Factors to increase demand of reusable containers

Factors to increase demand of reusable containers Daisuke Numata *, Shunsuke Managi ** Abstract Conversion of one-way PET bottles to reusable ones and making effective use of these are implied to be able to reduce the environmental burden. Therefore, recently in Japan, the introduction of reusable bottles is being considered. One of the barriers to their introduction is consumers willingness to accept them. This paper describes a survey administered as the questionnaires to consumers in the reusable PET bottles pilot tests organized by the Ministry of the Environment in Japan. On the basis of the data obtained through the questionnaires, empirical analyses were conducted to consider the demand for the products contained in reusable PET bottles. As a result, some implications could be derived with regard to consumers purchase of reusable PET bottles, which included the following: Adding information related to reusing and refilling increases the demand for new and refilled reusable bottles. The level of the deposit may not decrease the demand for each new reusable bottle; however, it may decrease the demand for a set of new reusable bottles. Efforts should be made to supply reusable bottles (both new and refilled) that are acceptable to consumers who are worried about flaws and stains in containers. Key Words: Reusable containers, PET Bottles, Demand, Refilled, Questionnaires JEL Classification: H23, Q53 * Faculty of Economics and Business Administration, Fukushima University. 1, Kanayagawa, Fukushima, 960-1296, Japan Tel&Fax +81-24-548-8423; E-mail: numata@econ.fukushima-u.ac.jp ** Graduate School of Environmental Studies, Tohoku University, Institute for Global Environmental Strategies 1

1. Introduction PET (polyethylene terephthalate) bottles constitute a significant portion of beverage containers on the market, as confirmed, for example, on the Japan Soft Drink Association website 1. In Japan, one-way PET bottles are mainly used and a lot of them are recycled. One-way means breaking the collected bottles into pieces and making new bottles with the pieces (which corresponds to recycling). However, conversion of one-way PET bottles to reusable ones and making effective use of these are implied to be able to reduce the environmental burden (Ministry of the Environment 2009a). Reusable means being able to wash the collected bottles and refill them. Recently, this process has been advocated more and more, due to the landfill shortage, the increased environmental consciousness, the large amount of recycling of one-way PET bottles, etc. The Ministry of the Environment in Japan considers the introduction of reusable bottles necessary (Ministry of the Environment 2010) and is considering policies to implement the reusing of PET bottles. On the other hand, in order to proceed with reusing PET bottles, the bottles have to be collected after they are consumed, separated by size and color, and washed. However, manufacturers of beverages and alcoholic drinks etc have used a variety of containers to promote product demand, showing that reusable bottles are not economical. PET bottle is one of the varieties whose characteristics include easy portability (Hosoda 1999). One of the ways to implement reusable bottles is the deposit-refund system, which is used in Germany. There, the deposit-refund system is a system where consumers pay deposits that are added to the price of a product and receive refunds when they return the containers. However, even after the introduction of the deposit-refund system in Germany, the amount of reusable containers as a percentage of beverage containers did not necessarily go up; in fact, the percentage of reusable containers for bottled water decreased (Ministry of the Environment 2009b). The Ministry of the Environment (2008) points out that one of the conditions for success in reusing the PET bottles is that consumers must accept the reusable bottles; in other words, consumers must purchase the products contained in the reusable PET bottles. These facts mean that we must find a way to increase the percentage of reusable containers. There are at least two types of reusable bottles. One is a new reusable container and the other is a refilled reusable container. The number of refills is important from an environmentally friendly perspective, so that increasing the number 1 Japan Soft Drink Association Changes in output of soft drinks classified by package (http://www.j-sda.or.jp/about-jsda/english/sd-statistics04.html) (accessed on January 16, 2011) 2

of refilled reusable containers is important. However, the factors for increasing reusable containers have not been checked empirically. Tanigawa et al. (2000) show that, from questionnaires on the use of PET bottles in Tokyo, Japan, almost half of the respondents felt that they needed to use reusable bottles. However, Tanigawa et al. (2000) do not consider the demand for reusable bottles in detail. Pal System Consumers Corporation Union (2007) conducted a pilot project on a reusable bottles system and described the project in detail. The report also considered the reusable bottles system from many perspectives on the basis of the pilot project. Among the perspectives, the consumers opinions on reusable bottles in the stores that the pilot project covered can be seen. The consumers think that reusable bottles are fine because they are environmentally friendly; however, the consumers have some concerns, such as the cleanliness of the collected and washed bottles. However, in the report, the factors explaining whether reusable bottle products are demanded are not adequately examined. Pal System Consumers Corporation Union (2008) conducted another pilot project on reusable bottle systems and considered them in more detail. However, the factors explaining the demand for reusable bottles are not sufficiently studied. On the other hand, the Ministry of the Environment in Japan also conducted another pilot project on reusable bottles. Fortunately, the authors were able to administer the questionnaires to consumers in this project. Numata and Managi (2010) examined the questionnaires from the viewpoint of the effect of a deposit-refund system on the demand for new reusable containers. On the other hand, this paper examines the factors to increase the demand for the reusable containers, focusing on the demand for not only new but also refilled reusable containers. Therefore, this paper shows the analysis of the demand of the new reusable containers, based on Numata and Managi (2010). Then, we analyze the demand for refilled reusable containers. Although the authors published the Ministry of the Environment (2009c) which is a summary report about the questionnaires including this perspective, this paper focuses on the demand for reusable containers in more detail. The contents of this paper are as follows. In the next section, we explain the structure of the pilot project conducted by the Ministry of the Environment, focusing on reusable containers. We also describe the situations under which the questionnaires were administered in the project. In the third section, we discuss the results of the empirical analysis of the data obtained through the questionnaires to deduce the policy implications for increasing the demand for reusable bottles, which includes new bottles and refilled ones. Finally, we present our conclusions and the implications for future work. 3

2. Structure of Pilot Project on Reusable PET Bottles and Questionnaires 2.1. Structure of Pilot Project on Reusable PET Bottles The pilot project was conducted in fiscal year 2008, in three shops in Yokohama and Chiba, Japan (we name each of the three shops as Shop A, Shop B, and Shop C ), and one home delivery service in Chiba. The period was divided into two. The period from the end of August 2008 was named Period 1, and the period from the end of January 2009 was named Period 2 ). The systems under which reusable bottles were purchased in the three shops were almost the same. Therefore, Diagram 1 shows the system in Shop A. The dotted lines denote money flows, and the solid lines denote reusable bottle flows. The product sold in the reusable bottles was mineral water, named as Shinobunomura no tennensui (Natural water in the Shinobu village), and was displayed in special sales areas with an advertisement containing text such as Conducting the pilot project on reusable PET bottles. In both periods, when consumers purchased the products, they paid deposits (in Shop A and Shop B, the deposit per bottle was 10 yen, and, in Shop C, the deposit was 20 yen), which were added to the price of the products (the price of one product was 130 yen). When the consumers returned the empty reusable bottles to designated places after they had consumed the product, the deposits were refunded to them. In Shop A and Shop C, they returned empty containers via automated machines for collecting the containers to receive refunds. In Shop B, the returns were handed manually. In Shop C, the refund was given as points that could be used in Shop C-affiliated stores. The deposit and refund systems were described in notices at the shops and on flyers. Empty reusable bottles were collected from the beginning of Period 1 to the end of March 2009, irrespective of the periods when those bottles were sold (Ministry of the Environment 2009d). 4

In Period 1, only new reusable bottles were used. In shops, 650 bottles were purchased, whereas, in home delivery, 1420 bottles were purchased. Some of the reusable bottles collected were washed, and the mineral water was refilled in the bottles Table 1. Breakdowns of Reusable Bottles sold in Shops (The unit is bottle) New Bottles 208 Refilled Bottles 167 Source: Authors made based on the Ministry of the Environment (2009d). to be sold as the product in Period 2. The refilled products were displayed along with the products in new reusable bottles that were used for the first time in Period 2. Seals marked 2 were put on the caps of the refilled bottles. In the notice at the shops, the meaning of the seal was explained. Consumers could distinguish the refilled bottles from the new bottles, which did not have the seal on the caps. The price of the water contained in the new bottles was the same as that of the water contained in the refilled bottles. Table 1 shows the breakdown of the reusable bottles in the shops in Period 2. The seals can be considered to correspond to the signs used in Germany: on the surface of PET bottles, when the bottle is washed, one sign is added. When the number of the signs reaches 12, the corresponding bottles are recycled mechanically (Furuhashi 2002). Diagram 2 shows the structure of the home delivery pilot project. In the home delivery project, two weeks before the products were delivered, catalogs containing the product information were distributed. Consumers ordered the products one week before they were delivered. In both periods, consumers paid the deposits on a monthly basis (20 yen per bottle), which were added to the price of the products, from the account registered for home delivery. The information regarding the deposits was on the catalogs. After the contents were consumed, the consumers put the empty bottles back into the box that had originally contained the products. In the home delivery system, for purchase and return, the unit was a box that contained four bottles. Each box for purchase contained four new bottles in Period 1, and two new bottles and two refilled bottles in Period 2. The breakdown of the reusable bottles in the home delivery in Period 5

2 was 144 new bottles and 144 refilled bottles. When a home delivery staff member came to consumers houses, the consumers handed the box containing empty bottles over to the staff. On a later date, the consumers would receive the deposits that they had paid with their purchase via the account. 2.2. Questionnaire Situations In the pilot project, the authors Table 2. The number of the questionnaires administered questionnaires on the purchase used in the analysis (The unit is sheet) 696 of reusable bottles, in cooperation with Shop A 292 Shops interested parties, including the Ministry of Shop B 201 the Environment, Japan. The questionnaires Shop C 203 Home Delivery were administered during the purchase times 884 System of Period 1 and Period 2 in three shops, and Source: Numata and Managi (2010) during the purchase time of Period 2 in the home delivery system. In the shops, questionnaires were administered through interviews in the special sales areas. However, in Shop B in Period 2, another special sales area was added where customers who had finished payment could be administered the questionnaires. The contents of the questionnaires were essentially the same in all three shops; however, some descriptions in the questionnaires were adjusted according to the system in each shop in each period. On the other hand, in the home delivery system, when the products were delivered, the questionnaires were given to the consumers including the consumers who did not purchase the products. Consumers were asked to fill out the questionnaires and send them to the home delivery service company. This paper reviews consumer demand for the water contained in the reusable bottles from material gathered in the questionnaires. Table 2 shows the number of questionnaires analyzed. 3. Analysis of Questionnaires on Purchasing Products in Reusable Containers 3.1. Change of Purchase of Products in Reusable Containers by Adding Information Respondents were asked whether they would purchase reusable bottles at the beginning and end of the questionnaires. From these responses, we can see the effect of adding information about bottles reuse on customers decision to purchase reusable bottles. However, questionnaires in shops in Period 1 are not made use of in the analysis, because, from the inquiries by respondents in the interview in Period 1, it is likely that the respondents did not fully understand the questions about the deposit-refund system, which might be one of the important factors in the demand for reusable containers. On 6

the other hand, as we saw in subsection 2.2, the questionnaires were administered in special sales areas for reusable bottles products in Shop A and Shop C. The special sales areas were set up before customers paid for the products. Therefore, it is unclear whether respondents carried through on the purchase behavior that they indicated in the questionnaires, so, the authors asked the respondents whether they hoped to buy the reusable bottles products. However, in shop B in Period 2, questionnaires were administered after consumers had finished payment, and the authors could not obtain the information on the sales areas before the interviews, so that, in Shop B also, the authors asked whether the consumers hoped to buy the products, although they should have asked whether the respondents had bought the products. Therefore, the questionnaires in shop B are also not used in the analysis when the samples are large. On the other hand, when the samples are small, in other words, in (2) of this subsection and in subsection 3.3, the questionnaires in shop B are used, which means we assume that the interviewers should have supplemented this point appropriately. In the questionnaires, the consumers were not asked whether they hoped to purchase the water or not, so that we cannot delete the samples who did not hope to purchase the water. Therefore, this paper analyzes whether the consumers hoped to purchase the water in reusable containers or not, to evaluate the effect of adding reusing information on the purchase of reusable bottles. (1) Change of Purchase of Products in New Reusable Containers by Adding Information Diagram 3 shows the share of the consumers who hoped to purchase the water in reusable bottles, derived from the beginning questionnaires in the shops. Diagram 4 shows the share from the closing questionnaires in the shops. From the comparison of Diagram 3 and Diagram 4, we can see the increase of the share, which shows that adding the related information increases that share. Diagram 3. Respondents' hope to purchase the water in reusable bottles in shopsin the beginning questionnaires (n=495) No response 1% Hope to purchase 20% Diagram 4. Respondents' hope to purchase the water in reusable bottles in shops in the closing questionnaires(n=495) No response 9% Hope to purchase 24% No hope to purchase 79% Source: Numata and Managi (2010) 7 No hope to purchase 67% Source: Numata and Managi (2010)

Diagram 5. Respondents' purchase of the water in reusable bottles in home delivery in the beginning questionnaires (n=884) Purchase 1% Diagram 6. Respondents' hope to purchase the water in reusable bottles in home delivery in the closing questionnaires (n=884) No or unclear response 9% Hope to purchase 35% No purchase 99% Source: Numata and Managi (2010) No hope to purchase 56% Source: Numata and Managi (2010) The same characteristics can be seen in the home delivery. Diagram 5 shows the share of the consumers who purchased the water in reusable bottles, which is answered in the beginning questionnaires for home delivery. Diagram 6 shows the share of the consumers who hope to purchase the water in reusable bottles in the next purchasing time, which is answered in the closing questionnaires for home delivery. (2) Change of Purchase of Products in Refilled Reusable Containers by Adding Information Next, we examine the change of purchase of refilled reusable bottles in the same way as in (1) of this subsection. Here, the samples to analyze this change are the respondents who purchased the reusable bottles, which means the samples are limited; therefore, if we exclude the samples of shop B, the number of samples is too small. Hence, we assume that the interviewers should have supplemented this point appropriately, and we include the samples from Shop B. As we saw in subsection 2.1, regarding the home delivery system, the breakdown of reusable bottles was determined when the products were delivered. Diagram 7. Breakdown of reusable Therefore, in the home delivery, we bottles in the beginning questionnaires in shops cannot consider the change from adding (n=109) information by comparing the share of both refilled reusable containers in the same 10% way as done in the shops. Therefore, we analyze the share of purchase of refilled products in refilled reusable containers 46% only in shops. new 44% Diagram 7 shows the breakdown of types of reusable bottles in the samples 8

of respondents who hoped to purchase the water contained in the reusable bottles, which are taken from the beginning questionnaires in the shops (samples of no response are omitted). In this diagram, refilled refers to the respondents hoping to purchase the products contained in refilled bottles, new refers to the respondents hoping to purchase the products contained in new bottles, and both refers to the respondents hoping to purchase the products contained in both refilled and new. From Diagram 7 and Table 1, we can see that the breakdowns of reusable bottle sales relatively correspond to those expressing the hope to purchase the products contained in reusable bottles. From Diagram 7, the share of the samples of both and refilled is shown as 56%. Diagram 8 shows the breakdowns of types of reusable bottles in the samples of respondents who hoped to purchase the water contained in reusable bottles, which Diagram 8. Breakdowns of reusable bottles in the closing questionnaires in shops (n=155) both 6% are taken from the closing questionnaires (samples of no response are omitted). The notation in this Diagram is the same as that in Diagram 7 above. From Diagram 8, the share of the samples of both and refilled is shown as 66%, which is larger than the share in Diagram 7. new 34% refilled 60% 3.2. Factors affecting Purchase of the Products in New Reusable Bottles On the basis of the responses to the questionnaires, we consider the factors affecting the purchase of the water contained in the new reusable bottles, in the situation where information related to reuse has already been added. In other words, we consider what factors determine the behavior of purchasing the water contained in the new reusable bottles, in the closing questionnaires. (1) Factors affecting Purchase of the Products in New Reusable Bottles in Shops At first, we consider the factors affecting the purchase of the water contained in the new reusable bottles in shops. In other words, we do the multiple regression analysis by setting the purchasing behavior as the dependent variable. The regression equation is as follows: (Whether the respondent hoped to purchase the products in new reusable bottles) = 9

+ 1 (Whether the respondent thought the deposit-refund system increased the price of the product) + 2 (Impression of the level of deposit) + 3 (Attitude to flaws and stains in containers) + 4 (Awareness of reuse) + 5 (Environmental consciousness)+ 6 (Sex)+ 7 (The number of family members)+ 8 (Ages)+ 9 (Income)+ 10 (Dummy of shop A) The dependent variable Whether the respondent hoped to purchase the products in new reusable bottles corresponds to the responses in Diagram 4, except for no responses. This variable becomes 1 if the respondent hoped to purchase the water in the new reusable bottle, and 0 if the respondent did not. Therefore, we perform the probit estimation. Next, we see the explanatory variables. is the constant term. The two variables ( Whether the respondent thought the deposit-refund system increased the price of the product and Impression of the level of deposit ) are related to the deposit-refund systems. Whether the respondent thought the deposit-refund system increased the price of the product is the response to the question Do you think the deposit-refund system increases the price of the product by the value of the deposit? If the respondent responds yes, this variable is 1, if the respondent responds no, it is -1, and if the respondent responds cannot say yes or no, it is 0. We can predict the sign of 1 as minus, because of the deposit-refund systems economic theory (for example, Shibata (2002)) and the empirical analysis of the deposit-refund systems on beer consumption in Numata (2006). Impression of the level of deposit is the response to the question How do you feel about the level of the deposit? If the response is high, this variable is 1 ; otherwise, it is 0. The sign of 2 will also be negative, which can be considered from the economic theory (Shibata 2002). In other words, the demand of consumers decreases, as the level of deposit increases. Attitude to flaws and stains in containers is a reply to the question, How worried are you about flaws and stains in bottles when you purchase products? The choices of the replies to the question are 0 when the respondent is not worried, 1 when the respondent is a little worried, 2 when the respondent is worried, and 3 when the respondent is very worried (samples of no response are omitted). We set this variable to consider the opinion, Japanese consumers are so sensitive to sanitation, quality of products, flaws of bottles, etc., that they may not accept reusable bottles (Ministry of the Environment 2008). This opinion implies the sign of 3 is negative. The variable Awareness of reuse means awareness of the effect of reuse on decreasing the environmental burden. In other words, this variable is a reply to the question, PET bottle recycling (sorting, collecting, and breaking PET bottles into pieces 10

to make new PET bottles) is less environmentally friendly than PET bottle reusing (collecting and washing PET bottles to refill contents). Did you know this fact? The choices of the replies to the question are 1 if the response to the question is yes and 0 if the response is no (samples of no response are omitted). We set this variable to consider the opinion It is necessary to change consumers opinions of reuse, by giving consumers enough information on how reuse can decrease the environmental burden (Ministry of the Environment 2008) (Samples that respond with the other opinions to this question are omitted). This opinion implies the sign of 4 is positive. The other explanatory variables are the social or economic characteristics of the respondents. The variable environmental consciousness consists of the responses to the question, How conscious are you about decreasing garbage in daily life? The choices of the replies to the question are 5 if the respondents are very conscious, 4 if they are conscious, 3 if they are a little conscious, 2 if they are not conscious, and 1 if they are not conscious at all (samples of no response are omitted). The sign of 5 can be considered positive. The variable Sex is 1 if the respondents are male and 0 if they are female (samples of no response are omitted). The variable The number of family members is the number of people who live with the respondent including him/her (samples of no response are omitted). The variable Ages is 1 for the respondents from 0 to 9 years old and 2 for from 10 to 19 years old. The variable increases by 1 for every additional 10 years of age. The variable Income is 1 for the respondents whose income is below 1 million yen and 2 for the respondents whose income is more than 1 million yen and below 2 million yen. The variable increases by 1 for every additional 1 million yen and 11 is for the respondents whose income is more than 10 million yen (samples of no response are omitted). The variable Dummy of Shop A is 1 if the respondents replied in Shop A, and 0 if they replied in other shops. The level of deposit in shop A is half as much as that in shop C, so that this difference might affect the demand according to the economic theory as in Shibata (2002); therefore, the sign of 10 can be positive. After deleting the samples of missing values, the number of samples is 336. Among the samples, 83 samples hope to purchase the reusable bottle water. Table 3 shows the basic statistics of each variable. High correlation cannot be seen among explanatory variables. Based on the above, the regression analysis is performed to deduce the result in Table 4. McFadden R-squared is 0.10. 11

Table 3. Basic statistics of each variable on the factors for the consumers to hope to purchase the products in new reusable bottles in shops Whether Whether the the respondent respondent thought the hoped to Attitude to Environme The depositrefund of the level Sex Ages Income Impression purchase flaws and Awareness ntal number of Dummy the stains in of reuse consciousn family of shop A system of deposit products in containers ess members increased new the price of reusable the product bottles Average 0.25-0.60 0.11 1.03 0.40 4.01 0.21 2.78 6.35 6.46 0.51 Standard Error 0.43 0.70 0.31 1.08 0.49 0.84 0.41 1.23 1.47 3.21 0.50 Minimum 0.00-1.00 0.00 0.00 0.00 1.00 0.00 1.00 2.00 1.00 0.00 Maximum 1.00 1.00 1.00 3.00 1.00 5.00 1.00 7.00 10.00 11.00 1.00 Source: Numata and Managi (2010) The results of the analysis are as follows: Whether the respondent thought the deposit-refund system increases the price of the product and Impression of the level of deposit do not have a significant effect on the purchase of reusable bottle water. Attitude to flaws and stains in containers has a negative significance of 10 percent, in other words, this result implies that the people who are worried about the flaws and stains in containers do not Table 4. Result on the factors for the consumers to hope to purchase the products in new reusable bottles in shops hope to purchase the water coefficient standard error marginal effect in reusable bottles. Constant term -1.73*** 0.56-0.49 Whether the respondent Awareness of reuse can be thought the deposit-refund -0.10 0.12-0.03 system increased the price seen to have an effect on of the product Impression of the level of promoting the purchase of deposit the water in reusable bottles. Attitude to flaws and stains in containers 0.23-0.15* 0.25 0.08 0.07-0.04 The result also implies that the people in shop A tend to Awareness of reuse Environmental consciousness 0.39** 0.06 0.16 0.10 0.11 0.02 Sex 0.31* 0.19 0.09 purchase the reusable bottle The number of family 0.11 0.07 0.03 members water at a 1 percent Ages -0.02 0.06 0.00 significance level. There is a Income 0.01 0.03 0.00 possibility that the Dummy of shop A 0.64*** 0.17 0.18 *** is 1% significant. ** is 5% significant. * is 10% significant. difference in the effect Source: Numata and Managi (2010) between shops comes from the difference of the level of deposit and also from the form of refund, which is cash in shop A and points in shop C. (2) Factors affecting Purchase of the Products in New Reusable Bottles in Home Delivery Next, we analyze the factors in home delivery. In home delivery, explanatory variables in the regression equation for the factors affecting hope to purchase the new reusable bottle water in the next purchase time are the same as those in (1) of this subsection; 12

Table 5. Basic statistics of each variable on the factors for the consumers to hope to purchase the products in new reusable bottles in the next purchase time in home delivery Whether the respondent hoped to purchase the products in new reusable bottles Whether the respondent thought the depositrefund system increased the price of the product Impression of the level of deposit Attitude to flaws and stains in containers Awareness of reuse however, the dummy of shop A is deleted. After deleting the samples of missing values, the number of samples is 614. Among the samples, 249 samples hope to purchase the new reusable bottle water. Table 5 shows the basic statistics of each variable. High correlation cannot be seen among explanatory variables. On the basis of the above, the regression analysis is performed to deduce the result in Table 6. McFadden R-squared is 0.02. Here, Whether the Table 6. Result on the factors for the consumers to hope to purchase the products in new reusable bottles in the next purchase time in home delivery respondent thought the coefficient standard error marginal effect Constant term -0.53 0.40-0.20 deposit-refund system Whether the respondent increased the price of the thought the deposit-refund -0.21*** 0.08-0.08 system increased the price product has a 1% negative of the product Impression of the level of significance on the hope to -0.01 0.13 0.00 deposit Attitude to flaws and stains purchase the water in new -0.12* 0.07-0.05 in containers Awareness of reuse 0.05 0.11 0.02 reusable bottles in the next Environmental 0.08 0.08 0.03 purchase time. On the other consciousness Sex 0.07 0.41 0.03 hand, Impression of the The number of family 0.01 0.05 0.00 members level of deposit has no Ages 0.00 0.04 0.00 Income 0.01 0.02 0.00 significance. Attitude to *** is 1% significant. * is 10% significant. flaws and stains in Source: Numata and Managi (2010) containers has a 10% negative significance and Awareness of reuse is not significant. Here, we consider the effect of the difference between shops and home delivery, on the responses regarding the purchase of the water in new reusable bottles, by comparing Table 4 with Table 6. In Table 4, Whether the respondent thought the deposit-refund system increased the price of the product is not significant, whereas in Table 6, it is negatively significant. In shops, the unit of purchase and return was one bottle; on the other hand, in home delivery, the unit was one box (which contains four bottles). In other words, the deposit in one home delivery transaction is 4 times as much 13 Environme ntal consciousn ess Sex The number of family members Average 0.41-0.49 0.25 1.62 0.46 3.71 0.02 3.28 5.37 6.77 Standard Error 0.49 0.70 0.43 0.81 0.50 0.73 0.13 1.19 1.40 2.68 Minimum 0.00-1.00 0.00 0.00 0.00 1.00 0.00 1.00 3.00 1.00 Maximum 1.00 1.00 1.00 3.00 1.00 5.00 1.00 11.00 10.00 11.00 Source: Numata and Managi (2010) Ages Income

as that in shops, which might affect the result of Whether the respondent thought the deposit-refund system increased the price of the product. The result of Awareness of reuse in shops is also different from that in home delivery. In home delivery, other containers such as bottles are regularly reused; therefore, consumers are accustomed to reusing containers, so that leveling up the awareness of reuse does not increase the purchase of reusable bottle products. In shops, however, reuse is rare even with bottles, so that leveling up the awareness of reuse may increase the purchase of products of reusable bottles. The result of this Awareness of reuse may be considered as implying this fact. 3.3. Factors affecting Purchase of the Products in Refilled Reusable Bottles Next, we analyze the factors relating to the consumers who hope to purchase the products in refilled reusable bottles. This analysis also uses the data provided in the closing questionnaires. However, in the same way as in (2) of subsection 3.1, because of the shortage of samples, we include the samples of shop B. (1) Factors affecting Purchase of the Products in Refilled Reusable Bottles in Shops As in the preceding subsection, we first consider the factors affecting the decision to purchase the water contained in the refilled reusable bottles in shops. The regression equation is almost the same as that in the preceding subsection. One of the differences is that the dependent variable is the respondents hope to purchase the products in refilled reusable bottles. If they hope to purchase the products in refilled ones, the variable is 1, and if they do not, the variable is 0. Another difference is that the variables related to the deposit-refund systems are deleted, because all samples are the samples who bought the water in reusable bottles and deposit-refund systems are applied to all of them; in other words, the application of the deposit-refund systems is the same for the refilled products as for the new ones. On the other hand, Dummy variable on the number refilled is added in the explanatory variables. The samples of no and unclear response to this dependent variable are omitted. The dummy variable on the number refilled is the variable showing whether the respondent thought that the larger number of refills was better. When the respondent thought it was better, the dummy variable was 1, and when the respondent thought it was not better, the dummy variable was 0. It can be predicted that, when consumers think the larger number of refills is better, they are likely to purchase products in refilled bottles, so that the dummy variable can be considered to have a significantly positive effect on the dependent variable. The meaning and treatment for the social and economic 14

characteristics are the same as those in subsection 3.2, except the variable Dummy of Shop B, which is 1 if the respondents replied in shop B, and 0 if they replied in other shops. Table 7. Basic statistics of each variable on the factors for the consumers to hope to purchase the products in refilled reusable bottles in shops Whether the Dummy Attitude to respondent hoped to The number variable on the flaws and Awareness Environmental Dummy of Dummy of purchase the Sex of family Ages Income number of stains in of reuse consciousness shop A shop B products in refilled members refills containers reusable bottles Average 0.65 0.29 0.96 0.54 4.11 0.29 3.12 6.06 6.72 0.50 0.27 Standard Error 0.48 0.45 0.95 0.50 0.79 0.46 1.38 1.48 2.89 0.50 0.44 Minimum 0.00 0.00 0.00 0.00 1.00 0.00 1.00 2.00 1.00 0.00 0.00 Maximum 1.00 1.00 3.00 1.00 5.00 1.00 6.00 10.00 11.00 1.00 1.00 Source: Authors made The samples responding to any choices except yes or no about awareness of reuse are omitted. The samples of no response about ages are also omitted. As a result, the number of samples is 112. The number of samples who hoped to purchase the water contained in refilled reusable bottles is 73 (65% of the samples). Table 7 shows the basic statistics of each variable. A large correlation coefficient among the explanatory variables cannot be observed. Based on the above setting, probit estimation was performed to acquire the results as shown in Table 8. McFadden R-squared is 0.19. The variable Dummy variable on the number of refills is not significant. The result suggests that, even if people think that the larger number of refills is better, they do not necessarily purchase the products in refilled reusable bottles. Increasing awareness of reuse also does not increase the purchase of the products in refilled reusable bottles, from no significance of Awareness of reuse. On the other hand, Table 8. Result on the factors for the consumers to hope to purchase the products in refilled reusable bottles in shops coefficient standard error marginal effect Constant term 2.31** 1.04 0.68 Dummy variable on the number of refills 0.04 0.33 0.01 Attitude to flaws and stains in containers -0.55*** 0.15-0.16 Awareness of reuse 0.33 0.27 0.10 Environmental consciousness -0.06 0.18-0.02 Sex -0.07 0.32-0.02 The number of family members 0.08 0.10 0.02 Ages -0.19 0.12-0.06 Income 0.03 0.05 0.01 Dummy of shop A -0.50 0.40-0.15 Dummy of shop B -0.81* 0.43-0.24 *** is 1% significant. ** is 5% significant. * is 10% significant. Source: Authors made the variable of Attitude to flaws and stains in containers is negatively significant. This result suggests that, if they become worried about the flaws and stains in containers, they do not purchase the products in refilled reusable bottles. We can also find that the Dummy of Shop B has 10% significance and its coefficient is negative. Each shop s main customers are different, and this may be shown in the difference between shop dummies. 15

(2) Factors affecting Purchase of the Products in Refilled Reusable Bottles in Home Delivery Next, we analyze the factors relating to the consumers who hope to purchase the products in refilled reusable bottles in the next purchase time in the home delivery system, in the same way as done in (1) of this subsection. Explanatory variables are the same as those in (1) of this subsection; however, the variables of Dummy variable on the number of refills, Dummy of shop A, and Dummy of shop B are left out. The Dummy variable on the number of refills is left out because this question in the questionnaires for the home delivery system were set only for the respondents who responded that they actually purchased the water contained in refilled reusable bottles, and the samples of these respondents are very small, as seen from Diagram 5. Table 9. Basic statistics of each variable on the factors for the consumers to hope to purchase the products in refilled reusable bottles in the next purchase time in home delivery Whether the respondent hoped to Attitude to flaws The number purchase the products in refilled Awareness of Environmental and stains in Sex of family reusable bottles in the next reuse consciousness containers members purchase time Ages Income Average 0.75 1.54 0.49 3.75 0.02 3.30 5.36 6.84 Standard Error 0.44 0.81 0.50 0.71 0.13 1.04 1.37 2.66 Minimum 0.00 0.00 0.00 2.00 0.00 1.00 3.00 1.00 Maximum 1.00 3.00 1.00 5.00 1.00 7.00 10.00 11.00 Source: Authors made After we omit the samples with unclear response, the number of samples is 252. The number of respondents who hoped to purchase the water contained in refilled bottles is 188 (75% of the samples). Table 9 shows the basic statistics of each variable. A large correlation coefficient among the explanatory variables cannot be observed. On the basis of the above setting, probit estimation is performed to acquire the results as shown in Table 10. McFadden R-squared is 0.11. Attitude to flaws and stains in containers is significant, and its coefficient is negative, which is the same as the result shown Table 10. Result on the factors for the consumers to hope to purchase the products in refilled reusable bottles in the next purchase time in home delivery coefficient standard error marginal effect Constant term -0.65 0.75-0.18 Attitude to flaws and stains in containers -0.36*** 0.11-0.10 Awareness of reuse 0.55*** 0.19 0.16 Environmental consciousness 0.35** 0.14 0.10 Sex -0.65 0.68-0.18 The number of family members 0.03 0.09 0.01 Ages 0.00 0.07 0.00 Income 0.04 0.04 0.01 *** is 1% significant. ** is 5% significant. Source: Authors made for the shops in Table 8. This result shows that, in order to increase the demand for refilled bottles, it is important to continue to supply refilled bottles that can be accepted 16

by the consumers who are worried about the flaws and stains in containers, in shops and the home delivery system. Awareness of reuse is positively significant, which shows, even if the home delivery customers are accustomed to reusing, they may not know much about refilling. Therefore, if they know more about refilling, they may more likely purchase the products in refilled reusable bottles. 4. Conclusion Conversion of one-way PET bottles to reusable ones and making effective use of them is implied to be able to reduce the environmental burden. Therefore, recently in Japan, the introduction of reusable bottles is being considered. One of the conditions to successfully implement reusable PET bottles is for consumers to accept them. In particular, we have focused on consumers purchase of the products contained in reusable PET bottles. The questionnaires were distributed to consumers in the reusable PET bottles pilot tests organized by the Ministry of the Environment in Japan in fiscal year 2008. This paper has considered the responses to the questionnaires in detail, from the viewpoint of consumers purchasing behavior regarding reusable PET bottles. The analysis of the responses in the questionnaires deduces some results including the following: Adding information related to reusing and refilling increases the demand for new and refilled reusable bottles; the level of the deposit may not decrease the purchase for each new reusable bottle; however, it may decrease the purchasing of a set of new reusable bottles. Third, to encourage consumers purchase of reusable (both new and refilled) bottles, it is helpful to supply both new and refilled reusable bottles that are acceptable to consumers who are worried about flaws and stains in bottles. Finally, in this pilot test, the price of the product contained in one-way containers is not considered; however, this price must also affect the demand for the products contained in reusable containers. We can also assume the case in which the price of the product in the refilled reusable bottles is lower than that in the new bottles. A Nippon Research Institute survey reveals that around half of consumers think that, in order to promote the use of reusable bottles, the price of the reusable bottles should be lower than that of the one-way bottles (Matsuno 2009). Future work should consider this case. References Furuhashi, A. (2002) Change from glass bottles to returnable PET bottles: Containers for mineral water in Germany. Engineering Materials 50(3) pp64-68, in 17

Japanese. Hosoda, E. (1999) The Economics of Goods and Bads, Toyo Keizai Publishing, Tokyo, in Japanese. Matsuno, S. (2009) Environmental policy study for establishing local reuse system, Graduate School of Environmental Studies, Nagoya University, Doctoral Thesis (http://ir.nul.nagoya-u.ac.jp/jspui/bitstream/2237/11893/1/%e6%9d%be%e9%87%8e %e5%8d%9a%e8%ab%96.pdf) (accessed on January 16, 2011), in Japanese. Ministry of the Environment in Japan (2008) On PET bottles reuse. Interim report from research meeting about repeated use of container and packaging such as PET bottles using deposit-refund system (http://www.env.go.jp/press/file_view.php?serial=11804&hou_id=9968) (accessed on July 15, 2009), in Japanese. Ministry of the Environment in Japan (2009a) On the result of the analysis of environmental burden by reusing PET bottles, etc. Report of the result of PET bottles reuse pilot test from research meeting about repeated use of container and packaging such as PET bottles using deposit-refund system, 6 th meeting material, Exhibit 2 (http://www.env.go.jp/council/36pet-junkan/y360-06/mat02.pdf) (accessed on January 16, 2011), in Japanese. Ministry of the Environment in Japan (2009b) Study tour in Germany. Report of the result of PET bottles reuse pilot test from research meeting about repeated use of container and packaging such as PET bottles using deposit-refund system, 4 th meeting material, Exhibit 2 (http://www.env.go.jp/council/36pet-junkan/y360-04/mat02.pdf) (accessed on January 16, 2011), in Japanese. Ministry of the Environment in Japan (2009c) On the result of the questionnaires to consumers in the pilot test of reusable PET bottles. Report of the result of PET bottles reuse pilot test from research meeting about repeated use of container and packaging such as PET bottles using deposit-refund system, Exhibit 4. (http://www.env.go.jp/press/file_view.php?serial=14088&hou_id=11451) (accessed on January 9, 2010), in Japanese. Ministry of the Environment in Japan (2009d) On the result of PET bottles reuse pilot test. Report of the result of PET bottles reuse pilot test from research meeting about repeated use of container and packaging such as PET bottles using deposit-refund system, Exhibit 1. (http://www.env.go.jp/press/file_view.php?serial=14084&hou_id=11451) (accessed on January 9, 2010), in Japanese. 18

Ministry of the Environment in Japan (2010) On action items for promoting 3R of the waste of container and packaging in the Ministry of the Environment. October 25, 2010, Presentation material, in Japanese. Numata, D. (2006) Does deposit-refund system affect product demand? Empirical analysis using beer consumption data in America. Environmental Science, 19(5), pp.371-384, in Japanese. Numata, D., Managi, S. (2010) Effect of deposit-refund systems on the demand of reused PET bottles: Analyses of consumers survey. Environmental Science, 23(5), pp.381-393, in Japanese. Pal System Consumers Corporation Union (2007) Report Constructing the system to reuse PET bottles, in Japanese. Pal System Consumers Corporation Union (2008) Report from research meeting to promote reusing PET bottles in 2007 FY, in Japanese. Shibata, H. (2002) Environmental Economics, Toyo Keizai Publishing, Tokyo, in Japanese. Tanigawa, N., Oikawa, T., Mitsumori, K., Masuko, T. (2000) Consumer awareness of recycling of PET bottles, used home electronics, and raw garbage. Annual Report of the Tokyo Metropolitan Research Institute for Environmental Protection. (http://www2.kankyo.metro.tokyo.jp/kankyoken/report-news/2000/haiki4.pdf) (accessed on July 15, 2009), in Japanese. Acknowledgement This paper is based on the questionnaires that the authors administered in the pilot test organized by the research meeting about repeated use of container and packaging such as PET bottles using the deposit-refund system under the Ministry of the Environment in Japan, in fiscal year 2008. The authors greatly appreciate the many people who helped with the questionnaires. The authors also appreciate the many valuable comments offered. This research was supported by the Grant-in-Aid for Young Scientists (Start-up) 19830008, and is supported by Grant-in-Aid for Scientific Research (B) 21330056. The authors wish to express their gratitude for these supports. The responsibility for all errors in this paper is that of the authors. 19