The Tokyo Foundation for Policy Research


The Tokyo Foundation for Policy Research

Japan's Watershed Forests in the Cross Hairs

May 20, 2009

The Tokyo Foundation has been engaged in research on the crisis facing Japan's watershed forests and recently announced proposals for protecting the country's forests and water cycle from interests backed by global capital. These proposals were subsequently addressed by " Sentaku", a magazine that carries substantial influence with Japanese policymakers.

The following is a translation of an article from the May 2009 edition of the Japanese magazine Sentaku. None of the contents may be reproduced in any form without the permission of Sentaku .

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Buyers backed by global capital are stealthily reaching their hands out toward Japan's forests. In January 2008, a Chinese concern approached the town of Odai in Mie Prefecture with an offer to purchase a large tract of its mountainous forestland. The group's intention was to log over 1,000 hectares of forest surrounding the upstream section of a dammed lake and ship the harvested timber to China from Nagoya Port. Although caution on the part of the local government prevented the deal from going through, the buyers, who were acting as intermediaries, merely turned their attention to a different locality.

There was a similar occurrence in June 2008 in the village of Tenryu in Nagano Prefecture. A buyer from Tokyo looking to purchase forestland reportedly told his associates of China's demand for lumber and potable water, explaining that a wide expanse of watershed forest could easily sell for several times the market price. Amid a protracted slump in the market for forestry products, talk of such deals is happening behind the scenes all over Japan.

A Fire Sale in Japan's Battered Provinces?

An increase in purchases of forestland can be explained by any number of factors; in the case of Japan, however, the immediate cause is unreasonably low prices. Forestland prices in Japan have declined for the past seventeen years in a row and are now lower than the levels seen in the mid-1970s. Prices for standing timber, too, began declining in the 1980s and have continued to fall for over 25 years. With prices so low, there are no profits to be made by properly managing and maintaining a mountain property. On the other hand, a buyer that purchased forestland cheaply and harvested all the timber without bothering to replant it (although this is against the law) would reap handsome profits. This explains the growing number of incidents all over Japan in which speculative real estate companies buy up mountain plots from struggling landowners, harvest the standing timber, and then abandon the land.

Water is another motive for purchases of mountain forests. As rising demand puts ever greater pressure on global water supplies, countries around the world are intensifying their efforts to secure water resources, including watershed forests. In China, in particular, demand for bottled water is growing rapidly, increasing fourfold between 1997 and 2004. Annual consumption of bottled water has ballooned to 9.8 billion liters. The so-called water barons—major water companies—are frantically buying up land all over the world to obtain rights to the water resources located there. The flow of money into water resource businesses through investment vehicles known as water funds has also increased in the past few years. Amid these global trends, water market players view Japan's undervalued forests as a “buy.”

In the Chubu and Kyushu region, the problem extends beyond direct purchases of forestland. According to reports, sake brewers and bottlers have also been bought up for their groundwater sluice gates and accompanying forestland. With provincial economies in tatters, alarming numbers of breweries have been going under. Brewers and bottlers desperate to sell off their capital as their businesses slump present ideal targets for overseas buyers.

A common thread in each of these stories is the widespread use by buyers of intermediaries and dummy corporations. The buyers behind the deals managed to conceal their true identities by interposing two or three extra links in the purchasing chain. Without realizing it, local landowners forced to part with their forestland due to economic hardship end up selling their property to an unknown buyer via a complicated resale process.

Administrative Failure

Gaining an accurate grasp of the facts behind the rumors circulating in various parts of the country, however, is extremely difficult. Roughly 60% of Japan's woodlands are private forests owned by individuals or corporations. Although sales of land, including privately owned forests, must be reported after-the-fact under Article 23 of the National Land Use Planning Law (though this applies only to plots of 1 hectare or more outside of city planning zones), the data provided by such reports are not subjected to the kind of rigorous compilation and analysis needed to understand what is happening.

To make matters worse, the comprehensive survey of Japanese land based on the National Land Survey Law is still less than halfway toward completion. Astonishingly, the authorities do not even know how large most areas of forestland are, let alone who owns them. Because of the lack of progress in completing the national land survey, real property registers do not provide an accurate picture of the present status of forestland. Omissions in information regarding landowners (caused, for example, when a new owner neglects to register the change in the name of the titleholder) and the sheer number of plots make it nigh-on impossible to get a clear picture of who owns what using land registers alone.

In short, there is no mechanism for the national authorities to identify who owns Japan's forestry resources and for what purpose. Jurisdiction over the country's forestry and water resources, including groundwater, is split among a number of government agencies: the Ministry of Land, Infrastructure, Transport, and Tourism is in charge of the national land survey and regulation of land use; forests are generally administered by the Forestry Agency; and tasks relating to the environment, including groundwater, are generally handled by the Ministry of the Environment. With the Ministry of Health, Labor, and Welfare, the Ministry of Economy, Trade, and Industry, and other agencies also involved, Japan's forestry and water resources are not being administered in a comprehensive manner.

In January 2009, the Tokyo Foundation issued a proposal titled “Japan's Forestry and Water Resources in Crisis.” In it, the Foundation points out that while forestry resources are the private property of individuals, corporations, and others, at the same time they generate the water resources on which Japan depends and are a fundamental part of the country's infrastructure.

In the days when Japan's forests were properly managed, the public benefit derived from forestry resources was maintained to some extent by landowners, who took good care of their mountainside plots. But now, with rural villages impoverished and a mere 50,000 or so forestry workers in all Japan (26% of whom are aged 65 or older), many forests lie neglected, the identities of their owners unknown.

The existing legal framework was erected back when there was high demand for domestic lumber and forest management was thriving. At that time it was impossible to foresee the increase in overgrown forests and the lack of reforestation that have resulted from factors such as foresters' financial hardships and the growing number of absentee landlords; consequently, the current laws are incapable of dealing firmly with such nonfeasance. Moreover, almost nothing has been done to put in place rules to protect forests and groundwater from global interests bent on realizing short-term profits. With the exception of farmland, the laws that are supposed to restrict the resale of land are simply not functioning. According to Article 207 of Japan's Civil Code, “Ownership in land shall extend to above and below the surface of the land, subject to the restrictions prescribed by laws and regulations.” In other words, it is possible that landowners could also lay claim to the groundwater and hot springs under their land.

In the event of a dispute over the rights to groundwater lying under private forestland purchased with foreign capital, local residents would be opposed in any legal action by an organization (most likely a corporation or fund) that might fiercely defend its position based on the legality of its ownership of the watershed forest and groundwater on and below the land. Already such a conflict over water rights is being played out in the US state of Michigan between local citizens and a bottled water company funded by Perrier, a subsidiary of the Swiss corporation Nestlé. In such cases, it is imperative that residents start a debate with the organization about the public and social significance of the resources. During a drawn-out conflict, the land in question continues to be used by the organization and is not returned.

Once structural changes like land subsidence occur due to excessive extraction of groundwater, it takes hundreds of years to restore the surrounding environment. If water and forestry resources are sold to an unknown buyer who proceeds to threaten the safety and peace of mind of local residents through reckless development or excessive water usage, it will already be too late. For this reason, the government's nonfeasance in administering Japan's water and forestry resources is unforgivable.

Viewing Japan's present system from this perspective, the rules put in place to safeguard the country's watershed forests and groundwater can only be described as alarmingly inadequate. To give watershed forests their rightful status as a key element in Japan's infrastructure, the government must swiftly establish a cross-ministry form of administration for the conservation of watershed forests and groundwater.

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