# Local Economic Effects of Introducing Solar Power Generation and Wind Power Generation in the Tohoku Region

Renewable energy is being incorporated into the reconstruction of the Tohoku region in the aftermath of the Great East Japan Earthquake, but what sort of impact will this have on the region's economy?

This question has been addressed in a 2011 environmental economics policy research paper entitled Balancing Environmental and Local Economic Concerns in the Correction of Endogenous Regional Disparities, the Creation of Local Jobs, and the Implementation of Relevant Policy (Okayama University Graduate School Professor Ryohei Nakamura, et al.). This paper looked at three prefectures in the Tohoku region (Iwate, Miyagi, and Fukushima prefectures) and analyzed the potential local economic effects of introducing solar power generation and wind power generation.

This analysis utilized the prefecture-specific Survey on the Potential for Introducing Renewable Energy discussed above, and also took into consideration the existing renewable energy policies of each prefecture. Local inter-industry tables for each prefecture were used to create a new inter-industry table that incorporates the economic ripple effects of the environmental sector, in the form of solar power and wind power generation. On this basis, Professor Nakamura and his colleagues carried out an analysis of the economic ripple effects on the local economy.

introduced according to the potential of each of these three Tohoku prefectures, it would be difficult to produce an economic effect greater than existing power sources. However, because the need to buy power from existing power sources outside the region could be eliminated, the region would be able to retain more of its money, which could be used in local revitalization efforts, such as efforts to correct regional disparities. For example, in the case of Iwate Prefecture, the connection between existing power sources and local industry is comparatively weak and a high level of power is purchased from other prefectures. In this case, the production ripple effect resulting from the introduction of renewable energy would surpass that of existing power, and communities would be able to retain a comparatively larger portion of their money. In contrast, in Miyagi Prefecture, the connection between existing power sources and local industry is comparatively strong, and a comparatively low level of power is purchased from other prefectures. In this case, the production ripple effect resulting from the introduction of renewable energy would be less than that of existing power, and the amount of money retained by communities would be comparatively small. Also, in the medium to long term, generating renewable energy locally is likely to have the following effects: lowering the costs associated with the evolution of

These results show that if renewable energy were

Local Economic Effect of Introducing the Solar and Wind Power Generation in Tohoku Area

Table. Local Input-Output Table Incorporating the Solar and Wind Power Generation Sectors

Primary Industry	Secondary Industry	Tertiary Industry (excluding existing power sector)	Existing Power Sector	Solar and Wind Power Generation	Final Demand	Outflow	Inflow	Production Value
1	2	3	A	B
Primary Industry	1	X_{11}	X_{12}	X_{13}	X_{1A}	X_{1B}	F_{1}	E_{1}	M_{1}	X_{1}
Secondary Industry	2	X_{21}	X_{22}	X_{23}	X_{2A}	X_{2B}	F_{2}	E_{2}	M_{2}	X_{2}
Tertiary Industry (excluding existing power sector)	3	X_{31}	X_{32}	X_{33}	X_{3A}	X_{3B}	F_{3}	E_{3}	M_{3}	X_{3}
Existing Power Sector $ ^{1} $	A	X_{A1}	X_{A2}	X_{A3}	X_{AA}	X_{AB}	F_{A}	E_{A}	M_{A}	X_{A}
Solar and Wind Power Generation $ ^{2} $	B	X_{B1}	X_{B2}	X_{B3}	0	0	F_{B}	0	0	X_{B}
Gross Value Added	V_{1}	V_{2}	V_{3}	V_{A}	V_{B}
Production Value	X_{1}	X_{2}	X_{3}	X_{A}	X_{B}

1 Sector responsible for supplying grid power via existing power sources. Production value will decrease as the sector is replaced by solar and wind power generation.

2 Sector responsible for solar and wind power generation. As production increases in this sector, production in the power sector will decrease and other economic ripple effects will be felt in other sectors.

Table. Local Economic Effects in Three Tohoku Prefectures as a Result of Introducing Solar and Wind Power Generation (units: million yen)

Iwate Prefecture	Miyagi Prefecture	Fukushima Prefecture
Power Supplied By Solar and Wind Power Generation $ ^{1} $	+9,357	+2,066	+5,390
Power Supplied By Existing Power Sources	-6,705	-1,340	-3,600
Production Ripple Effect on Industry in the Region $ ^{2} $	+182	-564	-977
Amount of Money Retained in the Region (amount of improvement in inter-regional balance of payments) $ ^{2} $	+2,608	+395	+1,541
Effect on the Local Economy $ ^{3} $	+5,442	+556	+2,354

1 Anticipated to be equivalent to 1% of introduction potential for each prefecture.

2 Estimate based on the intra-regional inter-industry structure, and so on.

3 Total economic effect produced locally if solar and wind power generation is introduced into each prefecture.

Source: the Ministry of the Environment Policy Research on the Environmental Economy 2011, Balancing Environmental and Local Economic Concerns in the Correction of Endogenous Regional Disparities, the Creation of Local Jobs and the Implementation of Relevant Policy Okayama University Ryohei Nakamura, and others.

renewable energy technologies; developing investment in infrastructure improvements connected with power storage facilities for electrical load leveling; hedging risks stemming from a future increase in prices due to the depletion of fossil fuels; improving local energy security; and further raising the level of local autonomy.

In order to realize these benefits quickly, it is important for renewable energy to be introduced

(2) Introduction of Renewable Energy in the Affected Areas

Because of the great length of time required to recover lifelines in the areas affected by the Great East Japan Earthquake, the majority of disaster survivors must suffer an inconvenient evacuation that exacerbates their refugee-like living conditions. In this situation, the effectiveness of pellet stoves, solar panels, and other distributed, autonomous heating appliances and power sources has fostered widespread recognition of the importance of renewable energy for such devices when the regular lifelines have been cut off. Renewable energy sources for evacuation shelters and other public facilities are also gaining attention from the standpoint of making communities resilient in the face of disasters.

This section looks at the examples of Aomori Prefecture and Oshu City in Iwate Prefecture, which were part of the Green New Deal funding program provided from 2008 to 2010, to consider the nature of local renewable energy usage initiatives in the Tohoku region.

In Oshu City, logging offcuts from mountain forests and used food oils from homes are collected and used as fuel to power and heat the hot spring facilities in the city. Specifically, the logging offcuts are chipped and wood in a short period of time. Policies that can be used to facilitate rapidly adopting solar and wind power generation include creating an investment income stabilizing feed-in tariff system, and also promptly developing regulations that would create significant ripple effects in the local economy. The introduction of renewable energy could thus be speeded up on a large scale.

gas is extracted, and the used food oils are converted into biodiesel fuel. Electricity and heat are produced using these energy sources in a co-combustion system. The electricity is used in the hot springs facilities, and the heat is used to heat the bath water, thereby reducing $ CO_{2} $ (Figure 3-1-1).

The cases of Oshu City in Iwate Prefecture and other initiatives in Aomori Prefecture show that the skillful utilization of local natural resources serves to promote the community and at the same time makes community development more distributed and autonomous. Thus the community is able to flexibly adapt in the face of disasters. In the wake of the Great East Japan Earthquake, a great many local governments are starting to take notice of these benefits.

According to basic principles for reconstruction from the Great East Japan Earthquake, the implementation of autonomous and self-reliant energy systems by leveraging unutilized resources in affected areas will be subsidized. Aid for reconstruction in affected areas is ongoing using the Regional Green New Deal Fund financed by the third supplementary budget for fiscal 2011. For example, leading-edge systems focusing on generating and storing energy in the evacuation area using renewable energy are being actively promoted.

Figure 3-1-1 Woody Biomass Gas Co-Generation System Introduced in Oshu City