Contents lists available at ScienceDirect Ecological Economics journal homepage: www.elsevier.com/locate/ecolecon Analysis Economics of underproduction: A polycentric approach for a depopulated commons in Japan Ashutosh Sarker Department of Economics, School of Business, Monash University (Malaysia Campus), 47500 Sunway City, Selangor, Malaysia ARTICLE INFO JEL classification: Q57 Q58 H41 H44 Keywords: Polycentric approach Ostrom Underproduction Depopulated commons Behavioural economics Japan ABSTRACT This study investigates whether a polycentric approach can exceed its traditional aim of overproduction and address underproduction in a depopulated commons. Secondary data linked to a depopulated commons were analysed in a polycentric framework traditionally used by economists to address overproduction when numerous individuals collectively manage populated economic commons. The study focuses on Japan's rice terraces, which are emerging as depopulated new commons and generating positive externalities such as valuable ecosystem services. Results show that a polycentric approach comprising local, regional and national stakeholders can potentially address underproduction in depopulated rice terrace commons. Individuals produce rice in terraces despite incurring economic losses due to high production costs, a phenomenon that is difcult to explain using neoclassical economic theory. This study provides practical implications for utilising a polycentric approach to address a depopulated commons generating valuable ecosystem services. 1. Introduction The polycentric approach has traditionally been used to address overproduction in complex, large-scale economic commons such as grazing land, fsheries and irrigation systems, where many competing users collectively utilise the commons in a populated setting (Ostrom et al., 1961; Ostrom, 2010, 2014). 1 Box 1 provides an overview of the important terms and concepts used herein. The polycentric literature has not, however, systematically docu- mented whether this approach can move beyond the conventional setting of overproduction and address underproduction in a depopulated commons. To this end, this study investigates the polycentric approach's potential to account for underproduction in rice terraces, which are emerging in Japan as a new depopulated commons. In this study, un- derproduction refers to an inadequate production of ecosystem services such as rice and scenic views of rice terraces, which are the most pic- turesque and aesthetically pleasing part of a satoyama (a mountain village) in Japan. I demonstrate that despite being private goods, rice terraces were historically considered commons (Ishihara, 2015; Ishihara et al., 2017) and are currently emerging as a new commons or, more specifcally, near-public goods. As the underproduction of eco- system services in rice terraces afects a wide range of non-farmer stakeholders, the terraces are strategically emerging as a new commons. McConnell et al. (2017) defne near-public goods are private goods that provide positive externalities to the public. In Japan, a satoyama is also known as a commons that consists of multiple commons, such as rice terraces, secondary woodlands, irrigation ponds and ditches, pastures and grasslands and human settlements (Takeuchi et al., 2003; Takeuchi, 2010; Duraiappah, 2012; Fukamachi, 2017). Rice terraces are con- sidered an indispensable part of the satoyama, which accounts for ap- proximately 40% of the nation's land (International Partnership Satoyama Initiative (IPSI), 2019). The main cause of underproduction is the widespread land aban- donment in satoyamas, arising from the massive depopulation in Japan, which has been triggered by rapid industrialisation and globalisation, leading to underproduction in many rice terraces (Takeuchi et al., 2003; Takeuchi, 2010; Takeuchi et al., 2016; Kobayashi and Harada, 2010). Some urban dwellers with deep cultural, ancestral, spiritual and https://doi.org/10.1016/j.ecolecon.2020.106597 Received 8 August 2019; Received in revised form 3 January 2020; Accepted 20 January 2020 E-mail address: ashutosh.sarker@monash.edu. URLs: https://www.monash.edu.my/business/about/school/academic/economics/dr-ashutosh-sarker, https://sites.google.com/site/sarkerashutoshsarker/ home/cv 1 Friedman (1971) used the term ‘overproduction’ (p. 855) to refer to overuse or overexploitation of the commons. He noted that overproduction occurs in commons when users compete to exploit resources from non-renewable natural commons. Subsequent studies (e.g. Ostrom, 2002; Druzin, 2016) also use the term overproduction to refer to overuse in the commons. Some studies (e.g. Druzin, 2016) use the term underproduction as the antonym of overproduction. Ecological Economics 171 (2020) 106597 Available online 06 February 2020 0921-8009/ © 2020 Elsevier B.V. All rights reserved. T