The Tokyo Foundation for Policy Research


The Tokyo Foundation for Policy Research

Protecting Our Land from a Post-Quake Fire Sale

June 15, 2011

As Japanese policymakers deliberate the best way to go about rebuilding northeastern Japan in the wake of the March 11 earthquake and tsunami, land use and land rights have emerged as important issues. Members of the prime minister's Reconstruction Design Council have called for changes to land-use policy and deregulation of land use in the regions affected by the disaster.

Council Chairman Makoto Iokibe, speaking at a May 10 press conference, suggested that one focus of deliberation should be the rules governing conflicts between public needs and individual property rights. [1] And several newspapers, reporting on Tokyo Electric Power Company's need to pay damages for the Fukushima nuclear accident, have mentioned the possibility of TEPCO's selling off company-owned land in Oze National Park. [2]

Land is not just individual property but also national territory, and land-use policy is one of the most basic tools of national development. Because land is by nature a public asset, there is a need to ensure that it is bought, sold, and used in a manner consistent with the good of society and the interests of the nation, regardless of whether it is privately or publicly owned.

The Tokyo Foundation's Conservation of Land Resources in Japan project has been pointing out for some time the inadequacy of Japan's regulation of land use and sales, specifically in connection with the accelerating sell-off of Japanese forestland to foreign investors. Here we would like to revisit the topic in the context of post-quake reconstruction, making the case that now is the time for fundamental reform to ensure that the long-term public interest is not sacrificed to immediate economic needs and short-term profits.

A Laissez-Faire Approach to Land

The following points sum up the problematic character of Japan's land system:

  • The national cadastral survey (to determine and register the area, boundaries, and ownership of all the nation's land) is still only 49% complete.
  • Japanese law provides for inadequate control of land transactions and land use even in areas essential to national security, such as the land around airports, harbors, and defense installations; land containing important water resources; and remote islands.
  • The property rights of private landowners are strong enough to block the government's right of eminent domain in many situations.
  • The Civil Code guarantees adverse possession of land (title based on continuous use). [3]

In all of the above, Japan sets itself apart from most of the advanced industrial world, where land is generally accepted as a public good.

Apart from agricultural land, Japan imposes virtually no regulations on land sales, and land-use regulations are quite loose in practice. In the ease with which land changes hands in Japan—as well as in the strength of owners' property rights—the status of land is scarcely different from that of a financial product. Despite its importance as a public good, any given tract of land (or national territory) may change hands and undergo commercial development at any time without so much as a legal determination of its boundaries, as long as the seller and buyer agree on the terms.

Such a system may have passed muster in an age when economic transactions were localized and concluded between people who knew one another by sight, but in our day, when the global economy is expanding and local communities are shrinking (owing to migration and an aging population), it is hardly adequate to protect the public interest.

Don't Sell Off National Parkland

TEPCO is currently considering selling off some of its assets to cover compensation and other costs stemming from the nuclear accident at the Fukushima Daiichi Nuclear Power Station, and according to several newspaper reports, one of the assets that could go is company-owned land located in Oze National Park. [4] The fact is that TEPCO owns a full 16,000 hectares of Oze, 43% of a park that covers 37,200 hectares spanning Fukushima, Gunma, Niigata, and Tochigi prefectures.

Since land use inside national parks like Oze is regulated under the Natural Parks Act, commercial interests would not be at complete liberty to develop or build there, and for this reason some have maintained that private investors would be unlikely to buy up the land even if TEPCO put it on the market. One could argue, though, that even undeveloped parkland would have great commercial value, given the 300,000-plus tourists who visit Oze every year. The average market price of Japanese forestland—having fallen for 20 consecutive years owing to the long decline of the country's timber industry—stands at about 200,000 yen per hectare, according to a major home builder. At this price, TEPCO's Oze holdings could be had for about 3.2 billion yen, not a bad investment when one considers Oze's natural beauty and tourism value. At present anyone can hike over the Oze moors free of charge, but by charging an entrance fee of 500 yen per person, the owners could expect annual earnings of 150 million yen. And since neither the Natural Parks Act nor the Forest Act regulates the extraction of groundwater, the owners might also find a way to exploit the land's water resources.

If TEPCO decided to sell off its holdings in Oze, the property would surely pique the interest of investors inside and outside of Japan, including funds from the emerging economies. And once part of Oze changed ownership, that part could be parceled up and sold off to others. In that case, land on which TEPCO currently spends 200 million yen annually for natural conservation (according to the company's public relations materials) would be left to the fragmented whims of various unrelated owners. Under such circumstances, could we be certain that Oze's natural environment, a crucial part of the Tonegawa watershed, would be carefully preserved as a national land resource?

Key watershed forests, outlying islands, and other territory of importance to the well-being and security of the nation or one of its regions should not be treated like a financial product, capable of being traded at will. It should be protected by basic rules required to prevent uncontrolled sale and development. Yet under current land laws, the government would have no firm legal basis for timely intervention in the event that the Oze parklands are sold and used in a manner no one had anticipated. When we consider the possible repercussions, we can see that great care must be taken to prevent the hasty, ill-considered sell-off of land assets for short-term economic gain.

Preserving Land for the Public Good

The town of Niseko, a well-known Hokkaido ski resort, was prompted last year to take action in response to the accelerating sales of undeveloped land to foreign-owned businesses. In a town where residents get almost all their tap water from underground sources, the township began negotiating last autumn to buy up five privately owned tracts inside its limits—two of them owned by a Malaysian company—located above water sources. [5] In addition, in April this year the local government enacted a groundwater conservation ordinance banning bulk extraction of groundwater without prior authorization and regulating the development of land above water sources. These steps represent an effort on the town's part to establish its own mechanism for conserving important resources while also encouraging investment by foreign developers and tourism companies. It is owing to the lack of a unified national framework for the regulation of land sales and land use that local governments are obliged to devise their own stopgap measures to counter threats after they emerge.

Similar situations could easily arise in the post-quake reconstruction process. In order to rebuild, the stricken areas will need outside investment, and the government is expected to relax regulations in order to facilitate such spending. The government, meanwhile, is hard pressed under the current system to acquire land for public use without the consent of the owner, even if the public good or the nation's interests demand it. [6] In today's global economy, hasty sales of land assets to shore up the bottom line could result in a massive sell-off of national territory, one parcel at a time. While the central government must continue transferring power to the local governments, it must not leave them to deal individually with such a threat. Where land is concerned, deregulation has to be carried out within the context of a national legal framework to protect lands from the standpoint of their long-term benefit to the public, with a far-sighted, objective perspective on national and regional security, as distinct from economic efficiency.

If we neglect to build such a legal infrastructure, trusting to providence or to the goodwill of individual landowners, we could once again find ourselves vulnerably exposed in the face of an "unanticipated" crisis—this time, the loss of our land. It is vital, therefore, that we begin the process of revamping the land management system by initiating a national debate on what should not be sold and what new land-use rules should be instated.

Who owns the harbors and fishing ports (many of which were devastated by the recent tsunami), outlying islands, the land around airports and defense facilities, forests, and arable land could have profound repercussions for public order and safety, the smooth functioning of the economy, and national security. In other words, it is inextricably bound up with the public good and the national interest. However difficult it may be, we must replace the current inadequate system with a new framework that balances the property rights of individuals against the need for rational and reasonable regulation governing the sale and use of such land.

Fortunately, the government has at least begun taking measures to protect forestland from the threat of uncontrolled investment. Opposition parties have submitted two pertinent pieces of legislation to the Diet, including amendments to the Forest Act that were incorporated virtually verbatim in the government's bill to revise the same act. This bill has already become law, passed in April along with disaster-related legislation on which the Diet took swift action. Key changes include mandatory registration by any entity acquiring title to forestland, [7] shared management of information on forest ownership by the agencies within each prefectural government, allocation of additional resources for on-site forestland surveys, reform of procedures for establishing land-use rights in forest tracts of unknown ownership, and financial assistance to support the purchase and management of forestland by local governments.

By allowing intragovernmental sharing of information on landowners and limiting private property rights to preserve the public benefits of forests, this legislation takes an important step toward reforming Japan's land management system

Japan's land, water, and forests are the essential foundations on which the nation will build its future, whether rehabilitating disaster-stricken areas or reviving farm and forest industries and revitalizing rural communities. With large areas of land rendered dangerous or uninhabitable by the tsunami and nuclear accident, and with the severe slowdown in economic activity, the temptation is strong to sell off large tracts of unused land. Such temptations, though, must not be allowed to thwart the efforts required to protect the long-term welfare and security of this nation.

Postscript: In late May a TEPCO official visited the Gunma prefectural government office in charge of conservation of Oze parklands, where he stated for the record that TEPCO's Oze property was "an important business asset" and that the company was not considering selling it ( Nihon Keizai Shimbun , May 28, morning edition).

[1] Nihon Keizai Shimbun , May 15, morning edition.

[2] Yomiuri Shimbun , April 30, evening edition; Mainichi Shimbun , regional edition, May 12, morning edition; Nihon Keizai Shimbun , May 24, evening edition, and May 26, morning edition.

[3] Article 162 of the Civil Code states that a person can claim ownership of any property that he or she has possessed peacefully and openly for 20 years (or for 10 years providing he or she took possession of the property in good faith) with an intention to own. This principle goes back to the Goseibai Shikimoku, the legal code promulgated by the Kamakura shogunate in 1232, which grants persons the legal right to control land on the basis of long-term de facto control, whether legitimate or not. In principle this means that in one of the many areas of Japan that has yet to be officially surveyed, if a person arbitrarily encircled a tract of land and claimed ownership under this adverse possession rule, neighbors would have no legal basis for complaint. As depopulation trends continue in the Japanese countryside, including areas affected by the recent disaster, the percentage of sparsely populated and unutilized lands is bound to increase, raising the possibility of an outbreak of land disputes.

[4] Sunday Mainichi , May 8 & May 15 combined edition.

[5] Two of the wells were originally owned by the Seibu (or Kokudo) real estate empire. After the collapse of the bubble economy of the 1980s, the land was sold to a US firm, which subsequently transferred it to a major Malaysian tourist enterprise.

[6] There have been quite a few cases in which major public projects deemed necessary by the government (including the construction of new runways at Narita Airport and the Tokyo Gaikan Expressway) have remained unfinished because a few landowners refused to sell their property.

[7] The National Land Use Planning Act, which requires that land transactions be reported to the prefectural or municipal government, exempts transactions of land measuring less than 1 hectare. The revised Forest Act does away with this exemption and calls for anyone coming into possession of forestland to report the acquisition after the fact.

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