Economics and the problems facing the earth are intertwined. Human economic activity has caused global warming and a biodiversity preservation crisis. Graduate School of Human Development and Environment Professor SATO Masayuki, an expert in environmental economics, analyzes the current situation from an economic perspective to try and find solutions. As issues related to the global environment continue to worsen, what kinds of approaches is Sato considering? We asked him about his current research and future prospects.
Environmental economics research is a fusion of fields
What kind of research is performed in environmental economics?
Sato:
Right now, due to significant expansion of human economic activity, multifaceted issues related to the environment are intensifying, including everything from problems in our daily lives like those related to waste and energy, to worldwide issues such as global warming and the destruction of the ecosystem. Environmental economics analyzes related factors and mechanisms to come up with socioeconomic systems for minimizing these problems.
The germs of ideas based on proposals by British economist Arthur Pigou (1877-1959), such as environmental tax and carbon tax, have been around for quite some time, but I’d say that the average person only began taking an interest in the economy and environmental issues from about 1997, when the third session of the United Nations Climate Change Conference of the Parties (COP3) held in Kyoto accelerated realistic discussions. In addition to reduction goals for greenhouse gas emissions, this conference also featured a proposal for emission trading to achieve these goals, which involves countries buying and selling emission quotas.
While COP3 was a milestone for global warming countermeasures, the 10th session of the United Nations Conference of the Parties to the “Convention on biological diversity” held in Nagoya in 2010 featured a milestone for another major global environmental issue: preservation of biodiversity. There were a number of discussions regarding economic value, namely that of the ecosystem that encompasses us all and how much it would cost to preserve it.
One role of economics is visualizing the value of the ecosystem and the cost of preserving it through evaluation and quantification. Moreover, we must develop policies and systems to protect this value and promote mainstreaming to move toward their implementation. For instance, in recent years, corporations have begun to disclose information regarding their burden on the ecosystem and measures to promote its preservation. Designing systems to promote these types of endeavors is the role of environmental economics.
How will you promote visualization and mainstreaming?
Sato:
The first thing we need to do is collaborate with researchers in engineering, agriculture and natural science fields such as ecology to get an idea of the state of air pollution, forests and living things as well as trends in urban planning. Also, when developing policies and systems in the mainstreaming process, it’s absolutely necessary for us to collaborate with researchers in law and politics. On top of that, in order to ascertain how people value the environment, it’s important to take approaches rooted in psychology and, occasionally, health sciences. Research in environmental economics is transdisciplinary, meaning we must conduct our research through a fusion of different fields.
Policy proposals are conducted through collaborations with agencies such as the Ministry of the Environment and the Cabinet Office. The Ministry of the Environment has established the “Environment research and technology development fund,” and many researchers from around Japan, including myself, are involved in projects in this fund.
Japan aims to achieve the “30 by 30” initiative, adopted at COP15 in 2022 under the “Kunming-Montreal global biodiversity framework,” which pledges to designate 30% of the Earth’s land and ocean area as protected areas by 2030. In order to do so, the country is promoting the registration of “other effective area-based conservation measures” (OECMs). I’m involved in designing systems that introduce economic incentives to increase the number of OECM registration applications in this region from corporations and private organizations.
Part of Yamada Town in the Kita Ward of Kobe City was one of the regions included in the first OECM in Japan in 2024, and our research group is working with Kobe City on surveying and analyzing the area.
Population imbalance has led to deterioration of rural “satoyama” areas
I hear that you’ve recently been focusing on the ecosystems of cities and suburban areas.
Sato:
My research is on ecosystem functions and effective preservation methods that consider changes in modern lifestyles, with a focus on the rural “satoyama” areas located close to our society. The satoyama ecosystem provides various benefits to people living in nearby cities, such as preventing disasters, preserving water quality and mitigating heat islands. They also provide important places for people to interact with and enjoy nature. Thus, we need to turn our gaze to the benefits of preserving satoyama areas, not just the convenience and economic efficiency that urbanization provides. Doing so will surely increase our quality of life.
On the other hand, when people gather in cities, they in turn disappear from the countryside. The satoyama environment, which was maintained by undergrowth cutting and pruning, has begun to deteriorate in the absence of people. Most of the nature found in Japan has aspects that have been preserved by human hands, so a decrease in rural population is deeply connected to environmental preservation issues. We need to consider how to go about well-balanced development from these perspectives as well.
Measuring the value of the natural environment seems difficult.
Sato:
Creating a scale to measure the value of our natural environment is a major topic of my current research. In recent years, “natural capital valuation” has been a keyword for many research projects conducted both in Japan and around the world, but I wonder if we can’t perform evaluations that are more rooted in the actual state of people’s lifestyles and livelihoods. How people value the nature around them changes depending on the person and whether or not they’re in an environment in which they can make use of that nature.
Recently, the problem of the “experience gap” is often pointed out. Making use of nature requires one to have time and means of travel readily available to them and there are concerns that this gap is related to income disparity. This means that the group that benefits from the value of nature, e.g. through experiences such as catching fish and bugs out in the wild and looking up at the beautiful night sky, is skewed. Additionally, while individuals who experienced nature a good deal during their childhoods are more likely to want to enjoy and protect nature, it’s been pointed out that individuals who grew up in urban areas without interacting too much with nature have a difficult time wanting to protect it. Thus, it’s important to provide children with opportunities to learn about the environment and about nature as a whole.
Most research to this point assumes the average person when assessing the value of nature, but detailed analyses require a scale that considers the social conditions of each individual, such as owning a car and having children. As I work on developing such a scale, I’d like to also to propose policies and design systems to eliminate disparity.
The newly-introduced forest environment tax requires guidelines
There must be some difficulty when it comes to constructing policies and systems.
Sato:
The financial resources we have for protecting the environment are limited, so we need to choose what we preserve. When it comes to environmental preservation, we need to respond by, for instance, discussing the most vulnerable ecosystems or prioritizing issues faced by people who have difficulties accessing nature, things like that.
In Japan, the forest environment tax was introduced in the fiscal year 2024, a national tax of ?1,000 per person, per year. However, there are municipalities that are still looking for ways to make use of this tax, so we need guidelines in some form or another. In order to make this system more effective, we have to think of procurement of financial resources and how those resources are used as a set.
Even in the corporate realm, rather than just demanding that corporations shoulder the burden, it’s important to create a mechanism that promotes self-motivated environmental measures. When corporations and their endeavors are appreciated by society, they’ll become more forward-thinking about these measures.
2015 saw the launch of the Task Force on Climate-Related Financial Disclosures, an international organization which urges corporations to disclose their measures for counteracting climate change. Then, in 2021, the Taskforce on Nature-related Financial Disclosures, which evaluates and discloses information on the impact of economic activity of corporations on the natural environment and biodiversity, was created, and now various corporations have begun to engage in disclosure of information within this framework.
Each of us needs to think carefully about the form our cities ought to take.
Sato:
I think that more and more people are beginning to understand the importance of preserving urban green spaces and blue spaces, that is, natural spaces that contain water. For instance, redevelopment in the central area of Osaka’s Umeda district has seen the birth of Grand Green Osaka, an area featuring both green and blue spaces. Our research group is also paying close attention to this area, which has been praised for incorporating ecosystem functions in urban design.
Once people understand that urban development which preserves the ecosystem is also good for humans, I think we’ll see an increased awareness regarding preservation, which will lead to a harmonious coexistence between human activity and the natural environment, an “environmental symbiosis” so to speak.
Failing to visualize the value of nature could cause us to lose it
Is there anything you notice when comparing research in Japan with that of the rest of the world?
Sato:
There aren’t many cities in the entire world that are as massive as the Tokyo metropolitan area. On top of that, the entirety of Japan is now confronting a rapid decline in population, making Japan a developed nation facing some new challenges. I think it’d be interesting if we’re able to study Japan’s situation and disseminate the results of our research to countries that could potentially face the same challenges.
Japan also experiences a lot of disasters, so there have been quite a few discussions on ecosystem-based disaster risk reduction, which makes use of the natural environment and the ecosystem to reduce disaster risk. Concrete levees were constructed during recovery efforts following the Great East Japan Earthquake to respond to major disasters, but seaside woodlands and riparian forests are also useful for preventing disasters to some extent. Policies to preserve green areas should also be able to coexist with these measures. I think that the topic of how we can use natural capital as an alternative to manufactured capital should be discussed moving forward as well.
On the other hand, research on the function and preservation of ecosystems in urban areas is actively conducted around the world, and I think Japan could learn some things from this research. For instance, there is research being conducted on the value of shade from trees in European cities. Even in Europe, there are concerns that high temperatures could affect urban regions during the summer, so it’s been indicated that having trees planted throughout the cities could mitigate the heat, which would allow residents to really feel the value of nature.
If Japan also values trees as a preventative measure for things like heat stroke, we could see more efforts to preserve trees and other green spaces. It’s in this way that the value of the natural environment changes depending on the era and the people who use it.
How do environmental economics contribute to human well-being?
Sato:
Environmental economics’ relationship with well-being was already being examined in the early 2000s when the U.N. published its “Millennium ecosystem assessment,” which contained assessments of the effects of ecosystem functions on well-being. Also, in 2001, Partha Sarathi Dasgupta, professor at the University of Cambridge, published a book entitled “Human well-being and the natural environment,” which had such a strong influence on me that I became a visiting scholar at the university.
Analysis on the importance of the bounties of the forests and oceans to human health has been conducted across a wide variety of research. Nature serves as the foundation of human livelihoods and thus can surely improve them. However, it’s difficult to show just how much they can be improved, which has led me to my own research, which aims to quantify and visualize that.
The word “well-being” can mean many things, but one thing that is important is having a variety of options. For instance, even if we choose to only visit forests, being in an environment which allows us to choose to visit either forests or the ocean is much richer than being limited to just forests. In other words, it’s not about evaluating only the results of the actions we did take, but rather, it’s the abundance of actions we can take that will lead to our well-being.
You could say that that’s one of the advantages of cities like Kobe that are located nearby areas of abundant nature. However, if we don’t take a conscious look at the value of this nature and visualize it, we could find ourselves in a situation in which we end up losing it. Because of that, I think that visualizing the value of the natural environment and ecosystems will become increasingly important in the future.
Resume
In 2001, graduated from Kyoto University’s Faculty of Economics. In 2006, completed the doctoral program at Kyoto University’s Graduate School of Economics and received his doctorate in economics. After serving as research fellow at the Japan Society for the Promotion of Science, assistant professor at Kyoto University’s Graduate School of Global Environmental Studies, and program-specific associate professor at Kyoto University’s Field Science Education and Research Center, in 2012, became associate professor at Kobe University’s Graduate School of Human Development and Environment. From March 2019 through March 2020, served as visiting scholar at the University of Cambridge. In 2020, became professor at Kobe University’s Graduate School of Human Development and Environment. Since 2022, concurrently serves as the head of the Environment Research Division at Kobe University’s Advanced Research Center for Well-being.
