Spatial economics is a relatively new area of economics, aiming to comprehensively analyze the spatial structures of economic activities that result from interactions between people and companies. Professor HAMAGUCHI Nobuaki, who works on global economy and economic integration at Kobe University’s Research Institute for Economics and Business Administration, specializes in spatial economics, and for over a span of 10 years has been visiting areas devastated by the Great East Japan Earthquake for his research. We asked him for his thoughts on recovery efforts from the perspective of spatial economics.
What is spatial economics?
Hamaguchi:
Spatial economics is a new discipline that was developed in the early 1990s. My supervisor, when I was working on my doctoral dissertation at the University of Pennsylvania in the United States, played a central role in developing this field. In short, it aims to analyze the spatial structures of economic activities with a comprehensive perspective.
For example, an individual might consider where the best place to live would be, or a company will assess the best area to build a factory in order to produce the most profit. When each person or company decides where they want to live or where they want to be located at the micro level, those interactions form macro-level patterns of where residences or factories are built. Spatial economics attempts to theorize how these patterns are formed, and how they affect economic activities. It is a discipline that was born from the interest in how the world will change as economic globalization progresses and the constraints of national borders fade.
How does spatial economics relate to disasters?
Hamaguchi:
Areas devastated by disasters become unstable locations for people to live, or for companies to conduct their activities, and each person or business makes the decision whether to remain in the area, leave temporarily and come back again, or give up and relocate, according to their circumstances. This subsequently leads to the question of whether the accumulation of urban functions and industries can be restored, or will disappear. These are the aspects we analyze in spatial economics.
The role of spatial economics as Japan faces population decline
Did you think of using spatial economics to analyze the situation surrounding the Great Hanshin-Awaji Earthquake?
Hamaguchi:
At the time of the Great Hanshin-Awaji Earthquake in 1995, Japan was still seeing population growth, even if it was very slight. So, the natural process was that people would relocate, the area they relocated to would become crowded, and that would prompt them to return to their original location. But the population in Japan has been on the decline since 2005. Some rural areas are already having a hard time maintaining the basic lifelines of water and wastewater utilities or local transportation because there are fewer members of the community; and so, some people even argue that it might be better to discourage people from returning to their hometown after a disaster. In other words, we are in a period where it isn’t hard to imagine that rebuilding communities will be more difficult, compared to when the population was still growing, and I think that has increased the role of spatial economics.
In the long-term, some local communities may disappear and that may be unavoidable. But if that were to happen right now, it would probably have major repercussions on society. So I believe that, as long as the cost of reconstruction is not excessive, even if we might not be able to rebuild communities to their original state, we would be better off trying to restore them to a certain size and maintaining them as communities.
What we need is speed and innovation
You have continued to visit areas affected by the Great East Japan Earthquake for your research.
Hamaguchi:
The Great East Japan Earthquake was the first large-scale disaster for Japan after its population started to decline. We have been given several opportunities over the span of a decade to visit the disaster areas and observe the recovery process.
There are two lessons learned from our research. The first is that speed is crucial if we want to restore populations to their original levels. This is because, as time passes by, people tend to resettle in new locations instead of returning to their hometown. To prevent this from happening, it is important to present people with a recovery roadmap as early as possible. Uncertainty about when they can return leads to people becoming more anxious about their future, and more money will have to be spent to try and encourage them to return.
What was the second lesson?
Hamaguchi:
Local industries can help advance recovery efforts by implementing innovative initiatives. Let’s take the fisheries industry for example. There are people who catch and sell fish, but there are also others who make and sell fishing gear. Then again, the industry isn’t simply about selling fish to city markets; it also makes a significant contribution to local restaurants and tourism, and a great many people with diverse expertise and experience are involved. The Great East Japan Earthquake caused such massive damage that, in addition to the loss of many lives, it also resulted in many people going out of business. It had been extremely difficult for older fishermen to invest in new boats and equipment in order to replace the ones they had lost in the disaster and resume their business. Meanwhile, the younger generation cannot be counted on to fill the void, since the region has always suffered from an extreme population drain. In such circumstances, people need some sort of innovative initiative to restore local industries to their previous state.
The reset made it possible to produce brand oysters
Can you give us a specific example of an innovative initiative?
Hamaguchi:
The Tokura district of Minamisanriku Town, Miyagi Prefecture, is an area known for oyster farming. Prior to the earthquake, oyster farmers would work 10 hours a day, seven days a week, and harvest as many oysters as possible in order to earn money and make a living. That had been the business model. But the Sanriku Coast has a jagged shoreline with countless bays, and the many oyster rafts used to be set closely together in the small bays. That resulted in a lack of nutrients and oxygen for the oysters, affecting their growth. This had been a problem for the oyster farmers for some time.
After the tsunami, caused by the earthquake, swept all of the rafts away, the oyster farmers of Tokura district sat down to discuss what they should do going forward. Their conclusion was to reduce the number of rafts down to a third of what they used to have. Some farmers objected, worried that their income would decrease. But ultimately, as they were members of a community who knew each other since childhood, they managed to talk it over and reach a consensus.
Subsequently, when they reduced the number of rafts to a third, what they actually found was that it greatly improved their productivity. It used to take a year and a half for the oysters to grow to a size that could be shipped, but that time was dramatically shortened to roughly 90 days. So, the farmers had known that having too many rafts was a problem, but had been unable to make any changes before the earthquake because that practice had been the norm. The earthquake reset everything, enabling the farmers to try something different. Now they have shorter workdays and weekends off. The oysters grow larger than before and can be sold in Tokyo as brand oysters. With shorter workdays and more income, young people are now starting to take up oyster farming as successors of the business.
How do you see recovery efforts with a population in decline?
Hamaguchi:
As long as the population continues to decline in Japan, it will be difficult to restore populations to their previous levels, or expect communities to bounce back and achieve remarkable development through recovery efforts. So, while we will try to bring populations, which have dropped significantly in disaster areas, back to certain levels, if we see that people are able to live a better life than before, taking advantage of the abundant resources of the region in a sustainable manner and achieving a better work-life balance, I believe that deserves to be called a recovery.
Disaster management measures and business continuity plans to mitigate population decline
How do you view the recovery efforts after the Noto Peninsula Earthquake of January 2024?
Hamaguchi:
I haven’t had the chance to actually go to Noto to conduct research, but from what I have learned from newspapers and other sources, I feel that efforts to restore lifeline infrastructures such as electricity and water have been slow. The Noto region has very few areas of flat land available, limiting where they can build temporary housing units, and this has forced people to stay in shelters for a long time. As such, the people who relocated to temporary accommodation offered by hotels and public housing in distant locations have started new lives there, resulting in more people deciding to leave their hometown for good. There are special circumstances unique to Noto, but it is unfortunate that the recovery efforts have lacked speed, which has been proven to be essential.
From the perspective of spatial economics, what measures can we take to prepare for future disasters?
Hamaguchi:
We ultimately need to prevent disasters from causing a devastating loss of life, or forcing people to relocate to distant locations; and so, one of the things that we can do is plan ahead so that we have disasters measures in place. The other is to develop regional business continuity plans beforehand, such as how to make temporary housing available immediately within the region, or how to add value to local industries in different ways.
Disasters demand an immediate response, leaving little time for thinking. What we can do is prepare during normal times, considering innovative ways to leverage local resources and develop the region in a sustainable manner, or initiatives to create better workplaces that allow people to achieve personal fulfillment; and these approaches are also applicable as efforts to revitalize regional economies.
Resume
Received a B.A. in Brazilian Studies from the Osaka University of Foreign Studies, before becoming a researcher at the Institute of Developing Economies (currently the Institute of Developing Economies, Japan External Trade Organization) and completing his Ph.D. at the University of Pennsylvania Graduate School of Regional Sciences in the United States. In 2004, he became an associate professor at the Kobe University Research Institute for Economics and Business Administration, before becoming a professor in 2007.
