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[ISHES Newsletter #3]Shimokawa Town, Hokkaido: Efforts in Recreating Local Economies

2018/10/25 15:40:24

ISHES Newsletter #3
October 25, 2018

See what's new on our web site:
Copyright (c) 2018,
Institute for Studies in Happiness, Economy and Society

In the October 2018 issue of the ISHES Newsletter:

- Shimokawa Town, Hokkaido: Efforts in Recreating Local Economies

- New articles from the Research Institute for Creating New Paradigms
based on Eastern and Western Wisdom

- Recommended articles on sustainability issue in Japan from JFS Newsletter


Shimokawa Town, Hokkaido: Efforts in Recreating Local Economies


Importance of building a solid local economy

In recent years, I've been on various Japanese government committees to
talk about issues such as energy, growth strategies, and plastic waste.
I've also been supporting small local towns in community-building, from
Hokkaido in the north to Kyushu in the south, and a remote island in
Shimane Prefecture. In these activities, I help communities develop
a shared vision and shift toward self-sufficiency by making the local
economy more visible and reducing the dependence on the outside.

One of the reasons I like this work of helping local communities is that
"that" is where I believe our future lies: in local communities. The
national government can show directions and policies for the future, but
it is in local communities that real lives are lived and real changes
happen. Japan is rapidly depopulating and greying, but declining
populations and waning community vitality in local towns are not
a concern only for local towns.

Japan now has 954 municipalities that have a population below 30,000
people. All combined they only account for about eight percent of
Japan's total population, but collectively they account for about 48
percent of Japan's land mass. This means that just eight percent of
the population is sustaining nearly half of Japan's land. If local
economies stop circulating, depopulation may accelerate, uninhabited
areas may grow, making it difficult to maintain the land.

About 100,000 young people move to Tokyo from local towns every year.
Some of them hope to return to their home towns, but with very few jobs
available, they say it difficult for them to return.

If each local community is able to have healthy circulation of its own
economy and reduce its dependence on external factors such as money and
employment opportunities, their independence can play a major role in
strengthening resilience -- the capacity to flexibly recover in any
circumstances -- in the event of the next financial crisis, energy
crises, global warming impacts, and so on.

Is your local economy a leaky bucket?

Many local communities make a huge effort to attract money in the form
of government subsidies and assistance, and by attracting companies,
visitors and tourists, and so on. But in Japan, subsidies and assistance
from the national government will decline in the future. What is more
important than trying to attract outside money into the local area is to
reduce the amount of money flowing out. In other words, the important
thing is to find ways to keep money circulating locally as long as
possible once it has flowed into the area.

One theory that nicely explains this idea of "plugging the leaks" was
developed by the New Economics Foundation (NEF) based in London, England.
Imagine the local economy as a bucket. Filling the bucket is not simply
about how much water you can bring in from somewhere to pour into
the bucket. It is also important to check and see if the bucket has any
holes leaking that precious water. If you can identify the holes, you
can then take steps to stop the leaks.

Below, I would like to introduce the efforts of the town of Shimokawa in
Hokkaido, population 3,300, to identify the leaks and reduce the outflow
of money.

Town's economy scale and trade balance are now found!

In order to reduce the amount of money flowing out, first we need to
find where the holes are and how big they are. At the national and
prefectural levels in Japan we can refer to inter-industry input-output
tables to understand the inflows and outflows of money, but they are
typically not available at the municipal level. Shimokawa, therefore,
prepared its own inter-industry input-output table in cooperation with
a university in 2012.

To create the tables, the town used publicly-available statistical data,
such as population data based on the resident registry, and economic
calculations for Hokkaido residents. Interviews were also conducted with
about 50 of the main local businesses in Shimokawa about the size of
their business and procurement activities. By learning where local
companies actually purchased and sold goods and services, they could
create an inter-industry input-output table to reflect the actual
business conditions.

And voila, the table showed the scale of the local economy (gross
regional product) in Shimokawa to be 21.5 billion yen (US$192 million).
You can see the town's strengths and weaknesses when you see the trade
balance on an industrial sector-by-sector basis. In terms of goods and
services it shows the economic value purchased outside the town, and
also the economic value "sold" outside the town.

The sectors with a surplus included timber and wood products (surplus of
about 2.3 billion yen or US$20.5 million) and agriculture (about 1.8
billion yen or US$16.1 million), but large deficits were found in oil
and coal products (deficit of about 750 million yen or US$6.7 million)
including kerosene for heating, and electricity (about 520 million yen
or US$4.6 million). In other words, about 1.3 billion yen (US$11.6
million) was draining out of the area to buy energy!

With an inter-industry input-output table you can also calculate
the economic benefits of plugging the leaks. If electricity and heating
fuel are substituted with woody biomass from local sources in Shimokawa,
not only does that eliminate the deficit of 1.3 billion yen spent for
purchasing energy. It also boosts the gross regional product by 2.8
billion yen (US$25 million) through the creation of 100 jobs and related
ripple effects.

Use local resources to create an energy self-sufficient town!

To make this big possibility a reality, Shimokawa began taking
the initiative to achieve energy self-sufficiency by utilizing its own
forest resources. First, the town started replacing oil and coal
products with forest resources from the area. Wood chips are produced
from feedstock made from logging residue generated by forestry work and
forest management activities, small-diameter timber from forest thinning,
pruned branches and wood wastes generated during wood processing.
The wood chips are used as fuel for biomass boiler systems in the town
and the 100% locally-generated heat is used in Shimokawa.

Currently 13 biomass boilers are operating and the town is 49 percent
self-sufficient in heat. This means that nearly half of the heat demand
in Shimokawa is already supplied by heat generated within the town. This
cycle has stopped the leakage of more than 200 million yen (US$1.8
million) that was previously being paid for energy, and an equivalent
value has stayed to circulate within the town. Also, the shift from
fossil fuels to biomass has reduced the town's carbon dioxide emissions
by 18 percent. The town now plans to bury the heat supply pipes to
achieve 100 percent self-sufficiency in heat. It also plans to promote
intraregional production of electricity.

How to involve businesses that have conflicting interests

If kerosene is replaced with wood chips, will it affect the people who
made a living selling kerosene? The sales of kerosene would drop and
their businesses would no longer be viable if the town became 100
percent heat self-sufficient. It is understandable that businesses
selling kerosene and other fossil fuels might end up resisting plans to
use forest biomass.

For issues related to energy shifting, Shimokawa takes a co-creation
approach. The town asked four cooperatives that were selling kerosene to
create a cooperative association to supply biomass energy, and asked
them to take care of the production and delivery of biomass materials.

If they can sell biomass materials in place of kerosene, they can
continue to have viable businesses. The effort of supporting fossil fuel
energy businesses to shift to renewable energy businesses is a good
example of a co-creation type of shift.

Increasing new industries and new people from outside the town

Shimokawa is seeing new businesses established in recent years based on
the use of forest resources and heat energy. One company established
a laboratory for medical plants because of the abundant heat energy
available. The business of shiitake mushroom cultivation in greenhouses
has grown to annual sales of over 70 million yen (US$625,000). Wood
sculpting artists have moved to the town. New businesses handling
firewood and essential oils from the Sakhalin fir tree have also been

Encouraged by this new trend, the numbers of returnees and newcomers are
increasing. Over 200 people are moving into own annually, and population
decline due to social factors has stopped.

The town of Shimokawa started to study family finances in the community,
aware that the local economy consists of both an industrial economy and
a "family economy," and inter-industry input-output tables alone do not
reveal the latter. Also, five years after the town prepared the first
inter-industry input-output tables, it prepared a new version in order
to accurately understand the current situation.

Still today there are not many municipalities in Japan that are making
an effort to visualize the local economy and undertake concrete
initiatives based on that. But more are beginning to realize that they
cannot continue relying so much on the national government, so they are
paying attention to this visualization approach, considering how to plug
the "leaks," and launching efforts to do so.

In February 2018, I published a Japanese book entitled "Jimoto Keizai
wo Tsukurinaosu (Recreating Local Economies: Analysis, Diagnosis,
Measures)" (Iwanami Shoten, Publishers) to share my ideas as well as
tools and examples. The third edition is already in print, and I believe
this is a sign of a high level of interest in the concepts. Besides
supporting these activities in Shimokawa, I have also traveled to other
places to help prepare inter-industry input-output tables and coach
related efforts. For example, I have done this in Minami-Oguni Town in
Kumamoto, Kyushu, and Ama Town on the remote island of Nakanoshima in
Shimane Prefecture.

Not every local community is seeking to be totally "self-sufficient."
And in fact, complete self-sufficiency is not that realistic. However,
local communities can regain some balance in their local economy,
instead of being so vulnerable due to excessive reliance on external
factors. And that is exactly what I am trying to support.


Written by Junko Edahiro


Shimokawa, Hokkaido: Advancing SDG-Based Community Building

15-Year Integrated Forest Environment Education in Shimokawa, Hokkaido
to Support Sustainable Forest Management

Sustainable Community Building in Shimokawa: Recycling-Oriented Forest
Management Enabling Permanent Use of Forest Resources


New articles from the Research Institute for Creating New Paradigms
based on Eastern and Western Wisdom


In this section we introduce the latest articles posted on the website
of the Research Institute for Creating New Paradigms based on Eastern
and Western Wisdom.

This time we introduce an article from the column by Yoshifumi Taguchi,
entitled "Taoist Thought and Japan's Heart: The Culture of Seeing what
can not be Seen." What kind of culture sees something that cannot be
seen? We hope you enjoy reading about the Taoist thought behind that

Taoist Thought and Japan's Heart: The Culture of Seeing what can not be


Recommended articles on sustainability issue in Japan from JFS Newsletter


In this regular section in each issue of the ISHES Newsletter, we will
recommend articles from past newsletters of Japan for Sustainability.
The non-profit JFS was active from August 2002 until July 2018, sending
out information to the world with the aim of moving both Japan and the
world toward being sustainable and happy societies.

This month, we introduce the concept of transforming structures into
something eternal by continually rebuilding them. This JFS article
describes the tradition of rebuilding the sanctuaries housing Shinto
deities every twenty years as part of the Shikinen Sengu ceremony at
Japan's top shrine, Ise Jingu in Mie Prefecture. The traditions not only
preserve the structures but also serve to continue preserving the
foundations of human traditions and happiness. What dynamics and
mechanisms are at play here?

Rebuilding Every 20 Years Renders Sanctuaries Eternal -- the Sengu
Ceremony at Jingu Shrine in Ise

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