Incentivizing repair over replacement in Japan: the role of economic incentives and lifestyle changes
Darius Corbier, Junior Scientist, Fondazione CMCC – Centro Euro-Mediterraneo sui Cambiamenti Climatici, RFF-CMCC European Institute on Economics and the Environment
With high levels of waste generation, large volumes of waste being incinerated, and a high dependency on primary material imports, focusing only on the “3R” approach is insufficient for Japan’s transition to a Sound Material-Cycle Society. To achieve more significant reductions in waste, lower material imports, and decreased CO₂ emissions, it is also important to focus on consumer-focused circular economy strategies, such as extending the product lifespans through repair. Policy support and lifestyle changes can be key enablers, but potential trade-offs between consumer-focused circular economy strategies and rebound effects must be carefully addressed.
The present paper uses the CIRCEE-LIFE model (Corbier et al., 2024), a dynamic general equilibrium model enhanced by material flow analysis. It studies how economic incentives and lifestyle changes influence household behaviors regarding the repair of energy-consuming goods. Additionally, it assesses the subsequent effects on resource use, waste generation, and CO2 emissions.
Key Insights:
• Decreasing the relative cost of repair seems more effective than increasing solely the cost of replacement: A subsidy on repair services (rising from 5% in 2025 to 30% by 2050) paired with increased Extended Producer Responsibility (EPR) fees (up to 20% of a new good’s price) can more than double repair rates compared to simply increasing replacement costs (see Figure 1 below).
• Barriers to repair matter: High barriers to repair, which constrain the substitution from new replacement goods to repaired goods, can significantly reduce the effectiveness of economic incentives, highlighting the need to eliminate these obstacles (see the differences between EPR_low and EPR_high, and Bonus_low and Bonus_high in Figure 1 below).
• Lifestyle changes are key antecedents to consumer-focused circular economy strategies. Households motivated by strong low-carbon values engage more in repair activities and achieve roughly twice the reductions in material use and waste generation compared to those motivated purely by the need to save money. Education and awareness campaigns to strengthen low-carbon cognitions alongside fiscal measures are important for the success of repair policies.
• Trade-offs between R strategies: Higher replacement costs encourage Repair, Rethink (“sharing” in CIRCEE-LIFE), and Refuse (“sufficiency”), but lower repair costs encourage households to own, highlighting a tension between “repair” and “rethink” strategies (see scenario “Bonus_low” in Figure 1 below).
• Potential rebound effects: While repair extends product life and can cut waste generation by up to 12 Mt/year and decrease material imports by up to 10 Mt/year in 2050 under low barriers to repair and strong environmental beliefs compared to a current policy scenario, increased use of older, less efficient goods can trigger rebound effects in energy consumption (+0.06 EJ of household final energy use in 2050 compared to a current policy scenario). However, the reduction of waste processed in incineration facilities, thanks to lower acquisitions of energy-using goods, helps mitigate the negative impact of repairing old goods on CO2 emissions.
Fig. 1. Scenario development: increase the repair of energy-using goods (“Repair”), reduce the purchase of energy-using goods (“Refuse”), engage in good-sharing rather than good-ownership (“Rethink”), decrease the imports of raw materials, processed materials and goods (“Resource Security”), decrease domestic material consumption (DMC), decrease waste generation (“Waste Mitigation”) and reduce CO2 emissions (“CO2 Mitigation”). Indicators are classified by their potential, ranging from low to high, based on the results of CIRCEE-LIFE. EPR_high corresponds to a scenario where we increase the replacement cost of the energy-using goods through higher EPR fees, coupled with high barriers to repair. EPR_low corresponds to a scenario where we increase the replacement cost of the energy-using goods through higher EPR fees, coupled with low barriers to repair. Bonus_high corresponds to a scenario where we decrease the relative repair cost of the energy-using goods through the implementation of a repair voucher and a higher EPR fee, coupled with high barriers to repair. Bonus_low corresponds to a scenario where we decrease the relative repair cost of the energy-using goods, coupled with high barriers to repair.
Policy Implications.
By moving beyond the “Reduce-Reuse-Recycle” approach with more consumer-oriented circular economy strategies, such as “Rethink, Repair, Refuse”, countries like Japan, which deal with high waste generation, high incineration rates, and resource import dependency, can transition towards a more sustainable consumption system with lower material needs and waste generation. However, trade-offs between circular economy strategies and potential rebound effects must be carefully considered when designing repair policies.
* Corbier, D., Pettifor, H., Agnew, M., & Drouet, L. (2024). CIRCEE, the CIRCular Energy Economy model: Bridging the gap between economic and industrial ecology concepts. Journal of Industrial Ecology, 28(06), 1996-2011.
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