Economics of underproduction: A polycentric approach for a depopulated commons in Japan

Abstract

This study investigates whether a polycentric approach can exceed its traditional aim of overproduction and address underproduction in a depopulated commons. Secondary data linked to a depopulated commons were analysed in a polycentric framework traditionally used by economists to address overproduction when numerous individuals collectively manage populated economic commons. The study focuses on Japan's rice terraces, which are emerging as depopulated new commons and generating positive externalities such as valuable ecosystem services. Results show that a polycentric approach comprising local, regional and national stakeholders can potentially address underproduction in depopulated rice terrace commons. Individuals produce rice in terraces despite incurring economic losses due to high production costs, a phenomenon that is difficult to explain using neoclassical economic theory. This study provides practical implications for utilising a polycentric approach to address a depopulated commons generating valuable ecosystem services.