Silviase/jgov_v1.4_full_ann huggingface dataset:
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## Ripple effects of improvement in the infrastructure, and understanding of wider impacts overseas

So far, it has been explained that various stock effects are caused by improving the infrastructure. Among these stock effects, for example, an improvement of the transportation infrastructure brings about ripple effects to the outside of traffic markets, such as production expansion and more plant sites, as well as direct effects (effects within traffic markets), such as shorter required time.

In the cost-benefit analysis underway in Japan, only the direct effects are measured on the premise that such ripple effects are all offset if the market is perfectly competitive, so the traffic market can be measured with direct effects.

In the meantime, it is known that there is actually an agglomeration effect referring to that it is more efficient to gather economic activities in a certain area than to scatter them geographically. It can be said that the improvement of the transportation infrastructure connects geographically separated sites, so it facilitates communication and exchanges among enterprises, and brings about agglomeration economies $ ^{Note} $ .

We can also say that the markets in the actual economies are geographically separated by a certain distance, so perfect competition is not always working. For example, it is sometimes found that, while gas stations in the neighborhood in competitive cities try to lower prices, gas stations in uncompetitive depopulated areas offer high prices.

These external agglomeration economies and geographical imperfect competition attracted attention. Thus, in the past 10 years, when conducting the economic analysis of the impact of streamlining the infrastructure, initiatives to analyze effects called the wider economic impacts, in addition to the conventional cost-benefit analysis, have spread among governments of the United Kingdom, New Zealand, Sweden, and other countries.

Specifically, in the United Kingdom, analyses of (i) agglomeration effect, (ii) changes in production activities

Note For example, Bernard, Moxnes, and Saito (2014) states, after analyzing changes in production network of Kyushu and other areas after construction of the Kyushu Shinkansen, that even the preparation of a network that transports only passengers, not cargoes, has important effects on the sales of enterprises.
In addition, to arouse people’s feeling of closeness with the infrastructure along with the local development, the ministry promotes infrastructure tourism $ {^{Note 45}} $ . The infrastructure tourism uses bridges and dams as tourist resources to motivate users and tourists to enjoy experiencing infrastructure while offering an illustrative description of the stock effect to help them deeply understand how the effect works (Figure 2-1-46).

In sum, offering and sharing information in a comprehensive manner (namely “visualizing”) allows the users to understand the stock effect easily.

Figure 2-1-45

Kanto Infrastructure Project Archives

(Article sample) Interexchange and co-exists of people with nature, urban with rural

-The outline of Miyagase Dam construction project-

* The benefit is calculated based on the transportation fee from the users' residences and adjusted with economic trends, given that the number of users of Miyagase Dam in 2003 was about 1.35 million people, and the annual number of tourists in Tsukui, Aikawa and Kiyokawa before the construction of the dam was about 0.78 million people.

Figure 12: Economic effect of the development of the periphery of Miyagase Dam (counted using the Travel Cost Method (TCM))

Sightseeing discharge

Christmas tree illuminations

Lake Miyagase Exchange Cultural Festival

Figure 10: Major events around Lake Miyagase

Source) MLIT

Figure 2-1-46

## Dam backstage tour (Yunishigawa Dam and Kawaji Dam)

Source) MLIT
The representative method of public-private partnership, PFI, is implemented by the private sector in charge of business financing. Since the formulation of the Act on Promotion of Private Finance Initiative (PFI Act) in July 1999, the number of PFI projects and project costs are on the rise year after year. In FY 2014, the number of projects was 489 and the project costs reached ¥4,501.5 billion. The results related to the Ministry of Land, Infrastructure, Transport and Tourism sum up to 151 cases as of January 1, 2016, and the number of projects implemented by local governments indicates a larger spike among business entities (Figure 2-2-4).

In the past, the related projects of the Ministry of Land, Infrastructure, Transport and Tourism using Japan’s PFI are mainly government buildings and public housing, and there are a fewer cases of utilization in roads and sewage works. In addition, there are 114 cases of the service-purchase type, in which the project formats by investment recovery are that the cost of public facilities maintained by the private sector and the cost of maintenance, management and operation are paid by public entities as compensation (service purchase price), which account for 75% of all (Figure 2-25).

Besides the service purchase type described earlier, the business types of PFI include a financially independent type, which the funds are recovered by the revenues from the facility use and a mixed type that the funds are recovered from both service purchase cost and facility use fee. With the financially independent type, while the operation risks are borne by the private sector, they can set up use fee and service content. Compared to the service-purchase type in general, there is larger room for ingenuity.

Figure 2-2-4 Changes in the number of businesses (Accumulated total)

(Note) The total is counted based on fiscal year before 2009 and calendar year after 2010. Source: MLIT

The number of businesses by business category (As of January 1, 2016)
## (2) Approaches of introducing PPP/PFI

With the diversification of needs for infrastructure and services, the key is to incorporate PPP method that matches with the purposes of each project and actual condition in the region. The latter part introduces a representative case of effective PFI method, called a concession method (operation right system such as public facilities) and the approaches of PPP introduction through comprehensive work consignment to private sector in rural regions.

## (Concession method (the operation right system for public facilities))

The concession method is a method that was introduced by the revision of PFI Act in 2011. It is the project that the private sectors operate facilities while the public entities hold the ownership of the public facilities that collect usage fees (Figure 2-2-6). This is a financially independent type project that the funds are collected with toll revenue from facility users. Under the ownership of the public entities, while a certain level of public nature is maintained, it allows for the operation with a high degree of stability and freedom to provide high quality services that reflect the needs of users. Mainly, it is introduced in airports, sewage facilities, and toll roads.

## ☑ Sendai Airport

Government-managed Sendai Airport was faced with a sluggish growth of the number of passengers and the cargo handling volume after peaking in FY 2006. With the reconstruction from the Great East Japan Earthquake of March 2011 as a symbol, the expectations toward Sendai Airport were on the rise (Figure 2-2-7 and 2-2-8). For that reason, while incorporating the know-how from the private sector for airport operation, the airport, and surrounding facilities are managed comprehensively, the potentials of the Tohoku region are maximized, and by implementing the integrated operation of the region and airport, they aimed for the revitalization of the Tohoku region.
In this project, the consideration of integration of public-private partnership began with the compelling from Miyagi around 2012. In March 2013, they formulated the future image of Sendai Airport and surround areas of the airport, which is the common principle for the public-private partnership. As the goal after 30 years from the realization of private operation entrustment of Sendai Airport, the goal was set to reach 6 million passengers annually and 50,000 tons of cargo handling volume annually. In addition, in June 2013, with the formulation of the act on the operation of national government administration airports that utilize the capabilities in the private sector, it allowed the clarification of framework for concession method in the airport, which also pushed forward discussion on a full scale. With such public-private partnership cooperation, it formulated a clear vision in operating airports and advanced the formulation of laws. In June 2014, the public invitation for the concession method began.

On December 1, 2015, up to 65 years of the operation right was given to Sendai International Airport Co., Ltd., established by the Tokyu Maeda Toyota Tsushio Group, for the first 30 years (Figure 2-2-9). The project proposal of this company was to enhance the international flights, expand the commissioned routes by the introduction of price system that motivates airlines to enter service and to enlarge the demand for air by transmitting the Tohoku brand actively. In addition, with the constructing traffic networks originated from Sendai Airport, the aim is to improve

the accessibility to each part of Tohoku and the ripple economic effects (Figure 2-2-10). This case is the first project of introducing the concession method at an airport. In the future, the activation in the Tohoku region is expected by the airport operation, in which the public-private partnership and region come together.

## Kansai International Airport and Osaka International Airport

As for Kansai International Airport (KIX) and Osaka International Airport (Itami), based on the Acts on integrated and effective establishment and management of Kansai International Airport and Osaka International Airport (Act No. 54 of 2011), the aim was to utilize the concession to make the maximum use of the know-how of private businesses to repay the debt related to the construction of KIX at an early stage and with sureness. In addition, another aim was to restore and strengthen as the international hub airport in Kansai, as well as through the proper and effective use of both airports of KIX and Itami, the entire Kansai would see an increase in demand for air transport.
Figure 2-2-11

Source) New Kansai International Airport Company., Ltd.

First, New Kansai International Airport Company, Ltd. was established (100% government funded) in April 2012 and in July of the same year, the management of KIX and Itami was unified. For the realization of concessions, New Kansai International Airport Company formulated the management strategy and the action plan, which is the medium-term management plan, to work on further improving the business values of both airports. In July 2014, the Implementation Policy on the Special Airport Operation of Kansai International Airport and Osaka International Airport was formulated and published to begin the procedure related to the public offering of private businesses. In November 2015, Orix Corporation and French airport operation company, VINCI Airports, were selected as the main members of the consortium with the first refusal right. In December of the same year, the operation right was set to Kansai Airports established by the consortium to conclude the implementation agreement with New Kansai International Airport Company.

The period of concession lasts for 44 years from April 2016 to March 2060. The compensations of operation right are paid each year by Kansai Airports from landing fees and airport operation revenues such as commercial sales (Figure 2-2-12). In addition, while Kansai Airports implements business in accordance with the implementation contract and the demand level indicated by New Kansai International Airport Company, without any hindrance to airport operations. On the other hand, New Kansai International Airport Company must provide monitoring to check proper airport operation is maintained.

check proper airport operation is maintained.

According to the business implementation policy provided by Kansai Airports, by strengthening marketing function and drawing routes by setting strategic price and promoting LCC business, they aim for the rise in revenues by layout changes of commercial facilities in the non-airplane related business, to present the enlarged revenues that utilize the company’s own knowhow besides strengthening the airplane related business (Figure 2-2-13).
In addition to the transport of passengers and cargo, which is the original purpose, the airport operation requires various capabilities such as the operation of commercial facilities and hotel facilities. This case is a project that overseas companies with the experience of airport operation work with Orix and other Japanese companies that are representative in the region hand in hand and allows the development of airport business with flexible ingenuity of private businesses. With this, both airports are expected to develop more than before to contribute to the increase in demand for the airport in Kansai to stimulate the enhancement of international competitiveness such as Japanese industries and tourism, as well as the activation of economy in Kansai.

## ☑ Hamamatsu Public Sewerage End Treatment Plants (Seien treatment district)

After the consolidation of municipalities in 2005, it was decided that the Seien basin sewage works managed by Shizuoka would move to Hamamatsu City. Although it was moved in April 2016, Hamamatsu City was faced with issues such as the transfer of maintenance and management skills due to a decline in staff. In addition, because proper maintenance update of the facilities due to aging was required, they also expected a decline in usage fee revenues due to a population decline. Because of this, they were considering the optimization of a project using public-private partnership.

Source) Developed by MLIT based on the materials provided by Hamamatsu City
As the efficient management with a long-term contract and the operation that utilizes ingenuity of private sector were expected, they considered the introduction of concession method and in the end, they have decided to introduce partial concession that sets up operation rights for a water purification center and pump station. For the scope of work, in addition to the maintenance and management of the facilities and renovation, they recognize the financially independent project such as the introduction of new treatment process and solar power generation (Figure 2-215).

In addition, for renovation, based on the list up of eligible facilities set by the private sector, the city will formulate renovation plans. The renovation costs will be mainly sourced by the city from enterprise loan Note 46 and national expenses while the private sector also bears a burden to give an incentive for suppressing project costs.

For the first two years after transfer, they subcontract and after 2018, they will begin operation under the same system.

Japan’s sewage facilities are at the point where major

renovation is required due to aging. Many local governments have the similar issue as Hamamatsu City. On the other hand, sewage works have little prospect of breaking even and management and risk sharing are difficult. By utilizing the concession method flexibly, the ingenuity of private sector is incorporated to reduce the financial burden of local governments.

## ■ Aichi Prefectural Road Public Corporation

For the introduction of concession method for toll-road businesses implemented by the regional road corporation, the ordinary session of the Diet in 2015 established and enforced Partial Revision of the Act on Special Zones for Structural Reform that enables private businesses to operate public-managed roll roads.

Figure 2-2-16

Toll roads eligible for the project and toll collection period

Names of roads	Extension (km)	Toll collection period
(i) Chita Peninsula Road	20.9	1970. 7. 15 ~ 2028. 2. 1 (Note)
(ii) Minami Chita Road	19.6	1970. 3. 1 ~ 2028. 2. 1 (Note)
(iii) Chita Oudan Road	8.5	1981. 4. 1 ~ 2028. 2. 1 (Note)
(iv) Chubu International Airport Connection Road	2.1	2005. 1. 30 ~ 2035. 1. 29 (Note)
(v) Kinuura Tunnel	1.7	1973. 8. 1 ~ 2029. 11. 29
(vi) Sanage Green Road	13.1	1972. 4. 1 ~ 2029. 6. 22
(vii) Kinuura Toyota Road	4.3	2004. 3. 6 ~ 2034. 3. 5
(viii) Nagoya Seto Road	2.3	2004. 11. 27 ~ 2044. 11. 26
Overall	72.5	1970. 3. 1 ~ 2044. 11. 26

(Note) Four routes will be pooled on October 1, 2016, and the period of toll collection ends on March 31, 2046. Source) Developed by MLIT by materials provided by Aichi.

Note 46 It is a long-term debt borrowed from the government to provide for the funds for the construction of pipelines, facilities, and improvement projects.
In August 2015, Aichi was specified as a National Strategic Special District and in September, the National Strategic Special District plans $ ^{Note\ 47} $ was certified. After that, the Aichi Prefectural Road Public Corporation published an Implementation Policy in October and a list of requirements in November. The scope of operation project of toll roads in Aichi is to maintain and manage the operation right for established eight routes (Figure 2-2-16) as well as its administration operations, and other operations incidental to the renovation operations and the sale of shops in existing parking area. At present, they are in process of selecting operators.

## (The public-private partnership in community development)

In rural cities, as a method for the response to financial restrictions and regional economic vitalization, they introduce PPP in a positive manner. Also, the forms come in variety and they introduce a method that meets regional characteristics and business purpose. In the process, the communication with private businesses and residents becomes important. The following introduces the approaches taken in each area.

■ Kannami-cho regional revitalization, exchange and disaster-prevention bases improvement project (BTO Note 48 method, mixed type)

Kannami, Shizuoka, is situated in the north of Izu Peninsula with rich tourist resources and in FY 2013, after Higashi-Surugawan Kanjo Road extended to the Kannami Tsukamoto IC; the traffic convenience was improved from Tomei Expressway to the New Tomei Expressway. In Kannami, in time for the development of the ring road, it is assumed to serve as an entrance to the Izu Peninsula and become the overall tourist base for Izu. They were promoting city development for creating live city by adding a base for information dispatch for the eastern part of Shizuoka and the entire Izu Peninsula. Also, the area is expected to see a magnitude 8-Tokai Earthquake and Nankai Trough Mega Earthquake and the route 136 that runs through the city is positioned as emergency transport roads.

In light of such background, the city discussed on working harmoniously under the public-private partnership to maintain and operate facilities that combine traffic safety function, reviving tourism, regional revitalization function and disaster prevention functions. In FY 2012, aiming for commercialization, they took advantage of the government's pioneering PPP support projects to conduct the entrustment of investigation for the project. This allowed public-private partnership to implement risk sharing to meet the detail of disaster, business scheme for the optimization of roles in regional

Source) Developed by MLIT based on the materials of Kannami.

revitalization. Also, the mayor led the consideration of small council group for promoting the development of Michi-no-Eki (Roadside Station) and Kawa-no-Eki (Riverside Station) to decide on the implementation of the PFI method for the project.
The project period is twenty years from March 2010 to February 2030 to develop and operate facilities such as public facilities such as bus terminals and open space, and a complex that has hotels, commercial facilities, and offices, as well as private facilities such as multistory parking garages by sharing roles under the private partnership (Figure 2-2-19).

In addition, for the facilities developed and operated by TMK, a fixed-term land leasehold for businesses is set to the land owned by the city and prefecture, which serves as bottomland, and the ownership of facilities is set to TMK (Figure 2-2-20).

With these private funds and the incorporation of know-how, it allows developing spacious space that makes consideration for local residents and facilities and planning the effective attraction of tenants for office facilities, creating new employment, and commercial ground. The effort of vitalizing the central urban area by Miyazaki City including this development, the satisfaction of citizens toward Miyazaki City's commercial environment and appeal improved after the opening of these facilities in September 2011 (Figure 2-2-21).

Source) MLIT

Figure 2-2-21 Satisfaction level of trading and industries (DI value)

Items	FY 2007	FY 2011	Increase and decrease
An attractive town that anybody wants to work	▲38.3	▲30.1	8.2
A town that offers opportunities of starting a new business	▲46.9	▲35.7	11.2
A town with many attractive stores	▲59.2	▲52.8	6.4
An extensive selection of products	▲36.9	▲37.7	▲0.8
An extensive selection of affordable products	▲17.8	▲12.6	5.2
High quality products	▲4.8	▲2.6	2.2
Do not have to worry about business hours	▲33.1	▲31.0	2.1
A town that offers common parking ticket, rental bicycle and temporary childcare.	▲41.0	▲26.9	14.1
A town that people have fun time	▲21.0	▲17.8	3.2
A friendly town that people can stop by casually.	▲5.8	▲4.2	1.6
A town that shop and business owners work together for revitalization.	▲6.0	▲4.8	1.2

In this case, the prefecture and city also obtain revenues from land rent based on a fixed-term land leasehold from the private sector. By effectively developing unused public real estate, it reduces the public entities' financial burden and leads to the creation of private demand and vitalization of the local district.

■ The maintenance management of Route 4 and prefectural roads in Fukushima (comprehensive work consignment to private sector)

For the maintenance management of infrastructure, in order to diversify the needs associated with an increase in costs due to aging and population decline in the future, Fukushima was considering it is necessary to improve productivity of maintenance management operation. Also, in April 2016, with the transfer of Route 4 from the government to the prefectural government, they considered the introduction of method that enlarges a public-private partnership such as the response to insufficient staff, effective operation, and the introduction of comprehensive work consignment to private sector.