, the then Minister of Economy, Trade and Industry. Vice Mayor Masao Iyoku, who succeeded Orita as mayor, continued to promote the municipal energy policy. Figure 11.2 shows the structured relationship between the factors that contributed to the formation of the project and the results based on the interviews. It can be inferred that the critical factors in Nakanojo’s project formation were the leadership and connections of the mayor, the town council that fully supports the mayor in principle, the collaboration in the project development between the local government and the private sector, and the quick project formation and implementation. Many interviewees specifically mentioned the leadership and connections of former Mayor Orita as a key factor. One said, “He knew the national government and various ministries and agencies very well, so he knew what documents needed to be submitted to where and by when so that the contracts under the high feed-in tariff program could be completed in time, and he gave precise instructions to the municipal government officials.” The interviews also revealed that Mr. Orita was a unique and critical factor in the close collaboration with private companies.

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Fig. 11.2 Formation process of the local energy system in Nakanojo

In addition, several private companies mentioned that considering the expected decrease in the feed-in tariff, which was set at an extremely high price at the beginning, it was vital to begin the operation of a local energy company as soon as possible after the program took effect and to conclude contracts with power companies at high purchase prices. It is assumed that the leadership and connections of the mayor and the political situation of the town encouraged the speedy formation of the project in Nakanojo. A certain degree of uncertainty remains regarding the project’s sustainability due to the dominant influence of a personal factor, that is, the leadership of the mayor in the case of Nakanojo, similar to that of Higashi-Matsushima. Moreover, larger retail businesses to local households would be a critical path to local production of energy for local consumption in order to achieve sustainability of the local system. As the project officials suggested in the interview, another uncertainty would be the declining purchase price of electricity that possibly erodes the financial stability of the entire local energy system. Possible ways to attract local households as customers of the local power company should be further discussed; for instance, a competitive retail price of electricity or any motivation for people to commit to the local power company. Conversely, the establishment of a business model at the early project formation stage, which enables local energy production for local consumption with the municipality’s own power generation infrastructure, was a critical factor in the sustainability of the project. It was practically driven by the leadership and connections of the mayor, the effective participation of private companies, and the capacity development of the local government in the energy business. With these foundations, Nakanojo has started various measures to enhance the sustainability of the entire

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local energy system, including an “electricity as a return” project (providing electricity equivalent to about 30% of the donation to the donors) within the framework of the hometown tax donation (“Furusato Nozei”). However, it cannot be said that they have solved the problems of the rapidly declining birthrate and aging population and the sustainability of the new local power company in this context. It is necessary to seek a system that achieves sustainability through discussions with and support from various stakeholders, including local residents, who have not fully participated in the past processes.

11.4.3 Case Study of Odawara, Kanagawa Odawara began to pursue local production for local consumption of energy after the Great East Japan Earthquake. The city was selected by the Ministry of the Environment for a “Pilot study program on the commercialization of community-driven renewable energy in FY2011,” and the “Odawara Renewable Energy Commercialization Council” was initiated under this program. The council brought together influential residents who had been involved in community development and had relationships with the local government before the Great East Japan Earthquake and began to study the feasibility of commercializing renewable energy. The “Solar Power Business Feasibility Study Team” and “Small Hydro Power Business Feasibility Study Team” were established under the council to conduct detailed feasibility studies. The small-scale hydroelectric power generation project was eventually abandoned due to the estimated low profitability, while Houtoku Energy, which runs the solar power business, was incorporated with local private industries as shareholders in December 2012. In May 2017, Houtoku Energy entered the retail business, in which locally produced energy is sold to local consumers, by forming a capital tie-up with Shonan Power Co., Ltd., a leading local power retailer. In August 2016, Houtoku Energy also made a sales agency agreement with local infrastructure companies, Odawara Gas Co., Ltd. and Furukawa Co., Ltd. A consortium to realize local production for local consumption of energy had been formed by Houtoku Energy, Shonan Power, Odawara Gas, and Furukawa. The companies participating in the consortium continue to work toward local production for local consumption of energy, and in particular, the community support plans provided by Shonan Power, the electric vehicle sharing service provided in cooperation with REXEV Inc. and the local government, are unique initiatives to realize a local industry-driven energy system contributing to solving local problems. The information obtained through the interview survey was analyzed to understand the causal relationships between factors that contributed to the sustainability of the project and ones that led to the establishment of Odawara’s local energy system run independently from the local government with the close participation of the local industry (Fig. 11.3). The leadership of the mayor and the agenda-setting triggered by

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Fig. 11.3 Formation process of the local energy system in Odawara

the crisis played a major role in the local government-led energy systems in HigashiMatsushima and Nakanojo, while economic and strategic incentives were found to be equally important in the local industry-led system in Odawara. Managers of the local energy businesses in Odawara mentioned, in our interviews, the understanding of citizens as a priority strategic goal and were aware of the need for local industry to conduct business in a manner that coexists with the community. They have been strategically investing in regional revitalization activities for the sustainable development of the region and in initiatives developing a platform for solving local issues as a comprehensive social service provider. Local residents who benefited from the activities of the power company thus came to have higher customer loyalty to the local sponsoring companies. A mutually beneficial relationship, beyond a simple provider–user one, was finally established between the community and the local power company through the participation of the local industry and their initiatives contributing to the community. This led to a comprehensive system (Fig. 11.4) that improves the sustainability of the business in harmony with the community. The project formation started with the agenda-setting triggered by the crisis of the earthquake and the leadership of the mayor, similar to the local government-led cases. The local energy system of Odawara is an excellent example of an autonomous business model with sustainability, in which the local industry has been actively engaged, and initiatives addressing social issues in the local community have been conducted within its energy business. Although uncertainties, such as price fluctuations of renewable energy, remain, the participation and reciprocal relationship of

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Fig. 11.4 Local industry-led model of the decentralized energy system in Odawara

various stakeholders, especially the local industry and community, would be expected to improve the resilience of the comprehensive system.

11.5 Synthesis and Conclusion Critical factors for sustainability would be argued based on a synthesis of the two levels of analysis. According to Morotomi (2019), local production for local consumption of energy has greater significance in the fact that it promotes a local circular economy. The national policies aimed at quantitative expansion of renewable energy supply, including high feed-in tariffs, have led to a rapid expansion of megasolar projects by large companies outside the regions. It is, however, unclear whether these projects contribute to sustainability transitions of the regions, as the electricity generated and the revenue from the sale of electricity flow out of the regions. As seen in the above three cases, it could be suggested that local governments or industries

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should play a primary role in designing and operating local energy systems in order to improve the sustainability of not only energy systems but also the local economy. The governance structure of an energy project, especially the operator, has a significant impact on the performance of a decentralized energy project (Adil & Ko, 2016). In contrast to the extra-regional private sector-led model, the three cases analyzed in this study as community-led energy systems can be classified into a local government-led model (Higashi-Matsushima and Nakanojo) and a local industry-led model (Odawara). Table 11.2 outlines the comparison between the two communityled models based on the factors contributing to sustainability that are drawn from the benefits of community energy conceptualized by Brummer (2018) and the case studies above (autonomous and self-sustainable projects and local problem-solving). One of the differences between the local government-led and the local industryled models can be seen in the participation of citizens. In the local government-led case of Higashi-Matsushima, the “Smart Disaster Prevention Eco-Town Project” was developed in line with continuous citizen participation in urban development and reconstruction planning. In that case, citizen participation can be observed in the goal setting of the project and the project formation. Conversely, citizens remain customers of the energy business, and the number of citizens as customers has not increased much. Hence, it cannot be said that new communities are being created through the local energy system. In the local industry-led case of Odawara, although the citizens did not participate extensively in the project formation, a mechanism to ensure sustainability was realized through a mutually beneficial relationship (new community) among the local industry, the power companies, and the citizens. The higher autonomy and self-sustainability of the local energy system in Odawara would Table 11.2 Comparison between governance models Local government-led: Higashi-Matsushima and Nakanojo

Local industry-led: Odawara

Economic benefits

+/+++

+++

Education and acceptance

++

++

Participation

++

+

Climate protection and sustainability

+++

+++

Community building and + self-realization

+++

Renewable energy generation targets

+++

+++

Innovation

+/++

++

Autonomous and self-sustainable project

+/++

++/+++

Local problem-solving

+/++

++

Note The number of “+” shows the degree of impact

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hinder adverse influences by uncertainties, such as the regional political situation, compared to the local government-led model. Other differences between the two models can be found in community building as well as autonomy and self-sustainability, both of which are closely related to the circular mechanism of project sustainability in the local society in the Odawara case. In the case of Higashi-Matsushima, citizens actively participated in the eco-town project and urban reconstruction right after the 2011 tsunami disaster. However, those movements have not contributed to community building for sustainability transitions, as the eroded interest of citizens in the local power system reform would demonstrate. The past and current mayors, local government, and supporters and members of HOPE played a significant role in developing its innovative initiatives, whereas the autonomous attitude of the local community toward sustainability transitions has not blossomed yet. The economic benefits of high feed-in tariffs played an important role in the two cases of Nakanojo and Odawara, both of which own renewable energy sources. In the local industry-led case of Odawara, this economic incentive promoted the participation of local industry, but it can be inferred that a decrease in the economic incentive would hinder industry participation and decision-making among multiple companies. In the two cases of the local government-led model, the major advantage was that the leadership of the mayor and the agenda-setting triggered by the crisis enabled rapid project formation for policy goals such as improving resilience, preventing climate change, and obtaining independent power sources, and these were not necessarily based on economic incentives alone. If policy goals become more widely shared and understood in the local community through further participation of citizens and educational effects of projects, the local government-led model may be less affected by economic and financial uncertainties than the industry-led models. The case studies and comparative analysis at the context level revealed two principal factors that contribute to the sustainability of the projects: mechanisms to enhance autonomy and self-sustainability (in the local industry-led model, the mutually beneficial relationship between the local industry, local energy companies, and citizens, cultivated through the community contribution activities run by the power companies); and measures to realize the continuous commitment to the project goals (such as citizen participation and educational effects of the project). However, when integrated with the analysis at the social level, it could be suggested that the institutional design primarily for the quantitative expansion of renewable energy supply may have limited possible measures to realize the sustainability of the projects. There is a big gap between the capacity of renewable energy required in Japan for energy security, energy self-sufficiency, or sustainable global environment and the minimum capacity required to build a local circular economy, support local economic revitalization, and maintain local infrastructure. Unlike the three cases discussed in this chapter, the institutional design to achieve quantitative expansion of renewable energy supply in a very short period for the former goals caused many municipalities that had neither the political environment for quick decision-making nor expertise in the energy business to run toward the development of renewable energy sources at the

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initiative of giant companies outside the regions. Another impact of the biased institutional design was that business autonomy and self-sustainability became critical for the sustainability of the project. Aoki (2020) argues that the Great East Japan Earthquake made demand control an urgent goal, which suppressed innovation toward the decentralization of the energy system. National-level institutionalization based on a comparison of selected local practices has not been realized, and it has been attributed to regime actors (not only the 10 vertically integrated power companies but also large-scale private operators). Considering that the Great East Japan Earthquake had such a significant impact on the policy process (especially on agenda-setting and framing), agenda-setting should be strategically discussed to promote more diverse innovative practices throughout Japan. Nevertheless, the agenda of quantitative expansion of renewable energy supply has been desirable for regime actors. They might not have been key stakeholders in the formation of the Special Renewable Energy Act 2011, which had not necessarily been successful before the Great East Japan Earthquake, with the agenda of building a local circular economy or improving local sustainability. The drivers and incentives for the dominant stakeholders in the political process are, therefore, crucial in the formation and implementation of innovative policies that advance sustainability transitions. In conclusion, under the Special Renewable Energy Act 2011, designed for the quantitative expansion of renewable energy capacity, the circular mechanism of the local industry-led model for higher self-sustainability, especially in terms of business, could be useful knowledge, as learned from the case studies in this chapter. As shown in the case studies of Higashi-Matsushima and Nakanojo, municipal governments in Japan often have limited expertise and experience in renewable energy projects. Inagaki et al. (2021) suggest that most local energy systems in Japan have been mainly supported by large private companies from the outside. Many local governments simply follow project proposals from such external capitals, and those large companies have higher competitiveness in terms of capacities and experience for successful bids. Especially considering the strategically high feed-in tariff, the municipal governments wanted to start local energy projects as soon as possible and contracted large external companies. It would be critical to diffuse the knowledge on the advantages of the local industry-led model, both for the local community and industry itself, so that local business leaders are encouraged to engage more actively in local energy system development. Moreover, we should perhaps pursue an agenda-setting that promotes practices contributing to the long-term benefits (sustainability) of society while at the same time designing appropriate incentives for the stakeholders who influence policy formation. The gradual but fundamental transition to a sustainable society, rather than a hasty quantitative expansion of renewable energy sources, should be widely accepted by the whole of society, enabling larger political and financial support for local energy projects, particularly local government-led ones, to enhance their sustainability. However, the agenda-setting that leads to long-term social values would not always move critical stakeholders to promote necessary policy formulation. Hence, while engaging in agenda-setting that leads to a variety of innovative practices contributing to the long-term values of society, political decision-making must

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be facilitated by strategically managing the short-term interests of stakeholders. The hometown tax donation system, “Furusato Nozei,” would be an early reference case in Japan for further research on such agenda-setting in terms of long-term social value with providing instant benefits for stakeholders. Further multidimensional policy analyses are necessary to understand stakeholders’ incentives at multiple levels and draw insights into possible agenda-setting processes. Acknowledgements This chapter relies on my research team’s past case studies in Japan regarding decentralized energy system development after the Great East Japan Earthquake in 2011. I wish to acknowledge a number of people for their research contributions and supports for our surveys. I would like to extend my gratitude especially to Daniel del Barrio-Álvarez, So Morikawa, Hiroshi Komikado, Taro Asano, and Ryo Akasaka. I would also like to thank Editage (www.editage.com) for English language editing.

References Adachi, Y. (2016). The will of the people as a prima facie principle for policy theorists and practitioners: If and to what extent is the “will of the people” to be accorded serious consideration in the policy processes? Journal of Public Policy Studies, 16, 59–72 (in Japanese). Adachi, Y. (2019). How is it possible for democracies to effectively tackle long-term problems? Journal of Comparative Policy Analysis: Research and Practice, 21(1), 116–129. Adachi, Y., & Sugitani, K. (2020). What challenges does the COVID-19 pandemic crisis impose on public policy studies as a trans-discipline. Journal of Public Policy Studies, 20, 76–86 (in Japanese). Adil, A. M., & Ko, Y. (2016). Socio-technical evolution of decentralized energy systems: A critical review and implications for urban planning and policy. Renewable and Sustainable Energy Reviews, 57, 1025–1037. Akasaka, R. (2021). The role of local companies in building local energy system for the sustainable community development: A case study of decentralized energy business in Odawara (Master’s thesis). Graduate School of Engineering, The University of Tokyo (in Japanese). Aoki, K. (2020). A study on the role and positioning of the local level in the system transitions: Analyzing the trends in Japan’s transition to a decentralized power system. Journal of Public Policy Studies, 20, 8–25 (in Japanese). Asano, T. (2020). A policy process analysis on the formation of municipality-oriented energy system under the Feed-in Tariff scheme in Japan (Master’s thesis). Graduate School of Engineering, The University of Tokyo (in Japanese). Brummer, V. (2018). Community energy—Benefits and barriers: A comparative literature review of Community Energy in the UK, Germany and the USA, the benefits it provides for society and the barriers it faces. Renewable and Sustainable Energy Reviews, 94, 187–196. Doman, H. (2013). The current trends of renewable energy promotion policies under the energy policy reform: From the policy making process of the Special Renewable Energy Act 2011. Rikkyo Economic Review, 67(1), 77–106 (in Japanese). Fischer, F. (1980). Politics, values, and public policy: The problem of methodology. Westview Press. Fischer, F. (1995). Evaluating public policy. Nelson-Hall. Fischer, F. (2003). Reframing public policy: Discursive politics and deliberative practices. Oxford University Press. Fischer, F. (2016). Climate crisis and the democratic prospect: Participatory governance in sustainable communities. Oxford University Press.

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Gerring, J. (2004). What is a case study and what is it good for? American Political Science Review, 98(2), 341–354. Grin, J. (2010). Understanding transitions from a governance perspective, part III. In J. Grin, J. Rotmans & J. Schot (Eds.), Transitions to sustainable development: New directions in the study of long term transformative change. Routledge. Iida, T. (2002). Degenerated “Renewable Energy Promotion Law”: Reality and issues in the Japanese energy policy process. Journal of Environmental Sociology, 8, 5–23 (in Japanese). Inagaki, K., Ogawa, Y., & Morotomi, T. (2021). The current status of municipal power suppliers and considerations for their development—Based on the survey of 74 municipal power suppliers– . https://www.econ.kyoto-u.ac.jp/renewable_energy/stage2/pbfile/m000396/REEKU_DP0037. pdf. Accessed 3 October 2022 (in Japanese). International Environment and Economy Institute. (2016). Historical analysis of the introduction of the feed-in tariff policy in Japan and root cases of its failure (Part 1–3). https://ieei.or.jp/aut hor/saiene-fukyu/. Accessed 29 June 2022 (in Japanese). Kikkawa, T. (2011). What to do about nuclear power: Toward the regeneration of Japan’s energy policy. The University of Nagoya Press (in Japanese). Koirala, B. P., Koliou, E., Friege, J., Hakvoort, R. A., & Herder, P. M. (2016). Energetic communities for community energy: A review of key issues and trends shaping integrated community energy systems. Renewable and Sustainable Energy Reviews, 56, 722–744. Komikado, H., Morikawa, S., del Barrio-Álvarez, D., & Komatsuzaki, S. (2019, June 26–28). Localized public service with national infrastructure: A case of post-Fukushima energy governance in Higashi-Matsushima, Japan. The 4th International Conference on Public Policy (ICPP4), University of Concordia, Montreal. https://www.ippapublicpolicy.org/file/paper/5cf eab93695c9.pdf. Accessed 30 June 2022. Lowitzsch, J., Hoicka, C. E., & van Tulder, F. J. (2020). Renewable energy communities under the 2019 European Clean Energy Package—Governance model for the energy clusters of the future? Renewable and Sustainable Energy Reviews, 122, 109489. Morotomi, T. (2019). Introduction to regional added value creation analysis: Regional economic circulation promoted by renewable energy. Nippon Hyoron Sha Co., Ltd. (in Japanese). Nagayama, H. (2012). Political economics of the unbundling of electricity generation and transmission. Toyo Keizai Inc. (in Japanese). Nagayama, H. (2020). The political economy of renewable energy as a major power source and power system reform: Lessons from the European power system reform. Toyo Keizai Inc. (in Japanese). Rotmans, J., Kemp, R., & van Asselt, M. (2001). More evolution than revolution: Transition management in public policy. Foresight, 3(1), 15–31.

Chapter 12

Climate Change Adaptation for Futurity: Public–Private Partnerships in the Japanese Insurance Sector Yumiko Takemae

Abstract Adaptation to climate change is essential in countries that are especially vulnerable to climate change. However, there is a global gap between the costs required and the funds available for climate change adaptation, and it is not possible for this to be covered by public funds alone. Insurance is a sector that is not only directly affected by climate change but also considers climate change as a business opportunity. However, there are challenges that prevent private companies from implementing adaptation measures, with Public–Private Partnerships (PPPs) one means to overcome such difficulties. Although the study of insurance adaptation using PPPs is limited in terms of lessons learned at each stage of the project and in terms of outcomes, it is necessary to clarify the lessons and outcomes to gain implications from dynamic and complex partnership efforts. Further, the efforts of Japanese insurance companies toward collaboration have received limited attention. Given these limitations, the objective of this chapter is to examine the potential of PPPs for adaptation measures implemented by Japanese entities. The chapter begins by reviewing the issues concerning adaptation, the background of PPP, and reviewing existing research. After clarifying the objective of the chapter, the chapter then outlines the methods and PPP projects involving Japanese insurance company, which are then analyzed using a framework. Drawing on the results, the benefits of PPPs for adaptation measures are discussed from a sustainability perspective. Keywords Adaptation · PPP · Climate change · Insurance · Process · Outcome

Y. Takemae (B) Kyoto University, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_12

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12.1 Climate Change Adaptation and PPPs1 12.1.1 Adaptation and Challenges to Adaptation The impacts of climate change have emerged in various forms around the world over the past few decades, and climate change is now recognized as an urgent global issue. There are two main measures for addressing climate change: mitigation and adaptation. Mitigation, comprising measures to reduce greenhouse gases, is important in the sense that it fundamentally remediates climate change. Since mitigation was set as a major agenda item by the international community, various actors have already discussed and promoted it. However, despite such mitigation efforts, it will take decades for them to become effective (Mimura, 2015). Therefore, to bridge the time between the implementation of mitigation measures and their effects, adaptation, that is, measures to cope with the effects of climate change, is also important. For this reason, it is necessary to simultaneously promote these two climate change measures. Moreover, as climate change has a greater impact when combined with other social and economic factors, such as poverty (Takemoto & Mimura, 2007), adaptation to climate change is essential in developing countries, which are the most vulnerable to climate change. Further, reducing vulnerability not only increases resilience to climate change, but also contributes to the sustainable development of the country (Biagini & Miller, 2013). Focusing on issues in the implementation phase of adaptation measures, the shortage of financial and human resources has been pointed out (Tanaka, 2016). Public adaptation measures have been deemed insufficient in terms of the scale of the problem, funds, capacity, and the burden of risk (Lemos & Agrawal, 2006; Taylor & Harman, 2016). In particular, in terms of funding, there is a global gap between the costs required and the funds available to address climate change, which cannot always be covered by public funds alone (Kozai, 2018). Given these circumstances, expectations are placed on private companies from technical and financial perspectives (Agrawala et al., 2011; Biagini & Miller, 2013; Pinkse & Kolk, 2012). Certainly, adaptation measures are important for private companies in terms of the potential impact on their business, as well as recent pressure from consumers and society, and climate change-related business opportunities (Agrawala et al., 2011; Biagini & Miller, 2013; CDP et al., 2015). Within the private sector, insurance is unique as an industry that must both adapt to climate change and, at the same time, provide insurance policyholders with products that enable them to adapt, while still securing its own profits. The insurance industry by its nature is always aware of the risks it faces and is forward looking. According to Kameyama and Sasaki (2020), who conducted an analysis using data from CDP, a non-governmental organization, the risk that companies are most concerned about is rapid and intensive rainfall and drought. This is also of the greatest interest to insurers because the insurance industry pays claims for these one-time losses, resulting in 1

This section is partly based on my thesis (Takemae, 2021).

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large losses per event. Insurance companies also care about their reputation. In other words, they are afraid of public disrepute in not acting on climate change. The finance and insurance industries are then concerned about the climate change impacts on the areas where they operate, and on the areas where their customers are located, the damage and disruption to operations from extreme events and disasters, and the risks associated with business investments (Kameyama & Sasaki, 2020). Insurance is thus a sector that requires adaptation, but it is also a form of adaptive capability to climate change (Mills, 2005). This suggests that climate change could provide business opportunities for insurance companies (Botzen et al., 2010). In addition to providing coverage after a disaster, insurance companies can play diverse roles by drawing on their extensive knowledge and data. For instance, there are many aspects of the insurance business relevant to climate change, including risk managers, underwriting and transfer specialists, institutional and infrastructure investors, and data holders, and these can play a major role in building urban resilience (Sugiura, 2019). In this way, it can be said that while the insurance industry is directly linked to uncertainty, risk, loss, and damage from climate change, it also has business opportunities. There are many roles it can play in adaptation, and the combination of mitigation and adaptation efforts can help reduce insurance payouts. However, some challenges hinder the implementation of adaptation measures by private companies. These include the lack of a common definition of adaptation, which often makes it difficult for companies to understand what to do and how to plan for adaptation; a shortage of information and knowledge; difficulty in making investment decisions given climate change uncertainty; difficulty in reflecting long-term climate change impacts for business planning; access to funds; policies and regulations; and social barriers (Biagini & Miller, 2013; CDP et al., 2015; Pinkse & Kolk, 2012; the United Nations Global Compact, United Nations Environment Programme, Oxfam, & World Resources Institute, 2011). It should also be noted that private companies tend to place more emphasis on mitigation measures that are more visible in terms of their effects and benefits (Pinkse & Kolk, 2012). The quantifiable target of greenhouse gas reduction is an obvious indicator to emphasize their efforts. Given the limited resources of the public sector, private companies are expected to act, but are less interested in adaptation than mitigation measures. Given that the lack of resources hampers the implementation of adaptation measures, the notion of public– private partnerships (PPP) appears to be a promising method to compensate for the lack of resources.

12.1.2 Background of PPPs and Their Potential for Adaptation The United Nations (UN) has promoted multi-stakeholder partnerships, including PPPs, since the late 1990s. The UN Global Compact, a platform designed to shape policies for companies to achieve sustainable growth and act as responsible members

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of society, is one example of this kind of partnership. In addition, at the World Summit on Sustainable Development held in Johannesburg in 2002, expectations were raised for PPPs in achieving the goals of environmentally responsible and sustainable development, and since then the movement to promote partnerships between public actors and private actors has accelerated. The voluntary partnerships between governments and non-state actors, including companies, non-governmental organizations (NGOs), and religious groups, referred to as Type II, of which more than 300 are registered, have attracted both public and academic interest (Bäckstrand, 2008; Tompkins & Hurlston, 2010). While PPPs are thus characterized from the perspective of hybrid governance, as a form of governance to achieve normative goals, they were initially viewed as a scheme for the implementation of infrastructure projects. PPPs were originally used as one of the development and management methods for public infrastructure and services (Brinkerhoff & Brinkerhoff, 2011). In general, public actors expect PPPs to provide timely, cost-effective, and high-quality services to the community, productive leverage of government resources that allows governments to concentrate resources in their areas of their expertise, and risk sharing (Cumming, 2007; Linder, 1999; Ng & Loosemore, 2006; Tang et al., 2010). Private companies expect PPPs to provide investment returns, risk sharing, cross-leveraging of their resources, knowledge, and expertise (Linder, 1999; Ng & Loosemore, 2006; Pinkse & Kolk, 2012). PPPs were developed in the 1970s as a method to promote private infrastructure investment in the United States, which then expanded mainly in the United Kingdom (International Energy Agency, 2011; Linder, 1999; Liu et al., 2014). However, through trends within the UN, they are now expected not only in infrastructure, but also in projects in other areas, such as education, development, and climate change. Thus, PPPs have been utilized in various fields. For example, PPP research on developing renewable energy requiring large initial investments argues that the mechanisms within PPPs enable public actors to resolve financial constraints and mitigate risks for both public and private actors. These have provided a significant incentive for the implementation of renewable energy projects in some countries, such as the United States (Cedrick & Long, 2017). In this way, PPPs are expected to remediate the problems of public and private entities and seem promising for adaptation measures that face similar problems. From an adaptation perspective, PPPs are expected to increase climate resilience, leveraging additional resources for public services (Agrawala et al., 2011; Biagini & Miller, 2013; Gardiner et al., 2015). As for private companies, they can receive support from public actors to implement adaptation measures such as advice, information, and capacity building through partnerships (Agrawala et al., 2011).

12.1.3 Accumulated Knowledge There are a number of PPP studies related to climate change in the field of governance. Many studies examine how partnerships, as part of climate governance, contribute to

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adaptation, mitigation, or more prescriptive goals, such as enhancing the inclusivity of global environmental governance (Andonova, 2010; Pattberg, 2010). Case studies have also been conducted on adaptation measures, including those that shed light on individual schemes. Sun et al. (2013) identify stakeholders and their roles in drought management projects in China. Some studies examine the effectiveness of PPPs. Tompkins and Hurlston (2010) conduct a case study of partnerships formed in the Cayman Islands and analyze each actor’s roles and the sharing of risk. This initiative facilitated the effective distribution of hurricane risk and shared the total cost of the country’s hurricane preparedness, demonstrating a successful governance structure. Other studies specifically examine stakeholder expectations of PPPs. For example, Wong et al. (2012), focusing on adaptation measures in the South Pacific tourism industry, found in an interview survey of stakeholders within the tourist industry in Samoa that they expected partnerships to adopt adaptation measures from a technical, educational, and behavioral perspective. These include measures such as early warning systems, eco-villages with both tourism and educational functions, and the protection of coastal infrastructure. Their study also highlights the potential benefits of PPPs, including efficiency and predictability in uncertain environments (Wong et al., 2012). It has also been suggested that PPPs may compensate for the lack of adaptation measures. Based on case studies of 361 adaptation projects included in the portal administered by the UN, Takemae (2020) shows that PPPs complement adaptation measures in sectors and regions where public actors and private companies are less focused. With regard to the efforts of insurance companies, it has been pointed out that while insurance companies play a major role, PPPs in the insurance sector are also very important in adaptation to climate change (Mills, 2004, 2005). Indeed, international organizations such as the UN Development Programme (UNDP) and the Asian Development Bank (ADB) are also promoting public–private insurance schemes. Such insurance PPPs may provide implications for the policy choices of future generations. Collaborative efforts to develop innovations, such as microinsurance and microcredit, are good examples. It is also important to combine these with preventive measures (Mills, 2005). Research on insurance PPPs has been conducted, including PPPs as an insurance problem-solving method (Kunreuther, 2015), risks in insurance PPPs (Altun & Güldiken, 2019), and regulation (Boni-Saenz, 2008). These studies also focus on actors such as consumers, insurance companies, and insurance regulators. Thus, a variety of perspectives have been examined. Some case studies have highlighted the importance of PPPs in the disaster sector, focusing on insurance in countries such as the United States, France, and Turkey (Auzzir et al., 2014; Botzen & Van Den Bergh, 2008; Ibrahim, 2012). Such studies specify the role of government, including the provision of subsidies. Looking at evaluation research, some have focused on performance measurement on PPPs of insurance companies. While many tend to focus on inputs and outputs (Pfisterer et al., 2009), performance measurement also encompasses process, strategies, and outcomes (Liu et al., 2014). Lessons learned at each stage of the project and the outcomes should be considered to obtain suggestions for future policy decisions. However, while there are studies focusing on processes

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and outcomes in evaluation studies of cross-sector partnerships (van Tulder et al., 2016), infrastructure studies (Liu et al., 2014), and development studies (Pfisterer et al., 2009), similar studies on PPPs for insurance adaptation cannot be identified. That is, a framework to analyze adaptation PPPs in terms of process and outcomes has not yet been established. As for previous research on PPPs in Japan, research on infrastructure is substantial. These include an analysis of the legal system in Japan (Kato, 2011; Yonemaru, 2019), the ideal form of partnerships (Izumi & Muraki, 2019), the overseas business expansion of Japanese companies (Abe, 2017; McClenahan et al., 2015; Nanami, 2011; Nitta, 2011), promoting factors (Saito, 2008), and issues (Kumagai, 2009; Ogura & Fukazawa, 2018). Among the many infrastructure PPP studies, Kato (2016) focuses on PPPs as a new means of regional development in Asian developing countries, considering Japanese actors. He identifies profitability and business scale as challenges when introducing PPPs into regional development. Turning to the situation of insurance companies in Japan, one of the issues facing the Japanese insurance industry is the response to frequent and severe natural disasters (Financial Services Agency, 2021). The payment of fire insurance payouts by casualty insurance companies, which cover typhoons, floods, and other disasters, has continued to increase. In 2018, for example, more than 850,000 payments were made for typhoon damage, and insurance payments totaled 1067.8 billion yen. These insurance companies have been significantly reducing their extraordinary contingency reserves to prepare for the payment of huge insurance claims in cases such as natural disasters. Reinsurance premiums used to reduce the company’s risk have also risen sharply, thereby increasing costs. In this way, frequent and severe natural disasters have become a major management issue, and it has been pointed out that countermeasures are urgently needed (Financial Services Agency, 2021). As for insurance PPPs, Japanese think tanks have only briefly mentioned the potential of PPPs in the adaptation of the insurance sector. Based on previous studies of insurance adaptation PPPs in Japan and abroad, which is limited in terms of the lessons learned at each stage of the project and in terms of outcomes, it is necessary to clarify these to gain implications from dynamic and complex PPP efforts. As there are many studies concerning the overseas expansion of Japanese companies and overseas aid, there seems to be a need for research on adaptation measures, which are in great demand both domestically and internationally. However, the majority of PPP research in Japan is conducted in the context of infrastructure development, and PPPs on adaptation including non-infrastructure measures such as weather forecasting services, agricultural technology, and insurance, have received little attention. Although some Japanese think tanks have mentioned insurance PPPs, little academic research focuses on the Japanese insurance sector and the potential contribution of PPPs.

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12.1.4 Chapter Objective Considering the limitations of previous research, the objective of this chapter is to examine the potential of PPPs implemented by Japanese entities in adaptation measures in which public actors have played a major role. Especially, the chapter analyzes the adaptation projects of a Japanese insurance company, highlighting overall project performance. As mentioned earlier, the insurance sector is an industry that must adapt to the impact of climate change and at the same time provide customers with the means to adapt while ensuring the insurance companies’ own benefits. It is always aware of risks and forward looking. Besides, insurance has also long been practiced in Japan and is a good case for learning lessons. In fact, it is one industry in which partnerships have been established from a very early stage, particularly regarding adaptation measures involving Japanese entities. Therefore, the efforts of insurance companies, which are early examples of adaptation PPPs by Japanese companies and governments, are good cases that illustrate the long-term effects of projects and their sustainability efforts to promote the interests of future generations. In addition, while many existing studies have focused on insurance, the approach of Japanese insurance companies to PPPs has received limited attention, and there is almost no formal academic research. Also, while some studies pay attention to measuring the performance of insurance company PPPs, there appears to be no research focusing on process and outcomes. The later part of this chapter provides policy implications for public and private actors using advanced cases in Japan. This enables the chapter to present suggestions for future policy in Japan and other countries leading the way in climate change countermeasures and contribute to reducing the impact of climate change for future generations as much as possible. Specifically, the chapter examines the possibility of a PPP as a new policy option by presenting the setting of target countries, goals, challenges, schemes, key performance indicators (KPIs), short- and long-term effects, sustainability initiatives, and the future prospects for PPPs.

12.2 Methods This section outlines the analysis framework, case selection, and data analysis procedures. A case study is a method in which a variety of data can be used to provide greater insight into specific cases and is also a suitable method to present the case in question as a unique situation that has not previously been the subject of discussion (Osei-Kyei & Chan, 2017a). For these reasons, the case study method is an appropriate method to understand PPP adaptation by Japanese actors. As mentioned, it is necessary to pay attention to factors that are often overlooked, such as process and outcome. Existing adaptation PPP studies do not capture the dynamic nature of the process and do not assess overall project performance while

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the project progresses. In particular, PPPs are more complex than traditional contracts and change dynamically through the process, so attention to the process is necessary (Liu et al., 2014). A framework for analyzing adaptation PPPs in this regard has not yet been established. Therefore, as proposed in Pfisterer et al. (2009), a study of PPPs in development, and Liu et al. (2014), a study concerning PPP performance measurement in infrastructure, an analysis focusing on process and effectiveness will be conducted. This analytical framework can be used to clarify the four stages of input, throughput, output, and outcome. It will also reveal the efficiency of the partnership building process and the effectiveness of PPPs. As shown in Fig. 12.1, the partnership is divided into a four-part process (Pfisterer et al., 2009). Input is necessary to execute the project and includes the partner’s goals, motivations, background, and target countries. Throughput comprises implementation, process, and dynamism. This includes the scheme of the partnership, as well as the division of roles by each actor. Output is the result of the project and can be measured by the achievement of the goal for each process and the final goal. Outcome involves effects, that is, the changes and benefits that have been established in a broad social context. Efficiency represents the internal value that adds value through partnerships. According to Pfisterer et al. (2009), a definitive cost–benefit analysis of partnerships is not yet fully feasible because not all partners systematically track the additional costs spent on the partnership, and because benefits are only known after the program is completed. Therefore, this chapter focuses on the costs, such as time and financial resources, for which information is available. Effectiveness is defined as the additional value a partnership provides and can be clarified by comparing it with that provided by a single actor. This includes perspectives such as whether the partnership provides additional ways to achieve goals that would not otherwise have been possible, or whether it has been able to allocate more resources than otherwise. Based on the study objectives, criteria are established to select the appropriate cases for analysis; that is, a PPP involving a Japanese insurance company, which has

Fig. 12.1 Framework of analysis for partnerships. Source Developed and adapted from Van Tulder and Kostwinder, 2007, cited in Pfisterer et al. (2009)

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been implemented in a developing country, and for which more than 10 years have passed, which is sufficient time for recommendations to be made. The case study consists of three phases, based on Osei-Kyei and Chan (2017a). In the first phase, through desk research, information is collected and summarized from the materials of organizations, papers, various published materials such as sustainability reports, and the websites of related stakeholders. The second phase involves a semi-structured interview with a relevant stakeholder to complement and strengthen information obtained from desk research. Semi-structured interviews were conducted in June 2022 with the person in charge of the insurance company that implemented the project subject to this study, and confirmed the project outline, objectives, scope of activities, selection of target countries, issues, roles, collaboration, goals, and outcomes. Thus, this study uses data from both literature and primary sources. All analysis and discussion are based on this information.

12.3 Case Study: Adaptation of a Japanese Insurance Company The cases covered in this study are those of two adaptation measures of Tokio Marine & Nichido Fire Insurance Co., Ltd. (hereinafter, Tokio Marine & Nichido), a leading casualty insurance company in Japan. These cases were taken up because they are not only progressive initiatives for a Japanese company, but also suitable for contrasting the efforts, as they have different purposes: one for business and the other for corporate social responsibility (CSR). In addition, projects were undertaken in developing countries said to be particularly vulnerable to climate change.

12.3.1 Overview of Adaptation PPPs in the Insurance Sector Tokio Marine & Nichido was founded in 1879 as Japan’s first insurance company and is one of Japan’s leading casualty insurance companies. As of March 2021, Tokio Marine & Nichido has overseas operations in 46 countries and regions, including group companies (Tokio Marine & Nichido, 2021a). Looking at the history of this insurance company, it has developed new and innovative products such as Japan’s first automobile insurance in 1914, Japan’s first liability insurance in 1959, cyber insurance in 1999, microinsurance in 2001, Japan’s first integrated life and nonlife insurance in 2002, and Japan’s first one-day automobile insurance in 2012 (Tokio Marine & Nichido, 2021b). Tokio Marine & Nichido launched a sustainability committee in 2021 to identify eight material issues for the company. These include measures to combat climate change and protect the natural environment. In the Tokio Marine & Nichido cases, this chapter focuses on two adaptation measures. The first is a mangrove-planting project, and the second is weather insurance, both of

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which are PPP projects implemented in emerging and developing countries in Asia. The following is a summary of each project based on information obtained from published materials and interview.

12.3.2 Analysis of Mangrove-Planting Project Mangrove forests have the effect of both climate change mitigation, by absorbing and storing CO2 , and adaptation, by protecting people’s lives and ecosystems from natural disasters such as large waves, tsunamis, and floods. Some measures that integrate mitigation and adaptation, such as the protection of mangroves, reefs, and wetlands, can reduce insurance losses (Mills, 2005). Since 1999, a total of 11,618 ha of mangroves have been planted in nine countries: Bangladesh, Fiji, India, Indonesia, Malaysia, Myanmar, Thailand, the Philippines, and Vietnam. In fiscal 2020, Tokio Marine Holdings and its major subsidiaries emitted 89,894 tons of CO2 . The effect of CO2 fixation and reduction from mangrove planting was 120,000 tons. As a result, the entire group achieved carbon neutrality for an eighth consecutive year. It has worked with three NGOs, local governments, and communities to plant mangroves. In 2007, the Mangrove Planting 100-Year Declaration was announced, and in 2019, the Mangrove-Based Value Co-creation 100-Year Declaration was announced, which aims to create value using mangrove-based services through stakeholder collaboration. In conjunction with these activities, the company conducts tree-planting tours for employees once a year in countries such as Thailand, Indonesia, Vietnam, and the Philippines. Employees, agencies, former employees, and their families have volunteered to plant mangrove seedlings and seeds and have visited elementary schools in the area. As of March 2020, a total of 20 tours have been held, with about 590 participants to date. Since 2005, as part of an environmental awareness campaign of this company, employees have visited elementary schools and other places in Japan to teach classes on climate change, biodiversity, and disaster preparedness, based on mangrove-planting activities. As of the end of March 2021, classes had been held at a total of 870 elementary schools and other locations, serving approximately 58,000 students. In 2009, the company further expanded its mangrove-planting activities and launched the Green Gift Project. This project, in cooperation with NGOs, non-profit organizations (NPOs), local governments, sales agencies, and employees that applied to be volunteers, supports both mangrove activities overseas and domestic environmental protection activities. It does this by donating part of the amount of paper consumption reduction to NGOs and NPOs when a customer chooses web-based insurance contracts instead of paper when purchasing an insurance product.

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Inputs

The project was proposed by employees in 1999 to commemorate the 120th anniversary of the company’s founding and was carried out jointly by the Corporate Administration Department and the Public Relations Department with the intention of making it an environmentally friendly project that could be continued for a long time. In this way, it was initiated as part of CSR, and in a broad sense, this activity is linked to insurance products. In the past, the company’s CSR efforts aimed at returning profits to society, but now it is increasingly shifting to contributing social and environmental values through the core business, and its initiatives and ideas have gradually expanded, and since 2009, it has been developing the customer-participatory Green Gift Project. Tokio Marine & Nichido cooperates with three NGOs to plant mangroves, as it takes time and money to build a network and it cannot undertake these by itself. In addition, some countries require permission and cooperation with the national and local governments to carry out specific activities. In the case of infrastructure projects, political support and acceptability for PPPs as well as positive government attitude toward private sector investment are the most important determinants of PPPs, and these factors often lead to the implementation of projects (Osei-Kyei & Chan, 2017b). Among adaptation measures, in the case of projects such as mangrove planting, consultation is required on the use of land. Thus, in this case, collaboration with NGOs and the governments was essential to realize the project. All nine target countries are in Asia for the following reasons. First, the project partners are all Japanese NGOs in Japan, and they planted mangroves in abandoned aquaculture ponds, all located in Asia. Second, the intention was to support the lives of Japanese indirectly through enriching fishery resources in the region. Lastly, it is easier to operate the project directly from Tokyo in adjacent regions than in other regions such as Africa and the Americas. Tokio Marine & Nichido formulated a five-year plan and carries out progress management every six months. The plan is revised every five years. The KPI is the planted area, which aims at implementing an afforestation plan totaling 1,150 ha for five years, from fiscal 2019 to fiscal 2023. In recent years, conservation efforts also have been focused on, and in some countries, plans include the installation of observation towers to monitor illegal logging and ecotourism. The chosen KPI is common to all target countries. In 2019, the Mangrove-Based Value Co-creation 100-Year Declaration was announced with the aim of creating value through services based on mangroves in cooperation with stakeholders. Toward achieving the goal of creating environmental value, the current five-year major policy is to promote Ecosystem-based disaster risk reduction (Eco-DRR) through afforestation efforts that contributes to disaster prevention and reduction, as well as to protect and nurture forests using various social and physical forms. The former is an effort to promote the role of mangroves as breakwaters. The latter is an effort to improve the livelihoods of residents and the productivity of agriculture and fisheries.

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Throughput

For mangrove planting, Tokio Marine & Nichido cooperates with NGOs that have advanced expertise in mangrove planting. These include Action for Mangrove Reforestation (ACTMANG), OISCA, and the International Society for Mangrove Ecosystems (ISME). The reason for such cooperation is that, owing to the time and cost it takes to build a network, the company cannot implement such projects alone. Therefore, it also works closely with local governments and communities. Tokio Marine & Nichido provides funds to the NGOs that carry out the actual activities, such as tree planting. Periodic monitoring is conducted, and three NGOs report on the status of tree planting every six months. The five-year plan as a whole strategy is drawn up by the insurance company based on the information from NGOs. In addition, local tours and educational activities at local elementary schools are also carried out. In this way, this company is involved not only as a funder and a manager, but also as an implementer. Vietnam is a unique example of this company’s cooperation with government. As Vietnam is a socialist country, cooperation is needed with the national and local governments in anything and everything that takes place there. For example, a tree cannot be planted without the permission of the national or local government. The insurance company also cooperates with mangrove research institutes. Permission from the authorities is also necessary in Indonesia, and therefore, coordination is required. Some form of government involvement and cooperation is required in other countries as well, such as in the selection of tree plantations and land use, or otherwise. Using a network of NGOs, Tokio Marine & Nichido is working indirectly with the national and local governments to plant mangroves. Figure 12.2 illustrates the scheme of the project. Fig. 12.2 Mangrove-planting scheme

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Under this scheme, when customers choose a web contract, they can contribute to the mangrove-planting activities that insurance companies are undertaking with NGOs, local governments, and communities. Various actors are involved, but it is the insurance company that manages the whole project.

12.3.2.3

Output

With the goal of planting a total of 1,150 ha in five years from fiscal 2019 to fiscal 2023, 680 ha have been planted from fiscal 2019 to fiscal 2020. Despite the impact of the COVID-19 pandemic, the progress rate has then been 59%, which is expected to achieve the initial goal. As mentioned above, KPIs are set only for afforestation, and not for conservation activities. The current five-year policy is intended to contribute to disaster prevention and reduction, and to protect the forest in various social and physical forms. According to methodologies such as the Millennium Ecosystem Assessment (MA) and The Economics of Ecosystems and Biodiversity (TEEB), the value of ecosystem services generated by mangrove plantations conducted between April 1999 and the end of March 2019 was evaluated. As a result, about 12.6 billion yen in protection or damage reduction from extreme weather events, about 14.2 billion yen in mangrove product harvest, and about 35.5 billion yen in support of off-site fishery productivity was calculated (Tokio Marine & Nichido, 2019). To sustain output, sustainable funding is a challenge, especially as planting costs increase. But insurance companies and their collaborators have flexibly pivoted, and they are now planting as much as they can and putting a cost on conservation. In addition, it is possible to build a system that does not rely solely on the funds of this insurance company, as it is also making efforts to make local profits, such as providing sustainable agricultural products. In other words, to realize a sustainable business, it is essential to make flexible changes to the business and to create a system for circulating profits at the site.

12.3.2.4

Outcome

Outcome indicates changes that are established in a broad social context. While afforestation and conservation create environmental value, the most symbolic benefit of mangrove afforestation for Tokio Marine & Nichido as an insurance company is protection from coastal storm surges and tsunami disasters. These activities also contribute to risk reduction in the core insurance business. For this reason, afforestation activities are carried out with consideration of the safety of coastal areas. For example, a hybrid method is used to contribute to the safety of coastal areas, such as revetment measures by constructing some artificial structures and mangrove planting in Indonesia. Mangrove forests, functioning as breakwaters, were able to protect many people and buildings living behind mangrove forests during the Indian Ocean tsunami of December 2004 and Typhoon Haiyan in the Philippines in November 2013.

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Fish and shrimp feed on mangrove leaves and fruits, and birds gather around mangroves, contributing to biodiversity. The fish and shellfish caught in the sea and rivers near mangrove forests not only provide food but also provide income for local people, contributing to food security and improved livelihoods. According to the MA and TEEB, which are internationally accepted methodologies, the total economic value generated from the beginning of afforestation to March 2019 is 118.5 billion yen. This has affected 1.41 million people living in and around the afforested area (Tokio Marine & Nichido, 2019). The number of subscribers that chose web-based insurance contracts promoted by the Green Gift Project was 11.75 million, resulting in a reduction of approximately 2,870 tons of paper. Besides the benefits as climate change mitigation and adaptation, this also creates social values such as contributing to local economies and societies, and biodiversity conservation. The company also increased its value through improvement of its reputation. Tokio Marine & Nichido was presented with the Minister of the Environment Award for Global Warming Prevention Activities (International Contribution Category) in 2013. In addition, the project is registered as a UN project and reports its progress to the UN every year. It also contributes to achieving goals 4, 6, 11, 12, 13, 14, and 15 of the UN Sustainable Development Goals (SDGs).

12.3.2.5

Efficiency

This section focuses on the costs of the project such as time and financial resources. One of the problems is that mangroves become mature after ten years of rapid vegetation and the absorption and fixation of CO2 then stops. The biggest problem, however, is the increase in planting costs. The number of plants is limited because labor costs for collaborators are increasing as economic growth and income increase. As a result, the planting area per investment has become smaller than at the beginning of the project. In addition, it has become difficult to find tree plantations in the past five to ten years. Despite these negative factors, measures are being changed flexibly. The focus used to be on planted areas, but it has now shifted to planting as much as possible and increasing conservation costs. Also, local profitable activities such as sustainable supply of agricultural products and application to DRR are examined within the project. In this way, the focus shifted from planting trees to individual themes. Stakeholders began to ask how the project actually had a positive effect on people, and DRR and agricultural productivity became recognized as valuable. Rising labor costs have forced the company to make the shift, but on the other hand, the company has become more attentive to details after 20 years of activities. Thus, while costs have increased, its view of profits has changed accordingly.

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Effectiveness

Effectiveness is the additional value that a partnership provides compared to what a single actor would deliver, as explained earlier. This case is an example of a multistakeholder partnership that NGOs have joined. By working with NGOs, the costs required for network building can be reduced, and the knowledge and capabilities of NGOs, such as local coordination, can be utilized. In Southeast Asia, consultation with the government is often required for the planting of mangroves, so the project could not have been realized without cooperation with the governments. Therefore, PPPs are essential for adaptation projects such as mangrove planting. Next, this partnership is compared with government-sponsored projects and community-led mangrove projects, both single-actor efforts, to show the value of PPP initiative. Comparing government project in Bangladesh with other projects in Southeast Asia discussed in the literature, Biswas et al. (2009) evaluated ecological considerations as positive in government projects in Bangladesh. By contrast, they give negative marks to the project for social considerations, community participation, financial benefits to the community, leadership, and rigorous monitoring. The PPP, in which Tokio Marine & Nichido participates, can be positively evaluated in terms of ecosystem considerations, social considerations, community participation, financial benefits to the community, and monitoring. In this study, leadership could not be judged. More information is needed in this regard. A study examining community-led projects in the Philippines found that while there are direct economic benefits such as fishing, tourism, and forestry, external funding is required because the initial cost would be a heavy burden on the household (Walton et al., 2006). This cost issue is cleared up in this PPP, involving Tokio Marine & Nichido. By including the private company in this scheme, its financial resources can be utilized. Another study of initiatives in the Philippines raised complex ownership issues, noting that mangroves should be planted where aquaculture ponds used to be. Inadequate human resources and funding are also seen as a problem (Primavera & Esteban, 2008). In this regard, Tokio Marine & Nichido’s PPP is a project to plant mangroves where aquaculture ponds were once located, with staffing and funding also resolved within the scheme. A study examining mangrove management in Asian countries points to sustainability challenges in community-based efforts. It notes that the weaknesses of those efforts are financing, planning and management capabilities, the forest products industry, and the implementation of strategies for sustainable mangrove management (Buncag, 2021). In addition to financial resources, Tokio Marine & Nichido’s PPP has strengths in its own planning and management expertise, from both an industry and longer-term perspective. Compared with previous studies, the complementarity of personnel and resources is a prominent effect of PPPs. Specifically, it is conceivable that the Tokio Marine & Nichido’s ability to fund and execute projects enables it to undertake large-scale initiatives that can generate local revenue. Long-term commitment and the use of corporate capabilities, such as planning and management skills and capacity building support, are also seen as strengths over conventional government or community-based initiatives.

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12.3.3 Analysis of Weather Insurance In 2000, IFFCO-TOKIO General Insurance Co. Ltd. was established as a joint venture with the Indian Farmers Fertilizer Cooperative Limited (IFFCO), a governmentowned fertilizer company in India, and began providing automobile and fire insurance in India. The company has tried to offer affordable insurance. Since its establishment, the company has been providing weather insurance, microinsurance, and medical insurance for the poor, hoping to make use of insurance to alleviate the concerns of farmers in India. Irregular weather during the monsoon (rainy) and rabi (dry) season results in the offering of weather insurance that takes the impact of these into account. Weather insurance also has an adaptation aspect, as a response to climate change risk. In order to help farmers understand how weather insurance works, the company held a series of information sessions. It currently provides weather insurance to more than 4 million farmers, mainly through government-sponsored weather insurance such as Pradhan Mantri Fasal Bima Yojana (PMFBY) and Weather-Based Crop Insurance Scheme (WBCIS). WBCIS is subsidized by the government.

12.3.3.1

Input

Tokio Marine & Nichido used to offer weather derivatives in Japan. At that time in Japan, it became possible to obtain surface meteorological observation data that could be analyzed, enabling the probability of damage and the probability of abnormal weather to be quantified, and they began to sell derivative products. After the establishment of the casualty insurance company, IFFCO-TOKIO General Insurance Co. Ltd. (IFFCO-TOKIO), in a joint venture with the IFFCO, Tokio Marine & Nichido supported IFFCO’s efforts, as it had expertise in weather derivatives methods. Against this background, weather insurance was launched by a private business in India. As the joint venture is a private company, weather insurance is provided as a business, not as a CSR. However, it is difficult to make a profit because of its high loss ratio. The profit mechanism differs depending on the insurance product, and in the case of weather insurance, the profit margin is small, but profit can be stably obtained. This insurance product plays a similar role to agricultural mutual aid and has a national policy aspect. This is the reason for the need for PPPs, and it cannot be realized without it. As mentioned above, political support and acceptability for PPPs and government positive attitude toward private sector investment are the most important determinants of PPPs for infrastructure projects (Osei-Kyei & Chan, 2017b). In infrastructure research, incentives provided by the government, such as government providing guarantees, are also regarded as determinants, and the determinants of this weather insurance share commonalities with this factor. The joint partner was a government-owned fertilizer company that required services to meet the needs of farmers. Also, India had a high need for weather insurance as an agricultural country. Therefore, the product was developed in the target

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country, India. Rather than setting KPIs as performance metrics, IFFCO-TOKIO focuses on balancing gross written premium (GWP) and claims paid as business metrics. Each year, the company determines the amount of risk it can take on and sells insurance products. The goal is to promote a virtuous cycle of solving social problems and growth. In this insurance company, climate change countermeasures and promotion of resilience are listed as part of eight material issues. In this context, the company aims to protect and raise the standard of living of local farmers, even though agricultural insurance is not profitable. Meanwhile, IFFCO aims to continue providing services to farmers.

12.3.3.2

Throughput

IFFCO, a government-owned fertilizer company, has 38,000 agricultural cooperative organizations throughout India and market research capabilities for local farmers. The Tokio Marine Group can use its insurance underwriting expertise to assess weather risks such as precipitation and temperature in various parts of India. By combining the capabilities of the two companies, a new type of product development and delivery was realized. Product development was made by two companies, Tokio Marine & Nichido and IFFCO. The pricing and other operations are controlled by IFFCO-TOKIO, and Tokio Marine & Nichido discloses information to the market. Employees of the head office and regional branches are working together to confirm damage and pay insurance claims. It has established its own assessment system for prompt insurance payments. After seeding, staff regularly visit the area to keep track of crop development, using drones, satellite photos, and other technology. It has a system that enables quick confirmation of the damage in a large area when losses occur. Moreover, for crop yield surveys, insurance claims are assessed with all hands on deck, including the participation of government officials in all districts. It is also supported by the Indian government. Government support includes yield surveys, but the most important part of government support is insurance premium subsidies. Support from the government is needed to provide insurance for farmers and low-income households at affordable prices. This insurance is not feasible for a private company alone because it is not viable as a business. Figure 12.3 shows the scheme of the project.

12.3.3.3

Output

As discussed, IFFCO-TOKIO considers the balance between GWP and claims paid as a business indicator rather than setting KPIs. In fiscal 2020, GWP was Rs 15,413 million and claims paid was Rs 16,167 million. In fiscal 2019, GWP was Rs 18,471 million and claims paid was Rs 12,006 million. In this way, income and expenditure are almost equal and the profit margin is low. This insurance product cannot be provided if profit is given priority because it is difficult to make profit as a private

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Fig. 12.3 Crops and weather insurance scheme

insurer. Insurance is provided to support India’s social issues and large agricultural population. This insurance has the role of agricultural mutual aid, and it is a system to provide insurance in a stable manner, making a small amount of profit, while taking into consideration how to bear the risk in the long term. As this is not a business that seeks to make large profits, it is possible to provide insurance products over the long term with subsidies from the Indian government. In other words, it is important to consider the balance between profit and cost sharing with the government to realize sustainable business. In terms of actual payments to farmers, IFFCO-TOKIO was able to provide insurance payments accurately and promptly to about 1 million farmers during a major drought in Chhattisgarh in 2017 because of a system established for damage confirmation and insurance payments.

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Outcome

Weather insurance, a measure to be used to counter climate change risk, is essential for stabilizing the lives of people in rural areas. It is not a highly profitable product for the company, but in India, the importance of the agricultural sector is high, so Tokio Marine & Nichido decided to support it as much as possible. It has provided weather insurance to more than 4 million farmers to help them prepare for climate change. The company’s added value is to improve its reputation. These activities contribute to achieving goals 1, 2, 8, and 10 of the SDGs.

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Efficiency

As discussed, a definitive cost–benefit analysis of the partnerships is not yet fully feasible. And, in an analysis of agricultural insurance, Prabhakar et al. (2017) note that most of the cost and benefit variables are not economically quantifiable because of inadequate data. Therefore, the cost and insurance company’s view of this are being shown below. The main problem is that it is difficult to make profits as an insurance product. High loss rates are a problem for commercial businesses. By contrast, IFFCO-TOKIO sells automobile insurance, medical insurance, and agricultural insurance, while making use of its partner IFFCO’s network of 36,000 branches throughout India. In the future, IFFCO-TOKIO plans to further expand its sales in rural areas, where the middle class is expected to increase. In fiscal 2023, the company aims to double its profits from fiscal 2020. Thus, it may lead to the sale of other types of insurance, though weather insurance itself offers a small profit margin.

12.3.3.6

Effectiveness

The partners in selling weather insurance are the government-owned company IFFCO and the Indian government. This means that weather insurance is based on a PPP involving two public actors. IFFCO has its network and market research capabilities and provides local networks and local knowledge to Tokio Marine & Nichido. In addition, this Japanese insurance company would not be able to provide weather insurance on its own, as it would be difficult to establish a business without subsidies from the Indian government. Next, this study draws on existing research and compares IFFCO-TOKIO’s scheme to the government’s National Agriculture Insurance Scheme (NAIS), introduced in 1999, to show the value of the PPP initiative by comparing it to the single actor effort. The main objective of NAIS is to protect farmers during the rabi season from crop losses due to natural disasters such as drought, flood, hailstorms, cyclones, pests, and diseases. This scheme is available to all farmers, both borrowers and nonborrowers, regardless of the size of their holdings. It covers all food crops, oilseeds, and annual horticultural/commercial crops. It is implemented by the Agriculture Insurance Company of India Limited (AIC), a public sector insurance company. AIC covers about 24 million farmers in about 500 districts in India and is the world’s largest crop insurance company offering both yield- and weather-based crop insurance programs (Wahab, 2019). Various studies have pointed out that challenges for NAIS include delays in payments, low area coverage, delays in yield data, estimation errors in yield, low visibility, and problems in the yield estimation process (Bhise et al., 2007; India Country Management Unit, South Asia Finance and Private Sector Unit, & Global Capital Market Non Banking Unit, 2011; Prabhakar et al., 2017). Under IFFCOTOKIO’s PPP, issues such as payment speed, yield research, and yield estimation are partially solved by the experience and technology of private companies. Furthermore, it is mentioned that farmers have more trust in PMBFY, a scheme that involves the

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private sector, than NAIS (Rao, 2020), thus trust seems to be another strength. The scheme eliminates these challenges through collaboration between IFFCO, which has a network throughout India, and Japanese insurance companies that can assess weather risks. It is also notable that it has its own assessment system to pay insurance claims quickly.

12.4 Discussion In this section, a comparison is made between mangrove planting and weather insurance, and then the benefits of PPPs are discussed in greater depth by comparing weather insurance with other PPP cases. Table 12.1 shows the results of the comparison between the two projects. Mangrove planting and weather insurance are activities that contribute to adaptation in Asia, but their objectives differ between CSR and business. Mangrove planting is a multi-stakeholder partnership involving a wide range of stakeholders, whereas weather insurance is a PPP. Performance indicators are both quantified. Mangrove planting is expected to achieve the KPI, while insurance is designed to generate small but stable profits, with profit margins varying year to year. Each partnership has its own local side effects. Mangrove afforestation has issues such as a slowdown in CO2 absorption and fixation, and operational issues of afforestation, whereas insurance has difficulties regarding making profits as an insurance product. Despite these challenges, improving social reputation is a partnership value. Focusing on the need to form partnerships, collaboration with public entities is essential in both cases. As mangrove planting as a form of CSR is closely related to local communities, cooperation with local governments is required. As a business, weather insurance is too risky for a private company to do business alone. Next, weather insurance, the core business of insurance companies, is taken up and the benefits of PPPs from a sustainability perspective are examined. According to Altun and Güldiken (2019), PPPs are necessary for natural disaster insurance in recent years, as many private insurers have withdrawn from the market after facing serious risks and uncertainties. In Mississippi, Hawaii, and California in the United States, as well as in Turkey, private insurers were forced to pull out of the market or raise prices significantly after disasters such as major floods, hurricanes, and earthquakes. This research points out that by introducing well-designed PPPs that leverage the technical expertise and market experience of the private sector and maintain a competitive structure, governments can solve affordability problems, while taking some responsibility, such as subsidizing premiums, providing reinsurance, and acting as guarantors (Altun & Güldiken, 2019). There are good examples of well-designed PPPs, so these are mentioned with particular focus on the throughput and effectiveness aspects. Take the case of France, where flood insurance arrangements are based on PPPs, in which private insurance companies charge premiums and deal with claims and payments in the event of damage. These PPPs are schemes in which the government provides a guarantee if flood damage goes beyond the insurance company’s ability to repay (Botzen & Van

Output

• Tokio Marine & Nichido: Funding, overall strategy development, monitoring and field tours • NGOs: Planting • Government: Support, such as land permission

KPIs and • KPIs are expected to be achieved achievement objective • Progress in the policy can be measured in terms of the value of ecosystem services

Schemes

• Three NGOs and local governments and communities

• KPI: Afforestation Area • Goal: co-creation of environmental value

KPIs, objective

• There is a small profit margin

(continued)

• IFFCO and Tokio Marine & Nichido: Product Development • IFFCO: Local controls • Tokio Marine & Nichido: Disclosure of information to the market • Support from the Government of India

• Government fertilizer company IFFCO and the Indian government

• Business metrics such as GWP and claims paid • The ultimate goal: To promote a virtuous cycle of solving social issues and to achieve growth

• Since the joint partner was a government owned fertilizer company in India, a service to meet the needs of farmers was required

• Consideration was given to the target country of the partner NGO, the connection with Japan, and the ease of operation

Setting of target countries

Crop and weather insurance

• This project is for CSR • This project is for business • Afforestation required cooperation with the government • Government-owned company in India became a business partner

Mangrove planting

Background and motivation

Throughput Partners

Input

Table 12.1 Comparison of the two partnerships

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Effectiveness

• The project could not have been realized without cooperation with the government

• Slowing of CO2 absorption and fixation • Increase in planting costs • Difficulties in finding tree-planting sites

Issues affecting time and financial resources

Efficiency

Mangrove planting

Changes and benefits • Measures against natural disasters established in a broad • Conservation of biodiversity social context • Improvement of food security • Increase in regional income • Paper reduction • Improvement of social reputation

Outcome

Table 12.1 (continued)

• Networks and know-how are provided from government-owned company • It is difficult to establish as a business without an insurance premium subsidy from the Indian government

• Difficulty regarding making profits as an insurance product

• Provision of weather insurance to more than 4 million farmers to prepare them for climate change • Improvement of social reputation

Crop and weather insurance

244 Y. Takemae

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Den Bergh, 2008). In this way, the private sector is responsible to a certain extent, but beyond that, the public is responsible, and thus PPPs support the sustainable participation of the private sector. In the case of Turkey’s TARSIM Pool, a PPP involving the government and private insurance companies, various forms of support have been provided by the government. These include agricultural insurance premium subsidies paid by the government to pools, administrative and loss adjustment subsidy, government support for reinsurance programs, and sales tax exemptions on agricultural insurance premiums (Ibrahim, 2012). As such, PPPs in France and Turkey have mechanisms to provide incentives that enable private companies to continue to participate. The PPP for agricultural insurance in India can be considered a sustainable example, with the support of the government. Premiums are set to be affordable prices for farmers and at the same time, set to make no significant profit but no significant loss for the insurance company. It is a well-designed scheme compared with other examples.2

12.5 Conclusion One issue with adaptation is the shortage of financial resources and human resources. It has been pointed out that public adaptation measures are insufficient in terms of the scale of the problem, funds, capacity, and the burden of risk (Lemos & Agrawal, 2006; Taylor & Harman, 2016). In this respect, attention is focused on private companies. However, challenges such as a shortage of information and knowledge, difficulty in making investment decisions due to climate change uncertainty, difficulty in reflecting long-term climate change impacts for business planning, access to funds, policies and regulations, and social barriers hinder the implementation of adaptation measures by private companies (Biagini & Miller, 2013; CDP et al., 2015; Pinkse & Kolk, 2012; The United Nations Global Compact et al., 2011). Under such circumstances, PPPs have been expected to serve as a method for solving the problems of both public and private actors in adaptation. From an adaptation perspective, the benefits of PPPs are that private companies can receive support from public actors to implement adaptation measures such as advice, information, and capacity building through partnerships (Agrawala et al., 2011). Within private sector business, insurance is unique in that it is an industry that must adapt to climate change, and at the same time, one that provides customers with products to manage the risks of climate change, while still securing its own profits. Despite its importance, most PPP research in Japan is conducted in the context of infrastructure development, and PPPs on adaptation including non-infrastructure measures such as insurance have received little attention. Although some Japanese 2

With crop and weather insurance, focusing on the business scheme, farmers pay for insurance, so climate change victims and vulnerable people are also paying. Among the basic principles of environmental law, there have been discussions on cost sharing, such as the polluter-pays principle. The scheme in this case is excellent in terms of sustainability, but can be considered from this perspective. This is one of the prospects of the research agenda.

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think tanks have mentioned insurance PPPs, there is a lack of academic research that addresses the Japanese insurance industry and the contribution of PPPs. Existing adaptation PPP studies do not capture the dynamic nature of the process and do not assess overall project performance as the project progresses, though it is necessary to pay attention to factors that are often overlooked, such as process and outcome. Therefore, with reference to the methods used in a study on PPPs in development and a study on performance measurement of PPPs in infrastructure, an analysis focusing on process and effectiveness was conducted. In this study, a case study was conducted on adaption PPPs by a Japanese insurance company. From these, it is clear how collaboration was achieved and how it worked better than conventional efforts. As discussed, lessons learned in each process and the outcomes should be considered to obtain suggestions for future policy decisions. In this chapter, the framework is used to identify the throughput and outcomes of two adaptation projects. Focusing on throughput, the role of each actor is clear in both cases, taking responsibility for their expertise and supporting each other in their respective schemes. Each partnership has its own local side effects, which also seems to be the reason local people support these projects. As such, both projects are likely to be sustainable in terms of operations and acceptance. However, it was shown that there is a slight difference between CSR and business adaptation. Since mangrove planting is closely related to local communities, cooperation with local governments is required. By contrast, as weather insurance as a business is risky and cannot be provided by the private sector alone, it is clear that the incentives provided by the government contribute to the sustainability of insurance. Insufficient adaptation has become a major issue in communities where the implementation of adaptation is an urgent issue. For this reason, it is necessary to accelerate cooperation between public and private actors to enhance adaptation measures. Acknowledgements I would like to show my greatest appreciation to Yukio Adachi, Makoto Usami, Susumu Cato, Shunsaku Komatsuzaki, Mika Shimizu, Kazuya Sugitani, and Gregory Trencher, whose comments and suggestions were of inestimable value to this study. This research was partly supported by the Japan Society for the Promotion of Science through KAKENHI Grant No. 22K18066. Part of this chapter draws on my doctoral thesis (Takemae, 2021).

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Chapter 13

Keeping Your Fossil-Fuel Cake While Eating It? Comparing the Decarbonization Approach of BP, Chevron, ExxonMobil and Shell Gregory Trencher

Abstract Reaching carbon neutrality by 2050 requires accelerated efforts to deploy clean energy while downscaling fossil-fuel extraction. With fossil-fuel producers under increasing pressure to respond to this challenge, large international oil and gas companies (so-called “majors”) are claiming to be transitioning to clean energy and net-zero emissions. This chapter focuses on pathways to net-zero proposed by BP, Shell, Chevron and ExxonMobil. It examines extensive documentation to answer: (1) How do decarbonization objectives differ, and do these include plans to downscale fossil-fuel production and sales? (2) Do decarbonization pathways rely on offsets, and in what way? (3) What are the consequences of offset reliance? Findings show no major has chosen to decarbonize by completely phasing out of fossil-fuel production. The American majors also trail their European counterparts significantly for decarbonization ambition. Meanwhile, all majors intend to or already use carbon offsets. Notably, the European majors are leveraging these to develop “carbon-neutral” hydrocarbon shipments and offset services for the aviation industry. BP and Shell as well as Chevron are vigorously investing in offsets, advocating this approach to industries needing a drop-in panacea to the decarbonization challenge. Based on this evidence, I argue that decarbonization pathways championed by the four majors promote a business-as-usual trajectory, collectively posing a major obstacle to society’s efforts to mitigate climate change by transitioning beyond fossil fuels. Finally, the chapter discusses Japan’s role in fostering demand for offset hydrocarbons. Keywords Oil majors · Transition · Clean energy · Carbon offsets · Fossil fuels · Net-zero

G. Trencher (B) Kyoto University, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_13

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13.1 Introduction Limiting planetary warming to temperature targets set under the Paris Agreement requires eliminating all greenhouse gas (GHG) emissions from human activities by around mid-century (IPCC, 2022). Achieving this requires not only accelerated efforts to deploy clean energy, but it equally necessitates the rapid and planned downscaling of fossil-fuel extraction. Put simply, fossil fuels must be “kept in the ground” while clean energies are deployed in their place (F. Green, 2018; Welsby et al., 2021). This transformation directly challenges the established business models of large, concentrated industries that profit from extracting and selling fossil fuels (Newell, 2021). Large international oil and gas firms, or so-called “oil majors”, are no exception (J. Green et al., 2021; Hartmann et al., 2021). Among dozens of oil majors under pressure to embark on an energy transition, BP and Shell in Europe as well as Chevron and ExxonMobil in the U.S. are four majors whose decarbonization and investment behavior have recently attracted considerable attention from researchers (Li et al., 2022; Tong & Trout, 2022), media (Westervelt, 2022) and politicians (U.S. Government, 2022). Being the largest investor-owned majors in the world, the energy products of this four have collectively contributed around 11% of energy-related GHG emissions since 1965 (Kenner & Heede, 2021). Moreover, these majors are economically and politically powerful. Not only do their energy preferences influence policymakers and investors, each injects billions of dollars each year into finding, extracting, refining and transporting fossil fuels. These actions profoundly shape the nature of the global energy system. On the one hand, this indicates a tremendous potential to spur the global transition beyond fossil fuels. But on the other hand, such a transformation poses an existential threat to the majors’ historical business models based on fossil-fuel extraction. The majors thus share a strong incentive to delay this transition (Colgan et al., 2021). Indeed, their obstructive actions are widely documented, including purposively misinforming the public about climate change (Supran & Oreskes, 2017), lobbying to stop climate policies (Kenner & Heede, 2021; Influence Map, 2019) and propagating discourse that shifts the responsibility of reducing emissions from energy producers to consumers (Supran & Oreskes, 2021). Contradicting these historical attempts to stall climate action, since around 2020 the aforementioned four majors—BP, Shell, Chevron and ExxonMobil—have declared the goal of reaching net-zero emissions by 2050 while announcing plans to scale up investments in clean energy. In parallel, all have developed seductive marketing campaigns (Influence Map, 2021) that skillfully create the impression of a born-again transition evangelist no longer engaged in the dirty business of fossil-fuel production. Stakeholders, however, have not been fooled, accusing these majors of greenwashing (NYC, 2021; Sheehan, 2018; Westervelt, 2022). Indeed, multiple studies have revealed the unwavering dependence of their business models on fossil-fuel

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extraction, insignificant spending on clean energy, and a lack of ambitious decarbonization activity (Li et al., 2022; J. Green et al., 2021; Trout et al., 2022). Furthermore, the announced decarbonization objectives by each major are inconsistent and full of loopholes; for example, by setting intensity-based rather than absolute targets for GHG emissions. Moreover, there is growing evidence that the majors are seeking to decarbonize by simply offsetting emissions in other sectors (Bose et al., 2021). This evades the more difficult and disruptive task of dismantling business models based on fossil-fuel extraction and rebuilding with clean energy. Meanwhile, at the time of writing, a Democrat committee of congressional lawmakers in Washington are probing the role these majors have played in delaying climate action (U.S. Government, 2022; Volcovici, 2022). This situation points to a need for a closer inspection of the opaque and inconsistent state of decarbonization strategies. Scholars and stakeholders to date have tended to focus on renewable energy investments, attracted by its importance as a transition indicator (J. Green et al., 2021; Shojaeddini et al., 2019). But focusing on renewables overlooks the litmus test question needed to determine the authenticity of claims to be on a transition pathway. That is: does an oil major intend to transition by downscaling fossil-fuel production? Or does its decarbonization strategy consist of maintaining fossil-fuel extraction and reducing emissions by simply offsetting or capturing emissions? Accordingly, this chapter focuses on BP, Shell, Chevron and ExxonMobil to examine proposed pathways to net-zero. Analyzing documents from each major and third-party sources, I ask: 1. How do decarbonization objectives for 2050 differ, and do these include plans to downscale fossil-fuel production and sales? 2. Do decarbonization strategies rely on offsets, and in what way? 3. What are the consequences of offset reliance? This chapter is structured to tackle each of these questions in turn. After doing so, I extract implications for Japan, which as findings show, has played a major role in generating demand for offset hydrocarbons.

13.2 The Scope of Decarbonization Ambitions 13.2.1 Net-Zero Targets This section unpacks and compares the extent of each major’s decarbonization ambitions. As summarized in Table 13.1, all four majors have announced pledges to achieve net-zero emissions by 2050. In April 2020, BP (2020a) was the first to announce such a target followed by Shell (2020a) , two months later. The American majors only declared net-zero targets after a gap of roughly two years; Chevron in late 2021 (2021b) and ExxonMobil in early 2022 (2022c). Sharing a “net-zero” label,

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all targets look similar on the surface. But unpacking the details reveals significant differences. First, and from a semantic perspective, Chevron and ExxonMobil explicitly describe their target respectively as “aspirational” and an “ambition” (Chevron, 2021b; ExxonMobil, 2022b). This word choice is no doubt deliberate, hinting they do not currently regard the net-zero goal as a do-or-die obligation. In contrast, the European majors employ stronger language. For example, Shell promises to reach net-zero by 2050 “at the latest” (Shell, 2020a). Second, the American majors have both omitted scope 3 emissions from their net-zero targets for 2050. By limiting decarbonization ambitions to scope 1 and 2 emissions, Chevron and ExxonMobil have merely pledged to eliminate selfcreated emissions from fossil extraction (scope 1) along with emissions incurred by energy purchased from others (scope 2), like electricity used during refining. But doing so would only reduce the GHG footprint of fossil fuels by around 20%, overlooking the roughly 80% of emissions released when products are burned by consumers (IEA, 2020). Glaringly, not only are ambitions to reduce scope 3 emissions missing for ExxonMobil, until 2021 this major routinely refused to even report these, arguing that: “[scope 3 emissions] do not provide meaningful insight into the Company’s emission-reduction performance” (ExxonMobil, 2021b). In contrast, netzero pledges from the European majors duly cover scope 3 emissions. This indicates a resolve to reduce the carbon content of energy products sold. Third, another noteworthy feature is the tendency to describe emission reduction targets in terms of intensity. By omitting the obligation to reduce absolute emissions, all majors are dodging the need to downscale fossil-fuel-production volumes meet these targets. Instead, as Chevron (2021b) explicitly states, by formulating targets in terms of intensity, the major preserves the “flexibility to grow its traditional business”. Thus, in terms of reducing the volume of GHG emissions entering Table 13.1 Attributes of net-zero targets (as of October 2022) Net-zero target for 2050?

Scope 3 covered in net-zero target?

Intensity-based?

Mid-term reduction targets (scope)

Sources

BP

✓

✓

✓

• 15–20% by 2030 (scope 3) • 50% by 2030 (scope 1, 2)

BP (2020a, 2022b)

Shell

✓

✓

✓

• 20% by 2030 (scope 3) • 50% by 2030 (scope 1, 2)

Shell (2020a)

Chevron

✓

✕

✓

>5% by 2028 (scope 1–3)

Chevron (2021b)

ExxonMobil

✓

✕

✓

None

ExxonMobil (2022c)

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the atmosphere, the prevalence of intensity-based targets indicates that their effectiveness might be limited, since absolute emissions could in theory increase if majors decided to increase their fossil-fuel production (Tong & Trout, 2022). In sum, the above analysis indicates considerable disparities between the decarbonization ambitions of the European and American majors. On the one hand, BP and Shell appear committed to reaching their net-zero targets, which include scope 3 emissions, and several mid-term reduction milestones. On the other hand, Chevron and ExxonMobil describe their targets with language that conveys a much weaker degree of commitment. Moreover, this pair has notably omitted scope 3 emissions from the net-zero goal, leaving uncovered the majority of carbon contained in fossil fuels. While these findings show that the American majors are not as serious about decarbonization as their European counterparts, since all four majors are pursuing long-term reductions with intensity-based targets, decarbonization strategies do not necessitate an immediate decline in fossil-fuel production.

13.2.2 Divergent Pathways to Net-Zero Targets This sub-section considers two stylized pathways by which each major could achieve their net-zero target (Fig. 13.1).

Fig. 13.1 Stylized depiction of different pathways to net-zero

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As indicated, in the current situation each major’s core activities are built around fossil fuels, with renewables and non-fossil energy being a smaller sidebusiness. Evidence indicates that currently, each major’s business model corresponds clearly to this conceptualization. For instance, even BP’s comparatively ambitious decarbonization strategy (2022c) frames areas like EV charging, renewables and hydrogen as “growth businesses”. Conversely, it positions traditional hydrocarbons as “resilient”, forecasting a three times larger cash flow than other businesses in 2030. The majors are thus confronted with a need to move from this situation to netzero emissions. If choosing a “transition pathway”, this could be achieved through a planned downscaling of fossil-fuel production and by shifting to a portfolio consisting of only non-fossil fuel or completely decarbonized energy products (e.g. hydrogen, biofuels, synthetic fuels, etc.). In such a pathway, it is the act of gradually phasing out fossil fuels from the energy portfolio that contributes to decarbonization. This is because although renewables per se are non-emitting, they do not contribute to decarbonization unless they replace fossil fuels. In this pathway, decarbonization thus occurs through an energy transition. The transition pathway is widely advocated by NGOs and scholars. For instance, a recent report by Belgium-based Carbon Market Watch explicitly describes that “real action” toward decarbonization should entail “…stopping exploration and new extraction projects; slashing oil and gas production and setting long-term phase-out plans; setting absolute emission targets for the full value chain” (Crook, 2021). Being acutely aware of such expectations, the majors are carefully tailoring marketing messages to create the impression of being on a transition pathway. For instance, Li et al. (2022) demonstrate that mentions of “transition” in annual reports increase markedly for all majors, particularly from around 2017. Shell annually publishes “transition reports”, while BP published a report in 2018 titled “Advancing the Energy Transition”. Furthermore, advertisements and language used to communicate decarbonization strategies frequently coin the term “transition”. Even ExxonMobil, for example, claims: “We plan to play a leading role in the energy transition” (2022b, p. 3), masking its status as the most regressive of the four majors in terms of decarbonization aspirations. The second route to decarbonization, the “business-as-usual pathway”, is far lessdisruptive, allowing the major to reduce emissions without dismantling its core fossilfuel businesses. Instead, decarbonization is pursued via any combination of: (1) optimizing hydrocarbon production through technological improvement like improving the energy efficiency of extraction, preventing methane leaks and phasing out flaring; (2) purchasing carbon credits to offset emissions (elaborated in Sect. 13.4) and (3) using carbon-capture technologies to reduce emissions. Not only does this strategy permit a major to continue its established business practices, but the use of offsets opens up the possibility of labeling regular fossil fuels as “carbon neutral” (Bose et al., 2021; Stapczynski et al., 2021). This pathway is clearly the most tempting for the majors, since it avoids the need to self-cannibalize profitable business models based on hydrocarbon extraction along with the unattractive proposition of writing down

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assets like reserves, refineries and transporting networks. In short, since decarbonization is still achieved on paper, this approach allows a major to “keep its fossil-fuel cake while eating it”.

13.3 Ambitions to Scale-Down Fossil-Fuel Production Considering the two stylized pathways to net-zero discussed above, this section briefly applies three indicators to determine the decarbonization approach chosen by each major. Shown in Table 13.2, these indicators ask: Does the major plan to: 1. downscale oil or gas production? (“Yes” in a transition pathway) 2. downscale oil or gas sales? (“Yes” in a transition pathway) 3. use offsets to meet decarbonization targets? (“No” in a transition pathway) The distinction between the production and sales of fossil fuels should be noted. This recognizes that the oil majors sell oil and gas produced by third parties in addition to that produced in-house (Liauw et al., 2022a). Strategies to curb their supply of fossil fuels must, therefore, include both these dimensions. On the surface, BP’s recently bolstered decarbonization strategy (BP, 2022c) gives the impression of a transition pathway. Peppered with the term “transition”, the strategy pledges considerable investments for clean energy, committing at least 40% of capital expenditures by 2025, increasing to around 50% by 2030. More importantly, it outlines an expected shrinkage of 40% for total fossil-fuel production in 2030 from 2019 levels. Furthermore, BP has explicitly decided to not rely on offsets to meet decarbonization targets for 2030 (BP, 2021c). But closer inspection reveals fundamental loopholes. These suggest that BP has one foot on a transition pathway and the other foot committed to preserving a significant portion of its fossil-fuel profits. First, although BP is poised to reduce in-house fossil-fuel production by divesting its upstream assets, analysts point out that it still intends to trade these products by simply purchasing them from other suppliers (Liauw et al., 2022b). Moreover, statements from BP in 2020 suggest that it intends to grow this share of third-party energy sales (BP, 2020b: 29). This tactic would allow BP to erase emissions from Table 13.2 Key indicators for classifying decarbonization pathways (as of October 2022) Downscale oil or Downscale oil gas production? or gas sales?

Use offsets for decarbonization targets?

Decarbonization pathway

Oil

Gas

Oil

Gas

2030

2050

BP

✓

✓

✕

✕

✕

✓

Hedged

Shell

✓

✕

✕

✕

✓

✓

Business-as-usual

Chevron

✕

✕

✕

✕

✓

✓

Business-as-usual

ExxonMobil

✕

✕

✕

✕

✓

✓

Business-as-usual

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its own company ledger while allowing it to continue generating profits from fossil fuels (Tong & Trout, 2022). Second, BP has not yet clarified if it intends to use offsets after 2030 to meet its climate targets leading up to 2050. Its currently ambiguous stance suggests, however, it may use them, stating that offsets: “…may help us to go beyond those [2030] aims if we can” (BP, 2021c). BP’s hedged strategy thus involves simultaneously pursuing both a transition and business-as-usual pathway. Relative to BP, Shell has more definitively chosen a business-as-usual pathway. This can be seen from its aims to increase gas production in coming years while relying on offsets to meet decarbonization targets. Although in late 2021 it stated that oil production would decline at 1–2% per year until 2030, this is a forecast rather than an objective. Moreover, it has pledged to raise the relative share of gas in total hydrocarbon production to 55% (Shell, 2021d). This matches Shell’s broader view that oil and gas will continue to provide energy for humanity over the rest of the century, and that upstream investments must continue for this, even in decarbonization projections reflecting a 1.5° scenario (Shell, 2021b). Because Shell emphasizes the growing nature of the gas market and continues to grow its proved hydrocarbon reserves—even in 2021 and after pledging net-zero emissions (Shell, 2022)—evidence suggests this major is possibly intending to increase its absolute volume of gas production (Ambrose, 2021). Meanwhile, it has made no commitment to decrease its volume of fossil-fuel sales. Unambiguously, both American majors are also following a business-as-usual pathway. Neither has fixed any plans to downscale hydrocarbon production and both have stated the ambition to use offsets to meet decarbonization targets (Chevron, 2021c; ExxonMobil, 2022b). Both state intentions to grow conventional hydrocarbon businesses based on views of increased future demand for oil and gas (Chevron, 2022a; ExxonMobil, 2020). Moreover, they have strategically left room to enable this by employing carbon intensity rather than absolute emission reduction targets. Indeed, Chevron unabashedly states this intention in its latest annual report, emphasizing that a focus on carbon intensity leaves “the flexibility to grow its upstream and downstream businesses” (Chevron, 2022a). It appears to be leveraging this flexibility, growing total fossil-fuel production and reserve estimates over 2019–2021 (ibid.). Meanwhile, ExxonMobil reported to its shareholders in early 2022 that it expects its total hydrocarbon production to grow around 10% leading to 2025 (ExxonMobil, 2022a).

13.4 Decarbonization Via Offsets The preceding analysis indicated that the majors—notably Shell, Chevron and ExxonMobil—are clinging to a business-as-usual pathway when pursuing net-zero targets, avoiding a commitment to downscale hydrocarbon production. Meanwhile, though BP plans to reduce in-house oil and gas production, like Shell, it does not plan to reduce sales of third-party products. This has two negative consequences for decarbonization efforts. First, it creates a need to invest in expensive and often

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difficult-to-adopt technologies to reduce emissions during hydrocarbon extraction and processing. Second, reducing operational emissions via technological improvement cannot eliminate scope 3 emissions. As mentioned, these occur when fossil fuels are combusted, making up approximately 80% of lifecycle emissions (IEA, 2020). As this section shows, however, a silver-bullet solution has emerged for these two problems: offsets (i.e. carbon credits). Furthermore, not only can offsets help a major wipe GHG emissions off its own company leger, but investing in carbon reduction projects and selling credits to other energy consumers opens up new opportunities for profit generation. All four majors are involved in the offsetting business, employing a wide variety of approaches. Compiled into Table 13.3, these can be coarsely categorized into two objectives: 1. Avoiding or reducing GHG emissions 2. Directly removing CO2 from the atmosphere Diverse approaches serve these objectives. Broadly speaking, these either involve nature-based or technology-based approaches. For instance, offsetting can involve the implementation of a nature-based project that claims to have avoided a certain volume of GHG emissions that would have occurred through deforestation or land degradation caused by agriculture. Emission credits can be created by generating a hypothetical baseline that forecasts GHG emissions in a business-as-usual scenario (e.g. where deforestation occurs), and then estimating the amount of emissions avoided by an intervention, such as preventing deforestation or improving soil management techniques. Technology-based approaches can also use an avoided emissions rationale. For instance, a windfarm project in a developing country can claim to have reduced the need for coal power, and produce credits based on a scenario where coal rather than wind was used to generate electricity. Conversely, both kinds of offsets Table 13.3 Examples of different approaches to offset generation

Objective Approach

Avoid or reduce emissions

Directly remove emissions

Nature-based Avoided deforestation

✓ ✓

Afforestation Technology-based Renewable energy

✓

Carbon capture

✓

Direct air capture

✓

Data Compiled from various sources (Blantin & Mosis, 2021; Bose et al., 2021; S&P Global Platts, 2021; Trove Research, 2021)

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can involve the objective of reducing emissions or capturing CO2 from the atmosphere. Nature-based projects can pursue this via afforestation while technologybased projects can capture CO2 from industrial stack emissions (either from fossil fuels or biomass) and store this permanently underground, thereby avoiding emissions. Alternatively, technology can be used to drawdown CO2 directly from the atmosphere (i.e. direct-air capture). From the perspective of mitigating climate change, the effectiveness and accuracy of offset projects claiming avoided emissions are highly contested (elaborated in Sect. 13.6). One reason is that historical baselines or the period during which avoided emissions are claimed may be exaggerated by project developers, since they have a financial motivation to generate as many credits as possible (J. Green, 2021). Accordingly, credits generated by projects that directly remove atmospheric emissions are generally preferred, since actual reductions are easier to verify (Allen et al., 2021). However, Bloomberg data indicates that the majors have predominantly offset emissions through avoided emission projects, with only 5% of credits coming from initiatives that directly remove emissions (Stapczynski et al., 2021). Preference for offsets from avoided emission projects can be explained by their plentiful supply and cheap cost, since they are generally regarded as low quality and difficult to verify on the carbon trading market (Pearce, 2021). The majors have reacted to this criticism by recently reassuring that only “high quality” credits are used (Shell, 2021c). Data also suggests that credits based on emissions removal via nature-based or carbon-capture projects will increase in the future (Belletti & Schelble, 2022). Offsets can perform two distinct roles for the majors (Belletti & Schelble, 2022): 1. Self-decarbonization: offset projects allow a major to claim it has reduced GHG emissions at any or all stages of the hydrocarbon lifecycle (e.g. during extraction, refining, transporting or combustion). 2. Value generation: offset projects are developed as a business product to sell carbon credits to other energy customers. The majors are actively leveraging both roles. As previously discussed, each intends to use carbon offsets to help meet short-term or long-term decarbonization targets (Table 13.2). To this end, they are simultaneously developing their own offset projects while procuring credits from carbon trading markets. Since cheap credits provide an easy way out for companies wishing to avoid the more difficult and expensive task of reducing emissions in-house, the carbon trading industry has developed best-practice principles to ensure appropriate usage. These stipulate that an entity is expected to reserve the use of offsets exclusively for “hard-to-abate” activities after exhausting all options to directly reduce emissions in-house (Allen et al., 2021). As discussed below, however, the majors do not adhere to this principle. With respect to the second role of value generation, following the style of their hydrocarbon businesses, three majors (BP, Shell and Chevron) are investing in the full value chain of offsets; actively producing, marketing and selling these to other customers (Belletti & Schelble, 2022). Illustrating this, these same majors have acquired equity stakes in carbon management companies such as Finite Carbon, Select Carbon and Boomitra; the former being specialized in afforestation and the

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latter two in soil carbon management. Such investments are incentivized by the rapidly growing voluntary offset market. Globally, demand for credits is surging as hundreds of large companies are seeking a quick decarbonization fix after announcing net-zero targets (Stapczynski et al., 2021). Such companies include not only carbonintensive industries like airlines and airports along with power and gas utilities, but also banks and retail giants like Amazon (Black et al., 2021; Trove Research, 2021). But since the oil majors currently feature amongst the largest buyers in the market, acquiring stakes in offset-production ventures could help them to cut the costs of their own credit consumption. In parallel, investing “upstream” in carbon offset development creates opportunities to generate profit by selling credits to other industries. Table 13.4 lists the various offset approaches currently employed by each major along with the role: i.e. self-decarbonization or value generation. The evidence indicates that all majors are extensively engaged in offsetting activities, not just as a part of their decarbonization strategy, but also as a means of profiting from the sale of carbon credits to other companies. The importance attached to offsetting can be gauged from the scale of budgets or emission reduction targets assigned to them. Notable examples are summarized below. Shell is by far the most vocal champion of offsetting for both self-decarbonization and profit generation. By setting explicit targets for usage, Shell intends to rely heavily on offsetting to achieve its net-zero goal (Shell, 2021e). Though offsets also entail carbon capture (targeting 25 million t-CO2 /year by 2035), most will be leveraged from nature-based projects (targeting 120 million t-CO2 /year by 2035). To this end, Shell is investing heavily in nature-based projects, pledging to spend $300 million over three years, from 2019 (Shell, 2019a). Though Shell also carries out tree-planting projects that absorb carbon, it is heavily involved in the contentious business of generating, using and selling offsets issued from conservation projects built on avoided emission claims (Shell, 2021c). Although BP has stated it will not rely on offsets to meets its 2030 decarbonization target, it is actively retiring credits. Additionally, like Shell, BP is using offsets to market various hydrocarbon products as “carbon neutral” (discussed in Sect. 13.5). Again, this indicates a general reluctance to completely phase out all hydrocarbon products. BP’s offset activities are concentrated around nature-based approaches in its “natural climate solutions portfolio”. This consists of credits generated mainly from conservation and afforestation projects. Thus, like Shell, BP also leverages offset credits based on avoided emission claims. In addition, it also purchases technologybased offsets in its “target neutral portfolio”. Several involve historically implemented projects under the U.N. Clean Development Mechanism. Projects in India and Mexico, for example, claim to have avoided emissions by providing more efficient cookstoves or solar panels to rural villages (BP, 2022d). Aiming to upscale its trading of self-generated offsets, like Shell, BP also actively advocates for offsetting as a decarbonization approach for other companies (BP, 2021c). Information about the American majors offsetting activity is scarcer. This likely reflects comparatively fewer decarbonization efforts, since their net-zero targets are aspirational, concern only scope 1 and 2 emissions, and were announced only in

Nature-based (avoidance and removal)

Value generation ✓ ✓ ✓ Insufficient evidence

Self-decarbonization

✓

✓

✓

✓

BP

Shell

Chevron

ExxonMobil

✓a

✓

✓

✓

Technology-based (avoidance)

ExxonMobil (2021a, 2022b)

Chevron (2021a, 2021b, 2021c, 2022a, 2022b)

Shell (2021c, 2021e) and Liauw et al. (2022b)

Liauw et al. (2022b) and BP (2021c, 2022a)

Sources

Note a While BP and Shell both consistently report using technology-based avoidance projects, such as renewable energy or cooking stove projects, evidence of such activity for ExxonMobil is scarce. However, it actively promotes carbon-capture technologies as an emission avoidance strategy. Such projects are frequently used to generate offsets

✓

✓

✓

✓

Approach

Role of offsets

Table 13.4 Summary of each major’s offset approaches (current and planned)

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late 2021. Nonetheless, both Chevron and ExxonMobil have stated intentions to use offsets to meet net-zero targets (ExxonMobil, 2022b). Chevron even explicates that meeting its carbon reduction targets “depends on” the availability of viable technologies and offsets (Chevron, 2022b). It is already allocating resources in this direction, including roughly $3 billion for offsets and carbon capture leading to 2028 (Holland, 2021). Like their European peers, the American majors both emphasize nature-based projects. Chevron is also attempting to leverage offset projects for income generation. For instance, it states that offsets generated by a tree-planting project in Louisiana, co-implemented with the Restore the Earth Foundation, will be leveraged for offsetting in-house emissions as well as selling to business customers (Chevron, 2022c). Finally, like Shell, both Chevron and ExxonMobil advocate carbon capture as a decarbonization solution. Both are using or signaling intentions to use captured emissions for offsetting in-house emission in addition to selling to others (ExxonMobil, 2022b).

13.5 Decarbonized Hydrocarbons: Domains of Application The preceding section indicated that offsets are rapidly mainstreaming as a way to fast-track progress to decarbonization targets. Their appeal lies in their compatibility with a business-as-usual pathway, since offsets allow a major to preserve its fossil-fuel businesses but wipe the associated emissions off its accounts. Moreover, the majors perceive considerable opportunities for generating profits in the rapidly growing offset market. Mirroring their approach to supplying hydrocarbons, BP, Shell and Chevron are taking control of the entire value chain for offsets, investing in their production, marketing and supply to other business customers. Lacking experience in the offset market relative to its peers, such activities were not observed for ExxonMobil. Beyond the discussed roles of self-decarbonization and value generation, hydrocarbon shipments and aviation services are two core domains (Table 13.5) where the majors are levering offsets to preserve their business models in an increasingly carbon-averse economy. Both domains share the alchemic objective of using offsets to magically transform a carbon-packed fuel like gas or oil into a “carbon-neutral” energy or service. Table 13.5 Key application domains for offset hydrocarbons

LNG shipments

Aviation services

BP

✓

✓

Shell

✓

✓

Chevron

✓

No evidence found

ExxonMobil

No evidence found

No evidence found

Sources Data for LNG shipments (Bose et al., 2021; Crook, 2021)

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13.5.1 Shipments of “Carbon-Neutral” Hydrocarbons The emerging practice of bundling offsets with seaborne deliveries of hydrocarbons dates back to an epoch-making deal in July 2019, when Tokyo Gas accepted from Shell a shipment of LNG sourced in Australia (Shell, 2019b). This marked the first time in history that a hydrocarbon cargo was sold as “carbon neutral”. Although this marketing label conjures images of a revolutionary new type of carbon-free fuel, this tanker delivered nothing but regular LNG that, consequently, emitted vast volumes of methane and CO2 during its extraction, processing, shipment and combustion. But thanks to offsets supplied by Shell, these emissions were magically erased from the transaction while the label “carbon-neutral LNG” presumably attracted a price premium. Shell’s undisclosed volume of offsets was derived from conservation projects in Indonesia and Peru that claim to prevent deforestation. Not only do these involve avoided emission claims, but the credits used to offset the LNG cargo’s carbon footprint were issued several years ago (Pearce, 2021). Shell’s claim of carbon neutrality thus did not correspond with a contemporary climate mitigation action that directly removed emissions from the atmosphere. The above deal opened the floodgates to a new era for the global hydrocarbons market, stimulating a flurry of offset-paired hydrocarbon shipments by Shell and other majors (IEA, 2021). Between July 2019 and September 2021, some 30 transactions have been tracked (Bose et al., 2021), with total trades in 2021 growing threefold compared to 2020 (Blantin & Mosis, 2021). LNG shipments by Shell make up roughly half of known shipments in this period, but other majors have joined the market. These include BP (with two LNG cargos in 2021), Chevron (completing its first cargo in 2022) and others like Total, Occidental and Japanese energy traders. ExxonMobil does not yet appear to have entered the market. Incidentally, this brief snapshot of market activity is based only on disclosed deals. It is thus possible that more deals are taking place out of public eye (Cahill, 2022). In addition to LNG, other variants of carbon-neutral hydrocarbons have emerged, including crude oil and ethylene. Notably, most shipments have been received by energy importers in Asia, principally in Japan, China, South Korea, Taiwan and Singapore. Featuring prominently in this list of importers are Japanese trading companies (e.g. JERA, Mitsui, Mitsubishi) and gas utilities (e.g. Tokyo Gas, Osaka gas) (Bose et al., 2021). Given that tankers are simply delivering regular fossil fuels, each carbon-laden shipment triggers a need to procure a vast volume of cheap offsets from the global carbon market. One cargo of LNG emits the equivalent of around 250,000 tons of CO2 over the full lifecycle. Offsetting this volume of emissions through afforestation, for example, would require planting roughly one tree per ton of CO2 (Cahill, 2022). This scale of offsetting is impacting the global voluntary carbon market. In 2021, some 5% of credit procurements were connected to shipments of carbon-neutral hydrocarbons, and this share is predicted to increase (Trove Research, 2021).

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13.5.2 Aviation The airline industry is another key domain where BP and Shell are using offsets to develop carbon-neutral products. Like oil majors, international airlines and airports are under increasing pressure to reduce carbon emissions. Airlines like Delta, Etihad, United, Qantas and countless airports have committed to reaching net-zero by 2050. But there are few options available to meet such goals. Technologies like hydrogen engines are years away from commercial readiness and biofuels suffer from short supply and high costs. Demand is thus high for a quick fix like carbon offsets. Seizing this opportunity ahead of their American counterparts, the European majors are prominently supplying two types of business products: 1. Carbon-neutral aviation fuels, which bundle regular hydrocarbons with offsets 2. Wholesale packages of carbon credits, which allow airlines and customers to consider a flight as carbon neutral. BP and Shell leverage diverse credits in supplying these services. Shells’ efforts to champion offsets as a decarbonization approach for the aviation industry are particularly prominent, illustrated by two recent reports that set out best-practice principles to govern offset use (Shell, 2021a; Shell & Deloitte, 2021). Both European majors have started supplying carbon-neutral aviation fuels to numerous airlines and airports, compensating for emissions via self-owned offset programs. BP’s customers include airlines like Delta (BP, 2021a) and Qantas (BP, 2021b) and small airports such as Teruel in Spain (BP, 2018a) and Cascais in Portugal. BP describes the latter’s novelty as “the first airport in the world where the carbon emissions associated with all aviation fuel are offset on an on-going basis” (BP, 2021d). Compared to BP, Shell has entered the carbon-neutral aviation fuel market later and more cautiously. As of early 2022, its deliveries appear limited to a truckload of offset fuel provided to small piston-powered aircraft in the U.S. The European majors also supply wholesale packages of self-produced carbon credits to airlines. This addresses a rapidly growing appetite for offsets, since airlines are currently subject to climate regulations such as Europe’s emissions trading scheme (EU-ETS) and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Global in coverage, the latter obliges airlines to purchase offsets to ensure emissions do not grow beyond 2020 levels. Offsets purchased by airlines from BP and Shell are then used to meet carbon reduction obligations while providing carbon-conscious passengers a means to voluntarily offset individual flights. Etihad and Jetex are two such airlines to purchase offsets from Shell (2021a).

13.6 Problems with Reliance on Offsets The above analyses reveal a rapidly proliferating use of offsets as a drop-in panacea for the climate change challenge. Their allure is that they allow the oil majors along with their customers like airlines and energy utilities to continue producing or burning

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hydrocarbons, all while reaping the benefits of reaching or pursuing the status of a “net-zero” or “carbon neutral”. This business-as-usual route to decarbonization rests on the logic that emissions produced when extracting or burning fossil fuels in one location can be compensated by preventing an equivalent amount from entering the atmosphere in another location (Dyke et al., 2021). As this section shows, however, this logic and the type of offset projects used are highly contestable. The findings revealed a prevalent use of offsets based on avoided emission claims (Crook, 2021). Many of these come from projects implemented in developing countries several years ago, like wind farms or conservation projects (Stapczynski et al., 2021) that do not contribute to the removal of atmospheric carbon emissions today. Offsets generated by such projects rest on claims to have prevented emissions from entering the atmosphere by preventing deforestation or by reducing the need to burn fossil fuels. Such claims rely on “additionality”, meaning that if revenue from carbon-credit sales were not created, an offset project would not have gone ahead, and a carbon-intensive activity would consequently have occurred. However, such claims are difficult to verify and prone to exaggeration. As mentioned, project developers are not subject to legal scrutiny and have a vested interest to issue as many credits as possible (Pearce, 2021). Besides, in terms of slowing climate change, claiming to have hypothetically prevented emissions from entering the atmosphere in the past is not as effective from a climate mitigation perspective as physically capturing emissions already in the atmosphere today (Anderson et al., 2019). For such reasons, offset credits based on avoided emission claims are widely perceived as low quality. Indeed, many actors contest or reject their use as a decarbonization strategy, including scientists (Green Finance Observatory, 2020), carbon market experts (Stapczynski et al., 2021) and institutions like Science-Based Targets (a global framework guiding corporate decarbonization actions). Further eroding the climate benefits promised by offsets is the widespread use of aged credits that reflect an emission reduction activity implemented several years ago. In many cases, this can be as many as ten or more years ago. Analyses by industry and media indicate that such credits are widely used, probably due to their low cost and abundance on carbon markets (Saiki, 2022; Turner & Grocott, 2021). Indeed, an investigation by Japan’s Nikkei newspaper found that globally, around one-third of offset credits purchased by companies were aged between five to ten years (Asada et al., 2022). Shell and its aviation industry partners openly acknowledge the inherent problems with legacy credits (Shell & Deloitte, 2021). Shell is also a top buyer of aged credits, offsetting emissions from LNG shipments with historical forest-conservation projects in Peru and Indonesia that claim to have prevented deforestation. Yet the appropriateness of these avoided emission claims are questioned (Pearce, 2021). The natural climate solutions portfolio of BP is also littered with legacy projects (BP, 2022d). The previous sections also indicated a strong preference for nature-based approaches to offsetting emissions. Carbon credits from conservation or afforestation projects might eliminate emissions on paper, but their effectiveness in terms of climate change mitigation is disputable. One problem is that nature-based offsets do not help lower atmospheric emissions in the short term. This is because forests

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grow slowly, requiring many decades for trees and soil to drawdown atmospheric carbon (Waring et al., 2020). In contrast, when oil or gas is extracted, processed and burned, the atmosphere receives an instantaneous injection of GHGs. Attempting to offset this creates a carbon debt, simply causing emissions today to soar as a result of the “burn now pay later” mentality (Dyke et al., 2021). Another problem is that even when atmospheric carbon is captured by natural sinks, these only provide a short-term storage solution compared to geological repositories, which in contrast, have stored fossil fuels for millions of years. That is, as natural sinks age, carbon may leak slowly back to the atmosphere; a risk acknowledged even by Shell (2021c). Indeed, carbon leakage can be accelerated by droughts, wildfires and tree diseases (Crook, 2021)—and such accidents are already occurring (Hodgson, 2021). There are also concerns about land availability. Realizing nature-based projects at the scales intended would consume vast swaths of land around the Earth. Already, BP, Shell and Chevron are investing to secure massive parcels of terrain across Europe and North America for tree-planting (BP, 2021c; Shell, 2020b). But upscaling such projects to make a meaningful dint in global emissions requires more land than currently available in developed countries. Indeed, Shell states that the scale of afforestation assumed in its “Sky 1.5” scenario (envisioning a global emission reduction pathway to keep temperature rise below 1.5 °C) would require some 700 million hectares of land. It describes the vastness of such an area as “approaching that of Brazil” (Shell, 2021b). Scientists that have taken the trouble to run the numbers and check the extent of land availability across the planet contest such assumptions (Dyke et al., 2021). As biologist Waring (2021) contends: “there aren’t enough trees to offset society’s carbon emissions—and there never will be”. But even if such land did exist, large-scale afforestation projects, just like biofuels, could spark competition with agricultural land needed for food production. As the majors fix their sights on cheap, plentiful land in the global south, there are concerns about land grabbing (Crook, 2021; Dyke et al., 2021). Such acquisitions can overlook traditional landownership or reduce agricultural land and food availability for underdeveloped rural regions. The deployment of nature-based offset projects thus carries ethical risks. These also arise from the idea of consuming cheap land resources in the global south to support the fossil-fuel-intensive business practices that have created climate change (Stapczynski et al., 2021; Tugendhat, 2021). A further problem is the tendency for offset procurements to omit the full scope of emissions created. This particularly concerns LNG shipments, where many transactions only cover scope 1 and 2 emissions, including deals from BP and Shell (Bose et al., 2021; Crook, 2021). In such cases, the claim of “carbon neutral” is misleading if considering the roughly 80% of lifecycle emissions from LNG that occur during combustion (IEA, 2020). A blatant example of such misleading claims is BP’s airport service that delivers aviation fuels to aircraft through its subsidiary “Air bp”. Touted as “carbon-neutral” operations, offsets only cover emissions produced during the delivery of the fuel. In this case, this means the distance traveled by the refueling truck from the airport fuel-storage tanks to the airplane’s wingtip (BP, 2018b). A final concern is that offsets will create a “moral hazard” that delays efforts to transition toward non-emitting sources of energy. As discussed, a code-of-conduct

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(ICROA, 2021) is expected to guide the use of offsets for self-decarbonization. This rests on the principle of only using offsets after exhausting all efforts to abate emissions in-house. But evidence examined to this point indicates this is not the case. Not only have all oil majors expressed intentions to use offsets to meet decarbonization goals, but BP, Shell and Chevron are already using them to erase GHG emissions that would usually be associated with the production and delivery of hydrocarbons. Climate scientists have previously predicted this risk, cautioning that using offsets to reach net-zero or carbon neutrality essentially creates “a blank cheque for the continued burning of fossil fuels” (Dyke et al., 2021). Such scientists also fear that uptake of offsetting as a decarbonization strategy in the fossil-fuel industry will incentivize continued investments in new oil and gas fields along with incumbent technologies like gasoline vehicles and gas-fired power stations. This would lockin emissions-intensive infrastructure and technologies for decades (Anderson et al., 2019), reproducing the very systems of energy production and consumption that have caused the climate crisis. And by reducing the rationale to tackle our emission problem at its roots, offsets could prolong societal dependence on fossil fuels (Bose et al., 2021). In effect, offsets risk to delay meaningful climate action (Tugendhat, 2021), by providing “an excuse to continue high-carbon activities” and by weaking the imperative for low-carbon innovation (Kreibich & Hermwille, 2021). The above problems point to the need for transparency when offsets are leveraged for decarbonization claims. Complete public disclosure is thus needed regarding the volume of offsets produced, their type (avoided or removed emissions), the locations of projects, and the cost of credits retired. Yet the tendency to date has been opaque, frequently masking such details from the public in the carbon offset registries (Verra, Gold Standard, etc.) where any purchaser of carbon credits is expected to record its identity (Rozhnov, 2021; Saiki, 2022). Interestingly, though Shell and Chevron frequently record their name in public registries when purchasing offset credits, BP does not. Furthermore, BP and Shell typically do not disclose the source of offset credits when reporting deals of carbon-neutral energy products (Cahill, 2022). Indeed, the International Energy Agency has recently critiqued shipments of carbonneutral LNG as requiring “greater transparency” (IEA, 2021).

13.7 Conclusions and Discussion This chapter aimed to verify the authenticity of claims by BP, Chevron, ExxonMobil and Shell to be transitioning to clean energy and net-zero carbon emissions. The research design assumes that if a major was aggressively pursuing decarbonization and an energy transition, it would plan to: (i) eliminate all emissions across the full lifecycle of energy products—including end use; (ii) gradually phase out oil and gas production while shifting to clean energy; and (iii) not rely on offsets to decarbonize energy products. No major was found fitting this description. The evidence can be summarized as follows.

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First, the American majors were found to significantly trail their European counterparts in terms of decarbonization ambitions, concurring with other studies (J. Green et al., 2021; Li et al., 2022). Not only do Chevron and ExxonMobil describe their net-zero objectives as merely “aspirational”, but their targets only cover scope 1 and 2 emissions. Consequently, they omit the arduous and more important task of eliminating the roughly 80% of lifecycle emissions that accompany the end-use combustion of hydrocarbons. Second, the analysis revealed a general unwillingness to shift business models away from fossil fuels. BP is the only major with aplan to partly downscale its oil and gas production. But this major still intends to maintain hydrocarbon sales consistent with current volumes by purchasing oil and gas produced by third parties. Shell has suggested its oil production will decline in coming years. Yet its focus on natural gas and carbon intensity has left room to grow both overall fossil-fuel production volumes. Consequently, BP and Shell’s decarbonization strategy does not guarantee a decline in absolute emissions in coming years (Liauw et al., 2022a). Meanwhile, the American majors lack any intention to downscale hydrocarbon extraction. Rather, they continue to state ambitions to grow these conventional businesses. Third, all majors were found to be actively leveraging offsets. Not only does this involve procuring credits from nature-based or technology-based projects for selfdecarbonization purposes, but in many cases, this extends to efforts to generate income by producing and selling offsets to other companies. Additionally, the findings revealed a growing practice of pairing offsets with deliveries of regular hydrocarbons, labeling these as “carbon neutral”. This evidence unequivocally portrays a business-as-usual approach to decarbonization, evading the urgent need to dismantle hydrocarbon-based business models and rebuild these around alternative energies. Indeed, if the majors successfully achieve their blueprint for net-zero, the world will still be extracting and burning oil and gas in 2050 and beyond, consuming vast swaths of land across the globe to offset the associated emissions. But by repackaging hydrocarbon extraction and regular energy products as “net-zero” and “carbon neutral”, the majors are attempting to extend their social license to operate in an increasingly carbon-averse economy. Their strategy attempts to divert attention from the unchanged fact that fossil fuels can never be carbon-free, and that emissions will always result from their production and combustion. In parallel, this strategy seeks to induce continued investments in fossil-fuel extraction and the industries and technologies consuming these products. The majors’ recipes for achieving net-zero are fundamentally at odds with efforts to wean the world off fossil fuels and transition to renewable energy. Their decarbonization pathway is more akin to “kicking the can down the road” (Mann, 2022) than the utopic images of transitioning to green energy cleverly conjured by their seductive marketing campaigns. In short, evidence presented in this chapter indicates a carefully orchestrated strategy that masquerades as an energy transition, but in fact, aims to “keep one’s fossil-fuel cake while eating it”. Several implications spill from these findings. The contradictory strategy of achieving net-zero while maintaining fossil-fuel production would be impossible without the existence of carbon offsets. Like an ejector seat in a jet fighter, offsets

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should only be used as a last resort for the last mile of hard-to-abate industries, such as cement or aviation (Dyke et al., 2021). Moreover, many scientists doubt that large-scale deployment of nature-based offsets could reduce emissions at a meaningful scale (Anderson et al., 2019; Waring et al., 2020). Furthermore, offsets pose a moral hazard, delaying the energy transition by incentivizing further investments in polluting fossil fuels. Offsets should thus not replace efforts to tackle the problem of climate change at its source, which is none other than the extraction and combustion of fossil fuels. Yet besides the majors, offsets have become the decarbonization tool of choice for a growing swath of corporations counting on these to achieve net-zero (Black et al., 2021). In addition to their low cost and plentifulness on trading markets, offsets are alluring because they provide a non-disruptive and drop-in solution. Essentially, they allow a company to maintain its business-as-usual trajectory while wiping away troublesome emissions from the accounting books. For oil and gas, offsets are alchemic, magically and instantaneously transforming carbon-laden hydrocarbons into “carbon-free” energy. Yet this chapter has argued that the oil majors tend to purchase carbon credits based on historical and avoided emission claims. Thus, in most cases, offsetting does not lead to the reduction of atmospheric carbon today. Troubling, however, the use of offsets as a decarbonization shortcut is being increasingly legitimatized by influential research institutions, international organizations, NGOs, consulting firms and corporations. Not limited to the oil industry, consider the pro-offset positions of the United Nations (through its Clean Development Mechanism and the CORSIA offsetting scheme for international aviation), university research institutes like at Oxford (Bose et al., 2021) and Columbia (Blantin & Mosis, 2021), the World Business Council for Sustainable Development (WBCSD, 2020) and the Nature Conservancy. This is not to mention countless hydrocarbon-hooked industries like aviation and energy utilities. Rather than avoiding reliance on offsets, these actors all share an interest in scaling-up and boosting their “quality”. From this perspective, the oil majors’ preferences for decarbonization pathways that maintain the status quo and avoid costly, risky and more difficult transformational processes are symptomatic of a broader disorder in society. On the one hand, efforts to brand fossil fuels as carbon-free resemble ongoing attempts to market coal as “clean” (Gunderson et al., 2020; Trencher et al., 2019). On the other hand, the relentless determination to reproduce the systems of energy production and consumption that have created the climate crisis point to a chronic inability by the oil majors to imagine a prosperous world without fossil fuels. Moreover, the legitimization and adoption of similar pathways by other hydrocarbon-hooked players like airlines and gas utilities shows to what extent fossil fuels and their associated technologies are entrenched in the global economy and hampering the transition to non-fossil energy. In closing, it is by no means insignificant for efforts to mitigate climate change that four of the largest publicly traded energy companies in the world have pledged net-zero emissions. But as evidence from this chapter showed, carefully examining the contents of these strategies reveals they are not synonymous with a reduction in fossil-fuel production today. Besides, all strategies assume the use of offsets. Thus,

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from the perspective of preventing GHGs from entering the atmosphere today while weaning societal dependence off fossil fuels, the global decarbonization toolkit has received an unwelcome addition. This points to the need for renewed measures to spur the oil majors to adopt transformational strategies centered around clean energy. Government policy is crucial. For instance, governments can accelerate the downscaling of fossil-fuel production by ceasing to issue permits for exploration and extraction and by eliminating subsidies that support these activities. To tackle the problem of reliance on offsets, there is a need for government regulations that penalize carbon-intensive activities through market mechanisms capable of distinguishing between offsetting and in-house carbon reduction efforts, which are typically more difficult and costly. In addition, both inside and outside the energy production sector, there will always be cases of “residual” or “hard-to-abate emissions” that make sense to tackle with offsets. To serve this need, the oil majors should be incentivized to carry out meaningful actions that lead to a direct removal of atmospheric carbon emissions today. Market mechanisms that promote investments in direct air capture technology are one potential strategy. Despite technological immaturity and high costs, companies such as Microsoft and United Airlines are already investing in and purchasing such credits (IEA, 2022). Stakeholders should pressure the oil majors to follow suite. That is, instead of cheap, historical credits from avoidance-based approaches, their offsetting activity should focus on applying their engineering expertise to develop and upscale technologies that directly, rapidly and permanently capture and sequester atmospheric carbon.

13.8 Implications for Japan Japanese has played a key role in contributing to the trends examined in this chapter, particularly the emergence of a carbon-neutral LNG market. As mentioned, Tokyo Gas was the customer of the world’s first shipment of carbon-neutral LNG from Shell, which since stimulated a global market (S&P Global Platts, 2021). Since then, Japanese gas utilities such as Hokkaido, Osaka and Shizuoka and energy companies like JERA have all purchased carbon-neutral LNG shipments (Bose et al., 2021). In addition, Japanese government and industry are pushing for increased use of offsets to decarbonize gas. For instance, the Japanese government states its support for carbonneutral LNG in the Sixth Basic Energy Strategy, even setting an objective for 5% of total gas consumption to be carbon-neutral by 2030 (METI, 2021). Meanwhile, a coalition of 15 gas suppliers, chemical companies and automakers have formed a “Carbon-Neutral LNG Buyers Alliance”. Working to mainstream and upscale the trading and consumption of offset-paired gas, this alliance explicitly describes its lobbying objective as: “[to] establish CNL [carbon-neutral LNG] as a CO2 reduction solution in various environmental systems” (Tokyo Gas, 2021). In addition, Japanese government and industry stakeholders are actively working to mainstream offsetting as a means for carbon-intensive industries to reach carbon neutrality by 2050 (METI, 2022).

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As already discussed, claims that offset LNG adds no net emissions to the atmosphere are contested. Nature-based offsets require decades to recapture any carbon emitted from fossil fuels. Meanwhile, every combusted molecule of LNG only adds more GHG to the atmosphere today, further exacerbating climate change. Furthermore, LNG deals from Shell to Japan have been found to use credits from historical projects based on dubious claims of avoided emissions (Saiki, 2022). Moreover, as already argued, by promoting the continuation of fossil-fuel production and consumption, relying on offsets in Japan simply delays the energy transition, creating an excuse to continue high-carbon activities. Offsets are thus a highly problematic and controversial approach to decarbonization. Promoting this approach might therefore spell trouble for Japan’s already tarnished image as a climate champion. Although criticism from international stakeholders to date have been mostly directed at oil majors and the voluntary carbon market per se, there is a risk that Japanese industry and government may find themselves the target of future criticism. Indeed, Japanese media is catching on to this situation, criticizing the recent procurements of carbon-neutral LNG by domestic energy companies (Saiki, 2022). If future pressure increases to the point where Japan must abandon efforts to mainstream offsetting for gas utilities and other industries, Japan may find itself with one less tool in its already underequipped toolbox of decarbonization tactics. This would significantly derail efforts to meet the carbon neutrality goal set for 2050. In closing, Japan’s support for the carbon-neutral LNG market and reaching netzero targets via offsetting points to a chronically persistent unwillingness to phase out fossil fuels during the transition to carbon neutrality. And more broadly, the preference for such decarbonization approaches that maintain the status quo are equally visible in the ongoing enthusiasm for carbon-capture and next-generation coal technologies by the Japanese state and incumbent energy actors (Tao et al., 2022).

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Chapter 14

Decarbonization and Critical Raw Materials Andrew DeWit

Abstract A science-based global consensus holds that decarbonization is imperative for intergenerational justice. International and national policy regimes are responding with commitments to net-zero in emissions. But many proposed pathways to decarbonization confront bottlenecks in supply capacities for the critical raw materials essential to realizing them. This chapter examines the best available evidence of serious gaps between escalating demand for critical raw materials versus feasible increases in their supply. Critical raw materials vary by jurisdiction and over time, but generally include cobalt, graphite, rare earths, and about two dozen other elements on the periodic table. Securing adequate supplies is complicated by inadequate investment capital, geopolitical competition, environmental risks, local opposition, and the long lead times required to develop new projects. Decarbonization pathways and technologies are nascent, so there are large knowledge gaps concerning the volume of materials needed to realize them and the governance regimes required to secure those materials equitably and sustainably. But it is clear that energy-transition scenarios have yet to confront the need for tradeoffs so as to maximize decarbonization at least cost in critical raw materials. Keywords Critical raw materials · Extraction · Decarbonization · Clean energy

14.1 Introduction Decarbonization, or the elimination of anthropogenic greenhouse gas emissions, appears essential to minimizing the impacts of climate change on future generations (IPCC, 2022). Decarbonization has also become a primary focus of international agreements and country-level public policy commitments. But in spite of general

A. DeWit (B) Rikkyo University, Tokyo, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_14

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agreement on decarbonization as a goal,1 the means to decarbonize electricity, aviation, mining, agriculture, and other sectors remain uncertain. And scenarios for decarbonization are often subject to bitter dispute, particularly in the all-important energy sector. In 2022, energy per se plus energy-intensive industrial processes, transport, and buildings (heating, lighting, and other categories) were estimated to be the source of 65%, or 45.7 gigatons (GT), of the global total of 57.8 GT of greenhouse gas (GHG) emissions.2 This level of GHG emissions was the highest ever recorded and is projected to increase to 62 GT by 2030. The latter number has been assessed as roughly 30 GT more than the GHG emissions pathway consistent with keeping global temperature increases at or below 1.5 °C.3 Energy, is therefore, the core area for any credible pathway to decarbonization. But here, let us briefly digress and consider the scale of conventional fossil energy, as its enormity is too often overlooked in decarbonization scenarios. Fossil fuels represent 82% of the increasing energy demand for the global population of over 8 billion. In 2021–2022, these fuels comprised an historic high of 8 billion tons of coal (Imahashi, 2022), 4.25 billion tons of oil (Sonnichsen, 2022a), and about 4.04 trillion cubic meters—roughly 3.35 billion metric tons—of natural gas (Sonnichsen, 2022b). By way of comparison, total global cereal production in 2022 was less than 2.8 billion metric tons (FAO, 2022). Decarbonizing global energy supply is clearly a massive undertaking that will almost certainly take decades and unprecedented international collaboration on setting goals and securing materials. Humanity cannot simply swap out energy systems, as one might tear down a house and build another in its place while living elsewhere. Decarbonization entails continuing to use the extant fossil-fuel economy, even expanding it in some areas, to keep the lights on (so to speak) and add new ones while also transitioning to clean energy. In gross material terms, decarbonization means chipping away at the annual extraction and combustion of billions of tons of fossil fuels via building out cleanenergy infrastructure. Building this new infrastructure will require millions of tons of copper, graphite, lithium, rare earths, and other critical raw materials (CRM).4 This is because clean-energy alternatives generate electricity, produce heat, and otherwise provide useful energy through processes that have comparatively high CRM footprints. Global CRM demand for energy-related systems in 2022 was about 7 million tons, and even moderate decarbonization efforts are expected to require a quadrupling of that annual flow by 2040 (Bazilian & Brew, 2023; IEA, 2021: 46). Securing many more megatons of CRM is geologically, industrially, and geopolitically very different from the ongoing extraction of billions of tons of fossil fuels. This point 1

Of course, many institutions and individuals continue to reject the science underpinning climate change and greenhouse gas emissions. Those arguments are beyond the scope of this chapter. 2 See the summary and sectoral data at World Data Lab (2022). 3 Kharas et al. (2022) describe the increasing gap between GHG emissions and reductions required to meet the 2015 Paris Agreement target of at or below 1.5 °C. 4 CRM are also often referred to as “critical minerals,” “critical and strategic minerals,” “technology metals,” and “battery minerals.”

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bears repeating: in quantitative terms, it may seem simple and sensible to substitute the extraction of billions of tons of fossil fuels with mining and refining for millions more tons of CRM; but the two types of extraction are qualitatively poles apart, as incomparable as the proverbial apples and oranges. For example, much thermal coal requires only some post-extraction processing (crushing and washing) before it can be combusted; but CRM are first extracted from massive volumes of mined ore, and thus need extensive and energy-intensive refining to render usable product. Ramping up CRM production, therefore, requires a vast and expensive expansion of mining and refining in tandem with maintaining the conventional-energy resource flows that power the mining and refining and the rest of the global economy. Even so, many advocacy coalitions insist the world can readily undertake a very rapid transition to such “green energy” as intermittent5 solar power and wind generation, and other renewable sources (Jacobson, 2023). They downplay CRM issues and argue that renewables offer the cheapest means of cutting GHG emissions. Through such organizations as the International Renewable Energy Agency, they largely dismiss nuclear energy as too dangerous and too expensive to be included in sustainable decarbonization pathways (Take, 2022). But other experts counter that decarbonization is an unprecedentedly large-scale ambition that must include not merely renewables but also nuclear power and a medley of other “clean energy” options that have minimal emissions. They contend that a diverse portfolio of clean energy can alleviate the risks of dangerous interruptions in power and fuel supply and reduce total energy system costs. Indeed, most expert scenarios envision a broad swathe of energy inputs that include not just renewables and nuclear, but also some degree of continued use of fossil fuels, with GHG emissions abated through carbon removal and storage including via direct air capture (IEA, 2022b). Thus, the general agreement that decarbonization is imperative has elicited a flurry of net-zero commitments from governments and businesses, but there is no global roadmap for how to get there. Each decarbonizing country or region will necessarily develop its own specific portfolio of low-carbon energy, efficiency options, lifestyle shifts, and other measures. Yet any credible scenario of decarbonization will necessarily ramp up the economy’s degree of electrification so as to minimize heat energy lost through internal-combustion engines and other conventional processes. The challenge is that electrification and its related devices require prodigious supplies of copper, cobalt, lithium, and other CRM.

5

Intermittency refers to the fact that solar and wind assets only generate power when the sun shines or the wind blows. These intermittent renewables have low “capacity factors,” or actual power generation versus nameplate capacity. Intermittent renewables are therefore distinct from nuclear, hydro, and other generation assets that run at higher capacity factors, and thus afford far more electricity production per unit of CRM used in their construction.

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14.2 Critical Raw Materials CRM are the focus of at least 14 national and regional (i.e., the EU) lists of commodities that are deemed strategic to such core industries as clean energy, high-technology (aerospace, microchips, health-care devices, computing, and others), and national defense. Another factor in deciding a commodity’s criticality is its supply-chain risks. These risks stem from the commodity’s geographical concentration of mining and refining in addition to other vulnerabilities that could lead to constrained supplies or outright shortages.6 Most energy-related CRM supply chains exhibit a very high degree of geographical concentration in their mining and refining. Producing CRM also requires significant capital investment and trained human resources, while often imposing heavy environmental costs in extraction, refining, and fabrication into useful inputs. Many CRM are also difficult to substitute for and recycle, at least in any reasonable time frame. In general, the more technologically advanced the device, the greater the density of CRM required to build it. One common example is the smartphone, a fistful of CRM that has replaced billions of old-style telephones, cameras, music players, and other obsolete or diminishing technologies. In consequence, the number of CRMs has expanded with the diffusion and integration of digital technology, clean energy, and decarbonization goals (Anderson, 2020). The EU CRM list perhaps best illustrates this phenomenon. Its first triennial review of CRM identified 14 materials in 2011, while the second review in 2014 expanded that to 20 CRM. Thereafter, soaring investments in renewable energy and other green technology sectors saw the EU’s critical mineral list increase further. The 2017 list contained 27 materials, and by September 2021 the EU critical mineral list had grown to 30 items (EC, n.d.). As an April 2021 editorial in the academic journal Materials warned, “[t]he indisputable conclusion after about 10 years of finalized CRM projects research is that the most advanced technologies required for the green and digital transition will lead to a drastic increase in demand” (Girtan et al., 2021). Adding to pressures on CRM supply chains is the fact that markets for advanced technology now include the total global population of 8 billion, as opposed to being largely confined to the roughly billion residents of the advanced economies. Even so, assessments of CRM-intensive decarbonization pathways tend to overlook the sheer scale of emerging global demand for energy-generation, storage, and transmission devices (S&P Global, 2022). Such assessments are admittedly extremely difficult to undertake. One hurdle in modeling CRM demand is the diversity of supply, demand, and other data concerning the several dozen CRM compared to the three fossil fuels. Another problem is the myriad uncertainties in policy change, technological advance, and other factors that will shape the future profile of each individual CRM demand. Further exacerbating the knowledge gaps, focused surveys of energy-related CRM demand generally downplay the clean-energy needs (or wants) of billions of people 6

The most recent and comprehensive summary of critical mineral lists is Calvino (2022).

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outside of Europe, North America, and other advanced economies. They also overlook the developing world’s demand for CRM-intensive non-energy devices used in communications, health care, education, and other sectors essential to equitable and sustainable development (Ramdoo, 2022). CRM surveys even disregard militaryrelated demand, though expert assessments suggest that annual US military demand just for rare earths (a subset of CRM) is roughly 3000 tons, a sizeable fraction of the 10,000–15,000 ton per year of rare earths consumed by the entire US economy (Lifton, 2023).

14.3 Critical Raw Materials and Energy Adding to the uncertainty, energy-related CRM are an area of increasing controversy. The controversy stems in part from technological tribalism, as advocacy coalitions clash over whether decarbonization via 100% renewable energy is possible or requires a broader portfolio that includes nuclear power and other low-carbon technologies. At one extreme, some critics of renewable energy depict CRM issues as the Achilles heel of decarbonization per se (Homewood, 2021). On the other hand, some advocates of renewables dismiss CRM constraints and insist that only inadequate political will impedes rapid decarbonization via an aggressive deployment of wind and solar renewable energy in tandem with hydropower (Jacobson, 2023). Both extremes distract the public debate from the need to consider tradeoffs in securing and deploying CRM, especially copper, lithium, cobalt, rare earths, and other materials required for clean energy. One clear fact is that building variable renewables, storage batteries, and transmission networks is especially dependent on CRM (Mills, 2022). Moreover, mining and refining of CRM do not respond in lockstep with policy signals and decarbonization scenarios. Thus in 2021–2022, an accelerated deployment of intermittent renewable energy quickly encountered supply shortages and price increases, as was evident with lithium, copper, and other materials. After more than a decade of dramatically declining costs for batteries, solar panels, and wind turbines, prices rose in 2022 by double-digits largely due to CRM costs (BloombergNEF, 2022; Kim, 2022). During 2022 in Europe, average auction prices for solar increased by 44% and by 21% for wind, versus 2021 prices (IEA, 2022a). And as we have already noted, CRM have myriad competing applications in aerospace technology, military technology, healthcare systems, robotics, digital transformation, and other technologically sophisticated areas.

14.3.1 Critical Raw Materials and Clean Energy Further evidence is found in the world’s first comprehensive analysis of global decarbonization-related CRM demand and supply is the International Energy

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Fig. 14.1 Critical mineral needs for clean-energy technologies. Source IEA (2021)

Agency’s (IEA) 2021 report on The Role of Critical Minerals in Clean Energy Transitions (IEA, 2021). The IEA is probably the global community’s strongest and most authoritative proponent of decarbonization. Its study quickly became the touchstone for work on energy and CRM, as it aggregates supply and demand data for copper, silicon, nickel, lithium, rare earths, and other CRM essential to 16 clean-energy technologies, including solar, wind, and nuclear. The IEA’s careful empirical work shows that the more rapid the decarbonization, especially if led by intermittent renewable, the greater the demand for CRM and thus the more urgent is collaborative action on bottlenecks. Figure 14.1 outlines the range of energy technologies the IEA assessed and their dependence on select CRM. The degree of dependence is visible in black, gray, and white dots, respectively indicating high, medium, and low reliance. We see that electric vehicles (EVs) and battery storage are particularly dependent on CRM. And among power generation technologies, intermittent wind and solar require far higher densities of CRM than hydro, geothermal, and nuclear. Electricity networks— meaning transmission lines and distribution assets—also require large amounts of copper and other CRM. Spatially distributed wind and solar power thus has even higher “system costs” of CRM since networking their dispersed power generation requires a lot of extra power lines, storage devices, and other assets.

14.3.2 Critical Raw Materials, Electric Vehicles, and Power Generation A comparative quantification of CRM density for EVs and clean power generation is seen in Fig. 14.2. The figure’s top section (“Transport”) reveals that an average EV is dramatically more material-intensive than a conventional, internal-combustion

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Fig. 14.2 Minerals used in select clean-energy technologies. Source IEA (2021)

engine (ICE) car. In 2022, the total global fleet of ICE vehicles was about 1.2 billion passenger cars, whereas the total global EV fleet perhaps reached 27 million compared to 1 million in 2016 (McKerracher, 2022). Electrification of transport is thus unfolding rapidly but is still only in its infancy. The CRM challenge stems from the fact that the average EV requires over 206 kg (kg) of CRM per vehicle, especially copper (53.2 kg), nickel (39.9 kg), manganese (24.5 kg), graphite (66.3 kg), and several other materials. By contrast, the average ICE vehicle requires just under 34 kg of CRM, mostly copper (22.3 kg) and manganese (11.2 kg). An EV is more than 6 times as mineral-intensive than an ICE vehicle, and more dependent on a wider range of CRM. The average EV also contains 8.9 kg of lithium and 13.3 kg of cobalt, neither of which is used in ICE vehicles. In consequence, reports in late 2022 warned that “lithium prices have increased tenfold since the start of 2021 and nickel is up 75 percent, while cobalt prices have been more than double their 2020 average” (Dempsey, 2022). From 2021, these CRM costs began to drive EV prices upwards. The increasing prices threatened the EV-centered decarbonization pathways just as the rollout of EVs began to accelerate. Similar complications are evident in intermittent renewable energy. Figure 14.2’s lower section (“Power generation”) reveals that nuclear and renewable power generation technologies in general have significantly higher material-density, expressed as kilograms/megawatt (kg/MW) of generation capacity. GHG-intensive natural gas and coal-fired generation require only moderate amounts of copper, nickel, and other CRM for the combustion turbines and other infrastructure that compose their plant. By comparison, a conventional nuclear reactor has, per MW of capacity, more than double the CRM footprint of a coal plant and triple that of a natural gas generation asset, with an especially heavy reliance on chromium. But solar and onshore wind generation both rely much more on copper, followed by silicon for solar and zinc for onshore wind. And offshore wind is especially dependent on copper and zinc, in addition to rare earths for their permanent magnets. Viewed from least to most

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CRM-intensive, we see that the per-MW footprint of CRM balloons is from a couple of metric tons for a natural gas plant to nearly 16 tons for offshore wind. Adding to the complications, intermittent wind and solar have considerably lower capacity factors—meaning percent of actual power generation versus rated generation capacity—than fossil fuel and nuclear plant. Therefore, the total volume of CRM they require to produce a given amount of electricity is even higher than expressed in the figure.7 Additionally, the IEA data suggest that small-scale distributed renewableenergy scenarios—often touted as key to bolstering community resilience and climate justice8 —need to consider CRM. This is because the more spatially distributed the renewable power generation and storage, the higher the CRM-intensity. The IEA warns that rooftop and other distributed solar systems require “about 40% more copper than utility-scale projects…Other mineral intensities are similar between utility-scale and distributed applications” (IEA, 2021: 56). Pace Schumacher’s ecological dictum of “small is beautiful,” that assertion seems dubious when smallscale, distributed renewable energy results in dramatically increased densities of CRM per unit of generated power.

14.3.3 Critical Raw Materials and Solar Power Figure 14.3 presents more detailed data on solar panels’ reliance on three key CRM between 2020 and 2040. It displays in kilotons (kt) the 2020 demand for copper, silicon, and silver in global solar deployments, exclusive of such system requirements as storage and transmission equipment. The figure estimates solar’s increased demand for the three materials according to two scenarios: the Stated Policies Scenario (STEPS), which implies global warming of over 3 °C; and the Sustainable Development Scenario (SDS), whose aim is to limit global warming to under 2 °C, and ideally to no more than 1.5°. STEPS and SDS are used throughout the IEA’s report and within several figures below. Figure 14.3 shows that the SDS and STEPS scenarios for solar vary greatly by 2030 and 2040. Solar’s call on copper more than doubles from its 2020 level of roughly 370 kt to just under a million tons in SDS 2040. The demand for silicon also doubles from nearly 400 kt in 2020 to over 800 kt in SDS 2030, and then levels off through technological change and recycling. And silver demand spikes from nearly 2 kt in 2020 to over 3.5 kt in the SDS 2030 scenario. More recent work suggests that solar’s demand for silver during 2020 was 12.7% of annual silver production, and could mushroom to between 85 and 98% of known global reserves by 2050 (Hallam et al., 2022). 7

For example, a 2021 study by the United Nations Economic Commission for Europe (UNECE) determined that nuclear power requires 84 g of select CRM per megawatt-hour (MWh) of generated power, whereas solar technologies need between 296 and 635 g/MWh and wind power uses between 255 and 292 g/MWh. See UNECE (2021: 55). 8 One example is seen in EC (2022).

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Fig. 14.3 Demand for copper, silicon, and silver for solar PV by scenario. Source IEA (2021)

14.3.4 Critical Raw Materials and Wind Power Figure 14.4 outlines the CRM requirement for onshore and offshore wind power in 2020 and then out to 2040. The left-hand side of the figure shows that copper, zinc, and other CRM demand nearly triples between 2020 and 2030 in an SDS scenario. The right-hand side of the figure details the wind-related rare earth element (REE) demand, estimated to more than double 2020 levels in the SDS base case for both 2030 and 2040. Even for an SDS scenario where REE demand—i.e., terbium, dysprosium, praseodymium, neodymium—is constrained by substitution, greater efficiency, and other measures, their crucial role in making permanent magnets for wind turbines sees their demand double by 2030.

Fig. 14.4 Mineral demand for wind by scenario. Source IEA (2021)

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Fig. 14.5 Annual capacity addition and mineral demand from other renewable technologies, by scenario. Source IEA (2021)

14.3.5 Critical Raw Materials and Other Renewables Solar and wind are the primary renewable technologies in the public debate on decarbonization because most scenarios expect them to expand most. But there are several other existing and potential renewable-energy technologies, and each has its own CRM demand profile. The left and right-hand sides of Fig. 14.5 outline, respectively, the capacity additions and consequent CRM demand for four of them: concentrated solar power (CSP),9 geothermal, hydro, and bioenergy. Among these four, a nearly 25-fold capacity addition is expected from CSP by 2040 in an SDS scenario. That expansion of CSP implies a dramatic increase in CRM, which rises from negligible amounts to just under 400 kt by 2040. By contrast, geothermal power is not expected to contribute much new capacity, even in an accelerated SDS scenario, but has a striking dependence on chromium and nickel per GW of capacity. Figure 14.5 also reveals that the least CRM-intensive kinds of renewables are hydro and bioenergy (which includes solid biofuels, biogas, incinerating municipal waste, and liquid biofuels). Both of these generation technologies also have generally high capacity factors, because they are not intermittent like solar and wind. They, therefore, produce a lot more electricity for a given nameplate capacity (e.g., MW). Thus in 2021, hydro represented 40% of total global renewable capacity of 3,064 GW but contributed about 53% (4,327 TWh) of total global renewable power generation of 8,115 TWh (IEA, 2022a). For its part, bioenergy is expected to double in capacity in the IEA’S 2040 SDS scenario. The CRM cost of bioenergy is minimal, but the 9

Concentrated solar power (CSP) is generally characterized by concentric rings of mirrors that direct sunlight onto a central tower containing a thermal sink. The absorption of heat from the focused sunlight is then used to power steam turbines to generate electricity. Unlike conventional solar photovoltaic panels, CSP is capable of 24-h operation, drawing on the stored heat in the central tower.

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Fig. 14.6 Average annual capacity additions and mineral demand from nuclear power. Source IEA (2021)

environmental cost is often significant because of reliance on food crops, land for growing the material input, and often high overall lifecycle emissions of GHG.10

14.3.6 Critical Raw Materials and Nuclear Power Figure 14.6 summarizes the expected capacity additions and CRM demand from nuclear power for STEPS and SDS scenarios. It shows that in 2020, new nuclear capacity additions were dominated by China, Russia, and the Middle East, and entailed about 50 kt of CRM. The data for Japan assume restarts of idled capacity rather than new build. The 2040 SDS scenario requires a doubling of nuclear’s average annual capacity additions, especially in China. Nuclear capacity additions seem quite likely to exceed that in China, India, and even many European countries because majority public acceptance of nuclear power became generalized during 2022.11 In material terms, the CRM costs of projected nuclear capacity for 2030 and 2040 SDS scenarios are slightly more than 80 kt, mostly for chromium, copper, and nickel. As we saw in Fig. 14.2, this CRM density per MW of generating capacity is far less than what is needed for solar and onshore/offshore wind, even without adding the larger power network (transmission, storage, and other infrastructure) required for those intermittent renewables. And because nuclear power has generally high 10

A regularly updated summary analysis of bioenergy can be found in the various publications of the IEA Bioenergy Technology Collaboration Programme: https://www.ieabioenergy.com 11 In this regard, see the results of a 30-country poll conducted by the internationally recognized polling firm Ipsos and released on December 9, 2022. The poll indicates that support for nuclear power increased 7% overall among the 30 countries, relative to 2021, and even higher in France (+10%), Germany (+15%), Spain (+13%), Italy (+17%), and the UK (+13%). The dramatic increases apparently reflect concerns over energy security and prices (Ipsos, 2022).

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capacity factors, its material efficiency is even greater when viewed in terms of volumes of CRM needed to generate a given unit of electricity.

14.4 The Need for Unprecedented Volumes of Critical Raw Materials We saw in the above that clean energy—and especially intermittent renewables— requires a lot of CRM per unit of output. A rapid decarbonization led by EVs and variable renewables thus entails a veritable tsunami of demand for CRM. The IEA’s moderate STEPS scenario implies a doubling of solar deployment between 2019 and 2040, with corresponding increases in wind, electricity networks, and EVs. However, the IEA’s more aggressive SDS scenario foresees a tripling of solar capacity, wind capacity, and electricity networks between 2020 and 2040, while EV diffusion increases 25 times to over 75 million new sales per year. In consequence, overall demand for the CRM used in clean-energy technologies is expected to increase by six-fold or more. The rate of increase per any given CRM clearly depends on which clean-energy elements are emphasized. Hydro and nuclear deliver a lot of electricity with low CRM footprints. Intermittent renewables have much higher CRM costs. And note that the SDS tripling of intermittent solar and wind by 2040 also requires a massive increase in utility-scale storage. To achieve this deployment, nickel demand for storage is projected to grow 140 times, cobalt by 70 times, and manganese by 58 times. Similarly, SDS by 2040 implies that 42 times more lithium must be produced over the next two decades, in addition to 25 times more graphite, 21 times more cobalt, 19 times more nickel, and 7 times more rare earths. And the IEA scenarios, like most others, are conservative and underestimate developing country demand in CRM-intensive energy and non-energy demand.12

14.4.1 Some Geopolitical and ESG Issues We do not suggest the world confronts absolute resource scarcity, as CRM reserves are nowhere near geological exhaustion. Indeed, most of them have plentiful terrestrial

12

As Isabella Ramdoo, Deputy Director of the Intergovernmental Forum on Minerals, Mining and Sustainable Development, points out: “forecasts mainly assume the energy transition demand will be driven by advanced and emerging economies, currently in the driver’s seat for the clean-energy technology revolution. However, a significant portion of future demand for minerals and metals will come from other sources: the Fourth Industrial Revolution, driven by digital technologies, and perhaps more importantly, developing countries’ demographic growth and organic industrial needs, is extraordinarily resource intensive. In any case, current forecasts are surely underestimated, as observed by the mounting pressure on the minerals market” (Ramdoo, 2022).

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reserves and resources,13 and many of them are abundant on or beneath the world ocean’s floor or dissolved within its voluminous waters.14 Yet it takes many years to build out the mining and refining capacity to extract CRM and render them useful as material inputs into production. And those steps are preceded by years of feasibility studies, environmental assessments, water and power infrastructure installation, and other costly site preparation. For example, developing a new copper mine requires an average of 16 years.15 Another difficult item is geopolitical risks. CRM generally have a comparatively high geographical concentration of production compared to fossil fuels. The largest fossil fuel producing countries, such as the United States and Saudi Arabia, have relatively small market shares of oil and natural gas (coal is even more distributed) compared to the top producers of critical minerals. Indeed, the Democratic Republic of the Congo is the site of roughly 70% of cobalt production, while China extracts 60% or more of rare earths and graphite. The higher the concentration of CRM mining and refining, the greater the geopolitical risks for consumer countries. These risks include producer countries’ incentives to raise royalties, further increasing CRM prices. Geographic concentration also presents sobering supply-chain risks from increasingly frequent natural disasters, strikes in mining, conflicts such as the Russian invasion of Ukraine, and related phenomena. The IEA has also warned that geographically concentrated CRM supply chains risk their being used as a geopolitical weapon (Walsh, 2023). The visible elephant in the room is China. That country’s large presence in rare earths and many other CRM mining and refining derives from decades of smart industrial policy. In addition, China’s institutionalized dominance of many CRM supply chains may be quite durable in spite of the 2021–2022 uprush of policymaker concern in the EU, North America, and elsewhere to reshore or at least diversify their supply chains (NBR, 2022). Indeed, though the oft-cited response to concentrated supply chains is to call for diversification that is far easier said than done. CRM mining is very capital intensive, requiring firms to risk large amounts of money for many years while developing a project. Mining firms therefore often rely on offtake agreements that commit customers to long-term contracts for CRM, thus helping alleviate business risks. These agreements are increasing in their volumes and contract time-periods, but they are nowhere near the huge CRM demand implied in most decarbonization scenarios (Sebrell & Ivanov, 2023). Given that gap, it is no surprise that mining firms are reluctant to invest enough in most CRM mining and refining to meet the IEA’s SDS scenarios or even more ambitious goals. These inconvenient truths have long been highlighted by the IEA and other observers. For example, specialists from the 13

Resources and reserves differ in the fact that the former is a general estimate of discovered and undiscovered deposits of a particular commodity, whereas reserves refer to known deposits that can be extracted economically. 14 For example, the amount of uranium dissolved in seawater is about 1000 times that in terrestrial sites (see Altay et al., 2022). 15 On this see Iannucci (2022).

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U.S. Center for Strategic and International Studies warn that “[t]here is little sign that the supposed 300 new mines needed to meet clean-energy needs for cobalt, graphite, lithium, copper, and vanadium will be anywhere close to operational by 2030” (Berg & Ziemer, 2023). By contrast, in January of 2023, China’s Ministry of Natural Resources committed to expanding support for overseas and domestic mining (Yutong et al., 2023). Unlike decarbonization scenarios that unfold on paper and at academic conferences, CRM mining projects take place in a real world of price volatility, local opposition, and other investment risks. Mining firms are quite aware that by 2030 there could be a cumulative shortfall of copper equating to 50.5 million metric tons, or well over two years of current annual production; but they cannot be certain of that estimate, and policymakers in the developed countries seem more inclined to privilege anti-mining interest groups (Schaps, 2022). Hence, significant reshoring and other diversification of CRM mining and refining are not likely over the next decade. That patent fact effectively shifts a lot of the supply risk from CRM producers to would-be consumers and decarbonization scenarios. The miners will make money, but the advocates of accelerated decarbonization will almost certainly be forced to accept politically and intellectually difficult compromises. A further complication is declining CRM ore grades and their impact on mining’s financial and environmental costs. One example is the 30% decline in copper ore grades in Chile, site of over a quarter of global copper production, from the mid2000s to 2020. Declining ore grades mean that more ore must be extracted and processed to produce a unit quantity of copper. The additional mining and refining raise the unit energy cost in addition to the volume of water. And a lot of CRM mining is situated in water-stressed areas (Galindo et al., 2022). The consequence is more expensive and environmentally damaging CRM plus larger volumes of waste rock and mine tailings (Bontje & Duval, 2022). Mine tailings are the waste left after refining separates the desired metal from the mined rock, leaving a slurry of particles mixed with water. This material is stored in settling ponds, whose global total is a staggering 217.3 km3 that weighs 282.5 billion metric tons. Approximately 46% of mine tailings are from copper, with significant amounts also from other CRM (LePan, 2021). The mining and refining of rare earths also produce significant quantities of radioactive materials and other impurities (Bai et al., 2022). To be sure, these localized impacts of extracting copper and other CRM pale when set aside the rising global risk of climate change. But in the end, all politics is local, and thus policymakers and advocacy coalitions in the developed world want CRM-intensive EVs and other decarbonizing devices but not the voluminous CRM extraction necessary to make them.

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14.4.2 Limited Prospects for Recycling and Substitution Since CRM extraction and refining are generally unwelcome, an expanding literature on energy transitions calls for recycling in “circular economy” strategies to reduce the need for newly mined copper, cobalt, rare earths and other metals and minerals. Substitution strategies complement this approach, by seeking new materials to replace the role of supply-constrained CRM used in batteries, solar panels, and other devices. Some analysts argue that circular economy and recycling could reduce CRM demand by up to 28% by 2030 (Simas et al., 2023). And recycling and circular economy approaches are indeed core principles of the 7-country Sustainable Critical Minerals Alliance16 that was launched in December of 2022 (Natural Resources Canada, 2022). But like many other careful assessments of CRM issues (Deloitte, 2022; Zeng et al., 2022), the IEA analysis does not expect recycling or substitution to play much of a role for at least a couple of decades. The IEA suggests recycled battery materials will cover at best 1% of demand by 2030 and only 8% of demand as late as 2040 (IEA, 2021). The IEA highlights several difficult issues impeding the role of recycling. One key constraint is the limited recycling resource-base: the global community has only just begun to diffuse the requisite stock of EVs, intermittent renewables, power systems, and related CRM-intensive infrastructure. Bloomberg New Energy Finance research shows that global spending on energy-transition infrastructure reached USD 1.1 trillion in 2022, over twice the volume of investment in 2019, and nearly quintuple the USD 241 billion a decade before, in 2012 (BloombergNEF, 2023). In gross material terms, those numbers mean a massive wave of new energy-transition infrastructure stock was deployed in 2022, well before previous years’ low volumes of EVs and other devices were even close to being retired and ready for recycling. Bloomberg predicts a rapidly increasing energy-transition investment in the coming years, but recycling can only become a significant source of material input after a very large infrastructure stock has both been deployed and then used for at least a decade (for an EV) or two (such as a solar array) or perhaps many decades (as with a nuclear reactor). The lifetimes vary according to the specific asset’s average useful life cycle and the specific conditions of its use. Another difficult issue is recyclability of the assets. Many of the devices currently being deployed are not built with recycling in mind, consisting of alloys and other CRM combinations that are difficult to recover (Graedel et al., 2022). Remedying that fact will not happen overnight and could add to the years required before recycling leads to significant new flows of CRM. A further complication is environmental damage. Recycling is less impactful than mining and refining virgin CRM, but it does generally involve significant environmental harm (Baum et al., 2022). It is thus unclear that publics in advanced countries 16

As of this writing, the Alliance comprises Australia, Canada, France, Germany, Japan, the United Kingdom, and the United States.

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will accept a rapid diffusion of recycling projects, in spite of increasing “circular economy” commitments. To reiterate, data clearly show that the global community is only beginning to build a stock of energy-transition infrastructure, including long-distance networks, distributed grids, battery storage, electric vehicles, and offshore turbines. Once a huge stock is in place and the recyclable portions of it have reached the end of their useful life, then one can expect an appreciable level of CRM flows from recycling. To make this happen, stronger policies on recycling and substitution surely need to be adopted. But the big caveat is that these policies are not likely to bear much fruit for many years, and perhaps decades. And it seems essential that those policies be coupled with new design rules that prioritize recyclability over appearance and possibly functionality as well.

14.5 Conclusions We have seen that the GHG-intensive fossil-fuel economy is enormous and growing. Decarbonizing energy is recognized as imperative, but it is also an unprecedentedly huge project. Cheap and abundant CRM supplies are essential to decarbonization, in tandem with achieving global goals on sustainable development. But it is unclear how to do that in the near and medium term, while relying on market mechanisms. There are few debates on how governance might match CRM supply with escalating demand and simultaneously minimize mining impacts and maximize benefits for current and future generations. The core governance challenge is achieving an equitable and efficient allocation of constrained CRM resources in a global and dynamic context. That context includes myriad public and private stakeholders and multiple sources of competing CRM demand. And we have seen that many advocacy coalitions explicitly reject the evidence that CRM bottlenecks threaten rapid and renewable-led scenarios of decarbonization. It is difficult to imagine how they and other stakeholders might come to agreement on strategic prioritization of constrained CRM supplies. Unlike World War II rationing of critical minerals in specific countries (Scherner, 2022), there is no global locus of authority empowered to commandeer CRM supply chains and devote them to specific decarbonization and sustainable development scenarios. Like many other recent studies of CRM, the IEA’s analysis includes warnings about the urgency of good governance through comprehensive and collaborative public policy. The IEA is most concerned to create and disseminate credible information on CRM supply and demand. As to policy action concerning supply, the IEA stresses clear policy goals that reduce the risks of CRM price volatility and other impediments to expanded mining and processing. To cope with demand, the IEA emphasizes policies to promote recycling, substitution, and innovation. Yet as we have seen, these measures will not have much effect for at least the next decade. At the international level, the IEA and others also emphasize coordinated governance in place of the current patchwork of international institutions and initiatives

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that address various aspects of CRM mining and processing. At present, most CRM are traded on very opaque markets, with a shortage of analysts who understand the intricacies of CRM. The G7 and other international actors need to build up the institutions for monitoring supply chains, collecting and disseminating credible data, sharing knowledge and best practices, and developing credible and actionable environmental standards (Hendrix & Bazilian, 2022). Doubtlessly, aggressive and coordinated public policy is an essential condition for spotlighting how to secure abundant supplies of CRM at acceptable financial and environmental costs. But defining good governance and building it is not a sufficient condition for securing the requisite CRM supplies, whose ramped-up mining and refining will inevitably take a lot of time. In consequence, price increases in variable renewables and EVs seem certain to escalate and become protracted as opposed to transitory (Kim, 2022). And for the myriad reasons discussed above, higher CRM prices will not quickly lead to a lot of new mining. Time is becoming the scarcest commodity. The issues were succinctly summarized by Canadian mining expert Nelson Bennett: “The problem for Canada, the United States and Europe, all of which are developing critical mineral strategies, is that no amount of money can buy time. Emissions reductions targets set by numerous governments will require so much copper, cobalt, nickel, lithium and other critical metals for things like electric car batteries and wind turbines that the new mines needed to provide the raw materials probably can’t be built in time to meet the targets” (Bennett, 2022). There is virtually no prospect of large-scale substitution, recycling, and other silver-bullet breakthrough solutions, so strategic prioritizing of the use of supplyconstrained CRM will almost certainly become necessary (Deloitte, 2022). These materially efficient approaches are likely to favor public transit over personal EVs, large-scale solar over rooftop, and perhaps more hydro and nuclear to supplement intermittent renewables. Yet there is little evidence that critical thinking about strategic tradeoffs is animating discussion among the myriad stakeholders focused on decarbonization. It certainly has not been on the agenda at the COP meetings and other international fora. That will have to change because by about 2025 serious structural supply deficits are almost certain to emerge in copper, the key CRM (S&P Global, 2022), in addition to lithium, cobalt, and several others (Berg & Ziemer, 2023). Divided by war and geopolitics, the international community appears unprepared for the challenge. High CRM prices thus seem likely to become the default tool for allocating among competing demands. As a result, decarbonization will probably take longer, cost more, and involve a lot more compromises than most scenarios imagine.

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Ramdoo, I. (2022, November 4). Is future supply of critical minerals difficult to predict? Mexico Business News. https://mexicobusiness.news/mining/news/future-supply-critical-minerals-dif ficult-predict. Accessed 28 December 2022. S&P Global. (2022, July). The future of copper: Will the looming supply gap short-circuit the energy transition? S&P Global. https://cdn.ihsmarkit.com/www/pdf/0722/The-Future-of-Cop per_Full-Report_14July2022.pdf. Accessed 31 January 2023. Schaps, K. (2022). Copper shortfall’s ‘dramatic impact’ on energy transition drives search for answers. International Bar Association. https://www.ibanet.org/Copper-shortfall-dramatic-imp act-on-energy-transition-drives-search-for-answers. Accessed 28 December 2022. Scherner, J. (2022). Preparing for the next blockade: Non-ferrous metals and the strategic economic policy of the third Reich. The English Historical Review, 137, 585. https://doi.org/10.1093/ehr/ ceac063 Sebrell, N., & Ivanov, F. V. (2023, February 2). The race for critical minerals. ISS Insights. https:/ /insights.issgovernance.com/posts/the-race-for-critical-minerals/. Accessed 5 February 2023. Simas, M., Rocha Aponte, F., & Wiebe, K. S. (2022, November). The future is circular: Circular economy and critical minerals for the green transition. Report prepared for World Wildlife Foundation by SINTEF. https://wwfint.awsassets.panda.org/downloads/the_future_is_circular_ __sintefmineralsfinalreport_nov_2022__1__1.pdf. Accessed 31 January 2023. Sonnichsen, N. (2022a, November 24). Global oil industry—Statistics and facts. Statistica. https:// www.statista.com/topics/1783/global-oil-industry-and-market/. Accessed 28 December 2022. Sonnichsen, N. (2022b, July 14). Global natural gas consumption 1998–2021. Statistica. https:/ /www.statista.com/statistics/282717/global-natural-gas-consumption/. Accessed 28 December 2022. Take, S. (2022, October 5). Nuclear power won’t help climate urgency, says renewables chief. Nikkei Asia Review. https://asia.nikkei.com/Business/Energy/Nuclear-power-won-t-help-climate-urg ency-says-renewables-chief. Accessed 28 December 2022. UNECE. (2021). Life cycle assessment of electricity generation options. United Nations Economic Commission for Europe. https://unece.org/sites/default/files/2021-10/LCA-2.pdf Accessed 2 February 2023. Walsh, M. (2023, February 2). Canada needs to move quickly on production of critical minerals, IEA says. The Globe and Mail. https://www.theglobeandmail.com/politics/article-security-min erals-production-canada-iea/. Accessed 2 February 2023. World Data Lab. (2022). World emissions clock. World Data Lab. https://worldemissions.io. Accessed 28 December 2022. Yutong, L. et al. (2023, February 14). China’s hunt for strategic new energy minerals. Nikkei Asia. https://asia.nikkei.com/Spotlight/Caixin/China-s-hunt-for-strategic-new-energyminerals. Accessed 16 February 2023. Zeng, A., Chen, W., Rasmussen, K. D., Zhu, X., Lundhaug, M., Müller, D. B., Tan, J., Keiding, J. K., Liu, L., Dai, T., & Wang, A. (2022). Battery technology and recycling alone will not save the electric mobility transition from future cobalt shortages. Nature Communications, 13, 1342. https://doi.org/10.1038/s41467-022-29022-z. Accessed 31 January 2023.

Chapter 15

The Politics of Evidence in Japan: Struggling Between Efficiency and Effectiveness and Beyond Kazuya Sugitani

Abstract Evidence-based Policy Making (EBPM) is a common guideline in many developed countries. For achieving a sustainable future, using rigorous evidence for policy is a necessary mission. Japan also works on EBPM, but it includes some problems. The most important point is the difference between “effectiveness” and “efficiency.” As is well known, EBPM focuses on effectiveness and the key-term of it is “What Works.” However, EBPM in Japan doesn’t focus on effectiveness but efficiency. This is because the context of policy evaluation is distorted. This section picks up main efforts of EBPM in Japan and reveals that they focus on efficiency and confuses the concept of evaluation. In the concluding part, I suggested the more complicated issue of politics and sustainability. Keywords Evidence-Based Policy Making (EBPM) · Sustainable Development Goals (SDGs) · Policy evaluation · Logic model · Performance management · Performance measurement

15.1 Introduction Today, many states now engage in Evidence-based Policy Making (EBPM). Generally speaking, EBPM is a project that attempts to improve public policy by utilizing scientific evidence. According to the most rigorous perspective, EBPM should be promoted like evidence-based medicine (EBM). EBM holds out the ideal of “evidence hierarchy” (or “gold standard”). In theory, the Randomized Controlled Trial (RCT) is the best research method. Of course, a single RCT is not so rigorous, and thus, we need to implement many RCTs and analyze them (we call such methods as “meta-analysis” and “systematic review”).

K. Sugitani (B) Iwate Prefectural University, Iwate, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_15

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It is said that EBPM began in the UK under the Blair Administration (Wells, 2007). Blair attempted to “modernize” his party and government. Also, this movement has the background of neoliberalism and NPM (New Public Management). Therefore, we should suggest that there are two types of EBPM. One is affected by medicine and using rigorous methods. Such types of EBPM also utilize new methods like behavioral economics, and it pursues the effectiveness of policy. On the other hand, another type of EBPM is not so new. It seems like the “Reinventing Government” (Osborne & Gaebler, 1993). In short, this type of EBPM treats diverse indicators as evidence. Thus, some scholars argue that such types of efforts are not EBPM. In this section, both of them are treated as EBPM because in many countries they do so. Especially in Japan, these two types of EBPM are promoted by the government. Focusing on EBPM in Japan enables us to recognize the importance of the evaluation concept. Many researchers cannot grasp it. Also, many scholars of EBPM in Japan ignore the concept of evaluation theory. For this reason, EBPM in Japan cannot distinguish between effectiveness and efficiency. This confusion stems from the background of the acceptance of evaluation in Japan. In Japan, public policy evaluation has begun from the local government. According to Yuko Kudo, Japan’s policy evaluation and NPM have strong relations (Kudo, 2003). Under such a situation, the culture of policy evaluation in Japan became dominated by the pursuit of efficiency. This tendency also influenced EBPM. This is because policy evaluation in Japan has emerged as the savior to the fiscal crisis. Policy evaluation in Japan had begun from the local government (Mie Prefecture) and this effort was touted as a successful story, the centerpiece of which was a drastic budget cut. Therefore, many saw policy evaluation as a cost-cutting tool, a tool to enable cost-cutting, and the aspect of identifying effectiveness was relegated to the background. It is necessary to understand this context to recognize the characteristics of EBPM in Japan. Under such a situation, Japan’s government has promoted EBPM since 2018. However, not only the government but also many scholars are ignoring the fact that Japan’s policy evaluation culture is distorted. In this section, I will focus on such distortions and reveal that EBPM in Japan is not concentrated on effectiveness but efficiency. One of things I want to emphasize in this chapter is this confusion. Therefore, this chapter criticizes EBPM in Japan for its failure to carry through with effectiveness evaluation. Moreover, I will discuss the political power of evidence and the politics of anticipation, which have grown in strength in the era of pandemic and climate apocalypse. For designing effective public policy, it is necessary to anticipate the future (Bali et al., 2019). To ensure a sustainable future, it is necessary to create public policy based on rigorous evidence. Moreover, to develop policies that contribute to sustainability, rigorous anticipation must be attained because reliable scenarios are necessary to ensure desirable future making. The scenario is a strong tool for persuading people, but we must be aware of its political meanings. It is widely known that policy knowledge is not ideology-free but often constructed through political will (Grundmann & Stehr, 2012: 40–44). In the concluding part, I will suggest this perspective.

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15.2 EBPM in Japan: “Three Arrows of EBPM” In this section, I will focus on EBPM in Japan and specifically the “Three Arrows of EBPM.” Through an examination of these concepts, I will reveal the confusion between “effectiveness” and “efficiency” in the context of policy evaluation in Japan. EBPM in Japan is also influenced by this context. Generally, EBPM pursues “what works,” but in Japan, this is not the case. For this reason, many scholars have criticized EBPM in Japan. For them, EBPM in Japan is neither sufficiently developed nor innovative because it is merely an extension of NPM, which is not a new concept in the twenty-first century. Is EBPM in Japan simply a mundane effort? The answer is yes and no. To explain this further, I will focus on the main related developments in Japan, known as the “Three Arrows of EBPM,” which have been constructed through different practices. Thus, an overview of these concepts is provided here. In 2009, the Statistics Act was changed dramatically, focusing on the use of sophisticated statistics as the foundation of effective policy making and strong research. Before the change, government statistics were prepared for and presented only to administration officials; however, with the change in the Act, such statistics were made available to citizens, researchers, and society in general. Thus, policy analysts were given the ability to use these government statistics in their work. In the 1st Basic Plan of Statistics, which was formulated in 2009, it was argued that promoting EBPM was an important mission. At the end of 2012, the Liberal Democratic Party (LDP) returned to political power and Shinzo Abe became Prime Minister. In 2013, Prime Minister Abe restarted the Council on Economic and Fiscal Policy (CEFP), which had previously been inactive. At this time, the group’s focus was on reforming government statistics. According to the CEFP, the calculation of Japan’s GDP was incorrect because the component statistics did not accurately reflect the real economic situation. The CEFP argued that Japan’s GDP should be calculated using a Supply Use Table (SUT) and that this reform should be implemented by 2020. The mandated reform was considered an application of EBPM. Based on this initial application, EBPM in Japan has since primarily focused on economic policy, having a strong relation to so-called Abenomics, the economic program of Prime Minister Abe. By achieving statistical reform, LDP expected to receive the support of the majority of Japanese voters since economics tends to be the most important issue for the Japanese people (Sugitani, 2022). In such discussion, rigorous research methods are not so emphasized. For example, RCT or behavioral economics are not referred to in statistical reform statements. Thus, it is uncertain how to achieve EBPM using statistical data and analysis. What is EBPM in Japan? It is not easy to answer because EBPM in Japan is a diverse project. It is impossible to suggest a whole of it perfectly. However, it is possible to suggest a main part of EBPM in Japan and point out its problems.

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Table 15.1 Three Arrows of EBPM “First Arrow”

“Second Arrow”

“Third Arrow”

Contents

Development of KPI on Economics

Policy Evaluation

Administrative Program Review

Target

Policy

Project

Program

Instruments

Reforming Statistics Corroborative Researches

Program Evaluation Corroborative Researches

Logic Model Performance Measurement

Purposes

Fiscal Consolidation Effectiveness

Accountability Effectiveness

Cost Cut Efficiency

Agency

Cabinet Office

MIAC

Cabinet Secretariat

Evidence

Impact KPI

Impact Statistics

Outcome Performance Indicator

Japan’s government promotes “Three Arrows of EBPM”. It is divided into three efforts. “First Arrow” focuses on “policy.” “Second Arrow” focuses on “program,” and “Third Arrow” focuses on “project” (Koike & Ochi, 2020). According to the government, they are different from instruments, purposes, agency, and what they treat as “evidence”; Table 15.1 shows their overviews. “First Arrow” focuses on developments of KPI (Key Performance Indicator). It has a strong relation to the economic policy of Abe’s government. At that time, Prime Minister Shinzo Abe promoted “Abenomics” which included diverse economic policies. When the LDP won the election in 2012, they emphasized economic issues. Thus, it is crucial for the LDP how to improve economics. In Japan, some researchers pointed out that economic indicators and statistics have some problems (Nishimura et al., 2020). According to them, the GDP of Japan does not reflect fact of economics. EBPM in Japan began as an economic issue. Thus, we can say that “First Arrow” is the main part of it. However, as shown in Table 15.1, EBPM in Japan has various forms. Then, I will explain them in order.

15.3 “First Arrow of EBPM” “First Arrow of EBPM” focuses on economic policy. It has the strongest relation to “Abenomics” and statistical reforms. Mainly, “First Arrow” promotes setting KPI in some policies and social experiments (it does not rigorous RCT because “N” is so small). For example, the “Empirical Research on Education Policy” was launched in 2016 and will continue to be researched and analyzed until FY2020 (2021 March). Figure 15.1 summarizes the contents of the “Empirical Research on

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Fig. 15.1 Improving budget efficiency and the quality of education in light of the serious decline in the birthrate (an example of first allow)

Education Policy.”1 As shown in the figure, it is indicated that policy formulation will be carried out by referring to empirical research in a wide variety of fields, such as the reform of teachers’ working styles and the introduction of smaller class sizes. In addition to the National Institute for Educational Policy Research, researchers from Osaka University, Naruto University of Education, and other institutions are involved in the project, and private companies are also cooperating. In addition, researchers from the National Institute for Educational Policy Research, Osaka University, Naruto University of Education, and other institutions are involved in the implementation of the project. Furthermore, an “empirical analysis of the working conditions of teachers” is also being conducted. This is being led by consulting companies and some researchers. The analysis is based on a questionnaire survey of full-time teachers in 400 randomly selected elementary schools and 400 middle schools. It is characteristic that they are trying to derive evidence by using not only quantitative research but also qualitative research. This is worthy of special mention as an example of full-scale EBPM. The attempt to clarify not only the “efficiency” but also the “effectiveness” of policies through research can be said to be an excellent example of EBPM. However, such cases involving full-scale empirical research are rare, and in most cases, target-controlled evaluations with KPIs are conducted. We can say that the features of “First Arrow of EBPM” are below. The first is that the evidence is not as rigorously derived as advocated. The policies listed in the reform agenda cover a wide range of fields, including science and technology innovation, social security, and the promotion of digital government, but 1

Figure 15.1 got from the Cabinet Office’s document (Cabinet Office 2019)

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the reality is that the quality of the initiatives varies considerably. As far as the “Process Chart” is concerned, only a limited number of policies have been subjected to empirical research, and the recommended methods of analysis are not clearly stated, which is not in line with the initial goal of spreading “good practices.” In many policies, KPIs are merely set for a limited period, and their relationship with measures and projects is not sufficiently organized. Even in the case of empirical research on education, which is a full-fledged effort, the working group in charge has become dormant, and the “report to this WG” at the final stage of the process doesn’t work well. The second point is that the purpose of many of the policies is defined as improving efficiency. It has been pointed out that budget reduction through efficiency improvement is not limited to the “First Arrow” but is a trend in EBPM in Japan as a whole (Takahashi, 2020: 9). This target setting is controversial in terms of consistency with EBPM. This is because EBPM essentially emphasizes the identification of the impact of policies or effectiveness. The third issue that can be pointed out is the ambiguity of the entities involved in promoting EBPM. According to previous studies, the Council on Economic and Fiscal Policy is supposed to take the lead in promoting the “First Arrow” (Koike & Ochi, 2020: 16). However, a closer look at the actual situation shows that it is the “Economic and Fiscal Revitalization Plan Promotion Committee,” a subordinate body of the Council, that is the driving force, and that the “New Economic and Fiscal Revitalization Plan,” on which the committee relies, currently sets the basic direction of the “First Arrow” of EBPM. In addition, the “working groups” under the committee are supposed to be in charge of each policy, but some of them have ceased their activities (some of them have been integrated), and their actual status remains ambiguous. Normally, it would be desirable to have working groups for each of the policy areas to be promoted to continuously monitor the efforts and have experts provide advice, but this is not the case (Sugitani, 2022: 89). In the first place, the selection criteria for the initiatives picked up in the “process chart” are unclear. While the “First Arrow” is a large-scale framework, it is still in its infancy in terms of operation. In contrast, the “Second Arrow,” which is promoted using some kind of institutional framework, can be said to be a systematic approach.

15.4 “Second Arrow of EBPM” The “Second Arrow of EBPM” is being implemented in the policy evaluation under the jurisdiction of the Ministry of Internal Affairs and Communications. The Administrative Evaluation Bureau of the Ministry of Internal Affairs and Communications (MIC) is promoting the “Second Arrow” with the same policy as the “First Arrow”. In other words, the policy is to select several leading cases and promote EBPM there. The MIC document in 2020, “Results of Empirical Joint Research and Future Initiatives,” explains desirable policy planning, desirable policy implementation, and desirable policy evaluation and improvement as follows (MIC, 2020: 2).

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First, desirable policy making is defined as satisfying the following two conditions: “an accurate understanding of the issues to be resolved using data and other evidence to achieve the policy objectives” and “the selection of appropriate measures based on logical consideration and evidence to resolve the issues” (ibid.). Then, desirable policy implementation is defined as “monitoring the status of policies being implemented and managing progress appropriately using evidence” and “using ICT and other means to promptly capture changes in society and reflect them in policies.” It stipulates that two conditions must be met: “efficient and reliable data collection and analysis are conducted” (ibid.). Finally, the report states that it is important that “efforts are made to improve the accuracy of policies, such as selecting more appropriate measures to address issues to be resolved, by conducting evaluations based on the evidence collected at the implementation and evaluation stages, as well as more robust evidence obtained by eliminating external factors to the extent possible” (ibid.). According to the MIC, “the Office of Government Management and Evaluation will work together with other ministries. The goal of this effort is using the EBPM tool as an entry point, to spread and establish the above-mentioned desirable policy process activities” (ibid.). Based on the above definition, it is intended to make EBPM take root through policy evaluation as the “Second Arrow” by conducting “empirical joint research.” As a concrete method, the same approach as the “First Arrow” is taken, which is to conduct experimental research on some leading cases. Compared to the “First Arrow,” which has an ambiguous institutional positioning and unclear driving force, the “Second Arrow” is characterized by the fact that the MIC is taking the lead in the initiative. The website operated by the MIC introduces its efforts to provide advice on EBPM promotion by accepting questions and inquiries from those in charge, under the title of “answering policy questions from those in charge at each government ministry.” In this site, the idea that EBPM practice is explained as “more like a skill that you learn with your body than a science that you think about with your head.” This is based on the idea that changing the mindset of those in charge at each ministry and agency by accumulating practices, even if they are incomplete, will contribute to the establishment of EBPM. What kind of empirical research is being promoted based on this idea? They are several empirical types of research about the variety of policy fields, each with a different department under its jurisdiction. Figure 15.2 is the document of MIC and it shows four points of “Second Arrow of EBPM”.2 According to Fig. 15.2, MIC pointed out the four issues on EBPM. First, it is pointed out that there is a limit to simply answering questions received via the Internet. It suggests the need to understand the needs of the demand side as well as the perspective of the supply side of policy, which is a very important perspective for the promotion of EBPM. This is a very important point of view for promoting EBPM. The current situation in Japan is still strongly focused on how to derive evidence, and the demand-side 2

Figure 15.2 got from the MIC’s document (MIC, 2020).

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Fig. 15.2 Tasks of empirical collaborative researches and future directions

perspective is not well understood. As for the need to involve those who accept and use evidence, it has been suggested that the use of evidence and the active participation of those who use it in programs are important in the promotion of EBPM in the UK (Pallett, 2020). Second, the need to promote EBPM in line with changes in society has been mentioned. In Japan, which does not have an abundance of practitioners capable of generating evidence like the US, the government must take the lead in supporting research that contributes to EBPM. This is because the more actors that can derive evidence, the richer the evidence will be and the more it will contribute to the promotion of EBPM that is adaptable to changes in society. Third, it has been pointed out that it is unclear what impact these results have had on the policy making of the relevant government ministries. Even in the two special cases mentioned as “advanced,” it is unclear to what extent the ministries concerned will continue to be involved in the efforts to determine how to proceed. Follow-up is necessary, but it would require an enormous amount of effort to start new initiatives while following up on existing ones. What seems to be worth considering here is the collaboration with the existing policy evaluation of the Ministry of Internal Affairs and Communications? Given the fact that the “Second Arrow” is being promoted as part of the policy evaluation, it may be realistic to follow up on the targeted measures in the process of policy evaluation. In terms of institutional positioning, the “Second Arrow” was supposed to be implemented in conjunction with the policy evaluation. The fact that it is implemented by the Ministry of Internal Affairs and Communications makes this clear. There is no evidence that such points have been considered as proof that the existing policy evaluation and the “Second Arrow” are not sufficiently linked. The fourth issue is that of administrative practice, which cannot be avoided in promoting EBPM. It is necessary to disseminate EBPM initiatives in an easy-tounderstand manner, but it is also necessary to involve various actors involved in EBPM, such as parliament, related companies, and evaluators and to share roles (Orr, 2018: 56–57). This is because if only results that are not commensurate with

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the enormous amount of work are obtained, the only thing that will remain for frontline staff will be a sense of drudgery, and there is a risk that an aversion to EBPM will become widespread. In the current situation where “evaluation fatigue” has been pointed out, it is important to save labor in the field as much as possible. In light of the above, it can be said that compared to the “First Arrow,” the “Second Arrow” has a better understanding of the issues and a more systematic approach because the Ministry of Internal Affairs and Communications is taking the lead. However, it is unclear what kind of criteria were used to select these measures. It is also unclear how EBPM differs from existing policy evaluations and how it relates to existing policy evaluations, even if we look at the definition of “desirable” policies. This is because all of the definitions listed above can be used as definitions for existing policy evaluation. Now, I would like to make three points that have become clear through our discussion of the “Second Arrow” under the jurisdiction of the Ministry of Internal Affairs and Communications. First, one of the major differences between EBPM theory and policy evaluation is that EBPM is oriented toward ex-ante evaluation, while policy evaluation efforts are generally ex-post evaluation. However, ex-ante evaluations are costly and difficult to implement in reality because of the high hurdles involved. For this reason, EBPM in the “Second Arrow” is practically centered on ex-post evaluation. Second, while policy evaluation in Japan is conducted as an internal evaluation, EBPM is based on the premise of external evaluation. In the past, the necessity of external evaluation has often been called for in discussions of policy evaluation, but it is not easy to fully develop external evaluation, which is labor-intensive and costly. In the case of policies treated as model cases for EBPM, a certain degree of externality seems to be ensured since external research institutes and experts are involved (although it is unclear what form of evaluation this takes). This is a characteristic and merit of practicing EBPM within the framework of policy evaluation. The third point is the active collaboration with the private sector. It has often been argued that bureaucrats are the main players in EBPM in Japan and that external actors such as researchers participate only in a limited way (Takahashi, 2020: 9). This is in contrast to the fact that consulting firms have become the main players in EBPM, especially in the US. The efforts of the second arrow have the potential to create a stir in the way EBPM should be. In light of the fact that bureaucrats see the lack of research understanding and skills as a constraint in promoting EBPM, it would be desirable to increase the number of actors involved in the derivation of evidence (Morikawa, 2017). Although the number of cases of collaboration with companies is still small compared to the US and the UK, EBPM should be promoted by involving many actors, including research institutes, in the future.

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15.5 “Third Arrow of EBPM” In the “Third Arrow of EBPM,” “administrative project review,” the logic model is used to check whether the logical structure assumed by the project is valid or not. In other words, we examine whether the causal relationships and theories assumed by the project are correct or not (Royse et al., 2015: 122–125). This corresponds to what is called “theory evaluation” in program evaluation. In the administrative project review, the review sheet is also used to examine the budget execution rate of the project and the progress of the project. This is what is called “process evaluation” in program evaluation. Both “theory evaluation” and “process evaluation” require a great deal of time and effort if they are to be implemented in earnest. For example, in order to examine whether the theory of a project is correct or not, it must be supported by data, including statistical information. It is also necessary to conduct interviews with the actors involved in the project to determine whether the project process is proceeding as expected (Bamberger & Mabry, 2020: 250–253). In the case of government project reviews, none of these are required, so it can be said that theory and process evaluations are conducted in a “simplified” form. Another characteristic of the Administrative Project Review is that it focuses on performance measurement. To begin with, logic models are also considered to be compatible with performance measurement because they set and visualize quantitative outcomes (McDavid et al., 2019: 33). In administrative project reviews, the efficiency of a project is examined by examining the extent to which the results obtained were in line with the resources invested. It should be pointed out here that the review pursues multiple objectives: the 2013 Cabinet Decision stipulates that the objectives of the review are as follows. The 2013 Cabinet Decision stipulates the purpose of the Administrative Project Review as follows: “Through the implementation of the Administrative Project Review (omitted), the government shall strive to ensure more effective and efficient implementation of the projects under the jurisdiction of each government ministry and agency, as well as accountability and transparency of the government administration to the public, thereby realizing a high-quality government that is trusted by the public”. Here, it is clearly stated that not only the “effectiveness” but also the “efficiency” of the project is to be considered. Despite the goals of the Administrative Project Review, it is actually difficult to pursue “effectiveness” and “efficiency” at the same time. In program evaluation, it is also pointed out that efficiency should be considered last, as pursuing efficiency too much may compromise effectiveness. Ideally, the existence of “necessity” should be examined, followed by an evaluation focusing on “effectiveness,” and finally, “efficiency” should be examined. From the perspective of EBPM, “effectiveness” should be the priority. However, administrative project reviews have limitations in examining “effectiveness.” This is because both “theory evaluation” and “process evaluation” are methods to evaluate the “effectiveness” of policies, but they are only implemented in a simplified manner.

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Fig. 15.3 Logic model of “R&D-based Startup Support Project”

In the fiscal 2019 Administrative Project Review, a total of 26 projects from five ministries (Ministry of Agriculture, Forestry and Fisheries [MAFF], Ministry of Land, Infrastructure, Transport and Tourism [MLIT], Ministry of Economy, Trade and Industry [METI], Ministry of Education, Culture, Sports, Science and Technology [MEXT], and Ministry of Health, Labor and Welfare [MHLW]) were examined from the perspective of EBPM using logic models. Figure 15.3 shows the logic model created for one of the projects, the “R&D-based Startup Support Project” of the MITI.3 The MITI has been more active in EBPM than other ministries, as it has been conducting trial verification of EBPM for all the projects subject to the public process since the administrative project review in FY 2018. The outline of the project is as follows: “Since the creation and development of R&D startups is insufficient in Japan, in order to solve this situation, we will provide support according to the project stage to R&D startups that have the potential for rapid growth and will be selected as J-Startup target companies in the future.” The results of the review of this project are described as follows.

3

Figure 15.3 is from MITI’s document (MITI, 2020).

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As a result of the review of this project, two respondents answered that the project was “as it is now” and four others answered that “some improvements have been made.” While the results were generally positive, questions were raised about outputs and outcomes, such as whether there is a relationship between the number of grant projects and the doubling of investment in startups, and whether the operation of the US venture ecosystem is compatible with Japan. It also points out the problem of “discernment” in determining what seeds to invest in at the input stage, and raises issues such as how to identify appropriate targets for resource input. The review deals with a variety of issues, but one suggestive issue raised is whether or not overseas approaches can be directly applied to Japan. This is in line with the question that is also discussed in EBPM: the gap between “it worked there” and “it will work here” (Cartwright & Hardie, 2012). More fundamentally, an administrative project review cannot examine the causality of policy. It depends on verbal communication between experts and bureaucrats. It has simple assumption that it is not so difficult to reveal the problems of the project and how to improve them. Thus, “Third Arrow of EBPM” has limitations on revealing the causality of policy and generating evidence.

15.6 Summarize of EBPM in Japan “Second Arrow of EBPM” is the most stable and systematic effort of the three arrows. This is because the second arrow is under the jurisdiction of the MIC which has implemented a policy evaluation since 2002. In short, MIC knows how to work on policy evaluation. This experience has been applied to EBPM. We can say that EBPM in Japan has two problems. First, compared to the US and UK, they are pioneers of EBPM, EBPM in Japan is not so systematic and not so fixed. The most important point is the difference in effectiveness and efficiency. As I mentioned above, to understand this, we should see the history of policy evaluation. The policy evaluation culture in Japan overemphasizes on cost cuts and it influences EBPM. Contrastingly in the US, there is a long tradition of social experiments (Baron, 2018: 42–44). Thus, the US can promote the large-scale RCT because many researchers involve social experiments. This context enables the US to promote EBPM under the Obama administration (Haskins & Margolis, 2014). Japan has no such context, and this is one of the reasons EBPM in Japan pursues efficiency despite it being not the core of EBPM. Moreover, the usability of data is a fatal point of EBPM and the US had prepared the Foundations for Evidence-Based Policy Making Act of 2018 that contributes to the promotion of usability of data (Sugitani, 2022: 21–24). Such efforts are underway in Japan, but they have only just begun and there are many issues to be addressed (ibid.: 55–78). The UK and Japan have something in common. At first, the momentum of using social sciences in public policy is not strong in the UK (Nutley et al., 2007: 12– 13). Therefore, the UK’s government had established a research agency called What

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Works Centre. This has enabled the UK to reign as the global leader in EBPM. This situation is similar to Japan because there is not much momentum for the use of social science in policy, and the number of think tanks which can implement RCT or social experiment is small. If Japan’s government wants to promote EBPM like the US or UK, it is necessary to establish a think tank or research agency that can contribute to social science for policy. However, this direction would lead to the reintroduction of the age-old phenomenon known as the nationalization of the social sciences (Klausner, 1986). This means that social scientists are forced to serve the national interests. It is a fundamental problem of policy sciences.

15.7 Some Problems of EBPM The feature of EBPM in Japan is the struggle between efficiency and effectiveness. As mentioned above, it is necessary to divide and readjust EBPM. Especially in Japan, the culture of public policy evaluation is influenced by neoliberalism. Under the administration of Junichiro Koizumi (2001–2006), “structure reforming” (KouzouKaikaku) was implemented. These policies are constructed by privatizations and regulatory reforms. EBPM in Japan is an extension of these efforts. Thus, many discourses of EBPM in Japan confuse effectiveness and efficiency because of the contexts of administrative reforms based on the efficiency. Confusing these concepts brought about distrust and criticism in EBPM. Some scholars argue that performance management and using logic models are not EBPM because there is no rigorous evidence. Such critics focus on policy evaluation, and we can see the neoliberalism behind this tendency. For example, some scholars argue that evidence-based movement includes colonialism which means the project of undemocratic and dominant discourses (Shahjahan, 2011). Policy analysis is useful to achieve this. As many scholars pointed out, policy analysis is not pure scientific engagement but the critique or advocacy (Dryzek, 2008). Thus, we should not divide knowledge and political power. However, the movement of EBPM hides such a side of expertise that collude with politics. Such intention is called “de-politicization.” As I mentioned above, EBPM in Japan is a diverse effort. However, it is necessary to recognize that there are common intentions which are related to anticipation and controlling the future. From such perspectives, we can say that EBPM is the project of politics for the control of our future and society. We should see the evidence is not pure scientific knowledge in the policy process but the tool of political power which procures support of the people. For example, the concept of efficiency has many functions. In examining them, the term “performance” is the key. According to Kathryn Newcomer and Clint Brass, the concept of performance is different from the actors to actors and the environment of public administration (Newcomer & Brass, 2021). Such viewpoints led us to a new

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perspective of public administration studies like psychology (Prysmakova, 2021). Thus, the pursuit of efficiency implies nothing less than a further strengthening of positivism in policy research and a centralization of approaches. In addition, pursuing efficiency means the dominance of positivism and scientism and the promotion of the project which is supported by rationalists’ worldviews (Newcomer & Brass, 2021: 71). According to management theory, “scientific management” can achieve an efficient government. Thus, the pursuit of efficiency implies nothing less than a further strengthening of positivism in policy research and a centralization of approaches. Also, the concept of effectiveness has diverse functions. For example, the existence of evidence itself does not have anything to do with politics. According to Peter Triantafillou, the accumulation of evidence is biased (Triantafillou, 2017). To gather evidence, it is necessary to intervene in the groups. (….) (E)xpmerimental methods are fine for examining programmes targeting the underage, the sick, the criminal. The drug abuser and the unemployed but not the company engaged in tax fraud or the lobbyist peddling contracts for new military equipment. (ibid: 124)

We need to recognize that pursuing effective policy making is not a neutral act. Of course, some scholars will argue that it is not evil but it is good for them. However, we have already known that the existence of evidence influenced the framing of the problem (Parkhurst, 2017: 54–58). If there is sufficient evidence to treat juvenile delinquents as “criminals,” the policy of how to deal with them will be supported. However, it is possible to consider them as people who need support from the viewpoint of how to “rehabilitate” them, and it is also possible to consider them as people who need support. Such a policy may be desirable. Making policy based on evidence also destroys the possibility of different approaches. In this way, efficiency and effectiveness are more than just one concept in policy evaluation. I pointed out that the distinction between these two functional concepts is not sufficient in the EBPM in Japan. More importantly, the formulation of policies in line with these concepts has an impact on the very nature of our society. In short, the promotion of EBEM is not simply a matter of pushing forward with scientific evidence toward a certain politically determined objective. To avoid such bias of evidence, Justin Parkhurst suggested the “Governance of Evidence.” This framework deny gold standard (or hierarchy) of evidence (Parkhurst, 2017). He suggested the new framework that focuses on the diverse aspects of EBPM. For example, transparency in evidence use, contestability of evidence and so on (ibid.: 163). These elements are mutually critical and can be interpreted as overcoming bias through a multifaceted view of the evidence. This approach pursues to overcome the bias of evidence.

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15.8 Conclusion: Struggling Between Effectiveness and Efficiency and Beyond The obvious feature of EBPM in Japan is the conflict between efficiency and effectiveness. As mentioned above, it is necessary to divide and readjust EBPM. Especially in Japan, the culture of public policy evaluation is influenced by neoliberalism. Thus, many EBPM discourses in Japan confuse effectiveness with efficiency because administrative reform is based on the latter. As mentioned above, EBPM in Japan is a diverse concept. However, it is necessary to recognize certain common intentions related to anticipation and control over the future. Such perspectives enable us to claim that EBPM is a political project to control our future and society. We should realize that evidence is not purely scientific knowledge used in developing policy but a tool of political power that could be used to procure people’s support. Therefore, efficiency and effectiveness are more than just one concept of policy evaluation. I have pointed out that these two functional concepts have not been sufficiently differentiated in EBPM in Japan. More importantly, the formulation of policies that align with these concepts influences the very nature of our society. In short, the promotion of EBPM is not simply a matter of using scientific evidence to push forward toward a certain, politically determined objective (Pabst, 2021). In Japan, the SDGs and sustainable development discourse have hegemony in public policy. Few would object to the creation and implementation of science-based policies aimed at a sustainable future. SDGs have become such a powerful statement because they are acceptable to many actors, whether businesspeople, activists, or partisans. I do not object to this, of course. However, we must not overlook the power of knowledge behind universally acceptable statements. According to Laureen Elgert, achieving sustainable development includes multiple issues like globalization, depoliticizing, and so on (Elgert, 2009). It is difficult to solve global policy problems with EBPM. This is because of the differences among experts in different countries and the democratic legitimacy that stands in the way (Strassheim, 2016). This is also true for COVID-19 (Amengual and Atusmi, 2021; Sugitani, 2021b). From this perspective, even sustainable development cannot be free from politics. This chapter provides an overview of EBPM in Japan and identifies the related problems. There are many versions of EBPM in Japan, but their common characteristic is the conflict between “efficiency” and “effectiveness.” It is no exaggeration to say that Japanese policy evaluation has been trapped in the spell of “efficiency” since its inception. This spell also defines the development of EBPM today. If EBPM in Japan continues to play an important role in the future, it will need to be more sensitive to these differences. Although effectiveness is more important than efficiency in EBPM, this category is not yet fully recognized in Japan. This makes the practice of EBPM extremely

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mediocre as it merely leads to cost-cutting, meaningless performance-based assessment, and numerical dominance. If this continues, EBPM in Japan will end in a transitory epidemic and soon be thrown into the wastebasket of history. Unfortunately, too few Japanese researchers have pointed this out. More important, however, is that this orientation based on evidence, whether efficiency or effectiveness, dominates our views, contributes to the strengthening of political power, and sometimes even encourages our prejudices. We may have to abandon the idea that enlightenment makes us infinitely liberal. We must remember that EBPM is a progressive effort, as well as a political project that determines the desired future and mobilizes the resources needed to get there. The same applies to the SDGs. Overlooking the politics behind the vision of a “sustainable future” on which everyone agrees will lead us into an unsustainable future. Nothing in politics is more dangerous than a policy on which everyone agrees. Acknowledgements A part of this chapter based on my full thesis of ICPP5 (International Conference on Public Policy) in 2021 and my thesis written in Japanese (Sugitani, 2021a). In the ICPP, I got a lot of “effective” advice from Fritz Sager and Justin Parkhurst. Thanks for their contributions.

References Amengual, O., & Atsumi, T. (2021). COVID-19 pandemic in Japan. Rheumatology International, 41, 1–5. Bali, A. S., Capano, G., & Ramesh, M. (2019). Anticipating and designing for policy effectiveness. Policy and Society, 38(1), 1–13. Bamberger, M., & Mabry, L. (2020). RealWorld evaluation: Working under budget, time, data, and political constraints third edition. SAGE Publication. Baron, J. (2018). A brief history of evidence-based policy. The Annals of the American Academy, 678, 40–50. Cabinet Office. (2019). New economic and fiscal revitalization plan process chart. https://www5. cao.go.jp/keizai-shimon/kaigi/minutes/2019r/1219/shiryo_01-2.pdf Cartwright, N., & Hardie, J. (2012). Evidence-based policy: A practical guide to doing it better. Oxford University Press. Dryzek, J. (2008). Policy analysis as critique. In R. Goodin, et al. (Eds.), The Oxford handbook of public policy (pp. 191–204). Oxford University Press. Elgert, L. (2009). Politicizing sustainable development: The co-production of globalized evidencebased policy. Critical Policy Studies, 3(3–4), 375–390. Grundmann, R., & Stehr, N. (2012). The power of scientific knowledge: From research to public policy. Cambridge University Press. Haskins, R., & Margolis, M. (2014). Show me the evidence: Obama’s fight for rigor and results in social policy. Brooking Institution Press. Klausner, S. Z. (1986). The bid to nationalize American social science. In S. Z. Klausner & V. M. Lidz (Eds.), The nationalization of the social sciences (pp. 3–39). University of Pennsylvania Press. Koike, T., & Ochi, M. (2020). The introduction of EBPM to Japan. Evi dence-Based Policymaking: Current Status and Issues, 9–35 (Written in Japanese). Kudo, Y. (2003). Between the ‘Governance’ model and the policy evaluation act: New public management in Japan. International Review of Administrative Sciences, 69, 483–504.

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McDavid, J. C. et al. (2019). Program evaluation and performance measurement: An introduction to practice. SAGE Publication. MIC. (2020). Results of empirical joint research and future initiatives (Written in Japanese). https:/ /www.soumu.go.jp/main_content/000686895.pdf MITI. (2019). On the R&D-based startup support project (Written in Japanese). https://warp.da. ndl.go.jp/collections/content/info:ndljp/pid/12685722/www.meti.go.jp/information_2/public offer/review2019/kokai/s1.pdf Morikawa, M. (2017). The evidence of ‘Evidence-based policy making’ (RIETI Policy Discussion Paper Series, 17-P-008) (Written in Japanese). https://www.rieti.go.jp/jp/publications/summary/ 17030029.html Newcomer, K., & Brass, C. (2021). Performance: Making sense of forests and tress. In T. A. Bryer (Ed.), Handbook of theories of public administration and management (pp. 67–79). Edward Elgar. Nishimura, K., Yamasawa, N., & Higo, M. (2020). Statistics the crisis and reformation: Towards the rebirth from the degradation of the systems. Nihon Keizai Shinbun Publishing (Written in Japanese). Nutley, S., Walter, I., & Davies, H. (2007). Using evidence: How research can inform public service. Policy Press. Orr, L. (2018). The role of evaluation in building evidence-based policy. The Annals of the American Academy of Political and Social Science, 678(1), 51–59. Osborne, D., & Gaebler, T. (1993). Reinventing government: The five strategies for reinventing government. Plume. Pabst, A. (2021). Rethinking evidence-based policy. National Institute Economic Review, 255, 85–91. Pallet, H. (2020). The new evidence-based policy: Public participation between ‘Hard Evidence’ and democracy in practices. Evidence & Policy, 16(2), 209–227. Parkhurst, J. (2017). The politics of evidence: From evidence-based policy to the good governance of evidence. Routledge. Prysmakova, P. (2021). Public service Lala-Land: Public service motivation research and its researchers. In T. Bryer (Ed.), Handbook of theories of public administration and management (pp. 151–166). Edward Elgar. Royse, D. et al. (2015). Program evaluation: An introduction to an evidence-based approach sixth edition. CENGAGE Learning. Shahjahan, R. A. (2011). Decolonizing the evidence-based education and policy movement: Revealing the colonial vestiges in educational policy, research, and neoliberal reform. Journal of Education Policy, 26(2), 181–206. Strassheim, H. (2016). Knowing the future: Theories of time in policy analysis. European Policy Analysis, 2(1), 150–167. Sugitani, K. (2021a). A challenge for evidence-based policy making in Japan: Focusing on ‘Three Arrows of EBPM’. Social Systems: Political, Legal and Economic Studies (24), 87–108 (Written in Japanese). Sugitani, K. (2021b). COVID-19 as wicked problem: Concentrate on the relation of politics and expertise. Journal of Health and Welfare Policy, 4(1), 27–37 (Written in Japanese). Sugitani, K. (2022). Do we need evidence in public policy?: Between politics and EBPM. Minerva Publishing (Written in Japanese). Takahashi, Y. (2020). Will EBPM establish in Japan?: Through the experience in Europe and US (Nakasone Peace Institute, Policy Paper) (Written in Japanese). https://npi.or.jp/research/2020/ 03/23135920.html Triantafillou, P. (2017). Neoliberal power and public management reforms. Manchester University Press. Wells, P. (2007). New labour and evidence based policy making: 1997–2007. People, Place & Policy Online, 1(1), 22–29. https://doi.org/10.3351/ppp.0001.0001.0004

Chapter 16

Governance Under Uncertainties for the COVID-19 Pandemic: Policy Lessons Learned in Japan from Resilience Perspectives Mika Shimizu

Abstract The Coronavirus “COVID-19” Pandemic poses tremendous policy problems especially in terms of how to address uncertainties and complexities interrelated with different national and local social and economic systems or conditions. Even after we overcome this challenge, we may have similar challenges in coming years, given human society’s over-intervention with nature. Thus, how we learn from the COVID-19 will largely be linked with how we formulate “governance for the sustainable future.” Specifically, the policy problems seen in the COVID-19 lead to the reality that the various parties to a decision do not know or cannot agree upon the system and its boundaries, bringing about the question of how to “link” local, national, and international public policy involving different parties including scientists, private sectors and communities under uncertainties. The linkage which is one of critical components in resilience-based public policy holds a key in addressing uncertainties and complexities through innovative policy processes and governance. This chapter draws on lessons learned from the COVID-19 in Japan with the focus on national-local policy processes and governance from resilience perspectives, specifically resilience-based public policy to provide policy implications for different stakeholders not only in Japan but also in other countries in terms of how to manage emerging complex and uncertain risks collaboratively. Keywords Decision-making · Deep uncertainty · Systemic risks · Resilience-based public policy · Systems · Complexities

M. Shimizu (B) Kyoto University, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_16

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16.1 Introduction and Background The Coronavirus “COVID-19” Pandemic (COVID-19 hereinafter) which has impacted on human society enormously, with 6,520,263 deaths worldwide as of September 30, 2022 according to World Health Organization, is characterized by uncertainties, including the aspects of how the virus will be transformed, how the COVID-19 will impact on the overall human society, and when people can get back to normal life or when another kind of virus will be emerging. Even after we overcome this challenge, we may have similar challenges in coming years, given human society’s over-intervention with nature: unprecedented road-building, deforestation, and agricultural development make us susceptible to pathogens like coronaviruses; the public health risks are interlinked with urbanization, population density, globalized travel and trade, as well as aging and poverty, which will result in far-reaching social and economic consequences in near future too. Thus, how we learn from the COVID-19 will largely be linked with how we formulate “governance for the sustainable future.” The COVID-19 poses tremendous policy problems especially in terms of how to address uncertainties and complexities interrelated with different national and local social and economic systems or conditions, which lead to the reality that the various parties to a decision do not know or cannot agree upon the system and its boundaries (Lempert et al., 2003) (see Sect. 16.3.1). The policy problems lead to the question of how to “link” local, national, and international public policy involving different parties including scientists, private sectors and communities under uncertainties. Especially large-scale complex disasters cannot be addressed by just community resilience but the linking of national-to-local to community systems are equally essential to creating effective public policy through a continuum of functions from the local community to national system-to-system linkages. Such linkages including ones in communication, or among actors, organizations, or sectors or between operations/fields and decision-making, or among resources, hold a key in addressing uncertainties and complexities through innovative policy processes and governance (Shimizu & Clark, 2019). Given the above, this chapter will draw on lessons learned from the COVID19 in Japan with the focus on national-local policy processes and governance from resilience perspectives. Especially, the chapter will address the questions including (1) how policy resources, including human, financial, information/data/knowledge and technological resources have been managed at national and local levels, (2) what kinds of information sharing or risk communication have been taking place, and how policy decision has been made, and (3) what kinds of best practices are identified from resilience points of views specifically to provide keys in addressing relevant challenges. Especially “resilience-based public policy,” which is a broad, flexible, and multifaceted framework for driving actions for resilient societies in reviewing, restructuring, and designing policy systems/subsystems or schemes based on understandings of systems approach, system linkages, and system capacity (Shimizu & Clark, 2019), will be referred to as an analytical framework through this chapter.

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As such, the above key major questions seeking through this chapter are also drawn referring to the framework of resilience-based public policy whose major pillars include national-to-local linkages from policy resource, policy actor, and policy communication perspectives (see Sect. 16.2). In applying the framework of resilience-based public policy to specific policy issues, considering both the whole and details in a continuum (Shimizu, 2022) is emphasized, and more specifically, specific contexts including social and economic contexts at national to local/community levels need to be taken into account to get a whole picture of policy lessons learned in Japan. In terms of the contexts at national to local/community levels, one of the critical contexts in addressing the COVID-19 policy case in Japan is the aging society. The number of the population aged 65 and over is 36.19 million. The percentage of the population aged 65 and over (percentage of the elderly) is 28.8%, and the population aged between 65 and 74 years is 17.47 million, accounting for 13.9% of the total population of Japan. More specifically, the population aged 75 years and over is 18.72 million, accounting for 14.9% of the total population, and has overtaken the population aged 65–74 years in size (Cabinet Office of Japan, 2021). Furthermore, it is to note that the aging ratio in regional areas compared to the one in the urban cities is much higher: The average aging ratio in prefectures which include major urban cities (Tokyo, Kanagawa, Osaka Hyogo, and Kyoto) was about 26.7% in 2018 and it is predicted to be 35.8% in 2045, while other prefectures including the regional areas was about 30.5% and it is predicted to be about 39.6% in 2045 (Cabinet Office, 2019). This social structure interrelated to the aging in Japan has cascading impacts on the structure of the overall society, including less population and less youths in the regional areas, which lead to less medical resources including less doctors and medical institutions in the regional areas, which sets an underlying social and economic conditions in thinking about the overall governance under uncertainties of the COVID-19. On the other hand, this kind of vulnerable situation including the lack of human and medical resources are not necessarily related to the lack of resilience during the COVID-19. This point will be discussed in association with the above research question (3). Although the chapter focuses on the case of Japan with the unique social and economic contexts, it may not be appropriate to see it just as a case study. Rather reviewing and assessing the case of Japan from resilience points of views, more specifically resilience-based public policy, will elucidate how to address uncertainties and complexities in and around systemic risks under specific social and economic conditions, which is an overarching theme in sustainable society (Shimizu, 2022). Addressing uncertainties and complexities of systemic risks under specific social and economic conditions needs resilience-based public policy especially because such systemic risks require systemic views and systems-based approaches. Those views or approaches can converge into resilience-based public policy, which engages in addressing the areas of policy resource management, coordination of systems/ subsystems, and communication between different stakeholders, which can impact policy effectiveness, efficiency, and consequences.

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As such, the policy lessons learned in Japan will provide policy implications for different stakeholders not only in Japan but also in other countries in terms of how to manage emerging complex and uncertain risks collaboratively. Based on the above, the below provides the details of the framework of resilience-based public policy in association with the COVID-19, followed by case analysis of COVID-19 in Japan from the views of resilience-based public policy.

16.2 Framework of Resilience-Based Public Policy and Its Application to the COVID-19 This section is twofold: First, a basic understanding is provided in terms of how resilience perspectives are relevant to the contexts of the COVID-19. Second, based on the understanding, the framework of resilience-based public policy is provided relevant to addressing the challenge of the COVID-19, and how the resilience-based public policy can be applied in drawing lessons from the COVID-19 in Japan, is provided respectively.

16.2.1 “Resilience Perspective” in the Contexts of the COVID-19 As specified in the beginning of the chapter, the COVID-19 is characterized by uncertainties: Although risks and uncertainties are overlapped and all kinds of risks have uncertainties, “risks” are basically controllable and quantifiable with measurements such as probabilities, while uncertainties are difficult to control and quantify and are interrelated with systemic risks. Furthermore, uncertainties refer not only to a current uncertain state of the problem or challenge but also to the uncertainty resulting from behaviors of actors involved in decision-making. Under deep uncertainty, which can be applied to the situation of the COVID-19 (see Box 16.1), experts do not know or the parties to a decision cannot agree upon (1) the external context of the system, (2) how the system works and its boundaries, and/or (3) the outcomes of interest from the system and/or their relative importance (Lempert et al., 2003). Deep uncertainty also arises from actions taken over time to respond to unpredictable evolving situations. Especially in terms of policy, whether to take deep uncertainty into consideration in making a decision is a choice, but a decision that ignores deep uncertainty ignores reality (Marchau et al., 2019), which may impact overall consequences during or after the crisis.

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Box 16.1 Deep uncertainty in association with COVID-19 The multi-layered uncertainties or deep uncertainty involved in risks and challenges reflect COVID-19. In particular, the complex situations for more than two years as of 2022 have entailed measurement, structural, temporal, and interpretive uncertainties from both scientific and social points of view, including how and when the virus will mutate, under what circumstances will it develop and in what forms, who will be impacted, what measures should be taken, and when will they be taken. As they are communicated, interpreted, and acted upon through complex social systems or stakeholders (e.g., health care systems, emergency systems, infectious disease tracking systems, vaccine management systems, governments, infectious disease expert committees, hospitals and health care providers, local governments, public health departments, media, and others), uncertainties arise in communication, interpretation, and response. In addition, such a situation especially causes more anxiety among the socially vulnerable, such as the elderly, pregnant women, people with disabilities, and foreigners who do not understand the local language (Shimizu, 2022). Given the characteristic nature of the COVID-19, especially in association with decision-making, the COVID-19 poses tremendous policy problems that require a complex calculus premised on decision-making under uncertainties (Shimizu & Clark, 2019), which, in turn, requires a paradigm shift, that is not based on predictions of the future but that aims to prepare for and adapt to the future, by monitoring how the future evolves and allowing adaptations over time as knowledge is gained (Marchau et al., 2019). In another term, the COVID-19 necessitates a paradigm shift from a reactive approach to anticipatory, proactive, and adaptive approach (Okada, 2004) in decision-making under deep uncertainty. It is the paradigm shift that necessitates resilience perspective. The resilience perspective which is based on a systems approach has different aspects including adaptation and learning. Specifically in the contexts of decision-making under deep uncertainty, the resilience approach suggests that at least the decision-making under deep uncertainty should not be based on linear and “silo” decision-making approach and one-time approach, and should be based on nonlinear learning-based, linkagebased, and process-based approach with multiple temporal (i.e., short-term, midterm, and long-term perspectives) and scale views (i.e., from small to large scales) (Shimizu & Clark, 2019). Especially to grasp the broader policy context and interrelationships between complex system elements requires a systems approach that provides a holistic and analytical approach for the identification of system elements, boundaries, and their synthesis as a “system of systems” (Jackson, 2010), which is a basis of resiliencebased public policy (see Sect. 16.2.2).

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16.2.2 Resilience-Based Public Policy in Association with the COVID-19 Given the above understanding of resilience perspective in the contexts of the COVID-19, the Table 16.1 draws major pillars of the framework of resilience-based public policy especially in association with the COVID-19 and provides how each pillar is applied to addressing the COVID-19 from decision-making and policy points of views.

16.3 Case Analysis from Resilience Perspectives: Japan The below provides the case of Japan with the focus on the above questions (1) how policy resources, including human, financial, information/data/knowledge and technological resources have been managed at national and local levels, (2) what kinds of information sharing or risk communication have been taking place, and how policy decision has been made, and (3) any best practice is identified from resilience points of views specifically to provide keys in addressing relevant challenges. Based on the above questions, the below addresses the situation with the focus on direct impacts and policy actions and cascading social impacts and different case analyses from the perspectives of resilience and resilience-based public policy.

16.3.1 Overall 16.3.1.1

Direct Impacts and Policy Actions

Japan has experienced six waves of the COVID-19 so far since the first domestic case of COVID-19 transmission was reported on January 16, 2020. At the beginning stage, for example, according to the reported numbers of infected cases as of October 30, 2020, a cumulative total of infected cases was around 99,000 and a cumulative number of deaths was around 1700, while as of the 26 of June, 2022, it was reported a cumulative total of new cases is around 930,000, and about 32,000 deaths (the Ministry of Health, Labor and Welfare [MHLW], Japan, 2022). As such, at the beginning of stage, since the numbers of deaths was comparatively low compared to other countries as seen from the ratio in terms of total numbers of deaths (1733) out of the total numbers of all deaths in the world (1,290,118) which is about 0.13% as of October 30, 2020, Japan tended to be considered as a successful case to contain the infection at that time, the situation has changed as virus mutated: Especially around the six wave around January–February in 2022, the total numbers of deaths increased sharply (see Fig. 16.1), and the ratio in terms of total numbers of deaths (31,116) out

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Table 16.1 Resilience-based public policy in association with the COVID-19 Pillars of the Framework (Shimizu & Clark, 2019)

Application to the COVID-19

Pillar 1 Continuum For resilience-based public policy as a whole, a continuum of functions among (1) individuals/ family/communities, (2) organizations/ institutions, and (3) society/public policy is necessary. In other words, while community resilience is generated through activities of community people, community resilience can be sustained only through linkages with local and national systems which enable effective functioning by incorporating components of resilience between community and local or national systems through public policy.

While individuals and family are supposed to protect themselves and communities need to play a role in helping especially vulnerable people, how national strategy and policy actions through the linkages with the locals on the COVID-19 is formed and works affects the local and community resilience, in turn, communities and people, especially vulnerable ones (see the figure below) Governments/ Policy /Institutions Local Governments / Policy, Institutions

Community

Individuals /Famil y

Pillar 2 Boundary Only looking at a system itself in which any problem possibly resides will not be able to solve the problem, and the boundary around the system often holds a key to solving the problem in the system

Boundaries to take into account in addressing the COVID-19 includes: (1) national-to-local to community boundary, (2) organization to organization or institution to institution boundary, and (3) policy to operation, (4) technology to operation (5) resource to resource boundaries. To enable linkages across the boundaries, communication across the boundaries is critical Especially as discussed in the above, since experts do not know or the parties to a decision cannot agree upon how the system works and its boundaries under deep uncertainty during the COVID-19, this policy reality brings about the question of how to “link” different parties including scientists, private sectors and communities under uncertainties. The linkage will be a key in thinking about innovative policy processes and governance

Pillar 3 Co-production of knowledge The boundary areas are critical to the co-production knowledge process required for operationalizing resilience. Not only at individual project or program level by communities or organizations but also at policy level, the co-production of knowledge process is a key in enabling resilience-based public policy

To make proactive and adaptive actions under multi-layered uncertainties or deep uncertainty in the challenge of COVID-19 as presented in Box 16.1, it requires building co-knowledge among different stakeholders by linking different actors, resources, and information taking into account specific contexts of regions and stakeholders (Shimizu, 2022)

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of the total numbers of all deaths in the world (6,351,195) resulted in about 0.49% as of June 26, 2022. It is true that there is an argument that fatalities given the population size is much less than other countries. For example, Japan’s population size (about 125 million) almost equals to population size in France (around 65 million) and Italy (59 million), while the COVID-19 fatality in Japan is about 44,500 as of September 30, 2022, which is almost 8 times less (151,000 in France and 177,000 in Italy, as of September 30, 2022) despite older population in Japan. However, only the fatality numbers do not tell us whether relevant policies operations have worked well. In other words, even smaller deaths in comparing to other countries, it is critical to review relevant policy process and operations toward better ones for sustainable future. What characterizes Japan’s approach to the COVID-19 includes emphasizes “sanmitsu” or 3 Cs: closed spaces, crowded places, and close-contact settings and “state emergency” with requests of self-restrained efforts by governments without legal enforcement and penalties. More than this, at the beginning stage, Japan focused on “clusters” and introducing PCR tests was slow and limited to limited numbers of people. According to open data released by MHLW, the average number of PCR and other tests performed per day for the previous seven days exceeded 1,000 on February 26, 2020, and 5,000 on April 7, and it was on July 9 that the number exceeded 10,000. From late March to mid-April 2020, the increase in the number of PCR and other tests performed could not keep up with the demand for testing for the COVID-19. Thus, since the end of March 2020, many cases have been reported in which people were waiting to be tested. On December 28, 2020, all entrants from countries and regions where a mutated virus has been confirmed are required to undergo inspection and submit a certificate

Numbers of Infected Cases and Numbers of deaths 2500000

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Fig. 16.1 Numbers of new infected cases and deaths during the COVID-19 (as of June 26, 2022). Note Numbers of Infected Cases: 2020/01/16-2022/06/26; Numbers of deaths: 2020/05/31–2022/ 06/26. The above figures are summed up by month and plotted on a graph, based on the open data provided by Ministry of Health, Labor and Welfare (https://covid19.mhlw.go.jp)

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of test result showing “negative” within 72 h before departure, and also must take an inspection test when entering Japan. Along with these actions, the third supplementary budget was decided, on December 15, 2020, and the test-related budget (67.2 billion yen) was secured as “Implementation of PCR test, antigen test, etc.” At this time, “Enhancement of inspection system, improvement of vaccination system, etc.” (820.4 billion yen) was also secured. Overall, the “corona budget” totaled 77 trillion yen in FY 2020 alone, when the new corona epidemic was in full swing, which can be calculated to be 610,000 yen per capita, while the reconstruction budget for the Great East Japan Earthquake was approximately 32 trillion yen over a period of about 10 years. As such, while tremendous budget was set and for example, the “Sustaining Grant Program,” which provides a maximum of 2 million yen to businesses whose sales have decreased due to the COVID-19, have helped to sustain business by providing a total of 5.5 trillion yen to approximately 4.3 million businesses, various problems have been brought to light. In November 2021, the Board of Audit released the results of its inspection of a series of contracts and revealed that the contracts had a multiple subcontracting structure with up to nine subcontractors, involving a total of 723 parties involving big businesses. At least at this point it can be said that a bigger budget is not necessarily linked with better response to the COVID-19.

16.3.1.2

Cascading Social and Economic Impacts

It is to note that the numbers of infected numbers and deaths do not tell us the overall impacts on society. There are complex and cascading social economic impacts which are indirectly linked to the COVID-19. Many of those impacts especially go to vulnerable people, which is always seen in different kinds of disasters (Shimizu & Clark, 2019). Major examples of the cascading social and economic impacts seen during the COVID-19 is shown in Table 16.2 with related data which signal the impacts. It can be recognized that the above tremendous budgets are not linked with helping vulnerable people. Also, these kinds of cascading social and economic impacts bring more uncertainties to the society.

16.3.1.3

Resilience Points of Views

The overall situation suggests positive and negative perspectives from resilience points of views. The positive side is related to Japan’s approach to “san-mitsu” or 3 Cs: closed spaces, crowded places, and close-contact settings and “state emergency” with requests of self-restrained efforts by governments without legal enforcement and penalties. Specifically, individuals’ capacities to take care of themselves without strong legal enforcement, which is related to individual resilience, enabled them to follow 3 Cs. This individual capacity contributed to less numbers of infected cases and deaths compared to other countries at least at the beginning stage of COVID-19.

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Table 16.2 Examples of cascading social and economic impacts Impacts on

Related data which signal the impacts

Economy and employment

Gross Domestic Product (GDP) fell 4.5% in FY 2020 due to a sharp decline in consumer spending and exports, which is a greater decline than the 3.6% decline in FY 2008 due to the Lehman Shock. The unemployment rate rose to 3.1% in October 2020, compared to 2.4% in both October 2018 and October 2019 (Source Japan Institute for Labour Policy and Training)

Elderly

For people aged 65 and older, about 20% of the respondents reported a decrease in their time spent going outside and exercising, and about 60% reported a decrease in their time spent socializing and communication with others (N = 438, NLI Institute, 2021)

Poverty, single parents

The proportion of single parents who answered that their lives were “difficult” toward the end of the year was 27.4%, followed by 33.4% who answered “somewhat difficult,” for a total of 60.8%. When asked if their household had been unable to buy necessary food due to lack of money in the past month, 35.6% of single parents answered “Yes” (n = 500, Japan Institute for Labour Policy and Training, 2020)

School children

Regarding the number of suicides among children (elementary through high school), compared to 2019, for example, there were 29 suicides in August 2019, compared to 64 in the same month in 2020, during the COVID-19. The overall number of child suicides in 2019 was 339 and is 479 in 2020. The overall number of child suicides in 2019 was 339 and is 479 in 2020, meaning a 40% increase (MEXT, 2021)

On the other hand, other systems around individuals are overall reactive in response to the COVID-19 which is articulated in PCR and vaccination introduction. Also, especially from “the continuum” perspective (see Pillar 1 in Table 16.1), it is recognized that there are missing links between national budgets and vulnerable people or communities, where local governments and non-profit organizations can play roles. The budgeting problems which are linked with big businesses and not fairly governed are governance issues which need to be addressed during the normal time. This issue is also a missing link issue between normal budgeting governance and crisis governance.

16.3.2 Resource Management 16.3.2.1

Policy Priorities

During the first stage in response to the COVID-19 in 2020, as a policy priority, the Cabinet decided to “deliver two cloth masks for every household” on April 7, 2020. For this “masks” policy, 46.6 billion yen was budgeted in total, which is specified as “no-bid contracts,” which is linked with what the Board of Audit found during its inspection of a series of contracts, i.e., a multiple subcontracting structure as pointed out in the above. Also, it is to note that delivery of “two cloth masks for every

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household” took more than two months to deliver all masks. Thus, it is to recognized that resources involving these policy actions include not only financial cost to buy masks, but also financial, human, and time cost involving local municipalities to stock and deliver all masks for every household during the crisis. Furthermore, in contrast to the mask budget (46.6 billion yen) set during the beginning stage in response to the COVID-19 in 2020, the budget for vaccine/medicine research and development (R&D) and the related systems was minimal as shown in the below list. This contrast shows that the national government prioritized “delivering two cloth masks for every household” over vaccine/medicine R&D and the related systems at least in the beggining stage of the crisis. Budget for Vaccine/Medicine R&D and the related systems (the first stage in response to the COVID-19 in 2020) • • • •

2 Billion Yen on February 13th 3.25 Billion Yen on April 17th 75 Billion Yen on April 30th 60.9 Billion Yen on May 27th

Furthermore, in each item, masks and vaccination, the following consequences have been revealed.

16.3.2.2

Masks

Regarding the masks which were purchased in 2020 by the national government to deliver two cloth masks for every household, over 80 million masks remained in stock by the end of December 2021, with storage costs of over 600 million yen. On December 22, 2021, Prime Minister Kishida announced during his press conference that he has instructed the government to dispose of its inventory of cloth masks by the end of the fiscal year, after distributing them to those who wish to use them effectively. Given the above policy priorities at the beginning of the response during the COVID-19, this consequence brings many questions in terms of what kinds of strategies and plannings they set especially in terms of resource management during the crisis.

16.3.2.3

Vaccination

Although national governments did not officially announce, many local municipalities have started announcing respectively that they are needed to waste vaccination during the fiscal year of 2022. Since national governments do not provide the related data, it is not unknown how much of vaccines have been wasted so far as of the end of June, 2020. However, a survey conducted by Kyodo News found that more than half (27) of the 52 cities and wards in prefectural capitals and government-designated cities have already reached the expiration date for the third vaccination against the COVID-19, and have either disposed of the vaccine or are planning to do so. The

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total amount of discarded items amounted to 739,085.1 This survey does not include all kinds of municipalities, so that it can be understood that much more vaccines were wasted mainly because of the expiration date. On the other hand, good practices are seen in some municipalities in managing vaccine resources. For example, Sumida Ward, Tokyo has been taking measures to prevent the vaccine from being disposed of through close cooperation within the ward, such as promptly transferring the vaccine to another medical institution. In order to prevent the disposal of expired vaccines, the ward has been checking the expiration date and calling on medical institutions to strictly adhere to the expiration date and to contact the ward immediately if it is difficult to use up the vaccine. When clinics and other medical institutions report that vaccines nearing the expiration date are still available, staff members immediately coordinate with them and transfer the vaccines to medical institutions with more frequent vaccinations, thereby preventing the disposal of vaccines. According to Tokyo Sumida Ward, there have been no cases of new corona vaccines being disposed of in the ward due to expiration as of April 28, 2022.2

16.3.2.4

Resilience Points of Views

Basically, as mentioned in the above section, enabling resilience requires multiple temporal (i.e., short-term, mid-term, and long-term perspectives) views. Thus, setting policy priorities in facing the challenge requires not only short-term, but also midterm and long-term views. Furthermore, not only just one dot, but also looking around the boundary areas in and around the policy action is a critical part in enabling resilience (see Pillar 2 in Table 16.1). From those perspectives, the mask policy at the beginning stage of COVID-19 in the above is away from the resilience baseline. Furthermore, from the boundary perspective, during the COVID-19 in which different stakeholders are in deep uncertainty, resource waste (which is the worst scenario in terms of policy-to-resource and resource-to-resource linkages) can negatively impact the consequences of the COVID-19 in that resource waste brings confusions among different stakeholders, leading to more uncertainties that lead to inefficiencies in different response activities. Also, financial and human resources which were wasted along with wasting goods could have been invested differently to contribute to better response. As such, the above policy actions to waste resources miss systemic views. From those perspectives, resource wastes are away from a basic line in enabling resilience or resiliency-based public policy.

1 2

Kyodo News, June 4, 2022. NHK News, April 28, 2022.

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16.3.3 Information Sharing During the pandemic, it is critical to share information on infected people among health and medical institutions to grasp the status of infection nationwide. Thus, sharing information is a critical function in managing health risks for people.

16.3.3.1

Information Sharing Systems

For this, before May 2020, hospitals were supposed to send information on confirmed cases by fax to local public health centers, which relayed the information to the national infectious disease surveillance system called NESID. It was in late May 2020 that MHLW developed and introduced the Health Center Real-Time Informationsharing System on COVID-19 (HER-SYS), which is a system that centrally manages information on people infected in real time. However, as the introduction of the system-to-local governments progressed, problems with the aggregation function and errors in the input data were discovered one after another. In addition, although the system was supposed to reduce the burden on public health centers by allowing medical institutions to directly input data, initially there were approximately 120 items to be entered and it took about 30 min for one person to enter all of the items, which was extremely burdensome to do while simultaneously performing duties such as patient health observation and hospitalization coordination. Thus, from October, five months after HER-SYS was introduced, MHLW reset prioritized items for inputs to 40 items. Later it was revealed that, another related system (which is different from HERSYS) has been developed based on lessons learned from past infectious diseases such as H1N1 influenza by the national research team within MHLW which is called as the “rapid case information collection system” (FFHS). The system has been developed through discussions with local governments to determine what information is necessary, and has been narrowed down to a minimum of 18 items, including patient age, gender, date of onset, and symptoms. Since 2013, the system has been in operation, and annual exercises have been conducted with several municipalities on the assumption of a pandemic outbreak. The reason why the FFHS system was not used in addressing the COVID-19 and a new system (HER-SYS) was developed during the COVID-19 is not unknown, but it can be assumed that information sharing among different departments within the MHLW did not work well. On the other hand, the MHLW has decided to introduce a new system starting in October 2022 given that medical institutions and health centers input each case manually in HER-SYS, which has become a work burden and has led to delays in understanding the situation.

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Resilience Points of Views

Again, in the middle of the COVID-19 under deep uncertainty, repeated system changes can bring more confusions and uncertainties and impact consequences of the COVID-19 negatively to lead to inefficiencies in response actions. Especially from the “continuum” perspective (see Pillar 1 in Table 16.1), the inconsistent policy actions can negatively impact not only local medical and health staff but also patients and vulnerable individuals. Also, the absence of sharing information even within the same institution (MHLW) for system developments and missing links between policy and technology (system development) or between policy and investments in technology can impact the response to the COVID-19 negatively, in that the absence or missing links present the actors or organizations don’t see the boundary (see Pillar 2 in Table 16.1), which is critical in enabling resilience. The absence or missing links can impact resilience-based public policy in Japan.

16.3.4 Risk Communication and Policy Decision-Making 16.3.4.1

Risk Communication

In terms of risk communication during the COVID-19, the characteristic point is the absence of a “communicator” who can catalyze communication between the central government and citizens. For example, during the Abe Administration, under the Novel Coronavirus Response Headquarters at the central government, the head is Prime Minister, and the vice heads are (1) the MHLW Minister and (2) Economic Revitalization Minister who became also a Minister in charge of the government’s response to the COVID-19. Under this structure, the MHLW Minister at that time, Kato, led some press conferences to update the situations of COVID-19, but the thenEconomic Revitalization Minister, Nishimura, switched to lead most of the press conferences later. Also, there is a leader (an expert in infectious diseases) in “Expert Meeting” under Headquarters who played a major role in providing information on ongoing situations until June 24, 2021. However, the Meeting has been resolved after criticisms (unclear roles, etc.), which led to another “NEW Expert Meeting” under a different name, though how the original Expert Meeting and New Expert Meeting is not clear. As such, the absence of a communicator which is also related with organizational matters has brought confusions in terms of who is the authorized person whom the public can trust to understand the ongoing situations and risks. Furthermore, it can be pointed out that the channel to make a process to enable two-way communication is lacking in Japan. According to the Science Council’s definition (NRC, 1989), risk communication is an interactional process of exchanging information and opinions among individuals, institutions, and groups. From this point of view, risk communication requires a process which enables interactive (at

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least two-way) communication, especially between the governments and the public. However, this kind of process or the related channel is missing in Japan.

16.3.4.2

Policy Decision-Making

The above structure in the central government seen in risk communication brings more uncertainties to the public especially in terms of the process of policy decisionmaking which has been made during the COVID-19. For example, because the public don’t understand the roles of, and differences between Expert Meeting or New Expert Meeting as mentioned in the above, it is unclear how comments and views from experts from Expert Meeting or New Expert Meeting are linked with policy decisionmaking. More than that, only limited numbers of “experts” have involved in national policy discussion, i.e., 12 members (all were infectious disease experts) for Expert Meeting, and 18 members for New Expert Meeting, it is unclear whether policy decisions has been made taking into account different dimensions of risks and impacts of the COVID-19. Furthermore, little meeting records from the policy discussion meetings have been open to the public. When asked a question about these meeting records during a press meeting, then-Economic Revitalization Minister (Nishimura) responded to the question saying “we will review the policy (not to open the records) later after the COVID-19.” The above state of policy decision-making process at the central government has influenced communication between national and local governments in critical timings during the COVID-19. For example, confusions have been seen over who to declare “State of Emergency” between the national government and prefectural governments, repeatedly at least the beginning stage of the COVID-19 during April– May, including the Tokyo Governor and the national government. This situation resulted in confusions among the public too. Furthermore, although in terms of when to lift “State of Emergency (April–May),” the criteria have been unclear. Local governors requested to set criteria—which was refused several times by the thenEconomic Revitalization Minister, Nishimura: responded saying “it is up to local governments,” which raised public criticisms. Thus, the national government decided to set criteria on May 14, 2021 almost one year after the COVID-19 was in pandemic.

16.3.4.3

Resilience Points of Views

The above case demonstrates that the risk communication structure reflects the decision-making process and consequences. Thus, structuring the risk communication process can impact the continuum (see Pillar 1 in Table 16.1) of the whole response system including different stakeholders. Moreover, the lack of process of the two-way risk communication may impact communication beyond boundaries between the governments and the public or stakeholders (see Pillar 2 in Table 16.1). Thus, the missing links in terms of continuum and boundary perspectives seen through risk communication are reflected in policy decision-making confusions as

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mentioned in the above. Most of the processes are ad hoc and reactive, which is away from resilience-based public policy.

16.4 Local Best Practices Although many challenges have been revealed at the national level from resilience perspectives, Wakayama Prefecture, a typical Japanese region, with an aging population but strong human ties, is said to be unique in its ability to detect infected patients at an early stage and to hospitalize and isolate them for treatment at an early stage. Although Wakayama Prefecture has faced challenges in addressing the COVID-19 in different stages for six waves so far (as of June, 2022), the “three (early detection, early isolation, comprehensive survey of action history) plus one (integration of health center and public administration) policy” initiated by the Wakayama governor has worked well at least at the early stage of the COVID-19. Without waiting for directions from the national government, Wakayama Prefecture has proactively engaged in investigating the behavioral history of infected persons and picking up those who have been in close contact with. Also, when they find an infected person or cluster, in order to detect the next infected person at an early stage, they conduct a wide range of tests, wider than the usual target population that the national government told them to test. Furthermore, they have recognized integrating individual information is critical in preventing the spread of infection. For this, Wakayama prefecture has made the most use of the network of public health centers which are located across municipalities in the prefecture to integrate information across cases. In addition to this, the Wakayama Governor quickly created a public information center within the prefecture which can respond to the calls 24/7 days at the beginning stage of the COVID-19. As such, Wakayama Prefecture has centralized information and coordination functions in the prefecture, and relayed information among medical institutions and between medical institutions and residents, which also linked with monitoring, assessment and control functions and decision-making in the prefecture.

16.5 Resilience Points of Views The above “Wakayama model” has three characteristics from resilience points of views: First, the proactive engagement in engagement, early isolation, and comprehensive survey has been enabled by linking information and integrating “dots” to form a process to link with decision-making and proactive actions, which is linked with the resilience approach baseline. Second, based on the first point, the centralized coordination role in the prefecture makes “the continuum” and “boundary” views possible in response to the COVID-19 among different stakeholders especially between municipalities, medical institutions, and residents (Pillars 1 and 2 in

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Table 16.1). Third, the first and second points led to building co-knowledge among different stakeholders by linking different actors, resources, and information taking into account specific contexts of stakeholders.

16.6 Analysis Results Overall, different policy actions have been largely reactive and ad hoc, and the relevant systems have changed repeatedly in not consistent ways. As such, whereas individuals’ capacities to take care of themselves without strong legal enforcement, which is related to individual resilience, contributed to less numbers of infected cases and deaths, little system linkages at the macro level hampered response to the COVID-19 at micro levels including different medical institutions, local municipalities, and individuals. In other words, the lack of systemic or linkage-based or systemsbased views/approach which are supposed to be built in different systems including resource management, information sharing, and risk communication systems or relevant actions to support resilience in individuals and communities brought more confusions and uncertainties to the public, which impacted different dimensions of the society directly or indirectly. The above cases have shown that even at organizational levels, information have not been shared, which should not be understood just as deviant coincidental events, but if these events are accumulated, it will result in collective lack of communication and co-knowledge production (Pillar 3 at Table 16.1), which can impact decisionmaking, policy actions, and policy consequences, which has been demonstrated through the cases. On the other hand, local best practices have indicated that the vulnerable situations including the lack of human and medical resources are not necessarily related to the lack of resilience during the COVID-19. The proactive engagement has been enabled by linking information and integrating “dots” to form a process to link with decision-making and proactive actions. Also, a centralized coordination role makes “the continuum” and “boundary” views possible in response to the crisis. Eventually, these actions can lead to building co-knowledge among different stakeholders by linking different actors, resources, and information taking into account specific contexts of stakeholders.

16.7 Implication for Sustainable Future and Conclusion Based on all kinds of challenges drawn from resilience points of views, if this reality is not learned from this crisis to adapt the current systems and environment to linkagebased or systems-based ones to link with collective co-knowledge (pillar 3 at Table 16.1), it can affect response to future crises and governance for sustainable society. Especially given that different risks and dimensions including natural, social, and

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economic ones are interrelated to bring challenges for humans, the co-knowledge production holds a key in directing our society toward sustainable society. Although the daunting challenges were drawn at the macro level from resilience points of views, local best practices at small scales suggest that if human awareness and insights are linked with actions, even small steps can change systems collaboratively. It is critical to learn from local best practices to link with our actions for our living systems linkages. Thus, how we learn from the COVID-19 will largely be linked with how we formulate governance for the sustainable future. Especially for governance for the sustainable future, the lessons learnt from Japan case during COVID-19, it suggests it is required to: • transform ourselves/society/governments to switch from reactive to more anticipatory, proactive adaptive approach using “resilience-based public policy approach” (Shimizu & Clark, 2019), especially with the focus on “continuum,” “boundary” and “co-production knowledge” perspectives. • review our systems linkages, including ones in communication, or among actors, organizations, or sectors or between operations/fields and decision-making, or among resources, during normal times to make sure the linkage can be operational in emergency, and update plannings and actions based on the review during normal times. • learn from local best practices to share and learn at different levels for better preparedness for co-production of knowledge.

References Cabinet Office of Japan. (2019). https://www8.cao.go.jp/kourei/whitepaper/w-2019/html/zenbun/ s1_1_4.html Cabinet Office of Japan. (2021). Annual Report of the Aging Society. https://www8.cao.go.jp/kou rei/english/annualreport/2021/pdf/2021.pdf Demographia World Urban Areas. (2021). http://www.demographia.com/db-worldua.pdf Jackson, S. (2010). Architecting resilient systems: Accident avoidance and survival and recovery from disruptions. Wiley. Lempert, R. J., Popper, S., & Bankes, S. (2003). Shaping the next one hundred years: New methods for quantitative, long-term policy analysis. RAND. Marchau, V. A., Walker, W. E., Bloemen, P. J., & Popper, S. W. (2019). Decision making under deep uncertainty: From theory to practice. Springer Nature. National Research Council (Committee on Risk Perception and Communication). (1989). Improving risk communication. National Research Council. Okada, N. (2004). Urban diagnosis and integrated disaster risk management. Journal of Natural Disaster Science, 26(2), 49–54. Shimizu, M. (2022). A Resilience approach to acceleration of sustainable development goals. Springer. Shimizu, M., & Clark, A. L. (2019). Nexus of resilience and public policy in a modern risk society. Springer.

Chapter 17

The Challenges for Health Systems and Policies: Growing Medicalization and Global Risks Monika Steffen

Abstract How can sustainability be achieved in a highly value-laden, expensive, and complex policy sector? This chapter applies a systems-based analysis to understand the policy problems of long-term health protection. It uses evidence from several high-income countries—including France and Japan—and identifies the gap between the “health-care state” and “population health” as the major challenge. Efficient health care has been achieved by combining medical dynamics and collective national funding, but long-term health protection and life expectancy rely on a massive risk reduction, which requires joint policies with other sectors, new international engagements and strong political leadership. The chapter first analyzes the structural characteristics and the economic significance of the health-care sector, which both make its governance and future-orientated changes extremely difficult. The health-care sector enjoys sociopolitical consensus despite its financial burden, which vastly exceeds even military expenditure. The chapter then documents the silent pandemics of rapidly growing chronic diseases, and the need to shift priorities toward population health. The final section traces emerging innovations, including new scientific approaches based on the overarching “One Health” concept; multilevel initiatives for transboundary policies; and lessons to be drawn from previous crises for a new global health governance. Keywords Health policy transition · Population health · Transboundary action · Risk reduction · One Health

M. Steffen (B) University Grenoble-Alpes, PACTE/CNRS, Grenoble, France e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 Y. Adachi and M. Usami (eds.), Governance for a Sustainable Future, https://doi.org/10.1007/978-981-99-4771-3_17

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17.1 Introduction: Political Ambiguity and Sustainability Challenges The health sector is generally viewed positively from multiple perspectives: by public opinion as providing high-quality care; by governments as a necessary public service for their citizens; and by economic actors, as well as governments, as a source of employment, innovation, economic activity, and, depending on the public–private balance in health care, of taxes, social contributions, and commercial profits. In most countries, current generations have experienced unprecedented progress in life expectancy and access to medical care. Many injuries can be repaired, physical pain eased, and formerly deadly pathologies, such as tuberculosis, some cancers, heart attacks, and strokes—and more recently, AIDS, viral hepatitis, and COVID-19— either healed or transformed into chronic conditions, enabling patients to continue living. Naturally, this collective experience has led to an expectation that the future will provide similar or even better progress toward good health and long life. Indeed, considerable scientific and clinical progress is under way. However, the shared positive perspective of the health sector stands in contradiction to the ever-increasing expenditure, massive increase of chronic disease, and recurring public health crises. This collective conviction—despite many being unaware that they even hold it— hides the fragilities of health systems and the shortcomings in risk prevention, and thus relieves citizens, experts, and policy-makers alike from critically assessing the system’s long-term sustainability and from designing and implementing policies for futures health needs, risks, and solutions. Long-term policies to protect the health and life expectancy of future generations need to tackle four major challenges. First, securing the financial stability, skills, and workforce resources of the health sector. Addressing this challenge is essential to provide care for a growing world population that is experiencing demographic and socioeconomic transition. Trends, including aging, territorial redistribution (urban concentration, mass tourism, and migration), and changing patterns in work conditions, labor markets, nutrition, and lifestyle, entail unequal access to care, increasing chronic diseases, and new epidemics. These epidemics consist of communicable and noncommunicable diseases, such as obesity, diabetes, cancers, mental disorder, addictions, and neurodegenerative pathologies. Considerable new investment is required to modernize not only the care systems and workforces, but also data systems and related professional skills, to integrate scientific and technical progress, from informatics to genetics, and apply it universally in daily practice. Second, rebalancing the health sector. So far, the health sector has evolved according to its own internal logic, centered on individual patients and doctors who are highly specialized in narrow medical fields. In future, the sustainability of the health system will require a shift in focus toward the health of the population as a whole rather than individual health. Public health is still considered a subdiscipline of medicine, occupying a rather marginal position in the hierarchy of the medical profession. Population health needs considerable upgrading in terms of professional

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status, funding, interdisciplinary research, and capacity to influence public choices and policies. Third, opening the health policy field to deploy strategic actions across sectoral boundaries. Today’s health systems are closed policy silos, although they operate within a web of multiple interdependent external constraints and constantly evolving risks. Systematic links need to be developed between health policy and the policy sectors that generate major health risks to identify and fight the sources of diseases, especially of the expanding chronic illnesses. Fourth, strengthening the international level of health governance to account for globalization and the rapid spread of health risks on a global scale. Infectious diseases travel with aircraft speed from any point of emergence to all continents. Global inequality in access to medical services is no longer acceptable, either in moral or global financial and geopolitical terms. High-income countries cannot erect health-safety borders that can keep out pathogens originating from poorer countries. However, there is a conflict between health systems with universal access based on national solidarity and the international implications of implementing sustainable health conditions. Sustainable health policy requires international governance and equity, and a shift in values from the long-standing concept of national solidarity as the basis for socialized health services to health as a global common good. Implementing such a system requires stronger regulation of the global commercial medical markets, and of all goods and production methods that carry health risks. Responding to these challenges requires new priorities and governance structures that extend beyond national boundaries and the usual sectoral controversies on cost containment, management reforms, and user participation. Large policy gaps need to be closed between care, prevention, and risks. Thus, establishing operational links between health policy and the various activities that produce health risks is required. Medical care and prevention measures will continue to underperform as long as risk production continues in other sectors. Criticisms of existing health systems, policies, and reforms have always existed: the political right condemns the growing public expenditure, the political left criticizes the insufficient funding and creeping privatization, and the unions of health professionals and care workers call for a larger workforce, higher remuneration, and better working conditions. These arguments, expressed for decades and reinvigorated by the COVID-19 crisis, illustrate the well-known configurations of sectoral policy actors, with each group defending its legitimate interests. Thus, continuous interest bargaining coexists with the shared positive image of the health-care sector, and the belief that mature health systems are sustainable and capable of facing future challenges with only more funding and some pragmatic changes. In short, the recipes used in the past are seen as adequate for sustaining the future. In 2020, however, the COVID-19 pandemic exposed the fragilities of health systems, and the hazardous art of policy-making for population health. The pandemic acted as a stress test in real-life conditions for all health systems worldwide. It provoked streams of criticism, denouncements of the unpreparedness of health

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systems for the pandemic, the lack of life-saving respirators, emergency beds, effective medication, and personal protection equipment, and the incapacity of governments to provide coherent and quick solutions. Thus, the COVID-19 pandemic enlarged the health policy debate far beyond the traditionally explored issues, extending from the zoonotic origin of the pandemic to its economic and social consequences, and the sources of bad health in environmental disorder and climate change. The pandemic has led to contradictory assessments. On the one hand, the positive perspective of the health system seemed confirmed by the capacity of care institutions and professionals to cope with emergencies and massive arrivals of patients, and by the rapid provision of vaccines. According to Our World in Data (2022a), by December 31, 2022, 67.1% of the world population had received “at least one dose of a COVID-19 vaccine,” albeit with varying levels of coverage: 83.3% in upper-middle-income countries, 79.7% in high-income countries, 64.7% in lowerincome countries, and only 25.8% in low-income countries (2022b). On the other hand, the pandemic sounded severe alarms. Not only were large-scale contagious diseases back, but as yet unknown ones were to be expected. Unprepared governments, experts, and the public alike discovered that epidemics constitute a “total social phenomena” in the original sense of anthropologist Marcel Mauss (1950); they disturb societies in all their aspects, from family life, schools, burial habits, and public transport to all parts of the economy, including the entire tourist industry, national and international finance, transportation systems, production sites, and value chains. They impact geopolitics and create social contest and mistrust in governments and science. Given such encompassing consequences, the silo models of the past can hardly guide effective policies for the future. The Secretary-General of the United Nations (UN) released a “global wake-up call” at the virtual commemoration of the 75th anniversary of the UN Charter: “The pandemic, as horrible as it is, must be a wake-up call that prompts all political leaders to understand that our assumptions and approaches have to change … [The] only way to address global fragilities is through much more robust mechanisms of global governance with international cooperation. … We need a networked multilateralism in which the United Nations and its agencies, the World Bank and the International Monetary Fund, regional organizations such as the African Union and European Union, trade organizations and others work together more closely and effectively” (Guterres, 2020). However, health systems are national constructions, forged in a unique sociopolitical history. Consequently, they differ from each other in their institutional architecture, governance structures, and service organizations, and are national responsibilities (or subnational in federal or decentralized political systems). In the European Union (EU), health systems remain under the exclusive competency of member states, despite a long-standing mutual recognition of social security rights, the free market for health products, free movement for health professionals, possible transborder care for patients, and the continuous extension of EU competency over public health (Greer et al., 2022; Lamping & Steffen, 2009; Steffen, 2005). The question is how such deeply rooted national policy sectors, with strong geographical and

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institutional boundaries, can be articulated in terms of both international governance and trans-sectoral policy-making, while remaining operational and responsive on the ground, each in its own local territory and institutional ambit. In fact, the health sector has two faces, both equally important for future-oriented policies, but with divergent priorities. On the one side, its major activity is curing acute illness, and providing the necessary resources, including research, to achieve this goal. The health sector restores the health of individuals. On the other side, the health sector is a mirror of society, reflecting the collective state of health and risk exposure of the population. The statistics on morbidity, mortality, life expectancy, survival rates for severe pathologies, such as cancer, and the numbers and distribution of people with chronic conditions make the impact of living and working conditions crudely visible, in measurable and comparable terms, from nutrition, housing, quality of air and water, to equity in income distribution, and access to public services and education. Beyond universal access to medical care, it is well known that key factors accounting for the state of health of a population are not only “health literacy” (Nutbeam, 2000), but also the level of general education and, more broadly, the level of social cohesion or discrimination within a given society. The growing use of big data systems and artificial intelligence in public health studies allows risk factors to be identified, their geographical and social distribution detailed, and their long-term impact evaluated. Even the effects of risk exposure at very weak doses, which formerly remained invisible in laboratory research, can be made evident by the use of big data and artificial intelligence. Similar to climate studies, the health sector provides valuable knowledge for future-oriented public policies. The question is: will policy-makers be able to respond to the increasingly available public health knowledge?

17.2 Governing the Health Sector: Mission Impossible? Comparative studies of the health sectors of various countries—including France, other Western European countries, Japan, and the USA—show that not only is the health sector socially, politically, and economically important, but it is also of great internal complexity. It is composed of many agencies, distinctive subsectors, and multiple levels of governance, and crowded with many actors with divergent interests, all of which creates great coordination problems. Thus, policy-makers are confronted with a web of “wicked policy problems” (Head, 2022; Peters, 2017). This section provides background information from the rich comparative literature on health systems that demonstrates why the sector is difficult to steer and govern— an issue that makes the development of new future-oriented strategies even more difficult.

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17.2.1 The Health-Care State1 : Actors, Institutions, and Governance Initially, health-system studies focused on the medical profession, as the most central and visible actor in the system, its organizations and patterns of practice (Freidson, 1970; Steffen, 1987; Wilsford, 1991), followed by studies of institutional factors determining reform policies (Immergut, 1992). Comparative literature on social security systems shed light on the different funding systems for health care and related governance structures, and provided a first typology of health systems (EspingAndersen, 1990). From this perspective, there are three types of health systems: tax-funded national health service (NHS) systems under direct government control, which belong to the Beveridgian model; social health insurance (SHI) systems, known as the Bismarckian model, which are governed jointly by employer unions and trade unions as representatives of both the funding agents and the beneficiaries; and private systems, functioning as free or regulated markets, governed by private commercial interests. However, health systems differ substantially from other social security sectors. Unlike retirement, disability, and unemployment schemes, they do not distribute monetary benefits, but services in-kind: highly personalized medical care, produced by highly qualified professionals and important technical infrastructure (e.g., hospitals, laboratories, and surgery robots). This service-in-kind element of health systems, with the numerous and strongly organized health professionals and demanding patients, makes health governance a greater challenge than, say, the financial steering of social security funds. Therefore, health reforms tend to be incremental and rarely of structural importance. Such a context makes future-oriented reforms difficult. Despite growing government power over the health sector in the past three decades, the strongly organized medical profession remains a key player in health policy. Upstream, policy-makers lack the technical knowledge and depend on medical experts for advice, which allows the medical elite to influence policy framing and content. Downstream, doctors play the central role in the implementation process of health policies. Their practical work can reorient policy outcomes. In addition, doctors participate in clinical and fundamental research, enabling them to influence priorities for research and development policies in advance of policy decisions on care systems. Health industries are another powerful policy actor, deploying active lobbying at the highest government levels to push their commercial strategies. They need to obtain quality certification and marketing authorization, and to negotiate prices for their products, which range from pharmaceuticals to equipment for surgery, radiotherapy, or nuclear medicine, and from complex medical devices, such as electronic prostheses, to simple but massively used disposable items, such as syringes, gowns, gloves, and masks.

1

Michael Moran’s concept (1999), cf. further below.

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Governments are not primarily interested in specific medical procedures, but they have a permanent interest in boosting employment and the export capacity of their top national industries. As an example, the discovery of the human immunodeficiency virus (HIV) initiated a long diplomatic war between the USA and France over the intellectual property and expected commercial profits from the worldwide market for HIV antibody tests. The French government intervened directly to delay marketing authorization for the US-produced tests to preserve its domestic market for a French producer, whose production capacity was not yet sufficient. This delayed testing capacities for people at risk and contributed to the contamination of the blood transfusion system (Steffen, 1999). Concerning labor market interests, in 2019 (before the COVID-19 crisis), the French health sector employed nearly two million people, which represented 7% of the total economically active population (Eurostat, 2020). Moreover, this figure does not include the many indirect jobs linked with or generated by health care; once these are included, health-linked employment accounts for 10%–12% of the economically active population, depending on the precise definition of related jobs. Concerning export interests, France is the third biggest producer of pharmaceuticals in Europe. Pharmaceutical products are the country’s third top export item, producing a trade surplus of e30 billion per year, whereas the country’s general trade balance has remained constantly and increasingly negative since 2004 (INSEE, 2022). Finally, policy-makers are confronted with high expectations from the public and organized patient groups. Health-care services rank high, if not first, as a topic of public opinion polls in many countries, especially in Europe. The public and patients’ organizations make their voices heard via the usual representative channels, addressing parties, their local members of parliament, and the media. Patients’ associations are mostly organized by pathologies, with active support from their specialized doctors. Together, they lobby for their specific interests, generally directly at the level of the health minister and the top health agencies. If they are not satisfied with the response at this level, they go public, mobilizing the media and law courts. In democratic regimes with universal access to health services, the social demand for care is potentially unlimited. Politicians who ignore this, or even try to restrict medical consumption, risk not being reelected. Consumers/patients, health industries, notably the pharmaceutical industry, and the medical profession (although its power has suffered from cost containment reforms) are powerful constituencies, while governments pursue contradictory goals, aiming simultaneously at keeping health expenditure within limits, expanding access to care, and developing the economic dimensions of health activities. Moran captured these independent but intricate dynamics in his powerful conceptualization of “The Health-Care State” (1999). He bound democratic states and highly developed healthcare systems together indissolubly in a single concept using three arguments. First, advanced democracies cannot exist without a large accessible health-care sector, the development of which depends on the state, notably for socialized funding. Second, the regulating power of the state is limited because governing health care implies governing, simultaneously and permanently, the medical profession, science and

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technology, and social demand. Third, as those three strands evolve independently, each according to its own specific interests and dynamics, governments in democratic states have little, if any, capacity for path-breaking intervention.

17.2.2 The Regulatory Function However, since the late 1990s, and especially after the 2008 financial crisis, governments have gained regulatory power over advanced health-care systems. A research group from Bremen University (Germany), has examined the changing role of the state in member countries of the Organization for Economic Cooperation and Development (OECD) (Böhm et al., 2013; Rothgang et al., 2010). Their approach to healthcare systems is based on the fundamental “functions” required of all health-care systems. In particular, they have identified three functions: organization of funding, distribution of care, and regulation of the system. Their comparative approach shows that health systems are founded on the values and guiding principles of a given society: the functions of funding and of service provision translate these values into operational institutions and mechanisms; and this architecture of values, funding agencies, and providers is headed by the regulatory function, which is reserved to the government as the legal representatives of society. Thus, this theoretical perspective places regulation at the top of the three-dimensional analytical framework. As an example, the government is in charge of organizing the allocation of economic resources for the health sector and balancing trade-offs or necessary compromises between medical needs and public preferences.2 So far, these dynamics have resulted in extending care systems and expenditure, despite the increasing regulatory power of governments, which suggests that structural changes toward sustainable health protection for future generations primarily depend on changes in the fundamental ethics. From this perspective, long-termoriented health policies can only develop with new values. Examples exist of successful transformations of the guiding principles. Health is seen as a human right. For example, anti-AIDS associations imposed AIDS as a research priority, requiring the best medical care and coproduced prevention strategies (Kirp & Bayer, 1992; Steffen, 2004). Governments and their agencies impose price negotiations and quality evaluations on private industries, especially the pharmaceutical industry. Despite powerful lobbying, economic interests cannot totally escape moral principles and regulation when it concerns health (Geiger, 2021).

2

The analysis by functions takes into account the fact that funding and service provision can take public, private, or mixed forms. It has thus renewed the classification of healthcare systems, identifying five—not three—types, because the former general category of “health insurance systems” breaks in reality down into very different types: national health insurance (HI) systems, social HI systems, and statist social HI systems (Böhm et al., 2013: 16–28).

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Table 17.1 Current health expenditure (public and private): a comparative overview Country

Health expenditure as a % of GDP 1970

2019 by ranking

Per capita in purchasing power parity dollars (rank)

Share of government or compulsory schemesa (rank)

Military expenditure as a % of GDP, 2020 (rank)

USA

6.2

16.8

10,948 (1)

82.7 (5)b

3.7 (2)

Germany

5.7

11.7

6518 (3)

84.6 (2)

1.4 (8)

France

5.2

11.1

5218 (5)

83.7 (4)c

2.1 (5)

Japan

4.4

11.0

4691 (6)

83.9 (3)

1.0 (9) last

Canada

6.4

10.8

5370 (4)

70.2 (7)

1.4 (8)

Norway

4.4

10.5

6744 (2)

85.8 (1)

2.0 (6)

(6)b

UK

4.0

10.2

4500 (8)

78.5

Australia

4.5

9.4

4919 (7)

68.7 (8)

2.2 (4) 2.0 (6)

Non-OECD countries Brazil

–

9.6

1513 (10)

40.9 (11)

1.4 (8)

Russia

–

5.6

1850 (9)

61.2 (9) low GDP

4.3 (1) first

China

–

5.1

810 (11)

56.6 (10)

1.7 (7)

India

–

3.6

257 (12)

27.2 (12) weakest

2.9 (3)

a All

compulsory schemes, including those privately managed implementation of Obamacare saw a considerable increase of health insurance coverage, although not yet sufficient for coverage for the whole population, while the UK has experienced an increase of supplementary private health insurance to avoid waiting lists c For comparability, the share of government or compulsory schemes for France excludes complementary health insurance, which is semi-compulsory and a French particularity Source OECD Health data: https://stats.oecd.org/Index.aspx?DataSetCode=SHA (For military expenditure cf. Table 17.2 below) b The

17.2.3 The High Financial Burden In high-income countries, the health sector is one of the most expensive public policy sectors; in 2019, before the COVID-19 pandemic, it absorbed 10–12% of gross domestic product (GDP) in many high-income countries (OECD Health data3 ). In 2020, the onslaught of COVID-19 added 1.1% of GDP in both Germany and France, and 2.1% of GDP in the UK. The OECD average for health spending in 2019 was 8.8% of GDP; by 2020, the first year of the pandemic, it had grown to 9.7%. Furthermore, health spending has been growing constantly over the long term, more than doubling its proportion of GDP in many countries since 1970, as shown in Table 17.1. In developed countries, health funding is largely socialized. The huge expenditure is financed by public money, raised by general taxes or compulsory contributions to public or parapublic health insurance funds. Consequently, citizens consider 3

https://stats.oecd.org/Index.aspx?DatasetCode=HEALTH_STAT.

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health care as a personal right that is essential for their safety and daily well-being throughout their lives. Therefore, dysfunctions and shortcomings in the health-care sector can develop into political criticism, and even major political crises, as shown by the response to HIV-contaminated blood. In a comparative study of eight countries, Feldman and Bayer documented that all eight countries experienced resulting political contest or crises, including a “high-intensity scandal” in Japan, Canada, and France (1999: 353–360). In advanced welfare states, governments are held accountable for delivering quality care to all citizens according to their individual needs. The financial burden is considerable and expected to grow in the future, driven by demographic transitions (aging, population growth, and immigration) and the threefold dynamic of Moran’s “health-care state” (1999). Table 17.1 provides a comparison of total current health expenditure between countries. The health expenditures comprise public and private spending together, including out-of-pocket payments that are linked to medical prescriptions and official medical services. It includes all care services, prescribed medicines, devices and equipment used in hospitals or by patients, prevention expenditure, and the administrative costs for running the system. It excludes “investment” (building of hospitals and purchasing large long-lasting equipment) and income compensation during sick leave because many countries do not provide the latter via compulsory health insurance schemes. The share of expenditure paid either by government or compulsory health insurance (Table 17.1, column 4) shows that countries with systems with a large commercial sector (private health insurance, private hospitals, and private doctors) do not cover their population sufficiently (e.g., India and Brazil). The US system, largely in private hands, is the world’s most expensive, although it does not completely cover the medical needs of the population. The implementation of the Affordable Care Act on January 1, 2014 (known as Obamacare, first promulgated on March 30, 2010) increased the share of socialized funding from 49.4% in 2013 to 82.7% in 2019, in line with most other high-income OECD countries. Table 17.1 shows that a high proportion of the GDP spent on health services does not necessarily correspond to the same high level of spending per capita, as illustrated by the difference between, say, Norway and Germany, compared with France and Japan, where the latter both have lower GDP per capita. The discrepancy shows that the longterm financial sustainability of health systems is linked with the productivity of the national economy. Health expenditure largely surpasses military expenditure as shown in Table 17.2; nearly all the countries compared spend much more of their GDP on their health system than on their military forces (although note that the data are for 2020, before the Russian war on Ukraine). The exceptions are Russia and India—both nuclear powers, but with very different sociopolitical regimes—which spend nearly as much on their military forces as on the health of their populations. Carpenter noted that only Israel and South Korea “spend marginally more on defense than they do on health (2012: 289).” Japan and Germany lead this fundamental trend for health expenditure, spending 11 and 8 times, respectively, more on health than on their militaries, followed by Canada and Brazil, which both spend 7–8 times more. The

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Table 17.2 Ratio of health spending (2019) to military spending (2020), as a percentage of GDP, 2020 Country

Health spending exceeds military spending by a multiple of

USA

4.5

Germany

8.3

France

5.3

Japan

11.0

Canada

7.7

Norway

5.3

UK

4.6

Australia

4.7

Remarks on the ratios

2nd lowest military preference Lowest military preference

Non-OECD countries Brazil

6.8

Russia

1.3

China

3.0

India

1.2

High military preference High military preference

Primary source for military expenditure: Stockholm International Peace Research Institute (SIPRI), Yearbook 2020: SIPRI Military Expenditure Database: https://www.sipri.org/databases/milex Source https://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS

other selected countries spend 4–5 times more on health services than on the military, including France, the UK, and the USA, despite being nuclear powers. The huge amount of health expenditure raises the question of representativity. Who has the legitimacy to (co)decide on the amount and its use? As discussed earlier in this chapter, the expenditure is generated to a large extent by medical, social, and economic logics, that is, by micro-level decisions and system effects rather than by policy decisions. Although parliaments pass health budgets, their role is generally limited to fixing growth rates. The margins for decisions are indeed slim because most health expenditure is spent on workforce remuneration, which is predetermined and fixed. Furthermore, the expenditure does not equally benefit all citizens, but is concentrated on very ill patients. In France, chronic pathologies account for two-thirds of the statutory health insurance’s expenditure, which is spent on one-third only of all affiliates. Cancers, cardiovascular disease, and mental health account for 36% of the expenditure, and 56% of insured persons consume only minor treatments4 (Assurance Maladie, 2022). A theoretical model providing guidance on the most appropriate representation for democratic and/or future-oriented health governance remains lacking. Various types of interest representation models exist: general representative democracy concerning all citizens in national health systems; Bismarckian “co-management” between 4

The statistics are for 2019 (pre-COVID-19). The percentages have remained quite stable over time, with the share of chronic disease steadily increasing.

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employers and trade unions, representing business and the working population in SHI systems; mixed variants of those two models, as in France and Japan; and, more recently, the adjunction of consultative structures to those institutional models, with the institutionalized “participation” of users’ or patients’ organizations, which links governing bodies, health professionals, and civil society representatives specializing in care issues and patients’ rights. France has institutionalized such consultative participation, known as “Health Democracy,”5 the structures of which are compulsory at all levels, from local to regional hospitals and even certain national bodies. This approach helps to solve practical problems, notably local coordination of care pathways or waiting times, and provides general channels for information and the education of patients as well as feedback on treatment effects in everyday life. However, given the monopoly of patients’ associations (structured by pathologies) in this model, it carries the risk of silo-type interest representation and professionalization of militant elites. So far, there is little evidence that such participation could enhance major policy choices for future generations.

17.3 Questioning an Unsustainable Model Policies have evolved, step-by-step, under pressure of crises. Given the financial burden of health systems, regulation and reforms have focused on cost containment, which is obviously useful for future sustainability but not sufficient. Health-care access was expanded during the “Golden Thirties”; it was the 1973 oil crisis that sounded alarms about the level of expenditure, and set reforms in progress, although such progress was slow until the 1990s. During the 1980s, attention was captured by the AIDS pandemic, the contamination of blood and plasma supplies, and massive death rates among hemophiliacs and transfusion receivers. This crisis led to the mobilization of patients and the media, and court procedures, which have resulted in the imposition of high safety standards for medical treatment and medicines, compensation for medical accidents, and participatory channels. These crisis-born improvements have proved sustainable. Thus, medical care has become accountable to law, organized patients, and the public.

17.3.1 Sustainability in Managerial Terms Concerning financial sustainability, governments initially focused on budget caps. This proved effective in NHS systems because they were under direct government control, but it entailed waiting lists and increasing medical risks. In SHI systems, with larger governance networks and greater prescription freedom for doctors, budget limits were more difficult to impose. The French government imposed a unique 5

This reform was implemented in law on March 4, 2002.

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measure—after being granted the relevant power during the 1970s—of limiting admissions to medical school, which created an increasing and persistent shortage of doctors, and even “medical deserts” a generation later.6 Elsewhere, the “care baskets” have been reduced, mainly at the margins for medicines that were not considered vital, and user charges have been introduced or increased. These moves have been criticized as creeping privatization. Germany commenced a complex reform strategy after the financial shock of its reunification, profoundly reorganizing the Bismarckian SHI funds, aligning contribution rates, and introducing risk equalization and competition between the funds. The financial crisis of 2008 led to a new leitmotif—“better spending” of henceforth limited resources—under which medical activities came under management scrutiny. A 2009 report (Thomson et al., 2009), which was prepared for the meeting of the EU’s health ministers, explicitly formulated the “question of future sustainability” and qualified it as an “inherently political problem.” It evaluated the different cost containment strategies and their outcomes in the 27 EU member states, and announced two alternatives. The first was limiting resources, which would lead to breaches in universal access and to waiting lists, with higher costs for serious illness due to waiting times. This option would mainly hit lower-income groups and encourage privatization for higher-income groups. The second alternative was to switch from cost containment on the consumer side to increasing productivity on the provider side. The proposed tools, today implemented in most countries, although to different degrees, included changing remuneration systems for care providers toward pay-for-performance, organizing integrated care paths for chronic patients, efficiency assessments of treatment protocols and treatment guidelines, common procurement to lower pharmaceutical prices, the promotion of competition, and the creation of performance data systems to know what care is needed, when and where. Despite the social criticisms, these steps can be considered as a contribution to the sustainability of care systems. The comparative literature evaluating the post-2008 austerity period has reached rather convergent conclusions (Carpenter, 2012; Pavolini & Guillèn, 2013; Reeves et al., 2014). In most EU countries, the financial crisis did not decrease health expenditure, but slowed down its growth. Universal access was maintained, without a notable increase in out-of-pocket payments, except in countries with very high external lending (e.g., Greece). In countries with heavy public debts, the financial crisis operated as a policy window for implementing long-attempted but previously unsuccessful cost containment policies, especially in France.7 The comparative studies concluded that the types of political parties in power during the financial crisis did not have a precise impact on reductions in health expenditure, nor did the level of public debts as a proportion of GDP relate to precise spending changes. Rather, the 6

A 1971 law entitled the French government to fix the number of admissions to medical schools. During the 1990s, the number of yearly admissions fell by 60%. Admissions only recovered to the 1970s level in 2018, under the Macron administration. Since 2021, admissions are again open. 7 A 1996 reform imposed a limited budget for the public health insurance system in France, but without any effect for more than a decade. However, since 2010, the target has been strictly respected.

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explanation of health spending decreases appears to be linked to the institutional architecture of the health systems, and the related regulatory power of governments: tax-funded systems (NHS systems) tended toward decreased health spending when general tax income declined, while SHI systems reacted more to a decrease of their GDP. The crisis response was achieved via “lean management,” which entailed a set of management techniques that sought the continuous elimination of waste in terms of costs, time, organizational sequences, and stocks throughout the entire production process with the goal of maximizing productivity. However, lean management has had negative effects. Paying medical providers according to activity resulted in unnecessary medical interventions, particularly of interventions with high tariffs, resulting in pointless expenditure rather than savings. Productivity pressure led to overwork, stress, and dissatisfaction among hospital staff and, as the COVID-19 crisis ultimately revealed, to insufficient or even no stocks of basic equipment (respirators, painkillers, gloves, and especially masks). This exposed the care system to the hazards of global markets and production lines for the provision of such supplies, but these supply chains were interrupted by the COVID-19 crisis. Thus, successful lean management is one explanation for the lack of preparedness for the COVID-19 pandemic.

17.3.2 Medicalization Versus Population Health The shock of the COVID-19 pandemic demonstrated that even the most advanced and professionally managed care systems were caught out and unprepared for the massive outbreaks and case numbers, illustrating the “wicked” nature of health policy problems. Although lean management shielded universal access to care from the financial crisis, it paved the road to unpreparedness for an infectious pandemic. The lesson from the COVID-19 crisis is that care systems have limits, which demands priority shifting toward effective prevention of massive illness. Therefore, most national post-COVID recovery plans focus on crisis preparedness with a twofold investment strategy: upgrading care systems, and modernizing data systems for better monitoring of transmittable diseases and early warning systems. This double strategy constitutes a step forward to sustainability, but it does not reduce the burden of noncommunicable diseases, which severely undermine population health. This subsection highlights the undesirable effects of care systems and the shortcomings in risk prevention. The dominant model of health policy has been medicalization. However, the benefits of medicalization entail new problems and risks, notably massive chronic and iatrogenic pathologies. Patients survive in greater numbers than in the past, but with more debilitating chronic conditions and longer periods of suffering. Modern resuscitation techniques produce tragic cases, such as the “Lambert affair” in France, where a young man with irreversible total brain destruction after a road accident was kept “alive” for 11 years (2008–2019) because his parents opposed all medical and court decisions to stop artificial hydration and breathing. In many countries,

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therapeutic relentlessness has led to moral controversy and to social demands for soft end-of-life care and even active medical assistance for dying as a right for patients. Furthermore, medicalization has expanded, with the medical treatment of social issues (Conrad, 2007), such as menopause, aging, sexuality,8 addiction, social anxiety, depression, sleeping issues, and learning difficulties. Medicalization was initiated by the medical profession, and consolidated by corresponding legal prescriptions (doctors have a legal responsibility for “means,” not results). Today, the main drivers of medicalization are innovation, health industries, patients’ associations, and consumer movements. This joint dynamic provoked the HIV-tainted blood crisis in the 1980s and 1990s, and continues today, as illustrated by severe accidents with contraceptive implants (Foucart, 2022).9 The high iatrogenic risk for elderly patients taking multiple drug prescriptions is well known. The devastating “storm” of the opioid epidemic in the USA constitutes another example (Patel & Rushefsky, 2021). In 2000, Starfield estimated that in the USA, 250,000 deaths per year could be due to iatrogenic causes or unfavorable responses to medical or surgical treatments, with 44,000–98,000 of these due to medical errors. The pharma industry constantly invents new drugs, often with little new medical benefit, as a way of increasing prices. Recently, a member of the French National Academy of Medicine doubted publicly whether “this headlong rush” could be sustainable, and suggested that “this madness” must be stopped (Falissard, 2022). Health care is a highly polluting sector. It produces a great amount of waste, including plastics, toxic chemicals, and even nuclear waste originating from radioiodine therapy, radiopharmaceutical diagnostic preparations, and radioactive body fluids. The Lancet report on health and climate change (Romanello et al., 2022: 3, 21) found that, worldwide, in 2019, the health sector was responsible for 5.2% of global greenhouse gas emissions; of the 37 health systems individually analyzed by the report, the USA had by far the highest emissions per capita, exceeding India’s by 50 times. An estimated 80% of those emissions relate to the production and transport chains of health industries, and the remainder directly from care activities. Management of COVID-19 has considerably increased the amount of biomedical waste, in particular, infected waste (discarded syringes, used test kits, and old vaccine bottles) that requires careful specific means of disposal. In India, the amount of biomedical waste grew from approximately 620 metric tons per day in 2019 to 780–1600 metric tons per day during the COVID-19 period, yet the workers handling this waste had received inadequate training and lacked sufficient protective equipment (Kapoor, 2022). In addition, the health sector creates other forms of pollution. The first international worldwide study of river contamination by medicinal substances revealed that 255 of the 258 rivers monitored across 104 countries and five continents were contaminated, even those in the most remote regions. In many cases, concentrations 8

From January 1, 2023, in France, all young people aged 18–25 years have been entitled to condoms delivered free of charge from drugstores, and all women, including young teenagers, to “morningafter pills” (the emergency contraceptive pill) free of charge, without prescription. 9 In France, between 2016 and 2020, some 200,000 women utilized the new contraceptive device. Three victims associations are now fighting in the courts for compensation.

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of contaminants were very high, endangering the reproduction and survival of fish, and affecting human health (Wilkinson et al., 202210 ).

17.3.3 Transboundary Pressure on Health Systems: The Massive Risks Two categories of major risks endanger health sustainability worldwide: first, noncommunicable diseases, notably obesity, diabetes, and respiratory insufficiency, which originate from outside the ambit of health policy but result in heavy chronic illnesses with extremely expensive care; and second, antimicrobial resistance (AMR) and antibiotic resistance (ABR), which originate from inappropriate use of antibiotics, inside and outside the health sector and create new pathogens that are resistant to medical treatment. In contrast to AIDS and COVID-19, these risks constitute silent epidemics that have been growing for decades, jeopardizing health conditions and care systems. Both problems are preventable, but prevention remains the poor parent of health policy. Table 17.3 shows a convergent trend that overrides possible weaknesses in the statistical comparability (as prevention lacks a precise definition). Since France stands out for particularly low investment in preventive health, the Macron administration has raised prevention to the level of a national priority. Since January 2022, for the first time in history, the health department is titled Ministère de la Santé et de la Prévention (Ministry for Health and Prevention), which sends an important political signal. It has already spurred new intergovernmental structures for crosssectoral policies and budgets for innovative interdisciplinary research programs, data platforms, and teaching tracks. We provide a short review, subject to limited space, of the major risks and challenges, based on data from the Lancet Commission reports, which provide detailed analyses (Fuller et al., 2022; Landrigan et al., 2018; Romanello et al., 2022). Diseases caused by pollution (air, water, soil, and consumer goods) are responsible for more than 9 million premature deaths per year, an impact “much greater than that of war, terrorism, malaria, HIV, tuberculosis, drugs, and alcohol” together (Fuller et al., 2022: e-539). Since 2000, deaths caused by the modern forms of pollution, mainly air pollution and toxic chemicals, have increased by 66%. Despite the removal of lead from car fuel worldwide, lead pollution, which causes intellectual impairment in children, continues because of unsound recycling of lead–acid batteries and e-waste. The full extent of the disease burden attributable to the large numbers of chemical pollutants, their high toxicity, and ubiquity in modern life remains underestimated because it is underresearched. This is demonstrated by the case of neonicotinoids, a modern 10

The study sought 61 medicinal substances from among the most commonly used medicines, namely antibiotics, analgesics, anti-inflammatories, antihistamines, antidiabetics, and antidepressants. All collected samples were analyzed in the same laboratory to avoid bias. The study found evidence of the “feminization” of fish owing to hormone concentrations in rivers, resulting from contraceptive and menopausal treatments for women.

17 The Challenges for Health Systems and Policies: Growing … Table 17.3 Expenditure on preventive carea as a percentage of total current health expenditure

351

Country

2010

2019

USA

3.4

3.2

Germany

3.3

3.3

France

1.9

1.9

Japan

3.0

3.0

Canada

5.9

5.7

Norway

2.6

2.1

UK (2013)

5.1

4.8

Australia

1.8

2.0

Brazil (2015)

4.6

4.3

Russia, China, India

Not known

Non-OECD countries

a The

OECD category includes medical checkups and screenings, collective campaigns such as vaccination and health communication, and the operating of the agencies in charge OECD Health Statistics: https://stats.oecd.org/Index.aspx?DataSe tCode=SHA

pesticide. The product is widely used (constituting one-third of the global insecticide market), including as a systematic prophylactic treatment in plant protection (for crops, vegetables, fruit, and flowers), forest farming, fish farming, and veterinary products. It translocates into all parts of the plant, from roots to leaves and pollen, diffuses into the environment (soil, water, and air) and the other organisms living in it, and has lasting effects. It cannot be washed off, but enters and contaminates the entire food chain. Its neurotoxic elements are found in human food and bodies, and cases of accidental poisoning are documented, but the health impact of the everyday exposure remains unknown. Strong and growing evidence indicates the direct impact on human health of even low-level exposure, beneath the official limits, to pesticides, fertilizers, toxic metals, industrial chemicals (halogenated flame retardants, plastics, plasticizers, and dioxins), and chemicals of pharmaceutical origin. They cause a silent epidemic of endocrine disruptors with far-reaching consequences. They disorganize hormonal functioning, leading to declining sperm quality, increased frequency of abnormal development of organs or reproductive functions; they lower the age of puberty, and increase growth disorders, neurological development disorders, immune function disorders, hormone-dependent cancers, and metabolic diseases, including diabetes (Ministère de la Santé et de la Prévention, 2022). A recent synthesis of international research on the “rapid decline of human fertility,” evidenced in all high-income countries, ranked the identified causal factors (Zhang et al., 2022). The most important factors were plastic and plasticizers present in everyday life, notably in food processing and wrappings.11 In four decades (1973–2011), the median concentration 11

The plasticizers are bisphenol A and its substitutes, polychlorinated dioxins, and phthalates.

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of spermatozoids of Western men fell by 50–60%, and there are strong suspicions that the development of the reproductive system in utero is affected by the most commonly used analgesic, paracetamol. Although medically assisted reproduction is expanding, it cannot stop the increasing risks. Intensive farming and livestock production, and modern food processing have created a worldwide obesity epidemic that has already affected two billion people (a quarter of humanity), causing type 2 diabetes and increasing cancer risks. Unbalanced diets cause 11.5 million premature deaths per year, 93% of them in highincome countries, with 17% of these attributed to the consumption of red meat, processed meat, trans-unsaturated fat, and dairy products (Romanello et al., 2022: 20). Nitrites, systematically used as preservatives in all charcuterie, cause nearly 5000 colorectal cancers annually in France alone, and are highly suspected of causing stomach cancers. Sugar consumption has skyrocketed. It is abundantly present in modern food, not only in sodas and sweet drinks, but also in ready-prepared dishes, street and fast food, snacks, biscuits, and breakfast cereals. Increased sugar intake has caused a worldwide epidemic of type 2 diabetes, a most severe chronic pathology leading to coronary diseases, stroke, diabetic neuropathy, kidney diseases, blindness, and lower limb amputations, creating severe disability and high health-care costs. In Western Europe, the prevalence of type 2 diabetes grew from 5.6% of the adult population in 1990 to 10–11.5% in 2017 in the most affected countries (the Netherlands, Switzerland, Sweden, and Italy). It doubled in the USA, reaching close to 10% by 2019 (Khan et al., 2020). The World Health Organization (WHO) estimated that diabetes and kidney diseases directly due to diabetes caused two million deaths in 2019. Type 2 diabetes is a silent epidemic, as its symptoms are largely hidden in its earlier stages when diet changes could still prevent the illness. Given that sugar is cheap and most profitable for industries, but highly addictive for consumers, diabetes will further increase. It is thus recognized as the most challenging health problem of the twenty-first century. ABR12 is the other of the two most serious threats to health and food security worldwide (WHO, 2020). Although ABR and AMR occur naturally, misuse of antibiotics and antifungals has made them less effective. Thus, incurable multiresistant tuberculosis has developed, killing 250,000 patients per year worldwide. The total number of deaths due to ABR amounted to 4.95 million in 2019, including 1.27 million that were directly attributable (Renesto & Jouvin-Marche, 2022). The process of AMR is based on adaptation, mutation, and combination of germs exposed to antibiotics and antifungals. The alarming fact is that resistant germs can share their resistance mechanisms with other germs, including those that have not been exposed to antibiotics or antifungals, and that only the resistant germs survive (CDC, 2022). In 2017, the WHO stated that “the world is running out of antibiotics” because the antibiotics in development are not expected to be effective against the most dangerous

12

The arguments refer to both the broader concept of AMR, which involves resistance to bacteria, viruses, fungi, and parasites, and to ABR, which refers specifically to resistance to bacteria.

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forms of antibiotic-resistant bacteria. Given intergerm diffusion and global transmission, boosted by global traveling, AMR moves faster than the invention of new classes of antibiotics. The causes of the problem are well known: overprescription of antibiotics by doctors and veterinarians, and their overuse by the public, including for social convenience13 ; the ability, in many countries, for people to buy antibiotics for human or animal use without prescription; the lack, in many countries, of standard treatment guidelines for health professionals; and the industrial and commercial use of antibiotics to favor the growth of animals or plants, or for systematic prevention in healthy animals. The WHO (2020) urged the agriculture sector to improve biosecurity on farms through improved hygiene, vaccination, and animal welfare, instead of using antibiotics. Inappropriate disposal of unused medicines also contributes to AMR. To avoid the deviation of humanitarian donations to illegal markets that lack medical surveillance, regulations mandating the collection and destruction of unused medicines have been imposed in the EU.14

17.4 Milestones for Population Health and Sustainability Pollution is a complex transboundary problem because it spreads geographically via wind, water, and dust, and biologically via the interspecies chains of resistant germs. Health administrations cannot control such interwoven risk dynamics by themselves. New intellectual and organizational frameworks are required to support integrated strategies for population health. Transboundary risks call for coordination between different sectors and interests, and for shared responsibility for decision-making and implementation. The question is, how can health policy-makers, generally national authorities of public services, act on the risk-producing sectors dominated by private, mainly economic actors? How can they construct the “strong political leadership” that is essential for successful future-oriented policy-making, as discussed in Chap. 2 by Yukio Adachi. In the final section of this chapter, we bring together innovative approaches to achieve sustainable population health.

13

Until the mid-2000s, it was common practice in France to permit sick children to attend day cares and kindergartens on the condition that they were taking antibiotics. 14 Donations of unused medicines to poor countries, mainly Africa, have been drastically reduced. Only specific authorized nongovernmental organizations (NGOs) can still organize donation, subject to reporting obligations.

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17.4.1 Conceptualizing Transboundary Dynamics Comprehensive prevention strategies need uncontested guiding references as a foundation. Three interdisciplinary scientific concepts are relevant: “One Health,” exposome, and epigenetics. The idea of One Health originated as “One Medicine” in US veterinarian networks as a means to stress the similarity between animal and human illnesses. In the early 2000s, responding to H5N1 influenza and SARS, and expecting future zoonotic or vector-borne pandemics, the concerned international organizations—the WHO, the World Organization for Animal Health (WOAH), the Food and Agriculture Organization (FAO), and the UN’s Environment Program— began to promote One Health, which was expanded to a triad linking the health of humans, animals, and ecosystems, as a leitmotif. One Health has become a scientific concept validated by abundant interdisciplinary research. It provides the heuristic support for comprehensive long-term approaches to health. However, controversy exists concerning a potentially unlimited extension toward environmental issues. Medical academies warn against undue concept stretching, which would hamper research and policy implementation, whereas ecology movements argue that risks originate from disrupted biodiversity, which to their mind should be prioritized. Exposome and epigenetics are scientific approaches that cross the disciplinary boundaries of biology, virology, medicine, epidemiology, and public health. Both focus on the etiology of chronic diseases, using cellular, molecular, and mathematical tools. Exposome is typically a holistic and long-term epidemiology: it identifies and traces all the risks to which an individual or a group has been exposed, from in utero to death. Epigenetics focuses on how exposures to behavioral and environmental risks alter the functioning of genes. These new disciplines explain the individual variations in responses to similar social or environmental risks, and thus help close the knowledge gap between social and molecular epidemiology, and reduce political controversy. Alarmingly, epigenetic modifications can be passed on to subsequent generations, which means that the silent pandemics labeled “noncommunicable” diseases are in fact transmissible.15 By strengthening our understanding of the dynamics between chronic disease and risk, these new conceptual perspectives provide support for coherent policy decisions for sustainable health. Operationalization is progressing in three fields: infectious diseases and pandemic preparedness, AMR, and (to a lesser degree) food safety.

15

The Dutch famine during the German occupation of Holland (as it was then known) in World War II provides evidence of the transmissibility of “noncommunicable” diseases, because children exposed in utero or during their early years—and even the descendants of these children—continue to suffer diseases related to the famine experienced by their mothers and grandmothers.

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17.4.2 Coupling Behavioral and Structural Prevention Controversy over issues such as whether campaigns should target behavior or structural changes, and whether vaccination and mask-wearing should be compulsory or voluntary, continues to hamper policy-making. This controversy has become scientifically obsolete, but highlights the gap between the real risk dynamics and public perceptions. How then can citizens participate in health promotion? Ewert and Loer (2019) proposed the concept of “behaviorally informed health citizenship,” which couples people’s awareness of their behavioral risks with the socioeconomic determinants of health. They argued that citizens who are well-informed about their personal risks are more likely than others to voice risk reduction in representative or participatory forums, and to engage in collective action, especially in their community. Therefore, Ewert and Loer (2019) proposed that prevention must simultaneously deploy behavioral and structural strategies, and that governments must oblige producers to eliminate all health risks from their products or clearly indicate them to consumers. Several Latin American countries have already imposed standardized front-page warning labels on all food, with traffic-light colors indicating the total risk score. Such strategies can use already existing regulatory tools, which facilitate implementation. By linking the producer and consumer ends of the risk chains, and combining government regulation with health-informed citizenry, the approach conciliates behavior governance and democracy.

17.4.3 Coordination in Practice: Interprofessional, Trans-Sectoral, and Multilevel As shown by several earlier chapters, particularly Chap. 16 by Mika Shimizu, the local levels are the first to deal with emergencies because of acute need and the proximity for coordinated action. During the COVID-19 crisis, local actors initiated public–private and cross-sector collaborations to redeploy care capacities and staff, produce the masks that were lacking, and organize isolation and vaccination strategies (Nunes-Silva, 2022), as well as epidemiological research. The SARS-CoV-2 virus and variants have been identified in local wastewaters up to two weeks before they are identified by screening monitoring, which provides time to estimate transmission amounts in local communities and adopt preventive measures. When New York hospitals faced surprising polio cases in 2022, the pathogen was identified in several distant points of the city’s wastewater system, as well as in London and Jerusalem. These findings indicated that the clinical cases were only the tip of an iceberg, and that the weakened live virus used in oral polio vaccines had mutated back to a harmful variant in unvaccinated people. The local findings highlighted the need for coordination between those responsible for monitoring vaccination, AMR, hospitals, and sewage surveillance (Lange, 2022). In French cities, doctors, municipal services, and geographers launched air pollution measurements and confirmed the strong links

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between air pollution and the severity of COVID-19 (CNRS, 2022). Such local results questioned established etiology, and corroborated micro-epidemiology as a relevant scientific method. Central governments respond to health issues with national plans. The COVID-19 shock prompted political engagement, increased implementation, and transboundary policy content. When the French COVID-19 scientific advisory board was closed in July 2022, a Committee for the Development of the One Health Approach was established. The 4th Health and Environment Plan for 2021–2025 has been labeled “One Environment, One Health.” It is cochaired by the Departments of Health and the Environment, and engages four more ministries (Finance, Agriculture, Research, and Foreign Affairs). The plan includes a specific section on working with local communities. Simultaneously, both the National Association of Mayors and the Association of Local Elected Officials have created “health sections” for the first time. The Netherlands imposed a strict nitrogen reduction plan on its high-productivity and export-oriented livestock sector to stop the heavy pollution of soil and water. Local authorities are responsible for results, and can expropriate farms on the basis of an EU directive. In Europe, national plans are increasingly being articulated with EU frameworks for research funding, big data systems, and knowledge sharing, as illustrated by the endocrine disruptor program REACH. EU efforts to regulate harmful chemicals started in 2008 and enhanced national plans, but results remained below targets. However, in 2020, following the COVID-19 mobilization, the EU and member states renewed their commitment to harmonizing European definitions of all disruptors and prohibiting them in consumer goods. Considerable budgets for interdisciplinary trans-European research teams are now available, with all projects required to include educational actions for professionals and the public. The AMR case illustrates the increasing political drive for risk reduction and the usefulness of supranational leadership. French campaigns to lower the use of antibiotics started in 2002, with a health insurance campaign targeted at doctors. However, it resulted in only a temporary 15% reduction in prescriptions (Renesto & JouvinMarche, 2022). In 2006, the EU prohibited the use of antibiotics for animal growth. In 2010, the French government began its first national campaign, targeting both doctors and industrial breeders. In 2012, the EU launched a significant AMR researchfunding program. In 2015, the WHO published its AMR action plan, together with the FAO and the WOAH using the One Health concept. In 2016, shamed by European benchmarking, which ranked France the fourth highest (among 29 countries) for antibiotic use per capita, the French government launched its first intergovernmental action plan against the abuse of antibiotics, and introduced the One Health concept. In 2019, the WHO published an alarming report, warning that the international efforts were insufficient given the severity of the AMR risk. In 2020, the French per capita use of antibiotics, although decreasing, remained 25% above the European average. The targets set in 2016 were reached in the agricultural sector, given the EU

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prohibition, but not in the medical sector.16 Consequently, the government launched a large, well-funded priority research program for eight years, explicitly under the One Health concept, and closely articulated with the European programs. At both national and EU levels, the programs are interdisciplinary, interagency, and multilevel, thus addressing the entire chain necessary for substantial change: fundamental research, medicine, hospitals, public health, agriculture, training, teaching, and public information. The EU now enforces the full array of its public health regulations. As an example, the European Commission adopted a ban on neonicotinoid seeds in 2018, applicable in all 27 member states, but allowed 11 countries to deliver “emergency authorizations” to their sugar beet sectors, which claimed that they lacked alternatives. In January 2023, a ruling of the European Court of Justice put an end to the national exceptions, deeming them illegal. For the EU, the COVID-19 crisis presented a window of opportunity for extending its health mandate and its health diplomacy.17 At the World Health Summit in October 2020, the President of the European Commission announced the building of “a strong European Health Union” (EHU), in which the 27 member states “will work together to protect people’s health, both during a crisis and in normal times when we can tackle underlying health conditions.18 ” The term EHU covers a dynamic process deployed in three main directions: construction of a robust preparedness for epidemics,19 solidarity between the member states,20 and modernization.21 Several investment programs, notably the EU post-COVID-19 “Recovery and Resilience plan,22 ” are making important funds available to all member states, on the basis of project submission to strengthen their health systems for immediate needs and long-term resilience, including health risk prevention in fields like AMR and other trans-sectoral risks, the digitization of health systems, and the fourth EU Health 16

Medical overuse of antibiotics in France is concentrated in the ambulatory care sector, which is staffed with independent doctors, who enjoy prescription freedom. In Japan, a nationwide pilot project started in 2018, with voluntary “care units” receiving modest financial incentives to reduce their issuance of prescriptions for antibiotics. This resulted in an 18% reduction in the number of prescriptions issued (Okubo et al., 2022). 17 The EU played an important role during the AIDS pandemic by providing for transboundary networking and harmonization of statistics within its territory and the future Eastern European member states (Steffen, 2012), as well as in international AIDS diplomacy. 18 https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/promoting-our-eur opean-way-life/european-health-union_en. 19 Ensuring preparedness for epidemics involves the expansion of the missions of the European Centre for Disease Prevention and Control and the European Medicines Agency; the creation of the Health Emergency and Response Authority, which has delivered its first report in November 2022; and a new European Pharmaceutical Strategy to secure production capacity within the EU for vaccines and medicines. 20 Solidarity between the member states includes the joint EU procurement of vaccines and other health equipment, and common EU borrowing for the Health Recovery Plans. 21 One of the notable modernizations is a common European Health Data Space. 22 The Recovery and Resilience plan provides e672.5 billion. In addition, future-orientated health projects can also be supported by other EU funding sources, such as the Cohesion Fund, Horizon Europe, and Digital Europe.

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Research Program (EU4Health). The latter offers e5.1 billion for the period 2021– 27 (Fahy et al., 2021: 10, 15–16, 49–50), which is eleven times that of the previous program (EU3Health 2014–2020). The EHU also includes a global political initiative, the emerging of which is interesting. In 2021, the “Pan-European Commission on Health and Sustainable Development,” representing the 53 countries of the WHO–Europe region, and scientifically supported by academics and the European Observatory on Health Systems and Policies, published a substantial report (McKee, 2021). It drew lessons from the COVID19 crisis and, moving beyond health care and preparedness, it proposes ambitious policies for prevention and risk reduction, and a new more efficient international health governance. The latter should include financial expertise and institutions, and have a “strong leadership.” The Pan-European Commission was chaired by the Italian economist Mario Monti, who was prime minister during the public debt crisis, and former EU Commissioner. Monti was known for fighting fiscal evasion, lifting Swiss banking secrecy, and promoting taxation of the Catholic Church on the land it owned. His profile approaches that of Mario Draghi, Italian prime minister during the COVID-19 crisis and former governor of the European Central Bank (2011–2019). Both are respected as pragmatic, high-level public executives and independent politicians, who place responsibility over responsiveness to voters (Garzia & Karremans, 2021), which may suggest a profile for high-level political health leadership. In November 2022, the European Commission presented its “EU Global Health Strategy,23 ” a document directly inspired by the abovementioned Pan-European report. The European Commission document insists on multilateral independent governance, with “a strong, effective, and accountable WHO,” the necessary inclusion of the international public financial institutions for securing global health funding and providing economic and financial expertise (World Bank, OECD, central banks, and regional development banks), and “high-level competent leadership” (2022: 5–7). The inclusion of the OECD and public financial institutions is crucial because they can bring together financial and health ministers, which neither the WHO nor the United Nations Educational, Scientific, and Cultural Organization (UNESCO) can do. The document includes a precise implementation agenda (for 2023–2027) and outlines the principles for new governance. Kickbusch (2023: 1), an experienced global health expert,24 qualified the EU Global Health Strategy as an “unexpected political document,” and an “essential pillar of EU external policy,” aiming at “a new global health order through a more strategic, assertive, and effective engagement, and by working in meaningful strategic partnerships, (and) supporting low- and middle-income countries.”

23

https://health.ec.europa.eu/system/files/2022-12/international_ghs-report-2022_en.pdf. Professor Ilona Kickbusch is a member of the Global Preparedness Monitoring Board jointly established in 2018 by the WHO and the World Bank.

24

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17.4.4 Global Crisis as Global Opportunity The economic impact of the COVID-19 pandemic has provided the impetus for the rise of prevention and population health approaches, similar to the humanitarian and scientific drive derived from the AIDS epidemic in former decades. The pandemic revealed the weakness of international organizations in implementation, with their slow progress failing to match the risk dynamics. As an example, both the WHO and the UN launched action plans against noncommunicable diseases much earlier than the COVID-19 pandemic, the WHO from 2008 and the UN from 2011, as part of the Millennium Development Goals. Both promoted “whole-ofgovernment” approaches and “whole-of-society efforts” in response to the multisectoral and producer/consumer dilemmas. Relevant models and legal instruments have also been in existence since the same length of time, including the WHO Framework Convention on Tobacco Control, and the authority given to the WHO directorgeneral to declare a disease outbreak as a “public health emergency of international concern.” However, the WHO lacks the financial, legal, and political resources to impose compliance with its measures, which its member states are not legally bound to apply. Private foundation fundings and numerous interagency committees do not constitute an efficient governance framework for global health. This is indicative of the key problem analyzed by the Pan-European Commission under the Chair Mario Monti. Addressed to all global health actors, the EU Global Health Strategy now forms part of the project for a new international pandemic treaty. The pandemic has led to a surge in innovations. In May 2022, the member states of the WHO agreed to increase their contributions to cover 50% of its budget by 2030 (with their contributions having dropped from 80 to 16% from the 1980s to 2022). The G20 activated its “Finance–Health Task Force,” which unites health and finance ministers, and organizes the global funding for COVID-19 vaccinations. In 2021, the WOAH, together with the WHO, the FAO, and the UN Environmental Program, set up a “One Health High-Level Expert Group” to implement zoonotic disease prevention, and organize global shared data systems on all available knowledge, early detection, and surveillance. It seems that transboundary prevention strategies become feasible when pertinent concepts meet powerful crises.

17.5 Conclusion: Political Conditions and Leadership In this chapter, we have applied a systems-based approach to the health sector to understand if and how sustainable health policies can develop. The analysis is founded on data from different health systems, including France, other European countries, and Japan. To date, there is no theoretical definition of health sustainability. The notion is problem-dependent. It refers generally to cost containment and related issues (e.g., workforce power, infrastructure, and access). In the case of an epidemic or major disaster, it refers to the immediate accessibility of stocks and

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extra resources. Our focus in this chapter has been on the lasting health protection for future generations, beyond funding or crises. The sustainability lens reveals the limits of established health systems and policies to respond to the growing health needs and risks. Effective control of health risks requires changes in policies, politics, and governance, inside and beyond the health-care sector, which means solving many “wicked” policy problems. Our analysis distinguishes three different components within the health policy field: the care system, pandemic and disaster preparedness, and a dispersed domain of risk reduction. Thus, health sustainability requires interdepartmental, science-based policy-making. However, silo-based politics remains still dominant, but the COVID-19 crisis has highlighted the paralyzing effects of sectionalism opposing local and central actors, and of departmental politics opposing health and economic agencies. Political interest in health sustainability varies according to the three distinct components of health policy. First, the sustainability of care systems can be guaranteed with sufficient funding, efficient organization, a competent workforce, and respect for equity, universalism, and the individual, all of which are deliverable in democratic high-income countries. Investing in health care is highly beneficial for politicians, irrespective of levels of public expenditure. Therefore, sustainability prospects seem positive, as long as the supporting moral values are shared. Second, crisis preparedness requires important standby reserves and stockpiling, as well as quick decision-making. This is difficult for policy-makers to deliver because of uncertainty, potential public opposition, and the costly immobilization of important resources in the absence of a current disaster. Decision-makers can learn from crises, but the lessons from the last crisis may not be useful for the next one. In fact, good preparedness constitutes a burden without notable political benefits. Theoretically, the chances of implementing sustainability in this field are therefore modest, but they increase with each crisis. Third, effective risk reduction constitutes the key element for sustainable health conditions. Risk reduction is policy-making for the future. However, political benefits are small and potentially even negative because the results become visible only in the long term, not in the short electoral term, whereas the costs, incurred immediately, are far more visible. Moreover, risk reduction means combating other agencies and powerful interests, and often cultural norms; in short, it is much work for little political benefit. Thus, sustainability prospects in this major domain depend on the mobilization of civil society and virtuous political will. Given unbalanced political motivation, strong competent leadership is crucial for organizing funding, partnerships, and governance across boundaries, and for imposing the intrinsic value of health on concurrent lobbies. Naturally, leadership requires different methods and capacities in normal times, when decisions are taken by the usual agencies within known frameworks and options compared with times of crisis, when decision-making passes to the highest political level. The sustainability shift to population health requires strategic leadership, beyond the context of crises, for elaborating and institutionalizing the new future-oriented policies. The dynamic strategy developed by the EU in the aftermath of the COVID-19 crisis may suggest profiles for such leadership (see Sect. 17.4.3). The example suggests that strong

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leadership is not in contradiction with but a favorable condition for shared decisionmaking and responsibility. The right to health is anchored in international law and in the constitutions of many countries, but is understood as access to medical care, housing, and food. Two questions arise: can it be extended to population health?; and is population health sufficiently developed as a major science that can contribute to policy-making for sustainable health conditions? Science-informed decision-makers and healthinformed citizens will be an asset on the long road to sustainable health protection. The final issue is whether health politics differs from the politics of other fields. Carpenter (2012) concluded that indeed it does because of its moral significance. Distributive claims are more easily accepted by voters and politicians when they concern health than when they concern other social policies. However, the argument applies mainly to the medical care sector, and corresponds to the “health-care state” concept. Pandemic preparedness shares many aspects with disaster management, and the sustainable reduction of health risks with other complex policies of long-term relevance, such as education, poverty reduction, and environmental policies.

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