Toward Sustainable Regions: Essays in Honor of Kiyoko Hagihara (New Frontiers in Regional Science: Asian Perspectives, 73) 9819956668, 9789819956661

Table of contents :
Preface
Contents
Chapter 1: Greening in Vacant Lots and Regional Community in Urban Area
1.1 Research Background
1.2 Research Methods
1.2.1 The Areas Targeted by the Study
1.2.2 Examination Methods
1.2.2.1 Questionnaire Survey
1.2.2.2 Field Survey of Vacant Lots
1.2.3 Analytic Methods
1.3 Group Territory in Residential Areas and Residents´ Awareness
1.3.1 The Relationship Between the Effects of Vacant Lots and Group Territory
1.3.1.1 The Structure of Residents´ Awareness of the Functions of Vacant Lots
1.3.1.2 The Relationship Between the Strength of Group Territory and the Effects of Vacant Lots
1.3.2 The Relationship Between Group Territory and Personal Attributes
1.3.2.1 Personal Attributes
1.3.2.2 Activities in the Residential Area
1.3.2.3 The Views on Region and Society
1.4 Using Vacant Lots as Green Spaces
1.4.1 The Functions of Green Space
1.4.2 Residents´ Awareness of Weeds in Vacant Lots
1.4.3 The Possibility for People´s Participation in Maintenance and Greening
1.5 The Relationship Between the Number of Vacant Lots and Residents´ Awareness
1.6 Summary
References
Chapter 2: Challenges of a Large Park that Can Be Seen in the Wake of the COVID-19 Pandemic: Case of Hitachi Seaside Park
2.1 Introduction
2.2 Overview of Hitachi Seaside Park
2.3 Hitachi Seaside Park During the Coronavirus Pandemic
2.4 Challenges for Large Parks in the Future
References
Chapter 3: Supporting Organisations for Social Enterprises: Focus on Fundraising
3.1 Introduction
3.2 Background and Previous Research
3.2.1 Social Enterprises and their Supporters
3.2.2 Intermediate Support Organisations
3.3 Outline of Social Finance
3.3.1 Overview
3.3.2 Actors and Tools
3.4 Current State of Social Finance
3.4.1 Scale of Social Finance
3.4.2 Current Situation in Europe and the USA
3.4.3 Current Situation in Japan
3.5 Financing Support and Funding Sources
3.5.1 Supporting Organisations
3.5.2 Support Method
3.6 Issues and Future Problems
3.7 Conclusion
References
Chapter 4: Changes in the Electricity Market and the Emergence of Regional Energy Business in Japan: Toward the Realization of...
4.1 Introduction
4.2 Changes in the Electricity Market Resulting from Deregulation
4.2.1 Revision of the Electricity Business Act
4.2.2 Status of New Entrants in Electricity Retailing
4.3 The Development of ``Community-Based´´ Energy Systems
4.3.1 Movement to Establish Regional Energy Companies
4.3.1.1 Capital Size and Main Businesses
4.3.1.2 Capital Size and Electricity Supply (Sales)
4.3.1.3 Location of New Regional Electric Power Companies
4.3.2 Characteristics of Community Energy Projects
4.3.2.1 Contract Types and Customers
4.3.2.2 Contract Type and Electricity Business Characteristics
4.3.2.3 Characteristics of New Municipal Electric Power Companies
4.3.2.4 Characteristics Revealed by Electricity Supply Volume
4.3.3 Management Status of New Electric Power Companies Financed by Local Governments
4.4 Conclusion
References
Chapter 5: The Institutional Design of a Comprehensive Supply Scheme for Sustainable Local Public Services: Theoretical Consid...
5.1 Comprehensive Supply of Public Services
5.2 Business Integration Models
5.2.1 Benefit
5.2.2 Cost
5.2.3 Government Decision-Making Problem and Incentive Contracts
5.2.4 Best Solution as Benchmark
5.3 Business Integration
5.3.1 Comparison of Integrated and Non-integrated
5.3.1.1 Non-business Integration Cases
5.3.1.2 Business Integration Case
5.3.2 Evaluation of Welfare
5.3.3 Project Profitability and Incentives: Model Implications
5.4 Case Studies
5.4.1 Example of Business Integration: The German Stadtwerke
5.4.2 Summary of Case Studies: The Policy Research Institute for Land, Infrastructure, Transport and Tourism (2021)
5.4.2.1 Cases Under Investigation
5.4.2.2 Investigation Details
5.4.2.3 Overview of Stadtwerke According to Survey Results
5.4.3 Validation of Business Integration Models
5.4.3.1 Verification Methods
5.4.3.2 Positive Externalities Between Businesses: /δ < - d
Taxation System of Profit and Loss
Administrative Supply Obligation Provisions/Public Interest
Branding and Securing Demand from Local Communities
Factors that Do Not Lead to the Continuation of Loss-Making Projects and Investment
5.4.3.3 Absolute Risk Aversion of Operators and Uncertainty About the Benefits and Costs of Profitable Operations:
Absolute Risk Aversion of Operators
Uncertainty About the Benefits and Costs of Profitable Projects
5.4.3.4 Government Transfer Payments: t(Π) > Π - g(e1) - h(e2) > 0
Contract Projects with Local Authorities
The Involvement of Local Authorities in the Management of the Organization (Overlaps with 1 in Sect. 5.4.3.2)
5.4.3.5 Considerations
5.5 Concluding Remarks
References
Chapter 6: Evaluation of the Educational Role of Urban Facilities and Their Contribution to Regional Sustainability
6.1 Introduction
6.2 Museum-Like Functions of Urban Facilities and Regional Sustainability
6.2.1 Significance of Urban Facilities and Museum Functions
6.2.2 Relationship Between the Museum-Like Functions of Urban Facilities and Regional Sustainability as Seen from the Results ...
6.3 Current Status of the Education Index for Regional Sustainability Assessment
6.3.1 Education-Related Indicators in International Sustainability Evaluation
6.3.1.1 Human Development Index (HDI)
6.3.1.2 Agenda 21
6.3.1.3 Pressure State Response (PSR) Model
6.3.1.4 International Council for Local Environmental Initiatives (ICLEI)
6.3.1.5 Aalborg Commitments
6.3.1.6 Driving Forces, Pressures, State, Impact, and Responses (DPSIR)
6.3.1.7 UN Commission on Sustainable Development (CSD) Index
6.3.1.8 Urban Sustainability Indicators
6.3.1.9 Millennium Development Goals (MDGs)
6.3.1.10 EEA Urban Metabolism Framework
6.3.1.11 New National Wealth Index
6.3.1.12 ISO37120
6.3.1.13 UN Sustainable Development Goals (SDGs)
6.3.2 Localization Index in Regional Sustainability Evaluation
6.4 Role of Museum-Like Functions of Urban Facilities in Sustainability Evaluation
6.4.1 Social Education
6.4.2 Regional Social Capital Development by Learning about Local Heritage
6.4.3 Building Trust through Communication
6.5 Problems and Issues of Evaluation Indicators of Urban Facilities
6.6 Conclusion
References
Chapter 7: A Study on the Economic Evaluation of Public Facilities: Regional Utilisation Other than Intended Purposes of Schoo...
7.1 Introduction
7.1.1 Background and Purpose
7.1.2 Literature Reviews
7.1.3 Theoretical Framework in Evaluating Public Facilities
7.1.4 Efficiency Regulated in the Local Autonomy Law
7.1.5 Public Facilities as Goods and Services in Economics
7.1.6 Benefits of Public Facility Services
7.2 Research Subjects and Methods
7.2.1 Education Facilities
7.2.2 Use of School Facilities for Other Purposes
7.2.3 How School Facilities Are Evaluated
7.2.4 Choice Behaviour of School Facilities
7.3 Estimation of Utility Value by Discrete Choice Model
7.3.1 Model
7.3.2 Data
7.4 Results and Discussions
7.5 Concluding Remarks
References
Chapter 8: Land Value Differences Based on Approach Methodologies: Analysis Using Land Market Value Publications in Tokyo
8.1 Introduction
8.2 Model
8.3 Data
8.4 Results
8.4.1 Results of SCV
8.4.2 Results of ICV
8.4.3 Results of Net Income
8.4.4 Results of Cap Rate
8.4.5 Results of Match Rate
8.4.6 Results of the PLMV
8.5 Consideration
8.5.1 SCV and ICV
8.5.2 Match Rate
8.6 Concluding Remarks
8.6.1 Implications
8.6.2 Limitations and Future Research
Appendix
References
Chapter 9: An Overview of Indicator-Based Approach of Flood Vulnerability Assessment
9.1 Introduction
9.2 Indicator-Based Approach in Flood Vulnerability Assessment
9.2.1 The Formula Expression of Flood Vulnerability Index
9.2.1.1 UNESCO- IHE
9.2.1.2 Richard. F. Connor´s FVI Formula
9.2.1.3 Balica´s FVI Formula
9.2.2 Steps to Conduct an Indicator-Based Approach in Flood Vulnerability Assessment
9.2.2.1 Indicators Selection
9.2.2.2 Data Treatment
9.2.2.3 Data Rescaling
The Min-Max Linear Scaling
The Mean Value Scaling
9.2.2.4 Weighting
Iyengar and Sudarshan´s Ranking Method
Analytic Hierarchy Process (AHP)
9.2.2.5 Aggregation
9.2.3 Major Limitations of Indicator-Based Approach
9.2.4 Case Example of Flood Vulnerability Assessment in Hoa Vang District, Danang City of Vietnam
9.2.4.1 Study Area and Data Source
9.2.4.2 FVI Indicators and Data Analysis
9.2.4.3 Flood Vulnerability Map
9.2.4.4 Discussion
9.3 Conclusion
References
Chapter 10: A Study of Evacuation and Life Rebuilding After a Flood Disaster
10.1 Introduction
10.2 Survey Region and Study Methods
10.3 Typhoon No. 19
10.3.1 Characteristics of Damage Nationwide
10.3.2 Damage in Utsunomiya City and Countermeasures
10.4 Damage and Countermeasures
10.4.1 Spatiotemporal Analysis of Flood Damage
10.4.2 Spatiotemporal Analysis of Evacuation
10.5 Characteristics of Life Reconstruction
10.6 Digital Photo Archive Based on Location Information
10.7 Conclusion
References
Chapter 11: Consideration on the Subject and Criteria of the Minutes of the Environmental Assessment Deliberation Meeting by E...
11.1 Introduction
11.2 Background and Purpose of the Research
11.2.1 Purpose of the Research
11.2.2 Previous Studies
11.2.3 Hypotheses Tested
11.2.3.1 Discussion by ``Multi-Subject´´
11.3 Discussion Based on Multi-Standards
11.4 Minutes Analysis
11.4.1 Analysis Target and Survey Method
11.4.1.1 Minutes to Be Analyzed
11.4.1.2 ``Subjects´´ in the Discussion
11.4.1.3 ``Criteria´´ in Discussions
11.4.1.4 Text Analysis Method
11.5 Extraction of ``Clues´´ Words
11.5.1 Extraction of ``Clues´´ Words
11.5.1.1 Analysis of the ``Subject´´ of the Discussion
11.5.1.2 Analysis of ``Criteria´´ for Discussion
11.6 Results and Discussion
11.6.1 Results
11.6.1.1 ``Subjects´´
11.6.1.2 ``Criteria´´
11.6.2 Considerations
11.6.2.1 Analysis of the ``Subject´´ of the Discussion
11.6.2.2 Analysis of ``Criteria´´ in Discussions
``Level/Indicator/Criteria´´ Cluster
``Reason/Rationale/Number´´ Cluster
11.7 Concluding Remarks
References

Citation preview

New Frontiers in Regional Science: Asian Perspectives 73

Chisato Asahi Noriko Horie   Editors

Toward Sustainable Regions Essays in Honor of Kiyoko Hagihara

New Frontiers in Regional Science: Asian Perspectives Volume 73

Editor-in-Chief Yoshiro Higano, University of Tsukuba, Tsukuba, Ibaraki, Japan

This series is a constellation of works by scholars in the field of regional science and in related disciplines specifically focusing on dynamism in Asia. Asia is the most dynamic part of the world. Japan, Korea, Taiwan, and Singapore experienced rapid and miracle economic growth in the 1970s. Malaysia, Indonesia, and Thailand followed in the 1980s. China, India, and Vietnam are now rising countries in Asia and are even leading the world economy. Due to their rapid economic development and growth, Asian countries continue to face a variety of urgent issues including regional and institutional unbalanced growth, environmental problems, poverty amidst prosperity, an ageing society, the collapse of the bubble economy, and deflation, among others. Asian countries are diversified as they have their own cultural, historical, and geographical as well as political conditions. Due to this fact, scholars specializing in regional science as an inter- and multi-discipline have taken leading roles in providing mitigating policy proposals based on robust interdisciplinary analysis of multifaceted regional issues and subjects in Asia. This series not only will present unique research results from Asia that are unfamiliar in other parts of the world because of language barriers, but also will publish advanced research results from those regions that have focused on regional and urban issues in Asia from different perspectives. The series aims to expand the frontiers of regional science through diffusion of intrinsically developed and advanced modern regional science methodologies in Asia and other areas of the world. Readers will be inspired to realize that regional and urban issues in the world are so vast that their established methodologies still have space for development and refinement, and to understand the importance of the interdisciplinary and multidisciplinary approach that is inherent in regional science for analyzing and resolving urgent regional and urban issues in Asia. Topics under consideration in this series include the theory of social cost and benefit analysis and criteria of public investments, socio-economic vulnerability against disasters, food security and policy, agro-food systems in China, industrial clustering in Asia, comprehensive management of water environment and resources in a river basin, the international trade bloc and food security, migration and labor market in Asia, land policy and local property tax, Information and Communication Technology planning, consumer “shop-around” movements, and regeneration of downtowns, among others. Researchers who are interested in publishing their books in this Series should obtain a proposal form from Yoshiro Higano (Editor in Chief, [email protected]) and return the completed form to him.

Chisato Asahi • Noriko Horie Editors

Toward Sustainable Regions Essays in Honor of Kiyoko Hagihara

Editors Chisato Asahi Noriko Horie Faculty of Urban Environmental Sciences Bukkyo University Tokyo Metropolitan University Kyoto, Japan Tokyo, Japan

ISSN 2199-5974 ISSN 2199-5982 (electronic) New Frontiers in Regional Science: Asian Perspectives ISBN 978-981-99-5666-1 ISBN 978-981-99-5667-8 (eBook) https://doi.org/10.1007/978-981-99-5667-8 © 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 Paper in this product is recyclable.

Preface

This publication commemorates the research and teaching of Professor Kiyoko Hagihara, Professor Emeritus of Tokyo Metropolitan University and former Professor of Bukkyo University. Professor Hagihara holds a Master’s degree in Economics and a PhD in Engineering and conducted outstanding interdisciplinary research on real-world environmental issues, and urban and environmental problems, based on a systematic thinking of economic and planning theory. In particular, she has published numerous books and articles that contribute to solving regional problems in environmental economics, local public finance, and evaluation research. Many of these achievements are the result of her deep understanding of interdisciplinary approaches, as seen in her career at the National Institute of Environmental Pollution Research (predecessor of the National Institute for Environmental Studies) and the Urban Research Institute of Tokyo Metropolitan University, both of which were leading interdisciplinary research organizations. As a leading figure in interdisciplinary research, her contribution to regional science is therefore worthy of respect. Professor Hagihara’s contributions to academic organizations also include her positions in public policy and environmental academic societies, such as the Japan Society of Hydrology and Water Resources and the Japan Association for Planning and Public Management. In particular, she contributed to the development of regional science through her service with the Board of Directors of the Japan Association of Regional Science for more than 10 years, and as Vice-President from 2015 to 2017. There is no doubt that Professor Hagihara is an excellent and authoritative researcher, but she is also an excellent educator. She has worked at several universities, including Tokyo Metropolitan University, Bukkyo University, and the Disaster Prevention Research Institute of Kyoto University, and has mentored many excellent researchers, professionals, and practitioners. In fact, a number of contributors in the book are Professor Hagihara's students at the Graduate School of Urban Sciences of Tokyo Metropolitan University and the Graduate School of Social Sciences of Bukkyo University, and this book is a testimony to her excellent contribution to research and education. v

vi

Preface

The purpose of this publication is twofold. First, to celebrate Professor Hagihara’s achievements in developing regional science and her career as a teacher. Second, to present the results of the interdisciplinary approach to regional issues taken up by researchers who, as her former students, were inspired by her. This book is of great value to researchers, academics, policy makers, and postgraduate students who take an interdisciplinary approach to diverse regional issues. The underlying premise of this book is the recognition that “regional management” is a multidimensional and comprehensive framework to tackle today’s diverse regional issues, and that the basic position of the bearers of this framework is that of “Sei-katsu-sha” (in Japanese; it is similar to “prosumer” in English but is a broader concept that includes various interactions in society). Professor Hagihara has always conveyed this as her basic attitude towards research in regional science. Against the background of a rapidly falling birthrate and an aging population, which is said to be “world-leading,” Japan is currently experiencing serious effects from long-term structural changes, such as shortage in medical and nursing care, declining corporate competitiveness, and tight national and local finances. Furthermore, due to wind and flood disasters caused by huge earthquakes, climate change, and dilapidating infrastructure, the resource management of food, water, and energy is becoming more urgent and diversified. Although these issues appear to differ in scale and field, they are interrelated in many ways, and even global issues have a significant impact on the lives of local communities and individuals. Therefore, a multidimensional approach, in which various actors, such as countries, regions, companies and residents, work individually or in partnership, is required to deal with these challenges. In particular, for the sustainability of a region, local actors are required to identify regional issues on their own and solve them in cooperation with diverse actors. Therefore, “regional management” in this publication refers to “solving or improving problems and maintaining or developing the region towards the goals of the region while properly managing and utilizing the various resources possessed by the region,” and represents the basic direction and values when tackling regional issues. “Sei-katsu-sha” in this publication is defined as “individuals who are involved in diverse areas, in diverse positions and in diverse roles in society”. We live our lives every day, sometimes as consumers, producers and workers, or taxpayers and investors, and other times as travelers and volunteers. From a regional perspective, in the regions where we live and work, we are not only residents, but also consumers of food and energy, customers and suppliers, or perpetrators and victims of global environmental problems, and we have an undeniable relationship with various regions, both nationally and internationally. The term “sei-katsu-sha” describes the diverse roles and interrelationships of such individuals. The structure of this publication is divided into two parts. Part I, “Regional Management,” focuses on the spaces, players, and institutions that make a region sustainable. Chapters 1 and 2 deal with the management of space. Chapter 1 (Mizukami) examines residents’ perceptions of the expected value and maintenance issues of vacant land in urban areas, which are increasing as a result of the declining

Preface

vii

population. Chapter 2 (Ida and Horie) examines the conditions for maintaining functions of open spaces during the Covid-19 pandemic, based on a study of a large park with two important objectives: tourist attraction and open green space. Chapter 3 (Kimura et al.) examines the role of social enterprises and funding issues in Japan and identifies the challenges faced by intermediary support organizations. Chapter 4 (Tsuchiya) and Chap. 5 (Asahi and Tsuchiya) focus on the organizations and institutions that make local public services sustainable. Cross-sectoral service supply schemes to reconcile the twin goals of public value and efficient operation are examined through contract theory and are qualitatively tested using the case study of Stadtwerke in Germany. Part II, “Evaluation of regional management,” deals with evaluation methods for the effective functioning of regional management and covers public facilities, land, disasters, and dialogue. Chapters 6–8 deal with the evaluation of public facilities and land. Chapter 6 (Horie et al.) focuses on the multidimensional functions of today’s urban facilities. It discusses the significance of the museum function of urban facilities, based on a survey of water and waste treatment facilities. Chapter 7 (Matsumura and Asahi) discusses the need for an efficiency perspective in the restructuring of local public facilities due to population decline and presents a benefit assessment method using school facilities as a case study. Chapter 8 (Ebisu and Asahi) provides a comparative analysis of region and property-specific value factors, using two types of value information in land appraisals. Chapters 9 and 10 are valuations of regional flood damage, which is becoming increasingly severe due to climate change. Chapter 9 (Nguyen et al.) presents a theoretical organization of flood vulnerability assessment, which is one of the main components of flood risk management, along with a case study of the indicator-based approach in Danang City, Vietnam. Chapter 10 (Tsuboi) analyses the damage caused by Typhoon No. 19 in Japan in 2019, a geospatial location-based evacuation study, and post-disaster livelihood recovery, while also identifying challenges. Chapter 11 (Sugiyama and Asahi) attempts to visualize the discussions and communication during public meetings by using the case study of an environmental assessment meeting attended by experts. It quantitatively analyses linguistic data and presents aspects of the emergence of pluralistic actors and the criteria. We would like to express our deepest gratitude to the RSAI Japan Branch and Springer Japan for providing us with the opportunity to publish this book. Tokyo, Japan Kyoto, Japan

Chisato Asahi Noriko Horie

Contents

1

2

3

4

5

Greening in Vacant Lots and Regional Community in Urban Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shogo Mizukami

1

Challenges of a Large Park that Can Be Seen in the Wake of the COVID-19 Pandemic: Case of Hitachi Seaside Park . . . . . . . . . . . . Yoshinori Ida and Noriko Horie

25

Supporting Organisations for Social Enterprises: Focus on Fundraising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fumiko Kimura, Kiyoko Hagihara, Noriko Horie, and Chisato Asahi

37

Changes in the Electricity Market and the Emergence of Regional Energy Business in Japan: Toward the Realization of a Comprehensive Supply Scheme for Local Public Services . . . . . . . . Yoriko Tsuchiya The Institutional Design of a Comprehensive Supply Scheme for Sustainable Local Public Services: Theoretical Considerations and Case Study of Stadtwerke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chisato Asahi and Yoriko Tsuchiya

55

75

6

Evaluation of the Educational Role of Urban Facilities and Their Contribution to Regional Sustainability . . . . . . . . . . . . . . . . . . . . . . 105 Noriko Horie, Kiyoko Hagihara, Fumiko Kimura, and Chisato Asahi

7

A Study on the Economic Evaluation of Public Facilities: Regional Utilisation Other than Intended Purposes of School Facilities . . . . . 133 Toshihide Matsumura and Chisato Asahi

8

Land Value Differences Based on Approach Methodologies: Analysis Using Land Market Value Publications in Tokyo . . . . . . . 153 Miwa Ebisu and Chisato Asahi ix

x

Contents

9

An Overview of Indicator-Based Approach of Flood Vulnerability Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Thuy Linh Nguyen, Thi An Tran, and Hoang Nam Nguyen

10

A Study of Evacuation and Life Rebuilding After a Flood Disaster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 Sotaro Tsuboi

11

Consideration on the Subject and Criteria of the Minutes of the Environmental Assessment Deliberation Meeting by Exploratory Text Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 Takeshi Sugiyama and Chisato Asahi

Chapter 1

Greening in Vacant Lots and Regional Community in Urban Area Shogo Mizukami

Abstract This chapter was to verify resident’s consciousness about advantageous effects of vacant lot in urban area. In the area people have close contact with neighbors, group territory is built up. Residents think of vacant lot as one’s own space in the area. I verified the hypothesis which resident’s consciousness about advantageous effects of vacant lot is increased. Further, I focus on the function as a green space and consider issues about control of maintenance. As the result, it was found that residents recognize differences in the utility value and existence value. It has possibilities that residents in group territory think vacant lots have high utilization effect. Their relationship between attributes of residents and group territory was explored. It was indicated that resident’s regional action and aggressiveness and consciousness of activity make territory group. Green space is the highest demand for vacant lot. Residents desire for participation in regional maintenance of greenery and flower. Meanwhile, residents who have a desire for participation in maintenance tend to have affections for region. Environmental arrangement and maintenance connects to condition of regional community. The results show that participation in maintenance for vacant lot is a sense of meaning as regional community. It is necessary to consider regional community to receive the effect of vacant lot and utilization. Keywords Residential area · Vacant lots · Group territory · Resident’s consciousness · Greening

1.1

Research Background

Japan’s population has been declining since 2005. Therefore, it is necessary to preserve social infrastructure and the living environment by maintaining the sustainability of urban and regional areas. Depopulation has caused the number of

S. Mizukami (✉) Bukkyo University, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 C. Asahi, N. Horie (eds.), Toward Sustainable Regions, New Frontiers in Regional Science: Asian Perspectives 73, https://doi.org/10.1007/978-981-99-5667-8_1

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S. Mizukami

empty houses to increase. Presently, empty houses constitute 13.5% of all houses in Japan (Statistics Bureau, Ministry of Internal Affairs and Communications 2013). This is the highest proportion in Japan’s history. Several studies have been conducted on vacant lots. For example, Nishiwaki et al. (2008) investigated the ratio of vacant lots for each type of housing, and Kinoshita (1996) attempted to typify for open space. Higuchi and Chujou (2001) show that unused land in local urban centers is often converted from buildings to parking lots. According to another study by Chiba et al. (2009), the area covered by car parks has increased in the central areas of regional cities in recent years. Additionally, Matsumoto et al. (2012) indicate that the factors that cause vacant land are the distance from the nearest station and population decline. National Institute for Land and Transportation Policy (2012) predicts that a decline in population will lead to an increase in vacant land as well as vacant homes. According to a study by the National Institute for Land and Transportation Policy (2012), population decline has caused an increase in vacant lots, which is similar to the increase in unoccupied houses. This report hypothesizes that vacant lots impact regional communities. Asami (2013) summarizes the advantages and disadvantages of having vacant lots in urban area. The merits of vacant lots were identified as lowering the risk of fire spread, reserving ventilation and daylight, guaranteeing space between buildings, improving open environments, mitigating heat islands by waterfront and green space, and more. The disadvantages were identified as breaking the continuity of building, improving security, increasing pollution from disposal waste, and causing reserving of landscaping. National Institute for Land and Transportation Policy (2012) conducted a study on the awareness of local governments and residents concerning vacant lots, and the study found that both are worried about “deterioration of landscape” and “illegal waste dumping” on unmanaged, vacant lots. However, according to a study by Yamaguchi (2013) on the utilization of vacant lots, unoccupied land in dense urban areas has the potential to be used effectively for disaster prevention measures. Takubo and Kanki (2014) examined the potential use of vacant land on sloping sites. Maki et al. (2005) stated that open space is a local resource that can be used for recreation. These studies demonstrate that vacant lots are an advantage when they are utilized as green space. However, it is necessary to maintain vacant lots because a lack of control can result in disadvantages, such as illegal waste disposal and decreased security. Asada and Toru (2013) conducted a study on improving the environment and found that unoccupied houses and vacant lots are precious habitat for wild animals and can contribute to the conservation of biodiversity in urban areas. Amemiya (2013) discussed the potential for transforming unoccupied land into municipal farms and related challenges. In addition, residents living in a single neighborhood feel that they belong to a group territory (Suzuki et al. 1984). Group territory allows residents to build strong relationships with their neighborhoods and enhances crime prevention because residents are able to identify outsiders, which in turn increases the feeling of safety in the neighborhood (Kobayashi 1992). In instances where the owners of vacant lots live far away, neighborhood residents keep watch over vacant lots.

1

Greening in Vacant Lots and Regional Community in Urban Area

3

1㸬Research Background 2㸬Research Methods 3㸬Group territory in residential areas and residents' awareness

4㸬Using vacant lots as

5㸬The relationship between the number of

green spaces

vacant lots and residents̓ awareness

6㸬Summary Fig. 1.1 Position of each section

This seems to reduce problems related to vacant lots because it increases security and prevents crime, even when vacant lots are poorly managed. This study presents the following hypothesis: local residents recognize vacant lots on their territory even if people who do not live in the neighborhood own vacant lots within the group territory. Residents recognize the advantages of vacant lots, and disadvantages are minimized as a result of their awareness of the issues. To test this hypothesis, the present study investigates people’s thoughts about vacant lots and their local communities. First, the strength of group territory was estimated; subsequently, its relationship with residents’ level of awareness of the effects of vacant lots was examined. Second, the study investigated residents’ attributes in progressing communization area. There are several studies that have analyzed the utilization of vacant lots as open or green spaces; therefore, this study examines the disadvantages and maintenance by greening in vacant lots using residents’ awareness. The chapters are structured as follows: Chap. 3 describes regional group territory and residents’ awareness of vacant lots. Chapter 4 considers the potential for utilizing vacant lots as green spaces. As a supplement to Chap. 3, Chap. 5 analyzes the relationship between field research on vacant lots and residents’ awareness of vacant lots (Fig. 1.1). In general, vacant lots refer to unused land, parking lots, agricultural land, storage sites, and more. There are various definitions of vacant lots. In this study, vacant lots are defined as open spaces without buildings; during field research, graveyards, agricultural land, and parking lots were not considered vacant lots. On the survey of residents’ awareness, it was noted that vacant lots are “land without buildings,” and the recognition of a vacant lot was entrusted to each resident.

4

1.2

S. Mizukami

Research Methods

1.2.1

The Areas Targeted by the Study

The survey targeted Higashiyama Ward in Kyoto, Japan. In Kyoto, Higashiyama Ward has the highest percentage of vacant houses in the wards of Kyoto at 20.3%. The aging population rate is 27.4%, and the number of vacant lots is expected to continue to increase. As of June 2014, the population of Higashiyama Ward was 39,484, and there were 21,070 households. The total area of Higashiyama Ward is 7.460 km2, and the population density is 5287 persons/km2.

1.2.2

Examination Methods

1.2.2.1

Questionnaire Survey

A questionnaire survey was conducted to investigate residents’ thoughts about vacant lots and living environment. There are four elementary school districts (Kaisei, Hitotsubashi, Imakumano, and Tsukinowa) in Higashiyama Ward. Six areas were set up in four districts. One hundred questionnaires were distributed in 24 districts. The selection of areas was designed to cover a wide variety of living environments in each elementary school district. One of the area ranges was set to be within 25 m, ensuring a distance that is familiar and accessible. Although originally 2400 questionnaires were scheduled to be distributed, five of the questionnaires could not be distributed because some houses were unoccupied. Therefore, 2395 questionaries were distributed. An outline of the questionnaire survey is shown in Table 1.1. The number of collected questionnaires was 484, and the recovery rate was 20.3%. The sex ratio of respondents (n = 481) was 35.6% male and 64.6% female. The largest age group of respondents was people over 60. In total, 24.6% of respondents were in their 60s, 27.3% were in their 70s, and 13.3% were in their 80s. By contrast, in Higashiyama Ward 14.3% of respondents were in their 60s, 13.6% were in their 70s, and 10.5% were in their 80s.

Table 1.1 Outline of the questionnaire survey methods Targets of survey area Number of surveys distributed Method of investigated Period

Higashiyama Ward, Kyoto City 2395 Posted distributed, collect by mail 2014/7/30–31, collection period 8/11

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Greening in Vacant Lots and Regional Community in Urban Area

1.2.2.2

5

Field Survey of Vacant Lots

A field survey of vacant lots in the 24 areas where questionnaires were distributed was carried out. The survey counted the number of vacant lots between November 20 and 23, 2014. Sixty-two vacant lots were identified in this area.

1.2.3

Analytic Methods

First, this study examines features of residents’ awareness of effects of vacant lots using principal component analysis of the responses obtained from the questionnaire. Then, the study considers whether indexes of group territory have an impact on residents’ awareness of the effects of vacant lots. It also clarifies whether “personal attributes,” “community activities,” and “opinions regarding community and society” influence residents’ awareness of the effects of vacant lots. To consider the potential for converting vacant lots into green spaces, this study examines the disadvantages of vacant lots and the effects of green spaces by analyzing residents’ responses. Moreover, the study examines residents’ opinions regarding vacant lots based on an analysis of the frequent keywords used in free writing. It is clarified by investigating the correlation between residents’ awareness of vacant lots and the number of planted pots and vacant lots based on the survey of vacant lots. The analytic methods employed include correlation analysis and the chi-square test. The correlation analysis uses Pearson’s coefficients. The significance level and tables summarizing the statistics are indicated by **P < 0.01 and *P < 0.05. The numerical R and value V correspond to correlation coefficient R and Cramer’s V coefficient, and they express the strength of the relationship.

1.3

Group Territory in Residential Areas and Residents’ Awareness

1.3.1

The Relationship Between the Effects of Vacant Lots and Group Territory

1.3.1.1

The Structure of Residents’ Awareness of the Functions of Vacant Lots

This section discusses residents’ awareness of the functions of vacant lots on residential areas. The existing studies reviewed here identified eight functions of vacant lots, and these functions were assessed by analyzing responses to the question “Do you think vacant land has the following functions?” Respondents choose from

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Fig. 1.2 Residents’ awareness of the functions of vacant lots

the following four responses: “had an effect,” “had somewhat of an effect,” “had little effect,” or “had no effect” (see Fig. 1.2). To investigate residents’ perceptions of the functions of vacant lots, principal component analysis was performed on the above eight functions. Cronbach’s alpha was found to be 0.847. The two components were extracted as a result of the principal component analysis. The contribution by the two components was 67.8%. The first component is shown on the horizontal axis and the second component on the vertical axis of the figure Fig. 1.3. The results of the analysis suggest that Axis 1 (horizontal axis) is related to the difference between existence effect and usage effect. The item “spaciousness” displayed a high value; it refers to the effect gained when there are no structures on a vacant lot. In contrast, the items “children’s playground,” “reduction of neighborhood noise,” and “green space and biological habitat” displayed a low value. These effects are obtained by greenery. Axis 2 (vertical axis) is related to range differences because “children’s playground,” “improving the landscape,” and “spaciousness” affect a large portion of the regional area, and “lighting and sunlight” and “ventilation” affect a small portion of the regional area.

1.3.1.2

The Relationship Between the Strength of Group Territory and the Effects of Vacant Lots

In many cases, vacant lots in residential area are owned by people who do not live in the neighborhood. However, vacant lots have various effects on residents. In

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Fig. 1.3 The results of the principal component analysis on the functions of vacant lots

neighborhood with strong local communities, residents have a shared awareness of vacant lots with absent owners, and this could potentially influence consciousness and thinking about vacant lots. The present study investigates whether residents’ attitudes toward group territory affect their awareness of the effects of vacant lots. The indicators of group territory include “attachment to the community,” “number of friends,” “sense of security,” and “leaving the door open.” These variables were selected based on existing studies about group territory in residential areas (Yasuda et al. 1991; Kobayashi and Suzuki 1981). The existing studies used these indicators and found that more advanced group territory was associated with higher attachment to community; deeper interactions within the community were associated with higher numbers of neighborhood friends; and increased participation in neighborhood surveillance by neighborhood residents was associated with an increased sense of security and more people leaving doors open. In this study, “attachment to the community” was a response using four choices that assessed whether neighborhood residents felt attached to their community (see Fig. 1.4). The indicator “number of friends” was a response that obtained information about the number of neighbors who are usually close to (see Fig. 1.5). Additionally, “sense of security” was a response using five alternatives impression of which side obtained adjective pair “relief or anxious” about regional characteristics

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S. Mizukami

Fig. 1.4 Attachment to the community

1. feel

2. Slightly

3. Not so much

4. Don't feel

(see Fig. 1.6). Finally, “leaving the door open” was a response using four alternatives that obtained information about the frequency with which people left the front door to their own house open. The interactions between the above four indicators regarding group territory and the first axis score for the principal component analysis results about the effect of vacant lots as obtained in the previous section were examined using correlation analysis. “Attachment to the community” was a response the using four categories from “feeling attached” to “not feeling attached,” which were inserted as an ordinal scale. Moreover, “sense of security” was a response using five categories from “relief” to “anxiety” (see Fig. 1.6). “Leaving the door open” was a response using four categories from “often” to “very seldom” (see Fig. 1.7). “Number of friends” was a numeric data filled in (see Fig. 1.5). This analysis identified a correlation between “attachment to the community,” “number of friends,” and “sense of security.” When the value categories of “attachment to the community,” “sense of security,” and “leaving the door open” were smaller, higher results were observed for group territory and “number of friends.” Moreover, a stronger attachment to community, a greater number of friends, a higher sense of security, and an increase in the effect use of vacant lots were observed. In other words, when the above three indicators are regarded as indicators of group territory, people who live in areas where there is high group territory tend to be more aware of the increased utilization of vacant lots. However, there was no significant difference observed between the first axis score and “leaving the door open.” It is possible that whether a resident leaves their door open depends on the size of aisle in front of the door or construction of house. It was not possible to clarify the relationship between the effects of vacant lots in this analysis (Table 1.2).

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Greening in Vacant Lots and Regional Community in Urban Area

Fig. 1.5 Number of friends in the neighborhood

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0 people 1 people 2 people 3 people 4 people 5 people 6 people 7 people 8 people 10 people 12 people 15 people 20 people 30 people

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1.3.2

The Relationship Between Group Territory and Personal Attributes

Next, the study investigates the relationship between residents’ attributes and group territory. Three following three categories were examined as residents’ attributes: (1) personal attributes such as sex, age, and more (2) community activities, (3) thought about community and society. There were 11 subordinate variables

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S. Mizukami

Fig. 1.6 Sense of security regarding the area surrounding the residence

1. Relief

2. Somewat relief

3. Neigher

4. Somewhat anxiety

5. Anxiety Fig. 1.7 Frequency of leaving the door open

̏. Often

̐. Ocasionally

̑. not often

̒. almost never

Table 1.2 Relationship between effects of vacant lots and group territory The indicators of group territory Attachment to the community Number of friends Sense of security Leaving the door open **P < 0.01, n.s. not significant

The correlation with the effects of vacant lots R = 0.137** R = -0.140** R = 0.142** n.s.

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used to identify the above categories and investigate correlations between “attachment to the community,” “number of friends,” and “sense of security.”

1.3.2.1

Personal Attributes

The subordinate variables for “personal attributes” were sex, age, and years of residence; chi-square analysis was performed on their relationship to “attachment to the community,” “number of friends,” and “sense of security.” The results are shown in Table 1.3. It was observed that the longer a resident had lived in an area, the stronger their “attachment to the community.” Additionally, age was correlated with attachment to the community because there was a direct correlation between age and years of residence. That is, the longer someone lived in the area, the greater their number of friends. Table 1.3 The relationship between indicators and attributes related to the group territory Attachment to the community n.s. V = 0.164* V = 0.233**

Concepts (1) Personal attributes

The subordinate variables Sex Age Years of residence

(2) Activities to community

Neighborhood association activities Participation in local events

V = 0.190**

Neighborly companionship “greetings” Neighborly companionship “talking while standing” Neighborly companionship “sharing gifts” Frequency of going out to the pathway in front of the house Local community model

V = 0.182**

Volunteerism

V = 0.239**

(3) Awareness of community and society

**P < 0.01, *P < 0.05, n.s. not significant

V = -0.171**

V = 0.222** V = 0.230** V = 0.146** V = 0.204**

Number of friends n.s. n.s. V= 0.186* V= 0.280** V= 0.277** n.s.

Sense of security n.s. n.s. n.s.

V= 0.322** V= 0.352** V= 0.259** V= 0.225** V= 0.241**

n.s.

V= 0.139** n.s. n.s.

n.s. V= 0.139** n.s. n.s.

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1.3.2.2

S. Mizukami

Activities in the Residential Area

The variables for activities and actions in the community were neighborhood association activities, participation in local events, neighborly companionship, and frequency of going out to the pathway in front of the house. Additionally, the correlations between these variables and “attachment to the community,” “number of friends,” and “sense of security” were investigated. It was anticipated that investigating correlations between variables of activities and actions in the community and group territory would relate to social capital theory, which discusses the capital of social networks. Social capital summarizes the following three perspectives: trust, social participation, socializing and social interaction in the survey that the Institute of Statistical Mathematics investigated “study on national character,” cabinet office investigated social capital research in 2003 and 2005. The variables of activities and action in the community were also interpreted as indicators for part of social capital. The indicators for neighborhood association activities and participation in local events were the responses that used four alternatives obtained about degree of participation. The results of neighborhood association activities are shown in Fig. 1.8 Neighborhood association activities

1. Always participate 2. Sometimes participate 3. Don't participate much 4. Rarely participate

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Fig. 1.9 Frequency of going out to the pathway in front of the house

1. Almost never 2. About once a day 3. About twice a day 4. More than three times a day

Fig. 1.8. Responses about neighborly companionship were obtained by measuring the frequency of “greetings,” “talking while standing” and “sharing gifts” in the neighborhood. The responses related to frequency of going out to the pathway in front of the house were responses using four alternatives asking about the number of times respondents went out on the path in front of house per day to enjoy cool evening weather, talk while standing, or water one’s plants (see Fig. 1.9). The analysis results demonstrated that a higher frequency of “participation in events in the community,” “neighborly companionship,” and “frequency of going out to the pathway in front of the house” was correlated with a strong attachment to the community. The analysis results of “number of friends” showed a significant difference between “talking while standing” and “sharing gifts” in the neighborhood as neighborly companionship. However, there was no significant difference observed in relation to “greetings.” It was interpreted that “greeting” is an action performed in between neighbors who do not have a close relationship. Accordingly, it seems that “greetings” is not correlated with number of friends. Based on the above results, it can be concluded that the more community activities one participates in, the higher number of friends they have. A significant difference was found with “sense of security” between the two variables of lower frequency of activities and a higher “sense of security.” In contrast, a significant difference was not found between the four variables. It was considered that it is necessary to possess a certain amount of information about the entire region, such as knowing the inner working of self-government and understanding the situation in the neighborhood.

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1.3.2.3

S. Mizukami

The Views on Region and Society

Residents’ behavioral aspects were examined in the preceding paragraph. In this section, residents’ awareness of issues in the community and society are examined. The variables for analysis were “local community model” and “volunteerism.” The local community model was classified to understand four community types, assesses whether the activity of resident is subjective or objective, and determine whether local preference is strong or weak. The community typology utilized four types that were based on a study by Okuda (1983) that clarified concepts related to community life. The concepts of community life were measured via responses using four alternatives obtained closest match. Selection 1 consisted of those who responded that they “want to maintain harmony within the neighborhood as much as possible because this region has its own life and customs.” This selection identified residents who are conservative and inward-looking and cooperate with the local community [regional cooperative model]. Additionally, Selection 2 consisted of those who responded that they were “not interested and attached to the region although they lived in the area. The local enthusiasts will make region better.” This selection identified residents who are indifferent and uncooperative with the local community [indifferent model]. Selection 3 consisted of those who responded that “it is the right of a citizen to report complaints and demands related to their own daily life to the city government as much as possible.” This selection identified residents who have a sense of their personal rights and request that the administration improve people’s standard of living. This community is composed of people with such awareness [individual self-model]. Selection 4 consisted of those who responded that “residents should cooperate with each other and make life easier because the local community is a source of comfort in life.” This selection identified resident who have an active awareness of the local community [community model]. Volunteerism was measured using the responses using four alternatives regarding the degree of interest in volunteer activities. According to the analysis, 11.4% of respondents reported “feeling attached to the community” in the indifferent model; this percentage was less than the other three models. In the community model, 44.3% of respondents reported “feeling attached to the community”; this was the highest percentage among all models. However, in the indifferent model, 18.2% of respondents reported “not feeling attached to the community,” which was higher than the percentages of the other three models. Additionally, it was observed that people who have a high interest in volunteering feel attached to the community. Moreover, residents who have an active awareness of the local community have many friends. It was observed that people who have a high interest in volunteering have many friends. No significant difference was found between “sense of security” and the volunteerism. It seems that a sense of regional security had little connection with

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15

awareness about the community and society because it is related to public order and environmental factors. Based on the above results, it was clarified that there was a significant relationship between the indicators of group territory, personal attributes, community activities, and awareness of community and society. It appears that the length of residence brought opportunity of activities to community, people who are often involved in community activities and active in the community and society are deeper related with community.

1.4

Using Vacant Lots as Green Spaces

Although there are various possibilities regarding the utilization of vacant lots and their effects, this chapter examines the possibility of converting vacant lots to green spaces. There are many disadvantages to vacant lots; however, it is also possible to create a garden city with abundant greenery by converting free space in urban residential areas into citizen farms and green space. Ono (1996) study on community gardens discusses the community garden movement that began in the USA in the 1970; the study also discusses organized features of social recognition and values. Hirata (2004) evaluated the benefits of and challenges to converting unused city land into community gardens. Additionally, citizen farms were readily accepted; for example, many residents desired to use citizen farms (Watanabe 1991). Farms function as places where people can interact. There are many studies on green spaces in urban areas.

1.4.1

The Functions of Green Space

Is it possible to convert vacant lots into farms and green spaces? What do residents perceive as the disadvantages of vacant lots? To investigate the above questions, the study obtained responses using multiplechoice questions (multiple selections were permitted) about the kinds of places that are required in proximity to residences (see Fig. 1.10). The results showed that “green space” was the highest response and “park” was the second highest. This is seemingly connected to the fact that the surveyed area was near downtown in the city center, and there were few green spaces and parks in residential areas. The term “green space” refers to spaces where plants exist; however, there were few respondents who selected “farms.” This is because the availability of the space was an important characteristic. It is necessary to investigate the differences between citizen farms that are on private property or rented property. Next, this study will discuss the disadvantages of vacant lots. The selections that were reviewed presented six disadvantages that were previously identified in

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S. Mizukami 㻜

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Fig. 1.10 The space requested close to one’s residence 㻜

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䠍㻚㻌㻰㼡㼙㼜㼕㼚㼓㻌㼛㼒㻌㼓㼍㼎㼍㼓㼑 䠎㻚㻌㻵㼚㼟㼑㼏㼠㻌㼕㼚㼒㼑㼟㼠㼍㼠㼕㼛㼚 䠏㻚㻌㻴㼍㼎㼕㼠㼍㼠㻌㼒㼛㼞㻌㼔㼛㼙㼑㼘㼑㼟㼟㻌㼏㼍㼠㼟㻘㻌㼑㼠㼏㻚 䠐㻚㻌㻼㼛㼛㼞㻌㼘㼍㼚㼐㼟㼏㼍㼜㼕㼚㼓 䠑㻚㻌㻰㼑㼏㼞㼑㼍㼟㼑㻌㼕㼚㻌㼘㼛㼏㼍㼘㻌㼏㼞㼕㼙㼑㻌㼜㼞㼑㼢㼑㼚㼠㼕㼛㼚 䠒㻚㻌㻻㼠㼔㼑㼞㼟

Fig. 1.11 Disadvantages of vacant lots

existing research. It was considered whether the multiple-choice response of “insect infestation” was considered to be caused by the existence of plants. Greenery was associated with both positive and negative aspects. The presence of greenery was not included in the choices of disadvantages shown in Fig. 1.11 because greenery was a desirable element in urban residential areas. However, the choice of “others” was selected, and there were many free writing responses about greenery. Thirteen of the 17 respondents who selected “others” also responded that “being covered in weeds is an undesirable aspect” in their free writing. For other answers, there were three respondents who noted that “it becomes a hangout for people and is noisy”; there was also one respondent who stated that “car engine noises are too loud.”

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It is possible that greenery is an advantage of vacant lots; however, it is also associated with the disadvantages of overgrown weeds and unsanitary conditions, which can be burdensome. Therefore, the maintenance and management of green spaces are important.

1.4.2

Residents’ Awareness of Weeds in Vacant Lots

Free writing responses regarding vacant lots close to one’s residence were obtained as part of the survey. There were 148 responses, and respondents indicated many problems related to vacant lots. Out of these respondents, 21 used the keyword “weeds,” nine respondents used the word “vegetation,” and four respondents used the word “greenery.” It has been pointed out that overgrown weeds were not desirable scenery; they also create the burden of having to weed and perform other difficult maintenance tasks. To understand the content of respondents’ free writing, text data from answers about vacant lots were decomposed, and text mining, which is a form of quantitative analysis, was performed by inserting those components. The analysis was performed using the data analysis software WordMiner Version 1.150. First, the text data were divided into words; subsequently, particles, conjunctions, symbols, and punctuation marks were removed. Sentence elements were extracted using these operations. Similar keywords were treated as the same word to summarize the elements of sentences. For example, terms “vacant lot” and “open space” were unified, “kid” was converted to “child,” and “car park” was classed with “parking lot.” Among sentence elements, keywords with a frequency greater than two were extracted. The number of separating words in Japanese with spaces (e.g. in kana-only) was 2856, the number of keywords was 776, and the number of characters processed (original all characters) was 5534. After carrying out unification and replacement, there were 78 keywords with a frequency greater than two. The frequency with which keywords were used is shown in Fig. 1.12. The keyword “weeds” appeared in 21 instances. In text before and after the keyword, there were many references to weed management and greenery maintenance. For example, there were many references to overgrown weeds. In addition, weeds were evaluated as being difficult and not desirable in terms of scenery. The number of references to “weeds” is shown in Table 1.4. The keyword “vegetation” was used alongside words such as “growing quickly,” “sprout,” and “overgrown.” The keyword “greenery” was described as “lots of greenery in the community” and “desirable.” Respondents’ impressions and evaluations differed according to each keyword. Next, it was investigated what is the subject the keywords “leaving alone without care” and “neglect.” The results demonstrate that many responses did not describe specific subjects, such as the “management of vacant lot.” However, there were many responses that described specific subjects, such as “weeds” and “dumping of garbage.” There were three responses that described advantages of vegetation in

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S. Mizukami 㻣㻜 㻢㻜

㻠㻜 㻟㻜 㻞㻜 㻝㻜 㻜

㼂㼍㼏㼍㼚㼠㻌㼘㼛㼠㼟 㻴㼛㼡㼟㼑 㼃㼑㼑㼐㼟 㻼㼍㼞㼗㼕㼚㼓㻌㼘㼛㼠 㼂㼍㼏㼍㼚㼠㻌㼔㼛㼡㼟㼑 㻯㼔㼕㼘㼐㼞㼑㼚 㻻㼣㼚㼑㼞 㼜㼘㼍㼚㼠㼟㻌㼍㼚㼐㻌㼠㼞㼑㼑㼟 㻹㼍㼚㼍㼓㼑㼙㼑㼚㼠 㻹㼍㼕㼚㼠㼑㼚㼍㼚㼏㼑 㻸㼛㼏㼍㼠㼕㼛㼚 㻼㼑㼛㼜㼘㼑 㼀㼛㼣㼚 㻸㼍㼚㼐 㻳㼍㼞㼎㼍㼓㼑 㻼㼍㼞㼗 㻭㼞㼑㼍 㻵㼚㼟㼑㼏㼠㼟 㻺㼑㼓㼘㼑㼏㼠㼑㼐 㻯㼛㼕㼚㻙㼛㼜㼑㼞㼍㼠㼑㼐㻌㼜㼍㼞㼗㼕㼚㼓 㻲㼑㼚㼏㼑 㻭㼜㼍㼞㼠㼙㼑㼚㼠㻌㼎㼡㼕㼘㼐㼕㼚㼓 㻯㼍㼞㼟 㻻㼏㼏㼡㼞㼞㼑㼚㼏㼑 㻵㼚㼟㼑㼏㼡㼞㼕㼠㼥 㼁㼚㼠㼛㼡㼏㼔㼑㼐 㻿㼑㼏㼡㼞㼕㼠㼥 㻼㼞㼛㼎㼘㼑㼙 㻳㼞㼑㼑㼚

㻺㼡㼙㼎㼑㼞㻌㼛㼒㻌㼏㼛㼙㼜㼛㼚㼑㼚㼠㼟

㻡㻜

㻷㼑㼥㼣㼛㼞㼐

Fig. 1.12 Frequently keywords about vacant lots close to residence Table 1.4 The contents of free writing texts that mentioned the keyword “weeds” The keyword “weeds” is related to the content Management (including removal, care, etc.) Overgrowth, too much, etc. Troublesome Not good (including unsightly, etc.)

Number of cases 9 6 3 3

vacant lots; this number was lower than the number of responses that described disadvantages. It is likely that inadequate trimming and management of vacant lots by absent owners causes the disadvantages associated with greenery.

1.4.3

The Possibility for People’s Participation in Maintenance and Greening

How aware are urban residents of greenery and trimming? The amount of greenery was measured using responses using four alternatives in this study (see Fig. 1.13). There is little green space in Higashiyama Ward, Kyoto; therefore, respondents reported that they desired for 36.2% of land in Higashiyama Ward be occupied by green space. However, 58.4% of respondents reported that the current amount of

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Fig. 1.13 The desired quantity of greenery in residential areas

1. More is better 2. The current situation is fine 3. Less is better 4. Don't know

green space was acceptable. Therefore, it appears that most respondents do not demand more green space. However, there was a demand for green space when considering that green space was the most common response to the question about the most desired type of land close one’s residence, as shown in Fig. 1.10 in the previous chapter. One reason may be that it involves a large burden of green care and management. Therefore, this study measured how many people can be expected to participate in community green care activities. Residents’ willingness to participate in trimming greenery and flowers in the residential area was investigated (see Fig. 1.14). The percentage of participants who reported they “want to participate” or “want participate occasionally” was 53.0%; those who were unwilling to participate constituted 47.0% of respondents. In general, older people were more aware of the burden of trimming greenery; however, the results of cross analysis of participation in trimming of greenery and age demonstrated a significant difference between the two (V = 0.164*). Older people tended to be more willing to participate in trimming activities. The phrase “a place where local people can gather” was one possible response to the question about “the space requested close to one’s residence”; this data are shown in Fig. 1.10. Elderly people were significantly more likely to select this response. It appears that this is because trimming greenery and flowers is required of residents and creates an opportunity for residents to gather. It is assumed that the diversity of objectives and the possibility for role sharing resulted in a higher willingness to participate by a greater number of people in contrast to trimming greenery alone in a private garden. Additionally, the results of the cross analysis of willingness to participate in

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Fig. 1.14 Willingness to participate in trimming of greenery and flowers

1. Want to participate 2. Want to participate occasionally 3. Do not want to participate very much 4. Do not want to participate trimming of greenery and “feeling attached to the community” demonstrated that the stronger one’s attachment to the community the more willingness one is to participate (V = 0.168**).

1.5

The Relationship Between the Number of Vacant Lots and Residents’ Awareness

This chapter clarifies the relationship between the number of vacant lots that were identified through the survey and residents’ awareness, which was examined in the previous chapter. The survey identified 62 vacant lots in 24 areas. The minimum number of vacant lots was 0, the maximum was 11, and the average was 2.58. To examine whether vacant lots impacted residents’ awareness of residential areas and vacant lots, the correlation between the number of vacant lots in the area and residents’ awareness was investigated. The ratio of vacant lots to all lots was determined by dividing the number of vacant lots by the number of all lots in each area (see Table 1.5). The lowest ratio of vacant lots to all lots in each area was 0.00%, the highest was 5.07%, and the average was 1.26%. Yoshida (2013) reported that comprehensive statistics on vacant lots in Japanese residential districts do not exist at present. In addition, based on data from the housing and land statistical survey, it is estimated that the ratio of vacant lots to all lots is 2–3% in detached residential areas in Japan excluding parking lots. Parking lots were in high demand because the

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Table 1.5 The ratio of vacant lots and number of lots in each area School district a

b

c

d

Area No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Total Average

Number of vacant lots (a) 3 2 6 3 0 0 1 3 2 3 2 1 2 4 1 0 1 3 11 4 2 1 4 3 62 2.58

Number of all parcels (b) 223 246 233 209 189 345 173 194 222 182 188 146 196 221 223 190 212 182 217 166 224 180 163 194 4918 204.92

Percentage of vacant lots (%) (a/b × 100) 1.35 0.81 2.58 1.44 0.00 0.00 0.58 1.55 0.90 1.65 1.06 0.68 1.02 1.81 0.45 0.00 0.47 1.65 5.07 2.41 0.89 0.56 2.45 1.55 – 1.26

surveyed area was near downtown and the tourist district in Kyoto; the ratio of vacant lots was lower than the national average. The relationship between residents’ awareness and the ratio of vacant lots was examined using correlation analysis. Correlation analysis was used to examine the relationship between “the effects of vacant lots close to residences” from Fig. 3.2 in Chap. 3 and the ratio of vacant lots; there were significant differences observed between “improving the landscape” only one variable of 8 variables (R = 0.110*). Residents who live in areas with a higher ratio of vacant lots thought that vacant lots do not contribute to improving the landscape. Additionally, the relationship between “disadvantages of vacant lots” from Fig. 4.11 in Chap. 4 and the ratio of vacant lot was investigated using correlation analysis; there were significant differences observed with “crime prevention in the community” (R = -0.134**). It was found that residents who live in areas with higher ratios of vacant lots felt that vacant lots harm crime prevention in the community. Moreover, the relationships

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between each variable of residents’ awareness from the previous chapter were investigated, and there was a significant difference observed between “participation in local events” from Sect. 1.3.2 and the ratio of vacant lots (R = 0.112*). It was observed that residents who live in areas with their higher ratios of vacant lots do not participate in local events. The above results demonstrate that residents who live in areas with higher ratios of vacant lots are skeptical of the claim that vacant lots improve the landscape; they also identified harm to crime prevention in the community as a disadvantage of vacant lots. Therefore, it can be concluded that the present condition of vacant lots is undesirable. Chapter 4 discussed the inadequate management of vacant lots, and the effects and disadvantages of vacant lots were impacted by the state of management. Additionally, it is possible to conclude that participation in local event is decreasing in areas with declining populations and causing the number of vacant lots and vacant house to increase. It is considered a negative influence that is accompanied by the activities in the community.

1.6

Summary

This study clarified residents’ awareness of the effects of vacant lots on residential areas. A conceptual diagram is shown in Fig. 1.15. There was a difference between the existence effect and the usage effect by being used as residents’ perception of the open space. It was observed that the more group territory advanced, the more people recognized the usage effects of vacant lots. Additionally, it was suggested that a stronger attachment to the community and more active awareness of the local community promoted the group territory using the relationship between residents’ attributes and group territory. However, the

Attachment to the community, Number of friends, Sense of security Group territory

Willingness to participate in trimming activities

Usage effects of vacant lots

Greening in vacant lots

VS

Maintenance of weeds

Fig. 1.15 The conceptual diagram of residents’ awareness of group territory and vacant lots

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23

respondents tended to be older, which makes the findings of this study less generalizable, which was mentioned in Sect. 1.2.2. It is possible that one’s thinking, values, and habits in relation to community activities and neighborly companionship differ by age; therefore, it is possible that age impacts awareness of group territory. Converting land to green space was the most demanded land use method for vacant lots. However, the burden of management and the deterioration of landscape by overgrown weeds and illegally dumped waste in unmanaged vacant lots were raised as problems. There was considerable willingness to participate in trimming greenery and flowers in areas around residences; therefore, it is possible to promote the greening and maintenance of vacant lots. Moreover, participation in trimming greenery can be seen as an opportunity to bring people together. Greening and maintenance were related to the local community because the people who are willing to participation tend to be attached to the community. In areas with a high ratio of vacant lots, improving the landscape and crime prevention was not expected advantages of greening lots. The effect of vacant lots is not accepted by inadequate of management at present. Additionally, it was suggested that participation in local events was decreasing in areas with high ratios of vacant lots. It is possible that the existence and state of vacant lots can become an indicator of the condition of the local community. Based on the above results, the shared awareness of community and the management of vacant lots may affect the utilization of vacant lots. Participating in activities such as maintaining greenery in vacant lots is significant for local communities. Therefore, it is necessary to consider the utilization of vacant lots and the acceptance of effects in local communities in conjunction with local communities in the future. The results of the study, which focused on the ancient capital city Kyoto, may be specific to this region. Future studies must compare these results with those from multiple regions. Acknowledgements This study has originally published in Studies in Regional Science volume 45, pages 351–367, The Japan Section of the Regional Science Association International (Mizukami 2015). I would like to thank the publishers for their permission to use the material here.

References Amemiya M (2013) Examples of agricultural use of vacant lot and possibility of contribution to “safety and security” in residential district. Evaluation 50:20–27. (in Japanese) Asada M, Toru T (2013) Vacant lots, vacant houses and biodiversity: how do we think about the space where wildlife and human life overlap? Evaluation 50:7–12. (in Japanese) Asami Y (2013) Urban problems of vacant lots: how to effectively link with surrounding land use. Evaluation 50:1–6. (in Japanese) Chiba T, Tanima M, Koshid N (2009) A study on actual condition of low-use and unused land and the landowners’ attitude at the city center in Kushiro. Res Rep Kushiro Natl Coll Technol 43: 43–48. (in Japanese)

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Higuchi S, Chujou J (2001) Research for the condition of extensive used lands at the central district in local city and examination on the measures of their effective use: a case study in Nagaoka City, focusing on outdoor parking space. J City Plan Inst Jpn 36:433–438. (in Japanese) Hirata F (2004) What are necessary to convert environmental resources to environmental assets: using corporate accounting principles to assess the greenery activities conducted with collaboration between citizens and local government and it’s achievements. J Jpn Inst Landsc Arch 68(1):8–11. (in Japanese) Kinoshita INO (1996) A fundamental study on characteristics of open space constructed by urban redevelopment project. J Jpn Inst Landsc Arch 59(5):249–252. (in Japanese) Kobayashi H (1992) The study on territory of grouped inhabitants. Shokokusha 260. (in Japanese) Kobayashi H, Suzuki S (1981) A study on “territory of grouped inhabitants” in small housing groups: part1 process of territorialization. Trans Arch Inst Jpn 307:102–111. (in Japanese) Maki K, Yokohari M, Watanabe T, Amemiya M (2005) The relationship between the characteristics and location of provisional public open spaces in Tokyo’s 23 wards. J Jpn Inst Landsc Arch 68(5):867–870. (in Japanese) Matsumoto T, Kudo Y, Komori S, Amano M, Amano K (2012) A study on the factors behind the rise vacant lots and houses in the Yato Region in Yokosuka City. Summaries of technical papers of annual meeting Architectural Institute of Japan, pp 1165–1166. (in Japanese) National Institute for Land and Transportation Policy (2012) Survey and research on the actual condition and utilization of open space. Ministry of Land, Infrastructure, Transport and Tourism (in Japanese) Nishiwaki T, Tsuruta Y, Kaido K, Katayama N (2008) The research on the sustainability of suburban housing estates: focusing on the vacant lots and the unoccupied houses in suburban housing estates of Gifu City. Proc Tokai Chap Arch Res Meet 46:633–636. (in Japanese) Okuda M (1983) Theories of urban communities. University of Tokyo Press, Tokyo, p 349. (in Japanese) Ono S (1996) Community gardening movement in the USA from the 1970s to the early 80s. In: The technical bulletin of faculty of horticulture, vol 50. Chiba University, Chiba, pp 49–58. (in Japanese) Statistics Bureau, Ministry of Internal Affairs and Communications (2013) The statistical values of the Housing and Land Survey in 2013 (in Japanese) Suzuki S, Oyaizu J, Hatsumi M (1984) “House” and “town”: the logic of dwelling aggregation. Kajima Institute Publishing, Tokyo, p 239. (in Japanese) Takubo S, Kanki K (2014) A study on potentialities of usage of the vacant houses and lots in the densely built-up and steeply inclined urban areas at Nagata Ward, Kobe City. Proc Kinki Chap Arch Res Meet 54:349–352. (in Japanese) Watanabe A (1991) Promotion act for preparation of allotment garden. J Rural Plan 9(4):56–60. (in Japanese) Yamaguchi M (2013) Vacant lots and dense urban areas. Evaluation 50:13–19. (in Japanese) Yasuda C, Miwa K, Kiyama M, Tanaka E (1991) A study on territorialization of public spaces in small housing groups: through analysis of consciousness of dwellers in cooperative housing. Proc Kinki Chap Arch Res Meet 31:289–292. (in Japanese) Yoshida T (2013) Designing vacant lots in detached residential areas. Shrink Increase 50:46–52. (in Japanese)

Chapter 2

Challenges of a Large Park that Can Be Seen in the Wake of the COVID-19 Pandemic: Case of Hitachi Seaside Park Yoshinori Ida and Noriko Horie

Abstract This study explored the issues faced by large park facilities in the wake of the COVID-19 pandemic. The role of open public spaces has become more important than ever during the pandemic. Many national parks were shut down during the COVID-19 scourge, and it is necessary to find out the direction in which the park will continue to open from the aspect of the park’s expectations for the COVID-19 pandemic and the aspect of the park’s survival. We studied the Hitachi Seaside Park, which is managed by the state and serves two important purposes: as a tourist destination and as an open green space. As a tourist facility, the park represents Ibaraki Prefecture and has a great ability to attract visitors. However, the park was shut down as soon as it was categorized under “unnecessary and unurgent” services. The park has another very fulfilling function as an open space with lush greenery, but there is a challenge in working toward the outside of the park. To address this issue, it is necessary to improve the freely accessible areas of the park and actively disseminate its value. Such a large park should continue to operate not only during the COVID-19 pandemic but also in peacetime or during a disaster, and it is important to allow these spaces to serve their purpose, not only as tourist destinations but also as healthy green open spaces. Keywords COVID-19 · Leisure facilities · Open space · Tourist destination

Y. Ida (✉) Hitachi Seaside Park Office, Ibaraki, Japan N. Horie Bukkyo University, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 C. Asahi, N. Horie (eds.), Toward Sustainable Regions, New Frontiers in Regional Science: Asian Perspectives 73, https://doi.org/10.1007/978-981-99-5667-8_2

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Introduction

The COVID-19 pandemic has had a global impact with people all over the world refraining from going out unnecessarily, while time spent at home continues to increase. The role of open spaces is more important than ever. The Ministry of Land, Infrastructure, Transport and Tourism conducted hearings with experts, local governments, and various companies and summarized it in “Direction of Town Development Caused by the New Corona Crisis” (Ministry of Land, Infrastructure, Transport and Tourism, Urban Bureau 2020). The future of open space and the direction of policy were mentioned as one of the main issues. From the perspective of avoiding the three Cs, and by teleworking, many people are spending more time near their homes. It is thought that the value and role of the space has increased as the importance of the familiar relaxing space has been reaffirmed. Health Promotion Net (n.d.) (https://parkhealth.jp) from the Park Foundation cites the role of city parks during the coronavirus pandemic, focusing on contributions to physical and mental health, such as stress relief by using the park, elimination of lack of exercise, and prevention of weakened immunity. Hashimura et al. (2021) conducted a survey on the use of parks and child-rearing stress in coronastricken mothers of preschoolers; the results showed that mothers who used the park less frequently before and after contracting corona had higher levels of child-rearing stress. Moreover, in a study that followed changes in the number of users in 2019 before the corona disaster in Tokyo’s large-scale parks by Takeuchi and Hisama (2021), it has the number of users increased in more than 50% of the parks, even in March, when there was a request to refrain from viewing cherry blossoms, suggesting the importance of large-scale parks. Among city parks, which can be considered as representative open spaces in cities, there are parks that have vast sites and attract many customers and include tourist facilities and leisure facilities. Showa Kinen Park in Tokyo, Uminonakamichi Seaside Park in Fukuoka Prefecture, and Hitachi Seaside Park in Ibaraki Prefecture have vast land areas and welcome more than 2 million visitors every year. In such situations, expectations should be raised for a city park’s role as an open space. However, many national parks were forced to close because of their ability to attract customers (Table 2.1). The parks, which attract many tourists, were closed and this was accepted as necessary at that time. However, it is a social loss that the function that should be exerted in such a situation is abandoned based on the judgment that the park is closed. The role of these parks in disasters such as earthquakes has been discussed in the past, but the critical role they play even during a pandemic where there is worldwide spread of an infectious disease has not been fully discussed. In this paper, we confirm that parks have two roles: one as a tourist destination and the other as an open space, using the Hitachi Seaside Park as an example. In order for the park to continue to open, it is important to expand the role of greenery and open space not only inside the park but also outside.

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Table 2.1 Closed period of national parks nationwide Name National Takino Suzuran Hillside Park National Michinoku Forest Lakeside Park Echigo Hillside Park National Alps Azumino Park Hitachi Seaside Park National Musashi Hillside Park Showa Kinen Park National Tokyo Rinkai Disaster Prevention Kiso Sansen National Government Park Yodogawa Riverside Park Asuka Historical National Park/ Akashi Kaikyo National Government Park National Bihoku Hillside Park National Sanuki Manno Park Uminonakamichi Seaside Park National Yoshinogari Historical Park National Okinawa Memorial Park a

2020 3.2–7.11a 4.18–5.17 4.18–5.11 – 4.4–5.31 4.8–5.31 3.28–5.31 – – – – 4.8–5.25 – 4.18–6.2 4.8–5.19 4.18–5.10 4.19–5.31

2021 5.17–7.11 – – – 8.18–9.19 5.17–6.20 20.12.26–21.4.4 – – – – – 5.18–6.21 5.4–6.20 5.12–6.20 – –

8.28–9.30 – – – – – 4.25–6.4 – – – – – 8.27–9.30 – 8.6–9.30 – –

The appearance of brown bears also had an effect

2.2

Overview of Hitachi Seaside Park

Hitachi Seaside Park is a national park that is located on the Pacific coast of Hitachinaka City, Ibaraki Prefecture (Fig. 2.1). This park opened in 1991 and the total area is 350 ha (opening area was 215 ha). Nemophila, in the spring, dyes the entire surface of “Miharashi no Oka” in the park, and “Flower Shukei” by the autumn leaves of Kokia have high recognition both in Japan and overseas. It is also the venue for the largest outdoor music event in Japan, “Rock in Japan Festival.” Various animals and plants can be seen throughout the year in the park, and there are areas where rare species live. It is possible to have a picnic using the tables and leisure seats installed throughout the park and to dine at cafes and restaurants. There are various athletic equipment sets and playsets for children, and a water play open space that is open only in the summer. There is a bicycle rental that can run a cycling course with a total length of approximately 11 km. There are BMX courses and disc golf courses that are also used for various competitions and are open to the public free of charge. In addition, the amusement park “Pleasure Garden” has a Ferris wheel, a roller coaster, and other attractions. The Kanto Regional Development Bureau of the Ministry of Land, Infrastructure, Transport, and Tourism is in charge of the park in general, and the Hitachi Park Management Center is in charge of operation and maintenance, with various cooperating companies, event officials, and various volunteers also helping to run the park. The annual number of visitors exceeded 2 million for five consecutive years from 2015 to 2019, and the ratio of the number of visitors to the annual number of visitors

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Fig. 2.1 Location of Hitachi Seaside Park

in the three months of April, May, and October was close to 60%. It can be said that the park is clearly divided into busy and quiet seasons (Fig. 2.2). The park has a west entrance area, a miharashi area, a forested area, a pleasure garden area, a dune area, a grassland area, and a south entrance area (Fig. 2.3). It consists of 7 areas in total. Miharashi no Oka, which is popular due to Nemophila and Kochia, is located in the Miharashi area, and visitors during the busy season are concentrated here. Since it is common to enter the park from the west gate to go to this area, the west entrance area from this gate to the Miharashi area is also crowded. The pleasure garden area is an area where visitors gather throughout the year, not to

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Fig. 2.2 Breakdown of annual number of visitors and busy months

Fig. 2.3 Hitachi seaside park guide map (https://hitachikaihin.jp/)

mention during the busy season. In terms of area, even if the three areas of Miharashi, west exit, and pleasure garden are combined, it is approximately 20–30% of the entire open area of the park. Compared to these three areas, the forests, dunes, grasslands, and south exit areas are considerably quieter. Hitachi Seaside Park is treated as one of the largest tourist spots in Ibaraki Prefecture and Hitachinaka City. If you look at the tourist information of Ibaraki Prefecture on various websites and magazines, almost without exception, the Hitachi Seaside Park is the largest tourist spot. In the “Ibaraki Prefecture Tourism Promotion Basic Plan” (Ibaraki Prefecture 2016), which is a five-year plan formulated in March

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2016, “Tourism resources unique to this prefecture,” Hitachi Seaside Park is positioned as a “resource that has become a symbol of the attraction of tourism in this prefecture” and promotes the branding of tourist destinations. It is considered a tourism resource that is strategically and intensively marketed. According to the “2018 Tourist Dynamics Survey” by Ibaraki Prefecture, the annual number of visitors in Hitachinaka City in 2018 was 3,921,600 (Ibaraki Prefecture 2016). While the population of Hitachinaka City is about 150,000, the annual number of visitors to Hitachi Seaside Park was 2,278,061 in 2018. This indicates its significance and importance.

2.3

Hitachi Seaside Park During the Coronavirus Pandemic

Hitachi Seaside Park was forced to temporarily close during the first and fifth waves of the new COVID-19 pandemic. The first was 57 days from April 4 to May 31, 2020, which coincided with the park’s busiest season that attracts about half of the annual visitors. This year, two major events, Rock in Japan Festival, which has continued since 2000, and Kokia Light Up, which has continued since 2012, have been canceled, and the annual number of visitors is less than 40% compared to the previous year. The second closure was for 33 days from August 18 to September 19, 2021 at the time of the water play plaza, which had opened for the first time in 2 years and was busy, and it was. However, as with last year, it was already decided to cancel the large-scale event, as it was not the time for the park to attract visitors. Even during the coronavirus pandemic, other seasons, including the busy season in autumn 2020 and the busy seasons in spring and autumn in 2021, the park continued to open as usual, but the number of visitors was largely dependent on the number of coronavirus infections. In the fall of 2020, when the infection situation was relatively calm, the number of visitors exceeded the number of visitors in the fall of the previous year, which was greatly affected by the typhoon, thanks to the support of the “Go To Travel campaign.” However, in the spring of 2021, priority measures such as a state of emergency and prevention of spread were announced mainly in Tokyo. As a result, looking at about 10 days in “Golden Week” (Japanese holidays from the end of April to the beginning of May), it decreased to approximately 170,000 compared to approximately 580,000 in 2019. In particular, the number of tour-type group visitors, including inbound tourists, has decreased significantly compared to before corona, and the situation has not yet recovered. At the opening of the park, various measures against coronavirus infectious diseases were implemented. Table 2.2 summarizes the measures taken to prevent the spread of the new coronavirus infection published on the Hitachi Seaside Park website as of January 31, 2022. These contents almost overlap with the contents of the “Guidelines for preventing the spread of new coronavirus infections in amusement parks and theme parks” created based on the government’s “Basic Policy for Countermeasures against Coronavirus Infectious Diseases.” In addition, at Miharashinooka, where visitors are particularly concentrated, an hourly advance

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Table 2.2 Countermeasures against new coronavirus infectious diseases in Hitachi Seaside Park Requests to visitors • Temperature measurement before coming to the park • Refrain from visiting the park if you: – Have a fever (37.5 °C or higher), suffering from poor physical condition – Had close contact with people positive for new coronavirus infections – Are living with people who are infected or those close to you who are suspected of being infected – Are residents of prefectures who are issuing a state of emergency based on the policy of Ibaraki Prefecture • Inform the staff when you feel sick in the park • Leave the park if fever or poor physical condition is observed • Observe coughing etiquette including wearing a mask (however, putting on and taking off a mask as appropriate to prevent heat stroke) • Keep a distance from other visitors in the park • Use disinfectants in various parts of the park and encourage hand washing • Recommended by the national contact confirmation app “COCOA” and the contact notification system “Ibaraki Amabie-chan” in Ibaraki Prefecture Main infection control measures • Disinfectant dispensers are installed in various places in the park such as entrance gates, restaurants, and cycle centers • Displays reminding visitors to keep a certain interval in places where queuing is likely to occur, such as in front of ticket machines and attraction facilities • Install vinyl curtains at checkout counters, etc. • Install vinyl curtains in front of the cash register • Temperature measurement when boarding the “seaside train” (bus in the park) • At the attractions of the Pleasure Garden, we will reduce the number of occupants each time and carry out regular disinfection • In addition to reducing the number of seats and ensuring thorough ventilation at restaurants, we also offer take-out menus • Disinfection of various rental items (wheelchairs, strollers, rental cycles, etc.) • As a general rule, staff wear masks. Wear goggles, face shields, and gloves depending on the location • Cancelation of barbecue square

reservation system was introduced to climb the hill in the fall of 2020. In the spring of 2021, the number of routes in the hill increased, and one-way traffic was implemented. A numbered ticket system was also introduced for the operation of the water play plaza in the summer of 2021 to avoid crowding and close contact in the area. As for the shops in the park, measures were taken, such as opening only for take-out sales immediately after the first closure. In addition, new attempts were made from the first closure period, such as communicating changes in the state of the park on the park website via SMS and videos.

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Challenges for Large Parks in the Future

Based on the experience of being forced to temporarily close the park for a long period of 1 month or more during both the busy season and the off-season, it may be decided that the park will be closed at any time depending on the future situation. However, when considering the situation surrounding the park, it is necessary to explore options other than closing the park. One is the expectation of the role of the park in the COVID-19 pandemic. As mentioned above, expectations for parks and open spaces have been rising. At Hitachi Seaside Park, the number of people entering the park due to excursions to various schools that had to change their originally planned travel destinations increased. As a result, November, which is the off-season, in 2020, reached a record high number of visitors except for the first year of opening, and February recorded a record high number of visitors as well. This is an expression of expectations for areas other than the role of a tourist destination for a large park that is an outdoor facility and has a relatively low risk of infectious diseases under the circumstances of the coronavirus pandemic. In addition, continued opening is desired for the survival of the park. Park maintenance costs are on the rise nationwide due to aging facilities, etc. The budget is declining due to a lack of financial resources. Against this background, in recent years, park management methods that utilize private funds, technology, and knowhow, such as PFI and lease contracts, have been promoted. For example, there is the “Public Offering Installation Management System” (Park-PFI), which was newly established by the 2017 revision of the City Park Law. This is to provide incentives to build profitable facilities, such as restaurants in the park, and to utilize the profits generated from them to improve and renovate the park facilities in the surrounding area. As long as the profits of the facilities in the park are used for the maintenance cost of the park, the closure of the park directly leads to a lack of funds for the operation of the park. Given this situation, it will be necessary to find a policy to keep the park open, even if the rate of transmission of an infectious disease is increasing. The function of a park as a tourist destination is to provide an extraordinary experience, and the coronavirus restrictions are extensive and often called “unnecessary and unurgent,” and the vulnerabilities of facilities that specialize only in this tourist function are clear from the recent situation. Alternatively, the function of green or open spaces is relatively low in terms of profitability, but it is beneficial in daily life and exerts a greater effect in an emergency. Therefore, one direction is to aim for a situation where this function as greenery and open space is widely recognized and exhibited. Table 2.3 summarizes the contents of the pamphlet “New Lifestyle and Green Prescription” issued by the general incorporated association “Health Promotion Net from the Park.” This is to design a town development project that responds to the “new lifestyle” triggered by the COVID-19 pandemic from the perspective of landscape. If we set this content in the context of what will be required for future parks and has been applied to Hitachi Seaside Park, we can make the following

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Table 2.3 A new way of life and a green prescription. Recommendations from the landscape for future town development Theme A town with healthy and energetic people built around the park

Direction Urban greening leads to improved physical and mental health and ease of living Effective in preventing mental and physical illnesses

Cooperation between greenery and education that connects nature, the region, and generations

The park is a familiar nature that is open to all people regardless of generation or position Become a local resource for local exchange and nature education

Revitalization of local communities and economics through green town development

Increase in the value of parks and green spaces due to the expansion of remote work of Corona. Increase in the value of facilities and land by increasing greenery

Landscape design as a comprehensive policy

Expectations for green infrastructure with multifunctionality for a wide range of problems in community development Comprehensively handle

Concrete example Active design that improves the ease of walking in the entire city and encourages physical activity Knowledge of METs showing appropriate exercise intensity that varies depending on age, etc. Park trainer who can talk about a wide range of topics such as park use and living Health equipment that provides various exercise menus Enrichment of park green space as a place for nature education Expert Park Ranger that connects people and nature Park coordinator who connects various positions related to the green of the town Expert resource manager for proper management and utilization of living things and environment Biophilic design that creates a comfortable and creative work environment by utilizing nature A residential office within walking distance of a lush coworking space Revitalization of the local economy through the green space of the shopping district where you can touch the green while shopping Sharing of low-utilization land resources that considers housing supply together with streets and parks Formation of the core of the local community that encourages cooperation with various actors Social prescriptions that work to improve the social background that causes illness (continued)

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Table 2.3 (continued) Theme

Direction green functions in the landscape

Concrete example Comprehensive greening of parks and streets that form a green corridor with individual greenery and shades PPP/Park-PFI, which is a private cooperation to discover, regenerate, and utilize green assets

points: First, Hitachi Seaside Park has already realized or has the potential to realize most of the contents of “New Lifestyle and Green Prescription.” As mentioned above, Hitachi Seaside Park has all kinds of facilities, environments, and activities in the park. In fact, there are various exercise activities, natural education, staff, including volunteers with specialized knowledge, and local communities. It can be said that this park alone has an extremely extensive green space and functions as a public open space. Alternatively, there are items that have not been fulfilled at this time and are not easy to realize in the future, such as “touching the greenery while shopping” and “forming a green corridor with individual green shades.” This highlights the challenges faced by the Hitachi Seaside Park. Most of the functions of greenery and open spaces are completed only inside the park. It does not function, except for visitors. Many of the users enter this park by car, and they spend a certain amount of time, parking fees, and entrance fees. In other words, rather than being used in daily life, it has a strong color as a place for extraordinary experiences with a lower threshold than facilities such as other theme parks. Therefore, it can be said that the greenery of Hitachi Seaside Park and its function as an open space is the expansion of the outside of the park. For example, enriching the area outside the entrance gate of the park. Showa Kinen Park in Tokyo is a paid park like Hitachi Seaside Park. The area located at the entrance of the park called “Green Cultural Zone” has a lawn plaza of about 25,000 m2 as a free area, which is also used for various events. Hitachi Seaside Park also has a free area, such as that in front of the west gate, but its use is mostly only as a passage from the parking lot to the entrance gate (Figs. 2.4 and 2.5). Utilization of such areas will be an opportunity to exert functions in the daily lives of users, including local residents. In addition, it can be said that the most important means for the park to expand its existing functions as greenery and open space is by transmitting the value of the park to the area on a large scale and promoting its utilization. Of course, all kinds of public relations endeavors have been made to increase the number of visitors. However, it is important to present the option of utilizing the park not only as the conventional “tourist and visitor attraction” but also to companies and various

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Fig. 2.4 West entrance

Fig. 2.5 Free area outside the West entrance

organizations. If this can be done, the hurdle that separates the inside and outside of the park should be lowered, and the function of the park should be a stepping stone to spread from the inside to the outside. Although the new coronavirus pandemic has not yet shown signs of abating, its function as a green and open space is an important factor that the park provides to society regardless of the spread of the infection. For a park such as Hitachi Seaside Park, which functions as an extremely large tourist destination, it is necessary to further enhance its role in the daily life of the region and increase its social value. It can be said that this is an issue and a goal that will be re-established in the wake of the COVID-19 pandemic.

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References Hashimura C, Amemiya M, Hata T, Shimada T (2021) The relationship between changes in park use by mothers with preschool children and parenting stress of those mothers under the COVID19 pandemic. J Landsc Stud 84(5):485–490. (in Japanese) Health Promotion Net (n.d.) Health promotion net from the general incorporated association park (https://parkhealth.jp) (in Japanese) Ibaraki Prefecture (2016) Ibaraki prefecture tourism promotion basic plan (https://www.pref. ibaraki.jp/) (in Japanese) Ministry of Land, Infrastructure, Transport and Tourism, Urban Bureau (2020) Direction of town development triggered by the new corona crisis (in Japanese) Takeuchi T, Hisama A (2021) Analysis of changes in the number of park users and the facility usage restrictions in Tokyo Metropolitan Parks under the COVID-19 pandemic. J Landsc Stud 84(5): 479–484. (in Japanese)

Chapter 3

Supporting Organisations for Social Enterprises: Focus on Fundraising Fumiko Kimura, Kiyoko Hagihara, Noriko Horie, and Chisato Asahi

Abstract Social enterprises can be regarded as a new model of modern non-profit organisations (NPOs). They are working to challenge and untangle the various social obstacles we face today, such as issues relating to the environment, well-being, inequality of educational opportunities, and disparity in income distribution. Although prompt action must be taken to overcome these challenges, governments alone cannot find answers in a satisfactory manner, so social enterprises have recently stepped in and are shifting the boundaries. To accomplish their various targets from the viewpoint of sustainability, they need to earn money by generating their own business. They also need to receive contributions or investments to continue their activities. Many start-up social enterprises struggle to obtain resources such as manpower, contributions, and grants. As a support organisation for fundraising, non-profit organisations and commercial organisations can be considered. The former includes NPO banks, Shinkin Banks, community banks, etc., and the latter crowdfunding, etc. In addition, analysis support using financial data from the viewpoint of management is also necessary to improve the business management capacity of supporting organisations. In this chapter, we examine the function of the intermediate support organisation on fundraising. Social finance utilises private capital and contributes to solving social and environmental issues. In considering cases of venture philanthropy in Japan and issues of sustainable management for citizen funds, hints taken from the idea of actors and tools by Salamon’s proposal, diversification of fund procurement sources, and ingenuity to procurement methods are important. How to build empathy for the mission of social enterprises and fund providers is an issue that needs to be

F. Kimura (✉) Soka University, Tokyo, Japan K. Hagihara · C. Asahi Faculty of Urban Environmental Sciences, Tokyo Metropolitan University, Tokyo, Japan e-mail: [email protected] N. Horie Bukkyo University, Kyoto, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 C. Asahi, N. Horie (eds.), Toward Sustainable Regions, New Frontiers in Regional Science: Asian Perspectives 73, https://doi.org/10.1007/978-981-99-5667-8_3

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solved. For future intermediate support organisations in Japan, it is necessary to enhance and strengthen the function to support not only the current function—but also intermediary functions—and to foster and develop social enterprises. Keywords Intermediary · Infrastructure organisation · Social enterprises · Social finance

3.1

Introduction

A variety of actors are working on social issues that are piled up for the formation of a sustainable society. Private for-profit and non-profit organisations such as social enterprises and non-profit organisations (NPOs) are attracting attention as leaders. Social enterprises are attracting attention as business entities involved in solving today’s social and economic problems by utilising business to make a profit, rather than for charitable activities or volunteering. In addition, we mentioned the role of corporate social responsibility (CSR) and socially responsible investment (SRI), in social, economic, and environmental problems (Kimura et al. 2015, 2018). A representative example of such a social enterprise is Grameen Bank, founded by Muhammad Yunus (2007). In 2006, the bank and its founder were jointly awarded the Nobel Peace Prize (Takeuchi). Social enterprises must also have general clerical processing skills (accounting, general affairs, etc.) along with business execution. Social enterprises procure funds and human resources (volunteers, expertise, and specialised skills) and handle the issues encountered by various entities. A variety of support is required for business continuity, and the functions and roles of support need to be organised. As a support organisation for fundraising, non-profit organisations, and commercial organisations can be considered. With the former, there are NPO banks, Shinkin Banks, community banks, etc.; with the latter, there are crowdfunding, angel investment, etc. In addition, analysis support using financial data from the viewpoint of management will also be necessary to improve the business management capacity of the supporting organisations. In addition to the functions that have been provided, such as providing facilities and equipment and providing advice, the intermediary support organisation has expanded and enhanced mediation functions and enhanced and strengthened functions to support the development of supported organisations. Advice for business management is also important. This chapter summarises the support organisations (actors) and social finance (tools) that have attracted attention in recent years from the viewpoint of financing and seeks hints on the support of Japanese social enterprises in financing. In considering cases of venture philanthropy in Japan and issues of sustainable management of citizen funds, hints are taken on the idea of actors and tools by Salamon’s proposal, diversification of fund procurement sources, and ingenuity to procurement methods would be important.

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Section 3.2 defines social enterprises, explains the present circumstances (based on previous research and an overview of how social enterprises have emerged), and outlines the literature. Section 3.3 describes the overviews of social finance, and Sect. 3.4 shows its situation in the USA, Europe, and Japan. Section 3.5 examines the support of fundraising and supporters, and Sect. 3.6 shows problems and future issues.

3.2 3.2.1

Background and Previous Research Social Enterprises and their Supporters

Social enterprises can be regarded as a new model of modern NPOs. They are working to challenge and untangle the various social obstacles we face today, such as issues relating to the environment, well-being, inequality of educational opportunities, and disparity in income distribution. However, the meaning and definition of social enterprise has been discussed from various angles and is on-going (Borzaga, Kimura, Mair, OECD, Shin, Tanimoto). Kerlin (2006) presents a comparative study of social enterprise theory between the USA and Europe. Social enterprises in the USA focus on commercialisation to generate profit, and business entities (that is, in terms of socially oriented activities by for-profit corporations with social missions) are paying attention. Conversely, cooperatives are mentioned in Europe, etc., as there is no agreement on the definition, and basic data (the number of social enterprises in each country, the number of employees, market size, etc.) are not well-developed (Kimura, Yamauchi). In Japan, METI calls social enterprises ‘social businesses’, as shown in Fig. 3.1, which introduces the notion based on the two axes of ‘sociality’ and ‘profitability’ (2008). In this chapter, with reference to the above definitions, we regard social enterprises as entities that gather society’s resources to tackle challenges by solving social problems. Therefore, we define social enterprises as society-oriented corporations and business-oriented non-profits organisations. The establishment and operation of social enterprises requires support for various resources and the provision of information. However, requests from social enterprises and the goods provided by resource holders (potential resource providers) are diverse. Therefore, support from intermediary organisations is necessary to match resource holders with social enterprises. Intermediate support organisations have become important in ensuring that social enterprises’ activities are sustainable (Kishimoto). Social enterprises utilise society’s various resources to solve problems by cooperating with different entities; for example, through partnerships with supporters (Fig. 3.2). Ethics, charity, philanthropy, social responsibility, etc. are the principles of beneficiaries’ behaviour (Kimura, Tanaka). Salamon points out that a variety of institutions, organisations, and methods have also begun to focus on funding (donations, loans, investments).

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Fig. 3.1 Social enterprises

Fig. 3.2 Social enterprises and supporters

3.2.2

Intermediate Support Organisations

As well as social enterprises, there are various definitions of intermediate support organisations. Table 3.1 shows previous research of intermediate support organisations. Harada et al. (2010) pointed out intermediate functions and management support organisation (MSO) functions in the USA and infrastructure functions in

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Table 3.1 Previous research of intermediate support organisations Proposer Harada, Koki Fujii, Atsushi Matsui, Mariko

Yamauchi, Naoto

Yoshida, Tadahiko

Function Intermediate Management support organisation: MSO Infrastructure Mediation of management resources Promoting networks between NPOs Intermediary Management support organisation: MSO

Infrastructure organisation

Tanaka, Yayoi

Transaction cost reduction Evaluation function

Aoki, Takahiro

Advocacy features Management function

Remarks USA

Europe Human resources, funds, information

Mediation between resource providers, and NPOs Consultation on management, consulting Temporary staffing, education, and training Information provision, networking promotion Policy proposals such as system improvement Search cost, negotiation cost, monitoring cost For the development of the NPO itself Macro perspective using financial statistics surveys Micro perspective on individual entities

Source: Created by the author

Europe. Furthermore, regarding the current status and issues of intermediary support organisations in Japan, they point out that there are (1) many small organisations with a short history and (2) difficulty in raising funds. Consequently, the contents of the support projects are mainly enlightening NPOs, creating opportunities for exchange between NPOs, supporting the establishment of corporations, lectures, and training, etc. That is why management support functions such as provision of management resources, mediation, and consulting are weak. Yamauchi et al. (2013) regards management support functions main role in Japan to consist of the following: (1) mediating management resources (human resources, funds, information) and (2) promoting networking between NPOs. Yoshida (2004) points out three functions, similar to Harada et al., and shows the classification by support pattern (activity area specialisation type, support function specialisation type such as infrastructure maintenance activities) and establishment pattern classification (business development type, original purpose type). Furthermore, there is a case in which the intermediary support organisation may become a subcontractor for easy administration as a future task; he points out that care should be taken to ensure that the original partnership is not lost in the contract.

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Tanaka (2005) shows the cost (search cost, negotiation cost, and monitoring cost) reduction functions for providers and the evaluation functions for NPOs. Namely she defines an intermediary as a function to coordinate cooperation between NPO and resource providers, and one that reduces transaction costs, etc. required for matching. It also performs matching while conducting a credit guarantee using the evaluation function. Aoki (2015) focused on advocacy and management support. For advocacy, a macro-perspective using financial statistics surveys is shown, and for management support, an approach from a micro-perspective is used for each business entity using an evaluation system.

3.3 3.3.1

Outline of Social Finance Overview

Since 2000, funds flow for social problems has attracted more attention than traditional grant-making charities. The funds flow is expected to deliver both social return and economic outcomes (dividends, interest, etc.) and is called social finance (Hasegawa, Shin). Hasegawa (2017) shows that the birth of social finance has been led by local residents—and people with problem awareness who are trying to rectify modern social issues from a financial perspective—and has developed in different social situations. Therefore, there are also large variations in definition. In the USA it is defined to generate investments that bring social and environmental benefits as well as financial benefits. These are financial services to areas where commercial financial institutions are not profitable. Kishimoto (2015) points out various types of finance. There are many variations between donations that do not require an economic return and investments that assume an economic return, such as dividends. For example, in SRI, the investment target is determined in consideration of ethics and sociality, but the investment target is shares of listed companies. Impact investment, however, is a direct investment in social projects that produce a measurable impact. Impact investment is an investment method introduced by the 2007 Global Impact Investing Network (GIIN). It is defined as ‘investments made by companies, associations, and funds based on the intent to produce measurable social and environmental impacts, along with financial returns’. At the 2013 G8 Summit in the UK, the ‘Social Impact Investment Task Force’ was formed and attracted attention. But as well as social enterprises, there are various definitions and many proposals (Harada, Hasegawa, Horiuchi, and Salamon). Recently, SRI is often referred to as sustainable investment (investment that considers social returns in some way) and is often referred to as ESG (environmental, social, and governance) investment. Conversely, divestment (the sale of shares of a high-risk company, the opposite of investment) is an investment activity that focuses on investment risks related to climate change. The sale of fossil fuel-related stocks

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has begun in order to avoid the financial risks posed by the transition to a decarbonized society, including the tightening of regulations, technological progress, and unpredictable market changes (Mizuguchi). In 2012, a Social Impact Bond (SIB) was issued. This means that a private investor will outsource the work to a highly specialised NPO, and if the business succeeds in achieving the set goals, a portion of future administrative expenditures that will be reduced by the success will be returned to the investor. It is a public–private partnership bond investment (Table 3.2). This chapter defines social finance as financial activities that bring social and environmental benefits as well as economic benefits to society-oriented corporations and business-oriented non-profits organisations.

3.3.2

Actors and Tools

Salamon (2014) defines ‘philanthropy’ as the broadest meaning, ‘the provision of private financing for social and environmental purposes’, with the source of funding (private financing) and the purpose of using funds (social and environmental purposes). He points out that ‘a significant revolution appears to be underway on the frontiers of philanthropy, and the heart of this revolution is a massive explosion in the tools of philanthropy and social investment, in the instruments and institutions being deployed to mobilise private resources in support of social and environmental objectives’. Moreover, he has described how four important processes of changes are situated. Those are ‘the changes being achieved by the new philanthropy as (1) beyond grants, (2) beyond foundations, (3) beyond bequests, and (4) beyond cash’. The upshot is the emergence of a ‘new frontier’ of philanthropy and social investing that differs from twentieth-century philanthropy in four ways. Those are (1) more diverse, (2) more entrepreneurial, (3) more global, and (4) more collaborative. He has divided the philanthropic frontier into two major groups: the group of actors and the group of tools. The former contains the many new institutions, and the latter contains the instruments available to these actors to do their work. Salamon classifies the many new institutions into three types (Table 3.3). The first are new types of financial investment institutions that have emerged to move capital within the social impact investment market—they do not yet exist in Japan. They include five types of entities; they are ‘capital aggregators’, secondary markets, social stock exchanges, quasi-public investment funds, and a special set of foundations functioning as ‘philanthropic banks’. The second are actors that supply various forms of support to these new social impact financial institutions. They are ‘enterprise brokers’, new types of ‘capacity builders’, and a variety of supportive infrastructure organisations. Finally, there are other actors. They focus on the traditional philanthropic tools of grants but are doing so in a novel way. There are corporate-originated charitable funds, conversion foundations, online portals and exchanges, and funding collaboratives.

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Table 3.2 From SRI to ESG investment Period Eighteenth century 1920s

Region/subject John Wesley Founder of Methodist Church British and American Christian churches

1960s– 1970s

USA

1969

USA

1970

USA

1971

USA

USA

1973

USA

1980s 1984 1990s 1999 2000

USA/Europe UK Europe Japan UK

2000s

Investment management company United Nations environment program financial initiative Government financial institutions Japan

2006

2008 2008

Note Do not profit by hurting neighbours such as alcohol and gambling

Function Screening

Avoid investment in companies involved in alcohol, tobacco, gambling, weapons, etc. Social movement (civil rights movement, antiwar movement, environmental movement) Proposals of Dow Chemical Shareholders to discontinue production of napalm Campaign GM

Screening

Establishment of SRI-type investment trust, participation of small investors in SRI Shareholders of Sectarian Center for Corporate Responsibility propose to GM withdraw from South Africa Withdraw from South Africa

Expansion of fund types Ethics fund Eco-efficiency fund Eco fund launched Revision of the pension law (mandatory disclosure of investment policy) promotes SRI operation ESG investment (sustainable investment) Principles for responsible investment: PRI Impact Investment/impact bonds (SIB) Launch of vaccine bond (Japan’s first impact bond)

Shareholder behaviour Shareholder behaviour Shareholder behaviour Screening

Shareholder behaviour Community development financial institution Screening Screening Screening Screening Screening

Screening Institutional investors commit by signing Impact + return Impact + return

Source: Created by Domini (2001), Tanimoto (2007), Tsukamoto and Kaneko (2016), and Mizuguchi (2017)

Social impact investments tools include loans and credit enhancements, bonds, securitisation, equity investments, social impact bonds, insurance, socially responsible investing and purchasing, prizes, and crowd-sourcing. The increase in these

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Table 3.3 Types of actors Types Type 1 Social impact investment organisations Type 2 Social impact investment support organisations Type 3 New types of grantmakers

Organisations Capital Secondary aggregators markets

Social stock exchanges

Enterprise brokers

Capacity builders

Infrastructures

Online portals

Coporateoriginated charitable funds

Conversion foundations

Quasi-public investment funds

Foundations as philanthropic bank

Funding collaboratives

Sources: Salamon (2014)

diverse financial institutions reflects the increase in the methods used to pursue social and environmental objectives. As mentioned before, management support functions such as provision of management resources, mediation, and consulting are weak, in Japan. Type 2 actors in Table 3.3 have supporting functions for capacity building and infrastructure. Takeuchi (2015a, b) points out that Japanese social enterprises need to strengthen their business performance because of the shortage of abilities for fundraising, human resources, collaboration, and goods and services.

3.4 3.4.1

Current State of Social Finance Scale of Social Finance

As suggested in Table 3.4, Europe and the USA account for 90% of the regional sustainable/ESG investment balance. ESG investment is progressing in Europe and Table 3.4 Sustainable investment balances in 2016 Regions Europe USA Canada Australia Japan Asia (excluding Japan) Total Source: Mizuguchi (2017)

Asset balance ($1 billion) 12,040 8723 1086 516 474 52 22,890

Percentage (%) 52.6 38.1 4.7 2.3 2.1 0.2 100.0

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the USA, becouse many organisations play a leadership role. They consist of asset owners (final sources of funds such as public pensions, corporate pensions, and insurance companies), investment institutions (specialised organisations that manage the management of funds), ESG evaluation and index-related institutions, networks (PRI secretariat, etc.) (Mizuguchi).

3.4.2

Current Situation in Europe and the USA

Behind the rise of social finance in Europe are the following: 1. 2. 3. 4. 5.

Increase in financial exclusion Increase in demand for funds by social enterprises, etc. Flow of funds to support the voluntary sector EU has taken various measures with social integration as a priority policy issue Increasing interest in the social impact of corporate activities

Moreover, the government provides policy guidance and various menus (Trust Forum Foundation 2006). Typical examples in the UK are (1) public funding, (2) supporting social finance leaders, (3) support measures for depositors and investors, etc. First example is the case that the Local Investment Fund, established in 1995 by the Ministry of the Environment and private banks and companies, provides loans to promote the independence of social companies. As a support measure for the second example, there is a Phoenix Fund created by the Ministry of Trade and Industry. The funds of this fund are not provided directly to individuals or companies, but to those who provide support services to companies. The third example is a support measure for the funding entity. Specifically, a preferential tax system called the regional promotion tax credit has been created. The scheme is an idea to address investment shortages in disadvantaged areas. In the USA, ESG investment varies by region; California and New York are eager, for example. In August 2016, the California Public Employees’ Retirement Pension Fund announced an ESG investment strategy plan that required companies to reduce CO2 emissions and diversify their controls. Behind this policy is the belief that asset owners are the starting point of the investment chain and are the leading entities in ESG investment. Mizuguchi (2017) points out that ‘economic inequality’ has been cited as an important ESG issue along with environmental issues; further, awareness of ESG investment is increasing. With the expansion of ESG investment, the demand for disclosure of ESG information is also increasing. In October 2014, the EU required companies with more than 500 employees to prepare ‘non-financial statements’. In the UK, the revision of the Corporate Law in 2013 required the creation of a Strategic Report; however, small businesses are excluded. France passed the Energy Transition Act for Green Growth in 2015, requiring listed companies to disclose financial risks

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related to the effects of climate change and the methods they are using to reduce them (Mizuguchi). As described above, the USA and Europe are moving towards the institutionalisation of ESG investment information disclosure—it can be said that stewardship is emphasised.

3.4.3

Current Situation in Japan

Regarding social finance in Japan, institutional investors have begun to show interest in ESG investment after the GPIF (Government Pension Investment Fund) signed the PRI (Principles for Responsible Investment) in 2015. Mizuguchi points out that in 2017, the FSA (Financial Services Agency) revised the ‘Japan Stewardship CodePrinciples for Responsible Institutional Investors’ published in 2014 and Japan entered the ‘ESG first year’ in 2017. The provision of funds can be classified into donations, loans, and investments and loans, and the providers of funds are individuals and corporations. Concerning donations, JFA (Japan Fundraising Association) has estimated donations through questionnaire surveys since 2010 and issued a ‘Giving Japan’. Since 2013, it has been issued every other year. ‘Giving Japan 2017’ shows the results of a survey that divided donations in 2016 into three categories: (1) Themes: 221.5 billion yen; (2) Residents’ associations and neighbourhood associations: 269.7 billion yen; (3) Hometown tax payments: 284.4 billion yen. Young and middle-aged people tend to donate to Category (1) themes, and older people tend to donate to Category (2) residents’ associations and neighbourhood associations. In 2016, Japan, Korea, the USA, and the UK compared the total amount of individual donations to 775.6 billion yen (0.14% of nominal GDP), Korea to 7.900 trillion won (0.5%), the US to $281.9 billion (1.44%), and the UK is £9.7 billion (0.54%). Many studies point out that the difference between Japanese and foreign donation cultures is that participation in religion and worship has a positive effect on donation behaviour in Europe and the USA. The main motivations and triggers for donations in Japan are that the residents’ associations and neighbourhood associations are gathering, because it is every year, and it is hard to say positive things about donations (JFA). Funding other than donation includes investment and financing. Consider the comparison of household asset composition shown in Fig. 3.3 between Japan, the USA, and Europe (as of 31 March 2017). Japan has a high cash/deposit ratio. The sum of receivables, mutual funds, and stocks is 16.8% in Japan, 52.4% in the US, and 30.6% in Europe. In Japan, 16.8% of the financial asset balance of 1809 trillion yen is about 303 trillion yen, and 5.4% of investment trusts alone is about 97 trillion yen. Since institutional investors have begun to show interest in ESG investment, it can be assumed that the spread of social finance awareness and investment trusts that focus on themes such as eco-funds will work to review household financial assets.

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Fig. 3.3 Comparison of household financial assets (Japan, USA, and Europe)

When people unfamiliar with donations become aware of both ‘economic return’ and ‘social return’ that is also a characteristic of social finance, the household sector becomes interested in social finance as a fund provider. The possibility of selecting SRI, ESG investment, social impact investment, social impact bond, etc. as funding destinations may increase. ‘Giving Japan 2017’ proposes to promote social contribution education. The creation of a flow of funds towards a variety of social issues can create favourable conditions for sustainability initiatives. In particular, a favourable flow of funds can be expected for NPOs and social enterprises with a serious shortage of activity funds. Shinkin banks and credit unions are not for-profit financial institutions, but as a regional financial institution they have accumulated know-how on credit and lending and collect credit information, and can be expected to play a role as a support organisation for entities working on solving local social issues. In other words, the function as an intermediate support organisation can be expected. Conversely, Shinkin banks and credit unions are also exposed to competition from regional banks in terms of regional finance. They are expected to play a role as an intermediary support organisation in financing to solve social issues in order to demonstrate the significance of existence. According to Shinkin Central Bank’s ‘Overview and Statistics of the National Shinkin Bank, FY2016’, the number of safes at the end of March 2017 was 264, and the balance of deposits was 13,091.2 billion yen, which is the number of Japanese households shown in Fig. 3.3. It is equivalent to about 7% of the financial assets of about 1800 trillion yen.

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As a fund, it operates a fund for the establishment as ‘Shinkin no Tsubasa’, development and growth of small- and medium-sized enterprises, as of March 2017, it has 68 projects, with a cumulative investment of 2345 million yen (http://www. shinkin.org/ retrieved July 25, 2018). In the future, it would be effective for Shinkin Bank to cooperate with existing intermediary support organisations and consider co-financing with social enterprises.

3.5 3.5.1

Financing Support and Funding Sources Supporting Organisations

Social enterprises expect the effect of social finance as new instruments for mobilising private resources in support of social and environmental objectives. As shown in Fig. 3.3, Japan has a high cash/deposit ratio. New types of financial investment institutions that Salamon (2014) introduced as new actors of philanthropy do not yet exist in Japan. However, today’s social enterprises are facing difficulties in raising funds, and organisations that provide funding support in various aspects are important for Japanese social enterprises. Type 2 actors in Table 3.3 have supporting functions for capacity building and infrastructure. Therefore, this chapter focuses on those two actors. New capacity builders have emerged focusing on sustainability and scaling. Their objective is organisational sustainability and scaling. They assist organisations to develop earned-income strategies, access the new, non-grant forms of capital now available, and measure social outcomes. They fall into two groups. One group is ‘venture philanthropy’ populated by organisations that provide a combination of funding and intensive, ‘high-engagement’ technical assistance and organisational development. A second group of capacity builders are classic consultancies that have made a specialty of promoting organisational sustainability but do not themselves provide financial assistance. A substantial network of social impact infrastructure organisations has also emerged to support the work of these operating entities at a more macro, or wholesale, level. They connect the actors in the field to each other, polularise and publicise the field and thereby attract newcomers and external support, and legitimise and strengthen practices. The upshot was the infrastructure organisation called the Global Impact Investment Network (GIIN) launched in 2009. Other entities are exploring new approaches to mobilising more traditional forms of charitable activity through such mechanisms as online portals, funding collaboratives, and corporate-originated charitable funds. They make creative use of the new communications technologies to connect donors and investors directly to recipient organisations. They have three different types of valued resources: (1) financial resources, including short-term cash and long-term investment capital;

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(2) commodities, such as computer hardware and software, pharmaceuticals, and food; and (3) services, both paid and volunteer.

3.5.2

Support Method

Tokunaga (2017) states that fundraising is an English term for financing non-profits. The word is not just about financing the activity of an organisation, but also increasing the empathy and number of supporters in the process of raising funds. In addition, she has demonstrated a deep knowledge of specific financing, including donations, membership, event holdings, grants, and business income and introduces an online payment system for non-profit organisations. These settlement means are basically credit card payments, but payment by convenience store or online banking is also possible. Moreover, there is an explanation about ‘click donation’. This is a mechanism in which a supporter clicks on a banner such as ‘donate’ on the Web, and the sponsor company donates it to an organisation without any financial burden for supporters. The role of capacity building support organisations is expected to improve the fundraising ability of social enterprises. At present, the total amount of personal donations in Japan is 0.14% of GDP, so it may be necessary to consider raising funds other than donations such as loans and investments. In terms of household financial assets, cash and deposits account for 51.5% of the total, but assuming that low interest rates will continue, it will be important to utilise social finance, which is typified by an ESG investment. Japan Fundraising Association (2017) reports that individual donations pay attention to both ‘clear and effective use’ and ‘sympathy and support for activities’. In social investment, empathy will be the focus of funders. Besley and Ghatak show an approach from contract theory in collective goods (public goods) supply. They analyse collective goods suppliers as mission-oriented and using the principal-agent model to focus on the incentive structure and the role of competition in the contract between workers (agents) and employers (principals) in the mission-oriented sector. Agents in the mission-oriented sector are highly motivated, and sharing missions results in increased efficiency. Capacity building support organisations, which support social enterprises on an individual level, also play a large role in improving financing. Here, we can examine the possibility of new initiatives by Shinkin banks and credit unions. Next we consider the form of funding from the individual who is the ultimate funding provider. There are various types of personal funding, from free donations to deposits and investments for interest and dividends. Japan’s total personal donation is 0.14% of GDP, almost a tenth of the USA 14.4%. ‘Benefit-Your-Locality’ tax scheme, which began in 2008, is for donations to local governments. In that tax scheme, the tax is deducted from the inhabitant tax of the following year when the donation is made, and the income tax is deducted from the current year. As an individual, ‘return goods’ has been talked about, and interest is growing. Rather,

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Table 3.5 Form of providing funds from individuals Type Donation Benefit-your-locality’ tax scheme Social finance

Socially responsible investment (SRI) Social impact bonds (SIB) ESG investment

Form Gift Tax payment Investment

Return Tax credit, thanks Tax credit, return goods Social contribution dividend

Investment trust Stock investment Deposit

Deposit

Dividend Interest

Destination Organisation Local government Company Project Financial institution Financial institution Company Financial institution

Source: Created by the author

fundraising requires an environment that encourages the flow from donation to investment and financing (Table 3.5). Financial institutions’ CSR is said to be CSR through their main business, and PRI, ESG investment, and stewardship codes are attracting attention. Social companies, NPOs, etc. will be able to use new tools such as online donations to improve their fundraising ability, taking into account future trends in social finance utilising ICT. Institutional investors are required to act as responsible investors under the Stewardship Code. Specifically, it will become a PRI signatory and execute ESG investment. To this end, it is desirable to provide support to organisations that address social issues from the aspect of fund allocation towards the realisation of a sustainable society by utilising ESG investment tools, such as engagement, as well as ESG information disclosure. Institutional investors use ESG information disclosure to develop financial products such as funds for new supporters, mediate between funding providers and fund consumers, and engage with companies to become ‘good corporate citizens’. Guides are expected. Furthermore, with regard to fundraising, including taxation, it will be necessary to create an environment that encourages the flow from donation to investment and financing. With the development of social finance that pursues both ‘economic return’ and ‘social return’ from investments for economic purposes such as interest and dividends, it is sustainable if private funds are invested in financing and investing in social enterprises. Then it will be a flow of funds towards the formation of a safe society. In addition, the social investment broker proposed by Salamon (2014) can be expected to play a significant role in social finance.

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Issues and Future Problems

As mentioned above, Japan is said to have reached the first year of ESG in 2017 (Mizuguchi). The following are issues of social finance in Japan and issues for funders. Issues of social finance in Japan include: 1. In Japan, composition of financial asset of households focuses on savings. 2. Diversification of funding sources and ingenuity in financing methods are required. 3. It is necessary to consider the development of new methods and tax systems that enable the emergence and activities of support organisations. As mentioned above, Japan Fundraising Association (2017) reports that the issues for donors is the credit guarantee of the recipient. It reports that the importance of individual donations is ‘clear and effective use’ and ‘sympathy and support for activities’. In the case of social investment, funders focus on trust and empathy. Itoh (2015) points out the issues of business evaluation of social enterprises. In other words, in order to invest funds, it is necessary to have a basis for business results, along with to clearly account utilising resources and funds to solve problems; it also introduces the impact assessment method and the social return on investment (SROI). As pointed out by Iwasaki (2011), the use of social finance is useful when tackling the issues facing Japan. Conversely, social finance is not yet widespread in Japan. The following can be cited for dissemination: 1. To recognise the need for social finance and promote it as a policy. 2. To formulate various measures to nurture social finance leaders. 3. To establish a certification system for NPO banks so that investors can invest safely. 4. Social finance providers cofinance with general financial institutions. 5. To build networks in cooperation with various fields, such as receiving referrals from borrowers from NPOs and intermediate support organisations. As support organisations for fundraising, non-profit organisations, and commercial organisations can be considered. The former includes NPO banks, Shinkin banks, community banks, etc., the latter includes crowdfunding, etc. In addition, analysis support using financial data from the management viewpoint is also necessary to improve the business management capacity of supporting organisations.

3.7

Conclusion

In this chapter, we examine the function of the intermediate support organisation on fundraising. Social finance utilises private capital and contributes to solving social and environmental issues. In considering cases of venture philanthropy in Japan and issues of sustainable management for citizen funds, hints taken from the idea of

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actors and tools by Salamon’s proposal, diversification of fund procurement sources, and ingenuity to procurement methods are important. How to build empathy for the missions of social enterprises and fund providers is an issue that needs to be solved. For future intermediate support organisations in Japan, it is necessary to enhance and strengthen the function to support not only the current function—but also intermediary functions—and to foster and develop social enterprises. Acknowledgements This work was supported by JSPS KAKENHI Grant Number 15K00666. We would like to thank Editage (www.editage.jp) for English language editing. Note This paper is a revision to Kimura F., Hagihara K., Horie N., Asahi C. (2020).

References Aoki T (2015) Strengthening the foundation of social business. Bull Univ Aizu Jr Coll 72:21–41. (in Japanese) Domini A (2001) Socially responsible investing. Kaplan Publishing, Wokingham Harada K, Fujii A, Matsui M (eds) (2010) NPO Saikotiku heno Michi (non-profit organization). Keisoshobo, Tokyo. (in Japanese) Hasegawa K (2017) One consideration about social finance. Soc Innov Stud 12(1):101–144 Itoh K (2015) Sosharu Bijinesu no katihyouka to atarashii shakaitekitoshisyuhou (valuation of social business and new social investment methods). In: Japan Finance Corporation (ed) Social business in Japan. Doyukan, Tokyo. (in Japanese) Iwasaki K (2011) Sosharu Fainanse Takamaru Jyuyousei to Suishinsaku no Arikata (Social Finance Growing Importance and Promotion). Business & Economic Review Oct. 2011, The Japan Research Institute, https://www.jri.co.jp/page.jsp?id=20300. Retrieved 31 March 2018 Japan Fundraising Association (ed) (2017) Giving Japan 2017. Japan Fundraising Association, Tokyo Kerlin JA (2006) Social enterprise in the United States and Europe: understanding and learning from the differences. Voluntas 17(3):246–263 Kimura F, Hagihara K, Asahi C, Horie N (2015) Types of social enterprise and various social problems. Stud Reg Sci 45(1):87–100. (in Japanese) Kimura F, Hagihara K, Asahi C, Horie N (2018) Supporting organizations for social enterprises: intermediate organisation case. Stud Reg Sci 48(1):51–70. (in Japanese) Kishimoto S (2015) Diversification of philanthropy coming close to investment. Plan Publ Manage 38(3):19–24. (in Japanese) Kimura F, Hagihara K, Horie N, Asahi C (2020) Supporting organizations for social enterprises: focus on fundraising. Stud Reg Sci 49(2):51–70. (in Japanese) Mizuguchi T (2017) Environment/social/governance. Nikkei Press, Tokyo. (in Japanese) Salamon LM (2014) Leverage for goods: an introduction to the new frontiers of philanthropy and social investment. Oxford University Press, Oxford Takeuchi E (2015a) Social Buisiness no Teigi nitsuite (the definition of social business). In: Japan Finance Corporation (ed) Social business in Japan. Doyukan, Tokyo. (in Japanese) Takeuchi E (2015b) Social Buisiness Shien no Arikata (supporting social business). In: Japan Finance Corporation (ed) Social Business in Japan. Doyukan, Tokyo. (in Japanese) Tanaka Y (2005) NPO to Shakai wo Tsunagu (NPOs and Society). University of Tokyo Press, Tokyo. (in Japanese) Tanimoto K (ed) (2007) SRI to Atarashii Kigyou Kinyu (SRI and new Enterprise, Finance.) Toyokeizaishinposha (in Japanese)

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Tokunaga Y (2017) Hi Eiridantai no Shikin Chotatsu Handbook (handbook of fundraising for non-profit organization). Jiji Press Ltd., Tokyo. (in Japanese) Trust Forum Foundation (ed) (2006) Social finance. Kinzai Institute for Financial Affairs, Tokyo Tsukamoto I, Kaneko I (eds) (2016) What is social impact bond? Minerva Shobo, Tokyo. (in Japanese) Yamauchi N, Tanaka T, Okuyama N (eds) (2013) The Japanese Nonprofit Almanac 2013. Center for Nonprofit Research & Information, Tokyo. (in Japanese) Yoshida T (2004) NPO Cyukann Shien Soshiki no Ruikei to Kadai (types and issues of NPO intermediate support organizations). Soc Business Admin Ryukoku Univ 44(2):104–113. (in Japanese) Yunus M (2007) Creating a world without poverty. Public Affairs, New York

Chapter 4

Changes in the Electricity Market and the Emergence of Regional Energy Business in Japan: Toward the Realization of a Comprehensive Supply Scheme for Local Public Services Yoriko Tsuchiya

Abstract This paper introduces the current status and characteristics of regional energy projects in Japan and examines the possibility of a Japanese version of “Stadtwerke.” Approximately 100 new regional electric power companies have been created since the electricity market was liberalized. As urban residents and businesses have switched their contracts to these new power companies, the share of “electricity sold by new power companies” now accounts for 30% of the total electricity sold in Japan. Most new electric power companies specialize in retail electricity. Still, a few have entered the market from other industries, such as gas, public facility management, waste disposal, tourism, and water supply. Among the new regional power companies are municipal power companies established with investment from local governments. Many of them have been located in rural areas. The percentage of local government investment varies, and there is a variety of investments from local governments, the private sector, and mixed types. Some of the new regional electric companies are actively promoting renewable energy and are expected to play a leading role in the diffusion of renewable energy. However, several operators do not sell to ordinary households (citizens), and there are other issues to be addressed involving raising awareness among citizens and contributing to the local economic circulation. Keywords Electric power business · Local energy business · Electricity deregulation · New municipal electric power companies

Y. Tsuchiya (✉) Mejiro University, Tokyo, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 C. Asahi, N. Horie (eds.), Toward Sustainable Regions, New Frontiers in Regional Science: Asian Perspectives 73, https://doi.org/10.1007/978-981-99-5667-8_4

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4.1

Y. Tsuchiya

Introduction

Maintaining local infrastructure and public services to support the lives of citizens is a crucial issue in the context of severe local fiscal situations caused by the declining birthrate, aging population, and shrinking local governments. As a result, the supply and business operations of public and utility services provided by local governments must be more efficient. In Europe and the USA, entities considered “comprehensive regional public and infrastructure service providers” supply multiple public services through a single public utility company in each administrative area, such as a local government. The German “Stadtwerke,” which is a comprehensive supply scheme for local public services, has attracted a great deal of interest from Japanese electric utilities and administrative agencies. Japanese interest in the German model is due to two reasons: first, the Stadtwerke is a provider of a variety of public services with energy at its core; and second, it has played a role in the diffusion of renewable energy in the German electric power industry, which is committed to a nuclear power-free Germany. In addition, “decentralization” and “regionalization” in the electric power system also contribute to “decarbonization,” which is a solution to the climate change problem. For example, in the UK, the privatization of the electric power industry in the 1980s led to the centralization of domestic power sources, and the scale of the power generation business and its scale increased. In recent years, however, “regionalization” and “localization” of the energy business are being considered from all policy, technological, and business perspectives (González et al. 2021, 2022; Vernay et al. 2023). Involvement of local governments is not a prerequisite for this “regional energy system,” but it is an important issue in both the UK and Germany due to the need for partnerships and return of benefits to local communities. In Japan, the number of studies on the Stadtwerke is growing. The Ministry of Land, Infrastructure, Transport and Tourism, which manages major infrastructure, is also investigating the Stadtwerke service supply schemes as a cmprehensive infrastructure management scheme on a regional basis (2021). Morotomi (2017) provided a bird’s-eye view of the implications for Japan. Based on the failures of local government-funded public corporations and the third sector in Japan, Morotomi (2017) suggested that Japan should learn from the Stadtwerke by “establishing a public entity” that can generate profits in the energy sector, which will then be used to reinvest in the local economy and improve the lives of citizens. Laupach and Mitsui (2017) stated that a condition for establishment in Japan is to secure a stable revenue source other than the energy business, as the Stadtwerke has other revenue sources besides electricity, such as heat supply, water supply, and waste disposal business. The advantages and characteristics of Stadtwerke’s integrated supply of multiple public and infrastructure services were also pointed out by Tsuchiya and Kotani (2018). This paper focuses on the Stadtwerke as a provider of infrastructure management and public services to ensure regional sustainability. We are looking at the

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Changes in the Electricity Market and the Emergence of Regional. . .

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possibility of introducing the Stadtwerke business model in Japan as a new type of public utility that “contributes to solving regional issues” while “securing a stable source of revenue” through “maintenance and management of infrastructure by the community.” To this end, it is essential to examine the possibility of developing the energy business as a pillar of revenue to determine if a “community-based” electricity supply or electricity business can be established. With the deregulation of electric power, many electricity suppliers have been established. How many of these companies are rooted in local communities, such as the Stadtwerke, and how are they developing their business? This paper introduces the current status and characteristics of Japan's regional energy projects to date and examines the possibility of a Japanese version of the Stadtwerke.

4.2 4.2.1

Changes in the Electricity Market Resulting from Deregulation Revision of the Electricity Business Act

Since the end of World War II, Japan’s domestic supply areas have been divided into 10 regions, and 10 electric power companies in each region have supplied electricity to designated areas. However, since only the electric power companies in that region sold and supplied electricity, there was no market competition, and consumers could not choose their electricity supplier. In 1995, the Electricity Business Act was revised, and entry into the electricity market, which the major electric power companies had monopolized, was permitted in stages (Agency for Natural Resources and Energy 2023a, 2023b). Since 2000, liberalization has progressed by target category (low voltage, high voltage) according to the scale of demand, and full liberalization into the retail electricity business was completed in April 2016 (Table 4.1).

4.2.2

Status of New Entrants in Electricity Retailing

With the liberalization of electricity retailing, new entrants to the retail sector were called “new electric power companies.” Strictly speaking, this term refers to businesses that supply electricity to consumers with a contracted power of 50 kW or more through the power lines owned by the general electric utilities. Before deregulation, the 10 central electric power companies determined electricity rates by region, and consumers could not select their electric power company based on price. However, with the entry of new operators following deregulation, consumers could contract with other operators, resulting in market competition in electricity prices. In addition, for consumers, the choice of service providers and rate plans

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Table 4.1 Revision of electric utility law AY 1995

AY 2000

AY 2005

AY 2016

Details of the amendment • New market entry into the power generation business will be expanded • The wholesale electricity business entry permit system is abolished, and a new system is created under which general electric utilities procure electricity through bidding in the wholesale electricity market • The specified-scale electricity utility system is established • A system will be set up to allow companies with the ability to operate retail electricity businesses to enter the market to meet demand at specific supply points • Part of the retail electricity sector is to be liberalized • The establishment of the Specified-Scale Electricity Utility System opens the retail electricity business to large consumers with a maximum power consumption of 2000 kW or more, in addition to general electric power utilities • The rate regulation is reviewed • Rate reductions in the regulated sector will be relaxed from an approval system to a notification system • A policy vision to promote the development of distributed power sources is announced • Electricity supply to liberalized customers through their own transmission lines becomes possible • Wholesale power exchanges are created • A national market for trading private and voluntary wholesale electricity is established • The scope of liberalization of the electric power business is expanded • The market is fully liberalized in stages

expanded, allowing households, stores, and businesses to choose the most attractive service providers and plans based on their electricity consumption and time of day. In Japan as a whole, the number of contracted units of all retail electricity providers was 89 million units as of October 2022, with 26 million cumulative consumer changes of electricity companies since April 2016 (Electricity and Gas Transactions Monitoring Committee 2022). Looking at the breakdown of these switches, the majority, 77.8%, were from “major electric power companies” to “new electric power companies.” Switching from “new electric power companies” to “major electric power companies” accounted for 6.8%, and from “new electric power companies” to other “new electric power companies” accounted for 15.5%. The share of “new electric power companies” in total electricity sales in Japan reached 19.9% as of June 2022. Of this share, “low-voltage” contracts, which include households, accounted for 25.7% (Agency for Natural Resources and Energy 2023c). The share of new electric power companies by service area is the highest in Tokyo at about 30%, followed by the Kansai and Hokkaido regions at about 20% and other regions at about 10% (Agency for Natural Resources and Energy 2023c). Although the number of registered retail electric utilities has been increasing, the business environment in recent years has remained difficult for retail electric utilities in terms of management. A total of 732 retail electric utilities had been registered by

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Fig. 4.1 Change in the number of retail electricity companies

September 2022 (Fig. 4.1), which include 122 companies that “transferred their business to other companies,” 75 companies that “discontinued business or dissolved corporations,” and 23 companies that “suspended business.” We estimate that approximately 30% of all new electric power companies are in a complex business situation (Agency for Natural Resources and Energy 2023c). Of the retail electric power companies registered as of September 2022, 679 were new entrants to the sector other than the former major electric power companies. Only 36 of these companies are also in the power generation business. The traditional major electric power companies and the former wholesale electric power companies still own the domestic power supply, which accounts for 74% of the total generation of 69,942 GWh (Agency for Natural Resources and Energy 2023d). With the deregulation of electricity retailing, the retail sector purchases electricity generated from the power generation sector in the wholesale electricity market. Wholesale electricity in Japan is traded exclusively on the Japan Electric Power Exchange (JEPX). The volume of trading on the wholesale power exchange was about 2% of the total demand at the beginning of the full liberalization of the retail market (April 1, 2016), while it has remained at around 40% since 2020 (Agency for Natural Resources and Energy 2023c). The annual average price of spot transactions in the wholesale electricity market was 8.46 yen/kWh in FY 2016, immediately after liberalization; however, it has been rising in recent years, to 11.20 yen/kWh in FY 2020 and further to 13.45 yen/kWh in FY 2021, indicating that the market price continues to rise. The cold wave that hit Japan in December 2020 also increased demand for electricity due to heating demand, but wholesale electricity in the market was scarce, resulting in

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electricity shortages. The year 2021 saw a sharp increase in energy demand as the economy recovered from COVID-19 and the energy supply and demand tightened, resulting in historic energy price spikes from late 2021 onward (Agency for Natural Resources and Energy 2023e). Furthermore, the impact of Russia's invasion of Ukraine in February 2022 and the shutdown of the thermal power plant in Shinchi town due to the Fukushima earthquake in March 2022 caused wholesale prices to rise to 26 yen/kWh in August, exceeding electricity sales prices (Agency for Natural Resources and Energy 2023e). Since most retail electricity providers do not own power plants, they procure electricity from the wholesale power market. Since the difference between the selling price and the procurement price is the profit for retail power producers, higher procurement prices put pressure on their profit margins. Since the electricity prices of the new power companies are also linked to market prices, the electricity bills of consumers who sign contracts with the new power companies have also become sharply higher.

4.3

The Development of “Community-Based” Energy Systems

4.3.1

Movement to Establish Regional Energy Companies

Among the new electric power entities, some retail electric power companies have been set up by local governments and companies (Fig. 4.2). These retail companies are called “new regional electric power companies,” and those funded by local governments are named “new municipal electric power companies.” Although they are not limited to particular areas in which they supply electricity, they are power companies in which the investors are local governments or companies; thus, they focus on business development within their administrative area. These companies are similar to the Stadtwerke, public utility companies established by local governments in Germany. This section describes this regional energy business model in detail. The concept of “new regional electric power” is widespread, but its legal basis is unclear. For this reason, this report identifies 97 (as of March 2023) electric power retailers that have their headquarters in the administrative district in which they are located or that are financed by local government.

4.3.1.1

Capital Size and Main Businesses

We next look at the number of operators by capital size (Table 4.2). Entrants from the telecommunications and gas sectors, whose main businesses are infrastructure assets, are large, with capital of 100 million yen or more. However, many small

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Fig. 4.2 Number of companies by year of registration for retail electricity business

companies specialize in the electric power business, with 19 companies having capital of less than 10 million yen and 13 companies having capital of between 10 and 20 million yen. The fact that entry into the retail electricity business is possible even with a small amount of capital may have stimulated local governments to enter the electricity sector.

4.3.1.2

Capital Size and Electricity Supply (Sales)

The annual volume of electricity supplied (sold) by new electric power companies varies across firms. Of the 97 companies, 51 are small-scale operators supplying less than 20 MWh of electricity, accounting for most of the firms (Table 4.3). Some of the companies that supply more than 500 MWh are telecommunications and gas companies with capitalization of more than 1 billion yen. Most of the companies with less than 10 million yen in capital supply between 10 MWh and 20 MWh of electricity. It can be seen that the greater the capital, the larger the scale of the business. Of the 97 companies, 14 are private that are not funded by municipalities. Compare the percentage of municipal investment in the 77 companies in which the municipality has invested (Table 4.4). There are 30 companies in which local governments have more than a 50% stake; the local government leads these companies’ management. Of these, 100% (three

Capital: million yen 3.0–9.9 10.0–19.9 20.0–49.9 50.0–99.9 100.0–499.9 1000–1999 2000–4999 5000 Not disclosed Total

3 76

Electric power 19 13 23 14 4

9

1 2 2 4 4

1 2

1

2

2

1 1

Main business (new entry from other businesses) Public facility Telecommunications Gas Tourism management 1 1

Table 4.2 Number of companies by main business by capital size

2

2

Waste management

1 1

Community management

1

1

Water supply

Total 20 14 23 16 9 2 3 6 4 97

62 Y. Tsuchiya

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Table 4.3 Number of companies by scale of supply by capital size Capital: million yen 3.0–9.9 10.0–19.9 20.0–49.9 50.0–99.9 100.0–499.9 1000–1999 2000–4999 5000 Not disclosed Total

Amount of electricity supplied: MWh Less than 10 10 20 50 100 200 10 5 2 4 5 3 1 7 10 1 3 2 2 6 2 1 2 1 2 2 1 1 1 1 1 1 1 26 25 14 9 3 1

More than 500

Not disclosed 3 1 2 3 1

1 1 4 6

3 13

Total 20 14 23 16 9 2 3 6 4 97

companies) or more than 90% (one company) of the companies that mainly provide public services (public facility management, waste disposal, and water supply) are owned by local governments; that is, the municipality has complete management control. There are 28 other companies in which the local government has a small stake of less than 10%, including telecommunications (eight) and gas (three) companies. Based on rate revenues, these companies have stable management bases. There are also many electric power specialists (17 companies), some of which are funded by regional financial institutions and influential local companies, while others are funded by electric power companies or infrastructure-related companies expanding nationwide. The companies with 20–49% investment are managed in a balanced manner, with the private sector taking the initiative, while local governments are involved or cooperating in the business. As can be seen, the current state of public–private partnerships in regional energy projects in Japan is a variety of municipal-led, private-sector-led, and mixed models. Note that there are 10 companies funded by multiple municipalities: seven telecommunications companies, and one each in the electric power industry, gas business, waste disposal business, and utility management. The system in which multiple municipalities provide public services to a wide area is widespread in Japan for services such as waste disposal and firefighting. However, this model is not widely used in the electric power business, and there are few examples.

4.3.1.3

Location of New Regional Electric Power Companies

The largest number of new regional power companies was located in regional cities, with 58 companies (Table 4.5). The number of companies is almost evenly distributed: 14 companies are located in the 23 wards of Tokyo or cities with a population of 500,000 or more (government-designated cities), i.e., large cities; 13 companies

No municipal funding 1–9% 10–19% 20–29% 30–39% 40–49% 50–59% 60–69% 70–79% 80–89% 90–99% 100% Not disclosed Total

8

1 9

4 76

1 4

3

2

1

3

1 1

Main business is not electric power business Public facility Telecommunications Gas Tourism management 1 1

17 1 4 9 5 13 3 2 4 2

Electric power 12

Table 4.4 Number of companies by percentage of investment by municipalities

2

1

1

Waste management

1

1

Water supply

28 1 4 9 5 15 3 2 4 3 3 6 97

Total 14

64 Y. Tsuchiya

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Table 4.5 Number of companies by location by municipal investment ratio Government-designated cities/23 wards of Tokyo No municipal funding 1–9% 10–19% 20–29% 30–39% 40–49% 50–59% 60–69% 70–79% 80–89% 90–99% 100% Not disclosed Total

8 1 1

Major regional cities 3 5

3 1

2

2 1 14

13

Regional cities 11

Local towns and villages

Total 14

15 1 3 3 4 8 1 1 3 3 1 4

3 1 4 2 1 1

28 2 4 9 5 15 3 2 4 3 3 5

58

12

97

are located in major regional cities; and 12 companies are located in rural towns and villages. Not all of these areas have large populations that can be expected to generate electricity demand (i.e., attract customers). Many companies are located in rural areas because local cities and towns/villages are trying to utilize the electric power business as a source of revenue to maintain public services in the face of a significant population decline and tight local finances.

4.3.2

Characteristics of Community Energy Projects

4.3.2.1

Contract Types and Customers

Electricity contracts provided by Japanese electric power companies are defined by the “Ministerial Ordinance Establishing Technical Standards for Electric Facilities” (Table 4.6). There are three types of contracts by voltage: “special high voltage,” “high voltage,” and “low voltage.” The “special high-voltage” contract supplies electricity to “large customers” that consume large amounts of electricity, such as large-scale factories, commercial buildings, commercial facilities, railroad operators, and general hospitals. “Low-voltage” contracts are for “small consumers” such as stores and residences. The intermediate “high-voltage” contract is for supplying electricity to small- and medium-sized commercial buildings, factories, schools, kindergartens, nursery schools, public facilities, and small and medium-sized hospitals, and so on.

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Table 4.6 Legal contract types for retail electricity business in Japan Contract type Special high voltage High voltage

Low voltage

4.3.2.2

Voltage Over 7000 V for both DC and AC DC: 750 V or higher to 7000 V or lower AC: 600 V or higher to 7000 V or lower DC: 750 V or less AC: 600 V or less

Contract classification Over 2000 kW 50 kW or more

Less than 50 kW

Supply destination (customer) Large-scale factories and business buildings, commercial facilities, railroad operators, and general hospitals Medium-scale factories and business buildings, schools, kindergartens, nursery schools, public facilities, hospitals, etc. Stores and residences

Contract Type and Electricity Business Characteristics

Furthermore, by overlaying the volume of electricity supplied (sold) by each business operator by contract type with the type of customers of each business operator, the characteristics of the business can be identified (Table 4.7). Of the 84 companies whose contract type supply volume is publicly available, only three supply “special high-voltage” electricity. Two of these companies supply more than 70% of the “high-voltage” electricity, so it cannot be said that they sell significant amounts of “special high-voltage” electricity. In other words, most of the new regional electric power companies do not serve large customers such as largescale factories and commercial buildings but mainly sell to medium-sized commercial buildings, factories, general households, and stores. The ratio of “high-voltage” to “low-voltage” companies indicates whether the service is provided to businesses or households. The majority of the companies mainly sell to businesses: “only high pressure (10 companies),” “mostly high pressure (33 companies),” and “high pressure 50–79%” (23 companies). Therefore, it is evident that only a handful of companies sell to general households. However, although the number of companies is small, with “only low voltage” (eight companies) and “mostly low voltage” (two companies), the supply volume of these companies is large at more than 500 MWh, indicating that their business scale is large.

4.3.2.3

Characteristics of New Municipal Electric Power Companies

We will next examine the types of electric power businesses being developed by the electric power companies in which local governments have equity stakes (Table 4.8). The number of companies on the scale of supply for each investment ratio shows that there is no difference in the scale of supply by investment ratio. Some “highvoltage” companies have a high percentage of local government investment, while others have a low percentage.

◎ main, 〇 many, △ few

Supply characteristics Special high-voltage majority High pressure 70% and the rest special high pressure High pressure 100% High-voltage majority High pressure 50–79% and the rest low pressure Half high pressure and half low pressure 50–79% low pressure and the rest high pressure Mostly low pressure Low pressure 100% Total

△

26

◎ ◎

△

25

1 14

1

1 1 9

1

◎

1

〇

1

〇

〇

4 7 3 1

3 7 13

△ 〇

◎ ◎ ◎ 2 15 9

2

Shops and residences

1 3

1 1

Amount of electricity supplied: MWh Less than 10 10–19 20–49 50–99 100–199 1

◎

Type of electricity contract Large-sized Medium-sized “factories” and “factories” and “office buildings" “office buildings” ◎ △

Table 4.7 Number of companies by volume of electricity supplied (sold) by contract type

1 1

200–499

5 6

1

More than 500

2 8 84

2

3

10 33 23

2

Total 1

4 Changes in the Electricity Market and the Emergence of Regional. . . 67

Special highvoltage majority High pressure 70% and the rest special high pressure High pressure 100% High-voltage majority High pressure 50–79% and the rest low pressure Half high pressure and half low pressure 50–79% low pressure and the rest high pressure Mostly low pressure Low pressure 100% Total 14

26

2

1

1

70–79%

4

1

3

80–89%

3

1

1

1

90–99%

3

2

1

100%

1

3

22

33

10

2

Total 1

81

7

1

1

60–69%

7 3

7

5

1

1

50–59%

2

8

1

2

40–49%

2

4

1

1

13

6

5

1

3

6

30–39%

6

3

20–29% 1

4

0

10–19%

3

1

1–9%

Percentage invested by the municipality

1

No municipal funding

Table 4.8 Number of companies by supply scale by municipal investment ratio

68 Y. Tsuchiya

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Changes in the Electricity Market and the Emergence of Regional. . .

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The investment ratio was low for those supplying only “low voltage,” i.e., those that only sell to stores and residences. These are new entrants from the telecommunication industry. Entrants from other industries whose main businesses are gas, waste disposal, public facility management, and tourism are mainly engaged in “high-voltage” electricity sales. The reality is that in Japan today, even with the involvement of local governments in management, electricity supply to ordinary households is almost nonexistent. Japan's new municipal electric power companies are different from Germany’s “Stadtwerke” model, which enjoys a high degree of trust from citizens.

4.3.2.4

Characteristics Revealed by Electricity Supply Volume

The characteristics of electricity supply are identified in terms of (1) whether electricity is supplied to public facilities, (2) whether electricity is supplied (sold) to households, and (3) whether electricity derived from renewable energy is procured (Table 4.9). New electric power companies that supply less than 100 MWh, i.e., small-scale, supply about 80% of their electricity to public facilities. Small- to medium-scale operators account for about 70% of sales volume. Eighty-one percent (68 companies) of all companies “have a renewable energy procurement as a feature of their operating companies (advertised)” or “have a contract type (product) that guarantees supply from renewable energy sources, including renewable energy feed-in tariffs.” Regardless of the size of their supply, these companies appear to be proactive in procuring renewable energy. In addition, there is a movement to procure energy derived from local natural resources or from power plants in the region. New regional electric power companies in Japan generate revenue from the sale of electricity to public facilities in the region, indicating the significance of local Table 4.9 Number of companies by the amount of electricity supplied (by supply to public facilities, retail for households, and procurement of renewable energy)

Amount of electricity supplied: MWh Less than 10 10 20 50 100 200 More than 500 Total

Electricity supply to public facilities Ratio Number (%) 25 96 19 76 12 86 7 78 1 33 0 1 17 68 81

Electricity retailing to households Ratio Number (%) 18 69 18 72 7 50 6 67 2 67 1 100 6 100 56 67

Procurement of renewable energy Ratio Number (%) 17 65 19 76 10 71 7 78 3 100 1 100 5 83 68 81

Total Number 26 25 14 9 3 1 6 84

Ratio (%) 100 100 100 100 100 100 100 100

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governments’ investment in the electric power business. Furthermore, not all companies are actively engaged in promoting renewable energy and can be expected to play a leading role in the diffusion of renewable energy. However, some companies do not sell electricity to households (citizens), and there are issues to be addressed regarding raising awareness among citizens and contributing to the local economic cycle.

4.3.3

Management Status of New Electric Power Companies Financed by Local Governments

For some of the new regional electric power companies in which local governments have invested, business reports are publicly available. Thirty-two companies whose business income and expenditures for FY2021 are publicly available confirm the management status of the municipal new electric power companies (Figs. 4.3 and 4.4). Eighteen of the 32 companies have deficits in ordinary income and expenditures in FY2021. Looking at the percentage of investment by local governments, nine of the 11 companies with an investment ratio of 50–59% are profitable. However, companies that suffer losses are distributed regardless of the investment ratio. Although, significantly, the new municipal electric power companies use their earnings as a financial resource for the supply of public services, the reality is that half of the companies are in the red in a single year, and this should be monitored closely. The maximum deficit was approximately 200 million yen, and the maximum surplus was 500 million yen. However, the size of the surplus is not so large, with many of the 10 firms having a surplus of less than 30 million yen. The size of the deficit varies, but about half (eight companies) have a deficit of less than 10 million yen.

Fig. 4.3 Current income and expenditure by municipal investment ratio in 2021

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Fig. 4.4 Balance of payments by main business type (by monetary scale of surplus and deficit)

Companies whose main business is waste disposal are profitable, and those with a surplus of 500 million yen are located in urban areas. Companies whose primary business is tourism are also running a profit, while those in the public facility management and water supply businesses are in the red.

4.4

Conclusion

This chapter clarified the institutional transition of the liberalization of the electricity market in Japan and the resulting trends in the establishment and management of local energy companies. Approximately 700 companies have entered the retail electricity business since 2015. The switch to new electric power by urban residents and businesses has been progressing, and the share of “new electric power companies” of the total electricity sales in Japan reached 19.9% as of June 2022. However, the business environment has been difficult in recent years due to soaring international prices of energy resources (import prices). Approximately 30% of the new operators have already transferred or ceased operations.

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Of the new electric power companies, 97 are new regional electric power companies. Most (76 companies) specialize only in electricity retailing, but a few have entered other sectors, such as gas, public facility management, waste disposal, tourism, and water supply. Among the new regional power companies are new municipal power companies that have been founded with investment from local governments. Many new regional power companies have been located in regional cities and other rural areas. The percentage of local government investment varies, and there is a variety of local government-led, private-sector-led, and mixed types. Many new regional electric power companies have contracts to supply “high-voltage electricity.” Their principal source of revenue is from sales and supply to small- and medium-sized commercial buildings and factories. Few companies focus on sales to large customers, such as large-scale factories and commercial buildings, or to residences and stores. Regarding the management of new municipal electric power companies, only about half are profitable in a single fiscal year. Even those that are profitable are not in the business of generating high profits, with revenues in the tens of millions of yen. Therefore, it is not easy to “make the energy business a pillar of earnings” as envisioned in the Japanese version of the Stadtwerke. However, many entrants from other industries, such as gas and telecommunications, have large supply (sales) volumes and are profitable. It is thought that they are achieving synergies with the electric power business by charging fees for multiple enterprises, thus, appealing to existing customers. Considering that it is still too early to evaluate the results of many companies that have only been in business for a short period as well as the recent deterioration in the energy business environment, we have not yet presented an energy company as a pillar of revenue, according to the concept of a Japanese Stadtwerke. However, it is possible to clarify the management situation and business characteristics of regional energy companies by taking an in-depth look at the changes in their financial conditions over time from the published financial data of the new municipal electric power companies. Therefore, in the future, we will first identify the business requirements of each operator to achieve a single year surplus in the current account balance of the new regional power company. Furthermore, to establish a stable management base, we would like to examine ways of collaborating that will enable wide area and multi-layered business development, such as interregional and interoperator collaboration.

References Agency for Natural Resources and Energy (2023a) Full liberalization of electricity retailing (in Japanese). https://www.enecho.meti.go.jp/category/electricity_and_gas/electric/electricity_ liberalization/ Agency for Natural Resources and Energy (2023b) Electricity utilities system. (in Japanese). https:// www.enecho.meti.go.jp/category/electricity_and_gas/electric/summary/

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Agency for Natural Resources and Energy (2023c) Progress in the full liberalization of electricity and gas retail trade. (in Japanese). https://www.meti.go.jp/shingikai/enecho/denryoku_gas/ denryoku_gas/pdf/054_05_00.pdf Agency for Natural Resources and Energy (2023d) Electricity survey and statistics. Statistical tables for FY2022. (in Japanese). https://www.enecho.meti.go.jp/statistics/electric_power/ep002/ results.html Agency for Natural Resources and Energy (2023e) Ministry of Economy, Trade and Industry. Energy White Paper 2022. Section 2: Global Energy Price Spike and Russian Aggression in Ukraine. https://www.enecho.meti.go.jp/about/whitepaper/2022/html/1-3-2.html Electricity and Gas Transactions Monitoring Committee (2022) Ministry of Economy, Trade and Industry. Electricity transactions. (in Japanese) González FF, Webb J, Sharmina M, Hannon M, Pappas D, Tingey M (2021) Characterising a local energy business sector in the United Kingdom: participants, revenue sources, and estimates of localism and smartness. Energy 223:120045 González FF, Webb J, Sharmina M, Hannon M, Braunholtz-Speight T, Pappas D (2022) Local energy businesses in the United Kingdom: clusters and localism determinants based on financial ratios. Energy 239:122119 Laupach, Mitsui (2017) Germany Stadtwerke’s strategy for responding to the changing European energy market. Econ Rev 190(4):13–37. (in Japanese) Morotomi (2017) On the special issue of ‘Renewable Energy and Stadtwerke’: the creation of municipal energy utilities in Japan and its significance. Econ Rev 190(4):1–12. (in Japanese) The Policy Research Institute for Land, Infrastructure, Transport and Tourism (2021) Research on efficient regional management of infrastructure and public services. National Land Transport Policy Research 159, Tokyo. (in Japanese) Tsuchiya, Kotani (2018) Research study on sustainable regional infrastructure and public services kick-off of the Stadtwerke study in Germany. PRI Rev 71:48–55. (in Japanese) Vernay A-L, Carine S, Fabrice A (2023) Energy community business models and their impact on the energy transition: lessons learnt from France. Energy Policy 175:113478

Chapter 5

The Institutional Design of a Comprehensive Supply Scheme for Sustainable Local Public Services: Theoretical Considerations and Case Study of Stadtwerke Chisato Asahi and Yoriko Tsuchiya

Abstract For the sustainability of a region with a declining population, the maintenance, renewal, and operation of regional infrastructure and public services to make them sustainable have become an important issue against the background of a weakening regional economic structure and tight public finances. In recent years, the realization of multidimensional and inclusive social values, as represented by the SDGs, has been recognized as a requirement for sustainability. Moreover, efforts are being made to maximize the social value of local resources through public–private partnerships and area management for the supply of local public services. Regarding new supply schemes for local public services, some seek economies of scale for a single service, as typified by the wide-area development of projects, and others comprehensively supply multiple services, such as some forms of Private Finance Initiative (PFI) and comprehensive partnership agreements. This chapter examines a theoretical model that allows for the assessment of social welfare in relation to a comprehensive supply scheme to reconcile the dual goals of public value and efficient operation. Concerning the efficiency of a multiple-service supply scheme, a case is assumed in which the government outsources the supply of multiple services to private companies through public–private partnerships, and a contract theory framework focusing on agency costs and business risks among transaction costs is examined. These theoretical results are examined qualitatively through two rounds of Stadtwerke surveys. Keywords Public service · Contract theory · Stadtwerke · Multi-utility service company · Public–private partnerships · Transaction cost

C. Asahi (✉) Faculty of Urban Environmental Sciences, Tokyo Metropolitan University, Tokyo, Japan e-mail: [email protected] Y. Tsuchiya Mejiro University, Tokyo, Japan © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 C. Asahi, N. Horie (eds.), Toward Sustainable Regions, New Frontiers in Regional Science: Asian Perspectives 73, https://doi.org/10.1007/978-981-99-5667-8_5

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Comprehensive Supply of Public Services

Many infrastructures, such as water supply, sewage, electricity, and transport, have been managed as regulated industries because they are networks or natural monopolies. In recent years, however, against the background of population decline, the replacement of aging facilities under financial constraints, decarbonization, basin flood control, digital transformation (DX), etc., a change to flexible and diverse business management methods that differ from the previous institutional framework is being sought, such as the integration of water supply and sewage systems and comprehensive management of public facilities. One of the directions of this transformation of business operation methods is “integrated infrastructure,” where multiple infrastructures are operated in an integrated manner on a regional basis. According to McLean (2017), in today's discussions on sustainable cities, the integrated management of infrastructure has been highlighted as bringing benefits of' “maximizing return on investment,” “minimizing technical renewal costs,” “providing services that satisfy citizens’ needs,” and “global public benefits,” such as combating climate change. Asahi et al. (2020) conducted a case study on the scheme and governance of Stadtwerke (city works) in Germany to examine the management approach to make local infrastructure and services sustainable. Stadtwerke is a public utility that comprehensively manages infrastructure and public services on a municipal basis. It provides citizen services at an appropriate price by achieving synergies through a diverse mix of projects. Such Stadtwerke schemes are considered to fall under the five forms of infrastructure integration classified by McLean (2017): “organizational,” “technological,” “sectoral,” “geographical,” and “social” levels of integration. That is, at the organizational level, it is a Multi-Utility Service Company that provides a single point of contact for consumers, whereas at the “social” level, it feeds back user information obtained from the supply and management of multiple services and provides region-specific services through user-collaborative service supply value. In the operation of such comprehensive public service provision on a regional scale, how should the system of service provision by combining multiple projects be evaluated? From the standpoint of regional sustainability, the integration of provision should be evaluated not only in terms of cost efficiency and financial balance, but also in terms of social efficiency, which includes transaction costs associated with the collaboration of multiple actors, such as public–private partnerships (PPP), the quality of services provided and environmental externalities, and disaster prevention. In particular, local public services are expected to contribute to the sustainability of services and the improvement of local issues through PPP and institutional design involving local economic actors. Therefore, this study supports Iossa (2015), who used contract theory to model the efficiency of vertical integration of infrastructure projects through PPPs, and presents a model to evaluate horizontal integration of public service supply projects from the perspective of incentive design. Moreover, the implications of the model are discussed in The Policy Research

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Institute for Land, Infrastructure, Transport and Tourism (2021), and those of the model using the Stadtwerke case study reported in it are examined.

5.2

Business Integration Models

In the supply of public services through PPPs, the government outsources the project to a private contractor or other party; therefore, the distribution of profits from the project, the affiliation of the project assets, the supply stage, and the risk allocation of demand through contracts and other systems must be stipulated. In such cases, the government, which is obliged to supply public services, is the information-dominant contractor, whereas the private companies implementing the project are informationdominant trustees. Furthermore, multitasking problems arise when multiple projects are combined and outsourced, such as the construction of infrastructure including facilities and the operation of service supply, or the operation of water supply and sewerage projects together. The optimal contract theory framework, which assumes moral hazard due to information asymmetry, is suitable for examining the system in such situations. Iossa (2015) states that PPPs need to consider the perspectives of (1) integration of operations (bundling), (2) risk transfer, and (3) long-term contracts. They also need to assess the efficiency of outsourcing integrated facility construction and service supply operations using a model based on optimal contract theory. One of the factors influencing efficiency here is the externality of the additional investment in the facility in the construction project (improved quality) on the costs of the service supply project. A positive (negative) externality is considered to exist if the additional investment in the construction project of a facility lowers (increases) the costs of the operational project of service supply; if a positive externality exists, social welfare is greater if the construction and operation of the facility are ordered in one package than if they are ordered from separate operators. In this study, the vertical business integration model of Iossa (2015) is applied to horizontal business integration to examine the efficiency of inclusive supply schemes. The government outsources the business of supplying public service x1 to a private operator. The benefits and costs of one unit of x1 are then influenced by the quality of another public service x2. The decision is then made based on social welfare regarding whether x1 and x2 should be commissioned separately or integrated.

5.2.1

Benefit

The user benefit B generated by one unit of x1 is expressed as follows:

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B = b0 þ be1 þ de2 þ η

ð5:1Þ

where b0 represents the basic benefits derived from service x1. The benefits are influenced by e1, the operator’s effort to improve x1 and e2, and the effort to improve x2. b and d are the marginal benefits of the quality improvement effort (b ≥ 0, d ≥ 0) and η is a random shock (assuming a standard normal distribution with mean 0 and variance σ 2η ). Here, when d > 0, d is a parameter representing a positive externality because a quality improvement in x2 increases the benefits of x1. If d = 0, the quality improvement effort in x2 has no effect on the benefits of x1. For simplicity, we do not consider the case of negative externalities (d < 0), in which e2 decreases B.

5.2.2

Cost

The supply cost C of one unit x1 is expressed as follows: C = c0 - γe1 - δe2 þ ε

ð5:2Þ

where c0 represents the basic cost of supplying service, x1. The cost is also affected by the operator’s effort to improve the quality of x1, e1, plus the effort to improve the quality of x2, e2. γ and δ are the marginal costs of quality improvement effort, with γ ≥ 0, δ ≥ 0, or δ ≤ 0. Assume that the quality improvement effort of x1 decreases the cost of supplying x1, whereas the quality improvement effort in x2 may increase or decrease the cost of supplying x1. When δ > ( 0′ in Table 5.2 (survey content in Table 5.4) are presented in Table 5.7. Regarding the effect of quality improvement efforts in unprofitable businesses on profitable businesses and their extent (positive externality between businesses), the items on the relationship between the implementation of loss-making businesses and profitable businesses confirm whether the items on the relationship between loss-making businesses and profitable businesses support the model's suggestions. However, concerning the relationship between undertakings, general economies of scope (e.g., efficiency gains through joint procurement) are excluded. Concerning the absolute risk aversion of the undertaking and its magnitude of uncertainty, the model primarily examines items related to organization and governance (e.g., organizational structure and supervisory board involvement). In terms of government transfer payments, we primarily examine items related to the relationship between local governments and Stadtwerke and the involvement of the supervisory board.

5.4.3.2

∂B = d ≥ 0/δ < - d Positive Externalities Between Businesses: ∂e 2

In Stadtwerke, the relationship between the implementation of loss-making projects and profitable projects revealed three incentives for the continuation and investment in loss-making projects: (1) the tax break-even system; (2) administrative supply obligation rules and public interest; and (3) branding and securing local demand. However, there were also responses regarding (4) factors that do not lead to the continuation of and investment in loss-making projects.

Taxation System of Profit and Loss • A mechanism whereby other loss-making businesses compensate for the profits from the energy business by transferring the profits and losses of the interbusiness or loss-making subsidiary to the parent company. Offsetting profits and losses also reduces profits, thus leading to tax savings (Stadtwerke Oerlinghausen/Stadtwerke Iserlohn/Eichsfeldwerke/Stadtwerke AnnabergBuchholz).

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Table 5.7 Correspondence between business integration model and interview items

e2 > 0 (1)

∂B ∂e2

(2)

δ< -d

(3)

r σ η2 þ σ ε2

(4)

t(Π) > Π g(e1) h(e2) > 0

=d≥0

Conditions relating to quality improvement efforts in unprofitable projects Quality improvement efforts in unprofitable operations have a positive effect on the benefits of profitable operations → Implementation of deficit projects and relationship with surplus projects Quality improvement efforts in unprofitable operations lead to an increase in marginal benefits that more than offset the increase in marginal costs to profitable operations → Implementation of deficit projects and relationship with surplus projects Absolute risk aversion of operators, the higher the uncertainty of benefits and costs of profitable projects, the lower the quality improvement efforts of unprofitable projects → Degree of marketization and economic focus → Risks related to profitable businesses The transfer payments from the government cover the difference between the “cost of quality improvement efforts in profitable and unprofitable projects” and the “income and expenditure of profitable projects” → Relationship between regional governments and the Stadtwerke → Involvement of regional governments on deficit projects

Relevant interview items As deficit businesses are actualized in all cases, conditions (1) and (2) are both tested in terms of the relationship between deficit and surplus businesses • Project overview and interproject supplementation • Stadtwerke and local communities • Economic benefit

• Organizational structure and its relationship to the size of the local authority • Invested company • Involvement of the Supervisory Board

As there are not necessarily direct transfer payments (only projects such as concessions and voluntary contracts), the organizational relationship between the regional government and the Stadtwerke is also included. • Stadtwerke and local authorities • Involvement of local authorities • Involvement of the Supervisory Board • Transparency and accountability

• Corporate income tax savings from the tax profit and loss account are approximately EUR 70,000, which can be returned to the region (Stadtwerke Nürtingen). • Because DREWAG is profitable, the losses of other affiliated companies in the transportation and swimming pool businesses are passed on to the Holdings as a whole (DREWAG–Stadtwerke Dresden).

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Administrative Supply Obligation Provisions/Public Interest • The reason for the commissioning of loss-making projects (e.g., trams) is because, although they are loss-making projects, the Stadtwerke is owned by the city and the city is obliged to implement transport projects. It is included in the business purpose of the Articles of Association and is essentially an obligation (Stadtwerke Ulm/Neu-Ulm). • School buses, for example, operate according to the administration’s basic policy, even in areas with few users, as this is a service commissioned by the city (Wuppertaler Stadtwerke). • Public interest is assessed when investing in the economic impact on the community. Before investing, even if the investment is deemed unprofitable, it is determined whether it is politically significant to provide the service, and if so, it is brought before the supervisory board (Stadtwerke Ulm/Neu-Ulm). • As a company and loss-making business, it is necessary to provide public services as a matter of social responsibility (Stadtwerke Iserlohn).

Branding and Securing Demand from Local Communities • The company has increased its presence in the region through various means, including branding through advertising, symbolic colors, and merchandise sales, in addition to funding professional sports teams and events in the region. Publicity is also heavily emphasized, with posters and brochures explaining “Why ‘Stadtwerke is better’” (Stadtwerke Iserlohn). • Many citizens choose Stadtwerke (even if the electricity and other retail prices are slightly higher than other companies) because of its roots as a local company, including support for community and school events (City of HeilburtHeiligenstadt). • It has the city’s largest market share of all electricity distributors, accounting for 80% of the total. Citizens choose us even though we charge more than others because they know we are investing in the cultural and social facilities of the city (Stadtwerke Annaberg-Buchholz). • The installation of feeding stations in underpopulated areas is recognized as important from a marketing (brand-building) perspective, even if it is not profitable (Stadtwerke Nürtingen). • Green is the company’s symbolic color, and green buildings in the city are associated with Stadtwerke. In this way, the company also focuses on branding and making its citizens aware of the company (Stadtwerke Annaberg-Buchholz). • As listed companies, economic efficiency comes first. In addition, it does everything it can do for local companies. Although not required by the city, MVV Energie works in smart cities and other projects, taking advantage of its community-based nature (MVV Energie).

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Factors that Do Not Lead to the Continuation of Loss-Making Projects and Investment • Sewerage projects are not subject to VAT (Mehrwertsteuer) in the tax system, but are managed by local governments, as GmbH would have to charge VAT if they were implemented (which would result in higher user fees) (Stadtwerke Nürtingen). • At the time of listing, energy and transport are separated, with energy being listed and transported, a loss-making business that continues to be held by the city as the share price does not increase. However, the revenue of the energy business is allocated to the city’s transport business through dividends. In the case of AG, it is not possible to put provisions in place that would give an advantage to one shareholder, and Mannheim understands that it relinquished control of Stadtbergke by the city when it was listed (MMVV Energie). • The city’s involvement has decreased but become more mobile. Moreover, the city rarely communicates management intentions to the Stadtwerke. It is acknowledged that the Stadtwerke plays an important role in earning a decent return. Because other shareholders are present, it is critical to seek economic efficiency. Dividends to local governments are mostly used for public transportation, swimming pools, and so on (MMVV Energie). • The company pays dividends to the city to the extent that it can ensure an equity ratio of at least 30%, and the dividends are used to supplement the pool project (Stadtwerke Nürtingen).

5.4.3.3

Absolute Risk Aversion of Operators and Uncertainty About the Benefits and Costs of Profitable Operations: r σ η2 þ σ 2ε

Absolute Risk Aversion of Operators Many of the responses related to the separation of ownership and management, i.e., a structure in which local governments contribute to capital stability by investing in the company, but this does not force them to carry out unprofitable business operations, as a factor that reduces the degree of risk aversion of the operators. Because the board of directors, which is subject to the decisions of the general meeting of members, and the supervisory board are separate bodies, the GmbH’s corporate form allows the supervisory board to make decisions based on economic rather than political criteria. This system enables management decisions to take necessary investment risks without taking unnecessary risks as a private company. Meanwhile, the corporate form of AG instead of GmbH contributes to a lower degree of management risk aversion in that day-to-day management decisions can be made more independently and quickly, but the local authorities only have the authority as a single shareholder and have less power to assert the public interest as

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an administration in the supervisory board. In this regard, lower risk aversion may not be an inducement to continue unprofitable operations. • Governance engagement as a city through investment (Stadtwerke Nürtingen et al.). • As the company is only a legal entity under private law, management decisions that would undermine the company’s interests, even if requested by the government, are made with caution (from the first case study summary). • Stadtwerke and others are general companies whose mission is to pursue profit, so it is assumed that they should not make a loss (from the first case study summary). • If the demands of the city/council and profitability of the Stadtwerke do not necessarily coincide, the Stadtwerke cannot force the city/council to do what the city/council wants (City of Erlinghausen). • The terms and conditions of the contract between Stadtwerke and the city do not contain any restrictions on management but only supportive clauses (Stadtwerke Ulm/Neu-Ulm). • The city’s control was based on articles of associations. The articles of the association stipulate the obligation to provide access to electricity, gas, and water to all residents in the city. Additionally, investments can only be made in projects with economic potential. The holding company has a supervisory board that supervises the city (DREWAG–Stadtwerke Dresden). • Involvement of the city council and supervisory board in the execution of management is limited. In particular, the city council was not directly involved in the management of Stadtwerke. The supervisory board only has the right to consent to business matters and has no authority over the execution of management (Stadtwerke Nürtingen). • DREWAG has a Supervisory Board, but it has little power, and the General Meeting of Members serves as an alternative to the Supervisory Board (DREWAG–Dresden City Works). • The reason for using AG rather than GmbH is that the management team can make day-to-day management decisions independently if they are not critical, allowing for more agile management than a GmbH. As a for-profit company, we want to actively develop our business and operate in a competitive environment without our shareholders’ political involvement (the city) (Holding Stadtwerke Frankfurt).

Uncertainty About the Benefits and Costs of Profitable Projects Concerning business risks, there were responses to the effect that business risks are reduced through a system in which local authorities share risks in terms of demand and financing, as well as through consistency with municipal plans and projects, in addition to the separation of ownership and management described in the previous section.

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• The contract for the right to manage and operate the electricity supply network is renewed on a 20-year basis, but was renewed in 2013 and is therefore stable until 2033. There is a possibility that the contract could be terminated; however, as the parent company is a city, such a risk is not considered to exist (Stadtwerke Oerlinghausen). • The basic principle for borrowing is that the city guarantees debt and Stadtwerke finances the borrowing. In addition, a city guarantees debt when loans are obtained from financial institutions. However, Stadtwerke pays a guarantee fee to the city for this guarantee. In other words, the interest rate paid to the bank can be reduced by the city guaranteeing the debt, and Stadtwerke pays a guarantee fee to the city equivalent to the reduced interest rate, which is also linked to the return of funds to the region (Stadtwerke Nürtingen). • Regarding involvement in urban planning, a joint committee has been formed with the city as it has an impact on the environment and landscape. A joint project team of the city and Stadtwerke from the planning stage also carried out the recent construction of a tram line across the city (Stadtwerke Ulm/Neu-Ulm). • We will provide advisory cooperation to the city in the formulation of the city’s renewable energy and energy-saving strategies. For example, in the energy mix, there is talk about withdrawing coal-fired power, which is 30% of the energy mix, and in the future, Mainova is making its own decisions on when to stop coal-fired power in Mainova and how to do this by estimating the economic and environmental contributions and presenting them to the city. Mainova’s decision-making is based on economic efficiency (Stadtwerke Frankfurt Holding).

5.4.3.4

Government Transfer Payments: t(Π) > Π - g(e1) - h(e2) > 0

Transfer payments from the government are difficult to observe in the absence of actual payments linked to business income and expenditures. Although Stadtwerke may be contracted by local authorities to carry out projects (e.g., public transport), we consider the relationship between the organization and the local authorities here. In other words, the answers concerning the advantages and disadvantages of Stadtbergke derive from its relationship with local authorities in relation to its cost-effectiveness in the broad sense of combining the income and expenditure of profitable projects and quality improvement efforts, including unprofitable projects, are summarized.

Contract Projects with Local Authorities In projects related to contracts, competition costs are excluded by voluntary contracts, particularly for loss-making projects. In addition to project risks, project costs are reduced through close communication with local authorities regarding network infrastructure projects.

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• When undertaking projects related to public transport, contracts are discretionary (periodically renewed). However, from the perspective of free competition in the EU and solving regional problems, it is not a negotiated contract, but a competitive tender (Wuppertaler Stadtwerke). • Some operations (for example, public transportation and waste management projects) may be negotiated (Eichsfeldwerke). • The county is entrusted with voluntary contracts for public transportation and waste management projects. All others were tendered competitively. Public works do not have to be tendered as voluntary contracts are allowed in the Eurozone (Eichsfeldwerke). • Stadtwerke and the city have excellent communication. There is no waste in the construction work, for example, if gas pipes are installed or sewage pipes are upgraded in conjunction with road rehabilitation work. It is critical to maintain close contact with Stadtwerke and the sewage treatment company. For example, the Public Works Department has a meeting once a week to ensure that there is no waste in construction work (Municipality of Erlinghausen).

The Involvement of Local Authorities in the Management of the Organization (Overlaps with 1 in Sect. 5.4.3.2) In terms of organizational management, on the one hand, local authorities are obliged to be supplied by local authorities, which are monitored by investment and the supervisory board; on the other hand, the powers of local authorities over the execution of management are constrained, and management decisions remain independent from the administration. While local authorities are obliged to supply, including loss-making projects, the system is designed to maintain management autonomy, focusing on profitable projects, which are thought to create incentives to continue unprofitable projects efficiently. • The city’s control was based on articles of associations. The articles of the association stipulate the obligation to provide access to electricity, gas, and water to all residents in the city. Additionally, investments can only be made in projects with economic potential. The holding company has a supervisory board that supervises the city (DREWAG–Stadtwerke Dresden). • Involvement in governance as a city through investment (Stadtwerke Nürtingen et al.). • The company has a contract with the city of Iserlohn under which it pays the city a portion of its annual profits. If profits are low, the amount to be paid is reduced; if profits are high, the company is not required to pay more than the contracted amount, increasing the amount invested in the company. Every five years, the contract is renewed (Stadtwerke Iserlohn). • The Board of Directors and the Supervisory Board, which execute business in accordance with the decisions of the General Meeting of Members, are separate

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bodies. The Supervisory Board and the Board of Directors (management) discuss matters of importance to municipal and regional governments and new projects. • Involvement of the city council and supervisory board in the execution of management is limited. In particular, the city council was not directly involved in the management of Stadtwerke. Auditors only have the right to consent to business matters and have no authority over the execution of management (from the first research summary). • Although operationally independent of the city, there is a strong aspect of responsibility for the implementation of the city’s policies and plans, and there is a close link between the city’s plans and the project (from the first survey summary). • Stadtwerke’s basic role was to ensure a stable supply of energy in the city. The city believes that imposing unprofitable projects that would worsen Stadtwerke’s business conditions would exhaust Stadtwerke and not lead to a stable supply and that Stadtwerke must respect the fact that it is a profit-seeking company (from first survey summary).

5.4.3.5

Considerations

In the previous sections, we examined whether the suggestions for the business integration model were established based on the results of the case study of Stadtwerke, Germany. This section summarizes how quality improvement efforts in unprofitable businesses, that is, incentives for continuation and investment, are ensured. In terms of the first model implication, the “positive externality between businesses,”’ which is a requirement for non-negative quality improvement effort e2 of unprofitable businesses, suggests that two institutional factors are important. The “obligation to supply” is the first institutional factor. In Germany, the Constitution guarantees livelihoods (survival considerations: Daseinsvorsorge), and local authorities accordingly stipulate in their articles of association the obligation to provide lifelines to the contractor Stadtwerke. Thus, even if a project is losing money, Stadtwerke is required to assess and supply the public interest. However, because Stadtwerke is a private law organization, it is necessary to make flexible management decisions, such as combining with profitable operations and risk strategies, in order to be sustainable as an organization while having loss-making operations. As a result, the second system, profit and loss sharing, creates an incentive to focus on unprofitable businesses alongside profitable businesses. This creates an Incentive to continue and invest in loss-making businesses, as businesses result in tax savings. Another strategy strengthened the positive external effects between businesses by linking contributions to the operation of loss-making businesses and the local community through supply obligations to increased demand for surplus businesses. Regarding the second model implication, it is suggested that Stadtwerk’s organizational form and institutional factors of management contribute to the conditions for enhancing the quality improvement efforts e2 of unprofitable businesses, namely

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the absolute risk aversion of the business and the uncertainty of profitable businesses. To reduce Stadtbergke’s degree of risk aversion, the execution of management should be based on the economic efficiency of a private company. This is accomplished through the “separation of ownership and management” and the “separation of audit and execution in management.” There are two paths for governing the public interest of projects (including loss-making projects) commissioned to the Stadtwerke by local governments. One is investment, which indicates that the company is a contractor for the provision of “survival considerations” services. The mayor, chairperson, councilors, and others on the supervisory board participate in monitoring the city's planning and public interest perspectives. Most Stadtwerke have the corporate form of a GmbH, which means that the auditor cannot serve as a member of the board of directors at the same time and thus has little authority over management execution. This institutional design, in the end, allows decision-making to prioritize managerial economy while not increasing risk aversion. As for factors that reduce the “uncertainty of profitable projects,” local authorities share the risk of securing demand and financing and work together to ensure that projects align with the administration's urban planning. This also shows that Stadtwerke has a monopoly position as a trustee of public service provision despite being a private company in a competitive environment. The third model implication examines the cost-effectiveness of local authorities’ involvement in a broad sense. The institutional implications are similar to those of the latter concerning the “absolute risk aversion of the operator.” That is, they are subject to the governance of local authorities as trustees of the supply of local public services, but do not take on more management risk than necessary due to the separation of ownership and management, as well as audit and enforcement in management, and are able to collaborate with the public administration in their business, making the broadly defined payments from local authorities considered positive. The preceding demonstrates that efforts to improve the quality of unprofitable projects in the business integration model are effective in the surveyed case study Stadtwerke due to institutional factors. Finally, we would like to discuss AG (MVV Energie), where different suggestions from the business integration model were addressed: in AG, the decision was made not to keep the loss-making business (public transportation) as an integrated business. The AG made the business decision not to maintain loss-making operations as a for-profit company because the listing of its shares does not allow it to prioritize local public authorities over other shareholders. Meanwhile, AG’s dividends to local authorities are earmarked for public transport. This case has two possible implications. First, contributions related to the maintenance of unprofitable operations can take forms other than business integration, such as dividends. Second, the institutional features of GmbH are effective as a mechanism for balancing the local authorities’ demands for maintaining public interest and efficient management decisions in the framework of business integration. It has been stated that striking a balance between management execution is easier (The Policy Research Institute for Land, Infrastructure, Transport and Tourism

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2021). Because many small- and medium-sized Stadtwerke are organized as a GmbH, it can be assumed that they have organizational characteristics compatible with the business integration model.

5.5

Concluding Remarks

This study supports Iossa (2015), who used contract theory to model the efficiency of vertical integration of infrastructure projects through PPPs. It presents a model to evaluate horizontal integration of public service supply projects in terms of incentive design, after which the model's implications are examined using The Policy Research Institute for Land, Infrastructure, Transport and Tourism (2021). The model’s implications are examined using the Stadtwerke case study reported in (2021). The theoretical arrangement in Sect. 5.3 shows that under certain conditions, the efficiency of the comprehensive supply of public services, which is based on outsourcing to the private sector and others, increases the social welfare of the supply through business integration through government incentive contracts. In addition, using information from a case study in Stadtwerke, Germany, this chapter examined the implications of the project integration model for the design of incentives for unprofitable projects that affect regional sustainability. The results showed that efforts to improve the quality of unprofitable projects in the project integration model are effective because of institutional factors. Many of the institutional factors that are effective for the continuation of and investment in unprofitable businesses by examining that the implications of business integration models are not immediately applicable in Japan because of differences in systems and practices. In this study, what have been regarded as institutional differences in previous Stadtwerke studies and others are generalized by a model of incentive design. We believe that such a generalization is useful for examining what types of institutional design are possible in the current institutional and historical frameworks of Japanese regions. Vertical integration of PPP projects is assumed in Iossa (2015) and Chen and Chiu (2010), on which the basic framework of the model in this study relies, based on the impact of quality efforts in the infrastructure and facility construction phase on the benefits and costs of the operational phase. The study clarifies the benefits of business integration. Although this study assumes horizontal integration of public service supply projects, public services, like infrastructure assets, are diverse in their nature as businesses, including no fee income and asset ownership (residual disposal rights) as an incentive. To determine what type of business integration and incentive design can improve welfare, future studies must organize diverse public services based on model parameters and study examples of various PPP schemes and comprehensive cooperation agreements for public services.

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References Asahi, Tsuchiya, Kotani (2020) Institutional design of infrastructure management for regional sustainability: the case of the German Urban Corporation “Stadtwerke”. PRI Rev 77:110– 127. (in Japanese) Chen BR, Chiu YS (2010) Public–private partnerships: task interdependence and contractibility. Int J Ind Organ 28(6):591–603 Iossa E (2015) The simple microeconomics of public–private partnerships. J Publ Econ Theory 17(1):4–48 McLean A (2017) Defining infrastructure integration: abstract aspirations and institutional variations. People Place Policy Online 11:1 The Policy Research Institute for Land, Infrastructure, Transport and Tourism (2021) Research on efficient regional management of infrastructure and public services. National Land Transport Policy Research No 159. (in Japanese)

Chapter 6

Evaluation of the Educational Role of Urban Facilities and Their Contribution to Regional Sustainability Noriko Horie, Kiyoko Hagihara, Fumiko Kimura, and Chisato Asahi

Abstract The challenges of a super-aging society with a decreasing population must be addressed if regional sustainability is to be ensured. The United Nations 2030 Agenda for Sustainable Development lists 17 Sustainable Development Goals (SDGs) covering a broad range of challenges. While education is the focus of one of the SDGs, the targets and indicators only take formal school-based education into account. A range of other facilities within cities may contribute to sustainability by providing educational experiences and these contributions need to be better assessed. Many social systems and services rely on urban facilities that support their activities. Urban facilities often have broad functions as shared property in a community, in addition to their intended functions. Questionnaire surveys of water treatment facilities and waste treatment facilities showed that many facilities play crucial roles in promotion of education. Urban facilities have been shown to function in ways similar to museums, and the significance of such museum-like functions is as follows: (1) they serve as venue for disaster prevention education and environmental education for citizens; (2) they convey local memories and lessons learned from ancestors and history; (3) they provide a place and context for communication between citizens and urban facility managers. Keywords Urban facilities · Museum-like functions · Regional sustainability · Social education · Indicator JEL Classifications H41 · H49 · I29

N. Horie (✉) Bukkyo University, Kyoto, Japan e-mail: [email protected] K. Hagihara · C. Asahi Faculty of Urban Environmental Sciences, Tokyo Metropolitan University, Tokyo, Japan e-mail: [email protected] F. Kimura Soka University, Tokyo, Japan © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 C. Asahi, N. Horie (eds.), Toward Sustainable Regions, New Frontiers in Regional Science: Asian Perspectives 73, https://doi.org/10.1007/978-981-99-5667-8_6

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Introduction

In a super-aging society with a decreasing population, measures to maintain and improve regional sustainability are of urgent need. As identified in the 17 SDGs, sustainability must be addressed across a wide range of areas (e.g. Asahi and Horie 2018). A city cannot be maintained without urban facilities 1 that support various essential services and activities. If the cost of renewing aging urban facilities cannot be met due to population decline, the city will lose its economic base and collapse. To ensure the sustainability of a city, it is necessary to maintain the functions of urban facilities and infrastructure. Research on urban facilities has investigated various aspects, such as their form, function, and their historical and cultural significance. Efficient placement and management of urban facilities are required to reduce costs, especially in densely populated countries like Japan. Optimizing the placement of urban facilities to withstand population decline is already the focus of many researchers (Iwamoto et al. 2011, 2014; Kobayashi et al. 2017; Okano et al. 2019; Sato and Morimoto 2009; Tamura and Tanaka 2019). We must also consider how to adapt the existing urban facilities to match the needs of a super-aging society. Research efforts in this area are already underway, and this includes research on urban facility layouts considering the needs of elderly people living in the city center (Ding et al. 2008), research on walking movements of elderly people and the layout of urban areas (Ohmori et al. 2019), studies focusing on the relationship between proximity to facilities and the number of steps taken to move between them from the perspective of promoting healthy lifestyles (Hino et al.

1

Urban facilities are facilities that support various activities in the city and form the framework of the city necessary for daily life. In Article 11, Paragraph 1 of the Town Planning and Zoning Act, “1. Roads, urban high-speed railways, parking lots,” Automobile terminal and other transportation facilities, 2. Parks, green spaces, plazas, graveyards, and other public vacant lots, 3. Water supply, electricity supply facilities, gas supply facilities, sewers, sewage treatment plants, waste incineration plants, and other supply facilities or treatment facilities, 4. Rivers, canals, and other waterways, 5. Schools, libraries, research facilities, and other educational and cultural facilities, 6. Hospitals, nurseries, and other medical or social welfare facilities, 7. Markets, livestock, or burial grounds, 8 . Residential facilities in a housing complex (meaning 50 or more collective housing in a housing complex and passages and other facilities incidental to these), 9. Government facilities in a housing complex (buildings of national organizations or local public bodies in a housing complex) and the passages and other facilities incidental to them), 10. Distribution business complex, 11. Tsunami disaster prevention base urban formation facility in one complex (Act on Tsunami Disaster Prevention Area Development (Act No. 123 of 2013) No.) Refers to the tsunami disaster prevention base urban area formation facility of a housing complex prescribed in Article 2, Paragraph 15), 12. Other facilities specified by government ordinance,” and each city is a necessary urban facility for that city. Is selected, and it is decided by the city planning at an appropriate scale and the necessary position in consideration of the current situation and future prospects of the city, such as traffic conditions.

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2018), and studies analyzing the relationship between the location density of urban facilities and the participation of elderly people in social activities (Kim et al. 2019). The focus of this stream of urban facilities research has been on efficient placement and maintenance of the original functions of facilities that are indispensable for various activities, including daily activities. There is also a stream of research that centers on the multi-functionality of urban facilities (e.g. Horie 2015) and involves investigating various roles thereof, such as collection and preservation, research, exhibition, education, and entertainment, and is grounded on the observation that these are commonly thought of as the functions of museums. Questionnaire surveys of water supply and waste treatment facilities revealed that they have museum-like functions (Horie 2018, 2019). It is believed that such functions of such urban facilities will lead to the development of human resources that are indispensable for survival and sustainability of the city. Research has also been conducted on the relationship between urban facilities and community attachment and participation, with some studies focusing on open spaces, libraries, shopping streets, and elementary schools (Suzuki et al. 2011), the relationship between attachment to retail stores and community attachment (Suzuki and Fujii 2007), the relationship between contact with the local landscape and community attachment (Suzuki and Fujii 2008b), and the relationship between community attachment and participation (Suzuki and Fujii 2008a). These studies suggest that community attachment, influenced by interaction with local urban facilities and landscape factors, promotes active involvement in community life (e.g. Hano 2018). Community attachment and participation is thought to develop a sense of civic pride, which has been attracting attention from local governments in recent years. The role of public halls in Education for Sustainable Development (ESD) also needs to be considered (Oyasu 2018). It has been identified that sustainability indicators rarely align with ESD indicators, and that ESD-specific indicators do not necessarily lead to sustainability, which should be the goal of ESD (Nakaguchi 2000). A framework of indicators to measure the impact of educational activities on community sustainability has been proposed (Nakaguchi 2016b). The framework consists of four phases: Infrastructure/Sustainability Index Group (Stock), Input/ Action Index Group, Output/Behavior Change Index Group, and Result/Sustainability Index Group (Change). Input indicators include the number of ESD plans or policies, the number of participants in ESD promotion organizations, the total number of efforts to support ESD, the number of schools with ESD learning plans or mechanisms, and the active practice of ESD. The number of classes to be conducted and the number of ESD activities practiced in course of lifelong learning are also suggested as indicators. This is an attempt to clarify the need for a wide range of education types, including formal school education as well as social education, and evaluate it from the perspective of improving sustainability through changes in human consciousness and behavior.

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The Central Council for Education prepared a report in December 2018 on the ideal method of social education, titled “Promotion measures for social education for new community development in the era of depopulation,” following consultation with the Minister of Education, Culture, Sports, Science and Technology. The report emphasizes cooperation with various actors and states that “human resource development” and “connection development” through social education will lead to sustainable “community development.” However, the report only considers sustainable development within the framework of traditional social education facilities, such as public halls, libraries, museums, youth facilities, and women’s education facilities. It has also been pointed out that an interdisciplinary approach is important for sustainability education (Annan-Diab et al. 2017), and that higher education to address sustainability challenges requires regional partnerships and public funding (Owens 2017). However, it is insufficient that only educational institutions are considered as institutions that provide education. Education that can improve the consciousness and behavior of individuals is important because the sustainability of the community depends on it. However, further development of educational resources in both the public and private sectors is needed. For various educational efforts other than conventional school education, aimed at improving sustainability, it is necessary to secure a framework of sustainability evaluation, a suitable budget, and relevant indicators suitable for such evaluation. Many reports and proposals have been made ranging from the local to the international levels regarding the current status and successes of sustainability assessments and indicators (for example, Honda et al. 2015; Kano and Aoo 2018; Kawakubo et al. 2018; Masuhara et al. 2019; Nakaguchi 2016a; Sahely et al. 2005; Suzuki 2004; Tsukamoto 2018). There has also been an international review on the current state of sustainability assessment for policy and decision-making (Dizdaroglu 2017) and a report on evaluation tools for urban facility management for sustainability (Boyle and Michell 2017). In addition to these reports (AnnanDiab et al. 2017; Nakaguchi 2000; Owens 2017), the necessity to interpret and localize the SDG indicators based on local values has also been identified (Burford et al. 2016). Current research evaluating sustainability education beyond schools remains insufficient. To enhance the sustainability of the region, the educational role of urban facilities should be integrated into the framework of sustainability evaluation and evaluated using appropriate indicators. In this paper, I have summarized the current state of research evaluating social education in sustainability with a survey of the literature and consider the ideal method of applying evaluation indicators to studies of the educational role of urban facilities. First, I have discussed how the multifunction and educational role of urban facilities are confirmed by research about the museum-like function of urban facilities. Next, I have reviewed the education-related indicators currently used in sustainability evaluation, paying particular attention to indicators related to social education. Finally, I have considered the indicators necessary for evaluating the educational role of urban facilities and discussed the issues for evaluation index operation.

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Museum-Like Functions of Urban Facilities and Regional Sustainability Significance of Urban Facilities and Museum Functions

Urban facilities are facilities that support various activities of city-dwellers and form the framework of the city. Urban facilities are physical structures designed to perform utilitarian operations, but they also fulfill other less tangible roles within society (Horie 2015). These roles include inheritance of the wisdom, hardships of the predecessors, the preservation of local history, culture and providing a place for social interaction. For example, the original function of water purification plants is to purify raw water and to provide safe water. In addition, they also symbolize the memory of the hard work and ingenuity of our ancestors to obtain clean water. The understanding and support of citizens as voters, taxpayers, and residents is essential to the proper maintenance of urban facilities. The interest or indifference of citizens in visiting and maintaining urban facilities significantly affects the sustainability of the local area. Lewis Mumford argues that a museum is needed to solve the problems faced by modern metropolises, and that the city itself should act as a museum (Mumford 1961). This requires that cities are spatially open, allowing citizens to interact with various places and buildings within the city as if they were museum exhibits. Urban facilities should ideally provide the base for this experience. The International Council of Museums (ICOM) states that the museum is a non-profit, permanent institution that contributes to society and its development, and is open to the public for the purposes of education, research, and enjoyment. It is defined as acquiring, preserving, researching, communicating, and exhibiting the tangible and intangible heritage of humans and their environment (ICOM2007). There are some arguments about the functions of the museum, but according to ICOM, these are generally “collection/preservation,” “survey/research,” “exhibition/education,” and “entertainment/fun.” Various examples of the ways in which urban facilities fulfill these functions are shown in Table 6.1.

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Table 6.1 Museum-like functions in urban facilities Museum-like functions Collection/ preservation

Overview Efforts to collect, preserve, and conserve the facility, area, and related resources

Survey/ research

Confirmation, survey, monitoring, research, recording efforts, etc. regarding the facility, area, and related resources

Exhibition/ education

Exhibition, commentary, education, succession efforts, etc. about the facility, area, and related resources

Entertainment/ fun

Efforts to entertain users when demonstrating the above functions, etc.

Source: Horie 2019

Examples • The remains of the Jomon period residence discovered during the construction of the Azami Station platform (Tobu Kiryu line) were preserved and exhibited at the site • Preservation of historic structural and decorative bricks on the outer wall and other areas of Tokyo Station during station upgrades • Continued research and monitoring for the conservation of Ontsutsuji, a native species of the Shikoku region, in Sanuki Mannou National Park • Citizens collaborating to create a biotope using treated sewage water and conducting water quality and biological surveys at Aichi sewerage science museum • The museum providing regular tours at Kachidoki bridge, Tsukiji • Opening of sewerage facilities and water reclamation centers in various cities • Establishment of an exhibition room explaining the role and operation of customs at the Tokyo customs facility • Tours and visits of the Tokyo central wholesale market (Horie 2018, 2019) • Introduction of water-based games during the facility tour at Samukawa water purification plant, Kanagawa prefecture • Installation of a game where visitors can experience the mechanism of sewerage at Nagoya City sewerage science museum

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Relationship Between the Museum-Like Functions of Urban Facilities and Regional Sustainability as Seen from the Results of the Questionnaire Survey

According to a questionnaire survey2, 3 conducted from 2017 to 2018 for waterworks and waste treatment facilities, about 80.9% of waterworks and 97.0% of the waste incineration plants have museum-like activities. This research confirmed that there are a considerable number of facilities that play an educational role in the area, mainly by providing elementary school tours. According to a questionnaire survey of waste treatment facilities, 86.3% of the existing facilities needed activities to reach out to the public. 69.9% emphasized the “necessity for weight reduction and sorting of garbage brought into the facility,” 60.9% stressed the “necessity for environmental education of the general public and children,” 55.6% stressed the “necessity for obtaining the understanding and cooperation of local residents,” 26.2% said that “a facility located in the area needs to be open to the community,” and 5.3% said that the facility providers “do not need to work on anything other than the original role of the facility (waste disposal).” The results of this survey indicate the need for waste treatment facility themselves to communicate directly with the public about waste reduction, separation and to gain their understanding and cooperation in order to maintain a sustainable waste treatment system. Conversely, these facilities are not designed as educational facilities. There are few facilities where qualified personnel, such as curators, social education supervisors, or volunteers, are involved. In most facilities, staff struggle in providing educational activities they are not trained in, while performing their primary duties. Correlation analysis suggests that collaboration and the involvement of experts and volunteers are effective in enhancing education efforts and overcoming these issues. Therefore, to enhance educational efforts by urban facilities, it is necessary to cooperate with local communities. Enhancing efforts through such horizontal collaboration will enhance education within the entire region, develop local social capital, and improve regional power and sustainability. It is possible to evaluate the efforts of urban facilities from the perspective of contributing to the improvement of sustainability through enhancing education in the region, providing feedback to the facilities to enhance them, and promoting the improvement of sustainability in the region.

2

A questionnaire survey of water purification plants was conducted from April to June 2017, targeting 375 major water purification plants nationwide, and responses were received from 225 facilities (recovery rate 60.6%). 3 A questionnaire survey targeting waste treatment facilities was conducted from February to April 2018, targeting 708 major waste incineration plants nationwide, and responses were received from 432 facilities (recovery rate 61.0%).

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Current Status of the Education Index for Regional Sustainability Assessment

The concept of sustainability is controversial (e.g. Hagihara 2013), and in recent years various frameworks for measuring and assessing sustainability, including the SDGs of the United Nations Development Program (UNDP), have been introduced. SDG-related programs are widespread in Japan. There are symposia and other events that discuss SDGs, the development of teaching materials, visualization of issues in each region from index data, and proposals for specific practical methods (e.g. HSF: Human Security Forum and Takasu 2019). A selection of these indicators is provided in Table 6.2. In the following sections I have reviewed how items related to consumer education are positioned in the field of sustainability assessment. Related topics to be reviewed include references to sustainable lifestyle, urban facilities, and participation and decision-making.

6.3.1

Education-Related Indicators in International Sustainability Evaluation

6.3.1.1

Human Development Index (HDI)

The HDI was developed by Amartya Sen and Mahbub ul Haq in 1990 and is reported annually by the United Nations Development Program. It is a composite statistic of three dimensions, i.e. health, education, and income, emphasizing that not only economic growth, but also people and their future potential should be the ultimate criteria for assessing the development of a country. Life expectancy at birth is used as a health index, average years of commuting to school and expected years of education as education indices, and gross national income per capita as an income index (UNDP 2020).

6.3.1.2

Agenda 21

Agenda 21 was adopted at the 1992 Rio Earth Summit (International Conference on Environment and Development) and is the first step of a comprehensive global action plan in all areas of sustainable development. It was reaffirmed at the 2002 Johannesburg Earth Summit (World Summit on Sustainable Development). The 40 chapters are divided into four main sections, and Section 3 also recommends ways to strengthen the role of different actors in achieving sustainable development. Chapter 36 of Section 4 (Means of Implementation) describes “promotion of education, enlightenment, and training” and states that both formal and informal education are essential to change people’s attitudes, so it can be said that a wide range of

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Table 6.2 Status of educational indicators in sustainability assessment

1

Evaluation framework or indicator tool Human development index (HDI)

Provider organization United Nations Development Program (UNDP)

Year※ 1990

2

Agenda 21

United Nations Conference on Environment and Development (UNCED)

1992

3 4

PSR model ICLEI (cities for climate protection campaign)

OECD ICLEI

1993 1993

Reference to educational indicators (figures in parentheses are from the original) “The education dimension is measured by mean of years of schooling for adults aged (Kim et al. 2019) years and more and expected years of schooling for children of school entering age” (UNDP 2020) As a means of implementation, “Chapter 36 Promoting education, public awareness and training” includes the importance of education for sustainable development and guidelines for its efforts, referring to universal access to basic education, equity, and expanding the means and scope of education. “Both formal and non-formal education are indispensable to changing people’s attitudes,” which calls for the promotion of programs not only by governments and educational authorities, but also by non-governmental organizations, businesses, and community organizations (Sustainable Cities International (Canadian International Development Agency) 2012) – “We pursue secure and safe access to food, water, energy, sanitation

Reference to education indicators other than school -

○

-

(continued)

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Table 6.2 (continued)

Evaluation framework or indicator tool

5

Aalborg commitments

6

DPSIR (driving forces, pressure, state of environment, impacts, response) CSD index

7

8

Urban sustainability indicators

9

Millennium development goals (MDGs)

Year※

Reference to educational indicators (figures in parentheses are from the original)

Reference to education indicators other than school

The Aalborg chapter of European cities and towns toward sustainability OECD

1994

for all, culture and education, as well as clean air and soil” (ICLEILocal Governments for Sustainability 2018) –

-

UNCSD

1995

European Foundation for the Improvement of Living and Working conditions United Nations

1998

Provider organization

1994

2000

“Awareness, training, and education: Sales promotion, Percent of population trained” (EPA 2020) Educational indicators include “Gross intake rate into last year of primary education,” “Net enrolment rate in primary education,” “Adult secondary(tertiary) schooling attainment level,” “Lifelong learning,” and “Adult literacy rates.” Of These, “Lifelong learning” is described as “Percentage of the population aged 25 to 64 in education or training” (United Nations 2007) –

“Enrollment in primary education,” “Completion of primary education” and “Everyone get into school” are part of “Target 2A: By 2015, all children can

○

-

-

(continued)

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Table 6.2 (continued)

Evaluation framework or indicator tool

10

11

12

Provider organization

Year※

Reference to educational indicators (figures in parentheses are from the original)

Reference to education indicators other than school

complete a full course of primary schooling, girls and boys” in “Goal 2: Achieve universal primary education” (Sustainable Cities International (Canadian International Development Agency) 2012) –

-

EEA urban metabolism framework Inclusive wealth index

European Environment Agency

2010

UNU-IHDP and UNEP

2012

ISO37120

International Organization for Standardization

2014

Educational capital calculates the amount of capital from the main variables “years of schooling” and “educated labor force” (Manaki et al. 2019) “Ding et al. 2008 Education/6.1% of female school-aged population enrolled in schools (core indicator)/6.2% of students completing primary education: survival rate (core indicator)/6.3 Percentage of students completing secondary education: survival rate (core indicator)/6.4 Primary education student–teacher ratio (core indicator)/ 6.5% of school-aged population enrolled in schools (supporting indicator)/6.6 Number of higher education degrees per[100] 000 population (supporting indicator)” (ISO 2018)

-

-

(continued)

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Table 6.2 (continued)

13

Evaluation framework or indicator tool Sustainable development goals (SDGs)

Provider organization United Nations Development Program (UNDP)

Year※ 2015

Reference to educational indicators (figures in parentheses are from the original) Targets and Indicators have been set in “Goal 4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all” Target 4.7 is described as “By 2030, ensure that all learners acquire the knowledge and skills needed to promote sustainable development, including, among others, through education for sustainable development and sustainable lifestyles, human rights, gender equality, promotion of a culture of peace and non-violence, global citizenship and appreciation of cultural diversity and of culture’s contribution to sustainable development.” Indicator 4.7.1 is described as “Extent to which (1) global citizenship education and (2) education for sustainable development, including gender equality and human rights, are mainstreamed at all levels in: (a) national education policies, (b) curricula, (c) teacher education and (d) student assessment” (Institute for Building Environment and Energy Conservation 2018a)

Reference to education indicators other than school ○

※The year of creation. In some cases, it has been revised since then. ○mentioned -not mentioned

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education beyond school education is considered in Agenda 21. In addition, Chapter 40 required the development of indicators that could provide reliable information on decision-making, which led to creation of sustainability indicators by the United Nations Conference on Sustainable Development (UNCSD) (Sustainable Cities International (Canadian International Development Agency) 2012).

6.3.1.3

Pressure State Response (PSR) Model

The PSR model was developed by the Organization for Economic Co-operation and Development (OECD) in 1993. It is a conceptual framework for analyzing the relationship between human activity and the environment in systems of pressure (environmental burden), state (environmental situation), and response (social response). Based on this model, the OECD has formed a group of indicators, including core set indicators, sectoral environmental indicators, and decoupling environmental indicators. Core set indicators consist of indicators that measure load, condition, and response to each of fifteen environmental problems, including climate variability. The fifteenth indicator is “social and economic sector and general indicators (not limited to specific environmental issues),” which includes “public opinion on environmental issues,” but there is no item considering education (Ministry of the Environment 2020).

6.3.1.4

International Council for Local Environmental Initiatives (ICLEI)

ICLEI was established in 1990 and renamed Local Governments for Sustainability (LGS) in 2003. It is an international network of more than 1750 local governments aiming to realize a sustainable society. Its mission is to support the development of regional efforts by local governments and expand global movements to ensure global sustainability. At the 2018 World Congress, five developmental paths were initiated to achieve its four goals. It was proposed that “comprehensive development for all” is required to achieve “fair and human-centered development,” which is one of the developmental paths. Safe access to education is also included; however, there is no mention of consumer education (ICLEI-Local Governments for Sustainability 2018).

6.3.1.5

Aalborg Commitments

The Aalborg Commitments were signed in 1994 by European Cities and Towns toward Sustainability. Relaunched as Aalborg 10+ in 2004, the goal of the 10 commitments is to turn sustainable urban development from a discussion into concrete action. There is no direct mention of education, but the first commitment is “governance,” which makes people’s participation possible. This enables participatory

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decision-making and decision-making processes that are open and transparent. It is clear that the participation of consumers is required because “responsible consumption and lifestyle choices” are mentioned. A follow-up survey conducted in 2010 showed that the local governments that approved the Aalborg Charter have achieved promising results (Sustainable Cities International (Canadian International Development Agency) 2012).

6.3.1.6

Driving Forces, Pressures, State, Impact, and Responses (DPSIR)

DPSIR is a framework based on the PRS model developed by the OECD in 1994. It has the flexibility to assist decision makers at each stage of the decision-making process. Administered by UNEP and the European Environment Agency (EEA), it assesses and manages environmental issues by describing the interactions between society and the environment. “Sales promotion, percent of proportion trained” is cited as an index of “awareness, training and education,” which is one of the factors measured (EPA 2020).

6.3.1.7

UN Commission on Sustainable Development (CSD) Index

The CSD Index was presented by the United Nations Commission on Sustainable Development (UNCSD) in 1995 and consists of 134 indicators in four areas: social, environmental, economic, and institutional. The indicators set for education are “rate of progress to the final grade of primary education,” “net enrollment rate of primary education,” “adult secondary education (higher education) achievement level,” “lifelong learning,” and “literacy rate of adults.” “Lifelong learning” is needed for people to embrace new skills and organizational techniques as workers, as well as attitudes and behaviors as citizens and consumers as society shifts to sustainable production and consumption patterns. The percentage of the population aged from 25 to 64 years who are educated or trained is used as an indicator of the degree to which the working-age population is engaged in learning activities (United Nations 2007).

6.3.1.8

Urban Sustainability Indicators

Urban Sustainability Indicators were developed by the European Foundation for the Improvement of Living and Working Conditions from the commitments set out in the Charter of European Sustainable Cities and Towns, known as the Aalborg Charter. The Urban Sustainability Indicators are designed to assess the global climate, air quality, ecosystem condition, transport, waste management, energy consumption, and water quality, as well as consumption, pollution, social justice, housing quality, urban safety, urban economic sustainability, greenery, public vacant

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lots, cultural assets, and citizen participation. Sustainability indicators unique to each city are also planned. There is no item on education, but the “citizen participation” index is measured by the percentage of people who participate in local elections or as active members of associations for urban improvement and quality of life (European Union 2015).

6.3.1.9

Millennium Development Goals (MDGs)

The MDGs were introduced at the UN General Assembly in 2000 and required governments to take concrete measures by 2015. They consisted of 8 goals, 21 targets, and 60 indicators, with “eradication of extreme poverty and hunger” at the top. The second item was “achieving the full spread of primary education.” They contributed to improvements in poverty and the infant mortality rate in developing countries. Lifelong learning and consumer education were not indexed (Sustainable Cities International (Canadian International Development Agency) 2012).

6.3.1.10

EEA Urban Metabolism Framework

The EEA Urban Metabolism Framework was created by The European Environment Agency. It evaluates urban sustainability based on a metabolic flow model rather than fixed measures of performance or conditions. This framework is low in cost because it uses readily available data sources, but it does not provide a comprehensive measure of the sustainability of cities. Education is not included among the indicators (Ding et al. 2008).

6.3.1.11

New National Wealth Index

The New National Wealth Index was developed by the late Professor Kenneth Arrow, who won the Nobel Prize in Economic Sciences, and Professor Emeritus Partha Dasgupta of the University of Cambridge. The wealth of the entire economy is classified into three categories: artificial capital, human capital, and natural capital. Human consists of educational capital and health capital, which are calculated as the value of having longer and more advanced school education and longer life (Manaki et al. 2019). The main variables of educational capital are “years of school education” and “educated labor force,” which are calculated from the average years of schooling and the number of employees. Social education is not included.

6.3.1.12

ISO37120

ISO37120 is a guideline standard for sustainable cities and communities developed by the International Organization for Standardization (ISO). The first edition was

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published in 2014 and revised in 2018. It covers 19 themes: economy, education, energy, environment and climate change, finance, governance, health, housing, population and social conditions, recreation, safety, solid waste, sports and culture, communications, transportation, urban and local agriculture, food safety, city planning, drainage, and water. There are 2–10 indicators for each theme. “Education” consists of four indicators and two supporting indicators, all of which are related to school education (ISO 2018).

6.3.1.13

UN Sustainable Development Goals (SDGs)

The UN SDGs are composed of 17 goals and 169 targets, and each target has 1–5 indicators, for a total of 232 indicators. The realization of a sustainable society requires that “no one is left behind.” Data about income, gender, age, race, ethnicity, migration status, disability, and geography is required to assess the indicators. A number of targets relate to urban facilities, including “. . . access to basic services . . . (1.4),” “develop quality, reliable, sustainable and resilient infrastructure . . . (9.1),” “. . . provide universal access to safe, inclusive and accessible, green and public spaces . . . (11.7).” Regarding education and enlightenment, target 4.7 states “By 2030, ensure that all learners acquire the knowledge and skills needed to promote sustainable development, including, among others, through education for sustainable development and sustainable lifestyles, human rights, gender equality, promotion of a culture of peace and non-violence, global citizenship and appreciation of cultural diversity and of culture’s contribution to sustainable development.“Additionally, target 12.8 states “By 2030, ensure that people everywhere have the relevant information and awareness for sustainable development and lifestyles in harmony with nature.” Two additional targets relate to participation; “Develop effective, accountable and transparent institutions at all levels (16.6)” and “Ensure responsive, inclusive, participatory and representative decision-making at all levels (16.7).” (Institute for Building Environment and Energy Conservation 2018a). In this way, it is important to consider physical infrastructure in sustainability evaluation, as well as the less tangible forms of capital based on human relationships, including partnership and participation, social inclusion, trust, and education. For physical infrastructure, indicators calculated from maps and demographic data can be used. This approach is applicable to sustainability indicators, such as the proportion of population living in households with access to basic services (SDG 1.4.1). Conversely, indicators for measuring education, enlightenment, and participation require a qualitative approach. Examples of these types of indices include “the extent to which (i) global citizenship education (ii) education for sustainable development, including gender equality and human rights, are mainstream at a level in (a) national education policies, (b) curricula, (c) teacher education and (d) student assessment (SDG 4.7.1),” and “proportion of population satisfied with their last experience of public services (16.6.2).”

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Sustainable Cities International (Canadian International Development Agency) (2012) provides important insights from case studies of 12 pioneering cities operating within the framework of sustainability. The indicators discussed in these case studies include measuring GHG emissions, focus on environment, physically visible actions, missing indicators for food, back casting, institutionalization, as well as public/private partnerships, risk management, community participation and stakeholder engagement. Sustainable Cities International argues that it is very important for governments to understand the importance of risk management in sustainability and to raise public awareness of the issues of climate variability, energy use, and non-renewable resource consumption. It also points out that, for a truly sustainable future, it is important to emphasize public participation, ties between stakeholders, and integrity and trust, and to increase process transparency. Table 6.2 summarizes the presence or absence of education-related indicators in the above sustainability evaluation. Participation in sustainable production, consumption, and investment activities, pro-environmental behavior and lifestyles, which is the goal of many people, cannot be achieved without educational opportunities for each individual. It cannot be said that “no one will be left behind” unless educational opportunities are provided regardless of age, gender, financial condition, physical condition, or nationality. Nevertheless, it seems that there is little consideration of educational efforts to ensure no one is left behind beyond formal school education.

6.3.2

Localization Index in Regional Sustainability Evaluation

The SDGs are global goals, but they are also applicable at the local level (Institute for Building Environment and Energy Conservation 2018a), and the localization process itself has an educational effect (Burford et al. 2016). The SDG guidelines for each local government state that it is important for local governments to identify the issues that apply to them, set priorities, and allocate local resources. The translation of the SDGs into local SDGs is recommended, to support efforts to address regional issues. A draft version of a localized indicator list has been released (Institute for Building Environment and Energy Conservation 2018b). Localized SDGs relevant to urban facilities management include “water supply penetration rate,” “vacant house rate,” “paved road ratio,” “number of libraries and public halls,” “size of library and public hall area.” No indicators related to education and enlightenment are listed as “Investigating index candidates.” One indicator related to participation, “Female ratio of prefectural assembly members,” is listed in the section “Investigating index candidates.” In addition to these, local SDGs related to education include “education cost ratio,” “elementary and junior high school attendance ratio,” “vocational training cost per population,” “number of students per computer,” “parity index (male student/female students),” “average number of correct answers in Japanese, mathematics, and science for elementary and junior high school students,”

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“internet connection status rate in schools,” “computer installation status rate in schools,” “number of special needs schools per population,” “number of toilets per elementary and junior high school,” and “status of ICT utilization leadership of teachers by prefecture.” Quantitative assessment of libraries and public halls, vocational training expenses, and other easily measurable factors are given priority while there is little attention given to the development of the social capital required to improve the quality of education and sustainability. Since there are many items that are said to be “under investigation as index candidates,” we hope that the provision of programs related to consumer education and the provision of educational opportunities to a wide range of citizens will be included as SDGs in future.

6.4

Role of Museum-Like Functions of Urban Facilities in Sustainability Evaluation

Modern societies cannot be sustained without a range of urban facilities, which are only maintained with the understanding and support of citizens. Maintenance of a waste treatment facility requires attention to a range of systems, including waste collection and transport services, management of the waste treatment processes, and maintenance of facility equipment to ensure effective waste treatment. These cannot be achieved without the understanding and cooperation of citizens in a range of roles. Citizens may produce waste, pay taxes that fund waste treatment, vote and participate in decision-making processes, or accept waste treatment operations in their neighborhoods despite the negative aspects of living near such facilities. The museum-like functions of urban facilities include the provision of social education about topics like disaster prevention and environmental issues, serving as archives of local memories and records, promoting of community attachment, and as places where relationships of trust (through communication between citizens and facility staff) can be developed (Horie 2015). It is thought that urban facilities increase the sustainability of regions through such people-focused functions. Incorporation of these functions into systems for evaluating sustainability is necessary to foster recognition and promote the role of urban facilities in achieving sustainability goals. I have considered the kind of index that can be used to suitably measure these important functions in evaluation processes, and the kinds of data that are required to allow evaluation by the index below.

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Social Education

It is now acknowledged that many urban facilities play educational roles in various ways. Research has shown that waterworks and waste treatment facilities contribute to the realization of sustainable lifestyles for the next generation, but the educational functions of other urban facilities are not sufficiently understood yet. There may be specific indicators suitable for different facilities, but the common applicable indicators are “amount of educational opportunities provided by urban facilities” as an input indicator, and “percentage of people who have educational opportunities by urban facilities” as an output indicator. Outcome indicators of environmental education include “ratio of people who take environmental actions,” “waste disposal amount” and “recycling rate.” In the case of disaster prevention education, the outcomes are “the proportion of households preparing for a disaster” and “the proportion of deaths due to a disaster” (Table 6.3). However, such outcome indicators do not capture the contribution of individual facilities, but instead reflect the overall educational efforts of the entire region and other influences beyond it. Data for measuring these may include survey data collected by private organizations or local and national governments which relate to environmental and disaster prevention education. However, if it is a one-off survey or if the questions differ depending on the year, it is difficult to capture long-term changes. There is insufficient data to assess whether sufficient progress has been made toward the SDGs to “leave no one behind” and further research is required. The Non-profit Organization (NPO) “Human Security” Forum presents the “Japanese Human Security Index” (Oyasu 2018) as an index aiming for a society in which no one is left behind, which is the philosophy underlying the SDGs. Urban facilities are essential for the lives of all residents, regardless of disabilities, languages spoken, financial status, education levels, or any other personal attributes. To ensure the sustainability of waste management systems, for example, it is essential for everyone to reduce the amount of waste they produce and to properly separate and dispose of waste in the correct places. It is necessary for all citizens to know about facilities which contribute to reducing the environmental impacts of society and to take appropriate pro-environmental actions. According to the results of a questionnaire survey of waste disposal facilities (Horie 2019), wheelchairaccess is provided by nearly half of the facilities surveyed, but only a few facilities are suited for the needs of multilingual and vision- or hearing-impaired people. Accidents involving visually impaired people falling from train station platforms are seen to occur regularly. In order for everyone to be able to move safely, it is necessary to educate transport users about the design of transport facilities and how to use them safely. Tekken Corporation holds educational events where visually impaired people are trained in a facility imitating a real train station, including emergency alarm systems, and such efforts should be recognized and promoted. It is essential that no one is left behind in the public facilities that we use every day.

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Table 6.3 Examples of indicators related to environmental and disaster prevention education Environmental education

Examples of possible indicators Amount of environmental education opportunities provided by urban facilities [IP] Percentage of people with environmental education opportunities [OP]

Percentage of people taking environmental actions [OC]

Waste treatment amount [OC] Recycling rate [OC] Disaster prevention education

Amount of disaster prevention education opportunities provided by urban facilities [IP] Percentage of people with disaster prevention education opportunities [OP] Percentage of households preparing for a disaster [OC] Percentage of people who (will) be able to take appropriate action in the event of a disaster [OC] Percentage of people dying from disasters [OC]

Example of existing survey data Questionnaire survey on promotion of environmental education/learning (National Institute for Environmental Studies) Questionnaire survey on environmental education/learning (Fukuoka City) Public opinion poll on environmental issues (cabinet office) Environmental citizens and corporate awareness survey (Yokohama City) Discharge and treatment status of general waste (Ministry of the Environment) –

Public opinion poll on disaster prevention (cabinet office) Public awareness questionnaire survey on disaster prevention (Sendai City) Awareness survey on disaster prevention and disaster prevention education (ALSOK) Number of people dead or missing due to natural disasters (cabinet office)

[IP] Input index [OP] Output index [OC] Outcome index

Facility designs that are universally accessible should be incorporated into sustainability indices and evaluated.

6.4.2

Regional Social Capital Development by Learning about Local Heritage

There are various aspects of the history of a locality that are important to be preserved and communicated. Some are tangible reminders, such as archaeological sites and monuments, but there are many intangible aspects of history that are forgotten over time. There is no corresponding dedicated index relating to the preservation of regional history or the development of social capital within a region. Although SDG 11.4 specifies the need to “strengthen efforts to protect and safeguard the world’s cultural and natural heritage,” the index is measured by the

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Table 6.4 Examples of indicators related to learning from local heritage Examples of possible indicators Number of urban facilities providing opportunities to experience the history and culture of the area [IP] Percentage of people who know the history and culture of the region [OP]

Percentage of people who are attached to the region [OC] Percentage of people participating in community activities [OC] Population in and out [OC]

Example of existing survey data Survey of all cultural properties located in Fukuoka City (Fukuoka City) Public opinion poll on culture (cabinet office) Survey on the actual conditions of life and culture (Agency for Cultural Affairs) Regional brand survey (brand research institute) Survey on the social contribution of citizens (cabinet office) Census (Ministry of Internal Affairs and Communications)

[IP] Input index [OP] Output index [OC] Outcome index

total amount of spending by the public and private sectors, which has little to do with local heritage or social capital development. The input index is “the number of urban facilities where you can come into contact with the history and culture of the area on a daily basis,” the output index is “the percentage of people who know the history and culture of the area,” and the outcome index is “the percentage of people who are attached to the area,” “the percentage of people who participate in community activities,” and “population move in/out.” As for the data required to evaluate these indicators, the results of surveys about vital statistics and participation in volunteer activities are available, but data sources for other indicators need to be identified and developed (see Table 6.4). Protecting local heritage is important for utilizing ancestral wisdom and ingenuity, learning the lessons of history, and fostering an attachment to the region among citizens. Experiences of history should not be limited to museum visits. It would be highly beneficial for people to be immersed in local history through experiences within the urban facilities that they use every day. In Europe, places like station buildings often contain memorials that describe the forced entrainment of victims of wartime Nazism. There are facilities and monuments that commemorate history in Japan, but they are not frequently visited. In recent years, there have been concerns that people may be forgetting the lessons learned in past wars, industrial accidents, and natural disasters. Minamata City, Niigata City, Toyama City, and Yokkaichi City, all sites of major industrial disasters, have their own museums that serve as bases for environmental learning. However, ordinary people have no opportunity to learn unless they go to the museum. I believe it is significant to have the opportunity to encounter the history of the region in course of our daily lives and to think and imbibe lessons therefrom.

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Building Trust through Communication

Communication between citizens and urban facility managers is important for developing a relationship of trust. The “Tokyo Waste War History Miraikan” has been set up in the Suginami Incineration Plant explaining the process of constructing a waste treatment facility. This exhibit plays a role in maintaining a relationship of trust with local residents and educating them about a group of facilities that are often regarded as annoying. People are often concerned about adverse effects of waste treatment facilities on the surrounding environment due to wastewater discharge, exhaust emissions, noise pollution, and vehicle movements and often have a “Not in My Backyard” (NIMBY) reaction to them. Facilitating participation of local residents in facility management through environmental surveys and other participatory processes is useful for building relationships of trust based on transparency through information disclosure. In the SDGs, there are two relevant factors: 6.b.1 (“Proportion of local administrative units with established and operational policies and procedures for participation of local communities in water and sanitation management”) and 16.7.2 (“proportion of population who believe decision-making is inclusive and responsive, by sex, age, disability and population group”). Indicators related to communication between urban facilities and citizens include “Urban facilities open to the general public” as input indicators, “Urban facilities where volunteers work”, and “Urban facilities where citizens participate in management” as output indicators (see Table 6.5). They could be measured by recording the number of facilities and the number of participants, the outcome indicators could be “the ratio of citizens who trust urban facilities (managers).” For example, an evaluation of city parks might consider survey results about volunteers and civic participation. However, there are no existing comprehensive survey data for the entire range of urban facilities.

Table 6.5 Examples of indicators related to communication between urban facilities and citizens Examples of possible indicators Urban facilities open to the general public (number, ratio, number of people) [IP] Urban facilities where volunteers work (number of facilities, ratio, number of people) [OP] Urban facilities in which citizens participate in operations (number of facilities, ratio, number of people) [OP] Percentage of citizens who trust urban facilities (managers) [OC]

Example of existing survey data There are surveys in some fields, such as city parks, but not all urban facilities are found

—

[IP] Input index [OP] Output index [OC] Outcome index

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Problems and Issues of Evaluation Indicators of Urban Facilities

In the previous section, we examined indicators for evaluating the potential contribution of urban facilities to sustainability through their museum-like functions. In this section, I have discussed some of the issues affecting the introduction of evaluation indicators. Data on core statistics, which are regularly surveyed nationwide and include the national census, are continuously acquired and published in a consistent form and can therefore be reliably compared. Facility managers record attendance data which can be used if it is published, but it may not be possible to compare with other datasets if the data types and acquisition methods are different. The data collected in one questionnaire survey cannot be validly compared to another, unless the survey methods are the same. Data from public awareness surveys conducted by local governments are also used as indicators for administrative evaluation, and while they are effective for capturing change in localized sustainability indicators, it is necessary to be careful when comparing between local government areas. To capture changes in indicators and differences between regions over time and use these insights to improve sustainability, a mechanism is required to continuously acquire valid and usable data. This is a major task requiring significant and continued funding. Another challenge is about how to determine appropriate methods for evaluating social capital. In order to evaluate the effect of urban facilities on the development of social capital and sustainability, it is necessary to have an index for evaluating the characteristics of the population as well as an index for the quantitative measurement of health (Table 6.4). In this paper, we have presented an example of an index that captures the amount of local social capital based on knowledge, attachment, and awareness of participation, with a focus on connecting with local heritage within urban facilities. Indicators, such as motivation to start a business in the area, dissemination of local information, NPOs, and activities of local companies, reflect the amount of social capital in a community. Furthermore, as the population declines throughout the country, it is possible that the presence of migrants and visitors will increase, although they will not be registered as residents. How should they be incorporated into the evaluation index along with the registered residents? The issue of identifying all the people contributing to sustainability in a region and measuring their social capital requires further consideration. Finally, clear plans for implementing the evaluation system must be established at the local government level. Generally, urban facilities develop their own systems for evaluating the services they provide. Meaning that perspectives and educational functions relating to SDGs that are not established within laws and regulations may not be evaluated or may be addressed separately. The evaluation system needs to be integrated into government plans and administrative processes, so that the indicators and targets measured by governments align with those measured in urban facilities. For example, if the Waste Policy Division in a local government uses “waste

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reduction amount” and “ratio of citizens with high environmental awareness” as indicators, the waste treatment facilities that are conducting educational activities should use them as well. It is necessary that SDGs be affirmed in the policies of local governments, and that substantive indicators are systematically incorporated into all plans and administrative review processes.

6.6

Conclusion

Regional sustainability, which is affected by migration, population demographics, and socio-economic activity, depends on “people.” Urban facilities have become educational bases at various levels, fostering educated citizens who can confront regional issues while contributing to developing interest and attachment to the region, and expanding the base of people who are proactively responsible for the community. Areas where citizens’ engagement with urban facilities is neglected will only develop weak regional power. There is a possibility that the museum function of urban facilities can be used as an indicator of horizontal cooperation and regional power. Enhancing the museum-like functions of the various urban facilities to improve social connectivity and education is the foundation of improving the sustainability of the region. In this paper, after confirming the current state of sustainability evaluation and the state of social education, we examined the possibility of an index to evaluate the contribution of urban facilities to the improvement of sustainability by playing an educational role. At present, the index used for evaluating social education is not sufficient to effectively guide efforts toward sustainability. Although there is no index that can directly measure the contribution of the educational role of urban facilities to the improvement of sustainability, there is a possibility that it can be measured indirectly, and it should be considered for inclusion in the localization process. In this paper, I have summarized the current situation and proposed some indicators, but their validity, reliability, and effectiveness have not yet been demonstrated. I plan to expand the understanding of the museum-like functions of urban facilities through further research and validate the application of the sustainability indicators I have proposed. Indexing should provide valuable information for developing regional social capital and improving sustainability. Acknowledgements This work was supported by KAKENHI (20K01126). This paper is a translation of Horie, Hagihara, Kimura and Asahi (2020) into English with minor modifications. We would like to express our gratitude to the Japan Section of the Regional Science Association International.

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ISO (2018) ISO 37120:2018 Sustainable cities and communities - Indicators for city services and quality of life. https://www.iso.org/obp/ui/#iso:std:iso:37120:ed-2:v1:en. Accessed 10 Sept 2021 Iwamoto S, Tanaka T, Nishina D (2011) Evaluating future scenarios from the viewpoint of urban infrastructure development and maintenance cost, a study on the preferable urban structure of provincial small town in the depopulation age, part 1. AIJ J Technol Des 17(36):661–666. (in Japanese) Iwamoto S, Tanaka T, Nishina D (2014) Evaluating future scenarios from the viewpoint of CO2 emission in provincial small town. J Environ Eng 79(700):545–554. (in Japanese) Kano M, Aoo K (2018) An Attempt from a Region: Connecting Science and the SDGs Based on Local Culture and History. Trends in the Sciences. SCJ Forum 23(8):11–15. (in Japanese) Kawakubo S, Murakami S, Chujo A (2018) Research on implementation level of the sustainable development goals (SDGs) in Japanese local governments. AIJ J Technol Des 24(58): 1125–1128. Japanese) Kim H, Hino H, Usui H, Hanazato M, Takagi D, Kondo N, Kondo K (2019) The relationship between participation of older adults in hobby clubs and sports groups and density of neighborhood facilities—a case of Nagoya City using JAGES panel data. J City Plan Inst Jpn 54(3): 1490–1495. (in Japanese) Kobayashi T, Ikaruga S, Song J, Tsuboi S (2017) Study on applying area division system for location of urban facilities and evaluation of the environmental performance. J Architect Plan 82(737):1765–1774. (in Japanese) Manaki S, Nakamura H, Matsunaga C (2019) Sustainable City planning: affluence in data. Chuokeizai-Sha Holdings INC, Tokyo Masuhara N, Iwami A, Matsui T (2019) Local initiatives and issues toward achieving sustainable development goals: trends of setting goals and indicators by leading areas. Papers on environmental information science. J Environ Inf Sci Jpn 33:43–48. (in Japanese) Ministry of the Environment (2020) Commentary: Consideration of Environmental Indicators in the OECD and UNCSD (interpretation). http://www.env.go.jp/doc/toukei/contents/kaisetu.html. Accessed 18 Jan 2020 Mumford L (1961) The City in history: its origins, its transformations, and its prospects. Harcourt, Brace & World, Toronto Nakaguchi T (2000) International and Japanese situation and problem on sustainable development indicators. Environ Inf Sci 29(3):11–15. (in Japanese) Nakaguchi T (2016a) Proposal of indicators for sustainability assessment of educational activities. Research report, 2016 of Japan Society for Impact Assessment, Japan Society for Impact Assessment (in Japanese) Nakaguchi, T. (2016b) Analysis of Education-related Items of ESD and Sustainability Indicators– The National Level and European Local Level. Annual Report of Kanto Branch of Japan Society for Environment Education, vol. 10 The Japanese Society for Environmental Education (in Japanese) Ohmori T, Oosawa M, Nakamura H (2019) Study on the relationship between urban facilities and the chain of private pedestrian trips of elderly people. J Jpn Soc Civ Eng 75(5):527–533 Okano K, Komatsuzaki R, Katayama A, Taniguchi M (2019) Facility location in Core areas of cities with population decline-how urban function guided area should be like. J City Plan Inst Jpn 54(3):508–515. (in Japanese) Owens TL (2017) Higher education in the sustainable development goals framework. Eur J Educ 52(4):414–420 Oyasu K (2018) Linkages and networking of community based learning institutions for sustainable development: case Studies from UNESCO project. Annu Rep Jpn Soc Stud 15:75–80. (in Japanese) Sahely HR, Kennedy CA, Adams BJ (2005) Developing sustainability criteria for urban infrastructure systems. Can J Civ Eng 32(1):72–85

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Sato A, Morimoto A (2009) The effect of shrinking degree of administrative management and maintenance cost in Compact City. J City Plan Inst Jpn 44(3):535–540. (in Japanese) Sustainable Cities International (Canadian International Development Agency) (2012) Indicators for sustainability; how cities are monitoring and evaluating their success. https://procurementnotices.undp.org/view_file.cfm?doc_id=164983.Accessed 18 Jan 2020 Suzuki M (2004) Indicators for sustainable society. Proc Inst Stat Math 52(2):263–273. (in Japanese) Suzuki H, Fujii S (2007) The study on effect of attachment toward shops on place attachment. J City Plan Inst Jpn 42(3):13–18. (in Japanese) Suzuki H, Fujii S (2008a) Study on effect of place attachment on cooperative behavior local area. Inf Plan Rev 25(2):357–362. (in Japanese) Suzuki H, Fujii S (2008b) Study on effects of contact level to regional environment during travel on emotional attachment to local areas. J Jpn Soc Civ Eng 64(2):179–189. (in Japanese) Suzuki T, Ishikawa T, Sadahiro Y, Asami Y (2011) Effects of urban facilities on the development of residents’ place attachment. J City Plan Inst Jpn 46(3):117–123. (in Japanese) Tamura S, Tanaka T (2019) A Report on the relationship between existence of various facilities and population density -basic study Foe Compact City design. J Jpn Soc Civ Eng 75(3):172–180. (in Japanese) Tsukamoto N (2018) Transition of the concept of sustainable development and the implications of the SDGs (Japanese title only). J Int Coop Agric Dev 16(2):8. (in Japanese) UNDP (2020) Human Development Reports. http://hdr.undp.org/en/content/human-developmentindex-hdi. Accessed 18 Jan 2020 United Nations (2007) Indicators of sustainable development: guidelines and methodologies third edition. https://sustainabledevelopment.un.org/content/documents/guidelines.pdf. Accessed 18 Jan 2020

Chapter 7

A Study on the Economic Evaluation of Public Facilities: Regional Utilisation Other than Intended Purposes of School Facilities Toshihide Matsumura and Chisato Asahi

Abstract Local governments are promoting plans for the integration and reconstruction of public facilities. About 40% of the public facilities are made up of elementary and junior high school-related facilities. A school is a facility for implementing compulsory education services. Therefore, it can be said that there is little room to show the difference in utility depending on the choice. However, school facilities are used for purposes other than those intended, including social education, sports promotion, elections, as a shelter during disasters and emergencies, etc. For many of these extra uses, usage varies depending on the maintenance status of the school facilities. This study aims to theoretically examine the facility evaluation method to construct an evaluation method for public facility reorganisation. First, we organise the basic concept for evaluating the benefits of public facilities. Second, we organise the perspectives of the value analysis of public facilities. Third, we consider how to evaluate the use of school facilities for purposes other than compulsory education services. We conducted a questionnaire survey on the use of elementary school facilities and estimated their benefits using the discrete choice model. Keywords Public facilities · School facilities · Cost–benefit analysis · Discrete choice model · Local public accounting

T. Matsumura (✉) Cross Point Consulting Co., Ltd., Okinawa, Japan e-mail: [email protected] C. Asahi Faculty of Urban Environmental Sciences, Tokyo Metropolitan University, Tokyo, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 C. Asahi, N. Horie (eds.), Toward Sustainable Regions, New Frontiers in Regional Science: Asian Perspectives 73, https://doi.org/10.1007/978-981-99-5667-8_7

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7.1 7.1.1

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Introduction Background and Purpose

Currently, local governments in Japan are making plans for the consolidation and abolition of public facilities to respond to population decline and ageing. This leads to a reorganisation of public spaces in the region (Ministry of Internal Affairs and Communications 2018). To ensure these plans and their effectiveness, we need to evaluate public facilities in terms of the benefits of the residents. Such an evaluation will lead to plans for relocation and reconstruction of public facilities and encourage local government managers to make decisions (Matsumura and Asahi 2017). School-related facilities account for approximately 40% of the total floor space base. School-related facilities enable the implementation of compulsory education services, and their functions are mandatory consumer goods. As a result, there is little room for differences in utility due to user preferences. However, school facilities have certain functions in a region from the viewpoint of use, such as disaster prevention. The use of school facilities for purposes other than compulsory education services includes social education, promotion of sports, and elections. Many of these features are supposed to be selectively required and used by residents. Each benefit for the user depends on the condition of the school facilities. This study evaluates the benefits of school facility reorganisation as a basis for constructing evaluation methods for public facilities that contribute to local sustainability. First, we will overview the basic status of public facilities in Japan that need to be evaluated. Second, the evaluation method for the school facility was theoretically examined. In particular, we consider how to evaluate the use of school facilities for purposes other than compulsory education services. Third, we conducted questionnaire surveys on residents’ use of municipal primary school facilities. Finally, we conduct benefit estimation using the survey data and discrete choice model and consider its general application to the evaluation method for public facilities.

7.1.2

Literature Reviews

Recently, in Japan, there have been a lot of research on the evaluation of public facilities, because public administrations began to settle a comprehensive management plan for public facilities. Tsutsumi et al. 2015 proposed public facility evaluations in combination with ‘the administrator’s point of view’ and the ‘user’s point of view’. The administrator’s perspective has six metrics, and that of the user has six metrics. These 12 metrics are used to map all public facilities into four categories: abolition, maintenance, renovation, and changes in usage. Using such scoring is a common assessment method for public facilities (Uemori and Saito 2017). School facilities may be evaluated

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from four perspectives, such as safety and comfort, and a simple four-step evaluation can calculate their total score (Ministry of Education, Culture, Sports, Science and Technology 2009a, b). In some studies, a cost-effectiveness analysis was carried out from the viewpoint of the use of financial statements in public accounting. The Ministry of Internal Affairs and Communications (2014) introduced examples of the use of accounting information, such as depreciation and amortisation of facilities in administrative project evaluations. Nemoto (Nemoto 2017) points to the importance of financial data in the evaluation of public facilities and proposes the introduction of public ROA to promote the efficient use of public facilities. However, due to the concept of public interest and the lack of assets, public ROA is simply defined as ‘cost/scale = cost per scale’. Tsuruoka et al. (Tsuruoka et al. 2016) not only used financial data but also proposed the use of a cost–benefit analysis to gain residents’ consensus. Kikuchi (Kikuchi 2007) applied the travel cost method to analyse the costs and benefits of public facilities, targeting prefectural libraries in Iwate Prefecture, and found that the factors contributing to the increase in benefits were mainly the total floor area. As described above, research on public facility evaluation has been carried out in a wide range of fields. Moreover, the framework of facility evaluation is necessary for public bodies, as the government orders them to establish a comprehensive management plan for public facilities. However, a method for public organisations and users to easily measure the monetary value of public facilities has not been sufficiently developed nor it has been realised to compare the monetary value of public facilities with that of other public entities. Although the local public accounting system plays a certain role in comparing the value of facilities, the nature of public facilities as assets is much different from that of private companies. Therefore, this study aims to show an evaluation method for estimating benefits in terms of the monetary value of public facilities, as a first step, focusing on school facilities, which account for 40% of the public facilities of the local government. Utilising choice information of targeted use, which is affected by user preferences and distance from facilities, rather than compulsory services, makes it possible to calculate the benefits of facilities.

7.1.3

Theoretical Framework in Evaluating Public Facilities

In economic and financial decision-making in the reorganisation of public facilities, it is necessary to clarify its use and benefits. The benefit is equivalent to the economic value of facility use, and decision-making for public facilities should depend not only on their cost but also on their benefits. We organise the reason for this from the local autonomy law and their nature as economic goods.

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Efficiency Regulated in the Local Autonomy Law

The public facility supply by local governments is stipulated in ‘public facilities’ under Chap. 10 of the Local Autonomy Law, which clarifies the significance of public facilities and the rights of residents to use them. Article 244, Paragraph 1 of the Local Autonomy Law defines them as ‘a facility for the purpose of promoting the welfare of residents’ and stipulates that it meets the following requirements: (1) it is a facility; (2) it is intended for use by residents; (3) it is intended for use by residents of their own local governments; (4) it is provided for the purpose of promoting the residents’ welfare; and (5) it is provided by local governments. In addition, the Local Autonomy Law stipulates that ordinary local governments shall not treat residents’ use of public facilities unfairly and discriminatorily. The nature of public facilities consisting of these requirements is also considered from the viewpoint of economics. The ‘welfare improvement’ of the residents corresponds to the contribution to the maximisation of the resident’s utility (efficiency in resource allocation). The ‘facilities for resident’s use’ and ‘provided by local governments’ are interpreted to local public goods (club goods). Therefore, local governments need to consider efficiency in maintaining and updating the facilities, as clarified in Article 2(14) of the Local Autonomy Law (maximum effect at the lowest cost).

7.1.5

Public Facilities as Goods and Services in Economics

It is known that the optimal supply level of local public goods is generally given by Samuelson conditions: when local public goods are supplied at such a level that ‘the sum of the marginal benefits of local residents from local public goods is equal to the marginal cost’, social surplus is the maximum. Thus, the marginal benefit of public facilities for residents equals the demand price. The nature of the marginal benefits of public facilities depends on facility services. First, the services provided by public facilities are public services pertaining to the promotion of various welfare and have various contents, such as education, sports, welfare, entertainment, and community activities. Therefore, the demand for public facilities depends on the demand for public services. In other words, it is a ‘derived demand’. This means that a change in intrinsic demand fluctuates the demand for facility services. The fluctuation is unrelated to the area or equipment of the building, such as air conditioning. Second, their services have the nature of ‘instantaneous goods’, which have the property that consumption begins from the moment the service is produced and ends the moment the production ends. Many service industries, such as transportation, accommodation, and beauty salons, have the property of instantaneous goods that cannot be adjusted for inventory. The lack of supply flexibility causes peak and off-peak problems; therefore, demand control is needed to improve efficiency. These

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‘derived demands’ and ‘instantaneous goods’ have similar property to that of the transportation infrastructure that supplies transportation services.

7.1.6

Benefits of Public Facility Services

Public facilities are local public goods and have the property of derived demand and instantaneous goods; therefore, their benefits can be measured based on the theory of ‘derived demand’ and be applied to cost–benefit analysis. The optimal supply conditions for local public goods are derived in two stages: (1) regional decision-making problems (residents’ utility-maximising under production constraints) and (2) household decision-making problems (utility-maximising under budget constraints) (Boadway and Bruce 1984). The former, (1), gives the Samuelson condition. As for the latter, (2), a household’s utility, u, is determined by private goods (numeraire goods) x, and regional public goods, G, which is determined by the local public goods supply, z, and the number of users, n. Under budget constraint, I, a household pays 1/n of the supply cost of public goods, c (z). The utility maximisation problem and marginal cost of local public goods are as follows. The subscripts represent the partial derivatives. Max uðx, Gðz, nÞÞ cð z Þ =I s:t: x þ n cðzÞGz cz = nGn

ð7:1Þ

The implicit price of public facilities, which is marginal cost, consists of three factors: (1) utilisation charge, c(z)/n; (2) supply effect, dG/dz.; and (3) user number effect, dG/dn. The supply effect represents the impact on usability and economies of scale, and the user number effect represents the impact of the number of users on usability, such as congestion. The supply effect and the user number effect may have various patterns depending on the facility type and regional conditions. However, the marginal benefit of a facility can be considered as ‘generalised cost’, including the time value of travelling due to the nature of ‘derived demand’. This idea was based on Kanemoto and Nagao (Kanemoto and Nagao 1997). The demand for public services (education, cultural activities, sports, community activities, etc.) is provided by making facility services into intermediate input. In addition, since the service cannot be enjoyed without going to the facility, transportation service is an intermediate input of the facility service. The demand and supply curves for public services are as follows: q is the demand price and p is the supply price.

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Q = D ð qÞ Q = Sð pÞ The demand and supply curves of facility services providing public services are as follows: qb and pb are the demand and supply prices, respectively. G = D qb G = S pb The demand for transportation services to the facility is expressed as T = D(qtt). The demand price of public services is represented by the facility service’s demand price because the demand for public services inevitably requires the use of facilities. Similarly, the demand price of facility services is determined by the supply price of the facility and the generalised cost of the transportation service because the demand for facility services inevitably requires the supply of and trips to the facilities. Here, generalised costs include monetary and non-monetary costs. Monetary costs include gasoline and public transportation charges, thus reflecting the traffic supply conditions. Non-monetary costs include time value. The demand price of public services is expressed as follows: q = p þ qb = p þ pb þ qt

ð7:2Þ

Equation (7.2) shows that the demand price of facility services should be the sum of the facility supply price and the transportation generalised cost. Whatever public service the facility provides, its demand price represents the marginal net benefit of the derived demand. Combining Eqs. 7.1 and 7.2 leads to Eq. (7.3), where the marginal cost of facility c z corresponds to the facility supply price pb. The model for Eq. (7.1) does not take trips to facilities into account, cz represents usage charges, congestion externality, etc., which are costs other than travel paid by households. qb =

cðzÞGz þ qt = q - p nGn

ð7:3Þ

As a result, the marginal benefits of public facilities are calculated by (1) the charge of a facility, (2) the supply effect, (3) the effect of the number of users, and (4) the generalised cost of going to a facility. Among these, (1) the charge of a facility and (4) the generalised cost for going to a facility can be observed relatively easily, regardless of the facility’s function. However, (2) the supply effect and (3) the number of users’ effects vary depending on the facility’s function and the number of users; thus, it is necessary to know the effects, such as economies of scale, economies of scope, and externality of congestion. Therefore, in this study, we adopt (1) the charge of a facility and (4) the generalised cost of going to a facility as the benefit valuation of local public goods. This choice will lose some of the benefits of

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the facility, but it has some advantages: the information cost required for valuation is low and comparison of benefits between facilities becomes easy. In addition, it will be the basis for more precise benefit evaluations in detailed reorganisation plans for each facility. The precise benefit evaluation should include (2) supply effect and (3) the number of users’ effects. The generalised cost of transportation to the facility reflects the conditions of transportation services, such as the availability of public transportation and gasoline prices. This means that the generalised cost of transportation also reflects changes in regional attributes, such as urban or non-urban areas and regional traffic conditions, and finally determines the demand price of the facility. This indicates that the generalised cost of transportation represents the facility benefit, which reflects the substantial usability of the facility for users. Therefore, the generalised cost of transportation is favourable compared to the simple facility cost-based evaluation method. To measure (1) and (4), the travel cost method and the discrete choice model are applied. The marginal benefit of a facility as a derived demand consists mainly of the charge paid by the user and the travel cost (time value for the trip and the transportation fee).

7.2 7.2.1

Research Subjects and Methods Education Facilities

Public facilities owned or managed by local governments in Japan are 98,528 by prefectures, 327,845 by municipalities, and 426,373 in total (Fire and Disaster Management Agency 2016). Among them, school facilities (education facilities) account for nearly 40% of the municipalities. Thus, the ‘reorganisation problem of facilities’ of local governments is that of how to deal with school facilities. School facilities, such as elementary and junior high schools, are established to provide compulsory education services; hence, the function of school facilities is mandatory for consumer goods. Thus, there is little room for a household to reveal the difference in preference for school facilities. For example, even if an elementary school in a school district is abolished and integrated into one in a neighbouring school district, compulsory education services for children will continue to be provided there. This means that, for the users of school education, the change in the benefits due to the facility’s consolidation and abolition can be generally ignored. On the contrary, school facilities have certain functions within the community. For example, the Ministry of Education, Culture, Sports, Science and Technology (MEXT) has established the following guidelines for school facilities: ‘School facilities are the most familiar public facilities for local residents. In order to actively promote school facilities usage for lifelong learning, it needs to be barrierfree facilities. We also promote school facilities to cooperate with other education ones or welfare ones for the elderly. It also should play a role as a local and

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Table 7.1 Number of buildings by facility type owned by local governments

Classification 1. Social welfare facilities 2. School facilities (school buildings, gymnasiums) 3. Government building 4. Prefectural halls, community halls, etc. 5. Gymnasium 6. Clinical facilities 7. Police headquarters, police stations, etc. 8. Fire department, etc. 9. Public housing, etc. 10. Staff office 11. Others Total

Prefecture 1394 27,745 4534 935 241 578 5299 554 33,267 10,700 13,281 98,528

Municipality 18,857 122,113 9103 26,857 6718 3896 – 5538 89,540 1580 43,643 327,845

Total 20,251 149,858 13,637 27,792 6959 4474 5299 6092 122,807 12,280 56,924 426,373

Source: Disaster Prevention Division, National Protection and Disaster Prevention Department, Fire and Disaster Management Agency (Ohno 2000)

emergency shelter. Furthermore, we develop school facilities as facilities that can contribute to the local landscapes and townscapes’. ‘We need to ensure the safety of school facilities by implementing crime prevention measures that are based on the characteristics of the school and the community. It is also important to plan school facilities for joint use with local residents, which enables them to use school facilities more actively’ ([10] and Ministry of Education, Culture, Sports, Science and Technology 2016a, b) (Table 7.1).

7.2.2

Use of School Facilities for Other Purposes

The additional use to compulsory education of school facilities was initially explained by the Constitution; however, today, laws, such as the School Education Act, the Social Education Act, and the Sports Education Act, have expanded the scope of utilisation as follows: Article 89 of the Constitution of Japan (Restrictions on the Use of Public Property) ‘Public property must not be used by religious organizations. In addition, the public property may not be used for charitable, educational or philanthropy projects that do not belong to public control’. Article 137 of the School Education Law (Use of School Facilities for Social Education) ‘As long as there is no hindrance to school education, we will establish facilities for social education in schools. Citizens may also use school facilities for social education and other public use’.

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Article 44 of the Social Education Act (Use of School Facilities) ‘As long as the administrative body of the school recognizes that there is no hindrance in school education, it may make efforts to use the school facilities for social education’. Article 13 of the Basic Act on Sports (Use of School Facilities) ‘As long as there is no hindrance to the school education, the national and public school facilities may make efforts to use the school facilities for general sports’. In addition, the use of facilities has been recognised by various laws, such as the Public Office Election Law (polling stations, venues for standing speeches, etc.), the Fire Service Act (prevention of fire spread), the Water Control Law, and the Disaster Relief Act. Those functions provided by school facilities are to be selectively used by residents, and the benefits from the facilities may vary depending on the maintenance situation.

7.2.3

How School Facilities Are Evaluated

Focusing on the extra use of school facilities, we organised methods for evaluating their non-market value, that is, economic value. The non-market value, such as environmental externality, represents changes in resource allocation that are not traded in the market but affect the third person’ s preferences. It is also used to evaluate public facilities and services for which demand cannot be observed due to the nature of public goods. The valuation methods are grouped into two categories: the revealed preference method and the stated preference method. The former utilises choice or demand information revealed in the market, which relates to the goods to be evaluated, whereas the latter utilises choice information that people state in a contingent market by means of a questionnaire or choice experiment. The extra use of school facilities is expected for various purposes, such as recreation, communication, and health. As measuring each effect as demand for school facilities has a risk of double counting or leakage of benefit, a comprehensive evaluation method is desirable (Ohno 2000). In the stated preference method, it is necessary to show a detailed scenario to respondents who choose the goods or service to be evaluated; therefore, the contingent choice situation should be closer to the actual situation. In this respect, it may be difficult to set a detailed scenario for the extra use of school facilities, which has various purposes. However, the revealed preference method can evaluate multipurpose comprehensively, regardless of the purpose of use, if we use the market of fundamental goods, such as land or transportation, for substitute market. The travel cost and hedonic price methods are applicable, whereas each has its own problems. The travel cost method utilises choice information to visit a school in the transportation market; therefore, it is difficult to distinguish compulsory education use from extra-purpose use. Similarly, the hedonic price method utilises the difference in land prices by the school district, which reveals a household’s preference for

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the school’s academic level and the household’s income level rather than the extra use of school facilities. In addition, as elementary and junior high school districts are generally within walking distance, it is not easy to observe a difference in access time and distance that make up the travel cost. Therefore, the evaluation method should be able to distinguish the extra use of school facilities from the original purpose of school education; hence, the utility function method using the discrete choice model is applicable. The discrete choice method can describe multiple factors that constitute a utility function and estimate the valuation from the relationship between utility and choices.

7.2.4

Choice Behaviour of School Facilities

Considering the residents’ choices concerning the use of school facilities for extra purposes, school facilities are available not only within the school district where they live, but also in other school districts if they belong to the same municipality. Therefore, the choice can be described as a binary choice problem: (1) use the school or do not, (2) choose between the nearest school and the other neighbouring school, or (3) choose one of the several neighbouring schools. Next, we set the type and scale of facilities as characteristic variables for the extra use of school facilities, as the characteristics of each option are a factor in the choice. For example, suppose that local sports teams use school facilities for training. Whether to use a certain school or not depends on the attributes of the facility, such as the area of the playground and gymnasium, the ease of access to the school (travel cost), and the presence of charges. It also depends on the attributes related to residents, such as family composition, gender, and residence years (Table 7.2).

7.3 7.3.1

Estimation of Utility Value by Discrete Choice Model Model

Logistic regression on the extra use of elementary school facilities in the nearest school district was conducted following the reference method of the Ministry of Land, Infrastructure, Transport and Tourism (Ministry of Land, Infrastructure, Transport and Tourism 2017). The independent variables were user attributes and facility attributes, of which the individual maintenance of each school was substituted by the area of each school, which results in the value of extra use of a school depending mainly on the area of the school facility (i.e. playground, gymnasium, and size of the classroom). The dependent variable is a dichotomous choice value of ‘use school facilities or not’ and the response to Q2 in the questionnaire. The estimation formula is as follows:

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Table 7.2 Characteristic variables for school facility selection Selection problem Purpose of use

Choice

Characteristic variables

log

School facilities Direct use (social education, community exchange, where children are located) School District schools Schools outside the nearest school district Other schools in the municipality Do not use [system and operation] Presence or absence of facility opening Existence of after-school children’s clubs, etc. [user attributes] Age Gender Income Family structure Local activities Activities related to schools, etc. [facility attributes] Playground and schoolyard (area) Gymnasium (area/ indoors and outdoors) Pool (or not) Special classroom (area) Classrooms (area), etc.

School District schools Schools outside the nearest school district Other schools in the municipality Do not use [system and operation] Presence or absence of evacuation centre designation [user attributes] Age Gender Income Family structure Local activities Activities related to schools, etc. [facility attributes] Presence or absence of disaster prevention facilities and equipment School site area (open space functions, such as fire spread prevention), etc.

pi = β0 þ β1 x1i þ ⋯ þ βk xki , i = 1, ⋯, 199, k = 13 1 - pi Q2 =

7.3.2

Optional use (disaster prevention)

1 0

, PrðQ2i = 1Þ = pi

ð7:4Þ

Data

We conducted a web questionnaire survey on residents’ use of elementary schools owned by local governments (see Table 7.3). We obtained data on school facility attributes from the ‘School Facility Register’ provided by the National Board of Education. The explanatory variables are shown in Table 7.4. ‘Road distance to the nearest school’ was obtained by latitude and longitude of the address information of the school and the respondents. The direct distance that was calculated from latitude and

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Table 7.3 Survey overview Time Target Number of responses Main survey items To use or not Actual conditions of use User attributes

February 22–26, 2018 A resident of a national local government and a registrant of answers at macromill 628

Nearest school, presence or absence of use for purposes other than the purpose, name of the school used, etc. Purpose of use, facilities used, evaluation of facilities used, means of transportation, satisfaction evaluation, etc. Age, gender, household income, family structure, address (town name), participation in community activities, participation in activities related to schools, etc.

Table 7.4 Description variable content Explainer variable Gender Age Presence of children Occupation Road distance to the nearest school Identifying the evacuation centre designation of the nearest school School that you want to leave in the area Household income Involved in local activities Participation in school activities Playground area Gymnasium area Classroom area City dummy

Variable name SEX AGE CHILD JOB DIS

Contents Female = 0, male = 1 Real number Yes = 0, no = 1 ‘Full-time housewife (husband)’, ‘part-time job’, ‘student’ = 1, other = 0 The real value squared

Q15

I don’t know = 0, I know = 1

Q17

No = 0, yes = 1

Q23 Q24S1 Q24S2 Gr Gy Bl

Real number Not involved = 0, involved = 1 Not involved = 0, involved = 1 Square root of real numbers Square root of real numbers Square root of real numbers Users with addresses in Tokyo’s 23 wards and government-designated cities = 1, other = 0

longitude was converted to road distance using a theoretical parameter, 4/π, and then squared (Morita et al. 2014). The respondent’s detailed address was personal information that needed to be handled carefully; therefore, we could not obtain the respondent’s exact address. However, the location of the school used by the respondent can be accurately identified as the street address, using the CSV address matching service (Center for Spatial Information Science, The University of Tokyo 2018) provided on the Web by the Center for Spatial Information Science, The University of Tokyo. ‘Identifying the evacuation centre designation of the

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nearest school’ was a binary value identifying whether the respondents knew that the school was designated as the evacuation centre in case of disaster occurrence. ‘School that you want to leave in the area’ was a binary variable of hope for leaving a certain school for the sake of historical remains or regional identity. ‘Household income’ was divided into 13 groups, from less than one million yen to more than 20 million yen. ‘Involved in local activities’ was a binary value that identified a resident’s commitment to the area. ‘Playground area’, ‘Gymnasium area’, and ‘Classroom area’ were the square root of their area (m2) data, the classroom area (m2) included special classrooms as well as ordinary ones. According to the Ministry of Education, Culture, Sports, Science and Technology (Ministry of Education, Culture, Sports, Science and Technology 2009a, b), the definitions of ‘playground’ and ‘indoor playground (= gymnasium)’ are as follows: ‘Playground’ shall mean the part of the land pertaining to installer possession and used for the outdoor physical education and sports and ‘indoor playground’ is defined as a facility for exercising indoors. ‘City dummy’ was a binary variable that addresses in Tokyo 23 wards and government-designated cities for examining a difference in the use of facilities between urban and rural areas. Descriptive statistics for each variable are presented in Table 7.5. Of the 628 questionnaire responses, 199 were analysed. The final sample excluded samples that did not provide household income or where no school facility information could be obtained. For those who responded with ‘I do not know the nearest school’, we pinpointed the nearest elementary school using their address information. Table 7.6 shows the correlation coefficients between each explanatory variable. Since AGE and CHILD have correlation coefficients of 0. 4, one of them may be excluded from the estimates. As there was no strong correlation between other variables, we judged that there was no concern of multiple collinearities.

7.4

Results and Discussions

We conducted a logistic regression, and the results are shown in Table 7.7. The effectiveness of regression is supported at the significance level of 5% by the chi-square test, which is as small as the p-value of 0. 00. Significant explanatory variables at the 5% level were ‘SEX’, ‘Identifying the evacuation centre designation of the nearest school’ (Q15), ‘household income’ (Q23), ‘participation in school activities’ (Q24S2), ‘classroom area’ (Bl), ‘gymnasium area’ (Gy), and ‘city dummy’. The sign conditions for ‘household income’ (Q23) and ‘gymnasium area’ (Gy) were positive and consistent with previous studies (Ministry of Land, Infrastructure, Transport and Tourism 2017). The sign of ‘classroom area’ (Bl) was negative, which is contrary to previous research. ‘Road distance’, obtained by multiplying the correction parameter, was not significant even at 10% level, and the sign condition was positive, which is contrary to the previous research result (Ministry of Land, Infrastructure, Transport and Tourism 2017) that the distance and access time negatively affect the utilisation of facilities. This time,

val N Mean s.d. Min 1Q 2Q 3Q Max

Q2 199 0.34 0.48 0 0 0 1 1

SEX 199 0.50 0.50 0 0 1 1 1

AGE 199 49.48 16.17 20 37 48 64 79

Table 7.5 Descriptive statistics

CHILD 199 0.64 0.48 0 0 1 1 1

JOB 199 6.89 2.91 1 5 8 9 12

Dis 199 6.39 19.51 0.00 0.36 0.98 3.00 159.76

Q15 199 0.79 0.41 0 1 1 1 1

Q17 199 0.58 0.50 0 0 1 1 1

Q23 199 5,879,397 3,883,795 500,000 3,500,000 5,500,000 7,500,000 30,000,000

Q24S1 199 0.37 0.48 0 0 0 1 1

Q24S2 199 0.20 0.40 0 0 0 0 1

Gr 199 88 21 21 75 89 103 142

Gy 199 30.32 3.99 21 28 30 33 43

Bl 199 47.97 6.75 21 45 48 53 62

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SEX AGE CHILD JOB Dis Q15 Q17 Q23 Q24S1 Q24S2 Gr Gy Bl

SEX 1.00 0.01 0.13 0.18 -0.05 0.04 0.00 -0.11 0.04 0.15 0.11 -0.01 -0.07

1.00 0.40 0.37 -0.11 0.11 0.12 -0.09 0.28 -0.07 -0.05 -0.04 0.16

AGE

1.00 0.13 -0.05 0.26 0.14 0.09 0.19 0.25 -0.03 -0.05 0.10

CHILD

1.00 -0.04 0.12 0.02 -0.14 0.09 -0.06 0.06 -0.01 0.02

JOB

Table 7.6 Pearson product-moment correlation coefficient

1.00 -0.05 -0.06 -0.02 -0.02 0.00 0.00 -0.08 -0.09

Dis

1.00 0.19 0.05 0.21 0.13 -0.04 -0.21 -0.02

Q15

1.00 0.02 0.26 0.17 0.01 0.00 -0.07

Q17

1.00 0.04 0.16 0.07 -0.13 0.04

Q23

1.00 0.39 0.02 -0.01 0.00

Q24S1

1.00 -0.02 -0.06 0.00

Q24S2

1.00 0.24 0.14

Gr

1.00 0.24

Gy

1.00

Bl

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Table 7.7 Logit model estimation results SEX CHILD JOB DIS Q15 Q17 Q23 Q24S1 Q24S2 Gr Gy Bl City dummy Constant term

Regression factor -1.681* -0.222 0.017 0.017 1.269* 0.184 0.000* 0.289 1.900* -0.005 0.177* -0.063* 1.077* -4.819*

Standard error 0.42 0.42 0.06 0.01 0.56 0.39 0.00 0.41 0.56 0.01 0.06 0.03 0.41 2.08

z-value -3.98 -0.52 0.27 1.89 2.28 0.47 2.92 0.70 3.41 -0.59 2.93 -2.50 2.63 -2.32

p-value 0.00 0.60 0.79 0.06 0.02 0.64 0.00 0.48 0.00 0.56 0.00 0.01 0.01 0.02

5% significance level, χ 2 test: p = 0. 00 < 0. 05, Pseudo R2 = 0. 26

*

Table 7.8 Results

Discrimination rate

They take advantage of 36 32 68 52.94%

Do not use 17 114 131 87.02%

Total 53 146 199 75.38%

due to the difficulty in handling personal information, we could not obtain accurate personal addresses of respondents’; therefore, exact ‘distance’ could not be calculated. Table 7.8 presents the identification results of the logit model. The prediction rule is that if the choice probability P ^r (Q2 = 1) is greater than 0.5, the respondents use the school facility (Q2 = 1). Of the 68 people who answered that they would use school, the model could correctly predict 36 people, but not 32 people. Similarly, it could correctly predict 114 out of 131 people who answered that they would not use it. The identification rate of ‘use’ and ‘non-use’ people were 52.94% and 87.02%, respectively, and the total of the two was 75.38%. Table 7.9 shows the marginal effects of choice probabilities. The estimated values are significant for the following variables: ‘Gender’ (SEX), ‘Identifying the evacuation centre designation of the nearest school’ (Q15), ‘Household income’ (Q23), ‘Participation in school activities’ (Q24S2), ‘Gymnasium Area’ (Gy), ‘Classroom area’ (Bl), and ‘City dummy’. The marginal effect of the binary variables shows the extent to which the probability P (Q2 = 1) changes when each changes from 0 to 1. ‘Gender’ (SEX), ‘Identifying the evacuation centre designation of the nearest school’ (Q15), and

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Table 7.9 Estimation results of marginal effects

SEX Q15 Q23 Q24S2 Gy Bl City dummy

dy/dx -0.345 0.261 0.001 0.390 0.036 -0.013 0.221

Standard error 0.08 0.11 0.00 0.11 0.01 0.01 0.08

149 z-value -4.25 2.32 2.88 3.48 2.92 -2.58 2.64

p-value 0.00 0.02 0.00 0.00 0.00 0.01 0.01

‘Participation in school activities’ (Q24S2) were binary variables, and the probability decreased by 0.34, increased by 0.26, and increased by 0.39, respectively. This means that women were more active in using school facilities than men in terms of gender (SEX). As for Q15, the more people knew that the nearest school facility was designated as a shelter, the more they were likely to use it, whereas the possibility that the causal relationship was inversely correlated cannot be ruled out, that is, school users are always aware of the function of the school as an evacuation centre. As a result, if there were multiple school facilities with equivalent functions at the same distance from the user’s home, we could not distinguish which school facility the user recognised as a ‘designated evacuation centre’. Regarding ‘Participation in school activities’ (Q24S2), we could interpret that the more the people were involved in school activities, the more they were likely to use school facilities. For ‘City dummies’, the probability increased by 0.22 in urban areas, which suggests that the use of school facilities increases in urban areas compared to rural areas. However, ‘Household income’ (Q23), ‘Gymnasium area’ (Gr), and ‘Classroom area’ (Bl) were continuous variables, whose marginal effects show how much the choice probability changes when there is a slight change from the sample mean value. The probability of ‘Household income’ (Q23) and ‘Gymnasium area’ (Gr) increased by a very small value and 0.03, respectively, which are consistent with previous studies in that the marginal effects are positive. Conversely, ‘Classroom area’ (Bl) decreased by 0.01, which is different from the results of previous studies. We used facility area as an explanatory variable based on the assumption that the size of the facility area was a proxy variable for the quantity and quality of the facility and its equipment. However, as for the classroom, not all classrooms were open to residents in that area; hence, the physical area of the classroom may not be a factor encouraging facilities to use. Finally, based on the above estimation results, we calculated the annual benefit amount per household for elementary school facilities for 37,804,720 yen. However, in this estimation, there were some problems due to the lack of precise data, such as ‘Road distance to the nearest school’ or ‘Household Income’; therefore, we could not help conduct calculations using only the income parameters. As a result, we proposed a method to value the benefit of a facility, but the calculated figure itself was not meaningful.

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Concluding Remarks

In this study, an economic evaluation method for public facilities was theoretically arranged, proposed to estimate the benefits of public facilities, and applied to the case of extra use of elementary school facilities, which is a key to the sustainability of a region. Theoretically, the evaluation consisted of the charge for using a facility and the generalised cost of a trip to the facility. The advantage of this arrangement was that it included a main part of the benefit conservatively, but the information cost required for evaluation was low and comparison between facilities was easy. In addition, public entities nationwide can easily evaluate the benefits of using their residents and facilities’ data. The proposition and some empirical results of this study can be applied to a municipal facility reorganisation plan. Theoretically, the benefit from facility usage can be captured as the derived demand of public service; therefore, it consists mainly of the charge of the facility usage paid by the user and the travel cost (time value of a trip to the facility). The travel cost method and the discrete choice model were proposed to estimate their values. The empirical study showed that some facility attributes, resident characteristics, and income information had an explicit effect on the use of public facilities; thus, these parameters were used to derive the monetary value of the benefit. To derive a more detailed benefit, it is necessary to consider the supply effect and the user number effect added to the charge and generalised trip cost of the facility. The limitations of the study are as follows. In this study, we did not get enough answers on transportation methods in the survey to identify the resident’s actual access burden to a facility. Therefore, the means of transportation were not available as an explanatory variable. In addition, accurate address information could not be obtained, which prevented us from obtaining sufficient accuracy for the road distance data. Outside some urban centres where public transportation is well developed, automobiles are the main means of transportation; thus, road distances may not affect the use of public facilities. In the future, we will expand the research scope from the extra use of ‘school facilities’ to that of public facilities, such as civic centres, community centres, and libraries. Furthermore, some issues need to be studied: the difference between urban and rural areas in estimates, more detailed benefit evaluation, including the supply effect and the user number effect at the individual municipal level, and a comparison of benefit values among similar municipalities. Acknowledgments KAKENHI Grant Number 16K03634 and JST RISTEX Japan Grant Number JPMJRX16E3. This chapter is a translation of Matsumura and Asahi (2020) into English with minor modifications. We would like to express our gratitude to the Japan Section of the Regional Science Association International.

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References Boadway RW, Bruce N (1984) Welfare economics. B. Blackwell, New York Center for Spatial Information Science, The University of Tokyo (2018) CSV address matching service. http://newspat.csis.u-tokyo.ac.jp/geocode/. Accessed 8 Aug 8 2018. (in Japanese) Fire and Disaster Management Agency, Disaster Prevention Division, National Protection and Disaster Prevention Department (2016) Investigation Report on the Status of Seismic Retrofitting of Public Facilities which will Be Disaster Prevention Bases. (in Japanese) Kanemoto Y. and Nagao S (1997) Chapter 5. Basic ideas for measuring benefits, Social Evaluation of Road Investment Road Investment Evaluation Study Group (in Japanese) Kikuchi N (2007) Measurement and verification of the benefits of public libraries using the travel cost method: a case study of the relocation and new construction project of Iwate prefectural library. Compr Policy 9(1):69–83. (in Japanese) Matsumura T. and Asahi C (2017) Examination of the Framework for Efficiency Assessment in Public Facility Reorganization - From the Viewpoint of Public Accounting Information and Economic Evaluation -, The 54th Annual Conference Academic Publications. (in Japanese) Matsumura T, Asahi C (2020) Economic evaluation of public facilities: regional utilization other than intended purposes of school facilities. Stud Reg Sci 50(1):55–72. (in Japanese) Ministry of Education, Culture, Sports, Science and Technology (2009a) Research collaborators' meeting on the formulation of guidelines for the improvement of school facilities Evaluation of school facilities – For improvement of school facilities - (final report). (in Japanese) Ministry of Education, Culture, Sports, Science and Technology (2009b) Public school facility ledger creation procedure (in Japanese) Ministry of Education, Culture, Sports, Science and Technology (2016a) Elementary school facility maintenance guidelines, (in Japanese) Ministry of Education, Culture, Sports, Science and Technology (2016b) Junior high school facility maintenance guideline (in Japanese) Ministry of Internal Affairs and Communications (2014) Practical study group on the promotion of new local public accounting in the future, Other Use Cases of Financial Documents (in Japanese) Ministry of Internal Affairs and Communications (2018) Financial Research Division, SelfGoverning Finance Bureau, Toward further promotion of comprehensive management plan for public facilities. (in Japanese) Ministry of Land, Infrastructure, Transport and Tourism (2017) Park Green Space and Landscape Division, Revised 2nd Edition Small Park Cost Effectiveness Analysis Method Manual, (in Japanese) Morita T, Suzuki K, Okunuki K (2014) Empirical study on the ratio of straight line distance to road distance in major cities in Japan. Theory Appl GIS 22(1):1–7. (in Japanese) Nemoto Y (2017) Development of a method for evaluating public facilities to enhance the effectiveness of comprehensive management plans for public facilities, vol 7. Proceedings of Toyo University PPP Research Center, Tokyo, pp 1–8. (in Japanese) Ohno E (2000) Practice of environmental economic evaluation, Keisoshobo. (in Japanese) Tsuruoka M, Fukumoto W and Onishi J (2016) Roles such as cost-benefit analysis in public works RI discussion paper series, no. 16A-03, general affairs research department, policy research institute, Ministry of Finance (in Japanese) Tsutsumi H, Uchiyama T, Mizudashi Y, Ikezawa R , and Matsumura T (2015) A study on simple facility evaluation using questionnaires on public facilities, proceedings of the 31st architectural production symposium of architectural institute of Japan, 223–228. (in Japanese) Uemori U, Saito T (2017) A study on facility evaluation in comprehensive management plan for public facilities, Architectural Institute of Japan. J Archit Plan 82(741):2927–2937. (in Japanese)

Chapter 8

Land Value Differences Based on Approach Methodologies: Analysis Using Land Market Value Publications in Tokyo Miwa Ebisu and Chisato Asahi

Abstract There are three basic approaches to appraise the value of real estate: the cost approach, sales comparison approach, and income capitalisation approach. These approaches help ascertain the value of a certain real estate, and the values of each approach should match if applied appropriately. However, in real estate appraisal, the appraised value of each approach can sometimes be different, and the degree of difference depends on the location or characteristics of the real estate property. In this paper, using the Land Market Value Publication appraisal reports from 2019 to 2021, we analyse the impact of area-specific value factors and propertyspecific value factors on land value appraised by the sales comparison approach and the income capitalisation approach. We also evaluate the impact of area-specific and property-specific value factors on the degree of the differences in value by each approach. Estimates show that easy accessibility and high land use reflect a greater increase in value using the income capitalisation approach (ICV) than the value calculated using the sales comparison approach (SCV). These factors are critical to bidders or potential buyers. Therefore, it is reasonable to assume that the ICV, which has the character of a bid price, is more susceptible to these factors than the SCV. All the samples in this study indicate that SCV is greater than ICV. In such cases, it was shown that in residential areas with excellent accessibility and land use, ICV is closer to SCV, and both values are likely to match. In other residential areas, the difference tends to be larger. Keywords Value by sales comparison approach · Value by income capitalisation approach · Land Market Value Publication · Appraisal value · Spatial autoregressive model

M. Ebisu (✉) Makino Appraisal Office, Tokyo, Japan C. Asahi Faculty of Urban Environmental Sciences, Tokyo Metropolitan University, Tokyo, Japan e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 C. Asahi, N. Horie (eds.), Toward Sustainable Regions, New Frontiers in Regional Science: Asian Perspectives 73, https://doi.org/10.1007/978-981-99-5667-8_8

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8.1

Introduction

In real estate appraisal, the cost approach focusing on the reproduction cost of real estate, the sales comparison approach focusing on sales data of real estate in the market, and the income capitalisation approach focusing on real estate income are used as the three basic methods. If these approaches were appropriately applied to appraise the value of a given property, it would be expected that the values using each approach would generally agree; however, in practice, they often do not. The extent of the discrepancy will depend on the property’s conditions, accessibility to the city centre, its surroundings, and other factors; however, this will often be within the experience and perception of each appraiser. Generally, a real estate appraisal is conducted according to each customer’s request, and the appraisal report is issued to the customer. Appraisal reports discuss the final opinion value, the application of the appraisal approaches, the reason for possible differences in the values by approaches, and the process of adjusting the value. However, it is not disclosed and cannot be viewed by a third party. Therefore, it is difficult to compare and consider the difference in the value of each approach among real estate. In this paper, using the appraisal reports of the Land Market Value Publication from 2019, we clarify the impact of area-specific value factors and property-specific value factors on land value appraised by the sales comparison approach and the income capitalisation approach.1 We also clarify the impact of area-specific and property-specific value factors on the degree of the differences in value by each approach. Previous research employed fewer empirical studies on real estate appraisal approaches. Harris et al. (2018) analysed the difference in land values evaluated by the sales comparison approach and the income approach using examples; however, the subject is timberland, not urban land with many suppliers and buyers. In Japan, many studies point out that the Published Land Market Value (PLMV) based on the appraisal is different from the actual market value (Hidano et al. 1995, 2000; Nishimura and Shimizu 2002a, b, 2003; Shimizu and Nishimura 2006; Yamamura 2006). Furthermore, studies have been conducted on presenting easy-to-understand land price information that bridges the gap between the PLMVs and the actual prices (Inoue et al. 2009, 2016). In addition, since the PLMVs are determined with reference to the transaction price information in the surrounding area, a study shows that space lag should be considered when using PLMVs in the analysis (Shimizu and Karato 2007; Karato 2007). However, few other analyses have been conducted on the properties of the PLMV, that is, the appraisal price.

1

In the appraisal of the Land Market Value Publication, all standard residential sites are appraised by the sales comparison approach. Of these residential sites, the sites that are suitable for rental housing are appraised by the income capitalisation approach (land residual method), and the sites that are suitable for condominiums are appraised by the subdivision development analysis (the sites that are not suitable for either are appraised by only the sales comparison approach). We target the sites that are appraised by the sales comparison approach and the income capitalisation approach.

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Fig. 8.1 Offer, bid, and market price curves

Since the appraisal of real estate is a process in which ‘an appraiser takes the place of the rational market and points out the price that shows the market value of the real estate’ (Japan Association of Real Estate Appraisers (JAREA) 2015), analysing the difference between the value by sales comparison approach and the value by income capitalisation approach helps improve appraisal skills and helps understand the nature of market value. In the theory of economics, the match between the supplier’s offer price and the buyer’s bid price determines the market price of real estate.2 As shown in Fig. 8.1, the market price function P(L) of a property (L ) with one attribute is an envelope curve tangent on the downside of the offer price function (O) and tangent on the upside of the bid price function (B). Considering the character of value by each appraisal approach in the market, the value by cost approach (CV), which focuses on the cost of procuring the property, has the character of an offer price; that is, the minimum price that the supplier can offer to secure the given profit under certain technical conditions. The value of income capitalisation approach (ICV), which focuses on the utility or profit generated using real property, has the character of a bid price, where the potential buyer is willing to pay the maximum amount commensurate with the profit. The value by

2 If the total amount of land is constant and the total supply curve is considered vertical, the rent of land is determined by the degree of demand of households and businesses (i.e., it is determined only by the bid prices by potential buyers). Here, it is assumed that there are economic agents that own land and those that do not, and economic agents that own land change the amount of land supplied by changes in rent. When the substitution effect of a decrease in reservation demand (increase in supply) due to an increase in rent outweighs the asset effect of an increase in reservation demand (decrease in supply), the supply curve of the land market goes up to the right. In this paper, it is assumed that the market supply curve of land is rising to the right, and it is considered that the behaviour of not only the demander but also the supplier affects the equilibrium rent (price) of the land.

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sales comparison approach (SCV), which focuses on the transaction prices in the market, has the character of a market price representing the point where the offer price and the bid price coincide. In other words, estimating the price using these approaches signifies following the process until the transaction price is decided in the real estate market. When the property consists of a building and its site, the CV has the character of the offer price. However, if the property is a site without buildings and the supplier purchases it in the market, the offer price is based on the transaction price. Therefore the SCV for a vacant site has the character of the market price (the point coincident with the offer price and bid price) and the character of the offer price itself. The analysis of the SCV and ICV of a vacant site leads to an analysis of the market price and bid price, or the offer price and the bid price. This study uses the hedonic approach to examine how each attribute influences price. The hedonic approach estimates the property price by calculating the coefficient of each attribute and has a high affinity with the sales comparison approach, which considers the degree of influence of each attribute (area-specific and propertyspecific value factors) on the price.3 Meanwhile, the income capitalisation approach calculates the value by applying a cap rate to the net operating income generated using real estate, so it is difficult to treat each attribute explicitly. Although the sales comparison approach and the income capitalisation approach have different appraisal processes, we assume that when the values of both approaches are matched, area-specific and property-specific value factors affect both values to the same extent. Therefore, using a hedonic model, we estimate the six dependent variables: SCV, ICV, net income, cap rate (ICV consists of these two variables), the match rate of values (indicates the degree of the difference between ICV and SCV), and PLMV. In the following, Section 8.2 discusses the adopted spatial autocorrelation model, and Sect. 8.3 describes the data, variables, and targets of analysis. Section 8.4 shows the estimation results of each dependent variable, and Sect. 8.5 examines those results. Section 8.6 suggests the implications of the difference between SCV and ICV, the limitations of this study, and necessary research in the future.

8.2

Model

Land value is determined based on various land attributes, such as distance from the nearest station, width of the front road, urban planning regulations, and site conditions. The hedonic model expresses the land value function as follows:

3 JAREA (2003) states that the logical orientation of the sales comparison approach is like the statistical method in the following respects; it requires the collection of significant sales data, it derives each value factor and a certain regularity between them by comparing and examining the data and estimates the value of the subject property from the quantified coefficients.

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K

Pn =

βk xnk þ εn

ð8:1Þ

k=1

where P is the land value, n is the sample (1,2...N), x is the attribute of the land, k is the attribute type of the land (1,2...K ), β is the parameter of the land attribute, and ε is the error term. The land value at a given place is not only formed by the various attributes of the land but also under the influence of land prices at other locations that are geographically and spatially close to each other. In addition, since many attributes affect land values, when they are estimated by the ordinary least squares (OLS) method, unobserved explanatory variables may be omitted from the model, and an exclusionary variable bias may occur. Considering spatial dependence and excluded variable bias, this study uses panel data and a spatial autocorrelation model. First, we discuss the spatial econometrics model in cross-sectional data. The general model is represented by the following equation: P = λWP þ Xβ þ WXθ þ ε ε = ρWε þ v

ð8:2Þ

This is called the Manski model (Elhorst 2010), where P is the vector of the dependent variable (land price), W is the spatial weighting matrix, X is the N × K vector of explanatory variables, and ε and v are the error term vectors. Although W, which represents spatial autocorrelation, can be considered as the dependent variable, explanatory variable, and error term, the model has a different name by setting one or two of the coefficients λ, θ, and ρ to 0, respectively (incidentally, when all coefficients are zero, the model is the same as OLS). Next, we discuss a panel data model that considers spatial autocorrelation. As the panel data consists of individual cross-sectional and time-series data, we can distinguish between individual and time effects, as shown in Eq. (8.3). Pnt = λWPnt þ X nt β þ WX nt θ þ un þ ηt þ εnt εnt = ρWεnt þ vnt

ð8:3Þ

where Pnt and Xnt are the dependent and explanatory variables at time t for sample n, un is the individual effect for each sample, ηt is the time effect, and εnt and vnt are the error terms (disturbance terms) at time t for sample n (each term is a vector). When the explanatory variable X includes variables that do not change over time, such as land attributes, it is appropriate to consider individual effects as random rather than fixed effects. In random effects, individual effects are treated as random variables (un = iid(0,σ u2)). In the case of the random-effects model, we can also consider the individual effects as following the same spatial process as the error term. This is called the KKP model (Kapoor et al. 2007), named after the authors of the paper that proposed the model, and is expressed as follows:

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Pnt = λWPnt þ X nt β þ WX nt θ þ ηt þ εnt εnt = ρWεnt þ un þ vnt

ð8:4Þ

In this study, we use Eqs. (8.3) and (8.4) as a foundation to estimate the land price function. There are two types of spatial weight matrices: one is based on the adjacency criterion and the other on the distance criterion. The former is a matrix in which adjacent regions are set to 1 and non-adjacent regions are set to 0 in the case that the sample consists of regions such as prefectures and municipalities. The latter is a matrix in which the distance between points is calculated from the coordinates of each point, and the inverse of the distance (or the inverse of the square or cube of the distance) is created as an index of proximity. In this study, we created and applied a spatial weight matrix by the inverse of the distance based on the coordinates of the samples. The element wij of the spatial weight matrix W is expressed as follows:

wij

1=Dij i≠j j 1=Dij

ð8:5Þ

0 i=j where Dij is the distance between points i and j. In this study, the terms to be multiplied by W are the dependent variable, the error term, or both, and the estimation is based on Eqs. (8.3) and (8.4). In other words, because of estimating the five types shown in Table 8.1,4 the model with the best score, as per Akaike’s information criterion (AIC), is selected.

8.3

Data

For land values and land-related attributes, data from the appraisal reports of the 2019–2021 Land Market Value Publication were used. The electronic data of the appraisal reports were released from 2019 onward. Since these appraisal report data

4 It is an important issue in spatial autocorrelation models whether the spatial weight matrix should be considered for one or more of the dependent variable, explanatory variable, and error term; Elhorst (2017) states that due to the unavailability of formal proofs of the conditions under which the parameters are identified and the problem of overfitting, it is rare that a complete model with all spatial interaction effects is used in empirical research. Although we considered that the spatial interaction has a greater effect on the land values themselves than the area-specific or propertyspecific value factors of other sites, we also tried to estimate dependent variables with models that consider all spatial weight matrices to double-check this. However, the results were that the sign and the magnitude of the coefficients in the total effects could not be interpreted. Thus, we did not adopt models using spatial interaction for the explanatory variables.

8

Land Value Differences Based on Approach Methodologies: Analysis. . .

159

Table 8.1 Types of estimating models

Type A B C D E

Equation Term to multiply W Eq.㸦8.3㸧 P Eq.㸦8.3㸧 ε Eq.㸦8.3㸧 P,ε Eq.㸦8.4㸧 ε Eq.㸦8.4㸧 P,ε

Note ρ㸻0ࠊθ㸻0 λ㸻0ࠊθ㸻0 θ㸻0 λ㸻0ࠊθ㸻0 θ㸻0

are the only data in Japan that can grasp the value of each appraisal approach, we adopted them. This study selected residential areas in Tokyo (excluding the islands) because they provide adequate data for comparison. The differences between urban and suburban areas can be observed. However, we exclude the land where the highest and best use is for condominiums for this analysis. The subdivision development analysis applied is different from any of the three basic approaches because such land tends to limit potential buyers to condominium developers. In addition, using the spatial autoregressive model with panel data must be completely balanced without any missing values. Therefore, we extracted the sites that have been published for both SCV and ICV for three consecutive years and analysed 1308 sites for each year and 3924 sites in total for 3 years. The variables employed are listed in Table 8.2. The explanatory variables are area-specific and property-specific value factors obtained from the appraisal report and the linear distance to Tokyo Station and the district’s population density. Since the PLMV is the value as of 1 January every year, we consider that the land value is affected by the socio-economic situation of the previous year and adopt the population as of January 2018–2020. Designated building coverage ratio and designated floor-area ratio were also considered candidates for explanatory variables; however, they were not included in the explanatory variables considering the multicollinearity because of their high correlation with other variables. In addition, water, gas, and sewage were also considered; however, because the installation rates of all of these are very high and are unlikely to be effective explanatory variables, they were also excluded. The dependent variables are the SCV, ICV, net income (NI), cap rate (CR) (the latter two compose the ICV), and match rate (MR), which indicates the degree of match between the SCV and ICV, and the PLMV. In the estimation, excluding the dummy variables and MR, the variables are used logarithmically. The descriptive statistics of the main variables are shown in Table 8.3.

160

M. Ebisu and C. Asahi

Table 8.2 Variables and definitions Dependent variable

Definition

ln SCV

Average value using the sales comparison approach by 2 appraisers (logarithm)

ln ICV

Average value using the income capitalisation approach by 2 appraisers (logarithm)

ln Net income (NI)

Average annual net income appraised by 2 appraisers NI = ICV × CR (logarithm)

ln Cap rate (CR)

Average cap rate (%) appraised by 2 appraisers CR = NI/ICV (logarithm)

Match rate of values (MR) (ICV − SCV)㸭{㸦ICV + SCV)/2} ln PLMV

The Published Land Maket Value (logarithm)

Explanatory variable

Definition

Expected sign

ln Site area

Area of the site (square meters) (logarithm)

Irregularly shaped site

1 if applicable, 0 otherwise

㸫

ln Frontage/depth

Frontage/depth of the site (logarithm)

㸩

Southern road

The site facing a road on the southwest, south, or southeast side, according to eight directions. 1 if applicable, 0 otherwise.

㸩

Two or more roads

The site facing two or more roads. 1 if applicable, 0 otherwise.

㸩

ln Front road width

Front road width (m) of the site (logarithm)

㸩

Not constant

ln Nearest station distance Road distance (m) from the nearest station to the site (logarithm)

㸫

Low-rise residential area Category 1 low-rise residential area. 1 if applicable, 0 otherwise.

Not constant

ln Distance from Tokyo Station

Straight line distance from Tokyo Station to the site (logarithm)

㸫

ln Density

Population per area (square kilometers) by the districts in the city or ward (2018–2020) (logarithm)

㸩

Note. SCV sales comparison approach, ICV income capitalisation approach

8.4

Results

First, the Moran’s I test was conducted to confirm the existence of spatial autocorrelation. Using the single year (2020) data, we perform OLS separately for the samples in all areas of Tokyo (1308), special wards (799), and suburban areas (509).5 Therefore, spatial weight matrices were also created for the three areas. The test results showed that the null hypothesis was rejected in all cases, suggesting the possibility of spatial autocorrelation. In addition, the VIFs of the ten explanatory

5 The 23 special wards located on the east side of Tokyo were regarded as urban areas, and the other municipalities (26 cities, three towns, and one village) located on the west side were regarded as suburban areas. According to Tokyo Metropolitan Government (2021), the entire 23 special wards have a population of 9,679,649 and an area of 627.57 square kilometres, and the 30 municipalities have a population of 4,294,265 and an area of 1159.81 square kilometres (the population is as of December 1, 2021).

8

Land Value Differences Based on Approach Methodologies: Analysis. . .

161

Table 8.3 Descriptive statistics of the main variables

(n: 3,924) Variable SCV (Yen/m 2 ) 2

ICV (Yen/m ) 2

PLMV (Yen/m ) 2

Mean

Standard Minimum Maximum deviation

4,60,595 3,25,053

53,900 27,75,000

2,83,103 2,47,775

11,550 23,85,000

4,48,569 3,07,905

53,900 26,30,000

NI (Yen/m ) CR (%)

11,844 4.332

0.214

3.500

4.700

MR

-0.571

0.229

-1.648

-0.066

Site area (m 2 ) Frontage/depth

171.92

87.99

47.00

930.00

0.80

0.29

0.29

2.00

Front road width (m ) Nearest station distance (m) Distance from Tokyo station (km) 2

Density (population/km ) Low-rise residential area (number of sites)

9,413

532

85,377

5.77

2.86

2.00

40.00

911.33

726.25

120.00

8,500.00

17.27

9.81

1.75

45.42

15,274

6,905

610

47,400

1,866

variables are estimated as shown in Table 8.4, and it is judged that there is no problem with multicollinearity. Next, the AICs are compared using the maximum likelihood estimation with the five types of models shown in Table 8.1, for the samples in all areas, the special wards, and the suburban areas for the six dependent variables using spatial panel data. For estimating the cap rate in the special wards, the model of type D is optimal; however, for all other cases, type E is optimal. According to the results of each estimation, the time (year) effects are significant in all other cases, although the effects in 2021 are not significant for some estimations in the suburban areas. For the spatial lag terms in all cases, the results of the Wald tests reject the null hypothesis that λ and ρ are zero, indicating that the addition of the spatial lag terms to the model is significant (only ρ in the cap rate estimation of the special wards). In the following, the results of each optimal model are presented and discussed.

162

M. Ebisu and C. Asahi

Table 8.4 VIF

VIF All areas Special wards ln Site area Property- Irregularly shaped site specific ln Frontage/depth value factors Southern road

1.14

1.22

1.12

1.03

1.02

1.06

1.06

1.04

1.03

1.01

1.01

1.01

Two or more roads

1.07

1.10

1.05

ln Front road width

1.20

1.13

1.39

ln Nearest station distance

1.29

1.20

1.11

Low-rise residential area ln Distance from Tokyo Station

1.30

1.31

1.35

1.78

1.38

1.39

ln Density

1.62

1.15

1.36

Average

1.25

1.16

1.19

Samples (for a single year)

1308

799

509

Areaspecific value factors

8.4.1

Suburban areas

Results of SCV

The estimation results for the case where the dependent variable is the SCV are listed in Table 8.5. We first show the results of OLS of the pooled data and maximum likelihood estimation of the panel data for the samples in all areas, next, the results of maximum likelihood estimation of the panel data in the special wards and the suburban regions. (The results for the pooled data in the special wards and the suburban areas are omitted. The same applies to subsequent results.) In the panel data estimation for the samples in all areas, the only significant variable among the property-specific value factors is the site area. The expected sign is indeterminate,6 but it is positive here. In other words, the larger the site area, the higher is the price. However, the variables of area-specific value factors, such as the

6

On larger sites, the shape and layout of the building can be freely used, which may increase the land price, but if the total price of one site increases above a certain value, the unit price may decrease.

17.80 ** -54.01 ** 11.33 **

67.66 **

0.0100

0.0129

0.0143

0.1938

8129.92

0.0082 0.0003 0.0003 0.1727 0.0053 0.0326 0.0035 0.0001 0.8287

0.0282

0.0127

0.0082

0.0130 0.0100 0.0113 0.0077 0.0266 0.0147

Std. Err.

4.03 103.27 86.49 76.01 15.25 82.00

-0.4618

0.0279

-0.1038

0.1240 0.0005 0.0221 0.0317 0.0460 0.1186

Coef.

** -0.0147 ** 0.0424 ** 0.0371 ** 13.4582 ** 0.0575 ** 2.7652 0.1609 0.0103

-19.32 **

-3.59 **

-15.23 **

8.49 ** -1.20 0.44 1.35 0.92 6.62 **

z

4926.54

0.0108 0.0004 0.0004 0.2174 0.0070 0.0555 0.0041 0.0002 0.6430

0.0389

0.0171

0.0107

0.0143 0.0110 0.0130 0.0123 0.0301 0.0189

Std. Err.

**

† *

**

-1.36 96.99 84.85 61.90 8.18 49.79

-0.9433

-0.0926

-0.1600

0.0127 -0.0427 -0.0238 0.0021 -0.0710 0.0596

Coef.

3576.67

0.0102 0.0002 0.0002 0.3892 0.0072 0.0709 0.0048 0.0002 0.7635

0.0895

0.0161

0.0108

0.0218 0.0234 0.0173 0.0070 0.0401 0.0180

Std. Err.

6.21 53.67 37.69 39.37 6.41 44.24

** ** ** ** ** **

-10.54 **

-5.75 **

-14.80 **

0.58 -1.82 † -1.37 0.30 -1.77 † 3.31 **

z

Suburban areas (E type)

0.0632 ** 0.0128 ** 0.0091 ** 15.3229 ** 0.0463 ** 3.1353 0.1479 0.0069

-11.86 **

1.64

-9.70 **

8.70 0.05 1.70 2.59 1.53 6.28

z

Special wards (E type)

Note: **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

3924 (1308) -16225.84

2397 (799) -9819.09

1527 (509) -7119.34

χ2(2)㸻6926.04 P㸼χ2㸻0.000 χ2(2)㸻2529.55 P㸼χ2㸻0.000 χ2(2)㸻2006.14 P㸼χ2㸻0.000

0.0329 0.0305 0.0256 13.1243 0.0805 2.6729 0.1730 0.0096

-0.5453

-0.0454

-0.1244

0.1104 -0.0120 0.0049 0.0104 0.0245 0.0970

Coef.

All areas (panel : E type)

Land Value Differences Based on Approach Methodologies: Analysis. . .

3924 1314.89

0.7754 0.7749

-23.98 **

** ** *

**

0.0085

All areas (pooled ols) Robust Coef. t Std. Err. 0.2476 0.0139 17.87 -0.0207 0.0177 -1.17 0.0082 0.0137 0.60 0.0269 0.0096 2.79 0.1058 0.0294 3.60 0.0376 0.0174 2.16

ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station -0.2032 distance Low-rise residential area 0.1781 ln Distance from Tokyo -0.6955 Sta. ln Density 0.1619 Year 2020 Year 2021 Constant term 13.1101 λ ρ /sigma_u /sigma_e R2/pseudo R2 Adjusted R2 Log likelihood Wald test of spatial terms Samples (( ): per year) AIC

Dependent variable ln SCV

Table 8.5 Estimated results (ln SCV)

8 163

164

M. Ebisu and C. Asahi

front road width, nearest station distance, distance from Tokyo station, and density are all significant, and their signs are as expected. According to this estimation, the expected sign for the low-rise residential area is indeterminate,7 but it is significant with a negative sign. This indicates that land prices are lower in low-rise residential areas than in other areas. Next, we provide an overview of the results of the special wards and suburban areas. In the special wards, the property-specific value factors of the site area (1% level), southern road dummy (5% level), and frontage/depth ratio (10% level) are significant with the expected signs. For area-specific value factors, unlike the case for all areas, the low-rise residential area dummy and density are not significant (their signs are opposite to those of all areas). Contrarily, in suburban areas, although at the 10% level, the irregularly shaped site dummy and the two or more roads dummy of the property-specific value factors are negatively significant, and the latter sign is the opposite of what is expected. In addition, the southern road dummy is not significant, unlike in special wards. The area-specific value factors are all significant, and the signs are the same as those for the samples in all areas. In the model considered the spatial autocorrelation among the dependent variables, it is necessary to check the indirect effect of other samples in addition to the direct effect of the explanatory variable on the dependent variable, and the total effect that combines the direct and indirect effects. Each effect is listed in the appendix table at the end of this report. As shown in Appendix Tables 8.13, 8.14 and 8.15, the indirect effects have the same signs as the direct effects, and the indirect effect values are small in all areas, the special wards, and suburban areas. Therefore, the total effects were not remarkably different from the direct effects.

8.4.2

Results of ICV

The estimation results for the case in which the dependent variable is the ICV are listed in Table 8.6. In the panel data estimation for the samples in all areas, the site area is positively significant among the property-specific value factors. In contrast, the irregularly shaped site is negatively significant. All area-specific value factors are significant with the same signs as the results of SCV. In the special wards, unlike the result of SCV, all property-specific value factors are significant (although some signs of variables are at the 10% level). These signs of coefficients are as expected, except for the site area. The area-specific value factors other than density are significant with the same signs as the results for all areas. The low-rise residential area dummy is also significant with a negative sign, unlike the result of SCV. Contrarily, only frontage/depth is significant in suburban areas with

7

Since the category 1 low-rise residential areas encourage use as low-rise housing with ample space on the premises, it is possible that land prices could rise due to the good living environment. However, land prices could also fall due to the low designated floor area ratio.

0.1092 0.0382 0.0178 12.2271 0.1166 3.9039 0.2312 0.0554

0.0158 -55.28 **

0.0180 15.36 **

3155.90

6.45 45.61 21.66 49.96 16.35 140.83

3924 (1308) -6277.81

Note: **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

3924 3210.89

0.7924 0.7918

0.0169 0.0008 0.0008 0.2447 0.0071 0.0277 0.0046 0.0008 0.8551

-0.6337

-0.1235

** 0.0264 ** 0.0501 ** 0.0303 ** 13.3148 ** 0.0503 ** 2.2125 0.1895 0.0440

0.0215 -31.29 **

0.0174 -11.17 **

-0.1542

0.1409 -0.0452 0.0404 0.0243 0.0935 0.1749

Coef. 8.19 -1.79 2.10 1.66 2.60 7.33

z ** † * † ** **

-6.18 **

2457.03

0.0191 0.0019 0.0019 0.2855 0.0077 0.0299 0.0048 0.0008 0.6265

1.38 26.32 15.93 46.63 6.57 74.04

-1.2224

-0.3149

-0.2518

-0.0229 -0.0555 -0.0656 -0.0277 -0.0626 0.0577

Coef.

0.1785 ** 0.0263 ** 0.0024 ** 15.2188 ** 0.0611 ** 2.1376 0.2542 0.0686

0.0387 -16.39 **

0.0200

0.0145 -10.62 **

0.0172 0.0252 0.0193 0.0146 0.0359 0.0239

Std. Err.

-0.58 -1.34 -1.83 † -1.22 -0.89 1.50

z

-7.52 **

962.44

0.0279 6.41 ** 0.0039 6.69 ** 0.0039 0.62 0.7201 21.13 ** 0.0111 5.49 ** 0.1102 19.39 ** 0.0083 0.0015 0.7525

0.1626

0.0289 -10.88 **

0.0201 -12.50 **

0.0396 0.0413 0.0359 0.0227 0.0708 0.0386

Std. Err.

Suburban areas (E type)

2397 (799) -4880.06

1527 (509) -1890.89

χ2(2)=19860.79 P㸼χ2㸻0.000 χ2(2)㸻5580.01 P㸼χ2㸻0.000 χ2(2)㸻408.53 P㸼χ2㸻0.000

-0.6722

4.28 **

0.0127

6.64 ** -2.79 ** -0.30 -0.34 1.61 6.67 **

z

0.0127 -16.06 **

0.0179 0.0237 0.0189 0.0133 0.0360 0.0220

Std. Err.

Special wards (E type)

Land Value Differences Based on Approach Methodologies: Analysis. . .

Samples (( ): per year) AIC

Wald test of spatial terms

-0.1945

0.0108 -23.52 **

0.2418 50.58 **

-0.2035

** **

** †

Coef.

All areas (panel : E type)

0.1191 -0.0661 -0.0057 -0.0045 0.0581 0.1466

All areas (pooled ols) Robust Coef. t Std. Err. 0.2530 0.0167 15.15 -0.0455 0.0243 -1.88 0.0178 0.0172 1.04 -0.0012 0.0125 -0.10 0.1268 0.0353 3.60 0.0644 0.0219 2.95

ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station -0.2538 distance Low-rise residential area 0.0543 ln Distance from Tokyo -0.8721 Sta. ln Density 0.2763 Year 2020 Year 2021 Constant term 12.2315 λ ρ /sigma_u /sigma_e R2/pseudo R2 Adjusted R2 Log likelihood

Dependent variable ln ICV

Table 8.6 Estimated results (ln ICV) 8 165

166

M. Ebisu and C. Asahi

the opposite sign to expectations. The area-specific value factors other than the front road width are significant with the expected signs (except for the low-rise residential area). As shown in Appendix Tables 8.16, 8.17 and 8.18, the indirect effects carry the same signs as the direct effects. The indirect effect values are small in all areas, including special wards and suburban areas. Therefore, the total effects were not remarkably different from the direct effects. This is similar to the result of the SCV.

8.4.3

Results of Net Income

As net income is one of the components of the ICV, the estimation result is almost similar to that of the ICV. As shown in Table 8.7, in the estimation of all areas and suburban areas, the variables that became significant and their signs are respectively identical to the case of the ICV. In the special wards, the three variables alone among the property-specific value factors, those are site area, frontage/depth, and two or more roads became significant, unlike the estimation result of ICV. Regarding the area-specific value factors, however, the four variables except the density became significant like the estimation result of ICV. As shown in Appendix Tables 8.19, 8.20, 8.21, the relationship between the direct, indirect, and total effects is the same as the SCV or ICV.

8.4.4

Results of Cap Rate

The cap rate is also a component of the ICV and is the interest rate that divides net income. As for the cap rate, a negative coefficient sign indicates an increase in ICV, while a positive coefficient sign indicates a fall in the ICV. As shown in Table 8.8, in the panel data estimation for all areas, the site area, the southern road, and the two or more roads are negatively significant. If they increase or fall under each category, they will lower the cap rate and increase the ICV. Only the distance from Tokyo Station is significant in the area-specific value factors. It has a positive sign, meaning that moving away from Tokyo Station will lower the ICV, as expected. In the special wards, the same property-specific value factors as in all areas are significant, and in the area-specific value factors, in addition to the distance from Tokyo Station, the nearest station distance is also significant with a positive sign as expected. In the suburban areas, only the distance from Tokyo Station was positively significant, however, the other variables showed no influence at all. There was no indirect effect in the special wards because spatial autocorrelation was not considered in the dependent variable. The indirect effects for all areas and the suburban areas are shown in Appendix Tables 8.22 and 8.23; however, the indirect effects are extremely low in both cases.

0.0152 -53.57 **

0.0175

0.2345

-0.8117

0.2701

9.0601

38.63 **

15.44 **

6.05 ** -2.91 ** -0.28 -0.64 1.29 6.59 **

z

3205.24

0.0168 0.0018 0.0018 0.2733 0.0094 0.0268 0.0047 0.0007 0.8502

7.18 10.11 1.68 33.30 14.36 82.95

** ** † ** ** **

0.0403 -15.72 **

0.0176 -12.17 **

0.0125 -15.77 **

0.0182 0.0241 0.0194 0.0136 0.0367 0.0224

Std. Err.

0.0284 0.0255 0.0112 9.9423 0.0732 2.6232 0.1814 0.0432

-0.5487

-0.1137

-0.1530

0.1266 -0.0394 0.0395 0.0202 0.0628 0.1760

Coef. 7.68 -1.63 2.14 1.45 1.82 7.68

z

† **

*

**

-5.85 **

2522.92

0.0185 0.0014 0.0014 0.2839 0.0107 0.0507 0.0046 0.0008 0.6490

1.54 18.21 7.95 35.02 6.85 51.71

-1.2025

-0.3159

-0.2512

-0.0232 -0.0559 -0.0665 -0.0278 -0.0630 0.0575

Coef.

-0.59 -1.36 -1.86 † -1.23 -0.89 1.49

z

976.65

0.0278 0.0041 0.0041 0.7076 0.0148 0.1240 0.0083 0.0015 0.7535

0.1581

6.48 2.55 -1.41 17.06 5.47 16.77

** ** **

** *

-7.61 **

0.0289 -10.94 **

0.0201 -12.52 **

0.0395 0.0413 0.0358 0.0226 0.0707 0.0385

Std. Err.

Suburban areas (E type)

0.1801 ** 0.0104 ** -0.0058 ** 12.0688 ** 0.0813 ** 2.0800 0.2538 0.0678

0.0423 -12.98 **

0.0194

0.0140 -10.93 **

0.0165 0.0242 0.0184 0.0140 0.0344 0.0229

Std. Err.

Special wards (E type)

3924 (1308) -6376.47

2397 (799) -5011.85

1527 (509) -1919.30

χ2(2)=7145.12 P㸼χ2㸻0.000 χ2(2)㸻2683.35 P㸼χ2㸻0.000 χ2(2)㸻314.26 P㸼χ2㸻0.000

0.1203 0.0182 0.0030 9.1017 0.1346 2.2261 0.2355 0.0542

-0.6337

-0.2137

-0.1976

0.1103 -0.0704 -0.0055 -0.0087 0.0473 0.1473

Coef.

All areas (panel : E type)

Note: **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

3924 2918.21

0.7860 0.7854

0.0123

0.0420

3.42 **

0.0105 -23.50 **

** **

** †

-0.2476

All areas (pooled ols) Robust Coef. t Std. Err. 0.2314 0.0159 14.57 -0.0456 0.0236 -1.93 0.0209 0.0165 1.26 -0.0041 0.0120 -0.34 0.1043 0.0328 3.18 0.0666 0.0211 3.16

Land Value Differences Based on Approach Methodologies: Analysis. . .

Samples (( ): per year) AIC

Wald test of spatial terms

ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density Year 2020 Year 2021 Constant term λ ρ /sigma_u /sigma_e R2/pseudo R2 Adjusted R2 Log likelihood

Dependent variable ln Net Income

Table 8.7 Estimated results (ln NI)

8 167

0.0013

0.0178

-0.0061

1.4343

3924 -16274.86

0.6372 0.6363

0.0013

0.0604

80.55 **

-4.71 **

47.81 **

0.0010 -12.04 **

-0.0122

7.41 **

0.0008

* ** **

**

0.0062

All areas (pooled ols) Robust Coef. t Std. Err. -0.0217 0.0016 -13.60 -0.0002 0.0019 -0.09 0.0032 0.0015 2.18 -0.0029 0.0010 -2.78 -0.0224 0.0041 -5.46 0.0023 0.0018 1.29

30.51 **

-0.05

1.17

-7.27 ** 1.32 0.12 -2.42 * -6.10 ** -0.83

z

11922.56

0.0013 -0.54 0.0002 -129.29 ** 0.0002 -102.77 ** 0.0192 70.13 ** 0.0048 2.65 ** 0.0422 78.31 ** 0.0004 0.0001 0.6136

0.0020

0.0013

0.0009

0.0013 0.0019 0.0014 0.0010 0.0027 0.0017

Std. Err.

7014.69

48.75 **

0.0600 0.0005 0.0001 0.3672

2.9253 0.0190 0.0080

9.16 **

-1.18

2.47 *

-7.55 ** 0.98 -0.14 -2.12 * -6.00 ** -0.82

z

0.0020 0.40 0.0002 -119.01 ** 0.0002 -92.87 ** 0.0280 49.70 **

0.0045

0.0021

0.0015

0.0018 0.0028 0.0020 0.0015 0.0037 0.0025

Std. Err.

0.0008 -0.0253 -0.0200 1.3924

0.0416

-0.0025

0.0037

-0.0133 0.0027 -0.0003 -0.0032 -0.0221 -0.0020

Coef.

Special wards (D type)

0.0008 -0.0167 -0.0088 1.4552 -0.0086 3.1352 0.0041 0.0039

0.0221

-0.0006

0.0002

-0.0005 -0.0006 -0.0009 0.0002 0.0006 -0.0005

Coef.

7.86 **

-1.09

0.56

-0.69 -0.77 -1.34 0.38 0.44 -0.64

z

5907.89

0.0005 1.54 0.0001 -134.95 ** 0.0001 -72.87 ** 0.0131 110.77 ** 0.0019 -4.49 ** 0.0484 64.80 ** 0.0002 0.0001 0.4629

0.0028

0.0005

0.0004

0.0007 0.0007 0.0007 0.0004 0.0013 0.0007

Std. Err.

Suburban areas (E type)

3924 (1308) -23811.13

2397 (799) -13997.38

1527 (509) -11781.77

χ2(2)=6390.27 P㸼χ2㸻0.000 χ2(1)㸻2376.29 P㸼χ2㸻0.000 χ2(2)㸻4233.55 P㸼χ2㸻0.000

-0.0007 -0.0214 -0.0154 1.3435 0.0129 3.3013 0.0170 0.0071

0.0614

-0.0001

0.0011

-0.0098 0.0025 0.0002 -0.0024 -0.0165 -0.0014

Coef.

All areas (panel : E type)

Note: **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

Samples (( ): per year) AIC

Wald test of spatial terms

ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density Year 2020 Year 2021 Constant term λ ρ /sigma_u /sigma_e R2/pseudo R2 Adjusted R2 Log likelihood

Dependent variable ln Cap Rate

Table 8.8 Estimated results (ln CR)

168 M. Ebisu and C. Asahi

8

Land Value Differences Based on Approach Methodologies: Analysis. . .

8.4.5

169

Results of Match Rate

The match rate (MR) is calculated by subtracting the SCV from ICV and dividing by the average of the two values. Therefore, the value of MR is negative if ICV < SCV. As shown in the descriptive statistics in Table 8.3, both the minimum and maximum values of the MR are negative, indicating that all samples have ICV < SCV. The larger the negative value of the MR, the larger the SCV, and the closer the MR is to zero, the more the ICV is equal to SCV. As shown in Table 8.9, the southern road and the irregularly shaped site are negatively significant in the panel data estimation for all areas. This signifies that when they fall into these categories, the ICV will be relatively lower than the SCV, and the MR will be lower. In the area-specific value factors, all variables are significant, and their signs are the same as those of the SCV and ICV. Among the property-specific value factors, only the site area is significant in the special wards, while all the area-specific value factors are significant. In the estimation results so far, there are no cases where the density is significant in the special wards; however, it is positively significant here. The signs of the other variables are the same as in the case of ICV. In suburban areas, the southern road was negatively significant. For area-specific value factors, the variables that are significant in the ICV are significant with the same signs. The spatial lag term λ is negatively significant for all areas, special wards, and suburban areas. This means that the lower the MRs of other nearer samples (the lower the ICV than SCV), the higher the MR of a certain sample. As shown in Appendix Tables 8.24, 8.25 and 8.26, the indirect effects show signs opposite to the direct effects for all variables.

8.4.6

Results of the PLMV

Although the PLMV is determined between the SCV and ICV, the average value of the PLMVs is close to the average value of SCVs, as shown in Table 8.3. Therefore, as shown in Table 8.10, the estimation results were similar to the results of the SCV.

8.5 8.5.1

Consideration SCV and ICV

First, we consider the ICV, net income, and cap rate (the latter two are the basis for the calculation of ICV) and then consider the difference between the ICV and SCV.

0.0064

0.0884

0.0981

-0.8199

3924 -3970.80

0.5947 0.5936

0.0057 -27.36 **

-0.1558

-9.27 **

15.21 **

0.0054 -20.88 **

-0.1132

-9.95 **

0.0043

** † **

†

-0.0430

All areas (pooled ols) Robust Coef. t Std. Err. 0.0082 0.0057 1.43 -0.0194 0.0104 -1.87 0.0075 0.0070 1.07 -0.0233 0.0051 -4.57 0.0224 0.0125 1.80 0.0239 0.0080 3.00 -5.48 **

0.87 -1.76 † 0.30 -2.88 ** 1.56 2.57 *

z

4498.88

0.0092 0.0014 0.0012 0.1442 0.0874 0.0672 0.0025 0.0006 0.6220

0.0191 6.00 8.85 -7.10 -4.40 -4.15 39.05

** ** ** ** ** **

-8.03 **

0.0094 -16.90 **

0.0068

0.0098 0.0134 0.0105 0.0073 0.0196 0.0120

Std. Err.

0.0469 0.0094 -0.0080 -0.7709 -0.2349 2.8218 0.1016 0.0408

-0.1064

-0.1300

-0.0201

0.0197 -0.0199 0.0175 -0.0085 0.0309 0.0515

Coef.

-2.49 *

2.09 * -1.34 1.65 -1.06 1.57 3.92 **

z

3066.75

0.0109 0.0015 0.0014 0.1592 0.1247 0.1119 0.0027 0.0007 0.3580

0.0233

4.31 6.13 -5.94 -4.84 -1.88 25.22

** ** ** ** † **

-4.57 **

0.0110 -11.79 **

0.0080

0.0094 0.0148 0.0107 0.0079 0.0196 0.0131

Std. Err.

Special wards (E type)

0.0381 0.0162 -0.0074 0.2256 -0.3089 1.7931 0.1438 0.0513

-0.2621

-0.2000

-0.0558

-0.0263 -0.0116 -0.0149 -0.0348 0.0051 -0.0119

Coef.

-4.92 **

-1.16 -0.49 -0.73 -2.65 ** 0.13 -0.54

z

1548.37

0.0159 0.0044 0.0043 0.3629 0.0985 0.1706 0.0047 0.0011 0.4508

0.0756

2.40 3.69 -1.73 0.62 -3.14 10.51

** **

* ** †

-3.47 **

0.0165 -12.10 **

0.0114

0.0226 0.0237 0.0205 0.0132 0.0405 0.0221

Std. Err.

Suburban areas (E type)

3924 (1308) -8963.76

2397 (799) -6099.51

1527 (509) -3062.73

χ2(2)=1575.92 P㸼χ2㸻0.000 χ2(2)㸻654.01 P㸼χ2㸻0.000 χ2(2)㸻110.52 P㸼χ2㸻0.000

0.0551 0.0125 -0.0087 -0.6348 -0.3626 2.6242 0.1241 0.0452

-0.1534

-0.1596

-0.0371

0.0085 -0.0237 0.0031 -0.0212 0.0306 0.0308

Coef.

All areas (panel : E type)

Note: **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

Samples (( ): per year) AIC

Wald test of spatial terms

ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density Year 2020 Year 2021 Constant term λ ρ /sigma_u /sigma_e R2/pseudo R2 Adjusted R2 Log likelihood

Dependent variable Match rate of values

Table 8.9 Estimated results (MR)

170 M. Ebisu and C. Asahi

0.0324 0.0306 0.0260 12.9483 0.0841 2.6460 0.1726 0.0081

0.0128 -52.89 ** 11.20 **

68.17 **

0.0142

0.1918

1.25

5316.23

-0.9383

-0.0860

-0.1567

0.0107 -0.0442 -0.0224 0.0010 -0.0707 0.0574

Coef.

8592.35

0.0342 -14.32 **

0.0164

* * † **

**

-9.61 **

9.03 -0.68 2.00 2.59 1.68 5.91

z

0.0092 -0.90 0.0627 0.0004 105.40 ** 0.0129 0.0004 93.30 ** 0.0095 0.1945 69.11 ** 15.2941 0.0064 8.34 ** 0.0464 0.0122 202.60 ** 3.1567 0.0040 0.1475 0.0001 0.0066 0.6292

-0.4894

0.0206

0.0098

0.0139 0.0090 0.0116 0.0121 0.0295 0.0179

Std. Err.

0.0073 4.45 ** -0.0082 0.0003 113.73 ** 0.0428 0.0003 97.18 ** 0.0377 0.1694 76.45 ** 13.4399 0.0053 15.95 ** 0.0533 0.0317 83.40 ** 2.4739 0.0035 0.1582 0.0001 0.0081 0.8269

3924 (1308) -17150.70

Note: **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

3924 1239.65

-3.26 **

0.0285 -18.18 **

0.0126

-0.0938

0.1254 -0.0062 0.0232 0.0312 0.0495 0.1060

Coef.

0.49 -1.89 † -1.32 0.15 -1.77 † 3.25 **

z

-5.36 **

3623.59

0.0099 0.0002 0.0002 0.3942 0.0073 0.0672 0.0048 0.0001 0.7626

6.34 56.36 40.96 38.80 6.37 46.98

** ** ** ** ** **

0.0898 -10.45 **

0.0160

0.0108 -14.57 **

0.0218 0.0234 0.0170 0.0068 0.0400 0.0177

Std. Err.

Suburban areas (E type)

2397 (799) -10598.46

1527 (509) -7213.17

χ2(2)㸻7178.90 P㸼χ2㸻0.000 χ2(2)㸻41057.38 P㸼χ2㸻0.000 χ2(2)㸻2254.46 P㸼χ2㸻0.000

-0.5181

18.64 **

0.0099

8.71 ** -1.69 † 0.70 1.04 0.91 6.35 **

z

0.0078 -14.95 **

0.0129 0.0087 0.0104 0.0071 0.0265 0.0141

Std. Err.

Special wards (E type)

Land Value Differences Based on Approach Methodologies: Analysis. . .

Samples (( ): per year) AIC

Wald test of spatial terms

-0.0411

0.0084 -23.89 **

0.7697 0.7691

-0.1167

** ** †

**

Coef.

All areas (panel : E type)

0.1120 -0.0147 0.0073 0.0073 0.0240 0.0892

All areas (pooled ols) Robust Coef. t Std. Err. 0.2448 0.0138 17.76 -0.0207 0.0174 -1.19 0.0106 0.0136 0.78 0.0262 0.0095 2.75 0.1019 0.0291 3.50 0.0335 0.0173 1.94

ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station -0.2014 distance Low-rise residential area 0.1841 ln Distance from Tokyo -0.6763 Sta. ln Density 0.1588 Year 2020 Year 2021 Constant term 13.0774 λ ρ /sigma_u /sigma_e R2/pseudo R2 Adjusted R2 Log likelihood

Dependent variable ln PLMV

Table 8.10 Estimated results (ln PLMV) 8 171

172

M. Ebisu and C. Asahi

Table 8.11 summarises the signs of the explanatory variables for the ICV, net income (NI), and cap rate (CR). In general, significant variables and signs are similar for ICV and NI. Although a few variables are significant for the CR, the direction of the sign is opposite to that of NI. All property-specific value factors for the ICV in special wards are significant. Although the significance level of some variables is as weak as 10%, the land conditions that affect the degree of land use are likely to affect the ICV. For the NI and CR, although all property-specific value factors are not significant like the ICV, some of them are significant with reasonable signs. In particular, the site area was significant at the 1% level for both NI and CR. All area-specific value factors were also significant, except for the density for both ICV and NI. The low-rise residential area is negatively significant, which is a rational result considering the generally low designated floor-area ratio. The non-significant result for density in the special wards is thought to be caused by high land prices in some areas near highlevel commercial areas in the city centre. Such areas have a relatively low resident population density than the daytime population density. In contrast, few property-specific value factors are significant in suburban areas. The frontage/depth ratio is significant for both ICV and NI, but this is different from expected. In other words, the narrower the frontage, the higher the values. However, the significance level was low (10%). As for the area-specific value factors, all of them are significant except for the front road width in the case of ICV and NI. Unlike special wards, density is also positively significant. For CR, in the suburban areas, only the distance from Tokyo Station was significant, but the other variables had little effect. As shown above, the ICV (and the NI and CR that comprise it) is less affected by property-specific value factors in suburban areas than in special wards. Moreover, Table 8.11 Summary of significant variables’ signs (ICV, NI, CR)

ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density

ICV

All areas NI

㸩 㸫

㸩 㸫

CR

㸫

㸫 㸫

ICV

Special wards NI CR

㸩 㸩 㸦㸫㸧 㸩 㸩 㸦㸩㸧 㸩 㸦㸩㸧 㸩 㸩

㸩

㸩

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸩

㸩

㸩

Note: Signs in parentheses are at the significance level of 10%

ICV

Suburban areas NI CR

㸫 㸦㸫㸧 㸦㸫㸧 㸫 㸫 㸩

㸩

㸫

㸫

㸫

㸫

㸫

㸫

㸩

㸩

㸩

8

Land Value Differences Based on Approach Methodologies: Analysis. . .

173

the CR is hardly affected by area-specific and property-specific value factors. These are thought to be due to the relatively low land use in suburban areas, that is, low profitability. Next, we consider the SCV and ICV. The signs of the explanatory variables for these are summarised in Table 8.12 (the ICVs are the same as in Table 8.11). Overall, the special wards have fewer variables that are more significant for SCV than ICV. Site conditions related to the degree of effective land use, such as the irregularly shaped site and the two or more roads, do not affect the SCV as much as the ICV. In addition, unlike the ICV, the low-rise residential area that negatively affects land profitability is not significant for the SCV. The density was not significant for either the SCV or ICV. Next, we provide an overview of the variables in the suburban areas. Few property-specific value factors are significant for both the SCV and ICV, and even significant ones are at the 10% level. For the SCV, the irregularly shaped site and two or more roads are significant, but the former is the expected sign, and the latter is the opposite sign to that expected. Two of the three significant variables in the property-specific value factors (the two or more roads for the SCV and the frontage/ depth ratio for the ICV) have opposite signs to those expected, but the reason is unclear. However, for the SCV, all area-specific value factors are significant. In suburban areas, area-specific value factors have a greater effect on SCV and ICV than property-specific value factors. In summary, property-specific value factors are more likely to affect land values in special wards than suburban areas. Furthermore, the SCV is more likely to be affected by area-specific value factors in suburban areas than in special wards. For the SCV in special wards, because the density is not significant, it can be inferred that land values are likely to be affected by factors other Table 8.12 Summary of significant variables’ signs (SCV, ICV, MR)

SCV

㸩

ln Site area

All areas ICV

㸩 㸫

Irregularly shaped site

MR

㸩 㸦㸫㸧

ln Frontage/depth

㸫

Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density λ

㸩

㸩

SCV

Special wards ICV MR

㸩

Suburban areas SCV ICV MR

㸩

㸦㸫㸧

㸦㸫㸧

㸦㸩㸧 㸩 㸩 㸦㸩㸧 㸩

㸦㸫㸧 㸫 㸦㸫㸧

㸩

㸩

㸩

㸩

㸩

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸩 㸩

㸦㸫㸧

㸩 㸩

㸩 㸩

㸩

㸩

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸫

㸩 㸩

㸩 㸩

㸩 㸫

Note: Signs in parentheses are at the significance level of 10%

㸫

174

M. Ebisu and C. Asahi

than the explanatory variables used here (such as the effects of highly commercial areas in the city centre).

8.5.2

Match Rate

In the special wards, the signs of the significant variables are in the same direction as the signs of the significant variables in either the SCV or ICV, except for the density, as shown in Table 8.12. For example, the site area is positively significant for both the SCV and the ICV, which signifies that a larger site area increases both prices. Furthermore, the fact that the MR is also positively significant means that a larger site area increases the ICV than the SCV. The density is not significant for either the SCV or the ICV, but Tables 8.5 and 8.6 show that it is negative for the SCV and positive for the ICV. Therefore, it is positively significant for the MR. Excellent location conditions, such as easy accessibility and high land use (non-low-rise residential area and high population density), increase the ICV more than the SCV thus increasing the MR. In suburban areas, the southern road was negatively significant. This is not significant for either SCV or ICV. However, according to the estimation results of SCV and ICV (Tables 8.5 and 8.6), the former has a positive sign, while the latter has a negative sign (the z value of ICV is larger than that of SCV). The low-rise residential area was also negatively significant for both values in suburban areas. Profitability by land use is generally low in areas where a good environment, such as the size and orientation of the site, is important. Therefore, it is presumed that the southern road becomes a proxy variable for such a residential site and is negatively significant for ICV rather than SCV. The significant variables among the areaspecific value factors have the same sign as the ICV, and it can be said that, again, easy accessibility and high land use increase the ICV more than the SCV. Furthermore, we check the coefficient λ of the spatial lag term, where the significance of λ means that the land value and MR of a certain site are determined by the surrounding land prices and the MRs. The SCVs and ICVs are positively significant for all areas, special wards, and suburban areas. This means that the higher the prices of the surrounding sites, the higher the site’s price. In the same way, we expected the sign of the MR to be positive. However, in this estimation, the sign is negative. In other words, the MR of a certain site is higher when the ICVs of nearer other sites are lower than their SCVs. The question then becomes how to interpret this issue. Other sites may compete in the market as income-producing properties. The λ for the MR of a certain site may have a negative effect because the site becomes more attractive as a profitable property when the profitability of other competing properties is lower than that of the site. However, owing to the lack of a priori knowledge and accumulated research on the relationship between MRs and locations, it is difficult to make a precise interpretation of λ in this study. In addition, although the examination of time effects is not the main objective of this study, as shown in Table 8.9, the results are positively significant in 2020 and

8

Land Value Differences Based on Approach Methodologies: Analysis. . .

175

negatively significant in 2021, compared to 2019. Interestingly, during the coronavirus disease 2019 pandemic, the gap between the SCV and the ICV in 2021 is larger than in the past 2 years. Finally, we examine the MR from the offer price and bid price perspective. As described in Sect. 8.1, the ICV has the characteristics of the potential buyer’s bid price, while the SCV has the characteristics of both the offer price and the bid price as the contract price. Factors such as accessibility and the degree of land use have a stronger effect on the ICV than the SCV, which means that they have a stronger effect on the bid price than the offer price. This is a reasonable result, given that accessibility and land use are factors that potential buyers consider more important than suppliers, in making a bid.

8.6 8.6.1

Concluding Remarks Implications

In this paper, we estimate the SCV, ICV, NI, CR, and MR for all areas, special wards, and suburban areas using the appraisal reports’ data of PLMV in Tokyo residential areas, with property-specific and area-specific value factors as explanatory variables. The results are briefly summarised as follows: Of the area-specific value factors, accessibility, among others, has been found to increase both SCV and ICV in both the special wards and the suburban areas. This result was as expected. More area-specific and property-specific value factors affect ICVs in special wards than in suburban areas. It is suggested that site conditions, which affect land use, strongly affect the land value in special wards. In addition, factors that increase MR increase the ICV, which is the bid price rather than the SCV, which has the characteristic of an offer price. Accessibility and land use are factors that are comparatively more crucial factors for potential buyers than suppliers, and sites in such excellent conditions are often competitive among buyers. Some potential buyers may offer a bid price close to the offer price to obtain sites in excellent condition. Considering this, the results reflect the real property market. Values from each approach should match if each is applied appropriately. However, if the land’s area-specific and property-specific value factors have different effects on the offer and bid prices, it is natural for the SCV and ICV to diverge. This signifies that the degree of difference represents the intrinsic value of land in the market. In general, real estate appraisals are performed individually in response to customer requests. Therefore, it is sufficient if the appraiser in charge of the appraisal understands the nature of the evaluated values and the cause of the differences among the evaluated values and can explain it to the customer. However, official land price indices such as the PLMVs are used as a reference for land transactions. Furthermore, they are also used statistically in surveys and research when evaluating environmental characteristics and social infrastructure development. Although this study analyses only residential areas in Tokyo, it is useful for users of the official

176

M. Ebisu and C. Asahi

land price indices to know in advance the attributes that tend to be reflected in each evaluated value and the conditions under which each evaluated value is likely to match. In addition, it is also useful for appraisers to use the results of such analysis as a basis for their judgement in their appraisal processes.

8.6.2

Limitations and Future Research

We discuss the limitations of this analysis and future issues. The site samples for the PLMVs were selected as the standard site in each neighbourhood area, and because they were not randomly selected, there is an inherent bias in the distribution. If the samples were different, the results might differ from this analysis. Furthermore, in this analysis, the samples are divided into special wards and suburban areas to investigate regional differences; therefore, the spatial interdependence can only consider the interdependence among the area’s samples. (That is, samples near the border between the special wards and the suburban areas cannot consider the effects of samples outside the border, even if they are close.) Therefore, spatial interdependence may not have been comprehensively considered in the study. In some PLMVs, only the SCV is appraised because it is difficult to use the ICV as an index for land transactions. However, in this study, we target PLMVs in which both SCV and ICV are appraised, except those in which only the SCV is appraised. In this study, the MR tends to be negative (in other words, the ICV tends to be lower than the SCV) in the samples that fall under the category of low-rise residential areas. First, there are two types of residential sites: one is suitable for rental housing and the other is suitable for detached housing, and the ICV of the latter is unlikely to be the bid price. Whether the ICV is appraised suggests that the real estate market to which the land belongs is different. In the future, it will be necessary to conduct an analysis using a truncated or censored regression model that considers the factors that determine whether the ICV is appraised, using data that includes samples in which only SCV is appraised. Furthermore, it is necessary to perform analyses targeting prefectures other than Tokyo, and comparing the attributes that affect actual market prices with those that affect SCV and ICV. Note: This paper is a translation of Ebisu and Asahi (2021) into English with minor modifications. (We obtained permission from the Japan Land and Environment Institute.)

8

Land Value Differences Based on Approach Methodologies: Analysis. . .

177

Appendix See Tables 8.13, 8.14, 8.15, 8.16, 8.17, 8.18, 8.19, 8.20, 8.21, 8.22, 8.23, 8.24, 8.25, 8.26, 8.27, 8.28 and 8.29.

Table 8.13 Direct, indirect, and total effects (ln SCV, all areas) ln SCV (all areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density

Direct effects dy/dx 0.1104 -0.0120 0.0049 0.0104 0.0246 0.0970

Indirect effects

Std. Err. z 0.0130 8.49 ** 0.0100 -1.20 0.0113 0.44 0.0077 1.35 0.0266 0.92 0.0147 6.62 **

dy/dx 0.0091 -0.0010 0.0004 0.0009 0.0020 0.0080

Total effects

Std. Err. z 0.0013 7.27 ** 0.0008 -1.20 0.0009 0.44 0.0006 1.35 0.0022 0.92 0.0014 5.82 **

dy/dx 0.1196 -0.0130 0.0053 0.0112 0.0266 0.1050

Std. Err. z 0.0141 8.48 ** 0.0108 -1.20 0.0122 0.44 0.0083 1.35 0.0288 0.92 0.0159 6.60 **

-0.1244 0.0082 -15.23 ** -0.0103 0.0010 -10.71 ** -0.1347 0.0088 -15.27 ** -0.0454 0.0127

-3.59 ** -0.0038 0.0011

-3.40 ** -0.0492 0.0137

-3.58 **

-0.5453 0.0282 -19.32 ** -0.0451 0.0027 -16.81 ** -0.5904 0.0288 -20.47 ** 0.0329 0.0082

4.03 ** 0.0027 0.0007

4.04 ** 0.0356 0.0088

4.05 **

Table 8.14 Direct, indirect, and total effects (ln SCV, special wards) ln SCV (special wards) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density

Direct effects dy/dx Std. Err. z 0.1240 0.0143 8.70 0.0005 0.0110 0.05 0.0221 0.0130 1.70 0.0317 0.0123 2.59 0.0460 0.0301 1.53 0.1186 0.0189 6.28 -0.1038 0.0107 0.0279 0.0171

Indirect effects dy/dx Std. Err. z ** 0.0073 0.0013 5.75 0.0000 0.0007 0.05 † 0.0013 0.0008 1.66 * 0.0019 0.0008 2.45 0.0027 0.0018 1.51 ** 0.0070 0.0015 4.68

-9.70 ** -0.0061 0.0010 1.64

0.0016 0.0010

dy/dx ** 0.1314 0.0006 † 0.0234 * 0.0336 0.0488 ** 0.1256

Total effects Std. Err. z 0.0151 8.68 0.0117 0.05 0.0138 1.70 0.0130 2.59 0.0319 1.53 0.0201 6.25

-6.33 ** -0.1100 0.0113 1.62

0.0296 0.0181

** † * **

-9.74 ** 1.64

-0.4618 0.0389 -11.86 ** -0.0272 0.0032

-8.43 ** -0.4890 0.0398 -12.29 **

-0.0147 0.0108

-1.31

-1.36

-0.0009 0.0007

-0.0155 0.0115

-1.35

178

M. Ebisu and C. Asahi

Table 8.15 Direct, indirect, and total effects (ln SCV, suburban areas) ln SCV (suburban areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density

Direct effects Indirect effects Total effects dy/dx Std. Err. z dy/dx Std. Err. z dy/dx Std. Err. z 0.0127 0.0218 0.58 0.0006 0.0010 0.58 0.0133 0.0228 0.58 -0.0427 0.0234 -1.82 † -0.0020 0.0011 -1.77 † -0.0446 0.0245 -1.82 † -0.0238 0.0173 -1.37 -0.0011 0.0008 -1.33 -0.0248 0.0181 -1.37 0.0021 0.0070 0.30 0.0001 0.0003 0.30 0.0022 0.0074 0.30 -0.0710 0.0401 -1.77 † -0.0032 0.0019 -1.70 † -0.0742 0.0420 -1.77 † 0.0596 0.0180 3.31 ** 0.0027 0.0009 2.88 ** 0.0623 0.0188 3.31 ** -0.1600 0.0108 -14.80 ** -0.0073 0.0013

-5.76 ** -0.1673 0.0113 -14.80 **

-0.0926 0.0161

-4.30 ** -0.0968 0.0168

-5.75 ** -0.0042 0.0010

-0.9433 0.0895 -10.54 ** -0.0431 0.0055 0.0632 0.0102

6.21 ** 0.0029 0.0006

-5.76 **

-7.90 ** -0.9864 0.0893 -11.04 ** 4.74 ** 0.0661 0.0106

6.24 **

Note: In each of the above tables, **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

Table 8.16 Direct, indirect, and total effects (ln ICV, all areas) ln ICV (all areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width

Direct effects dy/dx 0.1191 -0.0661 -0.0057 -0.0045 0.0581 0.1466

Std. Err. z 0.0179 6.64 ** 0.0237 -2.79 ** 0.0189 -0.30 0.0133 -0.34 0.0360 1.61 0.0220 6.67 **

Indirect effects dy/dx 0.0148 -0.0082 -0.0007 -0.0006 0.0072 0.0182

Std. Err. z 0.0024 6.15 ** 0.0030 -2.74 ** 0.0024 -0.30 0.0017 -0.34 0.0045 1.60 0.0031 5.90 **

Total effects dy/dx 0.1340 -0.0743 -0.0064 -0.0051 0.0653 0.1648

Std. Err. z 0.0201 6.65 ** 0.0266 -2.79 ** 0.0213 -0.30 0.0150 -0.34 0.0405 1.61 0.0248 6.64 **

ln Nearest station distance -0.2035 0.0127 -16.06 ** -0.0253 0.0023 -11.15 ** -0.2289 0.0142 -16.08 ** Low-rise residential area ln Distance from Tokyo Sta. ln Density

-0.1945 0.0174 -11.17 ** -0.0242 0.0030

-8.10 ** -0.2187 0.0200 -10.95 **

-0.6723 0.0215 -31.29 ** -0.0837 0.0055 -15.15 ** -0.7560 0.0229 -32.96 ** 0.1092 0.0169

6.45 ** 0.0136 0.0021

6.39 ** 0.1228 0.0189

6.51 **

8

Land Value Differences Based on Approach Methodologies: Analysis. . .

179

Table 8.17 Direct, indirect, and total effects (ln ICV, special wards) ln ICV (special wards) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width

Direct effects dy/dx Std. Err. z 0.1409 0.0172 8.19 -0.0452 0.0252 -1.79 0.0404 0.0193 2.10 0.0243 0.0146 1.66 0.0935 0.0359 2.60 0.1749 0.0239 7.33

** † * † ** **

Indirect effects dy/dx Std. Err. z 0.0072 0.0014 4.98 -0.0023 0.0014 -1.70 0.0021 0.0010 2.00 0.0012 0.0008 1.60 0.0048 0.0020 2.42 0.0089 0.0020 4.54

** † * * **

dy/dx 0.1481 -0.0475 0.0425 0.0255 0.0983 0.1839

Total effects Std. Err. z 0.0181 8.18 0.0265 -1.79 0.0203 2.10 0.0153 1.66 0.0378 2.60 0.0253 7.28

** † * † ** **

ln Nearest station distance -0.1542 0.0145 -10.62 ** -0.0079 0.0014

-5.67 ** -0.1621 0.0152 -10.69 **

Low-rise residential area -0.1235 0.0200 -6.18 ** -0.0063 0.0015 ln Distance from Tokyo -0.6338 0.0387 -16.39 ** -0.0324 0.0046 Sta. ln Density 0.0264 0.0191 1.38 0.0014 0.0010

-4.19 ** -0.1298 0.0211

-6.14 **

-7.03 ** -0.6662 0.0385 -17.30 ** 1.39

0.0278 0.0200

1.39

Table 8.18 Direct, indirect, and total effects (ln ICV, suburban areas) ln ICV (suburban areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width

Direct effects Indirect effects Total effects dy/dx Std. Err. z dy/dx Std. Err. z dy/dx Std. Err. z -0.0229 0.0396 -0.58 -0.0014 0.0024 -0.57 -0.0243 0.0420 -0.58 -0.0555 0.0413 -1.34 -0.0034 0.0026 -1.31 -0.0589 0.0439 -1.34 -0.0656 0.0359 -1.83 † -0.0040 0.0024 -1.71 † -0.0696 0.0381 -1.83 † -0.0277 0.0227 -1.22 -0.0017 0.0014 -1.18 -0.0294 0.0241 -1.22 -0.0626 0.0708 -0.89 -0.0038 0.0044 -0.87 -0.0665 0.0751 -0.88 0.0577 0.0386 1.50 0.0035 0.0025 1.43 0.0613 0.0410 1.50

ln Nearest station distance -0.2518 0.0201 -12.50 ** -0.0154 0.0032

-4.81 ** -0.2672 0.0215 -12.41 **

Low-rise residential area -0.3149 0.0289 -10.88 ** -0.0193 0.0041 ln Distance from Tokyo -1.2224 0.1626 -7.52 ** -0.0749 0.0123 Sta. ln Density 0.1785 0.0279 6.41 ** 0.0109 0.0024

-4.76 ** -0.3342 0.0307 -10.87 ** -6.11 ** -1.2973 0.1650

-7.86 **

4.48 ** 0.1894 0.0292

6.48 **

Note: In each of the above tables, **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

180

M. Ebisu and C. Asahi

Table 8.19 Direct, indirect, and total effects (ln NI, all areas) ln NI (all areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density

Direct effects dy/dx 0.1103 -0.0704 -0.0055 -0.0087 0.0473 0.1473

Indirect effects

Std. Err. z 0.0182 6.05 ** 0.0241 -2.91 ** 0.0194 -0.28 0.0136 -0.64 0.0367 1.29 0.0224 6.59 **

dy/dx 0.0162 -0.0103 -0.0008 -0.0013 0.0069 0.0216

Total effects

Std. Err. z 0.0030 5.46 ** 0.0036 -2.83 ** 0.0028 -0.28 0.0020 -0.64 0.0054 1.28 0.0038 5.61 **

dy/dx 0.1264 -0.0807 -0.0063 -0.0100 0.0542 0.1689

Std. Err. z 0.0209 6.04 ** 0.0277 -2.91 ** 0.0222 -0.28 0.0156 -0.64 0.0421 1.29 0.0259 6.53 **

-0.1976 0.0125 -15.77 ** -0.0290 0.0029 -10.09 ** -0.2265 0.0144 -15.73 ** -0.2137 0.0176 -12.17 ** -0.0313 0.0038

-8.20 ** -0.2450 0.0206 -11.89 **

-0.6337 0.0403 -15.72 ** -0.0929 0.0060 -15.53 ** -0.7266 0.0420 -17.30 ** 0.1203 0.0168

7.18 ** 0.0176 0.0026

6.87 ** 0.1380 0.0190

7.27 **

Table 8.20 Direct, indirect, and total effects (ln NI, special wards) ln NI (special wards) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density

Direct effects dy/dx Std. Err. z 0.1266 0.0165 7.68 -0.0394 0.0242 -1.63 0.0395 0.0184 2.14 0.0202 0.0140 1.45 0.0628 0.0344 1.82 0.1760 0.0229 7.68

** * † **

Indirect effects dy/dx Std. Err. z 0.0097 0.0020 4.89 -0.0030 0.0019 -1.56 0.0030 0.0015 2.04 0.0015 0.0011 1.41 0.0048 0.0027 1.76 0.0134 0.0029 4.70

** * † **

dy/dx 0.1363 -0.0425 0.0425 0.0217 0.0676 0.1894

Total effects Std. Err. z 0.0178 7.66 0.0261 -1.63 0.0199 2.14 0.0150 1.45 0.0371 1.82 0.0249 7.59

** * † **

-0.1530 0.0140 -10.93 ** -0.0117 0.0020

-5.75 ** -0.1647 0.0150 -10.98 **

-0.1137 0.0194

-4.14 ** -0.1224 0.0211

-5.85 ** -0.0087 0.0021

-0.5487 0.0423 -12.98 ** -0.0419 0.0059 0.0284 0.0185

1.54

0.0022 0.0014

-5.81 **

-7.12 ** -0.5906 0.0429 -13.76 ** 1.54

0.0306 0.0198

1.54

8

Land Value Differences Based on Approach Methodologies: Analysis. . .

181

Table 8.21 Direct, indirect, and total effects (ln NI, suburban areas) ln NI (suburban areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density

Direct effects Indirect effects Total effects dy/dx Std. Err. z dy/dx Std. Err. z dy/dx Std. Err. z -0.0232 0.0395 -0.59 -0.0019 0.0033 -0.58 -0.0251 0.0428 -0.59 -0.0559 0.0413 -1.36 -0.0047 0.0035 -1.32 -0.0606 0.0447 -1.36 -0.0665 0.0358 -1.86 † -0.0055 0.0032 -1.73 † -0.0721 0.0388 -1.86 † -0.0278 0.0226 -1.23 -0.0023 0.0020 -1.19 -0.0301 0.0245 -1.23 -0.0630 0.0707 -0.89 -0.0052 0.0060 -0.88 -0.0682 0.0766 -0.89 0.0575 0.0385 1.49 0.0048 0.0034 1.42 0.0623 0.0418 1.49 -0.2512 0.0201 -12.52 ** -0.0209 0.0044

-4.71 ** -0.2722 0.0220 -12.35 **

-0.3159 0.0289 -10.94 ** -0.0263 0.0056

-4.67 ** -0.3422 0.0314 -10.88 **

-1.2025 0.1581

-7.61 ** -0.1001 0.0167

-6.00 ** -1.3026 0.1611

-8.08 **

0.1801 0.0278

6.48 ** 0.0150 0.0034

4.42 ** 0.1951 0.0297

6.58 **

Note: In each of the above tables, **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

Table 8.22 Direct, indirect, and total effects (ln CR, all areas) ln CR (all areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width

Direct effects dy/dx -0.0098 0.0025 0.0002 -0.0024 -0.0165 -0.0014

Std. Err. 0.0013 0.0019 0.0014 0.0010 0.0027 0.0017

ln Nearest station distance 0.0011 0.0009

Indirect effects

Total effects

z dy/dx Std. Err. z dy/dx -7.27 ** -0.0001 0.0000 -2.46 * -0.0099 1.32 0.0000 0.0000 1.18 0.0025 0.12 0.0000 0.0000 0.12 0.0002 -2.42 * 0.0000 0.0000 -1.76 † -0.0025 -6.10 ** -0.0002 0.0001 -2.41 * -0.0167 -0.83 0.0000 0.0000 -0.80 -0.0014 1.17

0.0000 0.0000

1.04

Std. Err. 0.0014 0.0019 0.0015 0.0010 0.0027 0.0017

0.0011 0.0010

z -7.27 ** 1.32 0.12 -2.42 * -6.10 ** -0.83 1.16

Low-rise residential area -0.0001 0.0013 -0.05 0.0000 0.0000 -0.05 -0.0001 0.0013 -0.05 ln Distance from Tokyo 0.0614 0.0020 30.51 ** 0.0008 0.0003 2.56 * 0.0621 0.0021 29.20 ** Sta. ln Density -0.0007 0.0013 -0.54 0.0000 0.0000 -0.51 -0.0007 0.0013 -0.54

182

M. Ebisu and C. Asahi

Table 8.23 Direct, indirect, and total effects (ln CR, suburban areas) ln CR (suburban areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width

Direct effects dy/dx Std. Err. z -0.0005 0.0007 -0.69 -0.0006 0.0007 -0.77 -0.0009 0.0007 -1.34 0.0002 0.0004 0.38 0.0006 0.0013 0.44 -0.0005 0.0007 -0.64

ln Nearest station distance 0.0002 0.0004

0.56

Indirect effects dy/dx Std. Err. z 0.0000 0.0000 0.69 0.0000 0.0000 0.75 0.0000 0.0000 1.30 0.0000 0.0000 -0.38 0.0000 0.0000 -0.43 0.0000 0.0000 0.63 0.0000 0.0000 -0.56

Total effects dy/dx Std. Err. z -0.0005 0.0007 -0.69 -0.0006 0.0007 -0.77 -0.0009 0.0007 -1.34 0.0002 0.0004 0.38 0.0006 0.0013 0.44 -0.0004 0.0007 -0.64 0.0002 0.0004

0.56

Low-rise residential area -0.0006 0.0005 -1.09 0.0000 0.0000 1.05 -0.0006 0.0005 -1.09 ln Distance from Tokyo 0.0221 0.0028 7.86 ** -0.0002 0.0000 -5.65 ** 0.0219 0.0028 7.80 ** Sta. ln Density 0.0008 0.0005 1.54 0.0000 0.0000 -1.36 0.0008 0.0005 1.54

Note: In each of the above tables, **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

Table 8.24 Direct, indirect, and total effects (MR, all areas) MR (all areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density

Direct effects dy/dx 0.0085 -0.0237 0.0031 -0.0212 0.0306 0.0308

Indirect effects

Std. Err. z dy/dx Std. Err. 0.0098 0.87 -0.0022 0.0025 0.0134 -1.76 † 0.0060 0.0036 0.0105 0.30 -0.0008 0.0026 0.0073 -2.88 ** 0.0054 0.0021 0.0196 1.56 -0.0077 0.0051 0.0120 2.57 * -0.0078 0.0034

-0.0371 0.0068

-5.48 ** 0.0094 0.0023

Total effects

z dy/dx Std. Err. z -0.87 0.0064 0.0073 0.87 1.68 † -0.0177 0.0101 -1.76 † -0.30 0.0023 0.0078 0.30 2.55 * -0.0158 0.0056 -2.85 ** -1.50 0.0228 0.0147 1.55 -2.27 * 0.0230 0.0090 2.57 * 4.02 ** -0.0278 0.0054

-5.12 **

-0.1597 0.0095 -16.89 ** 0.0404 0.0079

5.14 ** -0.1193 0.0094 -12.65 **

-0.1534 0.0191

5.80 ** -0.1146 0.0182

-6.31 **

6.00 ** -0.0139 0.0031 -4.49 ** 0.0412 0.0077

5.36 **

0.0551 0.0092

-8.03 ** 0.0388 0.0067

8

Land Value Differences Based on Approach Methodologies: Analysis. . .

183

Table 8.25 Direct, indirect, and total effects (MR, special wards) MR (special wards) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density

Direct effects Indirect effects Total effects dy/dx Std. Err. z dy/dx Std. Err. z dy/dx Std. Err. z 0.0197 0.0094 2.09 * -0.0036 0.0023 -1.56 0.0161 0.0078 2.05 * -0.0199 0.0148 -1.34 0.0037 0.0032 1.14 -0.0163 0.0121 -1.34 0.0175 0.0107 1.65 -0.0032 0.0024 -1.36 0.0143 0.0089 1.62 -0.0085 0.0079 -1.06 0.0016 0.0016 0.97 -0.0069 0.0065 -1.06 0.0309 0.0196 1.57 -0.0057 0.0044 -1.31 0.0252 0.0162 1.55 0.0515 0.0131 3.92 ** -0.0095 0.0049 -1.94 † 0.0420 0.0112 3.75 ** -0.0201 0.0080

0.0037 0.0021

1.79 † -0.0164 0.0069

-2.37 *

-0.1300 0.0110 -11.78 ** 0.0240 0.0108

2.22 * -0.1061 0.0128

-8.29 **

-0.1064 0.0233

2.30 * -0.0868 0.0226

-3.84 **

0.0469 0.0109

-2.49 *

-4.57 ** 0.0196 0.0085

4.31 ** -0.0086 0.0040 -2.16 *

0.0382 0.0100

3.81 **

Table 8.26 Direct, indirect, and total effects (MR, suburban areas) MR (suburban areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width ln Nearest station distance Low-rise residential area ln Distance from Tokyo Sta. ln Density

Direct effects Indirect effects Total effects dy/dx Std. Err. z dy/dx Std. Err. z dy/dx Std. Err. z -0.0263 0.0226 -1.16 0.0059 0.0053 1.12 -0.0204 0.0176 -1.16 -0.0116 0.0237 -0.49 0.0026 0.0053 0.49 -0.0090 0.0184 -0.49 -0.0149 0.0206 -0.73 0.0033 0.0047 0.71 -0.0116 0.0160 -0.73 -0.0348 0.0132 -2.64 ** 0.0078 0.0036 2.18 * -0.0270 0.0103 -2.62 ** 0.0051 0.0405 0.13 -0.0011 0.0091 -0.13 0.0040 0.0315 0.13 -0.0119 0.0221 -0.54 0.0027 0.0050 0.53 -0.0093 0.0172 -0.54 -0.0559 0.0114

-4.92 ** 0.0125 0.0040

3.14 ** -0.0434 0.0093

-4.64 **

-0.2000 0.0165 -12.10 ** 0.0448 0.0114

3.94 ** -0.1553 0.0174

-8.92 **

-0.2622 0.0756

3.77 ** -0.2035 0.0673

-3.03 **

0.0381 0.0159

-3.47 ** 0.0587 0.0156

2.40 * -0.0085 0.0037 -2.27 *

0.0296 0.0129

2.29 *

Note: In each of the above tables, **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

184

M. Ebisu and C. Asahi

Table 8.27 Direct, indirect, and total effects (ln PLMV, all areas) ln PLMV (all areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width

Direct effects dy/dx 0.1120 -0.0147 0.0073 0.0073 0.0240 0.0892

Indirect effects

Std. Err. z 0.0129 8.71 ** 0.0087 -1.69 † 0.0104 0.70 0.0071 1.04 0.0265 0.91 0.0141 6.35 **

dy/dx 0.0097 -0.0013 0.0006 0.0006 0.0021 0.0077

Total effects

Std. Err. z 0.0013 7.47 ** 0.0008 -1.68 † 0.0009 0.70 0.0006 1.04 0.0023 0.91 0.0014 5.67 **

dy/dx 0.1217 -0.0160 0.0080 0.0080 0.0261 0.0969

Std. Err. z 0.0140 8.70 ** 0.0095 -1.69 † 0.0113 0.70 0.0077 1.04 0.0288 0.91 0.0153 6.33 **

ln Nearest station distance -0.1167 0.0078 -14.95 ** -0.0101 0.0009 -10.89 ** -0.1268 0.0085 -14.99 ** Low-rise residential area -0.0411 0.0126 -3.26 ** -0.0036 0.0011 -3.12 ** -0.0447 0.0137 -3.26 ** ln Distance from Tokyo -0.5181 0.0285 -18.18 ** -0.0449 0.0026 -17.38 ** -0.5630 0.0293 -19.23 ** Sta. ln Density 0.0324 0.0073 4.45 ** 0.0028 0.0006 4.42 ** 0.0352 0.0079 4.46 **

Table 8.28 Direct, indirect, and total effects (ln PLMV, special wards) ln PLMV (special wards) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width

Direct effects dy/dx Std. Err. z 0.1254 0.0139 9.03 -0.0062 0.0090 -0.68 0.0232 0.0116 2.00 0.0312 0.0121 2.59 0.0495 0.0295 1.68 0.1060 0.0179 5.91

ln Nearest station distance -0.0938 0.0098 Low-rise residential area ln Distance from Tokyo Sta. ln Density

0.0206 0.0164

** * * † **

Indirect effects dy/dx Std. Err. z 0.0068 0.0011 5.94 -0.0003 0.0005 -0.68 0.0013 0.0006 1.94 0.0017 0.0007 2.46 0.0027 0.0016 1.65 0.0058 0.0013 4.56

-9.61 ** -0.0051 0.0008 1.25

0.0011 0.0009

** † * **

dy/dx 0.1322 -0.0065 0.0244 0.0329 0.0522 0.1117

Total effects Std. Err. z 0.0147 9.01 0.0095 -0.68 0.0122 2.00 0.0127 2.59 0.0311 1.68 0.0190 5.89

-6.42 ** -0.0989 0.0103 1.25

0.0217 0.0173

** * * † **

-9.65 ** 1.25

-0.4894 0.0342 -14.33 ** -0.0266 0.0030

-8.80 ** -0.5160 0.0346 -14.90 **

-0.0082 0.0092

-0.88

-0.90

-0.0004 0.0005

-0.0086 0.0097

-0.89

8

Land Value Differences Based on Approach Methodologies: Analysis. . .

185

Table 8.29 Direct, indirect, and total effects (ln PLMV, suburban areas) ln PLMV (suburban areas) Delta-Method ln Site area Irregularly shaped site ln Frontage/depth Southern road Two or more roads ln Front road width

Direct effects Indirect effects Total effects dy/dx Std. Err. z dy/dx Std. Err. z dy/dx Std. Err. z 0.0107 0.0218 0.49 0.0005 0.0010 0.49 0.0112 0.0228 0.49 -0.0442 0.0234 -1.89 † -0.0020 0.0011 -1.83 † -0.0462 0.0244 -1.89 † -0.0224 0.0170 -1.32 -0.0010 0.0008 -1.28 -0.0234 0.0178 -1.32 0.0010 0.0068 0.15 0.0000 0.0003 0.15 0.0010 0.0071 0.15 -0.0707 0.0400 -1.77 † -0.0032 0.0019 -1.70 † -0.0740 0.0419 -1.77 † 0.0574 0.0177 3.25 ** 0.0026 0.0009 2.83 ** 0.0601 0.0185 3.25 **

ln Nearest station distance -0.1567 0.0108 -14.57 ** -0.0072 0.0013

-5.74 ** -0.1639 0.0112 -14.59 **

Low-rise residential area -0.0860 0.0160 -5.36 ** -0.0039 0.0010 ln Distance from Tokyo -0.9384 0.0898 -10.45 ** -0.0430 0.0054 Sta. ln Density 0.0627 0.0099 6.34 ** 0.0029 0.0006

-4.13 ** -0.0899 0.0168

-5.37 **

-7.94 ** -0.9814 0.0895 -10.96 ** 4.74 ** 0.0656 0.0103

6.38 **

Note: In each of the above tables, **, *, and { indicate significance at the 1%, 5%, and 10% levels, respectively

References Ebisu M, Asahi C (2021) Differences in the land value of residential area based on sales comparison approach and income capitalisation approach; analysis using the appraisal reports of the land market value publication in Tokyo. J Land Environ Stud 28. (scheduled to be posted). (in Japanese) Elhorst JP (2010) Applied spatial econometrics: raising the bar. Spat Econ Anal 5(1):9–28. https:// doi.org/10.1080/17421770903541772. Accessed 22 Jan 2022 Elhorst JP (2017) Spatial panel data analysis. In: Shekhar S, Xiong H, Zhou X (eds) Encyclopedia of GIS, 2nd edn. Springer, Cham, pp 2050–2058. https://www.spatial-panels.com/wp-content/ uploads/2017/07/Elhorst-Spatial-Panel-Data-Analysis-Encyclopedia-GIS-2nd-ed_WorkingPaper-Version.pdf. Accessed 22 Jan 2022 Harris AB, Singleton CN, Straka TJ (2018) Land value differentials resulting from variability between the sales comparison and income approaches in timberland valuation. Appraisal J 86(3):192–205. https://d2g5nwdurpn561.cloudfront.net/content/documents/HarrisArticle.pdf. Accessed 22 Jan 2022 Hidano N, Yamamura Y, Doi Y (1995) An empirical study on the land price changes in the commercial district of metropolitan Tokyo. City Plan Rev 30:529–534. (in Japanese). https:// www.jstage.jst.go.jp/article/journalcpij/30/0/30_529/_pdf/-char/ja. Accessed 22 Jan 2022 Hidano N, Yamamura Y, Doi Y (2000) An empirical study on the land price changes in the residential district of metropolitan Tokyo. City Plan Rev 49(1):56–66. (in Japanese) Inoue R, Shimizu E, Yoshida Y, Li Y (2009) Visualization of spatial distribution and temporal transition of land Price in Tokyo 23 wards based on Spatio-temporal kriging interpolation. Theory Appl GIS 17(1):13–24. (in Japanese). https://www.jstage.jst.go.jp/article/thagis/17/1/1 7_13/_pdf/-char/ja. Accessed 22 Jan 2022 Inoue R, Sugiura A, Yoneyama S, Nakanishi W (2016) A proposal for land price information service based on comparison between appraised prices and transaction prices. J Jpn Soc Civil Eng 72(1):1–13. (in Japanese). https://www.jstage.jst.go.jp/article/jscejipm/72/1/72_1/_pdf. Accessed 22 Jan 2022

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Japan Association of Real Estate Appraisers (JAREA) (2003) Sales comparison approach for builtup property (Research progress report). Research Committee Report (2001–2002). JAREA, Tokyo, pp 109–160. (in Japanese) Japan Association of Real Estate Appraisers (JAREA) (2015) Summary of the real property appraisal standards and the guidelines for investigation of the value, etc. Jutaku-Shimpo Inc, Tokyo. (in Japanese) Kapoor M, Kelejian HH, Prucha IR (2007) Panel data models with spatially correlated error components. J Econ 140(1):97–130. https://www.sciencedirect.com/science/article/abs/pii/ S0304407606002259?via%3Dihub. Accessed 22 January 2022 Karato K (2007) Estimation of a land price function and verification of spatial autocorrelation. J Land Inst 15(4):3–13. (in Japanese). https://www.lij.jp/html/jli/jli_2007/2007autumn_p003.pdf. Accessed 22 Jan 2022 Nishimura KG, Shimizu C (2002a) “Accuracy” of the commercial land Price index Tokyo wards area: 1975-1999. Quarter J Hous Land Econ 43:28–35. (in Japanese) Nishimura KG, Shimizu C (2002b) Distortion in land price information: error between transaction data and appraisal price. In: Economic analysis of the real estate market. Nikkei Inc, Tokyo, pp 19–66. (in Japanese) Nishimura KG, Shimizu C (2003) Distortion in land price information-mechanism in sales comparables and appraisal value relation. CIRJE Discussion Paper 195, The University of Tokyo. https://www.researchgate.net/publication/24135110_Distortion_in_Land_Price_Information% 2D%2D-Mechanism_in_Sales_Comparables_and_Appraisal_Value_Relation%2D%2D-/ link/0deec5319adfac0b0d000000/download. Accessed 22 Jan 2022 Shimizu C, Karato K (2007) Econometric analysis of the real estate market. Asakura Shoten Co., Ltd, Tokyo. (in Japanese) Shimizu C, Nishimura KG (2006) Biases in appraisal land price information: the case of Japan. J Prop Invest Financ 24(2):150–175. https://www.researchgate.net/publication/235254230_ Biases_in_appraisal_land_price_information_The_case_of_Japan/link/00b495319af204df0 8000000/download. Accessed 22 Jan 2022 Tokyo Metropolitan Government (2021) Statistics of Tokyo. Tokyo Metropolitan Government, Tokyo. https://www.toukei.metro.tokyo.lg.jp/. Accessed 18 Jan 2022 Yamamura Y (2006) The difference between the appraisal price and the actual price in land. Jpn J Real Estate Sci 19(4):24–32. (in Japanese). https://www.jstage.jst.go.jp/article/jares1985/19/4/1 9_4_24/_pdf/-char/en. Accessed 22 Jan 2022

Chapter 9

An Overview of Indicator-Based Approach of Flood Vulnerability Assessment Thuy Linh Nguyen, Thi An Tran, and Hoang Nam Nguyen

Abstract Vulnerability is one of the main constructing factors in flood risk management. One of the most significant purposes of assessing the vulnerability to flood is to provide scientific basis for more effective policy making process. The impact level of flood is varied for each region, system, and community; therefore, the vulnerability is not identical between research objects. Although there have been a variety of approaches in assessing vulnerability, the indicator-based approach gives more precise vision of overall flood vulnerability rather than other approaches since it considers integrated data of physical, environmental, economic, and social dimensions for the building of logical images that illustrate the spatial distribution of vulnerability. The purpose of this chapter is to review the theoretical framework, common methods used, and analyze the drawbacks of indicator-based approach. A case example of flood vulnerability assessment in Hoa Vang district, Danang city in Vietnam is presented to clarify the steps taken and the results achieved when this approach is put into practice. Keywords Flood vulnerability assessment · Indicator-based approach · GIS · Analytic hierarchy process

9.1

Introduction

Floods are predicted to happen more severe and frequent in the future due to the effects of climate change, changes in land use pattern, unplanned rapid urbanization, extension of impermeable surfaces, and poor management actions. This means that many areas around the globe are likely to be severely threatened by flooding especially in developing countries and regions. Flood management practices

T. L. Nguyen (✉) · H. N. Nguyen National Economics University, Hanoi, Vietnam e-mail: [email protected] T. A. Tran Thu Dau Mot University, Binh Duong, Vietnam © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 C. Asahi, N. Horie (eds.), Toward Sustainable Regions, New Frontiers in Regional Science: Asian Perspectives 73, https://doi.org/10.1007/978-981-99-5667-8_9

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Fig. 9.1 Flood risk management process

therefore should be improved to reducing the loss of life and possessions. Flood management with the goal of residents’ safety and well-being, while protecting their environment, is one of the main responsibilities of local authorities. To achieve this goal, reducing risks and increasing resilience are important approaches. Despite various definitions across literature, in flood risk management, the concept of risk with regard to “hazard” and “vulnerability” seems to be widely accepted among studies. The main objective of flood risk management is to reduce loss of life and economic costs to an acceptable level. Indeed, flood risk cannot be completely eliminated, but it must be managed and reduced. The reduction or shifting flood impacts through mitigation and adaptation are main goals of flood risk management (UNISDR 2009) and very important in a constant movement of socio-economic and environmental conditions. Flood risk management needs complete ordered activities before, during, and after hazard (Samuels et al. 2009) (Fig. 9.1). Flood vulnerability assessment is an important step in pre-flood actions and potential damage assessment in flood risk management process (Connor and Hiroki 2005). Measuring the vulnerability helps identify vulnerable areas before suggesting effective solutions (Takemoto 2011). Although the changes in environmental conditions and the constant movement of people’s socio-economic activities over time can change the vulnerability of areas to floods (Ahmad and Simonovic 2013), strengthening assessment methods and improving understanding of vulnerability to flood risk can assist decision-makers in reducing loss of life and property. The process of carrying out a flood vulnerability assessment depends on many factors such as the environment, society, economy, and politics of the studied area. Research on vulnerability matter involves diverse approaches and disciplines; therefore, variety of definitions of vulnerability was introduced over time. In general, regarding flood vulnerability, there is a description that has been widely applied among studies which states that human systems are vulnerable to floods due to three important aspects which are exposure, susceptibility (or sensitivity), and resilience (Balica and Wright 2010) (Fig. 9.2). Exposure refers to people, their surroundings, and every element present in flood-prone area being exposed to the flood impacts as a subject to potential losses (UNISDR 2009). Susceptibility refers to people, environment, and infrastructure tendency to influence by a hazard due to the fragility of community or ecosystem (Cardona et al. 2012) and resilience was stated as coping and adaptation

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Fig. 9.2 Three components of vulnerability (Source: Balica and Wright 2010)

ability of a system in addressing disaster stress (UNDP 2004), or sometime named as adaptive capacity (Hidalgo et al. 2020). The vulnerability of urban areas reflects the exposure and susceptibility to flood risk and the adaptive capacity to cope and recover from the flood effects (Smit and Wandel 2006). There are many approaches in assessing flood vulnerability which differ in their theoretical frameworks, vulnerability descriptions, and methodologies; however, this chapter focuses on discussing the framework, methods used, and limitations of the indicator-based approach with case example in Hoa Vang district, Danang city of Vietnam.

9.2

Indicator-Based Approach in Flood Vulnerability Assessment

The indicator-based approach uses and analyzes varied available economic, social, environmental, and physical data for the building of logical images that illustrate the spatial distribution of vulnerability. This approach has been widely used among researchers and often preferred by policymakers because it visualizes the vulnerability through maps. Through vulnerability maps, policymakers can suggest priority measures or introduce response actions for their region. In indicator-based approach, the visualization of vulnerability will be created via assessing the flood vulnerability index (FVI).

9.2.1

The Formula Expression of Flood Vulnerability Index

FVI formula expression has been researched and developed by many scientists over time, most notably and widely used are the works of Richard. F. Connor, Stefania F. Balica, and United Nations Educational, Scientific and Cultural Organization-

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International Institute for Hydraulic and Environmental Engineering (UNESCOIHE).

9.2.1.1

UNESCO- IHE

The UNESCO-IHE has developed an indicator system for flood vulnerability assessment at different scales including river basin, urban, and sub-catchment. The vulnerability to flood is calculated by identifying FVI’s components as in Eq. (9.1). FVI = E þ S - R

ð9:1Þ

In which Exposure® presents the values (infrastructure, goods, agricultural fields, cultural heritage, or people) that are at the location where floods occur. Exposure is defined as the potential of a system to be disrupted by a flooding event (due to its location in the same area of impact). Susceptibility (S) presents system characteristics (the social context of flood damage formation, the awareness and preparedness of people before floods, agencies involved in mitigating the impacts, and the existence of possible measures during floods). Resilience® relates to the experiences of a system which are encountered during and after the floods.

9.2.1.2

Richard. F. Connor’s FVI Formula

Richard. F. Connor’s formula was developed in the context of climate change causing significant impacts on human life. FVI in Richard. F. Connor’s formula, which was developed to study floods at the basin level, formed by four components: climate component (such as frequency of floods, precipitation), hydrogeological component (such as average slope of basin, urbanized area ratio), socio-economic component (such as literacy rate, poverty rate, people’s health status, population in flooded areas, infant mortality rate), and countermeasures (such as trainings, government’s investment) (Connor 2005); accordingly, the flood vulnerability index is expressed by Eq. (9.2). FVI = C þ H þ S - M

9.2.1.3

ð9:2Þ

Balica’s FVI Formula

Balica improved an indicator-based flood vulnerability calculation formula to assess vulnerability at different levels: river basins, sub-basins, and urban. The formula involves two concepts. The first concept is related to floods: the vulnerability to flood is formed by computing social, economic, environmental, and physical vulnerability as in Eq. (9.3) (Balica 2007). The second concept is related to vulnerability which

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includes three vulnerability components: exposure, sensitivity, and resilience as shown in Eq. (9.4). FVI =

1 × FVISocial 4

þ FVIEconomic

þ FVIEnvironmental

þ FVIPhysical

ð9:3Þ

The social vulnerability group includes social indicators that represent skills, knowledge, and behaviors of individuals and households. Social indicators are often used to assess conditions, people’s health, housing, educational attainment, etc. The economic vulnerability group represents the development of the study area and provides information on the production and distribution capacity of goods and services that may be vulnerable to flooding. For example, assessing FVI in developing countries needs to consider the low per capita income, lack of human resources, lack of investment and finance, etc. The environmental vulnerability group often refers to environmental damage such as agriculture, urbanization, afforestation, deforestation, nature reserves, degraded areas, rate of urbanized area, change of forest rate, etc. The physical vulnerability group represents the influence of physical conditions, whether natural or man-made, on flood vulnerability. In the Exposure component, indicators such as heavy rain, evaporation, distance to river, river flow, depth of inundation, flow velocity, sediment load, length of coastline,... are often considered. Depending on the study area, researcher can decide to select indicators that are suitable to the natural geographical conditions, socio-economic characteristics, data accessibility. 1 4 E×S × R Social

FVI =

þ

E×S R Economic

þ

E×S R Environmental

þ

E×S R Physical

ð9:4Þ

Exposure (E) provides data on population density, population in flooded areas, population near coastline, population poverty, percentage of urbanized area, population in rural areas, cultural heritage, population growth, land use, terrain gradient, flood duration, recovery time, non-residential land area, evaporation, flow velocity, precipitation, inundation depth. Sensitivity (S) is defined as the factors that influence the level of damage in floods such as education, child mortality, population with access to sanitation, unemployment, quality quantity of water supply, quality of food supply, rainfall. Resilience (R) represents for recovery and adaptive capacity such as past experience, preparedness, warning system, emergency services, dykes, flood recovery time.

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9.2.2

Steps to Conduct an Indicator-Based Approach in Flood Vulnerability Assessment

9.2.2.1

Indicators Selection

There are 2 approaches for selecting indicators: the theory-based means researcher sticks on a theoretical framework to select appropriate indicators for assessment, while data-based approach looks at the statistical connection with recorded vulnerability consequences (e.g. the statistic of mortality) when selecting most suitable indicators. The common theoretical frameworks are flood vulnerability system suggested by UNESCO-IHE for different research scales, set of indicators developed by Balica (2007). After the initial selection, all indicators are required to go through a justification process to make sure that they are all suitable for the studied area. Normally, literature review and experiences of the authors on floods in the research site are used in this step, but there still have been other methods to examine the initial selection (Fig. 9.3).

9.2.2.2

Data Treatment

Theoretically, there will be a variety of indicators that need to be collected when calculating FVI. The selected indicators must be suitable and be representative for the study area; meanwhile, the collection process is dependent on many influencing factors such as social, political status, and data accessibility. In this regard, different options can be used to replace data that cannot be collected. However, there are many opinions that changing the indicators can change the data structure and may create barriers in justifying the research results. Adding or subtracting indicators is, therefore, a huge dilemma in building the indicators set of indicator-based approach. There has been a study which claimed that there would always be a positive correlation between the indicators (OECD 2008), while others argued that it is not possible to choose completely independent indicators if they measure the same phenomena (Merz et al. 2013). However, it is generally accepted that if two or more indicators represent the same phenomenon and are highly correlated, when the

Fig. 9.3 Methodological flow of indicator-based approach (Source: Created by authors)

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initial indicators are inaccessible, they can be replaced by their correlated indicators. For example, if an area has 10,000 women and its comparison area has 20,000 women; the comparison on flood vulnerability between the two can be misled if the overall population is not considered; therefore, in this case, conversing the number of women into percentages of women over total population can ensure the reliability of results.

9.2.2.3

Data Rescaling

The Min-Max Linear Scaling To avoid adding up different units’ data, there is a need of transforming collected data into a single scale (OECD 2008). There are many methods for this purpose, the min-max linear scaling to convert values to a min-max scale (such as 0 to 1) has been widely used. Indicators that have a direct or positive relationship with the vulnerability are rescaled by Eq. (9.5), while the indicators that have inverse relationship with vulnerability are converted through Eq. (9.6) (Hudrliková 2013; Iyengar and Sudarshan 1982; Kablan et al. 2017): Xi =

X a - X min X max - X min

Xi =

X min - X a X max - X min

ð9:5Þ ð9:6Þ

For an indicator i, Xi is its normalized value, Xa means the actual value, Xmax represents the maximum value, and Xmin means the minimum value across the selected regions.

The Mean Value Scaling Another method for rescaling different unit data is applying the mean value scaling. The normalized value (Xi) is the difference of division of the subtraction between the actual value (Xa) and mean value (X) by standard deviations as in Eq. (9.7) (OECD 2008). The lack of adaptive capacity indicators was reversed before data rescaling in this method. Xi =

Xa - X σ

ð9:7Þ

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Weighting

Weights of indicators can have a significant effect on the final forming of FVI (OECD 2008). In different flood vulnerability studies, weights can be equal or differential. In some cases, equal weights are used; for example, if there is insufficient understanding of relationships between indicators, or a lack of consensus on the alternative weighting schemes, or there is a complete certainty that indicators have the same impact on vulnerability (rarely happen and hard to prove). In fact, vulnerability is affected by many indicators with unequal impacts. Normative approach is consulting expert opinion, public opinion, or local authority opinion, then analyzing these opinions through statistical or empirical analysis approach. Multiple-criteria decision-making (MCDM) is a common approach for the purpose of ranking indicators with unequal weights. Iyengar and Sudarshan and analytic hierarchy process (AHP) are two widely applied methods in FVI indicators weighting.

Iyengar and Sudarshan’s Ranking Method Iyengar and Sudarshan (1982) introduced a method to determine a composite indicator from multivariate data. This method was first used to rank the districts in terms of their economic performance. After that, this method has been widely applied for the development of composite indicator of vulnerability to climate change. In Iyengar and Sudarshan’s method the weights are assumed to vary inversely as the variance over the regions in the respective indicators of vulnerability. It is assumed that there are M regions, K indicators of vulnerability, and Xij (i: 1,2, . . . M; j: 1,2, . . . K) are the normalized scores, the weight are calculated by Eq. (9.8) (Iyengar and Sudarshan 1982): Wj =

c var X ij

ð9:8Þ

i

where c is a normalizing constant which is defined by Eq. (9.9) -1 K

c= j=1

1 max X ij i

ð9:9Þ

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Analytic Hierarchy Process (AHP) AHP has been considered as practical technique to address a broad decision-making problem involving a wide range of criteria (Abdelkarim et al. 2020). AHP has been well-developed and applied by many researchers and studies in a wide range of fields (Ouma and Tateishi 2014; Xiong et al. 2019). In flood vulnerability assessment research, there are three major steps of AHP for weighting purpose: Step 1: Performing judgments for pairwise comparisons (PC) by determining the priorities or the importance among indicators (decision elements) of the hierarchy. Experts’ opinions on the importance of FVI indicators are widely used in ranking AHP. There are many ranking scales that have been applied in literature; however, one of the most notable is the nine-point scale which was suggested by Saaty (1990) as shown in Table 9.1. Step 2: Normalize value (NV) in the pairwise comparison matrix dividing the PC value of each cell by its column total and determine the weight (wi) for each indicator by averaging the normalized values. Step 3: Checking the consistency of the subjective evaluations. To evaluate the consistency of the pairwise comparison in AHP, the consistency index (CI) is determined based on maximum eigenvalue (λmax). λmax is calculated by summing all the multiplication of the relative weights (wi) (the eigenvector) and the respective column total of the original pare-wise comparison matrix (Rajput and Shukla 2014). Then the consistency index (CI) is determined by Eq. (9.10). CI =

λmax - n n-1

ð9:10Þ

where λmax is the maximum eigenvalue of the comparison matrix and n is the number of evaluated criteria (number of indicators in the pairwise comparison matrix). Once

Table 9.1 Saaty rating scale (Source: Saaty 1990) Numeric value 1

Intensity of Explanation important Equal Two factors contribute equally to the objective important 3 Moderate Experience and judgment slightly favor one over the other important 5 Strong Experience and judgment strongly favor one over the other important 7 Very strong Experience and judgment very strongly favor one over the other. important Its importance is demonstrated in practice 9 Extreme The evidence favoring one over the other is of the highest possible important validity 2, 4, 6, 8 Intermediate When compromise is needed values 1/3, 15/, 1/7, 1/9: Value for inverse comparison

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Table 9.2 Random index of analytic hierarchy process (Source: Danumah et al. 2016) Size of matrix RI

1 0

2 0

3 0.58

4 0.9

5 1.12

6 1.24

7 1.32

8 1.41

9 1.45

10 1.49

11 1.51

12 1.58

Source: Saaty 1990

the maximum characteristic value λmax of the pairwise comparison matrix is determined, the consistency ratio (CR) will be determined using Eq. (9.11). CR =

CI RI

ð9:11Þ

CI is the consistency index, and RI is the random consistency index. Values of RI are dependent of the number of criteria (n) which are specified in Table 9.2 (Danumah et al. 2016). The comparison matrix is consistent, or the weights are acceptable if the resulting CR is less than 0.1 or 10% (Saaty 1990). When CR exceeds 0.1, it is necessary to revise the comparison matrix and re-calculate the weights for better weighting scheme.

9.2.2.5

Aggregation

A simple averaging method is the most common for calculating the overall FVI (Nelitz et al. 2013). The weighted normalized indicators are multiplied by their corresponding weights to form components of FVI factors as in Eq. (9.12), where n is number of indicators in each component, X is normalized value of indicator i, and W is its corresponding weight. n

E ðS or ACÞ =

W iXi

ð9:12Þ

i=1

The overall FVI values are calculated through Eq. (9.13) using additive function of all FVI components. FVI =

1 × ðE þ S - ACÞ 3

ð9:13Þ

At the visualization step, GIS software is often used to visualize the distribution of vulnerability through maps. Many spatial indicators are often calculated using GIS tools if their statistical data cannot be accessed.

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197

Major Limitations of Indicator-Based Approach

An indicator-based assessment requires complicated indicators in economic, social, environmental, physical dimensions, it faces considerable complexity regarding data standardization, weighting, and map aggregation methods. Uncertainty and sensitivity of input data are struggles with this approach. The interdependence is a difficulty that needs to be resolved since each additive data layer in indicatorbased approach includes a diverse variable. This difficulty can be mostly handled by assigning weights for the variables to reduce their impact in the final expression formation. Another difficulty of this approach is the quantification of the social indicators for the calculation of the vulnerability index. To minimize this difficulty, the reference of previous studies and expert opinion to choose the most appropriate social indicators from the beginning are important. In addition, the selection of survey questions, especially those with the aim of assessing the preparation, awareness, and past experiences of local communities in the study area, has a great influence on the result. Choosing multiple-choice questions with prepared answers would be more convenient for synthesizing and quantifying the responses.

9.2.4

Case Example of Flood Vulnerability Assessment in Hoa Vang District, Danang City of Vietnam

Danang is a coastal city located in the central region of Vietnam which is considered as one of the most sensitive regions to natural disasters and climate change. Being located in the downstream of Vu Gia-Thu Bon river, Danang is often flooded in the flood season. Hoa Vang district is among districts that is massively damaged by floods in Da Nang city due to its special location and topography. The practice of assessing the vulnerability in Hoa Vang district to flood, therefore, has an important meaning in disaster risk management. This case example develops a set of indicators to assess flood vulnerability for Hoa Vang district and develop map that reflects the spatial distribution of vulnerability. The data was obtained from statistical yearbook of Danang city, field survey, or calculated by geographic information system (GIS). The results of this assessment have important implications for proposing solutions to cope with flood in Da Nang City.

9.2.4.1

Study Area and Data Source

The study area covers 746.6 square kilometers (including 11 communes) of Hoa Vang district which is located in southwest of Da Nang city (Fig. 9.4). Hoa Vang has two distinct seasons in a year: the rainy season starts from August to December and the dry season starts from January to July. Annually, Hoa Vang is directly or indirectly affected by 1–2 tropical storms and 1–2 floods (Do and Nagasawa

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2014). The topography of Hoa Vang district is very diverse with an altitude ranging from 0 to 1663 meters above sea level. Since the diverse topography features is one of the main factors causing flooding in Hoa Vang, this study uses various elevation data sources including the spot height elevation data of Danang City and the global Digital Elevation Model (DEMs) including ALOS DEM, ASTER GDEM, and SRTM. Besides, data on socio-economic characteristics of Hoa Vang district were taken from district statistical yearbook 2018. To validate the reliability of flood vulnerability evaluation of this study, a field survey in July 2020 was carried to identify the information about the location and depth of the flood pillar points.

9.2.4.2

FVI Indicators and Data Analysis

Based on literature review and the availability of data, nine indicators for flood vulnerability assessment in Hoa Vang were selected. The exposure component includes four indicators including: elevation, flow accumulation, and Topographic Wetness Index (TWI) which are the main factors causing flood (Ballais et al. 2005; Tran et al. 2017), and the distance from the river channel which is also an important factor that increases flood risk since floods in Hoa Vang are mostly caused by water overflows from rivers (Tran et al. 2017). The distance from the river channel was calculated using the Euclidean distance method that was integrated in GRASS GIS software (r.grow.distance). The susceptibility component incudes population and

Fig. 9.4 Location of research site and topography feature

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Fig. 9.5 Flowchart of indicators and data processing (Source: Created by authors)

land use. While the average income and poverty index which are directly related to social condition were chosen for adaptive capacity component (Fig. 9.5). Results of some indicators are illustrated in Fig. 9.6 The data of all indicators were normalized into 0–1 value using min-max linear scaling as in Eqs. (9.5) and (9.6). In order to determine the weights for all indicators, a survey with participation of local experts was carried to assigning the level of importance of each indicator and building AHP hierarchy. The results of weights are shown in Table 9.3.

9.2.4.3

Flood Vulnerability Map

In the aggregation step, the normalized value of all indicators was multiplied by their corresponding weights (Table 9.3) to form three FVI components using Eq. (9.12), then the total FVI was generated by using additive function (Eq.9.13). The results of FVI components and overall FVI are shown in Table 9.4. By using the min-max linear scaling, FVI values were converted into a single scale from 0 to 1. After that, through manual classification method (Samanta et al. 2016), the normalized FVI values were classified into four categories: Low (