2016 Volume 46 Issue 1 Pages 21-40
Agricultural public infrastructure, such as irrigation and drainage facilities, farm roads and consolidated farmlands, is expected to increase gross domestic product （GDP） via improvement of agriculture production. However, most agricultural public infrastructures are aging and deteriorating due to a lack of investment budgets for renewal projects. This study aims to evaluate future influences of deteriorated agricultural public infrastructure by using the dynamic-spatial computable-general-equilibrium （CGE） model and the prediction method of capital stocks.
Features of this study include, （i） future situation of agricultural public infrastructure based on the method employed in the Cabinet Office of Japan （2012） with the first official documents on Japanese public capital stocks, （ii） the dynamic spatial CGE model used with consideration of endogenous productivity growth by agricultural public facilities, and （iii） needed public investment to keep public capital stocks at peak levels and the payment of certain sectors or all industries to secure funds for investments without an increase in public debts in Japan.
The simulation results demonstrate discord between famer and national benefits caused by renovation of agricultural public infrastructures. Furthermore, the benefit-cost ratio for renovation of agricultural public infrastructures became lower than expected in local regions because of leakage effects to urban regions when renovation projects were conducted in all regions at the same time. Urban regions experienced the opposite tendency.
Based on the above prediction of future situations, several policy implications for public investments can be raised. That is, maintaining public capital stocks by any counter measures is highly needed for sustainable growth of the economy. Different policies on budget sources for such measures and stock management measures can result in different economic effects, so policy simulation with a CGE model is helpful for decision makers to consider comprehensive effects of policies.
JEL Classification: D58, H43, H54, O11, O13, O18, Q15, R15
