Economic Implications of Government Flood Control Policy: A Case of Rice in Japan

Abstract

Japan’s susceptibility to and severity of floods have necessitated flood control policies by the government. “Overflowing flood control”, in which the floods due to torrential rains are systematically diverted to agricultural lands in the upper to middle reaches, is one of them. More information is needed on the public assessment of the overflowing flood control policy, and this research seeks to bridge this gap. Data evaluating rice affected by the policy were collected from a random nth-price auction using a developed online system. The sample consisted of 47 consumers living in the downstream areas of the Edogawa River, one of Japan’s first-class, or prime, rivers. Data on their attitudes toward the policy were collected with a questionnaire. Multiple ordered probit models are used for regression analysis. The results show that the sample respondents were willing to pay an average of JPY 1578 for 5 kg of rice, slightly higher than the national average rice production cost, and that 36% of the sample agreed with the flood control policy, which is positively associated with large families or owning many assets.

Keywords

• experimental economics auction
• willingness to pay
• random <i>n</i>th price
• online experiment
• regression analysis