For EST PLENARY SESSION 5

Sustainable Urban Development and Role of Private Sectors: A Case of

Senior Researcher Fumio KUROSAKI, Ph.D.

Intergovernmental 11th Regional EST Forum in Asia 4 Oct. 2018 (ten thousand) Present 14,000

12,000

10,000 8,000 Urbanization progressed along 6,000 with population increase. 4,000

2,000

0

Railways played an important role.

2050 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2055 2060 Working Ages (15 - 64 years old) Other Ages Transition of population in Japan

2 Railways with high market share Roads with few congestions 2 TOD could be achieved in

Bus stops in front of a station

3 Taxi stop in front of a station 3 TOD could be achieved in Tokyo

Bicycle parking space in front of a station

4 4 Three Major Types of Railways in Metropolitan Areas

1）JR Lines 2）Metros 3）Private Railways

Metropolitan areas have some types of railway operators, such as JRs, Metros, and private railways. 5 1) JR Lines

Chuo Line

Tokyo Station

A station and trains in Tokyo 6 1）JR Lines

JNR Reform in 1987

JR Hokkaido

Passenger Traffic Densities in 1987 JR Freight

JR East JR East, JR Central & JR West JR West JR Hokkaido, JR Shikoku & JR Kyushu JR Central JR Kyushu JR Shikoku Average of France, UK & Germany The four JR passenger railways* have become private companies. *: JR East, JR Central, JR West, and JR Kyushu （Passengers/day） 7 1）JR Lines

Construction & Operation in Tokyo

Source：”Railways of the World” JARTS

Before the Reform (1987) : Japanese National Railways (JNR)

Network was almost completed

After the Reform : JR East

Source ： Website of JR-East In principle, JR East invests when the return covers the costs 8 2) Metros

A train of Tochomae Station (Changing drivers for through train operation.) (Station in front of Tokyo Metropolitan Gov.)

Metro systems in Tokyo are operated by Tokyo Metro and TOEI Subway. Tokyo Metro : http://www.tokyometro.jp/index.html TOEI Subway: https://www.kotsu.metro.tokyo.jp/subway/ 9 2）Metros

Network of Metros in Tokyo

Yamanote Line

Metro Lines in Tokyo

Metro in Yokoyama 10 Source：JR Timetable 3) Private Railways

Tokyu Corporation

Keio Corporation 11 3）Private Railways

Private Railways in Tokyo Metropolitan Area

Yamanote Line

（Source：JR Timetable） Blue：Private Railways’ lines Black：JR East’s lines 12 3）Private Railways

Construction of Private Railways

Suburb Center of Tokyo

Network of Yamanote Line

Center of Tokyo (Business District)

Jiyugaoka Station

Source：Tokyu Corporation

The network lines have been extended by the railway company’s funds. 13 3）Private Railways Business Strategy by Japanese Private Railways

Real Estate Development Construction of department sores, Attraction of universities hotels, movie theater, etc.

Construction of baseball stadium, etc.

Terminal Station Station Station Railway Line

Residential District Office & Commercial District

Construction of Amusement Facilities

Integrated Development The company could earn (Railways + Real Estate) from both businesses 14 3）Private Railways

Revenue from Affiliated Businesses

Large-scale Private Railways’ Revenue （Billion JPY） Revenue 【a】/ Transport from the Total Revenue Subsidy Affiliated Company Revenue Businesses （%） 【a】 Tobu 156 0 65 29.3 Seibu 94 0 98 51.1 Keisei 53 0 8 12.8 Keio 78 0 23 22.6 Odakyu 108 0 51 31.9 Tokyu 122 0 162 57.1 66 0 48 42.3 JR Companies have been following the private railways’ business model. Sotetsu 32 0 81 71.9 （Figure：FY 1996） Source: “ World City Tokyo Established by Railways” (Yajima, Ieda. et al., 2014) 15 3）Private Railways

Management by Private Railways

✓ Several private passenger railways constructed the lines and operate in profit in metropolitan areas in Japan.

✓ These railways play an important role for commuting between suburb and CBD in metropolitan area. (In Tokyo metropolitan area, 8 large-scale private passenger railways cover more than 1,200km track and transport about 13 million passengers.)

✓ Besides transport services, private railways earn revenues from affiliated businesses including urban development.

16 Three Types of Railways Construction by the Public Act on Enhancement of Convenience of Urban Railways

The act is valid for constructing missing links and terminal station facilities.

1. Construction: Public Works Owner of the Central Local Infrastructure Government Government 1/3 1/3 1/3 (Private) Operator Construction Cost

2. Operation: Vertical Separation

Owner of the Infrastructure (Private) Railway Companies Responsible for O&M （Semi-Public Sector or JRTT） Lease Lease Fee Semi-public Sector or JRTT Owner of the Infrastructure 17 Three Types of Railways

Track Usage Fees

: Expected Revenue Usage fees of the new infrastructure : Expected Expenses planned by the project

b The amount is calculated based on “b-a” a Benefits received as an operator of the new infrastructure (Calculation Period) 30 years old The operator neither gains nor Case without the Project Case with the Project loses through the project.

The relationship between the railway company and the public can be adjusted by the track usage fees. 18 Competitiveness of Trains and Metropolitan Areas Short-distance Medium-distance Long-distance

Combined Utilization + Bus services & Bicycle

Competitiveness against Cars 19 Summary

1. Sustained by a large volume of passengers, private sectors operate many urban railway lines in Japan.

2. They have been promoting urban development and other affiliated businesses utilizing the external economy of railway operations.

3. Even in metropolitan areas in Japan, public finance is required to construct a new segment of railway lines. Vertical separation can be useful for the financial coordination between the railway company and the public.

20 Sustainable Urban Development and Role of Private Sectors: A Case of Japan

Thank you

Senior Researcher Fumio KUROSAKI, Ph.D. Contact: [email protected]