As farmland is not effectively utilized from economic or environmental perspectives, this study proposes an institutional system for coordinating farmland use in Japan, examining the role played by communities. We propose a theoretical and conceptual model to identify the conditions for successful farmland use coordination and classify the various types of farmland consolidation into four simplified models. We compare these models in terms of (1) change in profits from individual to collective farmland use for landowners and cultivators, (2) transaction costs for mobilizing farmland, (3) transaction costs associated with collective action, and (4) the possibility of coordinating the interests of community members. Econometric analysis indicates that the promotion of collective actions increases the likelihood of communities with a high level of social capital to coordinate farmland use, concentrate farmland in the hands of large-scale cultivators, and prevent the abandonment of farmland. Overall, the results of this study point to the importance of social capital accumulation in rural communities to achieve high degrees of land consolidation.

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Improving the efficiency of paddy irrigation, the dominant water consumer, is an important policy issue for the sustainable management of water resources in Japan. This needs to be consistent with the agricultural support policy, considering that Japan is now facing a drastic change in its agricultural policy environment. A key question is whether the irrigation sector policy developed for constructing new facilities under the agricultural price support regime could address issues associated with the new agricultural policy environment. This paper tries to discuss these aspects conceptually and proposes the general direction policy reform in the irrigation sector should take.

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