Estimating Future Renewal Costs for Road Infrastructure and Financial Burden in Japanese Prefectures

While the fiscal conditions of local governments will become increasingly severe along with the population decrease, the renewal costs they will incur for social infrastructure that has reached the end of its service life are expected to expand. In order to analyze the impact of the future increase in such costs, this paper estimates the road stock managed by each prefecture from super-long-term investment data from road management authorities, and estimates the necessary road renewal costs up until FY2040. The estimates show that if new investment is not reduced, renewal costs in FY2040 will be 2.6 times larger than current costs, exceeding the total fiscal expenditure in FY2012. If future fiscal expenditure is held at the current level, about half of all prefectures will be unable to renew 100% of the roads under their management, while the remaining half will be able to make new investment in roads. Extending the service life of infrastructure will be the effective solution for closing such a gap. However, these analysis results do not reflect the aspect of population decrease. Estimates made with consideration to this aspect show that the extension of the service life of infrastructure only has limited effectiveness. Thus, it is necessary to curtail the total amount of infrastructure through integration while carrying out reforms to the city structure, as typified by the concept of compact cities.