3.1.1. Typical *Iriai* Institutions

*Iriai* institutions were developed during the Edo period (1603–1867). At that time, resources that could be obtained from forests were crucial for subsistence purposes. In addition to firewood and timber, grass was an important source of fertilizer for rice fields. Particularly after the middle of the Edo period, population growth was evident due to the expansion of rice fields. As a result, overexploitation of forests and consequent forest degradation proliferated. Natural disasters occurred frequently. The Tokugawa Shogunate and domain lords ruling at the time developed several theories and measures to address the overexploitation of mountain forest resources, including advice for utilizing trees or planting trees after harvest [26]. In addition to such government measures, local rules and regulations concerning forest resources were developed to collectively avoid conflict among households or hamlets and to prevent overexploitation [7]. Such sets of rules and regulations governing *iriai* forests can be called *iriai* institutions.

The unit of *iriai* institutions was traditional Japanese hamlets (*mura*). In general, the principles of membership were strict: only people who resided in the hamlet had a right to access the resources of *iriai* forests. Although great variety was seen in rules applied among hamlets, or even in one hamlet across seasons or species, practices that carefully utilized limited forest resources were common. Typically, there were limits on the amount and time of harvest and particular techniques in exploiting resources. Contribution of labor to manage the forest areas—such as annual burning of grassland, cutting specific timber or thatch, and planting or enriching particular species—was an important obligation under *iriai* institutions. Enforcement of rules was substantial, with high degrees of compliance. *Iriai* institutions were largely in line with the design principles of CPRs presented by Ostrom [1].

#### 3.1.2. Policy Changes over Time

Institutional change has occurred in three directions: conversion to national property, conversion to municipal property, and conversion to private property [10]. The conversion to national property was established by the Public/Private Ownership Separation Policy, which began in 1873. Under this policy, forests for which evidence of private ownership was not confirmed were incorporated into national forests. Many *iriai* forests were regarded as forests without private ownership, due to their form of collective use; consequently, they fell under national forests.

The first wave of conversion to municipal property occurred with the Municipal Government Act in 1889. This act consolidated traditional hamlets (*mura*) from the Edo period into modernized municipal units of cities, towns, and villages. Processes of consolidation were expected to involve taking over resources under *iriai*-related institutions, such as forests, grasslands, or ponds, and making them the property (assets) of the new municipalities. Most of the peasants at the time strongly opposed this policy, to prevent their resources for subsistence from being taken away. Their protests made it difficult to implement the policy. As a compromise, the government created a new scheme of property wards (*zaisanku*). Under this scheme, right-holders of *iriai* resources can substantively maintain their rights to use, manage, and dispose of resources under the supervision of the municipalities. Property wards are one of the most common forms of *iriai* forest management, together with FPCs; in 2011, there were 3710 property wards in total, not only for forests, but also for ponds, hot springs, and graveyards [27].

The second wave of conversion to municipal property was the Village-owned Forests Integration Policy, which began in 1910. This aimed to incorporate into municipal property the *iriai* forests that had remained owned by former hamlet-like units (registered under the names of former hamlets such as *ku*, *aza*, or *kumi*). However, failing to deliver the expected achievements, this policy ended in 1939.

In the late 19th century, when the first wave of conversion to municipal property was taking place, Japanese law scholars learned about the laws and legal systems in Western Europe, and the Japanese Civil Code was enacted in 1896. In the Civil Code, rights of common (*iriai ken*) are specified in Articles 263 and 294. Rights of common ensure local community members' use of local forests or other natural resources based on local customs maintained since the pre-modern era. At the time that the Civil Code was enacted, more than 80% of the population lived in rural areas and were dependent on basic natural resources, such as firewood, fodder, grass, water for irrigation, and fishery; thus, ensuring the livelihood security of these people was essential.

According to the court rulings to date, rights of common are a private right. This feature is extremely important; as a private right, rights of common have been very strong [28]. If these rights had been public rights, the actualities of the rights of common might have been changed or manipulated at the discretion of the government. As a result of this definition of the rights of common in the Civil Code, on the one hand, the government tried to bring *iriai* forests into the public sphere through policy instruments, but on the other hand, it ensured that local community members hold collective access to *iriai* forests, with the rights of common held as a private right.

However, confusing issues have arisen related to the rights of common. On the one hand, rights of common can exist irrespective of land ownership status; court rulings have established that rights of common exist on national lands. On the other hand, rights of common cannot be registered; a group of people holding rights of common for an *iriai* forest cannot register the land of their forest as holders of rights of common. Consequently, holders of rights of common have been likely to register their forests in the name of former hamlets (such as *ku*, *aza*, or *kumi*) or in the individual names of all right-holders.

Until the 1950s, forests had been primarily used for subsistence purposes in Japan. Forest areas, including those of *iriai* forests, mainly consisted of broad-leaved trees such as oak, used for fuel and agricultural uses, and grassland, used for foraging. Such conditions were consistent with the livelihoods and lifestyles of local farmers in those times. However, circumstances drastically changed after the 1960s. Modernization of lifestyles, such as the increasing use of fossil fuels, resulted in the decreased importance of forest resources for the subsistence economy. Grass and small branches were replaced with chemical fertilizers, thatched roofs were replaced with iron roofs, and firewood was replaced with petroleum and natural gas.

At the same time, the national policy for forestry also changed. In 1964, the Forestry Basic Act was enacted, which states that the objectives of forestry are to increase timber production and productivity and to enhance the income of forestry workers. The government strongly promoted the planting of coniferous trees, such as Japanese cedar (*Cryptomeria japonica*) and Japanese cypress (*Chamaecyparis obtusa*), for intensive forestry. Existing broad-leaved forests were often replaced with coniferous trees.

In this context, the government tried to promote intensive forestry practices in *iriai* forests. The Act on Advancement of Modernization of Rights in Relation to Forests Subject to Rights of Common of 1966 has been the base of this policy shift [11]. This act was created to establish modern types of property rights related to forests by extinguishing pre-modern rights of common, developed on the assumption that communal types of management and decision-making rooted in rights of common are likely to hinder advanced and efficient utilization of forest resources. Under this act, which provides due processes, rights of common are to be extinguished, and forests under *iriai* institutions are to be converted to private property, owned either by cooperatives or individuals.

By 2014, approximately 580,700 ha of *iriai* forests had been subject to this modernization process (i.e., the extinguishment of rights of common). As of 2011, of the modernized *iriai* forests, 52.4% had come under the management of FPCs, 41.0% had been individualized by being equally divided among right-holders of *iriai* forests, 5.5% had become jointly owned private forests, and 1.0% had come to be managed by agricultural producers' cooperatives [11].

#### *3.2. Institutions of FPCs and ANAs*

The institutions of FPCs are rooted in the 1951 Forest Act. In 1978, the Forestry Cooperative Act was enacted and it is the legal foundation of FPCs. In Japan, cooperatives in the forestry sector generally refer to forest owners' cooperatives (*shinrin kumiai*: hereafter FOC), which differ from FPCs. Members of FOCs and FPCs are both forest owners, but FOCs jointly undertake forestry operations for forests owned by members and other entities. FOCs target ordinally individual private forests, and have nothing to do with *iriai* institutions.

An FPC is based on the principle of "consistency of ownership, management, and labor". Cooperative members make monetary or in-kind investments and own forests, and in principle, they manage the forests through their labor contributions [17] By law, an FPC is established for joint forest management for more than five people residing in a particular community, under the approval of the prefectural governor. After approval, members invest in the FPC and register the corporation. An *iriai* forest is jointly owned and managed by an FPC—i.e., the cooperative's members.

Only people who reside in the community or make in-kind contributions to the forests can be cooperative members. More than half of the cooperative members should regularly engage in FPC activities and more than one-third of the people who regularly engage in these activities should be FPC members. When an FPC gains profits, dividends are allocated to members according to the number of days that they work for the FPC. Activities that FPCs can undertake include forest management, cultivation of trees and edible mushrooms, agriculture utilizing forest areas, operations for or management of entrusted forests, and other related activities. Members can engage in not only forestry activities but also the cultivation of mushrooms, fruit, or animal husbandry.

Similarities exist between conventional *iriai* organizations and FPCs. Right-holders of *iriai* forests and FPC members overlap in many cases, and despite the change in legal status, FPC members are likely to have a sense of their forest as the commons rather than a sense of intensive commercial forestry [18]. There are also differences between conventional *iriai* organizations and FPCs in that legally, rights of common no longer exist for forests owned by FPCs. Furthermore, FPCs are likely to receive subsidies from municipalities. FPCs have to engage in various kinds of desk work, such as bookkeeping and organizing an annual general assembly, and they are subject to corporate and corporate inhabitant taxes due to their cooperative status [9].

The number of FPCs drastically increased after 1966, when modernization processes began, exploding from 586 in 1966 to 1494 in 1976, with a peak at 3482 in 1996. Since then, the number has decreased (Figure 1); as of 2020, 2693 FPCs could be found in Japan.

**Figure 1.** Recent changes in the number of FPCs (created from [29]).

The decreasing number of FPCs in recent years is mostly due to dissolution or status change. Although no official statistics are provided on dissolved FPCs, Table 1 indicates that 30–50 FPCs have been dissolved annually in the last decade. Approximately 72% of the dissolved FPCs have changed their status to ANAs [17].


**Table 1.** Basic information for the FPCs surveyed.

(adopted from [24]).

ANAs are defined in the 1991 revised Local Autonomy Law in Japan. Under certain conditions, a local neighborhood association (such as a ward) can obtain the status of legal entity and register fixed assets, such as *iriai* forests, under the name of the neighborhood association. Although the ANA institution was not originally meant to address issues concerning *iriai* forests, it can be used for the sake of such forests. Before 2017, the document procedures were complex and difficult: cooperative members first had to dissolve the FPC through due process—including the liquidation of assets (forests), which may cost around several hundred thousand Japanese yen—and then had to register themselves as an ANA. However, the 2017 revised Forest Act has enabled FPCs to directly change their status to ANAs without dissolution; in this case, members do not have to bear the costs related to liquidation procedures.

One of the most important reasons for becoming an ANA is that ANAs are exempted from corporate tax and corporate inhabitant tax, which FPCs must pay. Given that many FPCs feel the burden of tax payments, tax exemption is a significant advantage [9].

Another distinct point between FPCs and ANAs is that after an ANA is established, its stakeholders are not limited to the former cooperative members. The *iriai* forest becomes an asset of the neighborhood, and so, all residents of the neighborhood become right-holders within the ANA. Decision-making and forest management practices can be affected in cases where the number of residents is greater than the number of former FPC members. This involves a change from a strict membership regime to a much softer and broader community management regime.
